Congrats! You’ve just listed your rental property and already have some responses. Now with applicants lining up, what’s the next step? How do you decide which tenant to pick?
Choosing a tenant is probably the biggest decision you’ll make when leasing a property. The right tenant can seem like a dream while a bad one can cause aggravation, stress, and potentially money.
It’s important to mention, that before the screening process begins, that you must treat each potential tenant fairly, in accordance to the Fair Housing Act, which prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions. With that in mind, avoid asking questions associated with national origin, disabilities, children, or religion.
The Perfect Applicant Criteria
Ideally, you’ll want these attributes in your candidate:
- Steady Income (making at least two to three times the monthly rent for gross monthly income)
- Steady Employment History
- Clean Criminal and Background Check
- A Decent Credit Score
- Reference From Past Landlord
- Valid Reason for Leaving Last Residence
Questions You Should Ask
Asking in person or over the phone, will give you a more natural response.
Why are you moving? This one is the tell-all, so listen carefully. You’ll want to identify valid reasons for moving, whether it’s a new job, better school system, expanding or downsizing, all of these reasons are legitimate and understandable when searching for a new place. Beware of responses that relate to financial difficulties, issues with neighbors or landlords, and most importantly, being evicted.
When do you and other occupants plan on moving in? Questioning their timing will reveal if the tenant is responsible and organized. Mentioning anything less than 30 days is a red flag, since most landlords require at minimum of a month’s notice before terminating a lease. If tenant wants to move in “today” or “tomorrow” that may signify special circumstances like pay cut, job placement, or a change in relationship status.
What is your monthly income? Most importantly, you’ll want to know if your tenant can afford to live in the property and will be making payments on time. Typically, tenants gross monthly income should equate to two or three times the monthly rent. Keep in mind, that besides knowing the tenants income, it is important to know about their debt as well. Debt may also hinder timely payments, you can find this information by running a credit check.
Can you provide professional and personal references? References will help verify if your potential candidate has maintained stable income and steady employment. If it’s your tenants first rental property, personal references will be dire in determining credibility. It’s okay to be skeptical of some, it may be an instance of a current landlord trying to get rid of a bad tenant. Call and verify tenants references.
Questions to ask former/current landlord: “Did they pay rent on time?” “Did they respect the property and neighbors?” “Why did the move out?”
Will you be able to pass a background check? The answer will be to the point. It’s simply a “yes” or a “no”. Responding with a “no” will lead you to eliminate this candidate immediately. Don’t make exceptions, a bad judgment call on this could result in months long nightmare. This either means they have some information to hide or that they know their credit score is too low to be accepted. Answering “yes”, you must also have the tenant sign a form giving permission to run a check; verbal agreement is not binding.
Attract Qualified Tenants Through a Property Management Company
If you’re looking for guidance through the process or need help attracting qualified tenants, contact Precision Realty & Management, LLC today. We perform a five-point background check on each applicant which includes a Credit Check, Employment & Income Verifications, Rental References, and Nationwide Criminal History reports on all occupants 18 years old or older. In addition to negotiating renewal leases, collecting rent and security deposits, Precision Realty & Management Company also generates monthly reports to assist you in tax advantages as a property owner.