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The difference between a good tenant and a bad one can be thousands of dollars, hours of your time, and lots of frustration. As a landlord who owns or manages rentals, perhaps the single most important thing you’ll do is choose tenants for those properties.
But how do you choose the right renters?
It’s easy to say that it all comes down to a renter’s ability to pay, but the truth is that it goes far deeper than just that. When you have the right tenants, your rental business becomes more successful, more lucrative, and easier.
What isn’t easy is knowing how to choose tenants who will take care of the property, pay on time, and be easy to work with.
Your task to find a great tenant begins with you; you must set the right criteria for your rental and your ideal tenant. What do you want from the tenant-landlord relationship?
Set criteria that a tenant must meet in order to rent your property, then stick to those. What lifestyle requirements will you include? What income should your renter have to afford the rental? Will you allow pets? How about smoking? Will you accept renters who receive rental assistance?
Having solid answers to these types of questions will make your job of finding a great tenant easier and more effective. Other great criteria to consider include the following:
When you set criteria for tenants, you can filter out the ones who don’t meet them right from the start, limiting the time you spend going through applicants who aren’t up to your standards. It’s your property, and you deserve tenants you’re comfortable leasing it to!
Your rental listing description should let prospective renters know what the process will be like if they want to apply to live in your building. Make it clear from the start that they must fulfill certain criteria and perform certain duties — for example, completing a background check or authorizing a credit report check.
Setting expectations and making them known right off the bat will help filter out people who aren’t willing to do as you request. This can help you ease some of the “necessary evils” that can come with renting out a property. It’s better to have them turn their attention elsewhere before you spend any of your time on their applications.
Knowing your “deal breakers” ahead of time can save you a lot of time and effort and make the process of finding a tenant easier and more efficient. You can make a list of reasons to accept tenants that include things like:
You can also decide to deny tenants for reasons like:
In addition, you can decide you’ll deny anyone who doesn’t make you feel confident in their ability to afford the rent. This can come about because of an income that isn’t high enough, a rocky rental history, or both.
Do be aware of fair housing laws and ensure you’re not denying anyone for reasons that go against those laws. They vary by city and state, so check the laws in your area to ensure compliance. For example, some places do not allow landlords to screen based on criminal records at all. In other areas, there are no such restrictions.
While it’s true that you can’t get to know a person 100% by having a quick meeting with them one time, it’s also true that first impressions can tell you a lot. When you show your property to a potential renter, take the time to ask them questions. This is a good opportunity to gain some insight into what kind of renters they are.
Pay attention to whether the person is friendly and conversational, if they meet your lifestyle requirements, and if they show up on time. Do they appear to take care of themselves? If they do, chances are good they will take care of their rental home to the same degree.
Don’t hesitate to ask about their rental history, their work, if they have pets, etc. The more you learn about them during the showing, the better you can determine whether they fit your property well. It’s better to take extra time on this now rather than spend time with eviction proceedings of a bad renter later. This can help avoid issues with tenants in the future.
Your rental application should be your number one tool to get as much information as possible on anyone interested in renting your property. Important information to collect on an application includes:
You can also choose to require additional information if you want a specific length of time accounted for with employment or rental history. For example, on the application, you can request information on previous employers if the applicant hasn’t been at their current job for a specified length of time (chosen by you).
In addition, there are four very important additional questions you can include on applications to make your tenant screenings more efficient:
Assuming you receive truthful answers to these questions, you can decide quickly whether you want to pursue the potential renter further by asking additional questions or not. You can even add a sentence in the application stating that answering “yes” to any of the following does not automatically discount an applicant from being accepted.
More than a few renters out there assume that landlords don’t actually check up on things like past rental relationships with tenants or job references. Make sure that you do! Contact employers to verify income and employment status. Run credit checks and background checks. Learn about past behaviors from previous landlords.
Use the internet to your advantage; you can Google certain information, check LinkedIn regarding their claims of employment, and the like. Whenever you need to find the best tenant for your rental property, doing a lot of legwork can make your experience go smoothly.
While it’s understandable that you want a tenant to move in and start paying rent as soon as possible, be careful not to be in such a rush that you skip over critical checklist items. Doing so can cost you dearly if the tenant you choose falls short of abiding by the rental agreement down the road.
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