Hi Guys,

I have got 2 or 3 applicants for my rental property in Delaware. I was using smart move online form which gets the background on criminal, credit and income information from the tenant. I would like to know what are the top 3 things you would look for to decide an applicant over the others? Are there some red flags which I need to ask or check for in evaluating the application?

Thanks

Buyan

Doing the in person interview you evaluate personality. This is very difficult in many cases since the worst tenants put on an act. You want to find out what they have lied about on their application. Red flags are overly eager, offering to do repairs, offering advance rent payment, inability to pay FMR, deposit, LMR in advance in full, negative comments about present landlord, needing to move in less that a month.

Always contact their previous landlord, if they don't have one reject their applicayion.

I place a great deal of emphases on credit score since it is a measurement of financial responsibility and financial planning.

I do not accept couples renting their first property together, friends sharing rent, applicants from out of town, credit below 650, less than 2 years employment, pets.

If you have any restrictions in violation of fair housing do not bring it up simply find more qualified applicants. It is always important that you set firm screening standards and never waver. Biggest mistake new landlords make is working to accept a applicant that does not qualify.  As soon as you find a issue stop screening and move on to the next applicant.  Your goal in screening is to find reasons to reject. For those you can not find reasons to reject you choose most qualified and best fit for you as their landlord. 

Typically i use a 

Minimum credit score (your type of property will dictate the min for you). 

Income 3 times the rent. 

No evictions

No cats ever

No dogs unless they pay a non refundable fee and monthly pet rent. (If you make it enough it will discourage them from having them)

Iron clad lease to ensure rules are followed and rent is paid 

Automatic rental payment is required. 

They Must not exceed any housing requirement for the city county or state (too many people or adults or whatever in the unit)

For credit score I look at things like past due balances, what they were for and when they occurred.  No one thing would be a show stopper. But a pattern of going nuts at Christmas on a credit card then not paying it off is a big red flag.  

Heck you could flip a coin at the end.  No matter what they are on paper or even in person, you are dealing with people and people are unpredictable.  I think of it as a odds game.  I stack the odds in my favor and hope for the best.  Having multiple units helps smooth it out over the long term in my opinion.  

Thanks Guys for your quick response.

What part of Delaware? This makes a huge difference in how you screen. 

Originally posted by @Buyan Thyagarajan :

Hi Guys,

I have got 2 or 3 applicants for my rental property in Delaware. I was using smart move online form which gets the background on criminal, credit and income information from the tenant. I would like to know what are the top 3 things you would look for to decide an applicant over the others? Are there some red flags which I need to ask or check for in evaluating the application?

Thanks

Buyan

I sort of disagree with @Tyrone Jackson . I don't think location matters a whole lot unless your business model is to target people who couldn't pass a background, criminal, or credit check. I'm going to assume that since you're using Smartmove that you aren't working with that tenant base. And then in my opinion it's a lot more cut and dry than people realize.

Therefore I recommend that you read this blog post by @Brandon Turner . It's VERY comprehensive about what to look for when screening tenants. 

https://www.biggerpockets.com/renewsblog/2013/01/2...

@James Masotti  I'd imagine the tenant pool In Compton Village, Wilmington is much different than Hockessin. In that case you want to tailor your tenant evaluations to the people who are applying. Especially if you're doing Section 8 rentals. You can still use certain kind of software even if the tenant pool is not excellent. 

Originally posted by @Tyrone Jackson :

@James Masotti I'd imagine the tenant pool In Compton Village, Wilmington is much different than Hockessin. In that case you want to tailor your tenant evaluations to the people who are applying. Especially if you're doing Section 8 rentals. You can still use certain kind of software even if the tenant pool is not excellent. 

The tenant pool doesn't matter. Having 3x income to cover rent is a rule no matter where they are. I have a tenant who is 100% rent covered by WHA. She has a clean background. Therefore she qualifies for 3x income because 3x of $0 is still covered and her background is good. 

If you're willing to rent to a tenant with felony convictions why does it matter if it's a $600 a month rent of $1200 a month rent? You more than likely still have the same risk from a cashflow and headache perspective. 

I think it complicates things to have different criteria for different types of properties. You either accept that in your business you're going to allow certain kinds of headaches or your not. If one of the headaches you want to accept is complexity than by all means create a differentiated criteria.

I don't want that headache.