You bought your investment property to make money over time, and with the right tenant, it can. Selecting a tenant is the most important aspect of managing your investment property. An undesirable tenant can turn your owner experience into a nightmare if they damage the property, fail to pay rent on time or at all, or cost you when you have no choice but to evict them. The situation can get ugly fast. So, let’s discuss how you can be sure to rent your property to the best possible tenant.
Eliminate the Least Desirable Applicants Over the Phone
Before you invite them into your property, get to know them a bit better. When a renter calls to schedule an appointment to view your property, ask a few initial questions so that you can ensure you are only inviting reasonably qualified renters to look at the unit. If they are unwilling to fully answer your questions or are disrespectful, then you can eliminate them as possible candidates.
Ask them questions like:
- Do you have pets?
- How many people will be living in the space?
- Do you have good rental history?
- Can you verify that your monthly income is three times the rental amount?
Consult Their Previous Landlords
Have a discussion with at least two of their former landlords and ask them these questions:
- Did they pay rent on time?
- Why did they move out? If they were evicted, was it for non-payment or for breaking lease rules?
- Did they get along with their neighbors?
- Did they provide 30 days notice before vacating?
- Did they keep the property in order?
- Did they damage the apartment other than general wear and tear?
- Did they complain or request maintenance often?
- If the applicant is a first time renter they will not have a rental history, in which case, you may require a co-signer for the lease agreement.
Run a Credit Check
It is important to know that your future tenant has a habit of paying their bills on time. A credit check will reveal their bill paying history and how much debt they have. Even if they earn more than three times the rental amount per month, they may still have trouble paying rent if they have a lot of debt. A credit check will also show prior court judgments and/or bankruptcy filings.
Check Their Criminal Background
With just a name and date of birth you are able to view a tenant’s criminal record, which you can find at state and county courthouses. (It is important to check a valid ID so that you have their correct name and birthday.) Unfortunately, there isn’t a nationwide database of criminal records, so it may be difficult to reveal an applicant’s entire history, especially if they have lived in several states across the country. You will find it easier to justify rejecting an applicant based on drug-related or violent crimes than you would rejecting an applicant with multiple speeding tickets. Remember to reference state laws to make sure you do not unknowingly and illegally discriminate against renters with particular criminal convictions.
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