Follow These Steps to Find Better Tenants.
Finding quality tenants is the best way to make the most of your rental property. A great tenant will not only always pay their rent on time, but they will treat your rental property with respect, minimizing wear and tear. Good tenants report maintenance issues as they arise, instead of letting them turn into more costly repairs. They also prevent rather than invite crime to your property.
If you are managing your leasing process instead of using property management, here are steps to ensure you are properly screening your potential tenants.
1. Run a Credit Check
A credit score is a three-digit number that predicts the likelihood a person will repay debt. You can think of rent as installment payments on the total amount paid over the life of the lease. A high credit score is a good indication that the tenant will pay their rent on time.
Running a credit check is also one way to check for evictions, another check you should always perform when screening potential tenants. A credit check will also show unpaid rent that has gone to collections, another warning sign of an unqualified tenant.
2. Verify Employment
The general rule of thumb for apartments is a monthly income of three times the rent amount. Depending on the area and the amount you are charging for rent you may want to adjust that, but it is good to have a standard policy that you can apply to all applicants, and then verify that income.
Potential tenants sometimes lie to try and get into a rental that is out of their means thinking they can make the payments but if disaster strikes the eviction process can be costly so it is better to ensure your tenant can afford the rent.
3. Criminal Background
When checking criminal background you want to get national, state, and county level reports. Why all three? Due to the volume of cases processed at each level, there might be reports that do not get shared between the county and state for example. Additionally, some databases of criminal records are updated on a set limited schedule such as once per month.
It is best to check all three to ensure you receive accurate information. A national search should also include sex offender records.
4. Social Security Validation
A social security report will give you an address history you can compare to the credit report. This extra level of searching helps you ensure that the applicant isn't using a stolen identity.
5. Bankruptcies, Liens, and Judgements
If a prospective tenant has a bankruptcy, lien, or judgment against them, it may mean you will have to take action against them in the future.
Screening for these five things will give you a better picture of the applicant's financial history and trustworthiness. It is important to remember to abide by fair housing laws when screening tenants and making decisions about whom to rent to based on that screening. As a best practice set standards and apply them equally to every potential tenant you screen, and if you need help some property management companies such as JMZ Management will help you screen your tenants or handle the management of your property entirely.
If you want to do it yourself, we have tools to help. Click the link below for your free Make-Ready Checklist to ensure your property is ready for tenants.