First rental property

[Nick Fontana]

Hi everyone, I wanted to reach out because I am 25 years old and finally got my first real estate property in 2023. I'm very grateful to have completely saved up money myself to afford my house with no assistance. I had initially planned on using Airbnb to earn income but it's been very slow and hasn't got many booking so I think I'm going to turn it into a long term rental. Does anyone have any advice so I don't make any mistakes with my first potential tenants that move in? Right now I'm covering all the expenses for the property so if I have a renter it would help cover the mortgage and expenses. If anyone has any advice for long term rentals & using this first property to turn it into more properties or even a multi family home I would really appreciate it!

[Michael Smythe]

@Nick Fontana copied from our website, but the easiest way to answer your question:

Robust Tenant Screening

A bad tenant can lead to thousands of dollars of losses via unpaid rents, legal fees and property damages. We’re one of the few property managers that require W-2’s and a bank statement and we go way beyond the traditional, “income must = 3x rent” qualifier.

Below is more information about what our Applications Department does to screen applicants and find the best tenants possible for your property.

1. Required Info

   We require the following from each applicant over the age of 18, that is not a dependent of another applicant (as evidenced on a tax return):

   • Copy of acceptable state picture ID
   • Recent YTD paystub
   • Recent W-2
   • Recent Bank Statement, all pages, no info blacked out
   • Recent tax return if self-employed

   Applicants are often slow about turning this information in, asking us why we need it and then taking several days to submit. Then they complain that our process takes too long!

2. Credit History

   Many companies use credit summaries, but we find these rarely tell the whole credit story. So, we obtain a full credit report and review collections, chargeoffs, age of credit accounts, active accounts, etc. to build an overall credit evaluation.

   FICO Score	Pct of Population	Default Probability
   800 or more	13.00%	1.00%
   750-799	27.00%	1.00%
   700-749	18.00%	4.40%
   650-699	15.00%	8.90%
   600-649	12.00%	15.80%
   550-599	8.00%	22.50%
   500-549	5.00%	28.40%
   Less than 499	2.00%	41.00%

   Source: Fair Isaac Company

3. Public Records

   We also obtain data from national databases about evictions, convictions, and sex-offender histories. These all require applicants to submit an acceptable Letter of Explanation addressing each specific issue and occurrence.

4. Rental History

   Because a current landlord may say anything to get rid of a bad tenant out of desperation, we also require information for the previous landlord of all applicants…

5. Analyze Income

   Many landlords require a month of paystubs from applicants and just use these to calculate a monthly qualifying income…

6. Employment Stability

   Unless an applicant has exceptional credit, we strive to determine their stability of employment…

7. Assets

   We are one of the few management companies that requires a bank statement as part of our application process…

8. Letter Of Explanation

   Any time there are credit issues or we discover an inconsistency, we require a written letter of explanation (LOX)…

9. Underwriting

   Traditionally, landlords have only looked at the income of applicants…

10. Approval

    Once an applicant is approved, we require a nonrefundable Holding Fee to make sure they are serious…