Resident Screening Tips
- Sep 11, 2012
Have you recently had to go through the painful and costly process of evicting a resident? Was it because they violated their lease, or did it have to do with non-payment of rent, or collections? You are not alone. The worst part of an eviction is the cost associated with it. Let’s say you need to evict a tenant due to non-payment of rent. Costs vary from state to state, but we’ve used average U.S. figures for the below example. It will give you a better idea of how important it is to screen residents and use due diligence when it comes to renting and preventing costly evictions.
As an example Greg, your tenant, has not paid rent for four months. His rate is $1,009 per month, and some of the rent he paid previously was late, so for two months a late fee accrued of $100. You send the sheriff to serve Greg an eviction notice (an additional $30), and two days later, Greg is gone. Greg now not only has been evicted, but he has also skipped your property to avoid paying the remaining balances he owes you. Greg could still be in your city, or he could be across the country attempting to sign a lease with another unsuspecting landlord or manager. In this best case scenario you are left with losses around $2,148.
A more typical scenario is that Greg decides to wait as long as possible to delay the eviction.He might not do anything until you file the notice in court and begin an eviction (average court fees of $200-$500 and attorney fees between $250-$700). Greg will then stay until the last day to answer the case, getting an additional one month of free rent. If Greg fights the eviction, he may be able to stay without paying any rent for another one to two months, now increasing your eviction costs to at $3,607-$4,337.
If Greg if forcibly evicted, he may end up leaving a large amount of furniture or personal belongings, and you stuck with a messy apartment, and no tenant. If you choose to hire movers, they can charge $2,500, just to get it out of the apartment, so that you can clean, make repairs if necessary, and attempt to rent it again to cover some of your expenses. If the movers put Greg’s belongings into storage, that is also going to cost you another $50 per month plus a lock fee of $20 (according to many municipality laws, tenants may have upwards of 30 days to come retrieve their belongings).
So what are your options now? Sit and wait for Greg to come back and pay his remaining balance to you and pick up his belongings? Or are you going to wait for him to sign up with another unsuspecting landlord, halfway across the country?
There are incident reporting websites available at no cost to real estate professionals, and those who own property. These types of websites and databases help to keep track of the untraceable tenant, and are available nationwide. Let’s say you perform your due diligence, and screen your applicants closely. In this case, a Greg could end up in your apartment faster than the eviction record would become public. How else then would you be able to tell who you are really renting to?
A month later you find a site that shows your tenant, Greg, with the exact same scenario at another property. The reason the previous eviction(s) didn’t come through on your initial tenant screening report is because they weren’t of public record, or disseminated by the traditional credit reporting agencies yet. The Incident Reporting Database was able to track Greg, and show not only that he had been evicted from his previous apartment a few states away, but in fact that he had skipped, owed a balance, and left his belongings. There were even photos to document the mess he left the previous landlord’s apartment.
How many out there are cringing while reading this article, as it is a subject that hits very close to home? The key is to be proactive in what information you receive about the tenants, before renting to them. Time is money in the multifamily business, but if you are not properly performing due diligence, this very example could become yours, and it could end up costing you thousands of dollars.
Elizabeth Whited is operations coordinator at the Rent Rite Directory. The company was started by Joe Killinger and George Pino of Learning Links Centers. Rent Rite Directory started as a blog for property managers and individual owners to track proxy renters, people that skip, or have had evictions filed against them—and residents who commit on-property crime and damage.