Developer · Philadelphia, PA · Member since 2019 · 30 posts · 25 votes
I’m looking to rent out my first property and am trying to do it myself (without a management company). Can anybody advise me of a good tool to screen tenants and find a good template contract? I see there are services that are free for the landlord to screen tenants and that they pass along the application fees to the tenants. Is this the way to go?
@Tuvia Goldstein What are your minimum qualifications for a tenant. Credit score of ? Monthly income 3x rent? Pets or no pets? No evictions or evictions cleared more than 5 years? No criminal activity or only nonviolent ? The one rental I personally manage I prescreen the tenants and then schedule an open house and have everyone that is qualified come. It disrupts my current tenant the least to have an open house. I verify their names and their email address so I can send them to the Rentprep to fill out the background check. I plan to switch to Coziy.co so I can also collect rent electronically. Bigger pockets has state specific leases as part of the pro package or you can purchase them. Good luck in finding the perfect tenant. Another good resource. https://www.biggerpockets.com/blog/2013/01/27/tenant-screening/
There are a few online platforms you can use that allow you to pass the cost of the tenant screening on to the tenant. I would highly recommend conducting a full tenant screening, which includes a criminal and background check, credit check, eviction history check, and an Income check.
Whichever tenant screening service you choose, just make sure it is compliant and made for tenant screening, that way you protect yourself too.
I've used Zillow, and the benefit to the applicant is that they can use the screening report for other apartments they apply for. So if they don't get selected for your apartment, they haven't "lost" their application fee money.
As for a lease, I purchased one from a local attorney. While there are plenty of free examples out there, it's a risk using something that violates your local laws.
For credit scores and income, I use 600 for credit and (ideally) 3 times for salary: ratio, but depending on the location and the property, both of those numbers may be high. I'd recommend reaching out to investors in that specific area to weigh in on those numbers.
I've used Zillow, and the benefit to the applicant is that they can use the screening report for other apartments they apply for. So if they don't get selected for your apartment, they haven't "lost" their application fee money.
As for a lease, I purchased one from a local attorney. While there are plenty of free examples out there, it's a risk using something that violates your local laws.
For credit scores and income, I use 600 for credit and (ideally) 3 times for salary: ratio, but depending on the location and the property, both of those numbers may be high. I'd recommend reaching out to investors in that specific area to weigh in on those numbers.
Rental Property Investor · NC · Member since 2019 · 17 posts · 10 votes
7y
@Tuvia Goldstein
I am a new investor as well and dove in head first. I got my first tenant in 2 weeks but had so much interest. I did all my transactions through cozy.co and also collect rent and manage the property as well through cozy. Get some rental management books off of biggerpockets to assist in broadening your knowledge about investing and management. Depending on the neighborhood, I do 620 credit score and the tenant have make 2.5 times the rent. Typically renters make the deposit equal to the first months rent. I rent out my property for $1495/month but charge $1000 deposit. If the rent was lower than a $1000, then I would do the same amount as the rent. Hope this helps!
Property Manager · San Antonio, TX · Member since 2015 · 17 posts · 6 votes
7y
@Tuvia Goldstein I screen my tenants with smartmove which once you fill in all your information you or the applicant pays for the background check and credit check. You can also send an approval or denial via email from the site. You can also use cozy for rent payments and work order requests. Hope this helps :)
I personally use cozy.co. So far I’m very satisfied.
I would highly recommend reading The Book on Managing Rental Properties by Brandon Turner. Lots of information that will help you and comes with some templates for various forms you will need to manage your properties.
@Tuvia Goldstein if you want someone to answer you have have to tag them. Use the @ sign and start typing there name. To the left of comment box names will appear double click and it will highlite the name in blue and they will be notified that you commented or need more information. Back to credit score it all depends on the class of the property. Class d (war zone) you will be lucky to get 500 credit score. My minimum is 600. You will also want to call the 2 previous landlords and check if they make their payments on time. Call their work and verify that they work there and how long they have been employed.
Real Estate Agent · San Antonio, TX · Member since 2017 · 814 posts · 466 votes
7y
Best way is to have some templates, then customize to your needs. I have use several templates, every year I edit and add more and more. Basically I started out with the Texas "default" lease agreement, then added stuff that are missing and unique to my properties.
I also have templates for Rent Application, Pet addendum, Security Deposit and Checklist move-in, move-out, Rules and Regulations, copies of HOAs Rules and Regulations, Co-Signer List, Employment verification, Previous Landlord, Application Responses, etc. etc. PM me if you need good template forms.
I use DocuSign for sending these documents electronically and has works pretty good so far. There is a cost, but you can cancel any time after you are done with the deal.
I use TransUnion for screening, it’s called smart move. Tenant pays on line and you receive the results. They will provide the letter for a denial that meets the law. They provide recommendations as well. You will need to develop your own criteria. I use the following:
Credit Score 600
Income 3x the rent
No evictions in last 5 years
DTI less than 45%
Confirm employment
Positive recommendation from previous landlord
You can develop a scoring system as well. Good Luck.
Silver Spring MD · Member since 2015 · 198 posts · 116 votes
7y
@Tuvia Goldstein Best tip I've heard is to make sure you call prospect's second to last landlord. If they are a bad tenant their current landlord will lie to get rid of them. The second to last one has nothing to gain from lying
Fort Collins, CO · Member since 2019 · 185 posts · 61 votes
7y
@Tuvia Goldstein Congrats on your first property! There are lots of free softwares and tools to help smaller landlords that provide online rental applications, tenant screening, and marketing syndication! These tools are some of the best ways to make sure you are getting reliable and responsible tenants - check out the landlord resources tab on Bigger Pockets under tools: https://www.biggerpockets.com/tools/landlord-resources.
Rental Property Investor · Tampa, FL · Member since 2015 · 1k+ posts · 969 votes
7y
I use Cozy.co. Allows you to perform background checks and credit checks and pass on the costs to applicants. They have application templates and a great rental collection system as well.
There are several management software companies for the screening tenants. They all have slightly different niches. We all vary depending what you need. Their priorities range from helping you lease, collecting rent, receiving messages from tenants and finding local vendors. I would advise you to do some research to find whom the best fit is, they all work with the same 2-3 partners whether it's tenant screening, rental estimates or renter's insurance.
Regarding your lease, it's best to pay for a local lease. You can hire an attorney or buy a template from a legal source website. Typically the management software companies have an affiliate partner as well.
Fort Collins, CO · Member since 2019 · 185 posts · 61 votes
7y
@Tuvia Goldstein I know I'm kind of late to the game, but there are definitely many tools you can do without a management company - best of all, they are usually free! On the Bigger Pockets website on the top, click on tools, and then under services if you click landlord resources there are some options for you! Here is the link as well: https://www.biggerpockets.com/tools/landlord-resources! Best of luck.