Credit Check Scaring Away Tenants?
We did have quite some interested applicants for the 1-br condo unit we are trying to rent out, but It's so unusal that almost each time we mention we're gonna run a credit vs. criminal check, the person would "disappear" somehow. This has been happening for over 5 times by now, and we haven't really received a completely filled application.
Should we still insist credit/criminal checks? Or this is driving tenants away? There was a saying that it's better to have no tenants than to have bad tenants, but we don't want the apartment to be vacant for another month. Hmm....
Could make mention to the fact that you run them on all tenants and that it will not be the sole source of your rental agreement
I wholeheartedly support your running credit checks on your prospective tenants. If ones auto insurance rates can be influenced by one's credit, then it is very reasonable to assume that someone's timely fulfillment of a lease and care of a home is at least loosely correlated to their credit.
I insist on a credit report and if they don;t want to authorize one, then I figure I just saved in the long run. I do however present this as a "i don;t want any surprises" kind of thing - I am not expecting 700 credit scores for tenants, I expect to find some problems - if they didn;t have any problems, they'd probably be buying not renting, right???
I suggest being clear about what you are expecting to find on the credit report and I think your objections will disappear.
good luck!
steve
For a reference to your situation, i help
my biz friends in finding a "Quality"
employees for cash related biz. OVER
40 % FAIL A DRUG TEST , OVER 60%
FAIL WHEN CREDIT & DRUG TESTING
if BOTH REQUIRED! So don't be easily disappointed. Sadly $$$$ blinds your good judgement at times, Quality always pays in the end(both in life & with people)! Mark :-D
It's a 1-bedroom condo. So your potential tenants are probably singles or young couples. A huge number of people in these categories have credit problems now or have had them at some point.
It's understandable why this is happening, but I also think you might be able to do a thing or tow to help change the situation. Ask them, "What will I find if I run a credit check?" You're not saying, "I will run a credit check and base my decision on that." But you are giving them a chance to be open and honest right now. If they tell you that they've had problems that are going to be reflected in their credit report, will you automatically turn them away? Of course not. My best tenant told me that he had a bankruptcy a few years ago. That's not a deal killer. In fact I appreciated him being honest. That's one of the reasons why I rented to him. Now he and his wife have been there over a year, are very courteous and responsible, and might be moving into one of my larger units. In fact I'm thinking of offer this tenant an opportunity to do some management work on the side for me.
Another thing you might want to do is check with the utility companies. Depending on where you live and the way in which local utility companies work, you might be able to call them and find out if the bills were ever paid late at the address where the applicant currently lives. I've done this several times and it's worked well so far.
Thanks for all the warm answers. Well, yes, it's true that we are trying to attract either singles or young couples as potential tenants, and that most of them don't have very good credit. What we really want to avoid is to evict someone by force, or to have severe damages to our property due to criminal or violent activities. Doing this all by ourselves seems really time consuming 'cause both of us work and can only make use of evening or weekend time. Will a property management company take care of this kind of small unit? Or it's just too small a bite?
Couple of things I'd sure do:
First, don't let ANY T in your property without C&C check...it's better to have it sit empty for awhile than have some bum(s) in there who won't pay you or anybody else.
Second, put the condo into an LLC and then just tell all callers that you're just "local agents" for the co., you have no discretion and you've been told to follow orders or take a hike.
Sympathize with the poor applicants about what a bad employer you have & how you'd like to bend the rules, etc...but don't let any bums in.
[addsig]
DRUG TESTING!! Now that's an idea. I know the earlier post was talking about employee screening, but I wonder if anyone has tried telling apartment applicants that they require drug testing.
(I am chuckling as I type this, but I also live where competition for apartments is fierce.)
So here's my question -->is there a law against asking tenants to go to a lab for a drug screen? 8-)
Renters typically can not pass credit checks or do not have money for down payments or they would purchase rather than rent. Trust in a general check- employment references etc. Give people a break because you do not know their story.
In order to cover yourself- as a landlord-- you must be very keen as to what is going on with your properties and tenants. When rent is 2 days late-- take action.... if disruption occurs- make written warning notices... just be prepared to take immediate action instead of sitting around for weeks based on a promise waiting for rent money. my son rents a great place- he didnt have credit because he is just starting out. He had several jobs- so his history of employment was varied and only part time. He got the apartment- and the landlord let him know and in the lease- due on the 1st is the 1st - if not received by the 3rd- the eviction process will be activated. The land lord doesnt play around. People are basically good-- but as a landlord- you must be prepared up front and learn to follow through with the terms of the lease.
I'm of the opinion that you are better off scaring these tenants away. Even if they have bad credit they should at least be able to go through the check. I have had applicants that admit up front that the credit is bad but I tell them their personal referrals can out weigh that. You will regret having the headache of a bad tenant if you loosen up on your screening.
Consider my posting on "need ideas on this one". This has been a good method for me in the past. Less $$ initially,(rent) but a lot better neighbors & higher price & quicker sale of property, when selling.
Just a suggestion.
:-D
is there a law against asking tenants to go to a lab for a drug screen? 8-)
, and forward the results...
The legality for employers having drug testing done is a major issue that was covered in some of my buisness classes, I don't know how legal it would be to ask for Drug testing for RE, since it is a "health" issue and "private"
It never hurts to tell them that if the property is damaged in any way you will require one
My criteria is (1) decent credit - disregard all medical and anything more than 5 years ago (2) household income 3x the rent (3) rental history. No magic or mathematical formula.
Yes credit check scares them. But I do tell them that I disregard all medical and that I realize that nobody has perfect credit and that most people have had a bad spot. I look for a pattern of not paying bills. If there are multiple lates, charge off, bounced check spanning several years and some within the current year, then it is definately a no go.
I think if you are up front about what you are looking for, people will feel better about the Credit Check.
We tell our potential tenants that we are checking for prior evictions and utilities being shut off. We don't really discriminate for any other reason.
Drug test? I'm a half libertarian so I don't object to what people do in private as long as it doesn't hurt the house.
[addsig]