Renting your property can be a great idea if you’re a homeowner looking to earn a little extra income. However, as a landlord, finding the right tenant can be a complicated process.
Fortunately, there are a few tips and tricks you can use to ensure you find a tenant who will never miss a payment and treat your property with respect. With that in mind, here are 14 key considerations to remember when screening tenants:
3 Financial Things to Inquire About
The first step towards finding the ideal tenant is to ensure they can afford the rent and won’t miss payments.
1. Get Proof of Income
When you buy a house with a mortgage, you’re required to provide proof of income as part of a series of checks used by lenders to ensure you’re good for the money they lend you. It’s the same when you’re renting your home. You need to know that your tenants won’t struggle to pay the rent. So, obtain the following from any potential tenant to check that the figures add up:
- Pay stubs
- Tax returns
- Bank statements
Ideally, you want a tenant whose monthly income is at least three times the rent. Be wary of tenants whose rent would make up more than 30% of their income, as they may encounter difficulties later on.
2. Check Their Credit Score
A tenant’s credit score is evidence of their financial responsibility. Alongside their proof of income, it lets you know that they’re likely to make their payments on time. The higher their credit score is, the better. In general, most landlords look for a minimum of 650.
3. Examine Their Employment History
Long-term tenants tend to bring financial stability that many landlords favor, so it’s wise to seek out tenants who will commit to at least a 12-month tenancy. Proof of a long and steady employment history goes hand in hand with this.
Check whether your tenant switches jobs regularly or if they have significant, unaccounted-for gaps in employment. Both can suggest that the tenant may occasionally be delayed with payments between jobs or could miss the rent altogether if they’re out of work for prolonged periods.
8 Essential Tenant Checks to Carry Out
Finances aside, it’s just as essential to carry out the following eight checks on the tenants themselves to ensure they’ll be a good fit for your property.
4. Tenant Background Check
Equally as important as financial checks, background checks will let you know whether the tenant in question has ever previously been evicted and why. You can also carry out criminal record checks, but make sure you do so as per the law.
5. Get References From Previous Landlords
It’s well worth finding out what kind of relationship your tenant had with their previous landlord. A recommendation letter will tell you if they paid their rent on time, left the property in good condition, and were easy to deal with.
6. Check That Any Information Provided Is Accurate
It’s essential to double-check that any information you receive from a potential tenant aligns with your own findings. For example, if they tell you their credit score is X, but when you check their report, it’s Y, be wary, especially if the findings differ drastically. Another red flag would be if you discover they were previously evicted, but neglected to tell you about it.
While mistakes happen, knowing you can trust your tenant going forward is important. If they provide inaccurate information from the get-go, you may be in for a rocky ride.
7. Do They Have Pets?
Whether you’re pet-friendly or strictly against having them on your property, it’s essential to check in advance whether your tenant has pets. Many renters are pet owners these days, so it’s good to be aware of it from the beginning.
8. Do They Smoke?
From furniture and curtains to walls and woodwork, cigarette smoke can permeate almost everything on your property. This can lead to hundreds of dollars worth of damage, with discoloration, odors and burn marks all needing to be repaired and removed.
While you can use the security deposit to cover the cost of redecorating and de-odorizing, your property will have to be off the market in the interim. So, be sure that if your tenants do smoke, they’re aware of any non-smoking clauses and that they’ll need to go outside to a designated smoking area to do so.
9. Do They Lead a Potentially Disruptive Lifestyle?
While few tenants will admit to hosting regular late-night parties, it’s worth discovering if they have loud hobbies, like playing a musical instrument. Also, check for odd working hours, such as night-shift workers potentially disrupting the neighbors with their late-night comings and goings.
There is no reason to reject such tenants, of course. You just need to ensure they’re aware of quiet times, especially in apartment blocks and condos. Otherwise, you risk fines and problems with the neighbors.
10. When Do They Plan to Move In?
Naturally, many tenants start looking for a new place before their current tenancy expires. So, it’s always worth asking when they can move in and whether it will be immediately or after a month or so. Even a tenant who ticks all the right boxes might not be the best choice if they can’t move in for over a month.
Ideally, it would help if you started listing before your current tenants leave and arranged a move-in date that works for everyone.
11. How Many People Are Going to Move In?
From a legal point of view, it’s essential to know how many people will be moving in as you need to know that your property is legally spacious enough for everyone. By knowing who is moving in, you can create an accurate tenancy agreement that differentiates between co-tenants and sub-tenants.
When multiple tenants are involved, it’s also worth carrying out background checks on everyone who is of age.
3 Additional Things to Keep an Eye On
If everything so far is good, you’re close to finding an ideal tenant. However, be sure to check these last three things before signing on the dotted line.
12. Do They Have a Good Attitude?
The landlord/tenant relationship is often portrayed as strained, but it doesn’t have to be like that at all. Ideally, you should have a good working relationship with your tenants. So, be sure to set up an interview with each candidate. This way, you can get a feel for their character.
For example, are they polite and professional? Did they show up on time? Are they honest about lifestyle choices like owning a pet or smoking? Are they easy to communicate with outside of the interview? If they tick all these boxes, they’ll likely be far easier to work with than someone who doesn’t.
13. What Is Their Reason for Moving Out?
While it may seem nosy to inquire, it’s a good idea to ask your tenant why they’re leaving their current place. Nine times out of ten, they’ll be moving because their previous tenancy has expired and they need to relocate for work or school, or their previous landlord is selling up.
However, occasionally, they’ll be moving out due to a bad relationship with their current landlord or roommates. Carrying out a background check will give you one side of the story, but it’s worth hearing things from their perspective for more context.
14. Are They Haggling Too Much?
It’s well within the tenant’s right to haggle, but someone who tries to get the price down too far may struggle to make the payments. The best thing you can do is carry out proper market research before listing your property to get an accurate price.