Are you a property investor considering adding a rental property to your investment portfolio? Are you a homeowner who’s carrying two mortgages and looking for a way to hold onto both properties while potentially earning some extra income? Becoming a landlord can be an attractive prospect for many reasons, but it can quickly turn into a money-losing venture if you don’t get the right tenants occupying your rental. Cash 4 Kansas Homes has owned many successful rental properties over the last 15 years, and we want you to know that finding the right resident doesn’t have to be as challenging and overwhelming as it seems. Today, we’ll take a look at the three steps every property investor and landlord should take when screening potential tenants. By diligently completing these three processes, you’ll be minimizing the likelihood of experiencing the frustration that accompanies poor-quality renters.
Obtain Complete and Detailed Applications
This initial step in the tenant vetting process is crucial for obtaining the information you need to make an informed decision when trusting someone with your rental investment property. While it may seem convenient or easier to rent to friends, extended family, or others without the formality of an application, doing so can expose you and your rental property to unqualified, and possibly even dangerous, tenants and their activities. Additionally, renting to someone without knowing his or her financial background can quickly leave you in a financially tough situation. But what information should be included on a quality, thorough rental application?
- The Basics. This information should include the rental property address and possibly the rental and deposit amount, as well as the applicant’s personal information such as name, date of birth, current address and phone number, and social security number.
- Number of Proposed Tenants, Children, and Pets. From wear and tear to the agreed rental and deposit, many things can be impacted by the number of proposed occupants. For liability purposes, property investors should also be aware of who is permitted in the home at any given time.
- Job History, Including Current Job and Income. Does the prospective tenant currently have a job? Does he or she jump from one job to another frequently? Do they have a reliable source of steady income? These are just a few things that can raise red flags and expose financially irresponsible tenants, which can equate to late or absent rent payments.
- Financial Information. Property investors new to the rental industry may feel uncomfortable asking someone for bank account and routing numbers, but obtaining this information can give you insights into the possible tenant’s financial stability. In this section, you may also inquire as to whether he or she has prior bankruptcies.
- Authorization Form for Background and Credit Check. If you want to do a credit and/or background check on potential renters (which is always a good idea), you’ll need their signed authorization to do so.
- Thorough References, Including Personal, Professional, and Prior Landlords. This information can quite helpful in getting candid and relevant information as it relates to a future tenant’s demeanor, trustworthiness, dependability, and their respect for a rental property. If a potential renter doesn’t or won’t provide this information, he or she may have something to hide.
Review and Investigate Information Obtained
Now that you’ve gathered all the necessary information from your potential renter, you can begin the process of reviewing the information and doing the leg work of analyzing whether or not he or she will be a good fit for your rental property. After all, if you’re going to go through the trouble of having such a detailed and thorough application, it is wise to use the information provided by your applicant diligently. For example, there is no benefit to gathering references from your applicant if you aren’t going to actually contact them. Likewise, asking for personal and financial information should be done only if there is the intent to use the information as part of the decision-making process. So, make those calls and run those credit and background checks. Doing so will allow you to begin compiling a list of potential tenants ranging from those that are most desirable, to those that are the least sensible.
The last screening step for property investors and landlords should be an interview. Information and words on paper are no substitute for actual human interaction, and you can tell much about a person over the phone or in a face-to-face interview. Choosing to meet with your prospective tenant to show him or her the rental property may seem like an opportune time to complete an interview, but there can also be many distractions in the process of showing the property. To ensure you get the most out of your tenant interview, be sure to choose an appropriate time that will allow you to address all concerns and questions you may have, without distraction. Lastly, always remember that discriminating against potential, current, or former tenants based on race, color, religion, sex, or national origin is prohibited by the Fair Housing Act of 1968.
For a property investor, screening potential tenants can be a daunting and time-consuming venture with negative, expensive ramifications if not done properly. With these three steps, property investors and landlords can be certain they rent to the highest quality residents out there, and finding high-quality tenants equates to less hassles and evictions down the road. If you are a property investor or landlord who no longer wants the responsibility that comes with being a owning a rental property, contact Cash 4 Kansas Homes today! We’ll take your rental property off your hands in exchange for cash. Learn more today!