They seemed like such a nice couple when they moved in—polite, professional, well-dressed, and always smiling. They came ready to sign the lease, handed over the deposit, and even brought a small thank-you gift.
Everything looked good, so the landlord decided to skip the tenant background check this one time.
Everything was fine…until the rent was late on the third month. Then, the payments stopped altogether. They didn’t answer phone calls or reply to emails. A visit to the property found garbage piled up on the front porch and an overgrown lawn.
With no response, the landlord was forced to go to their attorney and found the legal process moved slowly. The couple remained in the house while the eviction process was underway, and the damage they did on the way out cost thousands of dollars to fix. This just added to the expense of the lost rent and attorney’s fees.
If only the landlord had done that tenant background check, they would have seen that this nice-looking couple had a history of bad debts, late payments, and evictions. A thorough background check for tenants would have saved thousands of dollars and a lot of frustration.
The High Cost of Failing to Conduct Background Checks for Tenants
Whenever you talk to someone new about renting your property, there’s a certain level of uncertainty. While tenant background checks don’t guarantee someone will be a model renter, they can provide accurate information that can increase the odds in your favor.
Failing to screen tenants can lead to:
Lost Income
Your bottom line can be impacted when rent isn’t paid on time or paid at all. This is especially troubling if you’re using the rental income to pay off a mortgage or loan.
Eviction Costs
Evicting someone takes time and costs money. Here is a breakdown of how quickly the costs can add up:
- Legal Fees: $500–$1,000 for an uncontested eviction
- Court Costs and Filing Fees: $50–$250
- Law Enforcement to Serve Notice: $50–$400
- Lost Rent: $4,000 (This assumes an average rent of $1,000 per month, with the eviction process taking at least four months.)
- Repair and Cleaning Bills: $1,500–?
Even if things go smoothly, you could be looking at more than $6,000. That doesn’t include additional costs for changing locks, advertising your rental property for new tenants, or your time to get the property ready.
Repairs and Maintenance
Whenever you rent property, you’ll need to make repairs and do some upkeep from time to time. The wrong tenants, though, can do considerable damage. If they stop paying their rent, they’re more likely to stop taking care of your property.
If out-of-the-ordinary damage was done, you may have legal remedies, but that can add to the cost, and you may never recover what you’re owed.
Safety Risks and Turnover
Poorly maintained properties can create safety risks and increase your liability.
If you rent to someone with a criminal history and don’t do a background check, you could be sued for negligence by neighbors if something happens. One note here: In some cases, denying a tenant because they have a criminal history may not be a valid reason for turning down an application, so you will want to check the laws in your state.
Even without a criminal history, bad renters can impact your property value and create additional turnover.
Cash for Keys
Making a mistake in renting to someone can be so expensive that some landlords have resorted to paying tenants to move out. Called cash for keys, it can be a less expensive option than having to evict someone for non-payment.
Protect Your Property and Your Cash Flow
As a landlord, you have the right to protect your property. While you must abide by discrimination, credit, and fair housing laws, you can reduce your risk substantially by conducting background checks for tenants. Reports are inexpensive and can save you thousands of dollars down the road. You also get the peace of mind that you’re making a smart decision before you approve an application and sign the lease.
If you think this will not happen to you, consider this fact: According to the Eviction Lab at Princeton University, which tracks national data, landlords file 3.6 million eviction cases every year.
Don’t make the same mistake as the landlord who didn’t do a tenant background check for that nice-looking couple. Looks can be deceiving. Contact Command Credit today for on-demand credit reports to protect your investment.