Tenant screening is a crucial step in the property rental process, playing a pivotal role in safeguarding the interests of landlords and property managers. While some may view it as an additional expense, a comprehensive tenant screening process can be a valuable investment in the long run.
As a property owner, a significant portion of your rental income may face potential threats such as property damage, tenant turnover, extended vacancies, and nonpayment of rent. However, the good news is that many of these risks can be mitigated through the implementation of a comprehensive tenant background check.
It’s relatively inexpensive to access important information that can protect you from costly tenant problems: Tenant Screening can help you avoid renting to someone who could end up costing you a huge amount of money in eviction costs, and of course, a lot of your time.
You can do tenant screening through a manual process, which would entail an exhaustive search for information, the study of all documentation, contact with previous tenants…
Or you can decide to do your tenant screening through technology companies like KBA that offer software services to automate the screening process and make it much more robust for a fraction of the application fees, so that you minimize manual effort, turnaround time and eliminate that opportunity cost.
In this post, we will conduct a cost-benefit analysis to shed light on the advantages and potential drawbacks of tenant screening.
Costs of Tenant Screening
- Screening Services Fees: Tenant screening services often charge fees for background checks, credit reports, and rental history verification. These costs can vary based on the depth of the screening.
- Time and Resources: Property managers or landlords invest time and effort in collecting and reviewing the necessary documentation, contacting references, and analyzing the screening results. Automated tenant screening can save you that time, in which you will also not be earning income.
Benefits of Tenant Screening
- Reduced Financial Risks: Comprehensive screening helps identify potential red flags, such as a history of late payments or financial instability. This minimizes the risk of renting to tenants who may struggle to meet their financial obligations.
- Enhanced Property Protection: Tenant screening helps identify candidates with a history of property damage or lease violations. This proactive approach can contribute to the overall well-being of the rental property.
- Safer Neighborhoods: Screening for criminal history can contribute to creating a safer living environment for all residents. Landlords have a responsibility to provide a secure place for tenants, and screening helps fulfill this duty.
- Legal Compliance: Conducting thorough tenant screening ensures that landlords comply with fair housing laws and regulations, protecting them from potential legal issues in the future.
- Improved Tenant Relations: By screening applicants consistently and fairly, landlords can foster a sense of trust and security among existing tenants, creating a positive atmosphere within the community.
- Easy online process: Use an online tenant screening service to start screening right away and from anywhere.
- Cost savings: As we said at the beginning of the post, making a small investment in tenant screening can save you from spending a huge amount of money on eviction costs.
While tenant screening comes with associated costs, the benefits far outweigh the initial investment. The peace of mind gained from knowing that tenants are financially stable, responsible, and pose no significant risks to the property or community is invaluable.
A well-executed tenant screening process is an essential component of responsible property management, helping landlords protect their investments, maintain a safe environment, and foster positive tenant relationships. In the long run, the cost of tenant screening is a small price to pay for the security and stability it brings to the rental business.