One of the best ways of creating a regular income source is renting out your property. Like every investment you make, even investing in rental property comes with its share of responsibilities. The primary task, in this case, with which you need to be adept at is screening tenants. Having a good tenant is solving more than half of your rental property management problems. If you are a newbie landlord or landlady, it's essential that you know screening tenants and devise a process that will ensure that you land up with diligent tenants, who make timely rent payments and keep your property clean, without any behavioral issues that may cause problems later.
How to Screen Tenants Meticulously?
Finding good tenants is a tough job and you can't rely on chance to find them. There has to be an objective selection procedure that helps you choose trustworthy tenants and avoid potential rent defaulters who can cause problems in the future. Those days are far gone, when you could take a man on his word.
Now you need to ruthlessly dig up the past and run credit, as well as background checks on people for your own safety and your financial security. The key rule to remember is 'Trust No One On Face Value'. Dig deep and know all that you need to know about the tenant, before agreeing to sign the lease. Here are a few tips on designing the screening and application process.
State Your Requirements Up Front
Normally property managers and landlords advertise in newspapers and provide contact numbers for inquiry. It's best on part of the landlord to inform callers about payments terms, right at the point of first contact. That way, most applicants who do not agree with your lease rental and security deposit requirements would be cut out right at the start. Provide your home or office address and set a fixed time for the applicants, who do agree with your terms and conditions, to meet up with you, where you can hand over an application form to each.
Get All Essential Personal Details
A well designed application form with all the important personal details is necessary, which helps retrieve all the necessary personal information. Besides personal details, like name, age, number of dependents, social security number, Taxpayer Identification Number (TIN) and driving license details, ask for current employment details, income details, reason for moving and past bank account information. Some landlords and property managers even demand a photocopy of pay slips and recent bank account statements. Also ask for past eviction history, if any, and inquire about personal habits like smoking.
You may also ask reasons for terminating earlier lease, if any, and ask for the contact details of the earlier landlord. Honest applicants who have nothing to hide, shouldn't have a problem with your demand. Your general impression of the person and their manner of inquiry will also tell you a lot about them. Let the personal information and background check be the deciding factor, rather than just looks and manners! It's necessary that you let the applicants know that you will use the information for credit checks and background checks.
Ask For References
Another simple way of checking out a potential tenant is by asking for references. Ask for two to three references who can vouch for the applicant. By personally calling up and inquiring, you will know all you need to know about him.
Run a Credit Check
The best way of determining the 'solvency' status of an applicant is to run a background check by requesting any of the credit bureaus for the information. A decent credit score is indicative of a responsible individual who pays.
Run a Criminal Background Check
If you want to be absolutely sure about the past of a tenant, you can apply with the state police for a criminal background check, which will help you trust the person even more or reject him on those grounds.
Ensure Lease Terms are Clarified While Signing
Once you have screened the applicants according to personal details, background checks and financial status, choose the applicant who scores the best overall. Inform him and let him know about the lease signing schedule, the date on which he can move in and payment details. During the lease signing, make sure that the applicant is aware of all the terms and conditions. This prevents any future problems that may result from miscommunication.
If you follow this strict criteria when selecting applicants, you certainly increase your chances of landing up with decent tenants who don't make your life miserable! Implementing this tenant screening process can be a time-consuming task, but it's time well invested, as it saves you a lot of time later, which most not-so-discerning landlords spend in running after tenants.