As a landlord, one of your top priorities should be to reduce tenant turnover from your property. A low tenant turnover rate usually equates to a higher return on investment and a better financial bottom line.
As such, it’d be a no-brainer to retain a tenant for as long as you can, especially if they have been good for the duration of their tenancy. This is inarguably the most cost-effective way to optimize your passive income.
But, don’t run into a lease renewal before re-screening the tenant. Screening a tenant in between leases can help cushion you against possible headaches down the line. That said, you need to conduct a renewal screening in a way that won’t hurt your solid landlord-tenant relationship.
Luckily for you, this blog will help you address such concerns, as well as educate you on how to conduct an effective renewal screening check on your tenant.
The Benefits of Renewal Screening Checks for Landlords
It’s pretty understandable why a landlord may want to skip a renewal screening check. After all, if the tenant has always paid rent and abided by the term of the lease, why would a lease renewal screening check matter?
Certain things about the tenant could have changed along the way. For instance, it’s possible that the tenant could have recently lost their job and is unable to make the rent payments.
With a simple lease renewal check, you’ll be able to spot such issues and make an informed decision on whether or not to renew your lease for another term. The following are some benefits that renewal screening checks provide landlords with:
- You’re able to understand the issues the tenant is undergoing. This will help you avoid potential headaches in the future, such as having to evict the tenant for nonpayment of rent.
- It incentivizes the tenant to care for the property and abide by all terms of the lease agreement.
- You’re able to reduce property damage. A thorough inspection in between leases can help you identify any major issues. This will enable you to know whether renewing the tenant’s lease for another term is going to be worthwhile or not.
- You’ll have peace of mind. Knowing that you have rented to a qualified tenant will give you peace of mind that your property is in good hands.
What Landlord Should Screen For
A renewal screening check is nearly identical to the regular tenant screening process. The only difference is that renewal screenings don’t have to be as thorough. Unlike new resident screenings, you don’t have to gather tons of information since you’ve already don’t the heavy lifting before.
With that in mind, the following are basic elements that a renewal screening check should cover:
Verifying how much a tenant is making is key to your bottom line. It’s in your best interest to know whether or not the tenant is still employed and making sufficient income to afford monthly rent payments.
To verify how much income the tenant is making, ask for their pay stubs and tax returns. You may also want to call the tenant’s employer directly and/or request an employment letter, detailing how much income the tenant is making, their job title, and length of employment.
A credit check will provide you with a comprehensive overview of the tenant’s financial habits. You can check this at either of the three major credit checking bureaus: Equifax, TransUnion, and Experian.
The results of a credit check can change from time to time depending on one’s financial standing. As such, it’s an area that you’ll want to ensure is still looking good.
A lot of things can happen over the course of a lease term. And however unlikely a criminal conviction can seem, this isn’t something that you should ignore. Ultimately, you want to ensure that a tenant’s circumstances haven’t changed.
Things to Keep in Mind When Conducting a Renewal Screening Check
You want to ensure that you maintain a strong landlord-tenant relationship, therefore, the renewal screening check should be both transparent and fair. The following are some tips to keep in mind:
- You want to make the screening process consistent for all tenants. This means that all the verifications and questions asked must be the same for every tenant. Don’t, for example, run an income verification on one tenant and fail to do so on the other. This would be unfair to the former tenant.
- Disclose what the process entails beforehand. Let the tenant know what they should expect during a renewal screening check in the initial lease agreement.
- Comply with the requirements of the Federal Fair Housing Act. The act requires that any housing provider, including landlords, treat tenants fairly regardless of certain protected classes, which, include race, color, sex, religion, nationality, and familial status.
- Of course, running any tenant screening process requires certain skills and experience. What’s more, while the process doesn’t have to be as lengthy as the initial screening, it can still take a lot of time. If you’re a DIY landlord and don’t know how to go about it, hire expert property management services.
At first, a renewal screening check can seem unnecessary, especially if you’ve had a great tenant staying in your property. However, if carried out properly, it can help you avoid potential issues in the future.
If you have a question, need help carrying out a renewal screening check, or even need expert help with the overall management of your property, turn to the team at State Property Management. We provide professional property management services to property owners in Florida. Get in touch to learn more!