In Chicago, 46% of the households are currently occupied by tenants. Safety measures should increase as the number of renters increase too. Any prospective tenant can seem great during the initial walk-through. So it’s important to screen every potential tenant thoroughly before allowing them to sign a lease.
A seasoned landlord knows how frustrating it can be to work with a difficult tenant. Whether they are constantly behind on rent, racking up complaints from neighbors, or damaging the property - Having the “wrong” tenant can end up costing you thousands of dollars.
We conduct extensive screening on all tenants. But, if you’re a DIY landlord, we highly recommend following a comprehensive process and taking a look at some key items.
Starting with a Rental Application. You should have potential tenants fill out a comprehensive rental application in order to be screened. If you want to make your own, hire another company or pull an example from the internet, you have options.
QUESTIONS TO ASK
- Personal Information Verification (Photo IDs, References, Contact Information)
- Financial Information (Landlord Debt/Bankruptcy/Foreclosure/Tax Liens/Collections, Credit Checks, Bank Statements, Proof of Income)
- Employment History – How long has the tenant been at their current job? Have they switched jobs multiple times in the last few years?
- Previous Rental History (Reasons for Leaving, Gaps in Rental History, Landlord Contact Information)
- Pet Information (Service Animals, Note Any Breed Restrictions)
TRUST, BUT VERIFY
The first step is verifying who your tenant is - collecting a photocopy of their state issued ID, like a drivers license. You can cross reference this with 1-2 other forms of ID like a passport and/or social security card.
INCOME VERIFICATION
Ensure your tenant has a way to consistently pay their rent in a timely fashion through a reliable income source (ie. their job). Verify their employment and source of income. You can ask for copies of pay stubs or a letter from their employer. If they’ve recently moved to a new city, and don’t have a history of pay stubs from their new job, you can ask for their offer letter that includes their proposed salary.
You can also take a look at their past 3-6 months of bank statements. If they don’t have more than a few months worth of rent in their accounts, they may default on a monthly payment, leaving you to cover the expenses. If this issue continues to persist, you may find yourself in eviction court, spending lots of unnecessary time and money.
CREDIT CHECKS
Another thing you should look at is their credit score or credit report. Understanding their credit history will tell you if they have a history of defaulting on payments or debts. You may want to stick with a certain level of credit scores for your potential tenants. Credit scores however don’t always tell the whole story, so it’s important to look at multiple factors and find out why a credit score may be low.
BACKGROUND CHECKS
Does your potential tenant have a criminal history? You can run a criminal background check for under $50. While it may not be considered criminal, you’ll also want to find out if your tenant has a history of not paying rent and has any records. If you want to be go a step further, you can also do a National Sex Offender Search.
However, make sure that you abide by the Fair Housing Guidelines. These guidelines protect tenants and require the screening process to ensue without regard to the race, color, religion, sex, handicap, familiar status or national origin of the applicant. A couple of years ago, Cook County Board of Commissioners passed the Just Housing Amendment to the Human Rights Ordinance that prohibits discrimination based on criminal history and “requires landlords to perform an individualized assessment of an otherwise qualified individual’s criminal conviction history prior to denying them and application for housing.” This has made running background checks more complicated so double check to make sure you are in compliance with the local law while running them.
As a landlord, you have to screen every potential tenant; there’s just too much at risk if you don’t. After all, you definitely don’t want to end up having to go through the process of evicting a tenant. But that doesn’t mean you need to become a private detective every time someone turns in a new application either.
Be careful not to overstep your boundaries, which can put you at risk for breaking Fair Housing laws.
At Landmark Property Management, We conduct extensive screening on all tenants and handle every aspect of getting your investment rented in the shortest time possible.
If you have questions about your Tenant Screening Process, have any questions, or are interested in learning from the best property management company in Chicago, don’t hesitate to reach out! You can contact us at Landmark Property Management via phone at 312-313-8553 or send us an email at office@landmarkrgc.com.
