Rental properties are an excellent source of passive income. However, managing them comes with a fair share of accountability, responsibility, and potential liability. If you want to manage rental properties successfully and ensure the safety, reliability and financial stability of your tenants, then engaging in robust tenant background checks becomes crucial. They are a way for landlords to examine prospective tenants, identify any potential red flags and choose the best renter for the rental property. A typical tenant background check includes the following –

• Verification of the prospective tenant’s identity
• Examining his/her criminal history at the county, state and federal levels
• Checking for prior evictions
•  Checking global watchlists
• Check for liens or other indebtedness
• Follow up with prior landlords – previous rental history – were they a problematic tenant

Importance of Rental Background Checks – A Concise Guide for Greensboro North Carolina

A rental background check is crucial for every landlord or property manager who is serious about the safety of his/her property and also about the well-being of other tenants. A rigorous tenant screening process helps identify the potential red flags of a potential tenant, such as criminal or anti-social behavior, and inability or unwillingness to pay debts, etc.

When you review the rental payment history of a potential tenant, it becomes easy to understand whether or not they will be able to pay their rent on time. So, you are saved from the hassle and headache of rental fraud. Likewise, a tenant application with a crystal clear record also ensures that the passive income you receive from your rentals is steady, smooth and consistent.

A tenant with a history could bring unwanted problems your way. You will want to speak with the previous landlord or have a private investigator in Greensboro speak with them, in addition to running a background check on a prospective tenant.

What Is A Tenant Background Check – Top 3 Components

 Before getting into the basics of how to conduct a rental background check, let’s examine some essential components of a rental background investigation.

 Eviction Records & Previous Rental History

One of the most important components of background checks for rentals is looking for eviction records. Eviction records are big warning signs that something is wrong with the individual who might become your future tenant. It might hint at the applicant’s inability to pay rent on time, misconduct, or any type of anti-social behavior. These types of records may be difficult for landlords and property managers to obtain on their own. Victory Investigations’ private investigators, in Greensboro NC, have access to information that is not readily available to the general public that can potentially help validate the findings of a reputable tenant screening service. 

Request a Criminal Background Check on Tenants

A criminal record check offers insight and details into the criminal history of the applicant, including convictions a person may have. They are important to ensure everyone’s safety and minimize your liability as a landlord. However, there are regions that have laws prohibiting landlords from asking prospective tenants about arrest or conviction records, such as Oakland and Berkley California. Landlords should always be aware of local laws and regulations when conducting criminal history checks.

It is important to note that there are NO central criminal databases available to anyone outside of law enforcement. However, background screening agencies and private investigators for Greensboro know how to locate and combine criminal records from all 50 states.

Another important piece of information is that PI’s and background screening agencies provide “human-audited” background information. You cannot rely on online, automated background reports. Although many many have useful and accurate information, more often than not, they are riddled with inaccuracies, stale data, and cross-contamination from others with similar attributes. 

Request a Credit Report Through the Three Major Credit Reporting Bureaus

Credit reports and scores provide invaluable insight into the financial stability and payment records of your prospective tenant. An assessment of the same is crucial to ensure that you are renting your property to someone who can pay the rent on time, something that can be easily analyzed by checking their credit report and scores. TLO’s SmartMove service can help determine whether the applicant’s credit behavior is aligned with their self-reported income. The three major credit bureaus  or major credit reporting agencies are:  Equifax, Experian, and Transunion. One or more of these are often used to screen prospective tenants. Just be sure to bone up on tenant rights before you run a credit report.

How to Run a Background Check on a Tenant in Greensboro NC – Four Best Practices

Get Written Consent to Run a Credit Check & Tenant Screening Report

The first and probably the most important step is to get written consent, from the applicant. You and the applicant should be aware of the Fair Credit Reporting Act (FCRA) and that he or she feels okay if you conduct their background check. You can provide them with an FCRA disclosure and it is best that they sign saying they have received it.

You may also want to have copies of the Fair Housing Act, printed off, to provide the rental applicant. Without written consent, rental background investigations could result in fines and other legal actions. All of this can be included in the complete rental application.

It’s probably not enough for them to verbally provide this information or just write it down. We suggest making copies of their driver’s license and social security card and keep them in their file.

If you do require their driver’s license information, it’s a good idea to provide them with Driver License Protection Act (DLPA) disclosure as well. Covering your bases will prevent a lot of potential future headaches – trust us.

Collect Required Information

Once you’ve decided to screen prospective tenants, for your rentals, you should ask for the right documents and information. This includes –

• The full name of the applicant
• Date of birth
• Social security number
• Current and previous addresses
• Income (possibly verification of income i.e. paystub)
• Employment history
• References, including previous landlord(s)

Choose Trusted Background Check Service in Greensboro North Carolina

The third and very crucial step of a rental background check is to choose the best screening service. A reputable tenant screening service, like E-Renter, adheres to federal and state laws and provides accurate and updated information promptly. Request a thorough background check, including checks on credit, income, rental history, eviction history, and criminal records to ensure quality assurance. Also, look into the services reviews and reputation. Make sure they’re on the up and up and have all the proper credentialing.

You should prioritize services that comply with FCRA regulations and also provide comprehensive reports, including credit history, criminal records, eviction history, and more.

Analyze the Results and Make an Informed Decision 

The fourth step of a tenant background screening is to analyze the reports fetched by the tenant background screening service and determine the applicant’s suitability as a renter. Some of the things you can do are – evaluate the debt-to-income ratio. It reveals how much of a person’s income goes towards paying debts. A low DTI reveals that the application has a good balance between income and debt and can probably clear its pending dues on time. A good DTI ratio is anything below 37 percent. Likewise, it is essential to consider the property type, the demographics, etc, while finalizing the suitability of a prospective tenant.

Wrapping Up – Background Checks on a Tenants 

….should always be considered before leasing your precious property. They should be considered a vital part of the rental application and it doesn’t just protect you, the landlord, but also the applicant. 

Once the applicant has been thoroughly screened, landlords need to take further action, like reaching out to references, confirming employment details, and ultimately determining the applicant’s suitability. This decision-making process should align with relevant laws and tenant rights.

It’s crucial for landlords to prioritize confidentiality and compliance with relevant regulations post-background check. Through vigilance and adherence to guidelines, landlords can effectively manage their rental properties while remaining lawful and respectful of tenant rights.

Just as an aside… Victory Investigations, in Greensboro, has assisted landlords and leasing agents with locating tenants that have “skipped-out” on their lease and payments and when they have left behind significant damages. Our private investigators have helped hundreds of landlords locate their former renters in order to have them served with legal process. If you have a situation that requires locating someone or skip tracing a debtor, former tenant and the like, reach out to our experts to assist.