Are you trying to Find a Perfect Tenant for your next rental property?
How to find a perfect tenant that pays rent on time, takes care of your property as if it were their own, notifies you of problems immediately, and overall is a pleasure to deal with requires a system. A screening system that gives you the best chance at renting to the perfect tenant.
Every Landlord’s Screening System should include:
Criteria that every applicant must meet to be “qualified”.
How to Find a Perfect Tenant?
Criteria that is used for every applicant in the same manner, and this criterion might be different for each rental unit dependent on the quality and geographic nature of the rental. Criteria can include things like:
- every applicant must complete a rent application in its entirety. If more than one adult is going to live in the same property, everyone completes a rent application.
- rent payments are reported to a rent reporting agency.
- stable employment and pay stub to show verifiable income 3 times the amount of the rent. Again, this may differ depending on geographic and other factors.
- no more than 1 move in current year (unless a reasonable excuse for doing so)
- a credit score of 650 or above (your discretion) Note: some tenants have a poor credit history but are good tenants. If everything else checks out, re-consider this.
- never been evicted
- maximum number of people who can live in the property, and that each adult person listed on the tenancy agreement will be added to the rent reporting for tenants.
- a pet policy
- no smoking
- always pays rent on time
- no criminal conviction for crimes such as sex offences, drug trafficking, breaking and entering, possession of stolen property, or any major criminal offence that puts you or other tenants at risk.
- proof of bank account
- positive references EG current/previous landlord, employer
- follows rules -perhaps applicant was slow in completing rental application-, or didn’t complete it in its entirety.
- pleasant demeanor and willingness to comply with landlord requests, not argumentative about same.
- I didn’t have a good gut feeling. EG evasive with answers, not truthful, hesitant about providing info, didn’t want landlord to report rent payments to a rent reporting Agency
As a landlord, you get to determine what that criteria will be, DO NOT violate anyone’s Human Rights! Once you have your criteria you will have to apply it consistently. Why? Consistent application of the criteria should refute any claim(s) of discrimination.
This should be written Criteria that you follow with each application in order to find a perfect tenant.
Once Criteria has been documented…then do this for each rent application
- Have the Applicant apply online at landlordcreditbureau.com
- Interview the Applicant on the phone, because this is where the screening process starts. With a short phone interview, you can quickly weed out tenants that are not serious and/or not qualified. It will save time, and you don’t have to meet face to face with someone whom you don’t want to rent to
- Ask questions based on the criterion you have documented. EG
- do you have a problem with having your rent payments reported to a rent reporting or a credit reporting agency?
- what kind of pets do you have?
- how many people will be listed on the tenancy agreement?
- when are you looking to move?
- how long do you want to rent for?
- how long have you lived at your current address?
- why are you moving?
- mention the rent amount and the security deposit amount and ask them if they would have a problem meeting their obligations with respect to that.
- take notes, listen for inconsistencies, evasiveness, perceived untruthfulness.
- are you stably employed?
- are you moving closer or further away from work?
- ADVISE the applicant…I will review the information that I have obtained, if it meets my criteria, we can schedule a tour of the rental. I will advise within 24 hrs.
Does not meet Criteria? Reject
Meets Criteria…then next.
Show the rental property
Sometimes applicants want to rent without having seen the property!
NO!! Meet applicant(s) in person. You get a better sense of who they are by meeting them. Here are some things to look for when showing:
- Are they on time?
- Do you like them?
- Do they meet the criteria?
- Do they want to pay rent in cash? Red Flag! Remember criteria? Must have a bank account.
- Re-ask the questions you asked during the phone interview…do answers match?
What is your gut feeling or overall sense of who they are?
Based on this information you should have a pretty good idea whether you want the Individual to complete a rental application.
Applicant does not meet criteria. Advise via email or telephone call. Applicant can’t argue if you advise via email.
Applicant meets criteria… then next.
- Complete a rental application… that has a clause which gives you authorization to obtain consumer reports, make employment and landlord inquiries. You may have to provide employer and current landlord with the signed authorization. You can advise if the party is hesitant…I have signed authorization from Applicant to make these inquiries and they are an important factor in the applicant obtaining rent.
- A rental application should be completed in its entirety! Why? You as the landlord need the information to conduct further tenant screening to determine credit worthiness and tenant worthiness.
- If the Applicant does not or refuses to complete in its entirety, you may not have valuable information that is required to obtain consumer reports, and…it may be an indication of how well this Individual is going to follow your direction and rules in tenancy agreement. REMEMBER your criteria? Rental applications must be completed in their entirety.
- Obtain a Consumer Credit Report
A consumer credit report is a useful tool that provides valuable information. EG
- Determines credit worthiness
- Identifies the applicant… EG name, DOB, current address, previous address, and in some cases employer and telephone number.
- Determines truthfulness… Compare the information on the credit report to the information on the rental application. Does it match?
- Allows you to interview the applicant about pay habits, the answers provided might be reasonable, or not. If not…then doesn’t meet your criteria of either not being truthful, being evasive, or you don’t get a good gut feeling.
- Inquiries with current and even previous landlord
- Most landlords will tell you the truth, some won’t, so you must be deceitful, or smarter than they are. EG Make statements like…the applicant advises that he had a problem with some of the tenants in the building, tell me about it. Or the applicant advises that he was late with some rent payments, can you tell me how often?
- If a friend is masquerading as a current landlord, ask this…what is the address of the rental? How many bedrooms? What was the monthly rent? Did the applicant have any pets? Mess him up to determine, whether landlord or not.
- “I lived at home with my parents, or I lived with a friend etc”. OK you’re 40 years old and you were living with your parents? Did you pay rent? Did you work? This is usually a case where the applicant has been evicted. Red Flag!
- Questions to ask a current or previous Landlord…
- How much was rent
- Did the applicant pay on time?
- Did the applicant abide by the terms of the lease agreement?
- Would you rent to the applicant again?
- Did the applicant give proper notice to leave?
- Did you site inspect the premises and if so, were there any issues?
- Inquiries with Employer…Supervisor, H.R. or someone who can verify stable employment.
- Verifying Income and stable employment establishes ability to pay rent and verifies pay stub information. Pay stubs can be counterfeited, VERIFY!
- How long has applicant been employed?
- What is hourly rate or annual salary?
- Is employment full time or part time?
- Does applicant have a good work history? EG easy to get along with, follows direction, is responsible etc.
Generally speaking, Individuals who have a good consumer credit report, good references from landlords and employers, are generally responsible members of society, they should meet your criteria, and should make good tenants.
What about serious criminal convictions? Individuals who have criminal records that you don’t want to rent to, will not pass your Screening process as noted above. Individuals with criminal records *in most cases* will not :
- have a good consumer credit report
- have stable employment
- have good references
- comply with simple requests, like complete application in its entirety
- be truthful with many aspects of the rental application
There are some Individuals who have made mistakes in life and have a criminal record as a result. But they have paid the piper so to speak. If all other due diligence is favorable, then reason should prevail. That would be left to your discretion and good common sense.
Signing the Lease
Many Landlords have a lease agreement that they obtained from the internet. Nothing wrong with that except it may not cover everything that you want in it and/or it may ask questions not allowed under the Privacy Act. EG
All the terms that you want the tenant to agree to, should be in the lease agreement, do not take for granted that the tenant will comply with the requests if not in the lease agreement.
You can add addendums to the lease agreement. **** if you have rules that are deemed to be unreasonable, then you will quite likely loose any arbitration or court hearing. Most Arbitrators or Courts will look at what is REASONABLE. Discuss with the tenant!
Make the tenant aware of Tenant responsibilities and Landlord responsibilities. www.tenantsinfo.com talks about same. Review these responsibilities with the tenant at Lease signing and get the tenant to acknowledge his/her responsibilities as stated. You can also Google search Residential Tenancy Laws for your State/Province and review landlord and tenant responsibilities.
What is one of the biggest MISTAKES that many landlords make with their rental business? They don’t know their Tenancy Laws! BIG Faux Pas! This could cost thousands of dollars. There are conniving Individuals who looks for inexperienced landlords that don’t abide by the tenancy laws. They are awarded a lot of money for landlord ignorance.
So, bottom line…. know your tenancy laws and abide by them.
How do I minimize my risk of rental income loss?
Every Applicant should read this: The Notice to Tenant advises of consequences for late rent pay, non-payment of rent, and damaged rental property. Visit the website for more information. www.landlordcreditbureau.com
Deterrents and Incentives
The lease lays out the terms of what is a legal contract. EG. tenant must rent for a year, pay rent on time, no pets, no smoking etc.
What if the tenant doesn’t adhere to the terms of the contract? What deterrent(s) do you have? Up until now, not many. You could evict for breaking the lease, you could do battle with the tenant for not adhering to the terms. However, none of these are a deterrent at lease signing, the tenant does not consider consequences for breaking lease terms at lease signing.
Reporting rent payments is an important tool for identifying high and low risk EG Paid on time, paid late, money owing for damaged rental property, collections etc. And it’s a great incentive for tenants to abide by the lease terms.
Tenants who pay rent on time can obtain a Certificate of Satisfactory Tenancy at the end of lease. A benefit for good tenants.
Making a tenant aware that there is a consequence for abusing landlords and benefits for abiding by the lease agreement is important to finding the Perfect Tenant.
Operating a SUCCESSDFUL RENTAL BUSINESS requires good Resources.
- Report rent payments landlordcreditbureau.com (USA) www.landlordcreditbureau.com (CDN)
- Obtain Consumer Credit Reports tenantverification.com (US) www.tenantverification.ca (CDN)
- Be an Educated Landlord theeducatedlandlord.com
- Educate your tenants tenantsinfo.com
- Know your discrimination laws: