Category Archives: Tenant Screening

Using Facebook as a Tenant Screening Tool

This is a recent article from American Apartment Owners Association, of which I am a member.  This was posted on their blog today and I found the information to be especially helpful for landlords:

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Q: When I screen potential tenants, I talk to their current landlord and their employer, ask for references, and order a credit report.crystal ballSome of the landlords in town are also regularly looking on the Internet, to see if the applicant blogs, has a Facebook page, and so on.

One friend told me that when he looked at the Facebook page of an applicant he was about to rent to, he saw that the person is really into partying and drinking. My friend didn’t rent to him.

Should I be looking at Facebook pages, too? –David R.

A: Your question calls for two answers: a legal one and a practical one. From a legal point of view, should you be checking applicants’ Internet postings? And, from a practical point of view, is it a good idea?

The steps you’ve been taking when screening tenants are the tried-and-true methods that careful landlords have been using for years to weed out risky applicants: those whose past actions indicate that they may not pay the rent or may not be considerate residents and neighbors. Although these methods are commonly used, they are not legally required.

It’s possible that a court might rule that these tools are the “industry standard,” which might make them quasi-mandatory, but it’s unlikely. Running a residential rental business (unlike, say, car manufacturing) is engaged in by too many people, in too many varied ways, to conclude that it’s an “industry” with common metrics and procedures.

So because you’re not legally required to do even what you’re already doing, it’s very unlikely that a judge would consider checking for Internet postings to be a legally necessary step in the screening process. Consider, for example, the issue of screening for those who are legally required to register as convicted sex offenders.

No state requires landlords to go online and look for their applicants on these lists, and California specifically forbids them from doing so. If you’re not required to consult the Internet for information as serious as registration for one of these crimes, it’s not reasonable to think that you’d have any duty to search for evidence of partying.

This conclusion has to be adjusted, however, for one situation: If you’re hiring a resident manager, you are screening not only a tenant, but a future employee, who will have access to tenants’ personal information and even their homes. You have a duty to make sure that you do not place a dangerous tenant manager in that position — in other words, your duty to screen has changed significantly.

Careful landlords do investigative background checks for tenant managers, with the legally required advance notice to the applicant. These investigations may turn up relevant information, including the applicant’s postings on the Internet.

So much for your legal duty. What about the practical value of hopping online and checking out your applicants? It’s hard to resist, and indeed you may learn information about your applicants’ lifestyle and habits that would reasonably lead any landlord to say, “No thanks on this one.”

As long as you’re looking at Web postings that are available to the public, your applicants will have no legitimate beef if you reject them based on what you see and read. But be careful — you can safely reject any applicant only when your reasons for doing so, no matter where you found the information, are legally justified, and not based on that applicant’s membership in a protected class, such as race and religion.

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For the rest of this article, please visit:  American Apartment Owners Association.  This link will take you directly to the article.

Tenant Screening Background Tips

It is not at all difficult to go online and find an overwhelming number of different tenant screening companies or tenant credit check services claiming to provide property owners and landlords with a variety of different types of tenant background check reports. It makes no sense to throw your money out on ordering a tenant background check that is not comprehensive. Never order a tenant background check unless you are going to be receiving data that searches for data from every state throughout the USA, and be sure that it includes both civil and criminal court records because you need to be aware of all evictions and judgments as well as criminal history.

You cannot just analyze the criminal background of any individual and legitimately believe you have done a thorough tenant background check. This fact should be obvious, but most companies in the business of offering tenant background checks to landlords are not providing many of the key elements absolutely necessary for a property manager to make appropriate decisions about the financial health and dependability of his or her rental applicant. Very often, a rental applicant that has a history of needing to be forcefully evicted from a property will very often repeat this undesirable behavior in the future. It is not uncommon to find rental applicants who have made a living out of defrauding unsuspecting landlords that utilize very lax tenant screening standards, or quit often neglect ever running a tenant background check. There is no doubt that appearance can be very deceiving as we have heard many stories from unhappy landlords who relied upon their instincts to grant a least to a tenant and realize that they made a huge mistake.

Click here for tenant screening companies by state

The Importance of Residential Tenant Screening & Commercial Tenant Screening

Some think that tenant screening services are unnecessary. They believe that it is a waste of money when you can verify the information yourself by calling references. However, the fact is that with regard to an investment, everyone must make smart choices. The only way that one can make a smart decision is based upon accurate information. Unfortunately, people will lie in order to get what they want. It is these people that are willing to do anything that are the most dangerous to your investment. Employment screening services ensure that you are adding the right person to your team, and confirm based on their history that your employees and business are not at risk by this person. Tenant screenings confirm that the renter is credible and is consistent on paying their bills.

Life Without Background Checks

When it comes to not using tenant screening services, there are countless stories of homeowners that rented to someone that then skipped out on their monthly rent payment. One example is from the state of Georgia. The person renting the home skipped out of town while still owing two months of rent. Calls, emails and texts all were not returned by that person. All the homeowner could do was file with the court, and look into the potential of garnishing wages. The only problem is that he did not know where the renter was any longer. Tenant checks could have pulled up any history of this type of action, and prevented the homeowner from losing out on money.

Not using employment screening services can be even more damaging as it involves the reputation of a business being on the line. There are several stories where businesses that work with children had unknowingly hired a convicted child molester. The reputation of the business can be permanently scarred by one bad decision. Employment background checks can prevent businesses from making poor hiring decisions.

Types Of Screenings

There are multiple facets to employment screenings. The first checks for a criminal background. This is important to the safety of other employees, yourself and to your business. If an employee has previously been convicted of embezzlement then it would not be a good decision to hire that person for an accounting position. The employment background checks also evaluates the work history of the candidate to verify that the information provided on the resume actually matches the recorded work history of the individual.

Tenant screening services check the criminal background of the renter as well. This is extremely important if the person has a history of drug abuse. If illegal drugs are made or distributed on the property, the government has the right to confiscate that property. In turn, you could lose your investment because of a renter. On the other had it also checks the credit history of the renter to ensure that they do not have a record of skipping out on their bills.

Protect Yourself From Risk

Regardless of your situation, you will want to employ either tenant or employment screening services to ensure that you are protected. The best way to protect yourself from risk is to make sure that the employment or tenant screening services you use meet the Fair Credit Reporting Act standards set by the federal government. Protecting yourself and your business is important, start by getting background checks today.

Article Source: http://EzineArticles.com/?expert=Chris_A._Harmen

 

First Drop in TransUnion Credit Risk Index Since 2008; Signals Improved Consumer Credit Risk Conditions

TransUnion’s Credit Risk Index (CRI) declined during the first quarter of 2010after five successive quarterly increases, signaling thatconsumer credit risk conditions in the U.S. are beginning to improve.  The Credit Risk Index is a statistic developed to measure changes in average consumer credit risk within various geographies across the nation.

TransUnion’s Credit Risk Index decreased nationally 85 basis points to 128.82 from 129.67 during the firstquarter of 2010, the first decline of this measure sincethe third quarter of 2008 — the early stages of the current recession.

“Based upon the Credit Risk Index it appears that weare finally beginning to see improvement within theconsumer credit economy and possibly the beginningof an economic recovery,” said Chet Wiermanski, globalchief scientist at TransUnion.

TransUnion CreditRisk Index- Statistics

After reaching an all-time high at the national level theCredit Risk Index’s percent decrease of 0.65 percent wasrelatively small compared to previous times when thenational index declined. “It is not out of the ordinaryto see the credit risk index decline 1 or 2 percent on aquarterly basis, but the direction of the change is whatmatters at this point in time,” said Wiermanski.

On a year-over-year basis, the Credit Risk Index stood1.23 percent higher than it did at the end of the firstquarter of 2009; however, at the end of the first quarterin 2010, 43 states and the District of Columbia experienced declines in their credit risk indices signaling that a broad improvement in consumer credit conditions is finally taking root. Four NewEngland states (Connecticut, New Hampshire, Rhode Island and Vermont) along with Montana, Utah and Wisconsin experienced slight increases in the credit index.

On a state basis, the order of states with the highestCredit Risk Index did not change with Mississippi having the highest Credit Risk Index at 167.46, fol-lowed closely by Nevada (166.26) and Texas (163.09).Continuing from the previous quarters, the least riskystates are predominately concentrated in New Englandand the Upper Midwest areas of the country, withNorth Dakota coming in at 82.51, Minnesota at 91.14 and Vermont at 93.54. North Dakota, theDistrict of Columbia and South Dakota experiencedCredit Risk Index declines of 2 percent or more.

Analysis

“We are cautiously optimistic that the Credit RiskIndex will continue to experience small declines as consumers keep reducing their debt burden and remaincurrent on their existing credit obligations,” saidWiermanski. “After experiencing one of the mosttumultuous economic periods since the GreatDepression, it is possible that consumers may be reluctant to take on significant debt in the near future,which could possibly temper an economic recovery.”

The Credit Risk Index is defined as the weighted average probability of 90-day delinquency or worseamong consumers in a given region relative to the nation as a whole. The Credit Risk Index uses thefourth quarter of 1998 as a baseline for comparison.Therefore, it measures changes in consumer credit scoredistributions relative to the national distribution anddelinquency rates as a whole at the end of 1998.

TransUnion considered 1998 as a representative year of credit performance within the usual dynamic of the historical credit cycle.  A value of more than 100represents a higher level of relative risk.  For comparisonpurposes, the Credit Risk Index in recent years has generally ranged between 110 and 120, experiencing a one- or two-point shift between quarters.

TransUnion’sTrend Data DatabaseThe source of the underlying data used for this analysisis TransUnion’s Trend Data, a one-of-a-kind databaseconsisting of 27 million anonymous consumer recordsrandomly sampled every quarter from TransUnion’snational consumer credit database. Each record contains more than 200 credit variables that illustrateconsumer credit usage and performance. Since 1992,TransUnion has been aggregating this information atthe county, Metropolitan Statistical Area (MSA), state and national levels.

www.transunion.com/trenddata

About TransUnion

As a global leader in credit and information management,TransUnion creates advantages for millions of peoplearound the world by gathering, analyzing and deliveringinformation. For businesses, TransUnion helps improveefficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data andadvanced analytics and decisioning. For consumers,TransUnion provides the tools, resources and educationto help manage their credit health and achieve theirfinancial goals. Through these and other efforts,TransUnion is working to build stronger economiesworldwide. Founded in 1968 and headquartered inChicago, TransUnion employs associates in more than 25 countries on five continents.

Tenant Screening is a Key to Low Vacancy Rates for Rentals

Nicole Lee, a leading property manager with the Ashford Realty Group / Masters Group, a Colorado Springs property management company specializing in investment properties, says finding quality tenants is a key to keeping low vacancy rates for her real estate investor clients.

Online PR News – 27-April-2010 – Colorado Springs, CO – Professional real estate property manager Nicole Lee of the Ashford Realty Group, a company specializing in Colorado Springs property management, says that finding quality tenants is one of the keys to keeping low vacancy rates for her real estate investor clients. She says that while many property managers shortcut the tenant screening process to save time, it invariably ends up costing both the manager and the owner more time and money down the road.

“We would much rather put the hard work into finding good tenants who are interested in taking good care of our properties up front than have to do two or three times the work in the long run by having to fill more vacancies.”

Lee says that there is a culture of cost-cutting among many management firms because most are only interested in the sales side of their business. That leaves the necessary task of screening tenants and keeping a property occupied underprioritized and understaffed.

“We take the long view with our business. We know that investors who place their properties with us do so to keep their investment property producing positive cash flow. That is impossible to do when you have a high vacancy rate due to insufficient tenant screening.”

She says her tenants have been known to go above and beyond the call of duty to leave a property in better condition than they found it.

David Tanaka, President of Rocksolidpower Solutions (http://rocksolidpowersolutions.com), says that the Ashford Group has saved him thousands of dollars on his four Colorado Springs investment properties, in part through excellent tenant screening.

“Ashford Realty Group is not only an expert in their field but they have an expert staff and vendors who can service our Colorado Springs rentals at the most efficient cost. I have been a property owner for over 20 years and I know how hard it is to find a fantastic property manager.”

While other Colorado Springs property management firms focus on simply adding more properties under management to their rolls, Lee says she works hard to cultivate good relationships with experienced investors who will become lifelong real estate clients.

“Building a relationship based on trust with our investors and renters alike is an essential part of our job description. We’ve found that produces rewarding business relationships in the long term.”

Provided by onlinePRnews

Please visit my tenant screening section for tenant screening providers.  As I’ve stated before, I am a Premium Member of the American Apartment Owners Association www.aaoa.com and they provide me with all my tenant screening needs.

The Importance of Credit History in a Tenant Screening

During a tenant screening, a landlord will often run a credit check on the prospective tenant. Here are a few things to consider about the importance of credit history in a tenant screening.

Credit Score

A credit score is calculated using a complex formula that was developed by the credit bureaus. One of the biggest factors in determining a credit score is whether an individual regularly pays his bills. If a credit score is high, you know that you are dealing with an individual who always pays his bills on time. Getting the rent payment is going to be one of the most important things to you as a landlord. By looking at the credit score, you will be able to predict if you are going to get your rent payment regularly.

Securing the Investment

As a landlord, you should look at the screening of tenants as part of your investment process. You want to take all of the proper precautions in order to secure the quality of the investment. By creating a good investment, you will have the option of selling your property with the tenant in place. If you have been thinking about unloading a property, quality tenants are a very attractive feature for potential buyers.

By Sequoia

For information on tenant screening please visit my tenant screening section.

The Tenant Blacklist ends

From GothamGazette.com

Council, Courts End the ‘Tenant Blacklist’

The term “blacklisting,” usually associated with 1950’s McCarthyism, has taken on a new meaning. The blacklisted in 21st century New York have been people applying for apartments whom property owners deem undesirable as tenants. In an effort to limit this practice, the New York City Council in March, building on previous court cases, enacted the Tenant Fair Chance Act.

While credit checks are well known, most New Yorkers do not realize that some companies buy landlord-tenant filings, harvest court histories and sell them to landlords. The endgame is for landlords to learn whether the apartment-seeker had an in-court dispute with a prior landlord.

Tenant screening agencies, as the companies are known, may supply information about credit, character, reputation and personal characteristics, but the new law’s emphasis is on “history of contact with any court… [and reports] used for the purpose of serving as a factor in establishing a consumer’s suitability for housing.”

The Legal Background

In the case of White v. First American Registry a class-action was brought in federal court in Manhattan against the nation’s largest tenant screening agency. In his ruling, Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York noted that landlords are all too willing to use such “consumer reports” as a blacklist, “refusing to rent to anyone whose name appears on it regardless of whether the existence of a litigation history in fact evidences characteristics that would make one an undesirable tenant.”

The judge went on to say the practice of seizing upon the availability of Housing Court filings helps “to create and market a product that can be, and probably is, used to victimize blameless individuals. Tenants and lawyers in that case won more than $2.9 million.

While everyone agrees landlords have a right to know who will be living in their buildings, and that they should do some checking, Kaplan agreed with tenants that the records obtained and sold by screening agencies are unreliable. As Supreme Court Judge Barbara Kapnick wrote in the later case of Dawn Weisent v. Subaqua, “regardless of whether or not a tenant prevails in the Housing Court, his or her name may appear on the ‘blacklist.'”

Limited Information

The Housing Court records that are bought and sold show merely that a proceeding was commenced, not what ultimately happened in the case, making the information incomplete or even inaccurate. The records the screening agencies receive from the court show a proceeding was brought — for example, Landlord v. Tenant — but give no other information. Because of the limited facts, the case might not even involve the tenant in question, but someone else with the same name, giving a false impression of a potential tenant’s history with a landlord.

The records also do not reveal, for example, that a tenant might have previously withheld rent due to dangerous housing conditions. Instead, they simply show that the tenant was a defendant in a lawsuit. The records also will not reflect that a Housing Court judge might have dismissed the landlord-tenant proceeding, finding that it was baseless, or deciding after trial in favor of the tenant. In other words, the mere fact that there was a proceeding in an apartment related dispute brought to court could be used against a person trying to rent an apartment — even if it is the wrong person.

The Council’s ‘Fair Chance’

The Tenant Fair Chance Act, which was introduced by Manhattan City Councilmember Daniel Garodnick and co-sponsored by 17 other members, goes into effect this summer. It intends to let potential tenants know if screening agencies are being used and what they have reported about them, especially if adverse information has led to denial of an apartment.

In introducing the bill, Garodnick said, “Tenant screening reports are one of the most powerful tools working against renters today, and yet they are almost completely unregulated.”

Under the new law, the tenant who is spurned is entitled to a copy of the report and the opportunity to make any corrections. The law states, “Every tenant or prospective tenant may dispute inaccurate or incorrect information contained in a tenant screening report directly with the consumer reporting agency.”

A violation of the Tenant Fair Chance Act law “shall be subject to a civil penalty of not less than $250 nor more than $700 for each violation.” Other penalties, including criminal prosecution, also are available.

Emily Jane Goodman is a New York State Supreme Court Justice
This is the full article, but you can view it again here.