The success of property investors looking to lease their acquired properties depends on how stable are their relationships with their tenants.
Securing a stable relationship can mean having tenants who pay rent on time, take good care of the property, and stay there for the long term. Landlord-tenant conflicts can lead to high turnover rates which is costly to both parties. For landlords, this means extra expense on putting up ads looking for new renters and cleaning and repairs to make the property more attractive and attract interest.
Therefore, a thorough research and background check of every applicant is important to partner with the best applicants in the market. Doing so helps ease concerns of a high-turnover property and earn that peace of mind while earning that recurring income.
So how do you effectively screen potential tenants?
Pre-screen potential tenants
The screening process can start before tenants have even filled out an application. By asking a few simple questions, such as inquiring about pets or mentioning that you will be running background checks, you can reap significant rewards, and save you time from considering a long list of willing tenants to rent your property. Gauging responses can turn up red flags, or make you want to pursue these tenants. Either way, it is a great first step to weed out the wrong type of tenants without wasting much time.
Along with asking a few pointed questions before accepting an application, in the modern age of social media being used as a means to do a background check, it is also wise to have a look at potential applicant’s profile if it ever offers a hint about lifestyles and potential red flags. If their accounts are public, landlords can ascertain a good picture as to what their private life is like, and therefore how they would treat a home.
Proof of income and identification
The rental application form is essentially a series of questions to help landlords profile their prospective tenants. The answers applicants will provide can be very insightful and valuable. In the application process, most landlords will want potential tenants to have employment or a stable business as a way to guarantee that they can cover the monthly rent.
Although proof of financial capacity does not guarantee a tenant will pay the rent on time, being on full-time employment or managing a business can indicate a stable way of living with no checkered past and is therefore highly likely to be an on-time payer. Illustrating the ability for maintaining a property and ensuring the place remains in shape is also extremely important when a tenant is being screened. As such, having the tenant provide quality and relevant proof that can support these criteria should go a long way in meeting these requirements.
However, be aware that some applicants may put down employment information that is either completely falsified, inaccurate, or not current. Therefore the answers to the application questions are only valuable if they can be verified.
As such, it is important that licensed property agents ensure that applicants verifiable information such as identification and proof of income, preferably in the form of their three most recent payslips and or a bank statement highlighting their income. In this way, landlords can see that applicants have not only been honest but can actually afford to live in the property.
Observe the applicant’s character during an inspection
An experienced property agent with a keen eye on applicant behavior can provide invaluable insights on each of the applicants who go for house inspections. Therefore, it pays to partner with a real estate professional to handle the job. In this case, he or she will be responsible for showing prospective tenants through your property. This is a good way for them to screen rental applicants away through an informal interview during the inspection. As such, they can get a better handle on what the tenants are really like.
With just a quick informal chat, your property broker may be able to find out what kind of person they are, how their job’s going, if they move often, and if they’ve ever had trouble with former landlords.
Not only that, but their physical interaction with the house will give an idea of how they might treat a property once they move in. If you want to have extra certainty when making the final call, it might be good for you to join the tour, too.
Conduct a formal interview to screen rental applicants
The tenant interview is of course still a very important part of the screening process. Like any interview, choosing the right questions to cut through the waffle and get the necessary information is a vital part of the property agent’s role.
There can be an exhaustive list of questions depending on the type of property you are renting, restrictions you wish to impose, and other factors. However, the following questions are good starters in this interaction with a potential tenant.
When would you like to move in?
This helps align the needs of both tenant and landlord. Do you wish to have the house rented out sooner? Do you need time to renovate the property before someone can move in?
Do you have pets?
If they have pets and you don’t accept animals, then you’ve saved both yourself and the applicant time and effort and can end the discussion way before the negotiation begins. If you do allow pets but have restrictions on the number or size of pets, this is also the time to let the applicant know. Now might also be the appropriate time to let them know of any pet fees/deposits you may require for their furry friend(s).
How long have you lived in your current home?
An honest answer to this helps you gauge the tendencies of your potential tenants. If they seem to lack stability, hopping around from property to property, chances are that they’re likely to do the same to you, leaving you with a vacancy to fill sooner than later.
Why are you moving?
Knowing their response will help you make the decision. Was the reason to move out driven by a long commute to work or did they’ve outgrown their old residence? Or was it because they have been evicted due to delinquent rental payments?
How many people will be living in the unit?
Asking this question will gauge the suitability of the potential renter with the capacity of your property. Needless to say, your one-bedroom unit will not accommodate a tenant with five children.
How many people living with you smoke?
Asking a tenant this question can gauge their suitability in your property especially if you are wary not only of the potential health hazard smoking poses but also the terrifying risk of fire.
This is a critical consideration if your property is located in a fire hazard area. Of course, an applicant can make a claim of clean living so this would be a good time to reiterate to your prospective tenant any smoking policy you may have and consequences that could occur if the smoking policy is seen as neglected. Be sure to include these details in your rental or lease agreement.
What is your monthly income?
One of the most common tenant violations and a reason of concern among tenants is the failure to pay rent on time. https://philippine-property.net/2658-common-tenant-violations.html Ideally, the monthly income to rent ratio is 3:1. This gives the tenant enough to spend on other expenses and keeps a cushion in case of incidental costs like car repairs or medical emergencies should arise.
Perform a reference check
Just as prospect employers do a background check in case resumes of job applicants turn out to be made up and inaccurate, landlords have the right to check tenancy and employment references to verify applicant claims. Most typical tenant applications require at least three references, from personal referees, past employers, and previous landlords.
It is the role of your property agent to double-check that the references they’ve provided are accurate, as well as try and extract some character profiling information from them.
The first and most important reference check will be a phone call to the property agent of their last rental, and the one before that if possible. They should ask things like what type of tenant were they, did they settle their rents on time, did they look after the property, was the deposit refunded in full, etc. Contacting the property manager of their last rental can provide valuable and accurate information as well as an insight into whether or not the applicant was a good tenant.
As the landlord, you have the final say as to who among the applicants deserves to be your tenant. A significant contribution to screen rental applicants and influence your selection can come from your property agent who does the preliminary interviews but also helps facilitate the paper works, handing over of keys, and periodic checks so you’ll have peace of mind your property that provides you with a steady income is looked after properly.