Screening tenants is one of the most important, and anxiety producing, parts of managing any rental property. The right tenants can ensure success, while the wrong tenants can cause unending headaches. Chances are, you won’t personally know applicants and must therefore rely on a wide range of services and practices to find reliable renters who will respect your property.
These are some of the steps you should take to qualify your tenants for leasing:
- Criminal background checks: A criminal background check will tell you if your applicant has had any run-ins with the law. Though they’re not always complete, and are often limited to the past 7 years, they’re a good place to start. Make sure the check complies with HUD guidelines.
- Credit history: There are several companies that will give you an overview of an applicant’s credit history, for a fee. These checks include information related to how much debt the individual is carrying, outstanding or late payments, prior evictions, etc. Credit Karma is free and convenient, but its reports can be less accurate than the scores you get from Equifax, TransUnion or Experian. For the best results, check applicants’ credit with at least one of these three credit reporting agencies.
- Employment and salary verification: Verifying employment status and salary is always a good idea. After all, you and your tenant are entering into a financial arrangement. You want to make sure they have the means to meet their obligations. You can do this by contacting their employer and by requesting documents like paystubs, W2s, or bank statements. A good rule of thumb is to require a monthly salary at least 2.5 times the rent payment.
- References: If your applicant has a prior rental history, it’s always a good idea to talk to previous landlords about their responsibility as a tenant. Did they pay their rent on time? Did they leave the home in good condition when they moved out? Were there any violations of the rental contract? Make sure you go back further than just their current landlord. A landlord may not be entirely honest about a problematic tenant they’re hoping to be rid of.
Before you begin, ask the right questions
Before you even get to the background, credit, employment, or reference checks, you can gain a wealth of information about someone who’s showing interest in your property by asking some simple questions over the phone.
Asking about rental history, how long they’ve occupied their current residence, why they’re moving, and how soon they’d like to move in can give you insight into their stability as tenants. Finding out if they’re smokers or have indoor pets can help you easily eliminate potential tenants if your property is no-smoking or pet-free. You can estimate an applicant’s financial health by asking for a rough income estimate, current employment status, and if they’re able to commit to a one-year lease, security deposit, and first month’s rent up front.
There are many ways to get the information you need to make an informed choice when it comes to selecting tenants, but it’s also important to know what you may and may not use in your determination. Both federal and state laws prohibit a landlord from selecting tenants on the basis of race or color, national origin, religion, disability or handicap, gender, or familial status.
Hire a property management company
Sound overwhelming? Let Greyhaven manage the entire process for you. We can qualify tenants for leasing your Chattanooga properties and reduce your stress.