Resident Screening: The Importance of Landlord and Employment Verification for Your Phoenix Investment Property
For you to get the best renters possible, you need to use the best management company. As a Phoenix property manager, we use employment verification as a part of our application approval process. Thanks to our careful screening process, we are able to weed out the bad tenants and pick renters who are more likely to stay for years.
How Landlord Verification Works
Some of our property owners have asked why we bother with full rental histories because credit and criminal records are cumulative. As most of you know, a single tenant can erase any profit your rental earns for the year. Because of this, you need more than a basic screening process.
When we screen tenants, we look at more than verified income, acceptable credit and background checks. We also look for how tenants have treated their previous rental homes. While verifying the tenant's rental history can take time, it is the only way we can get an accurate picture of the tenant.
This process is known as landlord verification or rental verification. Among the world's best property management teams, it is known as one of the most valuable parts of the screening process. Like any screening mechanism, there are advantages and disadvantages to using this process.
At a meeting of the industry's top property managers in Las Vegas this year, the National Association of Residential Property Managers (NARPM) conducted a survey. Property managers were asked how important landlord verification was for their screening process. About 66 percent of managers gave it a five out of five. A total of 86 percent of people gave it a four or a five.
The survey also asked managers how cumbersome it was to conduct this kind of screening. About 73 percent of respondents answered with a four or a five. Every property manager said that the biggest issue was the level of time and energy required for landlord verification.
When we conduct a landlord verification, we have to call the former landlord and email the form. Then, they have to print the form, fill it out, scan it and email it back. Sometimes, we also have to do a follow-up call as well.
While this process takes time and effort, it is worth the work. The majority of property managers believe this information is valuable. Hopefully, there will be new techniques in the future that make the landlord verification process easier.
Bryan Mower is the head of Western Reporting, and he thinks the future will involve more third-party verification services. Mower also believes there will be more open application programming interfaces (APIs) for property managers. Through better technology, landlord verification may eventually become a faster, easier process.
In the future, property managers can share information through an online database. After each tenant moves out, landlords can update the database with their information. Then, future landlords can search for the tenant and instantly access their rental history. Landlords and property managers can save time by easily searching for a tenant's name in the system. Former landlords will also save time because they will not have to answer multiple requests for the tenant's rental history.
For some reason, rental histories are still treated in a transactional way. In comparison, criminal and credit histories are cumulative. The prospective tenant authorizes the landlord to collect background information, so there is no reason why this difference has to continue.
The average company may spend three hours getting landlord verification from two or three landlords. At Service Star Realty, your Phoenix property management company, we spend a significant amount of time and resources on landlord verification. Even though we spend hours vetting each tenant's rental history, we believe the effort is worth it. By spending more of our resources on vetting tenants, we help to keep our property owners out of eviction court.
While we are hopeful that technology will make this process easier one day, we must deal with the system as it is. The cost of an eviction and repairs is too high. Because of this, we cannot afford to not verify a tenant's rental history. Our property owners need responsible tenants, and landlord verification is one of the best ways to achieve that goal.
The Importance of Employment Verification
Obviously, tenants must meet certain income and employment requirements before they can rent a unit. Right now, COVID-19 has caused unique problems. We are finding that some tenants are trying to submit their unemployment income as a part of their income.
While unemployment income may be technically considered income by the Internal Revenue Service, we do not count it as income when we go through rental applications. This is because unemployment income will eventually end. When the individual's unemployment runs out, they will need to find an alternative source of income.
With all the changes caused by COVID-19, unemployment income is even less reliable than normal. At the start of the pandemic, people were given an extra $600 a week. Now, that amount has been reduced to $300. Once the funding runs out, the $300 disappears.
The only thing we know for certain is that unemployment checks will eventually end. Sooner or later, tenants will have to find an alternative way to earn money. We have no guarantee the new income amount will be equal to or greater than the unemployment income. Because of this, we expect our tenants to be employed when they apply. We have a number of tenants who are trying to use unemployment income to qualify for a home. When we review each application, we carefully verify the applicant's employment status before we approve of their application.
Our primary goal is to find you the best tenants possible. Employment verification and landlord verification are important parts of this process. While getting this information is challenging and takes time, it is vital. By gathering these details, we can ensure the best quality of tenants possible.
As your property managers, we strive to be the best management company available. You trust us to take care of your investment, and our goal is to earn that trust. When you partner with our company, you can always count on us to do the legwork for you.