See how RentVine can help you rent your properties with confidence.
Fill out the form below and we will send your prospective tenant a link to our
rental application. This application has everything you need to make an informed
rental decision and protect your rental investment. Address history, employment
history, and additional occupants. Once your tenant fills out the application, we
will use this information to run a national credit check, criminal background
investigation including sex offender, and eviction history. We will take the
results and compile a rent report with a grade and recommendation. Your tenant
will be billed $39 per applicant (The national average is $52).
Once you click "Screen Tenant" we will automatically create your free RentVine account to view the report once your tenant completes the application. If you need to screen additional occupants or manage other aspects of your rental property (Advertise, collect rent, etc.), you can do so from your RentVine admin console. RentVine is always free for landlords.
Credit history is the single biggest factor in determining the risk involved in renting to a prospective tenant. A consistent record of paying one's debts is an accurate measure of their care and concern regarding their financial reputation. To determine credit worthiness property managers (Usually there is a 100 unit minimum) can apply with the major credit bureaus to gain access to a prospective tenants credit reports with a tenant's permission. Property managers can use the data to determine the probability that a tenant will fulfill the obligations of the lease. Of the three credit bureaus (Transunion, Equifax, and Experian), it is our opinion at the time of this document that Transunion has made the biggest investment in creating a model specific to the rental industry. The "Resident Score" available through their credit retriever product employs millions of records to predict a tenant's probability of fulfilling their rental obligations based on their score. This is the single most effective tool in determining the probability of paying rent. Other variations of FICO scores and financial modeling only predict an applicant's probability of paying their general bills.
For landlords and smaller property managers this information can be difficult to obtain. The three credit bureaus will not approve individuals, small property managers, or those that manage their businesses out of their homes to obtain consumer credit reports. This means that these parties must find a way to obtain the necessary information to make this decision. There are a number of third party services including RentScreener that can give landlords information to make a better decision, but they cannot provide the actual credit reports to a landlord. The key is determining the probability of the tenant paying their rent and determining the risk associated with extending credit to each applicant.
Once a property manager knows which score thresholds translate to which probability they are comfortable with, they can create a tenant screening policy that they can use to power their tenancy decisions. No model can eliminate risk. Sometimes even the most qualified applicants have problems, and don't pay rent. The key is understanding the risk involved in renting to every applicant and making a decision based on that risk.
Income to Rent ratio, often incorrectly called rent to income ratio is the amount of income a potential tenant earns as a ratio to the advertised rent. For example, if an applicant earns $6000 per month and is applying for a property that rents for $2000, her income to rent ratio is 3:1. While this measurement is important, many companies use it incorrectly.
Many companies set a strict requirement of at least 3 to 1 income to rent ratio. This policy immediately eliminates 18% of the most qualified applicants based on risk. In a study of over 15 million rental records conducted by TransUnion, they found that credit score was much more important than income to rent ratio. In applicants with high credit scores, but low income to rent ratio the default rate was significantly lower than those with high rent to income ratios and mediocre or poor credit. Many of these higher risk applicants would be accepted under most tenant screening policies with additional financial consideration.
Even though some applicants have lower income to rent ratios, they are a significantly better risk than those with better income to rent ratios but poorer credit scores. The fact is that applicants with higher resident scores have demonstrated a consistent ability to pay their debts on time. Applicants with great credit scores figure out a way to pay their bills. Don't let great tenants get away because of some arbitrary ratio.
Verifying an applicant's income can be challenging. A landlord usually needs a release to contact an applicant's employer and get this information. Often the HR department can be very difficult to track down, and their call back rate is usually abysmal. This reality can prolong the screening process from seconds to days. Often applicants are self-employed, contractors, or even unemployed. Sometimes they give contact info of a friend that will fraudulently vouch for their income. That is why income verification is a secondary screening criteria used to partially offset an average or worse credit score.
It is perfectly acceptable to ask an applicant for proof of income when making a rental decision. Most applicants have an employer that provides them with periodic pay statements. If that is the case ask to see their most recent W-2's to verify their income.
If an applicant is self-employed, or a contractor, ask them to provide recent bank statements and/or their most recent tax returns. Sometimes these are easy to fabricate, especially tax returns so beware.
What if an applicant is unemployed? This is a great question, and can usually be answered by the resident score. If an applicant has consistently demonstrated the ability to earn money and pay bills, they are still probably still a decent risk. In the event of unemployment it always a great idea to get extra financial consideration in the form or a higher security deposit, or pre-paid rent. The best way to offset poor credit, or sketchy income is always with additional financial consideration.
Determining an applicant's criminal past is difficult. Most bureaus offer the ability to check most national and state criminal databases. This sounds great, but much of our government infrastructure is pretty outdated technology wise. The bureaus can only provide the information that they get from the local, state, and national authorities. It is estimated that 60% of criminal activity does not make it into a criminal report from a credit bureau or background check. A clean criminal or background check means that there were no records found, not that the applicant has never committed a crime. Ordering these reports is significantly better than doing no diligence at all, but the information contained is definitely not perfect. In order to get all criminal activity one would have to visit the thousands of court jurisdictions that do not report to the national databases. This process is impossible.
Severity of the crime. If an applicant of yours has a criminal record, now you must determine if the crime is severe enough to deny that applicant tenancy. A criminal record shows a history of disregard for the law, property, authority, and even the personal safety of others. Know before you rent to anybody what your stance on criminal records will be and publish it in your tenant screening policy. Generally, those who have committed and been convicted of committing felonies and/or violent crimes are not good risks as applicants. While some people certainly change, many do not.
We recommend discussing with the applicant any misdemeanors to determine if you can get comfortable with the severity of the crime or the likelihood they will commit further criminal activity.
Other than credit history, this is the most important item to check. Unfortunately the data on eviction history is not very good. Most landlords and property management don't report eviction activity. Also, most non-paying tenants do not go all the way through the eviction process before leaving the property, so it will not generate a public record. If your applicant has an eviction on their record, DO NOT RENT TO THEM. This is the single best indicator that they will default again. If someone goes all the way through the court proceedings, and actually has an eviction filed, they are a very high risk.
A full eviction proceeding means that they forced the landlord to make court appearances, hire attorneys, and get the local sheriff involved. 95% of non-paying tenants will not make it to the full eviction. They will voluntarily vacate the property when they see that their removal is imminent. Those that stay to the bitter end are a special kind of bad tenant. Tenants that are familiar with the eviction process will know just how long they can stay for free before being forced to move, and are probably preying on landlords. Evictions often end up in foreclosure for the landlord. Don't do it.
Make sure you check with a tenant's previous landlords. Ask them if they paid their rent on time and if they took care of the property. Most importantly, ask them if they would rent to the tenant again.