When it comes to renting, an employment background check is critical. Not only does this protect owners and landlords, but it narrows the pool of renters and helps lay the foundation for friction-free landlord-tenant relationships. Good tenants make it possible for property owners to rest easy at night, knowing the rent will be paid and the property will be well-maintained.
Without an employment background check, however, landlords are much more likely to wind up with bad tenants who may damage the property and create more headache than is needed.
With this in mind, it’s critical for landlords to conduct an employment background check before renting a property. Here’s our simple guide to the process:
When it comes time to find a tenant for your rental property, you have two choices. You can hire a rental property management company to handle everything for you, or you can find new tenants yourself, assuming you’re comfortable with learning the ins and outs of rental law.
While partnering with a real estate professional or renting from a trusted apartment provider like Blueground will give you peace of mind, some landlords want to go it on their own.
If you’re one of them, here are six steps to evaluate a tenant’s employment history and make a great choice:
Instead of relying on verbal backgrounds, ask all interested tenants to complete an application. As a property manager, your application should cover everything you need to know about the tenant, including past employment history, personal information, and rental history.
The form should also make it clear that you intend to order background checks, criminal history reports, and credit checks if needed. Finally, it should outline under what circumstances a tenant can break a lease.
Make sure your application provides spaces for your applicants to outline their previous employment history. This provides the starting place for your background check and ensure you have all the information you need.
While credit history doesn’t tell you everything about a person, and is not technically a part of an employment background check, it does provide essential information. After all, would you want to rent to someone who has declared bankruptcy three times?
When you pull a tenant’s credit, you’ll get details about the last 7-10 years of their credit history. Services like Equifax Identity Report make it easy to order credit reports and scores for your prospective tenants.
Once you have the report in hand, look for red flags like missed payments, bankruptcy, and a history of maxed out credit cards.
Background checks provide detailed information about your potential tenant’s past, as well as illuminating anything in their employment history you may want to know about.
Generally, these background checks include details about criminal history and charges, credit history, any history of evictions, and anything in the public record that you may want to know. Landlords can order these reports by using the tenant’s social security number.
While the background check will unveil a load of information, pay particular attention to things that are relevant to your purposes, such as employment and eviction records.
If you’d like, you can ask for both personal and professional references on your rental application. As you screen the applicant, contact these references (as well as the tenant’s previous landlords).
Check into whether the tenant has paid all rent on time, can be counted on to arrive at work, and if they have a history of outstanding debt. When you get to the employment references, look for indications that the tenant is a good and honest employee, that they show up for work, and that they have no history of violent incidents at work.
While you don’t want to invade your tenant’s privacy, asking a few key questions is a great way to screen your new potential renter.
Speaking to a tenant’s employer is the best way to ensure the tenant has a steady, reliable source of income. If you’d prefer not to contact the employer directly, you can also ask the tenant to supply you with copies of recent pay stubs or bank statements.
In some instances, asking for paystubs is a better option. Employers bound by privacy agreements may not be able to provide salary history, personal details, or even information on whether or not the tenant is an employee of the company.
If the background information you’ve gained so far checks out, finalize the process by interviewing the tenant personally.
Use this time to learn more about them, their lifestyle, their housemates, their pets, or anything else that might interest you as a landlord. Remember that the Fair Housing Act covers landlords and tenants in all states, and states that landlords cannot discriminate based on color, disability, family status, race, national origin, religion, or sex. There are, however, allowances for asking about a tenant’s previous employment history, and asking for proof of income.
Conducting a background check on your potential tenants doesn’t have to be a complicated process. By following these six steps, you can learn everything you need to know about a tenant’s employment and financial history, which makes it much easier to find the perfect tenant for your new space.