Property Management-Encino

A tenant background check can easily mean the difference between positive cash flow from an ideal tenant, or spending the next year (along with thousands on legal fees) trying to evict a bad one.

It makes no difference whether you’re a property management company with 10,000 units, or an independent landlord renting your basement out for extra income.  Conducting a tenant background check prior to leasing should be standard protocol.  After all, you’re entrusting your property, your equity, and your liability, to a person you know nothing about.
A diligent tenant background check will cost (on average) between $25.00 and $75.00, depending on how in-depth the conducted background check will be.  A very basic rule of thumb is to plan on spending at least the equivalent to 5% of one month’s rent on a background for each signer of the lease.  For example, if you’re renting an apartment at $1,000 per month, you should be willing to spend at least $50 screening each signer on the lease.  Foregoing a background check to save a few bucks is comparable to buying a home without an inspection, or purchasing a car you’ve never driven.  You simply cannot make a reliable decision based on appearances, intuition or hearsay.

Criminal Record and Sex Offender Registry Search

• Importance:  High
• Speed:  Instant to 48 hours, depending on the jurisdictions searched.
• Reason: You certainly don’t want to rent your property to someone with a history of violent behavior.  You also don’t want to rent your property to someone with a history of drug trafficking, prostitution, theft, sex offenses or other illegal activities.  It’s your property, and it will be your liability at stake if a neighbor is hurt by a tenant that you placed without screening.

Past Evictions

• Importance:  High
• Speed:  Instant / Same Day
• Reason:  Everyone deserves a second chance, but an evictions search may reveal if someone has already used up their second, third or fourth chance.  A tenant with a history of evictions can become very good at avoiding the boot and extending their stay to a year or more without making a single payment.

Liens and Judgments 

• Importance:  Medium/High
• Speed:  Same Day
• Reason:  Circumstance is key when looking at Liens and Judgments.   A judgment from a car accident or a tax lien of fifty dollars does not mean that a person is a high risk.  However, a number of judgments or liens in recent years can indicate a pattern that you don’t want to be a part of.   Look at the amounts and case summaries.  Judgments or liens based on non- payment of contracts are a solid red flag.

Bankruptcies

• Importance: Medium
• Speed: Same Day
• Reason: Like evictions and other civil actions, you have to look at the circumstances.  One bankruptcy does not make a bad tenant, but it does raise their level of risk.  Multiple bankruptcies or multiple filings for bankruptcy that were not approved is a pattern.

Credit Report (availability varies as restrictions prevent easy access to landlords)

• Importance: Medium/High
• Speed: Instant/Same day for property management companies.  Varies for landlords.
• Reason: Credit reports are a powerful tool for establishing a person’s financial history.  They indicate years of payment history for virtually every credit card, car lease, or mortgage payment a person has, or has not, made, along with timeliness collections and overall debt. On the down side, credit reports are not much help when your tenant has little or no credit history.  You could very well get a report that simply states an applicant’s name and address.

Two years ago I would have said that a credit report should be a part of any tenant background check. They still are for property management companies.  However, as an independent landlord, getting a credit report on an individual isn’t as simple as it used to be.  Beware of websites offering instant credit reports that you can conduct on other people.  Many are scams to collect personal data, or sell you something other than an actual credit report.  Independent landlords can obtain a credit report on potential applicants one of two ways.

1) Utilizing an authorized Credit Bureau such as TransUnion,  offer a combination criminal record database search and credit report to landlords.  (evictions, liens and judgments are not included) This method requires the potential tenant to respond directly to the credit bureau’s “emailed permission request” immediately after the report is ordered by the landlord.  This is the credit bureaus way of assuring the landlord has the applicant’s permission to run the report.  Note:  Don’t even think about trying to send the permission request to yourself as it has several security features to prevent this.  Not to mention, it’s a federal offense to do so.  How quickly the applicant responds determines how quickly the landlord will receive the credit report. If the applicant doesn’t have an email address, this process does not work.

2) Another simpler, and arguably more in-depth option we offer is our Tenant Due Diligence screening package.  This option includes all searches listed above, minus the credit report.
The combination of evictions, liens,  judgements and bankruptcy searches act as a safety net for finding financial problems without the use of a credit report.
To combine the thoroughness of this search with the historical financial data found in a credit report, we recommend requesting that the applicant provide a copy of their own credit report.   The advantage to this method is that the credit report will cost nothing for the applicant or the landlord, and it will not negatively effect the applicant’s credit score, as it would in option one.
If this option is utilized, it’s important to send the applicant to the proper source for obtaining their own credit report.   The only website that should be used by an applicant, or anyone, to pull their own credit report is www.annualcreditreport.com.  This is the one and only website that is absolutely free as it was established by the “Big Three” credit bureaus to comply with regulatory demands of the U.S. Government.  There is no cost to view your credit report once a year, without a credit score.  To view the numerical score, enable credit monitoring services, or view an updated report more often, will have a fee associated with the request.

The Bottom Line:
When it comes to renting property a landlord is loaning a valuable asset to (for all intensive purposes) a complete stranger.   The renter has a pretty good idea of what they are getting, as they can walk the property, try out the appliances and see most potential problems, if any exist.
Without a background check, the landlord is rolling the dice and has only a signed contract that may not be worth the paper it’s printed on if things go south.   The renter that doesn’t pay his rent is just as unlikely, or unable, to pay a civil judgment.   Your best defense from a bad tenant is to learn from their history.  As we all know, history is bound to repeat itself.

Brad Jones is a licensed investigator and Director of Operations of Background Screening Consultants LLC.  Brad is an active member of the National Association of Professional Background Screeners and serves on the Chicago Chamber of Commerce’s Workplace Well-being Committee.  Please note: Any person or entity utilizing a third party to conduct applicant background checks for pre-employment or leasing purposes must follow applicable federal and state laws including but not limited to the Fair Credit Reporting Act.  Articles, blogs, newsletter and other materials issued by Background Screening Consultants LLC (SafeScreener.com) should not be regarded as or substituted for legal advice. 

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.

The reason for our success is helping owners like you when they need it. Below is a partial list of property management services we provide to help you protect your real estate investment.

• Tenant placement
• Tenant screening (including: credit check, landlord and employment verification, social security trace report, California eviction check and criminal check)
• Regular property inspections
• Accounting and landlord bill payment
• Monthly financial reporting
• Maintenance service and supervision (we use only proven independent vendors)
• Collections
• Evictions
• We supply all the necessary forms to meet California’s Landlord/Tenant laws
• 24 hour emergency phone service
• Advertising to the broadest tenant base possible

Call or e-mail us today for more information. We’re ready to get started!

Carnahan Property Management services Woodland Hills,West Hills, Calabasas, Canoga Park, Tarzana, Reseda, Topanga, Encino, Northridge, Van Nuys,North Hills,Chatsworth, Sherman Oaks, Studio City, North Hollywood, West Hollywood, San Fernando Valley, Granada Hills, Mission Hills, Simi Valley, West Lake Village, Agoura,Toluca Lake, Valley Village, Burbank. Call us at (818) 884-1500 and check if we can service your area.