Every landlord wants to find tenants who want to stay on their property for the long term. After all, long-term tenancies mean a stable rental income. When a tenant wants to renew their lease, most landlords jump the gun and simply write a new rental agreement for renters to sign. However, this can be detrimental to your rental business.
Believe it or not, performing renewal screening checks goes a long way. A lot can change throughout a tenancy. Even if a tenant was responsible during their initial lease, there’s no guarantee things won’t change for the worse moving forward. Screening previous tenants can go a long way in minimizing risks and helping determine whether you should keep an existing tenant.
In this article, the experts at KRS Holdings will go over everything you should know about renewal screening checks!
What Does Renewal Screening Checks Entail?
The purpose of renewal screening checks is to assess whether you should renew a lease agreement. Like in traditional tenant screenings, you want to ensure that renters are still financially responsible and trustworthy. Every renewal screening check should include:
- Credit checks to assess the tenant's financial stability.
- Rental history verification to determine whether they've been a responsible tenant.
- Criminal background checks (although this is not strictly necessary).
- Employment or income verification to ensure they can continue to pay rent.
- Reference checks with current employers and past landlords.
The best time to conduct renewal screening checks is when the current lease is about to end. This will give you time to decide whether to extend the current lease or find new renters in Northern Virginia.
The Benefits of Renewal Screening Checks
There are many benefits of performing renewal screening checks, including:
- Saving money. With a renewal screening check, you can ensure your renters still have the means to pay rent. This can help you minimize the risk of late or missed rents.
- Improving the relationship with your tenants. Renewal checks are a good opportunity to hear out any concerns they might have about the lease and make changes that benefit you both. This will go a long way in improving the relationship you’ve built with your renters!
- Reducing the tenant turnover rate. Ensuring that tenants are still financially responsible goes a long way in ensuring they won’t be leaving the property before their lease is up.
- Preventing evictions. As a landlord, you want to ensure that your renters will make payments on time and comply with the terms of the lease. A renewal screening check gives you an insight into your tenant’s finances, so you can have the peace of mind of knowing they have the means to pay rent every month.
- Reducing stress. Although it may seem like a lot of work, renewal screening checks can save you a lot of headaches in the long run.
How to Conduct a Renewal Screening Check
Renewal screenings are very similar to first-time tenant screenings. They’re even easier since you won’t need to gather as much information this time. Here’s the best way to effectively conduct a renewal screening check:
1. Request Updated Financial Information
There’s no point in renting out your home to someone who’ll struggle to make rent payments. That’s why you must check their credit score and employment status before renewing their lease. This is especially important if you’re considering raising the price of rent. If your tenant’s salary is not enough to cover the cost of rent, they might not be a good fit for your rental.
2. Review Their Rental History
When you’re screening tenants for the first time, you must contact their former landlords to determine whether they’ll be good renters. For renewal screenings, you’re the best source to determine whether a tenant is worth keeping. The best way to do this is to ask yourself the following questions:
- Did they pay rent on time?
- Did neighbors or other tenants ever complain about them?
- Did they cause any trouble during their tenancy?
- Did they follow the terms of the lease?
- Did they keep the property in good condition?
Making a late payment once or twice doesn’t mean that a renter is not worth keeping. However, a history of regular late payments or lease violations is a clear sign that a tenant shouldn’t get a renewal.
3. Conduct a Property Inspection
Your rental property is a huge investment. So, you want to make sure your renters take good care of it. One of the best ways to do this is through property inspections.
If a tenant wants to renew their rental agreement, schedule an inspection before their current lease is up. This will help you determine whether they’ve complied with the terms of the lease regarding property maintenance and care. If they haven’t, it’s best not to offer them a renewal.
4. Offer or Deny a Lease Renewal
After conducting the renewal screening check, it’s time to decide whether you’ll be renewing the lease agreement. You can choose to:
- Renew the lease as it currently is.
- Renew the lease with updated terms, such as increased rent, a different length, or additional clauses.
- Not renew the lease and send a move-out letter
Once you’ve made a decision, let tenants know in advance so they can read the new lease or start planning their move-out.
Bottom line
Renewal screening checks can help you find responsible long-term tenants, which often translates into a stable passive income and peace of mind. Now that you know what renewal screening checks entail, you can make this a standard practice across all your leases. This will go a long way in keeping your rental property profitable and safe!
Contact KRS Holdings if you need help managing your rentals. With our tried-and-true property management services, we’ll help you find great renters in no time!