Getting involved in real estate comes with its fair share of challenges, and those that rent out property are tasked with a variety of unique obstacles. One of the most important tasks assigned to landlords—both new and seasoned—is tenant screening.
In a perfect world, landing the ideal tenant would be quick and easy. Reality isn’t so kind. Placing the right tenants in your property is often a matter of trial and error, but this experimentation has served as the guiding force behind modern screening practices.
Watch for the following red flags to help improve your vetting process and pick the right tenant from the very start.
- Low Income
This red flag is easy to spot and easy to explain. Most landlords require their tenants make at least 3 times the monthly rental rate. This ensures that the tenant can pay what you’re asking for. If you’re renting to multiple roommates, you’ll need to base this calculation on the total combined income of the tenants.
- A Criminal Past
Checking for evidence of a criminal past is wise. A landlord can access a tenant’s criminal record, but there are rules and regulations regarding your ability to accept or reject a prospective tenant based on their rap sheet. Here’s what to consider when examining your prospective renter’s criminal record:
- Were they convicted?
- What was the offense committed?
- How serious was the offense?
- How recently was the offense committed?
- Could this behavior put your other tenants at risk?
- Could this behavior put your property at risk?
A criminal past doesn’t mean your applicant is a poor fit for your property, but it is something to consider.
- Bad Credit
It’s important to check your tenant’s credit history for a multitude of reasons. The better their financial history, the more likely it is you’ll receive rent in full and on-time. While this isn’t always a black and white area, landlords tend to be more confident in tenants that have a better financial report behind them.
However, don’t immediately rule out tenants due to low credit score. Millennials make up a majority of the rental market, and many of them may not have enough credit history behind them, or may be neck-deep in loans due to skyrocketing tuition rates. Another thing to keep in mind: credit companies have tightened the reins a bit in terms of credit card issuance. This puts younger generations at a disadvantage, and can make it more difficult to create a stellar credit score right off the bat.
If you are based in the US, check out the credit and background checks by SmartMove; you get a snapshot into their financial history, but the reports delve deeper, allowing you to take a look at criminal history and a past eviction.
- Certain Dog Breeds
Most rental insurance companies have certain rules regarding the types of dogs allowed under their coverage. Unfortunately, breeds including pit bulls, Rottweiler’s, and German shepherds are often left on the no-go list. If you’re hoping to rent to a prospective tenant that contains one of these breeds, if you are based in the US you may consider using an insurance provider like DogBiteQuote.com, which offers insurance plans that cover animal liability—or require your renter to purchase a similar policy.
- A Lack of Responsiveness
If your prospective tenants aren’t quick to respond (and aren’t respectful when they do respond), you may want to reconsider renting to them. As a landlord, you’re entrusting your property (your investment, your livelihood, and your potential retirement income) into the hands of virtual strangers. You’ll want the peace of mind that you can trust your tenant to be respectful, professional, and timely. If you notice lapses in communication before you’ve even signed the lease or handed over the keys, it’s unlikely that will change after they’ve signed the lease.
Verifying employment and looking for evidence of a criminal past are all important facets of tenant screening, but there are additional red flags landlords use to expedite your screening process. Keep the above in mind and make your vetting process that much smoother.
Discussion
No comments yet.