Why You Need a Tenant Check: Tips for Landlords
You should never rush into choosing a tenant for your rental property. One way you can ensure it will be in safe hands is by performing a tenant check prior to letting. It not only reduces the risk of rent arrears but also assures that your property will be treated with the respect it deserves.
Read this guide on the essentials of tenant checks and how to deal with a difficult tenant moving forward.
What is a Tenant Check?
Tenant background checks are designed to help you assess your potential tenants before you agree to a lease agreement. The goal is to determine that your tenants are both reliable and capable of following the obligations you outline.
As a landlord, it is your sole responsibility to carry out a background check on your tenants. This includes:
- A rental history background check
- Income and employment
- Identity check
To check tenant information, you can use the National Tenancy Database (NTD) and references from past landlords and current employers.
Reasons to Carry Out a Tenant Check
In most territories, a tenant check is a legal requirement. But that’s not the only reason to perform one prior to letting. Others include:
Protects Your Investment
Renting your property out to the wrong tenants can lead to both costly repairs and even unpaid rent. Performing tenant checks will give you peace of mind that your investment is in good hands.
Taking a look at your potential tenant’s rental history will show you whether they will treat your property responsibly or not.
Reduces Financial Risk
If your tenants refuse to pay rent, it can have a big impact on your cash flow. Assessing the financial stability of potential tenants by checking out their credit score and employment status improves the chances of you receiving on-time payments.
Helps You Avoid Legal Trouble
A dispute with a tenant can snowball into costly and time-consuming legal battles. Performing a background check reduces the chance of renting to someone with a criminal background or history of lease violations.
Ensures a Trouble-Free Tenancy
Every landlord dreams of renting to a responsible tenant that respects their property. Reading references as part of a tenant check will give you an idea of whether a tenant will be easy to manage and keep your investment safe.
How to Perform a Tenant Check
Tenant checks are a major part of the tenant screening process. You need to make sure your investigation is as thorough as possible so you get accurate and reliable information on your potential tenants.
Here are some tips for performing the most thorough tenant check possible:
Use a Reputable Tenant Screening Service
As a landlord, you don’t need to go through the NTD manually. Instead, you can use an online tenant screening service, which will provide credit and background checks in one place. You will receive background checks quickly, allowing you to speed up the screening process.
Some reputable tenant screening services include:
Choosing a leasing company like One Hive Property Group will make things far easier for you. They will handle the entire screening process on your behalf.
Verify Their Employment and Income
Ask the potential tenant for recent pay stubs or an employment letter to officially verify their income. Doing this will make sure they can actually afford the rent and won’t miss any payments.
Ideally, the tenant’s monthly income should be three times the rent amount. As a landlord, you have the power to decide whether you want to stick to this general rule.
Check All References Thoroughly
The references and documents provided by the tenant are undoubtedly helpful, but it’s also essential that you cross-check this information. If you see any potential red flags, don’t hesitate to keep digging. Any discrepancies, no matter how small, need to be rectified before you can move forward with the tenancy agreement.
Contact their previous landlords and ask about the tenant’s general behavior and payment history. If they left the property in good condition, they’ll probably treat your property in the same way.
How to Deal with a Difficult Tenant
You can never truly predict someone’s behavior. Even if you’ve carried out a thorough tenant check, you may find yourself dealing with a difficult individual. Learning how to deal with a difficult tenant professionally will help you protect your investment in the long term.
You should always:
Communicate Quickly
Small misunderstandings can normally be fixed with a quick phone call. If any issues do arise, you should address them straight away and document every conversation and agreement—this will work in your favor in case any further action is required.
Follow the Lease Agreement
Always check the lease agreement when you are dealing with a tenant issue, no matter how small. If you uncover a violation of the agreement, like late payments or property damage, the law will be on your side.
Offer Potential Solutions
If your tenant is having personal issues or going through a tough time financially, you can offer a compromise before resorting to legal action or eviction. You could agree to a payment plan or give the tenant time to get their ducks in a row.
Consider a Mediator
If all else fails, a mediator might be able to help. Having a neutral third party that represents both sides will more likely result in an agreement without having to resort to costly legal action.
Evict the Tenant – But Only As a Last Resort
If your tenant consistently violates the lease terms or causes major damage to your property, you can evict them. Follow the legal procedures and consult with a lawyer to ensure you handle the eviction properly.
Final Thoughts on Tenant Checks
Taking the time to thoroughly vet all potential tenants is always worth the effort. It ensures that your property will be well looked after and that you receive your rental payments on time.
If you don’t have time to manage your rental properties, partnering with a rental property management group will make things far easier. They will perform a thorough screening process on your behalf to ensure your investment is protected.
Contact One Hive Property Group today for expert assistance and support. Call us on 0439 451 915 or email us at info@ohpg.com.au to learn more about how we can help you.