How to Screen Tenants as a First Time Landlord

Chris at Hauseit (https://www.hauseit.com) goes over how to screen tenants as a first time landlord, what some best practices are, and what the easiest and most common steps landlords can take to screen and vet potential tenants for their properties. Save money when you buy a home in NY or FL: https://www.hauseit.com/buyer-closing-credit/

Save money when buying, selling and renting real estate in New York and Florida with Hauseit (https://www.hauseit.com). Available in NYC, Long Island, the Hudson Valley and South Florida. Established 2014.
.
.
Screening tenants as a first time landlord is much easier these days with advances in non-intrusive credit checks directly via any of the major credit rating agencies, such as TransUnion SmartMove. In contrast, in prior ages one had to contact a middleman credit check agency who might charge a hefty fee to run a hard credit check on the tenant. This would necessitate finding out sensitive personal information about the tenant such as the tenant's social security number. As you can imagine, this might cause discomfort with many tenants, or at least hesitation.

Instead, you can use a credit check product with any of the major credit rating agencies, and they can share the tenant's credit report and other background information with you directly upon receiving permission from the tenant. You'll only need the tenant's name and email address, and after setting up your property on the credit check site, you can simply invite the tenant to apply. The tenant will then verify their identity directly with the credit rating agency, without revealing their social security number to you, and once verified, the credit rating agency will share their credit report with you.

Keep in mind that you still are able to get their complete credit report, and often other types of background checks through this method. These checks often cost less than $50 to run, and can be paid by either party. Keep in mind some states prohibit checks on housing court records, such as New York. If so, services like TransUnion SmartMove simply won't show data for such prohibited searches for New Yorkers.

Another important diligence item landlords must do is to check landlord references. It's super important to get a sense of who the prior 1-2 landlords for the tenant were, and to contact them for a reference check. Ideally it's more than just an email, and you're able to speak with them perhaps via a phone call to get a sense of the landlord's experience. Did the tenant always pay on time? Did they treat the property and landlord well? Did they cause any property damage? Were they excessively difficult?

Another screening must-do for landlords is to check the tenant's income and/or assets. Obviously, a landlord must verify that the tenant has an ability to pay the rent, or otherwise has a guarantor who is able to. Be careful with this one as in some states like New York, "source-of-income" is a protected class. This is meant to protect people on housing vouchers from being discriminated against. In other states like Florida, there are no prohibitions on landlords verifying that the tenant has an ability to pay, and where they are sourcing that income.

Lastly, you should try to meet the tenant, or at least do a phone or video-conference interview if state regulations permit. Many landlords trust their EQ and gut when it comes to vetting tenants, if nothing else but to get a sense of whether they're a nice, honest, trustworthy person. With that said, since this is subjective, you might not be able to do this in some states like New York where you might be liable for claims of discrimination because you met and saw them. Of course, these kind of claims are entirely subjective as well and is purely he says or she says. However, in order to protect yourself from potential liability in states like New York, it might be better to hold off on a direct interview request.

Check out Hauseit's Rental Property Calculator to estimate your monthly/annual cash flow, cap rate and cash on cash returns: https://www.hauseit.com/rental-property-calculator/
.
.
Save money when buying, selling and renting real estate in New York and Florida with Hauseit (https://www.hauseit.com). Available in NYC, Long Island, the Hudson Valley and South Florida. Established 2014.

Hauseit LLC, Licensed Real Estate Broker
Tel: +1 (888) 494-8258
Email: team@hauseit.com
_
#hauseit #hauseitnyc #hauseitmiami #hauseitsouthflorida #hauseitlongisland #hauseithudsonvalley #hauseitwestchester #hauseitrealestate #hauseitre