5 Simple Steps to Choosing the Right Tenants for Your Rental Property
Choosing the right tenants can be an overwhelming and confusing process for many landlords. It's kind of like you're a hiring boss, and you're interviewing a slew of candidates, hoping to find the perfect fit for your job opening. The difference is, if it doesn't work out in a job setting, you can easily part ways. When you're a landlord, getting rid of a bad tenant can be a tedious and time-consuming process. That's why it's important to find the right fit before you sign the lease.
But, how do you find the right tenants for your rental property? This article will guide you through the process, helping you find quality, long-term tenants that make the job of being a landlord rewarding.
- Know Your Neighborhoods
What kind of tenants are you trying to attract? By being able to answer this question, you'll be able to speak to your property in a way that's enticing for your ideal renters.
If you're targeting families, be ready to talk about the surrounding amenities that family life has to offer, the fact that there are plenty of attractions around, and the activities other families in the area enjoy doing.
If you're trying to attract Millennials, think about things they might like. Are there great coffee shops around? Is your property within walking distance of great restaurants and weekend activities?
Remember, your ideal tenants are searching for their ideal rental, so they'll be looking for the kinds of keywords associated with the answers to these questions.
- Run a Credit Check
It's not enough for someone to simply tell you they can pay the rent; you need to see that for yourself. By running a credit check, you'll be able to identify red flags far in advance of problems you might run into if they become your renter, such as:
- This isn't always a deal-breaker, but if an applicant has a bankruptcy on his or her credit history, it's certainly something to be aware of.
- Debt-to-Credit Ratio.An applicant could make $100,000 a year, but if they have $95,000 in debt, they don't have much left over to pay the rent. On the other hand, an applicant might only make $30,000 a year, but if they don't have debt, they're a better candidate.
During this step, you'll also want to verify income by obtaining recent pay stubsand monthly earnings. You will also want to speak with their previous landlord to see if they paid their rent on time and to make sure the kept the property in good condition. It's best to find a tenant whose monthly income is at least three times the rent you're asking for.
- Run a Criminal Background Check
This is another step that'll help you identify potential problems well in advance of dealing with them as their landlord. Be mindful of the laws, however. Some states require you to obtain written permission before you run a background check. Some states also prohibit landlords from discriminating against renters with certain criminal convictions.
- Contact References
Don't just take your applicants' words for it that their references are great; get proof, then get on the phone. You can also request references from former neighbors. Have your questions ready before you hop on the calls, so you can jot down answers.
- Did the tenant pay on time?
- Did others complain about this person?
- Did this person voice excessive complaints to you?
- Did they give proper notice before moving out?
- Did they tell you why they're moving out?
- Was there any damage or excessive dirtiness to the property when they left?
- Hire a Property Management Company
A lot of landlords don't realize they can hire a property management company to take care of these details. Not only will property management firms take care of the advertising, screening, and lease preparations, but they'll deal with the day-to-day tasks associated with ongoing tenant/landlord relationships. They offer peace of mind and a plethora of specific experience.
Being a landlord isn't necessarily easy, and there are plenty of things that could go wrong, but if you put the proper plans in place from the very beginning, you and your tenants can enjoy a long and happy relationship together.