Screening tenants thoroughly and consistently is important. It might seem logical that when you show a property to potential applicants, you get a gut feeling that is positive. You might just have a sense that leads you to believe a certain person will be a good tenant. Be careful. You want to make sure you are screening every applicant consistently. If you screen some applicants but not others, you are violating Fair Housing laws because you are treating people differently. Make sure everyone goes through the same screening process and include certain checks that will ensure you are getting the type of tenant that you want. A good tenant is the key to your good investment property.
The first thing you must look at during your screening process is income qualifications. Income provides an ability to pay rent and it’s the most important aspect of renting out a property. Having an income ratio is common among landlords and most people will look for three times the amount of rent as a threshold. I like to examine the debt to income ratio because you never know how many other expenses a tenant has to pay with that income.
Be sure to check criminal records. We always recommend doing a full criminal background check on anyone who applies to live in your property. You can also get into the public information that is available. Look for eviction records and other matters that may be a part of public record.
Calling an applicant’s current or former landlord is an important part of the screening process, but be careful. You never really know if you are talking to the actual landlord or if you are talking to a friend of the applicant who is pretending to be the landlord. References are good, but they are not always reliable. Pay close attention to the things that can be proven, such as income and credit and criminal records. You know these things are factual, whereas you never really know who you are talking to on the phone during a reference check.
Understanding how to do a thorough tenant screening will help you make an informed decision. Always spend time on the screening process because as we said earlier – a good tenant is the key to a good investment property. If you would like additional information on how to thoroughly screen tenants for your property, please contact us at RP Management, and we would be happy to give you some advice.