Finding the right tenant for your rental property can be a stressful process. You are making at least a year-long commitment with a renter that can dictate whether the rental experience will be a breeze or a headache.
In a study reported by Bloomberg and done by the Census Bureau, it was found that in June of 2022, 8.4 million Americans were behind on their rent. This number represents 15% of renters and their inability to either pay in full or on time every month.
The debate over these statistics speculates that inflation and the end of the national eviction ban has resulted in more renters struggling to keep up with their bills. Although the housing market has decreased, compared to the 2020 and 2021 surge, rental prices have continued to remain over 12% higher than the previous year.
By being aware of the struggle that is taking place in society at large with increased inflation rates, resulting in lower purchasing power, it is even more important that you find a qualified tenant for your property.
There are a number of components that you can assess when determining if you have found a qualified tenant. These characteristics can help a landlord decide whether or not a tenant would be a good fit for the property.
Before accepting a tenant, there are several criteria that should be assessed. These include:
One key indicator that can help determine if your potential tenant will be reliable is to ask if they have had any past evictions or eviction notices. While you can ask on an application form if they have had an eviction, you can also run a public records check to verify their eviction history. Their response can help you to determine if they are honest and trustworthy as well.
As a landlord and perhaps a member of the community in which your rental resides, it is important that you keep your property and community safe. This can help to avoid any legal issues at your property. As such, running a background check on your potential tenant is important. A background check typically costs money, but the applicant would realize this cost when they submit an application fee to be determined as a viable tenant.
Nearly 20% of rental applicants possess a criminal history; this background check can be essential for securing a safe tenant. With such a high percentage of renters having a criminal history, it may be necessary to consult with a legal counsel and assess the type of crime (both nature and severity), the recency of the crime, and also any rehabilitation that has been done. These factors can better aid you in making your decision.
A credit report is another aspect of the application process that can help a landlord determine if the applicant is in a good financial position. A credit report shows different debts like credit cards, student loans, car payments, and other financial responsibilities. It can also show bankruptcies. Seeing a credit score can help a landlord determine if the outstanding debts owed would make it difficult for a future tenant to fulfill their financial obligations.
When determining if an applicant is capable of paying rent, their income and employment must prove stable. Stable employment for at least a year and two months of paystubs are suggested to determine if your applicant has the necessary funds and resiliency to pay rent. Don’t forget to call their current employer to verify their status with the business.
Your application should also request references. These references can help you determine the caliber of person you would be renting to. Typically, these references are friends, peers, co-workers, or community and church leaders.
By asking for a rental history and calling past landlords, you can ascertain if there have been any issues in renting to your future tenant. They can give you an inside look into whether your renter is reliable, easy to communicate with, and cares for the home they reside in.
While it is not suggested that you have a formal interview with an applicant, meeting them when they tour the property can help give an adequate indication of the type of person they are. Are they respectful, organized, and a good communicator? These can all be determined by how they conduct themselves when making the appointment, if they arrive on time, and if they have the proper paperwork ready to submit.
This includes whether or not your applicant smokes or has any pets, as these can affect the quality of your home. Lifestyle does not include assessing a person’s race, ethnicity, sex (including orientation and preferred gender), family status, or disability. These factors are protected from discrimination in the Fair Housing Act, and if violated can result in legal action.
Before allowing a renter to take possession of the premises, always make sure they have adequate funds. This is part of the reason why some landlords may ask an individual to provide earnest money to reserve the property, as well as a deposit. In some cases, landlords will ask for first and last month’s rent.
Make sure the check clears and the money is available, or ask for a cashier’s check. This will ensure that the money is backed by a bank and that your renter has the ability to meet their financial obligations.
Being selective in the renter application process will help you find the best renters for your property. This process should not be rushed, as it can determine whether or not your asset is being properly utilized or if it turns into a financial fiasco. A well-written rental listing can attract a prospective tenant who meets your criteria and aligns with your expectations. Additionally, tenant screening should involve checking the rent-to-income ratio and contacting the previous landlord to verify the applicant’s rental history.
To better aid you in finding the prospective tenants and dealing with the headache of the process, work with a property management company that can alleviate the pressures of the application process. They have a streamlined method for selecting the right candidates for you, ensuring compliance with the Fair Housing Act while helping you secure a lease agreement with good tenants who can pay the monthly rent on time.
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