If you’re starting out as a landlord, choosing the ideal tenant can be difficult. Most properties receive a number of applications, so how do you spot the best one? As a landlord, you should be primarily concerned with finding a tenant who can pay rent on time, maintain the property, and follow the rules on the lease. Here are some important factors to keep in mind during the rental application process.
Application fees are necessary if you want serious inquiries only. If an applicant is willing to pay an application fee, this is a good sign that they’re reliable and willing to move forward if their application is approved. Most standard fees are around $20, exclusive of screening report fees.
Remember that, by law, landlords cannot profit from application fees. The profits must be used toward actual costs incurred in leasing the rental. These fees may include a tenant background check (more on this later) and other related fees. Typically, application fees are nonrefundable, but make sure this is explicitly stated in your listing.
Credit and background checks
In addition to application fees, landlords usually charge a screening report fee. It’s crucial to run credit, criminal, and eviction reports, as well as verify previous residences and employment. Different landlords use different types of software to run their screening reports.
Find the software that best matches your needs, depending on how you plan to process applications. If you’re looking to maximize the number of applications you receive, try searching for software that allows you to conduct a free screening. A simple search phrase like “tenant screening report free” will lead you to various results.
Credit reports are essential, as they determine any potential risks in signing a rental agreement. A higher credit score indicates that the application is reliable and will likely make timely rent payments. On the other hand, a lower credit score may be a sign of late payments or a lack of credit history. Some landlords set a minimum credit score and monthly income for applications to ensure timely payments. For those lacking a solid credit history, you can recommend that they find a co-signer.
Screening potential tenants is an important deciding factor in whether or not you should approve their application. Only applicants have a stable job which allows them to pay rent on time, who have a clean background, and who seem capable of leaving the property in good condition should be contacted to move forward.
Ask for contact information of at least three references. References are most often previous landlords, but first-time renters may list employers or family. Make sure to contact each reference and ask questions regarding the potential tenants’ credibility and character.
For previous landlords, try asking questions regarding late payments and property damages. If the tenants received their security deposit in full when moving out, this is a good sign that they didn’t cause any property damage. If the landlord would rent out the property to those tenants again, they’re probably worth approving.
When you’re reviewing applications, you should look at each application thoroughly. An ideal tenant never forgets to include the essentials, like their full name, correct current address, phone number, driver’s license number, references, and occupation details. If the tenant seems like they’re attempting to hide something, they’re probably not going to be a good, trustworthy tenant.
Whether you’re an experienced landlord or just starting out, there are a multitude of different factors to consider when processing applications. You should feel confident that any tenants you approve are reliable, credible, and trustworthy. Becoming a successful landlord requires constant learning and adapting, so don’t become discouraged if every tenant isn’t perfect. As you become more experienced, you’ll know what to look for in tenants.