As a landlord, you are only as good as the tenants that live in your properties. You can have a great rental with high upside, but if your tenants don’t pay or damage the property, you will have nothing to show for it. The best way to decipher the strength of your tenants is by reviewing their application and asking the right questions. It is easy to panic when you are close to having a vacancy and rent is close to coming out of your pocket. However, keep a level head and trust in your education. Break down the tenant agreement before you put it into practice. In doing so, you will minimize risk and increase the profitability of your property.
Many landlords and property owners are misinformed in what questions they can and cannot ask on their applications. The bottom line is that you can rent to anyone you like, as long as you do not discriminate with respect to race, color , religion, sexual or marital preference and handicap. You have every right to ask about income, employment and if they have any pets or if they smoke. In fact, if you are not asking these questions you are doing yourself a disservice and potentially setting yourself up for trouble. If you do not like what you see, it is well within your rights to inquire further.
The first item you should look it on an application is their rental history. Income and employment are important pieces, but a rental history will provide a real feel as to what type of tenant they are. If they are constantly moving, their past could serve as a red flag. Many tenants do move from place to place, but frequent moving has to be met with questions to your applicant. If there are legitimate reasons, either work or family related, their moves may be justified. However, if there is an issue with every landlord, maybe the problem is more with them.
You must review what their employment and income is. Some landlords will go so far as to ask for a paystub or tax return to verify the income. There is no predicting when someone will lose their job, but some professions, such as nursing and union jobs, are more stable than others. Length of time at one job looks nice, but could be misleading if the industry or profession isn’t strong. You can also look at a credit report to see if they are overextending and carrying excessive debt. This could be a sign that the slightest reduction of hours or unexpected car expense could cause them to juggle bills leaving your rent coming later and later and eventually not at all. If they balk at paying the security deposit upfront or first month’s rent in advance, you should consider not renting to them. If they are looking to rent, they must know that these expenses will be required up front. Not having them at the time of signing a lease doesn’t mean they will be bad tenants, but it could mean the margin for error is slim.
One of the secrets to a successful landlord is being able to turn the property over quickly from lease to lease. If you rent to a smoker, you may have difficulty finding a tenant before the current lease is up. There are few, if any, public places that allow you to smoke inside anymore – your property should be no different. You can certainly rent to a smoker, but this means strict rules regarding smoking inside your property. Smoke odors can linger in the walls and rugs of your property and make it impossible to rent. If you are deciding between two potential renters, the non-smoker may be a more attractive option.
The same is the case regarding renting to a tenant with a pet. This can be a little trickier, since many potential tenants have pets. The issue lies with what the pet is. Some pets will cause damage to the furniture and yard while leaving a distinctive smell throughout the house. Other pets, such as birds or rabbits, will be confined to a cage and be of little worry to property damage. Not only do you have to worry about your property, but you need to think about your neighbors as well. If your tenant has a dog that barks at all hours of the night or could be a threat to a neighbor’s yard, you will have other issues to worry about. You don’t want to blindly eliminate pet owners, but you need to examine what the pets are and how they will take care of them.
Just like an applicant applies for a job, your tenant is applying to live in your property. Your new tenant will spend at least the next nine months living there. If you don’t spend the time reviewing the application, it can be a nightmare. Take the time and find out as much as you can about your tenant and how they will treat your property. If you aren’t comfortable with the answers or have any doubts, you can move on to the next application. The more information you know, the more likely you will rent to the right tenant for you.