As a landlord, you need to protect your property and finances. You can do this by choosing the right tenant. Here’s a quick guide on doing just that.
Remember what you can’t reject a tenant for
It’s important that you understand how the Federal Fair Housing Act affects you. The rules you have to follow actually differ from state to state. So don’t assume you already know what can and can’t be deemed as unlawful discrimination! The Act doesn’t apply to every type of housing, too, so be careful about that. In general, you can’t refuse a tenant based on the color of their skin, their national origin, their sex, or their religion. Disabled people, as well as people with children, are also protected.
Find out why they’re moving
This can tell you a lot about the person, so it’s vital you get this information. There are, of course, reasons that are encouraging. Perhaps they’ve got a new job, so they had to move. Perhaps they’ve gotten an increase in income and wanted more room. But what if they were evicted? Or if they got into altercations with neighbors? These aren’t necessarily deal breakers, but they are red flags.
Assess their income
Knowing someone’s income lets you assess their ability to pay the rent. Of course, it can be difficult getting proof of the figure they give you, and they’re not legally obligated to get you any proof. So you’ll have to go by what they tell you – which, by and large, tends to be the truth. Ideally, the tenant should make at least twice as much as the rent, or even two and a half times as much.
Work with the right property managers
Some property owners don’t deal with this stage of the process themselves. They want to deal solely with the financial and legal matter involved in property ownership. This is very prevalent among busy investors. In such a case, you would work with property managers. But you need to make sure you’re working with property managers who know a good tenant from a bad one. The real estate management service you use should have a strong history of tenants paying on time.
A lot of people in various positions ask candidates for references. But very few people actually check these references. People seem to treat reference data collection as something to fall back on if they still feel “on the fence” about the candidate. The same can be said for landlords in real estate. Getting references from their employer and their former landlord can help in many ways. Their employer can verify their income. The former landlord (not the current landlord!) can tell you more about them as tenants.
Keep your vacancy information complete and up-to-date
No-one wants their time wasted. If you can only accept certain tenants, or at certain times, then this needs to be reflected on all your lettings advertisements. Got policies against pets or smoking? Make sure that information is available immediately. Have you signed the tenancy agreement with someone? Then make sure the adverts are taken down.