How do you add the most value to your investment property? You start by finding the best tenants. Good tenants are ones who pay their rent on time, follow the rules, keep your rental in great condition, stay long term, and don’t have a history of evictions or bad credit. How do you find such great tenants? How do you screen potential tenants? Here are a few ideas to find the best tenants for your investment property.
First, you have to find and use the best tenant screening service that you can afford. The Pew Research Center’s analysis of the U.S. Census Bureau data confirms that more people are renting than they have in the last 50 years (36.6 percent of all U.S. households), so screening for good tenants is a critical step in the process.Your investment really reflects the quality of the output, so put the most money into this step that you can.
Typical fees can range anywhere from $25 to $100 per applicant, depending on how much information you want. Read online reviews, talk to colleagues, and choose the most robust service you can find – these tenant screening services can save you time, money, and frustration by weeding out the applicants who aren’t ideal. Screening services should include a thorough credit check, rental history including evictions, and a criminal record check at the very minimum.
Second, make sure that your applicants have a consistent income – this one quality will increase your chances of selecting the most reliable tenants. The rent you charge should be about 30 percent (or less) of their monthly income so do the math for each applicant. If the rent is out of their price range, save yourself a lot of headaches and pass on them as potential tenants. Conversely, looking at their work history will also help you make a good decision about their ability to pay the rent. It is one of the few pieces of information that you can legally look at to make a sound business decision of who to rent to.
Next, always check their references! If the applicant only has friends or family listed as references, proceed carefully if at all. They should list any former landlords or property management companies for any apartments for rent in buffalo ny or house they have previously lived in, their current and/or former supervisors at their place of employment, or even current or former coworkers who can vouch for their reliability and honesty.
Landlords, just like potential employers, should always ask for and check references to get an objective opinion of the applicants. Their history of paying bills and being reliable tenants should be obvious from talking with their references. And depending on which service you hire, it may be a task already included in your tenant screening process.
Finally, be sure that you proceed within the boundaries of the housing laws that are established to prevent discrimination when it comes to screening your candidates. The best way to do this is to have all of your requirements and policies in writing and apply them equally to all applicants. The Fair Housing Act basically says don’t ask questions or make decisions based on any applicant’s race, color, religion, gender, national origin, disability, or familial status.
In addition, state laws may also make it illegal to discriminate based on marital status, sexual orientation, or gender identity so be familiar with your state laws as well. Using a reputable tenant screening service can help prevent any appearance of legal impropriety as well as screen out any applicants who would not make good, reliable tenants for your rental property.
Following these suggestions should definitely give you a leg up when it comes to protecting your investment and finding great tenants. The $25-100 fees that you will pay to use a tenant screening service will be money well spent when you find a conscientious, long-term tenant for your property.