One of the most important things you can do as a landlord is select the right tenants. The right tenants help ensure the success of your rental business because they keep your property in good shape, follow the rules, pay rent on time, and get along well with the neighbors. Choose the wrong tenants and you could be setting yourself up for a big loss.
With careful scrutiny in a few key areas, your chances of selecting a good tenant go way up. Below are several ways to screen tenants to increase your rental business.
1. GET TO KNOW A PROSPECTIVE TENANT
Take time to meet with a prospective tenant in person. This gives you the opportunity to ask important questions like “Do you have any pets?” “How big is your family?” “What is your rental history like?” and “What are your preferences when it comes to the neighborhood?”
Try to learn as much as you can about the tenant to help you make an informed decision without coming off as intrusive. Getting too personal can cause you to lose a good tenant altogether.
2. CONTACT PREVIOUS LANDLORDS
While it’s tempting to skip this step, it’s important you contact previous landlords to get a clear picture of a prospective tenant’s likelihood to pay rent consistently. If a previous landlord tells you the tenant didn’t pay rent on time, or missed rent payments altogether, there’s a good chance he will repeat this behavior as your tenant.
3. CHECK CREDIT REPORTS
Anytime you screen a potential tenant, it’s a good idea to check their credit report. Look at the credit score but focus more so on the area that tells you how many times he or she has been late with payments or has missed payments completely. Periodic lapses shouldn’t concern you, but if the person has been consistently late or has ignored several bills, it’s a good indication he or she won’t make rent payments consistently either.
4. ALWAYS VERIFY INCOME
Just because someone tells you they can afford the rent doesn’t mean they really can. Always ask about employment and verify with the employer that the person actually works there and makes as much as he says. A good income level is somewhere in the ballpark of three times the amount of the monthly rent.
5. COLLECT A SECURITY DEPOSIT
No matter who you rent to, it’s always a good idea to collect a security deposit. You might be renting to the most responsible people on the planet, but accidents do happen. You can cover the cost of most incidents by collecting at least the equivalent of one month’s rent, which you can return after the tenant moves out and leaves the property in tip-top shape.
6. CONSIDER CHECKING CRIMINAL RECORDS
While it’s against the law to discriminate against someone with a criminal record, you can choose to not rent to certain people, especially if they act sketchy or give you a bad feeling. It’s easy enough to check anyone’s criminal record at the county or state courthouses using the person’s name and date of birth. Having said that, it’s crucial you understand the laws in your area concerning renting to people with prior criminal records.
You can check all the facts available to you, but in the end, it’s your own instincts that you should rely on. If a tenant looks good on paper but gives you an odd feeling, it’s a good indication that he isn’t the right tenant for you. Trust your instincts and use the six ways to screen tenants to increase your rental business above to ensure you rent to the right person.