Placing quality tenants in your rental property is one of the most important components to a successful and profitable investment. It’s worth taking the time to implement a system and strategy for analyzing potential applicants. Here are some helpful principles to consider when advertising and screening for tenants.
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10 Screening Tips to Help Avoid Profit-Tanking, Time-Consuming Tenants
Set Expectations With Advertising
You can help ease the screening process by making sure that you are listing your detailed expectations in the ads that you place. Phrases such as “single families only” or “no pets accepted” should be listed, as well as the size of the home, the location and the rent amount. This will eliminate many of the calls that are not going to be the right fit for your property.
Use Applications Wisely
An application is an important part of the process of screening your prospective tenant. Regardless of the exact system that you use to choose your tenants, you need to have an application on file in case of any legal issues that may come up. This should provide you with basic information that you can use for credit or background checks. Standard rental applications can be found online and printed out.
Ensure the Ability to Pay Rent
Knowing that the tenant you are considering is able to pay the amount of rent you are asking is the first big hurdle. A good estimation to use is multiplying the rent you are asking by three and comparing that to their income. This calculates a rough estimate of how much they are paying in rent, utilities and other living expenses against what they are earning. You want to know that you are not going to suffer because there is not enough money coming in the door to pay the rent you are asking.
Check Out Their History of Timely Payments
Check the potential tenant’s credit report or ask for references from a previous landlord about their payment history. You are checking to see if the prospect pays regularly and on time. Their history of timely payments should give you a good indication of what you can expect in the future. Having to deal with a tenant that doesn’t pay on time is something that can be hard to handle, extremely time consuming and harmful to your potential income production.
Keep an Eye on Cleanliness
Make sure the tenant you are considering is good at maintaining the house. While they are renting your property, it is important that they are able to care for the overall condition of the rental property. While you will likely be responsible to maintain the exterior of the property, you need to be sure that the tenants are going to report any problems that occur. The longer a problem is left unattended, the worse the problem can become. A leak might seem like a small thing, but without repairing it in a timely manner, the leak could easily do major damage to the property and even cause exceptional mold problems that could cost a fortune to have fixed.
Verify Employment History
The longer a potential tenant has worked at the same job, the better. You want to make sure that their source of income and ability to pay the rent will last at least as long as the lease period. Ideally, you want the tenant to work for a reputable company, and it is always a good idea to check employment references.
Check Credit History
Using credit information to analyze a potential tenant is a good idea, but not necessarily the whole story. Someone may have had a job loss or medical problem that tanked their good credit, but now that they are back on their feet, they are paying regularly. A rocky economy sometimes means taking a chance on people. Do not believe solely what a potential renter tells you. It is vital that you check their credit history to get to the truth.
Focus on how they are paying their debts over the last year or two. You want to look for some obvious improvements in their recently recorded accounts on their credit record. Someone who is consistently late on other types of debt will likely be a late or non-paying tenant as well.
Perform a Criminal Background Check
Make sure to check out the criminal history of your potential tenant. Another way to pre-screen tenants is to make it obvious in your advertisement that you will be conducting a criminal background check. This can help you to avoid wasting time with phone calls that aren’t going to pan out. The last thing you need is someone dealing drugs or wanted by the police. While this may seem obvious to most landlords, it’s important to spend the time and resources to get a good background check before placing a tenant.
Check Into Their Eviction Record
Avoiding tenants with any evictions on their record is a good way to ensure that you aren’t getting a repeat offender into the building. Call previous landlords to find out if the tenants left on their own or were evicted. While there are always unusual circumstances, double check the stories before making a decision.
Go With Your Gut
While your gut instinct may work in other instances, it’s probably not best suited for placing a tenant. While you can certainly take the time to get a good feeling of the individual, be watchful and cautious as they analyze the house and ask you questions. That said, you need to combine this with what you find in the basics of your tenant screening and application process. Weigh the items together and choose wisely. The wrong tenant can be costly and time-consuming.
Landlords: What would you add to this list? Has skipping any of these steps ever lead to a tenant disaster?
Weigh in with a comment below!