The Importance of a Tenant Background Check Explained

The Importance of a Tenant Background Check Explained

Around 16% of renters fall into the category of "perma-renters." These renters tend to stay in their houses for many years, continually renewing their leases when they expire.

Landlords like tenants like this, as they bring their tenant-turnover rate down. But how do you find great tenants like perma-renters? 

The solution is through a tenant background check. Performing background checks is vital to the tenant-selection process, as it helps you find better tenants.

Would you like to learn why this is so essential? Keep reading to learn the answers.

You Set the Criteria

Creating a tenant screening procedure lets you set the criteria. In other words, what is your definition of a good tenant? Once you decide, you can set your criteria for tenant screenings based on the answer. 

The goal is to find the best tenants. So, what qualities matter to you? Here are several to consider:

  • Clean criminal records
  • High credit
  • Job length and history
  • Income amount
  • Positive references

You can hire a property management company if you don't know how to choose the best tenants. They'll help you find the best ones.

Therefore, if you're having trouble finding good tenants, this might be a sign it's time to hire a property manager. 

It Weeds Out Bad Tenants

You can perform several types of background checks, and one reason to perform these is to weed out the bad tenants. 

For example, performing a criminal background check helps you avoid renting to people with violent criminal records. As a result, you'll have safer properties by avoiding tenants with criminal backgrounds. 

Good Tenants Result in Higher Profitability

The number one reason to perform tenant background checks is to find the best tenants. Finding tenants isn't hard in most cases. However, finding good tenants can be a little more challenging. 

Your rental property business will be more profitable if every tenant is a good one, though. After all, good tenants have the following characteristics:

  • Pay rent on time
  • Care for their homes
  • Don't cause problems
  • Won't bother you with minor issues
  • Abide by the lease

On the flip side, you might experience problems with these things if you rent to bad tenants. 

You Avoid Discrimination

One additional reason to perform tenant screenings is to avoid discrimination. The Fair Housing Act is a federal program that outlines what landlords can and can't do when selecting tenants.

If you break the rules of this act, you might find yourself in a discrimination lawsuit. However, if you create criteria for tenant selection and follow them, you'll have evidence to back up your case if you deny renting to someone.

Perform a Tenant Background Check on Every Applicant

Performing a tenant background check on every applicant leads to higher-quality tenants in your rental properties. Higher-quality tenants ease your duties and provide a more positive cash flow.

Do you need help performing tenant screenings? Contact us at HomeRiver Group for help. We offer property management services, including tenant background checks.

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