If you are renting out your property, it is important that you hand over the keys to a tenant you can trust. You have already invested hundreds if not thousands of dollars into your property to attract the highest-quality tenant, so how do you make sure you choose the right one? A high-quality tenant will be fiscally responsible, reliable, and respectful to your passive real estate investment. If you need assistance in this process, follow these essential steps on how to find good tenants for your property.
Ask Questions at the Showing
Showing your property is the first step to meet a variety of candidates that pass through. Some candidates may not stick around long, but some will stay and have many questions. They will ask you questions about rent, the complex, the fixtures, and a host of other inquiries. After you have answered them, they may still be interested; if they are, ask a few questions of your own about them. Ask when they plan on moving. If they are looking to move in within a week, they may have just been evicted from a previous rental, or they could be a military family who just moved.
In addition, you can politely inquire about their job, whether they are taking college courses, and what their plans are for the future. Most of this can be gleaned by a pleasant conversation after they have expressed interest in your property. You may also get an impression of their character. If you have close neighbors to your property, you won’t want tenants who are reckless partiers.
This will cause headaches for you in the future with your property and your neighbors. They may also be looking for a different lease limit than what you offer. Having an open conversation with them will help you gauge whether they will be the right tenants for you.
Screen Tenants Appropriately
Screening a tenant before having them sign a lease is easily the most critical part of choosing which tenant is best for your property. You will want to pay special attention to their credit history. Look for any delinquent payments or closed accounts. See how many accounts they have opened and how they have been able to keep up with them. If their credit appears low, analyze why that could be the case. See if they are able to keep up with their debt payments.
It is possible that your tenant is quite young and therefore they have not had time to gather much credit, or perhaps their parents are helping them get on their feet. If you have several tenants coming together in one unit, it may be easier to forgive lower credit from one candidate. Furthermore, it is important to compare their credit to their income. Generally, most landlords require that the tenants make three times more than the rent. Once again, if tenants are rooming together, there is more wiggle room for this—their combined income still has to be three times the rent.
After you check their financial history, you absolutely must check their rental history. Look for any evictions, and if they have them, try to gather why. Not all landlords are trustworthy, so it is important to figure out the terms of which they were evicted. On the other hand, not all tenants have a rental history. If this is the case, this candidate may still be preferable compared to the tenant with an eviction history.
If you are considering a tenant without a rental history, it is wise to check their references. References are always important in any case, as you can get accounts from people who know them. These people are an opportunity to get insight into their character to see if they are honest and if they will have integrity and respect for your property.
Conversely, you must be careful as to whether or not these references are honest as well. The truth is, not all references will be legitimate. A tenant can enlist the help of a close friend or family member. Nonetheless, references should not be discounted as a decent source.
Consider these things when looking for the best tenants for your property. Consider starting a real estate investment group to learn more about managing your properties. Conversing with them at the showing as well as performing proper screening procedures will help you know whether they are a good fit for your business.