Bad tenants, high turnover rates, as well as evictions all have a negative impact on your investment property business. As such, screening tenants is essential to the success of your rental property business. In order to get the renter, you will need to carefully scrutinise and thoroughly evaluate all prospects during the screening process. You might be wondering how to screen tenants and find responsible renters? Here’s what you need to understand about screening tenants and how it can help you identify the best tenants for your rental property.
How to screen tenants?
Not sure where to start? Luckily, we have broken down the steps required to successfully and effectively screen tenants.
To start with, set your standards and identify your preferences when it comes to tenants. After all, you do have a say in who you let stay and use your rental property. Some of the things that you can come up with in your list of standards include:
- Credit history
- Criminal record
It is important that you stick to your standards and follow them through. Your prospective tenant’s income should be at least two-to-three times their rental amount. A tenant who does not meet this standard could potentially cost you time and money in the long run. It is also important to proactively avoid tenants who can potentially lead you down the path of evictions.
Secondly, request a tenant application from all your potential tenants. A tenant application is an essential collection of a tenant’s pertinent information. Information gathered through a tenant application will help you undertake a background and credit check. Here are the important items to look out for on a tenant application.
1. Employment status
You need to ascertain that your prospective tenant has a steady form of employment and a source of income that allows them to comfortably meet their financial obligations.
All your tenants must provide verifiable proof of income that exceeds the standard rent-to-income ratio.
3. Financial status
You will need to know your potential tenant’s financial standing. This will require you to research if you tenant has any financial obligations that will impact their ability to pay rent.
4. Household size
There will also be a need for you to know your prospective tenant’s household size. This is important you can work out if you are operating within the law.
Settle for a prospective tenant who can provide verifiable personal references. The references should attest to the tenant’s character as well as rental history.
Run a credit check
There are various ways of carrying out a credit check on your prospective tenant. Whatever method you resort to ensure that you are abiding by the regulations that are applicable to your area. In the event that your potential tenant has a negative credit report, you can consider:
- Increasing the security deposit
- Requesting a co-signer
- Increasing the rent
- Carry out a background check
A thorough background check will enable you to anticipate your tenant’s behaviour. Background checks allow landlords to unearth the tenant’s past behaviour including criminal records and past evictions.
Talking to people that have had interaction with the tenant in the past allows you get information on the tenant. As such, employers and other personal references help you get a better understanding of the tenant. It is also important that you contact the tenant’s previous landlords to get a better feel for the tenant. Find out if the tenant payed their rent on time or if they breached any conditions in the lease agreement.
Interview the tenant
Take some time to have a sit down with your potential tenant so as to get a better understanding of their intentions as a tenant. Moreover, you will be able to determine how your tenant is as a person.