The work of a landowner is not an easy task. You have to be alert and smart all the time. From selecting a tenant to maintaining the property it is a full-time job that has to be done around the clock. Especially renting out a property. We live in a very unpredictable time. If unluckily you get a Medusa as a renter it would be a lot to handle. Leaving things to luck is not an option.
If renting your place to a stranger seems like a scary affair to you, you may want to start by hiring a property management company to do that for you. Renting your place can be a real headache if things are not taken care of carefully. It must be a task of top priority to find quality renters for your rental property. Selecting tenants with a sour background can cost you thousands and you will have to handle back rent, eviction fees, and even property damage.
An ideal tenant will pay the rent timely, treat the property respectfully, establish proper communication, follow the rental agreement to the word. Finding such a tenant is not a piece of cake. You’ll have to start by posting ads and run tenant screening as well.
Even so, you’ll find a lot of myths surrounding the basic tenant screening procedure. Instead of buying them, you need to go through all the rental applicants’ details before finally signing any contract or lease agreement. Talking to experienced landlords you’ll notice that most of them prefer a property management company handling tenant screening for them. This saves a lot of work and time for them in finding a great tenant for their property. Let’s bust some of the myths to get better results.
Myth 1#: Landlords should follow their gut
Whenever we have to take any decision, around 80% of us like to go with our gut intuition. But is it a wise decision to give away your house for rent to a stranger by the following gut?
A survey revealed that it is only a handful of them who would go for gut intuition. More than 86% of them would follow verification of the information provided by the prospective renter before going on to sign the rental agreement. Still, you’ll find a rising graph of landlords who are scammed each year just because they decided to trust their intuition.
Judging the person on the face value is not the right thing to do while searching for a prospective tenant for your rental property. They may look completely harmless on paper but only through a detailed inspection can you find out more about them. It is good to remember that a strong gut feeling supported by thorough research can give you excellent results. Never rely on the self-provided details of the applicant to be up to date. As you are looking for someone to stay in your property for a long period it is best to not just focus on the gut feeling alone.
Tenant screening is all about getting the right information from the right source. Gut intuition coupled with the tenant screening can save you a lot of headache, frustration, and money. if you have the right person to do it for you, you will be saving a lot of time and cost.
While screening tenants you may want to take care of a few points:
- Financial history
- Criminal record
- Eviction history
Myth 2# An ideal tenant = high credit score
Deciding the credibility of an applicant based on a single number won’t be a great idea. An applicant with a high credit score doesn’t need to be a good tenant. A high score won’t determine if the prospect is a responsible and respectful tenant. A bad score won’t mean that the renter would delay paying the rent on time.
Millennials or such young applicants may have no credit history but still, be able to pay rents timely. So, don’t be in a hurry to disqualify the rental application based on a low credit score. When it comes to renting a place there are other criteria to check rather than focusing on credit score. A survey states that around 59% of the tenants notice landlords placing great emphasis on prospective renters having a regular income than their credit history.
Before concluding financial background check, it is important to get a complete credit report. This will give you a detailed report on:
- Payment timelines
- Credit inquiries
- Open trade lines
- Student loans, etc.
These points will help in judging the ability of the applicant to pay rent monthly. It is a common scam that landlords must be aware of. The copy of the credit report submitted by the applicant doesn’t need to be valid. It can be heavily edited, outdated, or fake. Healthy practices involve getting your credit report from a reputed company. Verification of this from the landlord will help to clarify the application.
Consider charging high-security deposits from the applicant having poor credit or low income will help in mitigating the risk of non-payment in the future. This way you can get a good tenant even if he is without a good credit score.
Myth 3# Monthly payment making ability is the only thing that you must look for
You are keeping renters for a fixed monthly passive income, isn’t it? If that fails you may have several problems ready to bang on your door. Payment problems are the most serious threats to most landlords. It is for this reason that during tenant screening, landlords pay a lot of emphasis on the credit score and steady income of the applicant. But is that all you must look for in a rental application?
Yes, financial stability indeed is one of the priorities but there are other attributes that you must look for in an applicant. Following the statistics, 16% of renters with low income were unable to pay rent for at least one month out of 3 months. With these stats, it is valid for landlords to focus on the ability of the applicants to pay rent. However, focusing on this during tenant screening you could overlook other red flags. The rental property owners must widen their scope of consideration and look for other things like criminal history, eviction history apart from financial history.
Myth 4# The cost of tenant screening is covered by the landlord
The landlords may refuse to take tenant screening services fearing that the cost may get deducted from their pocket. In reality, is that the case?
Typically, property owners can add the cost of tenant screening to the rental application as a part of the application fee. In most areas, the landlords are at liberty to charge the prospective tenants with the application to run a check on their credit history. This fee may range from $30 to $60. The fee can cover the cost of the inspection. It will also save you a lot of time and energy that could otherwise be spent on tenant screening.
In case you end up rejecting the applicant before checking the background, you will have to return the fee to the applicant.
Myth 5# Any renter is better than a vacant rental property
Having a limited applicant pool can have you worried. Temptation of filling the vacant rental property can force you to choose a sub-par tenant. After all, someone is better than having an empty apartment, no matter how you fill it.
Vacancies can cost you an average of $1750 monthly whereas if there is a need for eviction it may cost you around $3500 and more. Going off to approve the previous tenant can cause some serious issues such as neighbor disputes, non-payment of the rent, and even property damage. If the scene goes from bad to worse, the tenant may refuse to leave and fail to pay the rent as well. The eviction process could be the last resort left with.
As eviction process may include expenses such as:
- Filing fees
- Court fees
- Hold costs in utilities
- In case of vacancy, lost rental income
- Turnover costs like for instance marketing for new rental listing, and damage repairs
All of this may cause a lot of trouble and may cost you a lot of time spent dealing with the eviction process. Evictions are stressful for both, the landlord and the tenants on all levels. Avoiding this will be a great idea. After going through the facts now you would never think that sub-par renter is better than keeping your rental property vacant.
It is natural to have so many doubts and myths when one doesn’t have much idea about the topic. Let’s hope that these myth busters helped let you make the right decision, next time when you go for tenant screening.