Finding reliable renters for an investment property is a must. As you well know, if you’re managing your own properties or somebody else’s and collecting the rent, you’ve probably had plenty of envious friends and family say something along the lines of, “Must be nice.” Because it sounds easy. People live in a home, and they send you money. But you know better.
Not that managing properties is a bad way to make a living, but it can’t be described as easy. As you know, you have complaints to handle and units to prepare before people move in. There’s a lot of work involved with being a property manager, even when things are going right.
That’s why making sure you screen potential tenants is so crucial. Just as running a business often means hiring the best and brightest employees, successfully managing properties depends upon the people who live in them. If they’re conscientious, almost any challenge you encounter can be met. If they’re duplicitous or shady, your business or side income could soon be in shambles. Here are some tips to find reliable renters.
Have the Tenant Complete an Application
This is probably obvious advice, but we’ll start here. It’s the most efficient way to learn a lot about a potential tenant.
Some questions to include are — who are your current and/or previous employers? How long did each job last? And what’s your current salary? (You need to know if they can afford to live at your place.) Essentially, everything you want to ask potential tenants, you can put on the application.
Get References – and Check Them Out
Requesting references is definitely something you’ll want to put on the application, including getting the name of previous landlords. If your tenant has had landlords, try to talk to at least two of them. That’s a quick and efficient way to (usually) tell if a tenant is going to work out.
You’ll also want to make sure you talk to your tenant’s employer. You want to make sure that he or she really has the job that they say they have.
Verify Tenant Income
Best to ask for three months of bank statements. In this age of computers and photo editing software, it’s become incredibly easy for people to create fake pay stubs to help them get loans or places to live. Can’t somebody create fake bank statements, too? Probably. But ask for them anyway. Look, the more documentation you get, the easier it becomes to get a picture of whether you’re dealing with a solid tenant or a shaky one.
Do Your Due Diligence over Social Media
As you can imagine, if you can find potential tenants on social media websites like Facebook, LinkedIn, and Instagram, you can learn a lot about whether this is somebody you want living in your property. That might sound like dirty pool, but it isn’t. This isn’t a matter of asking yourself whether you’d want to have dinner with this person or hang out with them. You want to get a sense of whether they’re dishonest and are the type of person to, say, vacate a home in the dead of night after falling behind on the rent.
Run a Background Check
Nobody wants to bring in a criminal into their property, though there has been plenty of discussion in the media that some landlords can take things too far — and deny somebody a place to live for something that they did, say, 20 years ago. People do change, and just because they were not a great tenant a generation ago doesn’t mean that they haven’t cleaned up their act. You also want to consider running a background check on a tenant’s spouse or roommate as well.
Run a Credit Check
Credit checks are also very important (and so you’ll want to ask for the prospective tenant’s Social Security number). If somebody has an eviction history or horrendous money management issues, you’ll find out by doing this. You also want to make sure you’re not running afoul of the law and complying with the Fair Credit Reporting Act. For instance, if you decline approval for a tenant due to something you find on their credit report, you need to tell them that’s the case.
Partner with a Professional Property Management Company
It’s easy to think, “Well, I’m offering property management services for homeowners already and doing a pretty good job of it. Money is tight enough. Why would I want to buy a property management franchise?”
Because we think we can free up your time by making herculean tasks like screening potential tenants easy, so you can manage more properties and grow your business. It may not sound easy to screen tenants, but Keyrenter’s 14-point tenant screening process will help you find quality tenants.
Keyrenter also gives you additional tools you need to professionalize your business and to make it more efficient. Click here to learn more about owning a Keyrenter office in your community.