Choosing the right tenants is crucial to your success as a landlord. Bad tenants often complain, cause property damage, or fail to pay rent on time, resulting in costly repairs and frustrating eviction legal battles.
Before filling your next vacancy, screen applicants carefully to ensure you select responsible and reliable individuals. Knowing how to find great tenants will help reduce headaches and ensure your property is successful.
Define your ideal tenant
Taking the time to identify the qualities you are looking for in a tenant will help you choose the right person or family. Be sure to write down your proposed criteria so you can remember it the next time you consider an applicant.
While every landlord’s situation is different, some common things to note include:
- Reliable payment history
- Be respectful and polite
- stable income
- Have not been deported before
- through background checks
Watching for red flags can also help you identify applicants who may not be a good fit. Just as it’s a good idea to write down the criteria for an ideal tenant, it’s also helpful to write down the red flags.
Potential red flags to look for include:
- Too much debt relative to income
- Frequent moving
- Incomplete application
- unwilling to provide information
- strange behavior
- Previous legal issues with landlords
Before starting the tenant selection process, be sure to review state and local fair housing laws to make sure you are in compliance. These laws prohibit discrimination based on race, religion, national origin, sex, disability, and other factors. The same screening process must be used for all applicants, and reasonable accommodations must be made for individuals with disabilities, such as allowing service animals.
Create an attractive rental listing
Attracting your ideal tenant starts with how to write a rental listing. The right marketing strategy will help you attract quality tenants while minimizing applicants who may not be a good fit.
Your rental listing should set tenant expectations. It should start with basic property information, including address, property type (e.g. apartment, house, apartment, etc.), monthly rent, and security deposit requirements. A detailed description of the property should then be provided, including the number of rooms, square footage, and amenities. High-quality photos, lease terms, availability dates, pet policy and whether any utilities are included should also be stated.
When writing a property listing, avoid using language that could be construed as discriminatory, such as “suitable for single professionals” or “no children.” Be sure to use inclusive language that does not favor any particular group or exclude anyone.
Effectively market your rental property
Once you’ve created an attractive listing, you’ll want to get the word out to attract as many quality applicants as possible. The more applicants you have, the more selective you will be. You can expand your reach by using a variety of marketing strategies.
Even though we now live in the information age, traditional methods of marketing rental properties still work. If your rental is located near a high-traffic road, consider placing a “For Rent” sign on your property with clear contact information.
Many people look at online platforms to find places to rent. Make sure your listing is included on the most popular platforms, such as Craigslist, local Facebook groups, and popular rental sites like Apartments.com and Rent.com.
Before showing your property, make sure it is clean and tidy. If you are in a hurry and show a dirty property, applicants may be rejected for this reason. If possible, staging your property can make it more attractive.
Finally, make sure you respond to inquiries quickly, especially in a competitive market. If you delay getting back to people, they may lose interest and choose another property.
3 steps to find great tenants
Finding great tenants doesn’t have to be complicated. If you follow a simple three-step process, you can quickly narrow your search to people who match your criteria.
1. Make sure they earn enough to afford living in your property
You don’t want tenants who are financially burdened. The more bills they have, the greater the risk of falling behind on rent. You want to make sure that any tenants you consider have enough income to comfortably cover all of their monthly expenses.
Many landlords like tenants who pay at least three times the monthly rent. For example, if your rent is $1,000 per month, you could look for tenants who make at least $3,000 per month. Whether you go by their gross income or net income (after taxes) is up to you. This is not a hard and fast rule and other factors may be considered at your discretion.
A tenant’s income does not necessarily come from a job. A lot of good tenants are subsidized, which is great. It is important that their income from any source is sufficient to cover their monthly expenses.
You can confirm an applicant’s income by checking their pay stub or a printed copy of their direct deposit. You don’t want to take their word for it. Another option is to accept a letter from your employer verifying income. Don’t forget to call to confirm the authenticity of the letter and make sure the message is correct.
2. Measure how well they are paying their other financial obligations
If an applicant pays their monthly bills on time, this may be a good indicator that they can afford their monthly rent. Pull a copy of the applicant’s credit report. This will tell you if they pay their car payments, utilities, cable bills, cell phone bills and other monthly payments on time.
When you review your credit report, be sure to check line by line to look for late or missed payments. Although an eviction won’t show up on a credit report, delinquent rent may show up if the landlord hands the debt to a collection agency.
The minimum credit score you accept is up to you and depends on your local market and risk tolerance. If rental competition is high in your area, you might consider accepting tenants with fair credit scores. If you have multiple applicants, you might prefer a higher score to increase your chances of finding someone who consistently pays their bills on time.
Negative information will remain on your credit report for seven years. Credit reports are not perfect either. Sometimes incorrect content is added. That’s why many people successfully dispute reporting errors and have incorrect information removed.
Some people also change their financial habits over time. If you see some hiccups on a report from six years ago but nothing negative since then, it might be worth ignoring it and focusing on your more recent payment history.
3. Determine who potential tenants are interacting with
The third step in finding great tenants is to assess their personality. You want to know if they will respect your property as they would their own home and be courteous to their neighbors.
The best way is to check the tenant’s profile. You should get at least two. Letters of recommendation should come from employers, past landlords, professors or teachers, clergy, or others who are trustworthy in the community. Recommendations from family members or close friends should not be accepted.
When calling references, be sure to ask questions that will help you understand the applicant’s personality, reliability, and financial responsibility. Also, be sure to ask how they know the applicant. For example, someone might claim that the reference you call is a former landlord, but in fact the person is actually a friend.
Before ending the call, ask them if there is anything else they think you should know about the applicant’s suitability as a tenant. Open-ended questions like this may reveal some important information that you may not have thought to ask.
The importance of thorough tenant screening
There are many factors that go into successfully managing a rental property, but perhaps the most important is making sure you have good tenants. The tenants you choose can determine your success or failure as a landlord. That’s why even if you need to fill a vacant property quickly, you shouldn’t rush into choosing a tenant.
As a landlord, you are a business owner. That’s why it’s crucial to fill your rent with someone who pays your rent on time and respects your property and other people. This helps ensure your cash flow is optimized and your valuable time isn’t wasted dealing with issues that could have been avoided by carefully screening tenants.
It’s important to remember that tenant screening does not guarantee that you will never encounter any problems. After all, all businesses have to deal with some degree of uncertainty. But it will help reduce potential problems, helping you save time and money.
final thoughts
Tenant screening is critical to the long-term success of your rental business. That’s why you should review your tenant screening process regularly to make sure you don’t miss anything. Additionally, be sure to regularly review your local fair housing laws to keep up with changes.
It’s also important to communicate with applicants so they have a clear understanding of expectations. Be sure to answer any questions they may have. Not only are you selecting a new tenant, but the applicant is also evaluating your abilities as a potential landlord. Being open and honest will help you build a positive relationship.
Save time and money with this refreshing guide to managing your own property.
exist self-managed landlordAmelia McGee and Grace Gudenkauf share tips for efficient property management, tenant screening and onboarding, and scaling your business, all to help you escape the 9-to-5 drudgery and create lasting wealth through real estate.
Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.
