Learn about tenant screening reports, how much they cost, and how they help landlords find the right renters.
Trustworthy tenants mean fewer vacancies — and a higher return on investment. Here’s how tenant screening reports help you gauge prospective renters’ reliability, and how Azibo can help you manage tenant applications and background checks in one hub.
As a rental property owner, protecting your investment is a top priority. One of the best ways to do so is by checking whether your tenants have historically been reliable, trustworthy, and able to pay rent on time. In screening for these key qualities up front, you can minimize the risk of property damage, late payments, or vacancies — and pave the way for strong tenant relationships right out the gate.
While meeting with a prospective tenant is always a good idea, it’s not enough to rely on an interview. Comprehensive tenant screening reports help you determine whether or not a tenant is a good fit for your property based on relevant information about their financial and rental history.
For many landlords, tenant screenings may seem overly complicated or expensive. In this post, we’ll take a closer look at the process for tenant screening reports, including what these reports are, how much they cost, and how Azibo can help you simplify the pre-lease process.
While many landlords conduct informal tenant screenings by meeting with prospective renters and interviewing them about their lifestyle or why they left their previous property, a formal tenant screening report goes a step further.
Typically, tenant screening reports involve a thorough examination of a tenant’s credit, eviction, or criminal history. They may also include looking into someone’s employment history and verifying their Social Security number. Before accessing this information, landlords must get written, dated permission from prospective tenants on a rental application form. From there, you need the name, address, birthday, and Social Security number of every adult named on the lease agreement.
A critical component of the process is maintaining an unbiased approach to tenant screening, in compliance with the Fair Housing Act. This federal mandate prohibits discrimination in the sale, rental, or financing of dwellings (including rental properties) on the basis of race, color, religion, sex, disability, familial status, or national origin.
Many landlords are wary of tenant screening reports because they want to avoid unnecessary costs. However, the reality is that a thorough tenant screening process could help prevent future costs by saving you the trouble of an unreliable tenant. What’s more, many tenant screening services allow landlords to request their applicants to pay the screening fee.
Typically, tenant screening report fees range from $25 to $75 depending on the company and how detailed the reports are. This range may also depend on where you are and how local laws regulate tenant screening.
Azibo provides landlords with a free portal for tenant applications, with the option to add background checks that include credit, criminal, and eviction reports — and cost prospective tenants $39.99. That means you can use the same platform you use for rent collection to review tenant applications and fill vacancies.
As a landlord, you want confirmation that your tenant has the means to pay their monthly rent. Checking recent pay stubs or tax returns can help you get a sense of tenants’ current income and whether they can afford your rent.
Typically, landlords look for a monthly income that is roughly three times the cost of rent. If a tenant doesn’t provide a pay stub or official W-2 form, you might consider asking for another version of proof of income, including bank statements, brokerage statements, or additional records.
Credit checks give landlords visibility into prospective tenants’ credit scores, debts, and payment histories. Renters are usually expected to have a score between 600 and 650, but this varies depending on location, the property type, and the preferences of the landlord.
Younger tenants, for example, may not have a credit score or a strong credit history. Others may be working to pay off debt and actively trying to improve their credit score to prove they are a reliable tenant who can pay rent. You can let tenants know that they can boost their credit score by reporting on-time rent payments through Azibo.
Checking a prospective tenant’s employment history is another way to determine whether they’ll be able to reliably pay rent each month. Some landlords may even call their prospective tenant’s current employer or ask for employment references to verify they have a job.
That said, employers usually don’t — or legally cannot — disclose more information about their tenant’s employment, beyond confirming they’re an employee. Keep in mind the Fair Housing Act requirements when reviewing applications from younger or underprivileged tenants who may not have the same income level or work experience as others.
By reviewing a prospective tenant’s rental or eviction history, you can gain a valuable glimpse into their past behavior. Eviction reports typically pull from public court records, regarding failure to pay rent on time, warrants for eviction, and more. Similar to credit bureaus, national agencies also collect relevant information about tenants’ rental histories in most states.
Some landlords ask that tenants provide references from previous landlords. This can help you gauge whether a tenant paid on time in the past and left the property in good condition.
While not everyone requires references, checking in with a previous landlord can be a great way to gain supplemental information about a prospective tenant and confirm whether they’re a good fit for your property.
Communication is a crucial part of the rental process. Landlords and tenants should clearly communicate their expectations up front to confirm alignment and ensure they’re a good fit for one another. For example, many landlords have rules surrounding pets, visitors, parties, and loud music — while tenants have expectations about what they should be able to do in their home.
In other words, look out for specific requests in renter applications. If a prospective tenant is a musician, for example, they may want to be able to play their drums at all hours of the day or host band rehearsals at home.
With Azibo, accepting tenant applications and running background checks is a simple, streamlined process built into the same platform that you use to collect rent and manage expenses for your rental properties. Azibo allows landlords to create an application for a rental unit, choose whether to require a background check, and view the results of the tenant screening — all free of hassle, or unnecessary expenses.
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Want to know what the Azibo experience looks like for your tenants? Read our blog post How Do Renters Sign Up for Azibo? for instructions on the Azibo renter sign-up process.