The easiest way to reduce tenant turnover is by retaining the tenants you already have. As such, it comes as a no-brainer when a tenant wants to renew their lease for another term.
That said, rushing to renew a lease without conducting a renewal screening check can lead to issues down the road. At worst, you may even be forced to evict the tenant from your rental property.
That’s why lease renewal screening is important. It will give you peace of mind knowing that your cash flow and investment are protected. You’ll also get to know how the tenant has fared since they started renting your property.
Were they consistent in paying rent? Did they take good care of the property by maintaining it and reporting issues? Did they abide by the terms of the lease agreement?
In this post, you’ll learn everything you need to learn about renewal screening checks.
Why shouldn’t you skip a renewal screening check? You’ll be able to save yourself some potential costs. Conducting a screening check will help you know about any issues your tenant is facing.
Identifying and fixing issues earlier on will ensure you’re able to minimize any potential
tenant damages and avoid hefty repair costs. It may also save you from a potential lawsuit.
Conducting a screening check shows that you care for the well-being of your tenant and want to
keep them happy. A renewal screening check can also guarantee you peace of mind. This is the ultimate goal of any tenant screening process.
Renewal screenings are somewhat similar to initial tenant screenings, but easier to do. New resident screenings usually take a lot of time as they involve the collection of a ton of information. This isn’t the case with lease renewal checks.
A dream tenant is one with a good credit score. A good credit rating provides a complete overview of a tenant’s financial standing. With that in mind, credit scores may change between leases.
As such, it’s important to obtain another report at the time the tenant is renewing their lease to verify their creditworthiness. You may be able to obtain a credit report from any of the three major credit reference bureaus. That is, Experian, Equifax, and TransUnion.
Generally speaking, you should only consider tenants with a credit score of at least 620. Tenants with a lower credit score may indicate a high risk of default on rent payments.
It’s possible for a tenant to lose a job or change jobs between leases. That’s another reason to conduct a renewal screening check on a tenant.
Doing income verification is beneficial to a landlord in two ways. One, it verifies whether a tenant is truthful or not. And two, you’ll be able to know whether a tenant is earning enough to afford rent payments.
You may be able to verify a tenant’s level of income in a number of ways. You can ask for a W2 form. This will show the tenant’s income from the previous tax year. You can also make a call to their employer and make important inquiries.
It’s important to check a tenant’s criminal background. Find out whether the tenant has engaged in any relevant criminal activity between leases.
Make sure, however, to first obtain written consent and approval from the tenant before running the check. Running it while the tenant is unaware is illegal.
Once you have taken care of the formalities, don’t forget to do a “soft check” on the tenant. The following are some of the things you should ask yourself:
Failure to understand the Fair Housing Act can be a grave mistake for you as a landlord. Violations don’t come cheap! Penalties often range from a low of $16,000 to a high of $65,000.
The following are some tips to help you conduct an FHA-compliant lease-renewal screening process:
Let the tenant know about the renewal terms, including renewal screening checks. This will ensure that the tenant isn’t blindsided when the time for lease renewal comes.
This is everything you need to know when it comes to doing renewal screening checks. If you have any questions, need help conducting a screening check, or need expert property management help, Advantage Realty Services can help!
We’re a reputable property management company that provides Tampa investment property owners with professional help. We can help you fill vacancies, screen tenants, collect rent, maintain your property, evict difficult tenants, and handle paperwork, among other things. Get in touch to learn more!
