How to Verify Tenant Income and Employment
As soon as you have a tenant’s completed rental application, you should reach out to the tenant’s references. In this chapter, we’ll discuss when and how to reach out, as well as what to ask a tenant’s employer.
Landlords who spend time reaching out to references end up learning quality information about a prospective tenant. This information educates your decision whether or not this applicant will:
- Pay rent on time
- Take care of your property
In this chapter, we’ll answer common landlord questions about tenant references:
1. When should you reach out to a tenant’s employer?
You should reach out as soon as you have the completed rental application. When you consider the tenant turnover timeline (shown below), you can see that most tenants reach out about 60 days before move-in day.
By the time you have the rental application, you’ll need to keep the process going in a timely fashion by reaching out to references as soon as possible.
2. How should you reach out to a tenant’s employer?
You can email or call a tenant’s employer. The benefit of emailing an employer is you can send a quick templated email with some personalization. This saves you time. However, people often ignore emails or the email gets lost in their inbox.
A phone call is a quick way to reach someone. Plus, with a phone call you can read tone of voice. We recommend verifying who you are speaking to because in cases of a tenant scam, the tenant will enter a fake phone number instead of a real employer.
Here’s an example script to help you get started:
“Hi, can I speak to [reference’s name]? I’m calling in regards to [tenant’s name]. [He or she] is applying to rent my property and I wanted to verify some information. Do you have a few minutes to chat?”
If you’re talking on the phone, you can assure the employer that the questions will only take a few minutes.
3. What questions should you ask a tenant’s employer?
Whether you’re emailing or calling, here are the important questions to ask:
- Can you confirm that [tenant’s name] has worked for you since [date of employment]?
- What does he or she do for the company?
- Can you verify that he or she makes [salary amount]?
- Is [he or she] a responsible employee?
Additionally, if you are following up with previous employers, you can ask why he or she left the job.
4. What are some red flags to watch out for?
- The tenant lied about employment or salary
- The tenant provided a fake reference
- The tenant’s employer had negative remarks about the tenant’s attendance, performance, or behavior
5. What if your tenant’s employer doesn’t reply?
If you don’t get a reply from a tenant’s employer, or they refuse to answer your questions, then you can always rely on the tenant’s credit report to verify income. This is the benefit of having a thorough tenant screening process- you don’t have to solely rely on the employer reference for this verification.
6. What if the employer refuses to say anything?
Sometimes an employer will feel unsure if he or she can trust a caller, which is understandable. It’s also possible that the employer might say ‘I can’t release that information’ in regards to income level. To respond to this, you can send a copy of the tenant’s signature verifying you have permission to follow up with references.
Keep in mind that employers often fear lawsuits. In this situation, a tenant could sue an employer if the employer says something to cause the tenant to be unfairly rejected.
This is why some employers may not reply or will only provide minimal information. They will sometimes only verify, “yes, [he or she] works here.”
If an employer doesn’t answer your questions, then this shouldn’t be construed as a red flag on the part of the tenant. It’s ultimately the employer’s choice whether he or she discloses any information about an employee.
Remember, reaching out to employers is an important step to follow, but it’s not the only way to verify income. You should also have the tenant upload a W-2, pay stub, or offer letter in your rental application. And you should also require a tenant credit check.
7. What if a prospective tenant gave you a fake reference?
A fake reference is a huge red flag. It’s possible your tenant is trying to hide his or her income level or is falsifying employment.
In more extreme cases, it’s a sign of tenant fraud. Here are five tenant screening scams and how to avoid them.
At Rentalutions, we occasionally hear from our landlords about mistakes they’ve made in the past. Below is the story of a landlord in San Francisco who rented to a fraudulent tenant:
The landlord did an abbreviated version of tenant screening, which he acknowledged was his first mistake. Instead of running a tenant credit report and background check, he used the credit report the tenant handed him. He then called the tenant’s employer and spoke on the phone with someone who verified the tenant’s employment. He said, “Everything sounded good, so I assumed this tenant checked out.”
The landlord’s second mistake was handing over the keys to the tenant at the lease signing. We recommend never handing over the keys until the security deposit or first month’s rent is actually in the bank. The best way to do this is to collect rent online.
After the tenant moved in, he never paid rent. It was at this point that the landlord realized he had made a big mistake. He even questioned if the tenant’s employer was legit, or simply a friend who was in collaboration with the tenant.
In this case, the landlord didn’t screen the tenant well enough. To double check if an employer is legit, we strongly recommend digging deeper. You can verify the employer’s identity on LinkedIn and by researching the company.
- Find Quality Tenants
- Screen Tenants Effortlessly
- Collect Rent From Tenants
After contacting a tenant’s employer, make sure you’ve taken thorough notes. Every step of your tenant screening process should be documented. If you emailed an employer, hold onto the emails as documentation.
Remember, if you spotted red flags during this step, you should not move forward with this applicant. If you suspect the reference is fake, or if the tenant lied about employment or salary, then you should decline the prospective tenant.
If everything checked out, then you should reach out to a tenant’s current and prior landlord.
Also published on Medium.