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CHATSWORTH PROPERTY MANAGEMENT

Tenant Screening – Ten Rules to Always Follow

It is your house. Maybe it was the family home that you inherited, and now you are renting it out. Maybe you purchased it as an investment and plan for it to be a big part of the retirement fund.

And now, you want to rent it out to some people who you think are really nice. They told you a story about what hardships they have gone through and you, being a nice person, want to help them out.

Well, maybe they told you the truth. Maybe. But then, maybe they are people who will tear up your lovely house, cost you thousands of dollars in damage, damage your reputation, and perhaps even drive you into bankruptcy.

Protect yourself. ALWAYS, ALWAYS, ALWAYS screen your tenants. And NEVER EVER violate tenant screening rules numbers 1 through 10!

Rule number 1: Screen your tenants.

Rule number 2: Screen your tenants carefully.

Rule Number 3: Screen your tenants thoroughly.

Rule Number 4: Screen your tenants even if you think they are OK.

Rule Number 5: Screen your tenants always.

Rule Number 6: Screen your tenants without fail.

Rule Number 7: Screen your tenants under all circumstances.

Rule Number 8: Screen your tenants especially if they wave money under your nose.

Rule Number 9: Screen your tenants even if they seem clean and well educated.

Rule Number 10: Never ever ever violate rules 1 through 9.

Because it does no good to tell you to screen, without telling you HOW to screen, here is how you screen a tenant.

First, make them fill out an application that asks for, at a minimum, the following:

(1) Full Name;

(2) Social Security Number;

(3) Current Address;

(4) Time at current address;

(5) Current Landlord’s name and phone number;

(6) Employer;

(7) Employer’s phone number;

(8) Their income;

(9) ALL – that means EVERY – address they have lived at for AT LEAST the last 3 years, with landlord names and numbers, and dates they lived there;

(10) Names of EVERYONE to occupy the rental

The application must also have on it a release permitting you to do a complete background check on the applicants, and all applicants age 18 and over must sign the application.

Then, check the DRIVERS LICENSE or STATE ID of every applicant age 18 or over – NO EXCEPTIONS, NO EXCUSES. When you look at the ID, make sure that the picture matches the person who gave it to you. Then verify that the name on the ID is the same (including middle initial) as the name on the application. For women, this often involves careful questioning. MAKE SURE you have all the last names for the person that you can obtain. The address on the drivers license MUST BE one of the addresses listed on the application. If the Social Security number is on the ID, match it against the one on the app. Finally, compare the signature on the ID to the signature on the application.

Charge the applicants a reasonable fee (typically $30 or $35) per name (nonrefundable) for an application fee. This is not unreasonable; a screening service will charge you at least that much, and if you do it yourself, you will put some time into it. Also, this is your first line of defense; if the applicant has a bad history, they usually won’t pay the fee since they know they will lose the money and won’t get the place. If they are bad guys, you do not want them anyway.

Then, you should turn it over to a good tenant screening service for evaluation. Make sure they are thorough. If you wish to screen the applicants yourself, here is what you do.

First, go to the local courthouse and search the eviction records to see if they have ever been evicted. If they have been evicted, you need to evaluate why. While you are there, check court records for criminal convictions. Then go to the tax office and pull property records on all addresses listed on the app. Make sure that the owner listed on the app is indeed the current (or previous) owner of the property. Commonly, you can do all of this online. One of the most common scams is to list a friend as a landlord. If you have cause to suspect this might have happened, then check the records to see if the friend has ever been evicted or arrested. You will wind up knowing a lot.

Second, go to the police station, and pull arrest records on them. This will usually be enlightening; many arrests never make it to court. So by looking at these records, you will learn if your applicant is troublesome.

Then, go to the credit bureau and pull their credit report. You can use this to determine whether they are a deadbeat or not. Bad credit is common among tenants; learn to decide WHICH KINDS of bad credit raise red flags. For instance, I tend to ignore medical collections; it is expensive and if you are ill, you have to have the service. I do not consider non-payment of medical bills to necessarily indicate moral turpitude. However, bad checks to grocery stores is a major red flag, and I routinely reject those who get jewelry store credit cards, run ’em up, then default. In my book, that is no different than theft.

Now, get on the phone. Call the present and previous landlords. Get references. Ask set questions; “Did they live there? did they pay on time? did you ever give them an eviction notice? did they cause damage? would you rent to them again?” Never forget the “would you rent to them again?” – often, your other questions do not pick up something and that last one is your clue.

Call the employer. Do they really work there? Is the employer really an employer? Pay particular attention if the phone is answered “hello”. Business phones are usually answered with a business greeting; “Doc’s morgue – you stab ’em, we slab ’em”. The “hello” answer could be your tip off that the “employer” is not really an employer.

If anything makes you in the least bit suspicious, criss-cross phone numbers. You can do this online at many websites.

When you are done with all this, you will know who you are dealing with. It won’t guarantee you that you will avoid a bad experience, but if you do not do it you are certain to have some extremely bad experiences, and by doing this you will certainly filter out 99.9% of the bad guys.

A good screening service will do all of these things for you. If you are not set up to do it routinely, you will find it to be a terrible nuisance and will be inclined to take shortcuts. Shortcuts will cost you many thousands of dollars in evictions, lost rent, and repairs. So never take shortcuts.

The screening service that we use maintains eviction, arrest, and property ownership records on site. They also keep complete records of everyone they have ever screened – so the second and third and fifteenth times they screen them they can see what was said the earlier times. They keep records on landlords as well, so they know who they all are (as best they can know – they know of several thousand of them in the area). So when you go to these guys, they have the data to quickly tell you what you need to know about the person, and all the previous landlords, and so forth.

Any good local screening service will have this kind of data – and some of it is only data that you get by running a screening service. This is the argument in favor of using a service rather than doing it yourself.

But ultimately it does not matter, just so long as you do it.

By Jim Locker

Jim Locker holds advanced degrees in physics, has designed and developed computer systems and software for over 30 years, and was a landlord for 20 years running up to a couple of hundred properties

Since 1946 the Carnahan name has had a reputation for honest and ethical Real Estate Property Management services in the San Fernando Valley, Santa Clarita Valley, Burbank/Glendale, Los Angeles, Westside and Conejo Valley areas.

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