Why is tenant screening important?
Ensuring you screen your tenants and knowing how to carry out a tenant screening check is crucially important to your investment strategy. One if the biggest factors that deters the success of an investment property is the quality of your cash flow aka your tenants. (The biggest factor is the quality of your property and its location, which if course impacts the type of tenant you attract).
Here at Benchmark our tenant screening process has been designed to be thorough and transparent to ensure our landlord clients are left with only the best quality tenants in their properties. For every application we receive, we carry out strict tenant quality control checks from employment confirmations, national tenancy database checks to eCourts checks for pending criminal charges (you’d be amazed at how many agencies skip this!).
It all starts with determining your conditions and measuring
The tenant screening process should be developed around your end goal which, should focus on what type of tenant is going to stick around and look after your property. There are lots of measurements you can use to make that assessment, but the most important attributes are the non-negotiable and fundamental areas such as:
- Financial Viability: Are you attracting tenants that can afford your property and location? This is a must have item on your tenant screening checklist! Most property management companies will undertake a financial assessment to ensure that prospective tenants have enough income to pay rent regularly and assess whether any credit issues should remove them from consideration. To ensure our landlords are selecting the right tenant, we run every tenant applicant through the following checks to ensure they are financially capable of renting the property:
- Employment confirmations.
- Veda Identity verification.
- Insolvency check.
- Directorship check.
- Barclays MIS Debt Default Database check.
- Rental history: Once you’ve deemed that a tenant can afford your property, the next step as part of the tenant screening is to check their renting history. Here at Benchmark, we go above and beyond to check the rental history of tenant applications using the National Tenancy Database and thorough reference checks via our agent member database.
- National Tenancy Database helps to carry out a thorough tenant screening with access to ID verification, blacklist screening, credit scores, bankruptcy & court records, and ASIC company directorship checks.
- Agent Member Database allows us to check address ID verification to cross reference private landlord ownership and records ensuring that references are truthful. This database also allows us to verify previous managing agents to cross reference rental history records.
- Criminal History: If the idea of having a criminal take up residence in your rental property doesn’t sit well with you, then this is also an important one to include on your screening checklist. You may be surprised to know that many property management agencies don’t carry out a thorough criminal check on all prospective tenants! The main reason for this is that criminal reports are often reliant on the individual to undertake and pay for. However, there are ways you can run a criminal background check to ensure you won’t have to endure the headaches of any potential criminal activity in your home. Here at Benchmark we utilise eCourts checks to identify if any applicants are up for any pending criminal charges, infringements or court hearings.
- Do you like the tenant? Finally, anyone who wants to take up a tenancy in your property must not have left behind a trail of negative baggage. Whether you’re managing the property or enlisting the help of a property management agency, it’s important that a reference check is carried out. Equally, when you or your property manager meet with prospects, you’ll be able to get a good read on their personality. Prior to meeting any prospecting tenant, we always run reference checks and conduct a social media profile to ensure they are qualified to be your tenant.
Some property management companies are very strict with their tenant screening and selection process and use numerical standards to quality score. Realistically though, what we have outlined above is the absolute minimum that we carry out as part of our tenant screening process and provides a great basis for finding and accepting a quality tenant.
Pre-Screening Your Tenants
As rental market demands change in your city and suburb, the tenant screening process can create some challenges as rental prices become more competitive. If your property has a lot of local competition, the higher your chances are of receiving ‘bargain shoppers’. If your property is in an area where there are lots of rentals, rental demand is low, and your competitors are out-pricing you, prospecting tenants may anticipate desperation in the market. You may be forced to forgo some of your criteria to avoid having a vacant property.
To circumvent this, it’s so important to enlist the help of a local property management company that understands the local market conditions and how to position and price your property to stay ahead of the trend. The property managers at Benchmark are committed to staying abreast of industry trends, changes and efficiencies in our services to clients. We have made it our mission to understand not only the market conditions of Australia and Western Australia, but specifically the northern suburbs and growth corridors of Perth. By understanding specific local conditions, we have been able to support our clients with specific market trends and stay ahead of the rental demands.
Aside from ensuring you invest in the right area and have the right knowledge to back your investment strategy, there are a few tactics you can implement to ensure your tenant pool is clear on your expectations and they perceive the value of your property.
- Make sure your advertising utilises ‘dog whistle copy’ – that is, it speaks directly to your target market and turns off the people you don’t want to apply. It helps to use the ‘if this is you…then this for you’ approach. Perhaps you may want to be very blatant and highlight that you don’t want unemployed applicants or that there is an application fee. If you can create objections for your unwanted tenant pool and more perceived value for your ideal tenant pool, then you’ve got a formula to stand out!
- When an applicant reaches out to you, be sure to highlight your standards and screening process. Whilst attracting a tenant is the ultimate goal, it’s equally important to communicate why people shouldn’t apply. For example, you can indicate some of the details that you’ll be asking for such as bank statements, references etc. If the prospects aren’t happy to part with this information, you know you’ve got a bad egg.
- Finally, if you or your property manager show a prospect through your property, this gives either or you an opportunity to assess their personality in more detail. Observe their habits, the way they take care of themselves and even their car. If someone takes pride in their appearance and possessions, this could be a good indicator that they too will look after your home too!
Remember, every ‘poor quality’ tenant that you can deter or turn away before they apply is one that you won’t have to spend time and money tenant screening.
Finally, property investing is a long-term strategy so, carrying out a proper screening on your tenants can ensure you only attract and accept the best quality tenant. What’s more, once you find a quality tenant, it’s equally important that you hold onto to them by providing a great property management service. If you need help to find the best tenant for your property, then we’d love to help you! Our tenant screening process has been regarded as one of the best in Perth so, if you’d like to ensure your property is looked after by a great tenant that in turn is looked after by a dedicated property manager, simply go here for a no obligation chat today.