 Carlton Sheets (famous for his real estate video and audio course) said “the profit on real estate is made at the time of purchase.” This means that if you buy too high you will never realize a profit and likely never recoup your investment. One can say the same thing about rental property: “the profit on a rental is made at the time of tenant selection.” All tenant selection begins with an application.
Rental application processing is more than just ordering a credit report. For rental owners who only do that or don’t do any screening at all, you are taking a big risk. One of the fundamental aspects of tenant screening is verifying applicant identity. Why? There are two reasons:
What Constitutes Identity? There are various ways to check the identity of the applicant. Obtain at least one and preferably two of the documents listed below, and examine at the originals:
Compare these against another item like a bill or pay stub. Before you request a credit check verify that any of these used in the application were correctly transcribed onto the application. Social Security Numbers In years past the social security number (SSN) was used as a universal salient identifier, even though the Social Security Administration (SSA) clearly warned not to use it for identification. Today that waring has largely been acknowledged and is used as a complementary piece of information, which together with an account number, verify identity and ownership. In processing an application the SSN should be used in this way. Credit bureaus and the SSA do not share their information. The SSA, however, will provide information to the credit bureaus about SSNs that belong to individuals who are deceased and numbers that have not legally been issued yet. Establishing Credit Without a SSN When renting to immigrants/non US citizens, there are certain documents that should be examined. Most will have a green card, which is NOT a social security card, but has 9 digits like a social security card. Often, individuals will use the green card to apply for credit because it has the same number of digits. If you receive a credit report indicating that the number provided was not administered by the SSA, this could be the reason or it may be a red flag signaling false identity. Many creditors (i.e. Bank of America) will extend credit to individuals that do not have social security numbers or citizen status, and will assign some other nine digit ID number in order to open a credit file. In a rental application, you are really validating the prospective tenant’s ability to pay. So, a credit history from a bank may be perfectly acceptable. Keep in mind, however, a valid SSN may be needed to find the tenant who leaves owing money. To complicate matters even more, some companies offer to sell “social security cards” to immigrants for a fee (tax ID numbers – 9 digits). These issued cards are not administered by the Social Security Administration, but will look similar to a social security card. There are only two ways for immigrants to obtain social security cards from the Social Security Administration: 1. Applying for one while still in their respective country 2. Visiting a Social Security Administration office in the United States. Cards obtained in this way are the official issue of the Social Security Administration and should be the only ones accepted. Verifying identity is key to establishing the validity of the entire rental application. Without it, the application means you are renting to a phantom. Parts of this blog were excerpted from the website of AMSTies, Inc, a credit reporting company. You may visit them at http://amstiesonline.com/ 77th Meridian, LLC is full service residential property management company. We serve Anne Arundel and surrounding counties, and parts of Baltimore City for a monthly fee of 7.7%. Why pay the 10% others charge? We save you TIME and WORRY. . . .
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