You’ve been diligent about carefully screening your tenants before locking them into a lease. Your job – at least from that respect – is done, correct? Not necessarily. While automatically renewing existing lessees may seem like a no brainer, doing so could be to your detriment. The fact is, people and circumstances change. Someone who seemed like the ideal tenant the first time around could be in a very different situation come lease renewal time. That’s why additional screenings are recommended.
Why Re-Screen Tenants?
Renewing a lease without screening again can be compared to renting the first time around based solely on references. Even if the feedback is stellar, chances are you’re still going to screen. Similarly, just because an existing tenant seems good, doesn’t mean you should just renew the lease without looking deeper. A lot of things could have changed over the course of their lease period, and a follow-up screening can help identify those changes – particularly ones that might be red flags.
Here are a few key benefits of renewal screenings:
- Cost savings – a screening will help you uncover and address any existing issues a tenant may have that might otherwise have lead to mediation, eviction or potential litigation.
- Resident satisfaction – when you’re diligent about regularly screening tenants, you indirectly ensure the ongoing wellbeing of the rest of the residents. This leads to greater overall trust and satisfaction levels.
- Peace of mind – just as your other tenants will appreciate knowing you’ve adequately screened everyone, you’ll also have the peace of mind of knowing your properties are filled with quality renters.
What to Screen For:
The good news is, renewal screenings are much less complicated than initial screenings. That’s because you won’t need as much information as you did the first time around. We recommend focusing on three areas for your re-screening:
- Credit Report – a person’s credit rating can change dramatically over the course of a year
- Income Verification – similar to credit rating, job changes and pay cuts can also occur
- Criminal Background Check – just because the background check was clean the first time doesn’t mean nothing of concern has happened since the initial lease signing.
In addition to these fundamentals, a soft check on things like timeliness of rental payments, how they get along with the other residents and how well they’ve cared for the property are also important to consider before renewing a lease.
How to Re-screen:
Renewal screenings should be relatively quick, easy and straightforward. Before moving ahead, we strongly recommend consulting with an attorney or brushing up on the rules, laws and regulations in your area to ensure you are in compliance.
Ideally, you should set expectations by including details about your renewal screening policy in the initial lease agreement. Provide ample notice, explain why you are rescreening and how it benefits everyone involved, and then collect the required permissions and documentation (e.g. updated employment information, signatures for credit report and background check).
To make things even easier, property management software can be leveraged to streamline and automate much of the process. This will save you time and make renewal season a breeze.