Appfolio Background Checks For Tenants: A Landlord's Guide

Tenant screening is a crucial part of being a successful landlord. Finding reliable tenants who pay rent on time and respect your property is essential for a profitable and stress-free rental business. Appfolio, a popular property management software, offers integrated background check services to help streamline this process. This post will explore how Appfolio background checks work, what they include, and how to use them effectively to find the best tenants for your properties.

Using a reliable system like Appfolio for tenant screening can save you time, reduce the risk of renting to problematic tenants, and ensure you comply with Fair Housing laws. Let's dive into the details of Appfolio's background check capabilities.

What Does an Appfolio Background Check Include?

Appfolio integrates with screening services to provide comprehensive background checks. The specific reports you receive can vary depending on the package you choose, but generally, they include the following:

  • Credit Report: This report provides a detailed history of the applicant's creditworthiness, including their credit score, payment history, outstanding debts, and any bankruptcies or liens. A good credit score is a strong indicator of financial responsibility.
  • Criminal History: This search checks national and local databases for criminal records, including felonies, misdemeanors, and pending charges. This helps you assess the applicant's potential risk to your property and other tenants.
  • Eviction History: This report reveals any prior eviction filings or judgments against the applicant. A history of evictions is a significant red flag and should be carefully considered.
  • Identity Verification: This confirms the applicant's identity and helps prevent fraud. It verifies the information provided on the application against public records.
  • Sex Offender Registry: This search checks the applicant's name against national and state sex offender registries.
  • Address History: This report verifies the applicant's past addresses, providing a more complete picture of their residential history.

How to Initiate an Appfolio Background Check

Appfolio makes it relatively straightforward to initiate a background check. Here's a step-by-step guide:

  1. Applicant Applies: The applicant fills out an online rental application through Appfolio's platform. Ensure the application clearly states that a background check will be conducted and that the applicant consents to it. This is crucial for legal compliance.
  2. Request Screening: Within Appfolio, navigate to the applicant's profile and select the "Request Screening" option. This usually involves choosing the specific background check package you want to order.
  3. Applicant Authorization: The applicant will receive an email from the screening service, prompting them to authorize the background check and provide any additional information required.
  4. Review Results: Once the background check is complete, the results will be available within Appfolio. Carefully review each section of the report.

Interpreting the Results: What to Look For

Understanding how to interpret the results of an Appfolio background check is just as important as running the check itself. Here's what to look for in each section:

  • Credit Report:
    • Credit Score: A score above 680 is generally considered good. Lower scores may indicate a higher risk of late payments or default.
    • Payment History: Look for a consistent history of on-time payments. Frequent late payments are a red flag.
    • Debt-to-Income Ratio: While the credit report doesn't directly show income, consider the applicant's total debt load in relation to the rent amount. Are they overextended?
    • Bankruptcies/Liens: Bankruptcies and liens can significantly impact an applicant's ability to pay rent.
  • Criminal History:
    • Type of Offense: Consider the severity and nature of any criminal offenses. Some offenses may be more relevant to tenant suitability than others.
    • Time Since Offense: How long ago did the offense occur? A recent offense is generally more concerning than one that happened many years ago.
    • Disposition of Case: Was the applicant convicted, or were the charges dismissed?
  • Eviction History:
    • Number of Evictions: Multiple evictions are a significant red flag.
    • Reasons for Eviction: Understand the reasons behind the eviction. Were they related to non-payment of rent, property damage, or other lease violations?
  • Identity Verification:
    • Discrepancies: Are there any discrepancies between the information provided on the application and the information in the report? This could indicate fraud.

Fair Housing Considerations: Avoiding Discrimination

It's crucial to remember that you must comply with Fair Housing laws when using background checks to make tenant decisions. These laws prohibit discrimination based on protected characteristics such as race, color, religion, national origin, sex, familial status, and disability.

Here are some key considerations:

  • Consistent Application: Apply the same screening criteria to all applicants, regardless of their protected characteristics.
  • Avoid Blanket Bans: Avoid blanket bans based on criminal history. Instead, consider the nature and severity of the offense, the time since the offense, and its relevance to tenant suitability.
  • Individualized Assessment: Conduct an individualized assessment of each applicant, taking into account all relevant factors.
  • Document Your Decisions: Document your reasons for accepting or rejecting an applicant to protect yourself from potential discrimination claims.

Example: You can't automatically reject an applicant because of a misdemeanor conviction from 10 years ago. You need to consider the nature of the misdemeanor and whether it poses a legitimate risk to your property or other tenants.

Tips for Effective Tenant Screening with Appfolio

  • Set Clear Screening Criteria: Establish clear and objective screening criteria before you start accepting applications. This will help you make consistent and fair decisions.
  • Communicate Your Criteria: Clearly communicate your screening criteria to applicants upfront. This will help them understand what you're looking for and avoid wasting their time (and yours).
  • Use a Consistent Process: Follow the same screening process for every applicant. This will help you avoid potential discrimination claims.
  • Consider Multiple Factors: Don't rely solely on the background check. Consider other factors such as the applicant's rental history, income, and references.
  • Follow Up with References: Contact the applicant's previous landlords to get a better understanding of their rental history.
  • Trust Your Gut: While data is important, don't ignore your intuition. If something feels off about an applicant, investigate further.
  • Stay Up-to-Date: Landlord-tenant laws and Fair Housing regulations are constantly evolving. Stay informed about the latest changes to ensure you're in compliance.
  • Consider Rent Guarantee Programs: Some companies offer rent guarantee programs that can protect you financially if a tenant defaults on their rent. This can be a good option if you're concerned about the risk of renting to a particular applicant.

Common Mistakes to Avoid

  • Not Obtaining Consent: Running a background check without the applicant's consent is illegal.
  • Using Inaccurate Information: Ensure the information you provide to the screening service is accurate to avoid errors in the report.
  • Relying Solely on the Background Check: As mentioned earlier, consider multiple factors, not just the background check.
  • Failing to Document Decisions: Document your reasons for accepting or rejecting an applicant to protect yourself from potential claims.
  • Ignoring Red Flags: Don't ignore red flags in the background check. Investigate further to determine if the applicant poses a risk.

Conclusion: Screening for Success

Appfolio background checks are a valuable tool for landlords looking to find reliable tenants. By understanding what these checks include, how to interpret the results, and how to comply with Fair Housing laws, you can make informed decisions and minimize the risk of renting to problematic tenants. Remember to use a consistent screening process, consider multiple factors, and trust your gut. By following these tips, you can increase your chances of finding great tenants and building a successful rental business. Tenant screening is an investment in the long-term health and profitability of your rental property.