As an investor, your primary goal should be to find quality tenants to rent your property. While that might sound obvious, it’s remarkable how many landlords miss subtle cues to the potential suitability of applicants. Given this is an area in which emotion can easily cloud judgment; it’s always best to keep interpersonal interactions on a strictly professional basis.
To minimize problems with renters, here are the top eight things to look for when screening tenants.
1) Sufficient Income
This is the single most important factor when it comes to determining a person’s ability to pay. A good rule of thumb is a monthly income level of approximately 2.5 times the rent, after basic living expenses are covered. If their credit record shows a lot of open accounts, their income level should be high enough to accommodate those added costs, while still leaving 2.5 times the monthly rent.
2) Good Credit Score
Hand in hand with income goes credit score. The higher the FICO number, the more likely they are to be people who live up to their responsibilities. Onerent’s (now Poplar Homes) leasing service recommends choosing an applicant group with a credit score of 650 or higher.
3) Ready Agreement to Rental and Deposit Rates
If you’ve done your homework, you know your rent is within the norms for the area. So when a prospective tenant tries to negotiate the payment with you, or talk you into foregoing the security deposit, or tries to pay it in installments, there will likely be some financial issues in the background.
4) Clean Legal Records
Another measure of an individual’s responsibility quotient, a clean legal record indicates a risk-averse person who takes rules and regulations seriously. Similarly, multiple convictions such as DUIs, driving without a license, or driving on a suspended license are cues to a person’s instability. Unpaid fines, warrants and or traffic tickets also indicate they’re living fast and loose and should be avoided.
5) Positive Rental/Referral History
Solid tenants are free of prior evictions and show up with strong referrals from previous landlords. When you’re screening, make it a point to phone all of the people listed as references. Be polite of course, but ask pointed questions and listen carefully to the responses. If you sense hesitancy, they’re probably trying to avoid telling you something negative. When you’re talking to previous landlords, inquire specifically about payment history, deposit refunds and the nature of the person’s disposition. Along the same lines, if the rental application shows they’ve moved more than once every couple of years, there could be instability issues.
6) Stable Employment History
You’re looking for people who have been on the same job for at least a year. If they’re moving into the area to start a new job, their previous job history should indicate longevity of employment. Similarly, you want to make sure the profession they list is one capable of generating enough income to cover the rent. If someone tells you they have a low-paying job and they’re trying to rent your expensive luxury apartment—well, you can admire their optimism but it’s probably best you moved on to other candidates.
7) Open and Honest Communication/Positive Disposition
People who readily answer pertinent questions are likely to be living lives in which they have nothing to hide. Evasiveness to standard questions such as why they’re looking for a new place is likely an indicator of potentially surreptitious activity in the background. Keep in mind you have a responsibility to your other tenants to maintain a peaceful environment. If you smell cigarette (or marijuana) smoke on someone trying to rent a no smoking place, or if you see copious amounts of pet hair on a person trying to rent a place with a no pets policy, that should be considered dishonest behavior. Said succinctly, if anything about an applicant seems unlikely to fit in with your existing tenants, consider the next one in line.
8) Professional Attitude
Renting an apartment or a home is a business transaction. You’re looking for people who recognize this fact and treat it with the consideration it deserves. They should arrive on time for the viewing appointment, or phone if they will be delayed. Their attire and demeanor should suggest they are respectful of the situation and trying to make a good impression. Applications should be neatly filled out and complete. If they arrive with children, are their clothes and faces clean? Are the children respectful and well behaved? These are all clues to how this person conducts their affairs.
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