The real estate market can be very profitable. However, it calls for understanding the rules of the game and making the right decisions. On this note, it is worth mentioning how many landlords make common mistakes that affect them in several ways.
While there are a bunch of these common landlord mistakes, a lot of them center on selecting the wrong tenant. Frankly, everything can go wrong from this point. For this reason, serious attention should be given to screening people before they are admitted as tenants.
This calls for understanding how to identify and choose the right people. Fortunately, this will be discussed here in this article. So, read on to ensure that you know how to choose the right renters.
Strategies for Selecting the Right Tenants
The misery of having to deal with the wrong tenants can be avoided by landlords. This is provided they understand how to choose the right ones. Well, discussed below are some of the very important strategies for selecting the right tenants for rental properties:
Take Documentation Seriously
Do not just accept someone because the person has enough money to pay for the space. You need to play by the book and this entails proper documentation.
For one, a rental application form needs to be filled out by interested parties. The submitted details ensure that you get to know interested parties better. The rental application form should request information like:
- Personal information
- Employment details
- Rental History
- References
Furthermore, a part of the form should request permission to run certain checks on interested parties. This includes credit and background checks.
Credit Checks
Financial capability and responsibility should play a huge part in deciding who ends up as a tenant in your rental property or otherwise. To this end, a critical assessment of the interested parties’ credit scores and profiles is crucial for this reason.
This information gives you a broad overview of prospective tenants’ financial capabilities and whether they would be able to make timely and regular payments. So, make sure to run this check.
Background Checks
A prospective tenant’s history reveals a lot about his/her/their personality and tendencies. In other words, a thorough assessment of a person’s history can reveal how good/bad they would be as tenants.
To this end, run background checks on all parties interested in becoming tenants in your rental property. You should be on the lookout for red flags while doing so. Some of the red flags to look out for while running these checks include:
- Criminal activities
- Previous evictions
- Late payment
- Frequent relocation
- Relatives only provided as references
- Refusal to give consent for background checks
These are just a few of them as there are several others. For more information on this, you can visit: https://www.apartments.com/rental-manager/resources/screening/10-red-flags-look-background-check.
Income Verification
Credit checks are important to help landlords understand a person’s financial state and capabilities, as mentioned early on. However, it is not enough to decide who should be admitted as a tenant based on their ability to afford the space.
You also need to verify their income status. Interested parties have to earn enough to afford to use your property.
However, there is the question of what qualifies as enough earnings. Well, you might want to settle for someone who earns triple the monthly rent, at least. This is considering how the person will have other financial commitments that need to be attended to.
Set Up a Physical Meeting
Online meetings are a huge possibility and they offer several benefits. However, there are still situations in which no alternative is nearly as good as having a physical meeting. Well, the meeting between a landlord and prospective tenant is one such.
It is crucial that a physical meeting is held to understand who the person interested in renting the property is. For example, it makes it easier to have better insight into the behavior and personality of the person.
Request for a Security Deposit
Requesting for a security deposit would be in your best interest as a landlord. This is given how the deposit would cover certain damages caused by the tenant if they happen.
However, you must approach this with integrity. This is considering how some landlords are known to find flimsy excuses to hang on to this deposit even when there is no need to. Such practices are wrong and damage the reputation of landlords, which you do not want to do.
Be Aware and Adhere to Housing Laws
There are local laws that spell out how landlords should behave towards their tenants and vice versa. You do not want to be guilty of violating any of these laws. For one, this is because of the penalties that apply when these laws are violated.
For this reason, make sure to adhere to every one of them. However, this also calls for knowing them in the first place.
Conclusion
Offering property rental services is one of the ways people benefit from real estate investment. However, it calls for admitting the right people into your property. Some of the ways to make sure of this have been discussed here and should be taken seriously.
By the way, it is worth mentioning that there are aspects of real estate investing that landlords may want to know. You can learn more about these aspects by utilizing certain resources. It is just important that the right resource is utilized for this purpose.
Doing so puts you in a good position to understand and make the most of the real estate market. So, take note of this going forward.