The references you get from the applicant are possibly the most important information you can get and there are certain references a landlord should always include in your applicant process.
- Previous landlords. They can tell you most about what kind of tenant the applicant was. Even though many are hesitant to say anything negative for fear of retaliation or lawsuits, you can still learn an amazing amount of information simply by asking leading questions. The two to ask first are, “Did the tenant give you the required notice?” (Thirty days for a year’s lease, and twenty days notice on a month-to-month agreement.) And “Why are they moving?”
- Employer references. Employers can verify employment, an income range (many employers will not give a specific dollar figure); length of employment, ability to get along with others, and whether there has a wage garnishment in the applicant’s time there. If the applicant has been employed less than six months, it’s very important to check the next most recent employer. Skipping that step can cause a landlord to miss information about garnishments, lawsuits, poor attendance, job hopping, anger management problems, etc.
- Personal references. These are almost always going to be friends or relatives of the applicant and they, too, may be hesitant about saying anything negative. But if there are pauses, tiptoeing around an answer, sidestepping a question, or other clues that they are uncomfortable, that deflection in itself is something to consider. The landlord can only work with the information he or she can get, but persons listed by the applicant in this category should be helpful and answer a few questions willingly, or it’s a clue that the applicant, for whatever reasons, does not have anyone that feels confident in providing a positive recommendation.
Check the addresses and phone numbers of the all the references given. If the employer, previous landlord and personal phone numbers are duplicates, then the applicant has used a friend or relative to impersonate an employer or former landlord. This occurs much more often than would be believed…until you see it on applications yourself.
Use the phone book or directory assistance to verify that all the names, addresses and phone numbers on the application match up. If the calls are long distance, remember that this is money well spent!! We cannot stress the importance of this too much. Professional bad tenants make a practice of having friends pretend they are landlords or employers. Some landlords let applicants leave parts of the applicant form blank if they say they don’t remember, have lost the information, or that they former employer is out of business or has moved, or that a previous landlord has moved away or died. Of course, these things may be true on occasion, but don’t just accept the statement at face value…check out the move, death, or whatever.
If you want to make sure you are talking to the real landlord, call the customer service department of a title company, the county tax assessor’s office, go online to the assessor’s office, or check the county records in person. Just give the address of the property, and you can get the name and address of the property owner. Check that against the name of the landlord reference. Of course, if the previous landlord is a property management company that is very easily verified by cross-checking the phone number in the yellow pages.
If the prospective tenant says they have just sold his house, ask for the name of the real estate agent, title company, attorney or closing agent. Even “Owner Private Sales” have a closing agent and title company that must be involved. Or you can ask for the name of the buyer. All this may seem so intrusive, so untrusting. Remember though, you are turning over the complete occupancy of your lifetime investment to a virtual stranger. The odds are that all will go very well. But when things do go wrong with a tenancy, the amount of damages, unpaid rent, unpaid utilities, eviction costs, and other costs can add up to tens of thousands of dollars. Just a few questions, however unaccustomed you are to asking them, can spell the difference between a good return on your investment and a financial hole that will take several years to dig out of.
When you call the previous landlord or property management company if the applicant was a renter, or the real estate agent or buyer if they just sold their house, ask about the condition of the property and sales price. This will give you information about whether the house was left with severe damage or in good condition and will tell you a lot about how they will leave your investment when they leave.
People who are moving from out of town are often considered higher risk for the small landlord who has only one or two units and no leeway in spreading their risk among many properties. Ask why they have moved into the area and, again, check carefully with employers and previous landlords.
Checking references yourself or having someone help you with it is an important first step to getting a good tenant. It is not a substitute for the second step – sending the application to a professional screening company for a background check, credit report, more detailed eviction and criminal record searches. The pros have experience, contacts, and a sophisticated network that has been built over many years. The applicant pays an application fee specifically for professional screening and a landlord or property manager, no matter how long in the business, should not forego the added information and protection that a screening companies can provide.