It’s easy to become blasé about renting out your property, particularly if you’re an experienced landlord. However, have you considered how much trust is involved when you rent to a tenant? Most tenants are complete strangers to you, but you trust them to live in your property anyway. Even when you protect yourself legally, renting to the wrong tenant can have big consequences. Renting out your property isn’t something to be taken lightly.
Before renting to a tenant, it’s extremely important to do your due diligence and uncover all the information necessary to make the right rental decision. Landlords who skip proper tenant screening procedures can quickly find themselves in hot water – both financially and legally. Avoid getting caught up in stressful legal proceedings that will drain your wallet. What information is important to receive about a potential tenant, and how can it be obtained?
1. Income.
It may be rude to discuss income in polite company, but the landlord-tenant relationship is a professional one. You must have an idea of your tenant’s income before you rent to him or her. While it may seem unlikely a potential tenant would lie about their income before signing the legal document of a lease, some people are in tough situations, and are doing what they can to avoid being homeless. While this is a very unfortunate situation, it’s also important to look out for yourself and ensure you only rent to a tenant who can afford your rent.
Most landlords will not consider renting to a tenant who isn’t making between two and three times the cost of the rent they’re asking for a property. Comfortable living is often defined as earning your rent money in just one week of work. While it’s difficult to turn away tenants who may be in a tough spot and need a place to live, dealing with a tenant who simply can’t pay the rent is not a situation you want to be in as a landlord. It often leads to legal trouble, as you may want to pursue getting your back rent. What’s more, your own livelihood could suffer if you rent to someone who can’t pay you.
Find out a tenant’s income before renting to him or her. Be sure to verify the information he or she gives you before accepting it as truth.
2. Credit history.
Income doesn’t always tell the whole story about a potential tenant’s financial situation. If a tenant makes enough money but is saddled with debt, he or she may not be able to put enough money aside each month to pay rent. In other cases, a tenant may have enough money, but simply be irresponsible or absentminded about paying bills. Waiting on a late rent check isn’t appealing to any landlord.
Looking at a tenant’s credit history can give you a better picture of how he or she manages finances. Potential tenants with a lot of debt may not be ideal choices. Unpaid or late credit card payments can also be a red flag.
3. Eviction history.
A tenant may be in an ideal financial situation for paying the rent you’re asking. However, some people are bad tenants not because of their financial situation, but because of their personalities. One way to tell if a tenant isn’t the best candidate is whether he or she has been evicted in the past.
It may seem harsh to disqualify a tenant who was evicted a long time ago, as he or she was maybe going through simple financial difficulty at the time. However, eviction processes can drag on for months, involve several court appearances, and come with a sea of paperwork. A tenant who has been evicted in the past is a risky person to rent to. Examine your applicant’s civil history to find out if he or she has been involved with an eviction claim.
If you feel your applicant was struggling with finances at the time of the claim, but eventually paid his or her back rent and is now in a stable financial position, you may consider renting to him or her anyway. Discuss the past eviction with the tenant to learn the details. You may want to contact the former landlord to find out the details of what happened.
In any case, there is no need to feel guilty about turning away someone who has been involved in eviction cases in the past. Protecting yourself is always a good choice.
4. Reason for moving.
Many landlords forget how important it is to find out why a tenant is moving. It is not included on background checks or credit reports, but it’s an important question to ask when interviewing a prospective tenant. There are many reasons a tenant may want to move, including relationships, a new job, and trying to find a dream apartment. Most tenants will have a straightforward answer when you ask why they are moving.
However, some tenants move because their relationships with their past landlords went sour. If a tenant’s response to your question seems out of place, or he or she launches into a long-winded complaint about the last landlord, this may be a red flag. Some landlords are genuinely bad. If you get a good feeling from your prospective tenant, you may try contacting this past landlord and evaluating the impression you get from him or her to find out if the tenant was in fact the wronged party.
5. References.
The best tenant screening processes always involve asking a potential tenant for references. Character references and landlord references are both very important when it comes to finding out what kind of tenant your applicant would be. Hearing somebody’s perspective on your potential tenant is sometimes the best way to find out if he or she is a good person to sign a lease with.
Screening your potential tenant is one of the most important parts of being a landlord. Finding out your tenant’s financial and civil history as well as character protects you from trouble in the future. If you’re struggling to find the right tenant, a property management company can help. The experienced professionals at Green Residential know how to screen a tenant, and can find you the perfect person to live on your property.
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