When your rental property is vacant, you are naturally anxious to get a new tenant in place quickly to ensure that rent will keep coming in. Too many landlords learn the hard way that a hasty decision and poor tenant qualification process can lead to big problems down the road. Rent delays, property damage, higher turnover, legal issues, and eviction risks are all possible.
Finding and placing a tenant quickly is important to your bottom line. But, you want to make sure you find and place a good tenant who will pay rent on time, follow the terms of your lease agreement, and take care of your home.
At Specialized Property Management, we have been managing rental homes for more than 35 years. We have learned how to find the best qualified tenants for a rental home. Today, we’re sharing seven important tips for finding more reliable tenants.
Consistent Application Process
All landlords are anxious to rent their property out quickly, but don’t hand over the keys to just anyone. You need to require an application of every resident who is 18 years of age or older. You need to provide a paper or online application and a way for prospective tenants to submit supporting documentation such as pay stubs or bank statements. In addition to providing an application, you should also have a written set of application criteria. It’s better for you and your applicants if they know what you’ll be screening for. If the potential tenants don’t meet your requirements, they’ll save money on an application fee and you’ll save time screening an applicant who wouldn’t qualify.
Verify the Applicant’s Income
You want to make sure your tenant can afford to pay rent every month, so make sure income verification is a part of your screening process. Ideally, your tenants will earn at least three times the amount of your rent. This means that if your rent is $1,000 per month, the tenants can demonstrate that they earn $3,000 per month. It’s perfectly acceptable to combine the income of all tenants living in the home. So, if you’re renting to a couple with two incomes, their combined earnings should meet the threshold of three times the monthly rent.
There are several ways to verify that a tenant earns what he or she claims. You can call the employers and ask for salary information. You can require your tenants to submit pay stubs for the last month or two months. If your applicants are retired or self-employed, you can ask to see copies of tax documents or bank statements. Don’t skip this step. I you rent your home to someone who cannot afford it, you’ll be chasing down late rent every month, and you might ultimately need to evict.
Check Credit and Financial History
A credit check is essential when you’re screening tenants for your property. While poor credit is increasingly common, you can always ask applicants for details concerning negative credit issues. Find out why payments were late or debts remain unpaid. If they are willing to put an explanation in writing or demonstrate that they are working on repairing their credit, you can probably be sure that they will be conscientious with rental payments.
Sometimes, medical bills or student loans can be overwhelming, and it doesn’t mean that the applicant is going to be a bad tenant. Look for evidence that they pay their bills and try to keep up with their financial responsibilities. You want to be careful of tenants who have outstanding debts owed to former landlords or management companies, and you never want to rent to someone who has an eviction. Check nationwide eviction records to be sure.
Explore a Tenant’s Rental History
One good way to find a reliable tenant is by asking whether they were reliable in the past. We recommend that you ask for landlord information for the last two years, at least. Talk to current and former landlords to find out whether they were good tenants or difficult tenants. Some of the things you can ask might include:
- Was rent paid on time?
- How often was it late?
- Was any property damage left behind?
- Did the tenant receive the full security deposit back?
- Did the tenant give proper notice before moving out?
- Were all the terms of the lease followed?
- Did you ever get a bounced check or a notice of insufficient funds?
- Did the tenant have pets?
The most important question you can ask a former landlord is this: Would you rent to this tenant again? The answer will tell you everything you need to know about whether this applicant is a good tenant for your property. Not a lot of landlords bother to conduct rental references, and we think this is a mistake. It’s a great way to find out how a tenant has behaved previously, and a good indication of how they will behave when they’re renting your property.
We recommend you talk to at least two landlords. If their current landlord is desperate to get them out of their property, they might not give you an accurate representation of what it’s like to have them as tenants. A landlord from the past won’t have any reason to avoid the truth.
Conduct a Criminal Background Check
A background check needs to be part of your screening process, and it should be thorough. Make sure you’re checking criminal records from across the country. You want to eliminate any tenants with a history of drug convictions or violent crimes. We recommend that you check the sex offender database and avoid renting to anyone with a predatory past. Placing a tenant with a history of violence in your property will not only endanger the condition of your home; it might put your neighbors in danger, which can create additional liability concerns for you.
If you don’t have access to national crime records, be sure to work with an Orlando property management company or a business that can conduct safe and legal background checks for your rental property. This is an important step in finding a good tenant.
Check References and Social Media
Always talk to references and do your due diligence when you’re checking out a potential tenant. You want to talk to landlord references, of course, and you can also get a good sense of a person by conducting employment reference checks. If the tenant’s employer has positive things to say, you know that you’re getting a reliable person and you also know that you won’t have to worry about the tenant being fired or losing a job anytime soon.
Beware of tenants who can only provide references that are family members and friends. These are not impartial references, and they won’t tell you much about your potential tenant’s true character. Check social media postings as well. For example, if you’re considering a tenant who claims to have no pets but you see tons of pictures of that person with her two large dogs, you may have to do some further investigating.
Thorough reference checks will give you a better idea of what your tenant is like, and you’ll have little reason to worry about property damage or unpaid rent when people are willing to vouch for the prospect.
Comply with Fair Housing Laws
It’s extremely important to comply with all fair housing and anti-discrimination laws when you’re marketing your home and conducting your screening process. This is an easy area to make mistakes. You might not realize it, but advertising that your property is close to churches or perfect for a single professional could violate fair housing rules. You need to understand the protected classes outlined in the federal fair housing laws, and you need to ensure that your marketing, showing, and screening processes are consistent and well-documented. Otherwise, you could face expensive penalties and fines.
The Fair Credit Reporting Act is also important. If you deny an applicant, you have to include certain language in the letter that you send explaining why the application was turned down. You also have to be careful of discriminating against people with disabilities. For example, a service animal or an emotional support animal cannot be treated as a pet. That means you cannot deny a tenant with a service animal based on your no-pet policy and you cannot require a pet deposit from someone with a support animal.
At Specialized Property Management, we are experts in placing the most qualified tenants into our Orlando rental property. Our careful and consistent screening process includes credit, employment, rental history, criminal and terrorist background checks. Plus, we do all of this in strict compliance with all applicable laws and ordinances.
With our screening process finding and placing only the best tenants, our clients and their cash flow are protected. We want to preserve the condition of your investment and protect you against any liability. That’s what good tenant placement can do for you.
Put our experienced team and proven process to work for you. Contact us at Specialized Property Management if you have any questions about tenant screening and placement. We’d be happy to help.