Tenant screening

New to park business - vacancy question. I have a small hispanic park that is mostly full. Two vacancies right now that just came up in Sept/Oct. What is the best economical way to qualify renters? How much info/background info needed? Frank mentioned Kroll, quite a few requirements to use them. Not sure with a small park with few annual vacancies if i need to go through Krolls requirements, but if thats best, ok. Any other thoughts?

Use Kroll. There is too much liability exposure to risk an amatuer system. We have used Kroll for years and have not had one single problem – and that’s over hundreds and hundreds of applications.

One tenant lawsuit could wipe out all the “savings” that you thought you had made – times a thousand.

Steve, we use Crimial Watchdog - it is about $18 for a national. And we never allow felons - ever for any reason, any amount of time past.

Now, one of our Attorneys in my Masters Group uses http://www.buildium.com/ they charge 11.95 for background credit AND litigation reports. Pretty cool, huh? If they sued a landlord in the past…

and we ALWAYS, ALWAYS, ALWAYS charge a $20 per adult living in the home “Approval Fee”. We never did and one of my mentors charged - I was afraid people would balk. not one. People are used to it - please charge and cut that expense out of your bottom line.

I appreciate it. we talked to Kroll and they said that they would do a criminal and eviction report on short notice, but if we want the credit background check, there are quite a few hoops to jump through.

They require an onsite visit to our home, do a back ground on us, we must keep the records for 7 years, insurance policy, … They say its new laws that require so much more background checking. Obviously we would like to have it, but can we get by without it?

sounds a little insane to me. :- I wouldn’t put anything past the govt now, but wow, this surpises me.

Also, I wouldn’t waste a minute on credit checks - I would guess 95%+ of our people have big credit issues.

We always do credit checks on applicants. In Canada we also must jump through hoops to set up an account with a credit check company but it is well worth the effort and once set up it is a snap to have a search completed. It is done on line and we generally have the results the same day.

What should be remembered is that a credit search provides a landlord with far more than simply a credit score, although a applicants score is very important. A credit report also informs you if there are creditors after the individual and gives you a insight into the integrity of your applicant depending on what institutions they have run afoul of financially.

For my business I would never accept any applicant without first completing a credit check in that it is very import to know not only that they can pay but also the likelihood that they will pay.

I have minimum standards for what I will accept and adhere closely to them.

I agree with Greg. I do a credit check and a background check. I use youcheckcredit.com. Probably there are better services, but I’ve used it for 8 years with no issues so haven’t changed. I’d like to charge an application fee, but since we’re often in Mexico and have to have the application faxed to us, and so few of our candidates have credit cards, we don’t charge the fee. However, I would if it weren’t for that particular inconvenience.

I have a 3 page application, and how that application is treated and filled in tells me as much as my credit and criminal check; if someone isn’t willing to respect the application and answer each line carefully, they probably won’t obey park rules, either. Slop job on the application is a flat out “no.” Poor credit because of medical issues is not a problem to us - we don’t care if the hospitals and doctors get paid.

I recommend that you use a rather long application, and have a Spanish version of it and an English one. And they either respect your right to ask for the information on credit references, personal references, former addresses and employment and income and answer carefully and with fear in their hearts, or they don’t get in the park.

I agree with Brad,…credit checks are a waste of my time since I have not seen a score above 550 in about 3 years

I do rental references and employment and criminal as my major checks and direct them to provide a credit report and last years w-2 and most recent paystub for me…they can usually get credit reports free thru myannualcreditreport.com I do NOT retain copies

but no matter what you do make sure you have the same requirements for everyone…I have a print out that says “A successful applicant will demonstrate the following qualities…no felony convictions, employment of at least one year, good rental references and housing expenses not to exceed 40% of net income” add what ever you think is needed for your condition

Lopo I have a very similar standard in screening as you follow. The applicant’s actual credit score is less important than the reason for the score which can only be determined by doing the check. My applicants scores have ranged from below 500 to over 800 but there acceptance is based on far more than their score. Having said that I do have a minimum score that I do not go below.

I carefully instruct all applicants that in filling out their lease application they must provide all information required. Any application not completed properly is automatically rejected as I believe following of rules/instructions is very important if they are to be my tenants. I never believe anything a applicant tells me nor do I accept any excuses. As applicants they must make a good impression. I have heard every lie and excuse in the book for why there life is in a shambles but since I am not their social worker it is not relevant.

By using a thorough screening process that covers all aspects including credit, employment, landlord references, income, attitude, and general overall presentation it is very simple to spot unacceptable applicants. I never compromise my standards in selecting tenants. It is far easier to reject an applicant than to evict a tenant.

from our CFO who managed just about every major apartment property in Lexington, KY at one time or another:

Greg must be dealing with a much better demographic than we are. Credit checks would never work here. It was required in Lexington on all the properties I worked on from A+ to C- but again, even the C- property that I was on was a better demographic than our peeps. Of course, we also got away with charging a $25 app fee, a deposit, and a $100.00 non refund “administrative” fee. Had a few folks balk at that initially but we wanted to increase our bottom line so we were able to “sell” it. Eventually other properties caught on that we were doing this, they followed in suite, and it became the norm.

I do agree with what Greg said:

“I carefully instruct all applicants that in filling out their lease application they must provide all information required. Any application not completed properly is automatically rejected as I believe following of rules/instructions is very important if they are to be my tenants”

If I had a dollar for every incomplete application that I process I would own the world!!! :slight_smile:

EAM

It is true we do have a better demographic but that is because myself and previous owners since the early 90s having selectively culled to upgrade the quality of our tenant base. The first step was in classifying the park as adult only in 1992. Prior to that it was a family park and was in rough shape tenant wise. Getting rid of the kids got rid of young married couples and allowed the park to develop primarily into a retirement community. In addition the prices of our homes are high enough to eliminate may applicants as they do not qualify for bank financing.

It was a long hall but definitely worth the end results. This is not to say that we do not have plenty of applicants that are bottom of the barrel we just do not allow them in and present residents can not leave until we qualify a buyer.

frankrolfe Wrote:


Use Kroll. There is too much liability exposure to

risk an amatuer system. We have used Kroll for

years and have not had one single problem – and

that’s over hundreds and hundreds of

applications.

One tenant lawsuit could wipe out all the

“savings” that you thought you had made – times a

thousand.

Frank what type of tenants lawsuits have you seen?

Shouldnt this be something that the insurance company would cover?

It’s important to have a written statement that you do not discriminate based on illegal reasons (race, color, religion, sex, age, country of origin, sexual orientiation…). If you are ever approached by any gov’t personnel investigating a claim of illegal discrimination and claiming they are just a third party there to help everyone settle the matter quickly, don’t fall for it. They aren’t neutral. Politely let them know that your legal counsel will respond on your behalf.

As for insurance coverage, general liability insurance will not defend or indemnify you for claims of discrimination by tenants (or employees). These claims fall under more than one coverage exclusion, including the intentional acts exclusion. Thus, to cover these claims, you need “Employment Practices Liability Insurance with 3rd Party Coverage.” You can buy this as an inexpensive add on ($200 or so) with some package property/liability park insurance policies. If you can’t, you can purchase it as a stand alone coverage (usually more cost here - min premiums are usually about $700).

When screening tenants for lot rent only park using Kroll, do you typically only request criminal background checks and prior evictions?Regarding criminal background checks, Kroll charges per county and per state.  Apparently a nationwide search is unavailable.  Which option do you typically choose?

I would also like to know the specific features/services that you guys use with Kroll Factual Data.

If you’re leasing lots only, and not selling homes, do any of you use Kroll to check credit scores, or just criminal records and evictions?

To effectively qualify renters for your small Hispanic park with minimal annual vacancies, it’s essential to strike a balance between cost-effectiveness and thoroughness in the screening process. While Frank suggested considering Kroll, its extensive requirements may not be necessary for your specific situation. Instead, opt for simpler background check services like reference checks, employment verification, and rental history inquiries. These methods offer valuable insights into potential tenants without incurring excessive costs.

In addition to these screening measures, run credit check on tenants is crucial. This step allows landlords to evaluate the financial responsibility and reliability of applicants by reviewing their credit history, which includes payment records, outstanding debts, and any negative marks. This information is indispensable for making informed decisions and minimizing risks associated with late payments or rent defaults.