You can work hard to get your ducks in a row for your investment properties—keeping detailed records, using the rental property management software, maintaining your properties, and improving your practices. But at the end of the day, there are few ways to make your rental investor life easier than by having responsible tenants.
The quality of your tenants can make or break your experience as a landlord. A good tenant will mean you can sleep easy at night, fully confident that someone is taking care of your property and is invested in its continued maintenance. On the other hand, a bad tenant could mean expensive repairs, late rent checks, and even legal issues. But how do you know when you're dealing with a good tenant versus a potentially disastrous one? Anyone can show off for a walk-through and an application process. Your screening process needs to be in-depth enough to filter out any tenant you'd rather avoid while maintaining fair housing standards and not discriminating. Here's how to hone your screening process.
Developing a Winning Screening Process
There are many ways to filter out the renters you don't want to work with, but most screening processes following a pattern something like this.
1. Develop an Application Process
You'll want to request an application from potential renters right away. Sample applications are available all over the web, but it's important to customize anything you use to your needs. Be sure it's extensive enough that you'll have all the information you need to make an informed decision.
You'll be looking out for information like how long someone has been at their current (and previous) jobs, whether their income level is sufficient to cover rent, and whether they've provided sufficient contact information from previous landlords. You'll want to know how many occupants and pets are included in their application.
2. Run a Background and Credit Check
It's always a good idea to check into an applicant's credit and background. Look for credit history and current debt load to determine whether an individual will be able to keep up with rent. Although a bad credit score doesn't equal a bad tenant, it can be a red flag.
Use a background check to understand eviction history, criminal history, and other public records about a potential tenant. A lengthy criminal record could give you pause as well as any legal battles or evictions.
3. Contact Employers, References, and Previous Landlords
Next, you'll need to make some phone calls. If your tenant has made it through the first round of sorting, you'll want to know what others think about this individual's responsibility. In particular, you'll want to ask previous landlords about any late payments, any outstanding debts owed, damage, and neighbor complaints. You may also want to contact references and the potential tenant's current employers to get a feel for their support system and lifestyle.
Finally, you'll want to interview your potential tenant(s) if you haven't seen any disqualifying red flags so far. Keep in mind that the Fair Housing Act requires you cannot discriminate based on race, disability, family status, national origin, color, religion, or sex. In the interview, you're asking questions directly of your potential tenant. You can ask about their lifestyles, such as smoking and pet ownership, see if they plan on getting a roommate, and other pertinent questions.
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