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Protect Yourself from Deadbeat Tenants, Winston Rowe and Associates
The difference between finding a great tenant and one who turns out to be a freeloader may be revealed when running a credit check on a potential tenant.
By: Winston Rowe and Associates
An immediate and comprehensive credit check will help shield your real estate assets against deadbeat tenants, expensive eviction costs and loss of your rental income in addition to avoiding a great deal of aggravation.
What does a tenant credit check reveal?
This section of the tenant background check includes the applicant's current and former names, aliases, their social security number and date of birth. Their present and past addresses and employment history are also included.
Credit Rating (FICO Score) and Report
As a responsible landlord, you should be evaluating not only the FICO score but their eviction records, criminal history and other information available, such as TeleCheck and sex offender searches.
Negative or Potentially Negative Items
Does your tenant have a history of paying bills by the due date? You can find any accounts that are past due, discharged or in collection. You'll find the name of the collection agency, amount and type of the collection and whether it has been paid. This data can indicate whether they are likely to pay their rent on time.
Bankruptcy, Eviction or Foreclosure on a Home
A prior bankruptcy, eviction, monetary judgment, liens or foreclosure on a home are obviously a bright red flag that need further investigation and perhaps a conversation with the applicant regarding the circumstances of a negative item.
Individual Credit Accounts and Loans
Review each account for late payments and note how past due those payments were, such as 30 days, 60 days or 90 days delinquent. This information is a good indicator as to whether you can expect to receive your rent by the agreed upon date.
My applicant doesn't have a credit file
A letter from the applicant's employer and pay stubs will verify their employment and indicate whether they can afford to pay you rent. Did they file an income tax return with the IRS for last year? Ask to see it. Have they previously rented? Contact those landlords to see if they paid on time.
This article was prepared by Winston Rowe and Associates a national consulting and advisory firm specializing in assisting apartment building and multifamily investors with structuring debt and equity financing.
If you would like to learn more about Winston Rowe and Associates you can review them online at https://www.winstonrowe.com
Winston Rowe and Associates