How to Choose a Good Tenant?
Before we go any further, let us define what a good tenant is. In simple terms, a good tenant pays the rent on time and doesn't damage your property. We can also give extra points for leaving the dwelling in better condition than received and being easy to get along with. It is tempting to call them unicorns, but with a little due diligence, they are not impossible to find. On the other hand, you can always hire a Property Manager to do the heavy lifting for you.
Follow The Law
Federal and state laws establish guidelines for how landlords must treat prospective tenants during the application process. These laws prohibit discrimination based on race, religion, national origin, gender, familial status, and disability. Additionally, the law requires landlords to provide potential tenants with a list of screening criteria used to evaluate their applications. By following these guidelines, landlords can ensure that they treat all applicants fairly and give them an equal opportunity to rent their property. Additionally, following the law helps protect landlords from facing legal penalties if accused of discriminatory practices. Ultimately, adhering to the law is the best way to treat everyone fairly and respectfully.
Credit & Criminal Background Checks
Criminal background checks and credit checks are essential tools landlords use to screen potential tenants. Criminal background checks can help identify applicants convicted of severe crimes, such as violence or drug-related offenses. Credit checks, meanwhile, can provide landlords with valuable insights into an applicant's financial history. A strong credit score is generally a good indicator that an applicant is likely to pay rent on time and maintain the property in good condition. Ultimately, by conducting criminal background checks and credit checks, landlords can help ensure they select responsible, reliable tenants for their properties. Keep in mind that certain states might make it illegal to discriminate against certain offenders.
Tenants with a high income-to-debt ratio are less likely to default on rent, making them desirable for landlords. To calculate this ratio, divide a tenant's monthly income by their monthly debts. The higher the number, the better the chances that the tenant will be able to make rent payments on time. For example, a tenant with a monthly income of $3,000 and monthly debts of $500 would have an income-to-debt ratio of 6. This tenant would be considered low-risk. However, a tenant with an income of $3,000 and monthly debts of $2,500 would have an income-to-debt ratio of 1.2. This tenant would be considered high-risk. Therefore, it is important to consider the applicant's income-to-debt ratio when qualifying for new tenants.
A tenant's rental history is essential in determining whether they will be a good fit for your property. For example, if a potential tenant has broken leases or evictions on their record, it may not be easy to trust them to uphold the terms of their lease. Additionally, late rental payments can indicate that a tenant may have difficulty meeting their financial obligations. As a result, a thorough review of a tenant's rental history can help you decide whether or not to approve their application.
Landlords and property managers typically look for tenants who have steady employment history and have not changed residences frequently over the past few years. There are a few reasons for this. First, employment history is a good indicator of someone's ability to pay rent on time. Those who have held the same job for several years are more likely to be responsible and reliable than those who frequently change jobs. Second, tenants who move around a lot are more likely to cause problems or damage to the property, and they also tend to be less stable financially. That's why landlords often prefer applicants with solid employment history and a track record remaining at the same address.
Setting rules and managing expectations at the beginning of a lease can help avoid problems later on. By clearly outlining what you expect of tenants in terms of behavior and care of the property, you can help to reduce the likelihood of conflict or damage. In addition, setting rules can help protect your rights as a landlord. For example, if you require that tenants give notice before making any changes to the property, you can avoid situations before they happen. Finally, managing expectations and setting rules at the start of a lease can help to create a smoother, more enjoyable experience for both landlords and tenants.
As any experienced landlord knows, thoroughly qualifying new tenants is essential to protecting your investment. The process can be complicated and time-consuming, but it's well worth it in the long run. A bad tenant can cause problems, from missed rent payments to high tenant turnover to damage to your property. If this is your first property or you don't have the time required, a Property Manager can help you screen potential tenants and make sure you're only renting to qualified, responsible people. Property Managers can also handle all the day-to-day tasks of being a landlord, from collecting rent to dealing with maintenance issues. As a result, they can save you a lot of time and hassle. If you're serious about being a successful landlord, hiring a Property Manager is a sensible idea.