Choosing Tenants for Your Rental Properties
You can save an enormous amount of time when choosing tenants if you get as much information about them as possible in your very first conversation. Why spend a lot of time conversing and showing a property only to find that there is something that will eliminate them as potential tenants? Ask at least the following set of questions when they first contact you:
- When do you want to move in?
- How many people will live in the property?
- Do you have any pets?
- Why are you moving?
- Can you afford the move-in fees (first month’s rent plus security deposit plus any other fees)?
Pre-Qualifying Prospective Tenants
By pre-qualifying your rental prospects at the outset, you will not only save yourself a lot of time, you will likely prevent a great deal of aggravation later. It is far better to eliminate early any tenants who don’t match what you are looking for (or those who find that the property will not fit their needs) than to find out later that it was not a good match.
IMPORTANT NOTE: When saying “not a good match” we are referring to those tenants who, by the number of people who want to live in the property, or by credit history, or by moving date, cannot be considered. We are not talking about people that you may not like because of some discriminatory bias.
DO NOT DISCRIMINATE. Don’t even think of it. Not only is it bad for your business (you eliminate a potential tenant), it could be bad for you legally. Get familiar with anti-discrimination laws in your locality (they can vary) so that there is not even the hint of any discrimination on your part.
Holding an Open House
Depending on the number of inquiries you receive from your advertising and “For Rent” sign, you may want to schedule an open house to show the property to prospective tenants.
This accomplishes a couple of purposes:
- It saves travel time to show the property to individual prospects (many of whom will not show up, wasting a trip).
- It shows and generates more interest in the property. More than likely, a number of potential tenants will arrive at the same time during your open house. This enhances desire for the property, since we all seem to want something that someone else also wants.
Getting a Good Renters Application from Potential Tenants
A lot of potential problems can be avoided by taking the time to get a full and complete renters application. The minimum information you should acquire through the application includes:
- Applicant’s name, social security number and birthdate.
- Their present address, their current landlord’s name and phone numbers and why they are leaving.
- Their previous address and previous landlord’s name and phone numbers.
- Who will be living in the house. Names and ages.
- Their employment and income information. How long, what their job is, who their supervisor is (and a phone number for the supervisor).
- Previous employment.
- Credit references.
- Banking references.
- Personal references.
If you are going to check an applicant’s credit, you need to include a disclosure stating this.
Continue reading through this section for more expert advice on real estate investing and landlording:
Next article: Keeping Tenants