Steps To Finding The Best Tenant for Your Property
Finding a good tenant for your rental property can be challenging, but with the proper background check and research on the tenant can bring down your odds of having a “trouble tenant”. Here are steps that can be taken to eliminate your odds of having to deal with “bad” tenant.
Meet the applicants in person – When you show the rental unit, meet everyone that will be living in the space for rent.
Everyone must fill out an application – Make everyone over 18 years old fill out an application and pay an application fee. The application fee is very important. If they are not willing to pay an application fee, then they are not serious about renting the unit. It will also offset your cost for the credit, criminal, and eviction background checks. It will also pay you for your time spent processing the application, calling previous landlords, and verifying employment/income.
Call all previous landlords for the previous 5 years – It is very important to call the landlord before the current landlord, because the current landlord could be telling you that they are a good tenant, just so they move. The previous landlord has no incentive to lie.
Verify all income – DO NOT take an applicant’s word for how much they make. If they cannot verify their income, then you cannot count it as income. Asking for an additional security deposit monies, is not uncommon in these situations. Tenants that receive cash income, can also offer to pre-pay rent for a few months in advance. Another option can also be a co-signer.
How Much Income Should they make? – ONLY accept an applicant(s) whose total household income is 3 times the gross rental amount per month. If they make less than this amount they will almost always fall behind in rent. Life circumstances happen and it has been my experience that the tenant MUST make at least 3 times the rental amount per month to be able to afford the rent.
Purchase a Background Check – Pay for a background check that includes a Criminal Background Check, Eviction Check, and Credit Check. DO NOT skip this step, even if you believe that the tenant would be the ideal tenant and you have verified income.
Any Previous Evictions? – If there is an eviction on their record in the last 10 years, REJECT the applicant no matter what!
What Credit Score Should I accept? – The credit score is up to you. If it is a low score below 600, then I would evaluate how many outstanding balances there are and how many late payments they had in the last 24 months.
If there is a Criminal Record? – Criminal Background; again this step is up to you. If there is a criminal background, what type of crime has been committed, how long ago, and did they disclose it on their application?
Your comfort level – The bottom line is, you must be comfortable with the applicants that you accept. If you get a bad feeling about a tenant, then it is your right, not to accept them. You will be having a long term relationship with this person(s). If you do not feel like you would get along with them, then do not accept the applicant.
There’s no luck in selecting a good tenant. Make sure you follow all of these steps to ensure a positive business relationship with your tenant. Please feel free to reach out to Skyline Realty & Property Management with any specific questions. There are always variations throughout the rental market. It’s always beneficial to consult a real estate professional, who specializes in property management, before making any decisions.