May 05, 2016 - 05:18
As a homeowner or an investor, owning rental property is a great idea and a way to gain extra income. It is a great cash flow vehicle and you should always take the opportunity if presented. But be weary of the tenants you let rent your property and make sure you have a thorough screening. If not done properly, you might see your cash flow get slimmer and slimmer and your maintenance fees and headaches grow bigger and bigger. However, by effectively screening prospective tenants you can reduce the chance of this happening and relieve the stress that comes along as a landlord.
Before you do an actual screening, you can do a pre-screening in order to shorten your potential list and knock out time wasters. The pre-screening can work through your advertisement, the information you put in your advertisement can help you weed out time wasters. By putting the location, price and even images you can keep those who cannot afford and don’t want to live in the area from calling you. Also, during a phone call, you will have a better idea of the type of tenant they will be by the way they communicate and the types of questions they ask. If they ask these types of questions and haven’t hung up on you by the time you give them pricing information then they could be a potential tenant.
-How much is the rent?
-How much is the security deposit?
-Is it a 6-month or 12 month lease?
-Can I go see the property?
-Can I bring pets?
Next would be to meet the potential tenant at the property and show them around, if still interested then its time to get into the application. The main sections your application should ask for is:
1. Name, address, phone number, drivers license number
2. Social security number and date of birth.
3. Current and past landlords with contact info.
4. Employer and job details with contact info.
5. Have they ever had an eviction filed upon them or broken a lease?
To know more about them, you should ask them if they have the cash to pay for first months rent and security deposit. How many people will be living here? Will you have pets and also how many? When will your move in date be? Any emergency contacts?
One of the final steps to qualify a tenant is to run a background check and a credit check. You will want to be looking for any past evictions, criminal history or fraud that would be a red flag to not rent if you want to save yourself some trouble. Also, employment verification will help to make sure that your tenant will have enough money to pay rent every month. A good rule of thumb to know is that the tenants must earn at least three times whatever the monthly rent is.
Making sure you have most of this information will help you make a good estimate on weather or not you will have a good clean tenants or a tenants that could possibly cost you hundreds in repairs and many headaches.