While most landlords will only screen two people per property, according to The Zebra, it can take a long time before they get a response. Such a long pause can seriously impact the ability to bring in tenants, leading to a property owner rushing the process and missing red flags in the check.
So, what should you do to complete everything faster and without as much work?
Below, we have prepared a guide that compares outsourcing your tenant screening to doing it yourself, including the following:
- Cost
- Speed
- Legal safety
- Long-term ROI
You can use this information to decide whether you want to do it yourself or whether you want to keep undergoing ongoing vetting processes yourself. Learn how you can find the best options for this process moving forward.
Looking at In-House and Outsourced Tenant Screening
When performing tenant screening independently, gathering and recording the data involved can be a lot of work. It can include:
- Searching public databases
- Using various verification methods
- Managing and complying with legal limits
- Crafting and sharing disclosure letters
- Understanding fraud patterns
- Analyzing applications for problems
If you are a property investor, you likely don't have time to chase down previous employers or landlords who may not want to divulge information for various reasons. As such, if you ensure your tenant will offer you the rent on time, you may need to outsource your efforts to a dedicated service.
Working with a third-party service, you can quickly pull down credit and criminal data once your applicants verify their information. The process beats the two-to-three business days a manual reference callback takes, according to MRI. These faster checks can then allow you to make speedier decisions regarding which tenant to choose and get your location filled after only a few days.
By partnering with a service that can get this done faster, you can then expect:
- Lower abandonment rates
- Improved tenant satisfaction with the whole leasing process
- Happier tenants during lease negotiation
- Reduced overhead due to completed leasing processes
Higher-quality tenants are often also known to apply to multiple locations at once. Resolving an application faster means someone else can't come in and swipe such an individual. As such, you can expect to be able to bring in people who are likely to offer fewer issues over time.
Total Cost Per Application
In simple cash terms, performing tenant background checks yourself will cost a lot more. You will need to handle many different areas of background checks, including (but not limited to):
- Application processing time and cost
- Credit pull fees
- National criminal database search fee
- Eviction history search fee
- Legal consultation fee
- Court access fee
- Employment verification fees
- Income verification services
Of course, not all locations will allow you to perform these. Also, Maryland has specific rules you must adhere to regarding what you can and cannot ask for. So, ensure you understand what you can do before taking action to avoid making a mistake.
You will also need to consider how you store your records and whether you need to put money aside to handle disputes or other issues.
To help with this, you may want to consider bulk processing multiple applications or charging applicants, but both of these come with their own issues. Bulk processing means you must wait longer before you send off the request, and applicants may simply choose not to pay for their background checks, forgoing the opportunity.
When working with an outsourced service, such as a property manager, they will already have access to all these systems, allowing you to pay a much lower price for their combined offering. As such, consider whether it impacts the ROI of gathering new tenants, and whether using an outsourced service can improve your bottom line.
Protecting Yourself from Liability
Both state and local statutes can often reduce the permissible questions you can ask during a background check. In Maryland, that specifically relates to:
- Being unable to apply screening questions differently between tenants
- Being unable to ask about a tenant's protected class
- Being unable to ask about arrests that did not lead to a conviction
- Being unable to charge more than $25 for an application
There are several other rules related to security deposits, refunding application fees, and so on. If something goes wrong, you also need to be able to respond to any dispute in under five days to meet the FCRA's "reasonable time" threshold and offer a clear audit trail of the process to ensure compliance with data regulations.
As such, working with an outsourcing firm means avoiding harmful clauses and preventing yourself from exposing yourself to potential liability or damages.
Embed Reports into the Rental Application Process
When potential tenants apply for a lease, you must ensure you have a straightforward workflow. As such, if you have not outsourced it, you may need to make what happens once someone applies as clear as possible. Doing this could include:
- Sending automated letters to and receiving letters from the tenant
- Sending letters to and receiving letters from a background check service
- Communicating thresholds that could lead to needing a guarantor
- How potential tenants can receive their results
- What conditional approvals are possible
- What the tenant will need to do to obtain approval
- After how long will a conditional offer or application expire
- Sending a full report of the background check to the tenant
- Creating a safe and secure digital method for sending the background check
Outsourced services will already have an effective tenant screening process that includes all of these, potentially including a secure online portal to ensure the highest level of online safety.
Communicate Tenant Appeal With Caster Management
Caster Manager is an expert in managing tenant data and landlord references, making the tenant screening process much easier. We can scale their efforts up and down to handle your rental application process from the top down. At the same time, our compliance methods can ensure you follow the requirements of your area and avoid potential danger.
We want to help you make the whole process as simple as possible. So, alongside our local Maryland landlord insights, contact us today to learn more about how we can help you build confidence in your skills as a landlord.
