Choosing the right tenants for your rental property involves more than just picking the person who looks good on paper. A property management company has experts who will help with the process, but if you're screening candidates yourself, follow these five steps to help you make the right decision.
1. Use the Showing as an Interview
When showing a unit to a prospective renter, you'll have an opportunity to ask questions and get a feel for what kind of person this may be and whether they will fit into the lifestyle of your community.
Ask why they are moving and whether their previous landlords would provide a reference. Ask about pets, smoking habits, and whether roommates will be present. Some things to look out for include being late or not showing up for the appointment at all, rude behavior, and a disheveled appearance that might suggest an incompatible lifestyle.
2. Application Red Flags
Once the showing is complete, the prospective tenant should complete an application and authorization for a credit check and background check. Along with asking for employment and income information, you'll want to ask the following questions:
- Have you ever been evicted?
- Have you ever refused to pay rent?
- Have you ever been convicted of a felony?
- Have you ever declared bankruptcy?
A "yes" response to any of these questions may not disqualify the candidate, but it should provide a good starting point for a broader conversation about these topics.
3. Contact the Applicant's Employer
Here, you want to ask the same questions a potential employer would ask (and is legally permitted to ask). Find out how long the applicant has been working there and whether they are considered a responsible employee. Also, ask if the person is a long-term employee and not filling a temporary vacancy.
It's important to keep a lookout for red flags, and that starts with ensuring the information the applicant has provided you with is accurate. Verify it’s actually their former employer and not a friend or family member pretending to be one. When in doubt, Google the main number of the company and ask for the contact directly.
4. Analyzing the Credit and Background Reports
A credit score is a good indicator of whether the applicant tends to be on-time and responsible when paying debts. The background check will alert you to any criminal history but be sure to consider the type and severity of any crimes. Violent crimes, weapons violations, fraud, arson, and theft should all be taken very seriously. Aside from major credit problems and crimes, the biggest red flag is failing to disclose this information on the application.
5. Remember the Law
Make sure you understand federal, state, and local laws and ordinances meant to prevent discrimination against protected classes of people. You cannot make a decision based on race, national origin, sex, disability, or religion, and your locality may have additional protected groups.
The Right Fit for You
Finding the perfect fit for your vacancies can be a frustrating process. However, taking the time to make the right choice will pay off in the long run, and you'll reap the rewards of a safe, profitable rental property with fewer complications.
About the Author: Patrick Freeze is the President of Bay Management Group, which manages about 4,000 units in the Mid-Atlantic Region. The company is overseeing more than $700 million worth of real estate as of October 1st, 2018.
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