Have prior landlord references been helpful in tenant screening?

Question

Hi all,

I've thus far been fairly lucky with tenants in my two SFH rentals, but did have one bad experience.

We had checked with our tenant's last landlord, and while she did not lavish her with praise, she didn't say anything negative about her either. In fact, said landlord even told us that rent had always been paid in a timely manner. Fast forward to us beginning to see rent slip, calls from cranky neighbors, and eventually the early termination of the lease. Some deeper digging eventually revealed that our tenant had actually been sued by the very landlord we spoke to for unpaid rent!

I've heard several times that landlord references are the absolute best tool for tenant screening, but part of me hopes this is not actually the case given that we didn't find it to be all that helpful in screening out the one bad tenant we did had. Has anyone else had bad luck with these references? Legally, what is okay or not okay for a landlord to say to another potential landlord?

Looking into better tenant screening methods as both of my rentals come up for new leases. Appreciate any insight!

Frank Trigoso · Answer

I use it; however, I am not solely sold on it. The landlord may praise the tenant to help remove the tenant from his/her property because the tenant could have been a headache.

Matthew Olszak · Answer

@Jen Harwood I request current landlord's info and act as follows:1. Applicant gives me a wrong name/number - easy: Declined.

2. Landlord gives a bad reference - somewhat easy: Declined. Still investigate to make sure its not a sour landlord angry their tenant wants to leave.

3. Landlord gives a positive reference - mostly useless. I ignore and continue my screening. However, its a good opportunity to try to get other details like who all is living in the unit.

I also check the landlord's name as a plaintiff in their local court to see if they've filed any eviction cases and how often. It gives me an idea of their tenant base, and if there was a recent case filed and I'm on the fence about my applicant, I quickly research the defendant in that case to see if there is any connection to my applicant since family/friends sometimes rotate who applies to hide evictions.

For folks with limited/no rental history, I take into account the difference in their rent and previous mortgage payment and any changes in circumstances. If the circumstances haven't changed and rent is similar to their previous payment, its usually a decline because if they can't find the money to pay for a home they own, they'll be even less likely to sacrifice to pay the rent. If they fell behind a while back and circumstances changed back to positive but they just couldn't catch up, that's not a bad thing and shows a history that besides that one episode, they can afford the rent amount.

Also consider that people and circumstances change, so while they truly may have been the world's best tenant to their last landlord, maybe some event occurred in their life that changed their approach/respect for their obligations.

Will Pritchett · Answer

I believe it is called erentpayment.com. let me know if that doesn't work. It's not great but is serviceable.  May want to look into it more. It does charge a couple of bucks per transaction and if they opt for paying by one method (credit card??) they get hit with a much larger fee. Maybe someone here has a better option. Some tenants don't like it because it requires the tenant to enter personal banking info.  For them we allow direct deposits to our account which I actually prefer as other option holds money for a few days. We don't accept cash or checks any more. Glad to have stopped that. These options are easier for me.

There are services (for a fee) that the tenant can use to have you report on-time rent to boost credit. Never used them but heard about them on a podcast somewhere. Don't recall the name.

Will Pritchett · Answer

I think credit report is different but also useful. I have had great tenants with bad credit but good references from previous landlords. There is always the risk that we are actually calling a friend who poses as a landlord I guess.      We do a criminal background, credit check, and call past landlords.  I would classify our rentals as A-.  Totally arbitrary classification, I know but they aren't dumps. Rents are from about 1050 to 1400.  Safe neighborhoods. The recurring theme is bad credit. Almost to the point of not wanting to check it.  I would be more concerned with evictions or poor landlord references.      A much more experienced landlord acquaintance says he doesn't check credit because if it was good, they would own the house. I am not there yet. We have had good luck with landlord references though. Knock on wood. And have had great tenants with poor credit. I have recommended the good ones subscribe to one of the services that allows them to have their rent credited to their credit report. Our online payment system gives them the option to opt in to that service if they use it. There are others like it as stand alone services. I want good people (who pay on time) to get credit for it and improve their situation if they can. Good luck!

Jen Harwood · Answer

Thanks Account Closed, we always pull credit history in addition to landlord references, but in our market it's fairly common to have renters that did a short sale on a home or some other issue with their credit that doesn't necessarily have to do with rental history. I haven't seen a lot of rental history on credit reports, but maybe that has changed in the last year or so?

Tim Smith · Answer

I just want you all to remember the landlords can be in the wrong as well.  I have over 10 years positive rental history, in my last unit,  the owner did a walk through a week before I moved out, said it looked great and we've been wonderful tenants, wished me luck and said to let her know if there's anything she can help with.  They gave us a positive reference for my current apt(moved to save money). The day I moved out I did the move out check list with the PM and I was expecting at least half of security deposit back based on my experience.  I ended up getting a bill for $2100.  It was itemized and the majority of the list was for things that were marked as ok on the checkout list. e.g. blinds ok, then charged $20 for new blinds, exhaust fans o.k., then charged for new exhaust fans, etc. I'll pay for anything I'm responsible for but I'm not paying to upgrade your property.  They never filed paperwork to retrieve any money, we actually did.  All they had to do was keep my full deposit and I would have been annoyed but just moved on.  The problem though is, I am moving for a job and now need to rent another unit and have to worry about references.  Moral of this story is just because there's a tennant/landlord dispute doesn't mean the tennant is a bad person, some landlords are gougers.

Jen Harwood · Answer

Thank you all - very helpful advice and recommendations!

Matt John · Answer

@Rick S. Thanks for the link, I just checked those out. ClearNow is $15 for the first transaction and $2 per monthly transaction after that (bi-weekly or weekly is more). Rentrack won't post their fees on their website, you have to contact them (which I won't waste my time doing). PayYourRent was $20/month for up to 10 transactions and $2.50 per month for each additional transaction. PayLease won't post their fees on their website, you have to contact them. eRentPayment looks the cheapest at $10 for the first 5 transactions and $1 per additional transaction.

I'm not interested in paying for a service that I currently get for free from cozy.co just to marginally help my tenant's credit score (and I'm sure they aren't willing to absorb that cost either), but I'm glad to know the option exists.

Rick S. · Answer

@Matt John I am involved with credit reporting and I don't know of a way for a landlord to report rent payment data themselves as the bureaus typically don't allow that unless you have over 500 units and create a profile with them.  There are services that will report for a fee or check out this Experian link for payment services they have partnered with:

http://www.experian.com/rentbureau/rental-reportin...

Matt John · Answer

Is there a way I, as the landlord, can report my tenants rent payment to be included in their credit score without it charging either party?

I have some really great tenants that pay on time every time. I suspect will buy a house when they leave mine and I'd love to help boost their credit for them if I can.

Have prior landlord references been helpful in tenant screening?

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