application information verification

9 Replies

I am new to the landlord business and am unsure as to what I can legally ask former landlords and employers.  My property is in Kansas City, MO and I need to verify income.  Is that something I can legally ask the employer, or do I need pay stubs from the applicant?  

The applicant also has several accounts on his credit report showing up as "charge off or collection" with the amounts disputed by the consumer.  Clearly that is NOT a good sign!?  

Am I legally permitted to call the accounts listed on the credit report to find out more about what is going on there?

I have also read some of the forums here already and learned that it is necessary to verify that a listed landlord is indeed the owner of the property.  So I did that and found that the landlord was accurate, but the rent listed by the applicant is much higher than what the landlord told me.  According to many of you all, that (lying on the application) is an automatic disqualifyer.

I am desperate to rent this and get it off the books, but this is beginning to seem like too many red flags, isn't it???

Thank you for your help!

Thomas

@Thomas Hallensleben   welcome to the site!

To answer your questions:

1) There is nothing wrong with asking to see or get copies of pay stubs from the applicant if they are willing to give them to you.  One trick you can do to verify length of employment is look at the "YTD hours" and/or "YTD wages" column and do some math to determine if they've been there that long.  If the YTD wages only add up to 6 months worth, and they said they've been working there 2 years, then something doesn't add up and you don't need to go any further.

2) Charge offs or collections generally mean that someone doesn't pay their bills. There are some exceptions such as medical bills which can take a long time to get resolved by insurance companies, and also identity theft which can cause a mess on their credit report.

3) Most companies won't release information to you as a third party and only to the individual themselves.  Also some property management companies won't release information to another landlord or property management company unless you email or fax them a release from the applicant.

4) I would think that the person may have listed their current rent amount as higher than it is to show that they can pay a higher rent even if they're not.  Is your rent higher than they are currently renting at?

You say you are "desperate" to get the place rented, but you need to chill out.  Just like they say you make money when you buy, the #1 time to be the most critical is when you're placing someone in your property.  A quick buck now won't make up for thousands in damages and unpaid rent when a bad tenant gets in your place, stops paying rent, destroys the place, and you have to evict.

Try to stick to policies and rules on tenants:

- 3x rent in gross monthly income at least; some people do 3.5x or 4x.

- No evictions, or no evictions within X period of time.

- No felonies.

- Some people do no pets and no smokers policies as well.

@Thomas Hallensleben  Not sure about calling accounts listed on the credit check, but I always ask for 3 months worth of check stubs as proof of income and I call the employer to verify that they are a good employee with a stable job.

Desperation and bad tenants go hand in hand. Some of my worst nightmares were deals I have done to get some cash flow going. Trust me-the situation is NOT going to get better. So let's see, what do you already know, without even going farther-1) they don't pay their bills and 2) they are liars. To make a rather poor analogy, if you put your hand in the lions cage, and get bit, it's not the lions fault; that's what they do! Take the known loss, and save yourself work and headaches and say no thanks!

You all are confirming my gut feeling on this!

To answer Dawn: the applicant listed the rent as almost what I am asking, while it actually was quite a bit lower than that.  I had the same suspicion as you about trying to show ability to pay, which, according to his listed annual income he would have without a problem.  (He easily meets the 3x rent guideline, if I can verify that.)

So how do find out about evictions and felonies?  I suppose felonies are public record, but where do I look for evictions???

Welcome Thomas!

@Dawn Anastasi  makes great points!  I typically ask for pay stubs and I have a release on my application that authorizes employers and landlords to give me the necessary information.  Some won't provide much information even with the release, but everything you can get helps.  I would also add that you really need a standard set of criteria for all tenants (not just for income, but credit score, debt-to-income, rental history, etc).  This protects you from discrimination claims.

Criminal History

I always run a national background check through an online service.  

Eviction Hisory

You can check Jackson County court records here.

Johnson County, KS has the same information here

I always ask for at least the last 2 landlords' contact info.  I always call both, but I assume the previous landlord is a more reliable source than the current landlord (the current landlord could be trying to pass his/her problem tenant to you).  By the way, I usually check that the landlord's name and contact information matches the owner of record for the property.

Hope this helps!  Best of luck!!

Justin Rollheiser

Originally posted by @Thomas Hallensleben:

You all are confirming my gut feeling on this!

To answer Dawn: the applicant listed the rent as almost what I am asking, while it actually was quite a bit lower than that.  I had the same suspicion as you about trying to show ability to pay, which, according to his listed annual income he would have without a problem.  (He easily meets the 3x rent guideline, if I can verify that.)

So how do find out about evictions and felonies?  I suppose felonies are public record, but where do I look for evictions???

 For MO criminal hisotry without cost to you, and quick look-up:

https://web.mo.gov/doc/offSearchWeb/search.jsp

Put in the applicant's Name. From the results, Click on the  DOC ID links that match. Look for Active Offenses or Completed Offenses. Google the list if you can't tell what they are... on my first random search,... e.g. DIST DEL MANUF CONTR SUB;POSS CONTROLLED SUBSTANCE-FELONY(2 CTS);TAMP 1ST W SERV OF UTILY;STEALING OF A MOTOR VEH-1ST OFNS(5 CTS);RECEIVING STOLEN PROPERTY. Verify the name against the Date of Birth, so you eliminate the false matches. It's still not 100%, but 99.99%. You can quickly weed out the 'no way' applicants.  Always do a full tenant screening when you (and they) are ready to commit to a lease.

This is a lot of great info and tips!  Thank you all so much!  I have my work cut out for me...

@Thomas Hallensleben

The advice above could not have been said any better!  Due diligence is the key to future issues.  I have been there before... I have renovated a whole house, rented it, and then the tenants ruined it.  It took me another 3 - 4 months to recover.  Not only was the damage extensive, but the months of having the house sit vacant was lost income as well.  Bigger Pockets (along with others) has a tenant screening capability listed under the resources tab.  You set up your parameters for acceptable tenants.  The applicants input their data into the system and you are sent a report, which will give you an idea of whom you are dealing with.  Trust me when I say... It is better to have a vacant house, rather than a bad tenant.  Do not let your emotions and desperation dictate your future.

Good Luck!

Gerald Thompson

Project Manager

Grasslands Property Solutions, LLC.

816-659-2352

[email protected]

Is anyone aware of a sample Release statement?

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