How to Screen Applicants like a Pro(Part 4): Verifying Rental History

Verifying rental history helps you know the real character and intentions of prospective tenants based on the experience of their former landlords. Through verifying, you’ll know if they’ve ever caused damage to previous rentals, if they’ve broken any lease agreements, or if they’ve ever missed rent payments. Essentially, giving you a glimpse of what’s possibly to come, should they become your tenants.

Why is Verifying Rental History Important?

As you can imagine, the things you’ll discover from checking an applicant’s rental history will greatly influence your decision to accept them or not.

Because of this, there are desperate people out there (especially now, post-COVID) who are willing to give false information on their rental application. It might be because they don’t have any rental history, or they have a terrible history with their landlords, but whatever the reason, giving inaccurate or fake information is a major red flag.

That being said, if the applicant has a great credit score (e.g., 680 or above) and has great depth of trade lines (e.g., 10 instead of 2), then this shows that they have a strong financial record. In cases like these, you might personally choose not to verify the rental history. However, if their credit score is below 680, or if they have minimal credit history, you always need to do verification of rent with their past landlords. This applies even to class A or B tenants.

Therefore, this article will focus on how to verify the list of previous addresses and landlord/PM references your prospective tenants give you. Then we’ll show you how you can ensure the legitimacy of their information, especially in these trying times.

1. Inform Them of Your Requirements

Let tenants know what information you require, and that you intend to check their background. State somewhere in your application form that faking information is a crime, and that their application will be forfeited if there are any problems or inconsistencies discovered in their rental history.

Here are some things to ask for:

• - Addresses of where they’ve lived for the past 2 years
• - Name and contact information for corresponding landlords
• - Valid applicant ID

2. Review the Applicant’s Submissions

Double-check their answers and see if any details were left out. If there are, the applicants might be hiding an issue they had with their landlords (and don’t want you finding out about).

- Check for gaps and ask why. Their reasons might be valid, but it’s also possible that they were evicted or experienced some kind of issue at their past address.

- Check for inaccurate and missing details. Cross-check landlord names against home ownership records to confirm that the reference listed was actually the homeowner at the time the applicant lived there.

- Verify other roommates. If an applicant was living with a friend or family member and splitting the rent at a past address, you need to verify who’s on the lease, how much rent each person is responsible for, and speak to their current landlord to confirm.

Here’s a scenario to illustrate why:

Right now, due to Coronavirus, we’ve been seeing an overwhelming number of people committing this kind of fraud: An applicant (Bob) is living with his aunt (Mary). Bob wasn’t on the lease at the house Mary was renting, but he claims he paid half the rent. Now he’s moving out to find his own place.

You call the landlord to confirm, and find out that Mary is actually being evicted for non-payment of rent. This begs the question - where is Mary going to go? Into the new 2-bedroom house Bob wants to rent from you?

This is a common trick we’re seeing from applicants who are trying to “hide” a tenant who has a bad rental history during the screening process.

Because of this, it’s more crucial than ever to investigate all documents they turn in, and all addresses that come up on the background check. Look out for inconsistencies where they may be trying to hide an address they were evicted from, or quickly moved out of because they couldn’t pay rent.

3. Have Applicants Sign a Rental History Release Agreement

Make sure that your lease agreement has a tenant information release form attached. (Even better if it’s required within the initial rental listing.) This agreement will authorize you to legally review their rental history information. The form should require the following:

• - Length of tenancy with previous rentals
• - Total rental amount paid previously
• - Rental payment history

If applicants show hesitation in giving this information, they might have a questionable background.

4. Get in Touch with Current and Previous Landlords

Once you’ve secured their details, call up their current and previous landlords. From talking to them, these are the things you want to discover:

- How did the tenants treat the property? Was it left in a reasonable condition?

- Were their rent payments paid fully and on-time?

- Who lived in the property, and were they all on the lease?

- Did they cause any problems for the landlord or the neighbors?

- Were they reliable, responsible, and communicated well during the tenancy?

- Why and how did they leave their past rentals? (Did they give proper notice?)

- Did they receive their security deposit in full when they left?

Remember, also validate that the person you’re talking to is really the landlord of the address stated (by cross-checking public home ownership records).

5. Opt to Conduct an Eviction Check

While you’re verifying an applicant’s rental history and talking to their landlords, also look out for any evictions that might have happened before.

Evictions deserve their own shoutout, as more than half (56%) of landlords say that prior eviction history is one of their top concerns when screening new tenants (according to MySmartMove). This is due to the high cost (around $3,500) and time (around a month) it takes to evict tenants.

Ideally, by conducting a thorough screening--including verification of rental history--you’ll be able to find quality tenants who pay their rent on time, will treat your rental property well, and have no criminal or eviction history. In the long-run, you’ll thank yourself for how strict you choose to be with tenant screening.

This is our fourth article for our series How to Screen Applicants like a Pro! If you missed the earlier ones, head on over to this link, where you’ll see our articles on verifying credit reports, DTI ratios, and stability.

Any other tips on how to verify rental history? What are some ways your applicants have tried to get away with problematic rental histories?

Image Courtesy of Ketut Subiyanto