You became a real estate investor to make passive income, but you've heard horror stories about becoming a landlord. Being a landlord is a lot of responsibility and requires you to find the best tenants.
Tenant screening can be tedious, but it's worth it to find quality renters. An important part of screening is running a tenant criminal background check. Keep reading to learn four best practices for this task.
1. Know Fair Housing Laws
The Fair Housing Act prohibits discrimination in housing. When you complete a tenant criminal background check, you can't deny a tenant because of:
- Color
- Race
- Religion
- National Origin
- Sex
- Disability
- Familial Status
Some states add a list of protected classes by barring discrimination based on sexual orientation, income, and marital status.
If you hire a property management company, they will know the laws in New Orleans to help you avoid a lawsuit. They do all of this while finding great tenants for your property.
2. Ask for Screening Consent
To legally run a rental background check, you need to ask the applicant for consent. Additionally, if you want to run a tenant criminal background check, you have to get one for every applicant.
Landlords cannot be selective about which applicants are required to undergo tenant screening.
To ensure you don't break any New Orleans laws, get signed consent from the applicant. Make things easier by adding a consent section to your rental application.
A full-service property manager can help you add this section if you don't already have one. They can then send the applicant's information to a trusted tenant screening service to avoid tenant issues in the future.
3. Gather Necessary Information
In addition to getting written consent, you need a comprehensive rental application to collect the following:
- Name
- Date of birth
- Social Security number
- Proposed occupants
- Previous addresses
- Landlord references
- Employer references
- Vehicle and driver's license information
Most importantly, you'll want to receive proof of income for applicants. A W-2, pay stubs, or bank statements can work as evidence. Accepting tenants who can afford the rent will help reduce tenant turnover and evictions.
4. Choose a Screening Service
If you are getting a tenant criminal background check, you likely need to hire screening services. These companies offer more than criminal history checks. If you want to get the best bang for your buck, hire a service with these offerings:
- Credit report check
- Rental history
- Employment verification
- Sex offender registries
- National terrorist watchlist
With the information they find, these services can provide you with a risk score based on the criteria you select.
Always Run a Tenant Criminal Background Check
You should get in the habit of always running a tenant criminal background check when a new renter applies for your housing.
When these best practices are followed, a background check can help you find top-notch tenants who pay rent on time and increase your tenant retention rate.
If you're a New Orleans landlord, you need to hire PMI New Orleans. Our full-service property management team can help you with investment success. Contact us today to benefit from our 20 years of experience.
