How to Choose the Perfect Tenant for Your Rental Property

Purchasing a rental property is the easy part. Renting it out to a potential tenant is also a cakewalk, provided you’ve found the right tenant. The question is: How do you find the perfect tenant? Don’t get us wrong; we aren’t in any way telling you that great tenants don’t exist. At the same time, what we’re doing is preparing you to encounter challenges in the form of unpaid rents, property damage, and unruly tenants.

So, what do you do to avoid these problems? A number of things, actually. While you might have an unerring tenant screening process, you need to brace yourself for unexpected situations. But if you follow these 10 tips that we’ve highlighted here, you might save yourself from some stress and anxiety and end up with the perfect tenant.

Let’s look at 10 tips that will help you in choosing the right tenant for your rental property:

1. Comply with the law

Successful landlords will comply with the Federal Fair Housing Act that requires them to treat all potential tenants justly. In other words, there must be no discrimination against any tenant on the basis of race, religion, sex, familial status, disability, and color.

Also, several states have their own fair housing rules. Read up on local laws because you need to comply with them too.

2. List proper rental criteria

Before embarking on the tenant-searching process, list out what you’re looking for in your tenant. To get a clear idea of your tenant requirements, ask yourself some basic questions such as:

• Does the tenant earn enough to pay the rent?
• Does the tenant have stable employment?
• Does the tenant have a cosigner with a steady and substantial income?
• Does the tenant’s rental history reveal timely payments?
• Are they approachable and amicable?
• Do their lifestyle preferences match with yours?

Finally, listing rental criteria involves setting income expectations from your prospective tenants. The general guideline requires tenants to make at least three times the rent landlords ask for, so make sure you do the same and refrain from being flexible in this area especially in popular cities like NYC, San Francisco, Los Angeles, San Diego.

3. Set expectations with a perfect rental listing

To add a listing of your rental property online requires you to write an attractive description of your rental property.

In your online post, make sure your language is clear and describes your unique property attributes in a way that makes potential tenants want to live there and also increases the value of your property. With technology dominating the business world, there’s no shortage of apps and portals you can use to post your listing so that it reaches a broader audience. As per popular opinion, Cirtru is the most trustworthy housing platform in the United States! So, follow three simple steps to list a property for rent, and you can rest assured that you’ll find the tenant you’re looking for!

In a word, it also makes sense to add details of the next steps should prospective tenants choose to apply. So, share the rental application process, the paperwork required, and the reports tenants need to approve before you request them, the credit report being one of them.

4. Select a tenant with good credit

It’s safe to assume that a tenant who makes timely bill payments will do the same with the monthly rent.

But how will you determine the tenant’s financial capability? By running a credit check, of course! Since running a credit check includes a fee, landlords request the applicants to pay for it. During the process, make sure you follow these steps:

• Validate their income by checking whether it’s three times the rent you’ve fixed.
• Request pay stub copies.
• Contact their current employer to verify their place of employment, employment tenure, attendance details, and monthly income.

Other critical things to look for are whether their payment history is sound and their income to debt ratio. For instance, a landlord sets the rent at $1500 and finds a tenant whose income is $4500. But their monthly debt amounts to $4000. On the other hand, you have another tenant whose income is $4000, but they have zero debts. In this case, it’s easy to guess who the better choice is.

Finally, check the tenant’s eviction history and whether they have any bankruptcies or civil judgments against their names.

5. Run a criminal background check

You’ll find a tenant’s criminal details at different courthouses because they’re public. With the help of the tenant’s name and birthdate, you should be able to run a check that will tell you all you need to know about their minor and severe crimes. Get a credible ID from the tenant so that you can corroborate their identity. You might have someone attempting to share false information, so you can never be too careful.

A criminal check includes the following searches:

• Federal Court Record Search
• Statewide Criminal Record Search
• Department of Corrections Offender Search
• Sexual Offender Database Search
• County Criminal Court Search

Know that some states don’t permit landlords to discriminate against prospective tenants based on specific crimes. So, it may be more challenging for landlords especially the first-time landlords to explain an applicant’s rejection for multiple traffic violations instead of a crime involving drugs or abuse. Also, no country-wide criminal database exists, so the background check may not be exhaustive.

In the end, the process takes up a lot of time, so it’s advisable to get a well-known tenant screening company to do the job for you. Some reliable tenant screening companies include RentSpree, RentPrep, and TransUnion SmartMove.

6. Check the tenant’s rental history

It’s wise to talk to not one but two of your tenant’s previous landlords. Want to know why? It’s perfectly possible that the most recent landlord might not be satisfied with them and may share falsified information just to get rid of them. It’s also a good idea to have a list of crucial questions to ask the landlords, such as:

• Did the tenant make timely rental payments?
• Did the tenant serve a 30-day notice period before moving out?
• Did they maintain the apartment well and keep it tidy?
• Were they responsible for any damage to the apartment, or was it restricted to normal wear and tear?
• Were they respectful of their neighbors?
• Any idea why they moved? Were they evicted for a clause breach or because they failed to pay rent?
• Would they often complain?

In summary, be sure to verify the identity of the references. Share some incorrect details about the length of stay of the previous tenant. You’ll know that the references are questionable if your answer isn’t corrected.

7. Select a tenant with stability

While screening the rental applications, go through a tenant’s employment history and previous addresses. What do the details tell you? If they indicate that the tenant has a habit of hopping from job to job or from one house to the next, it’s best to let them go.

Old habits die hard, don’t they? So, if you entertain a tenant with such a history, you might end up spending more time, energy, and money looking for a new tenant when they take off or trying to get them off your property!

On the whole, a shaky employment history also demonstrates a tenant’s financial instability, which means they might not be able to make timely rental payments. And that doesn’t bode well for your business.

8. Ask questions in person to know the tenant

Once you’ve shortlisted your potential tenants, meet them in person to know more about them. While you may have all the paperwork and reports you need for verification, depending solely on them isn’t enough. Have a list of questions ready to ask them so that you can get to know them better.

Some things you could talk about include:

• Family
• Likes and dislikes
• Whether they smoke or have pets
• Spare-time activities
• Expectations from the new house

If an in-person meeting doesn’t work out, meet over Skype or speak on the phone.

9. Go with your gut

No matter how effective your tenant screening process is, your gut drops a clue that paper-based or online information may not disclose in many cases.

When you meet your potential tenant in person, be watchful of things like whether they’re punctual, their behavior, their reaction or response to a question, and the way they communicate. Should you find anything that doesn’t add up, go with your sixth sense. Do a repeat background check and then take necessary action.

To sum up, you might actually save yourself from renting to a fraud!

10. Collect a hefty security deposit

Security deposits help landlords in many ways. If a tenant chooses to skip paying rent or goes about damaging the property, a landlord can take the expenses out of their security deposit.

But before fixing the amount to charge as a security deposit, read up on your state’s security deposit laws to determine the maximum amount you can set because it’s based on your property location.

Conclusion

So, are you psyched about deep-diving into the tenant-searching process? We hope you are! Know that these 10 guidelines will undoubtedly help you find an excellent tenant for your rental property. However, since everything in life comes with a price, do your research on all applicable housing and landlord-tenant laws and have a real estate lawyer on speed dial just in case you run into any unprecedented issues.