credit / criminal check how to arrange and who pays for it (apartment, tenant)
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Hello,
I am going to rent my second floor apartment.
I definitely would like to run at least credit and Criminal check reports for prospective tenants.
I am thinking that if I ask to pay $50-60 in advance for the reports from tenant and do not guarantee that I will take them, nobody will pay. I think they will not even pay if I promise to return the money in case I do not take the tenants.
I actually can tell them that I am looking for the credit score in the specific range and no criminal records. In case the report confirm it and for any reason I do not take the tenant I can guarantee that money will be refunded. I still think that prospective tenant will not pay.
The other option I think about is to pay for the report by myself. But it can happen that I will pay for reports and decide to take the tenant but the tenant decides not to take an apartment or reports will not be good enough. This way I will loose the money.
What could be the best strategy for the reports payments.
I charge $35 per adult that would be on the lease. That's what it costs me to run the credit/criminal report.
I always make sure they understand what I'm looking for, before I take their money. So bad credit or a mile long criminal rap-sheet means auto disqualification.
After that, I say that if they do qualify and they sign a lease, I will credit the amount they paid towards their security deposit.
If they pay for the application, and I find out they lied, or withheld truth, well then, I guess they are out $35 as I do no offer refunds.
The bottom line, make your tenants pay for this. If not, you are going to get screwed. If they are serious about renting from you, they should be serious about paying for it from the get go.
Create a written application with all the information you need to do the credit/background. Make sure it includes a section that states that you will be performing a credit and background check, with a signature from the applicant. (This is required by credit check laws, you can't check credit/background without permission.) The service doing the check may have a sample for you to use, or they are easy to find on the web. Add any requirements you want to add (i.e., proof of income.)
Have an "application fee". It is not a "credit check" or "background" fee, it's a fee for applying. This will weed out anyone that is just looking, because if they don't want to move in, they won't want to pay the app fee, and it's no money out of your pocket. If someone applies, require the application fee be given to you at the same time, or it's not a complete application. You may or may apply this to rent/deposit, I don't because it's money I spend to do the background check.
As FrugalYankee said, read you state landlord tenant laws to make sure you follow what the law says. Some states say you can charge a application fee but not any other fee. Others may say that you can charge anything up front but you can't keep any amount over the actuall cost to you. Some may even set a maximum amount you can charge.
Sorry for late reply. Thank you a lot for your answers. Look like NY allows application fees. If for some reason I screen 2 people and both passed my requirement. I decide to take one person and return all the money to the other one. Can the person who does not get the apartment complain (discrimination, waiste of time, etc.). Also, does it make sence to require credit score 700+ or it is way too high?
Regards,
Vad
This is why you have the same standard for everyone.
Make sure the forms are appropriate for your jurisdiction... be it Rent Controlled or State required.
I advise those new to the industry to consider joining your local Apartment House Association... it will provide a wealth of information, tenant screening services and up to date forms...
I had a discrimination complaint against me from a women I did not rent to... the investigator contacted me and I suggested we meet at the home in question... the lady claiming discrimination is African American with a child... the woman I rented to is African American with two children.
I did not rent to the first because she had a number of charge offs from Cable TV and Department Stores... the one I rented to had less reported income and a clean credit report... end of story.
Personally, I don't give the credit score much weight... I do look for people with no bad credit... it takes a lot of effort for someone to rack up several pages of bad credit... some of my best tenants had almost no credit... which is different from bad credit.
Do you have any particular recommendation on what company to choose for screening? I am thinking to get Credit Report, National Criminal records, Previous addresses. Do I need Eviction report? I am not sure if it is available nationwide.
Information about Bancrupcy? Is this part of a Credit Report?
Can credit Report be run for free? Looks like all these reports together cost about $60 - $70. Is this about right or I am looking at the wrong places?
You may want to consider joining a state or local LandLord or Multi-tenant Housing Association. Most of them as member benefits have discounted subscription to credit, criminal and court reporting services as well as verification services. The companies they afiliate with have all been verified as reliable and legitimate. Its a one stop shop for ytou to not only meet other LL, but access forms and ppolicies that have been checked for accuracy according to state laws and rules.
You may want to consider joining a state or local LandLord or Multi-tenant Housing Association. Most of them as member benefits have discounted subscription to credit, criminal and court reporting services as well as verification services. The companies they afiliate with have all been verified as reliable and legitimate. Its a one stop shop for ytou to not only meet other LL, but access forms and ppolicies that have been checked for accuracy according to state laws and rules.
And even more helpful to me is they forms are guaranteed compliant with local law
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