Although it can be very lucrative, buying rental properties as real estate investments carries a number of risks. Not only do you have to worry about collecting rental payments, you also have to be concerned about damage to your rental properties, as well as the actions of your tenants toward other renters and guests. For these reasons, it is crucial that you conduct criminal background checks on applicants before allowing them to move into your rental units.

A criminal background check will let you know about any criminal convictions that a potential renter has incurred, including arson, battery, and other serious offenses. In addition, it will tell you about any minor criminal charges. Knowing this information will help you make educated choices regarding the applicants you select for your rental units.

One of the most important aspects of conducting criminal background checks is that it will alert you of sex offenders that may be seeking residence in one of your properties. While sex offenders are required to update their residences with governmental agencies in most states, they do not always do this. If you choose to rent a unit to a registered sex offender, you will be required to notify your state government within 30 days of completing the contract. If the sex offender has not complied with his or her notification requirements, he or she may end up in jail, which means that you will be unable to earn rent from a unit until you find suitable tenants.

Keep in mind that while you can refuse to rent a unit to a prospective tenant on the basis of a criminal conviction, you must be careful not to base the refusal on the applicant’s status as a protected class. This means that if you allow a convict to rent a unit, you cannot deny another similar person the right to rent a unit, regardless of that person’s race, creed, religion, sexual orientation, or gender. For this reason, it is best not to provide housing for anyone with a criminal record, to avoid the possibility of having a future applicant claim that you refused to rent a unit based on a protected characteristic.