Thoroughly screening your rental property applicants is one of the most important steps you will take as a rental property owner. Implementing smart tenant screening practices is one of the best ways to maximize profitability on your rental property investment. Good tenants mean rent gets paid on time, there’s generally less chance the property gets damaged, and the lease will consummate as arranged. Not-so-good tenants can reduce your profits and can possibly lead to legal headaches should they breach their rental agreement.
A good way to find the right tenants while avoiding any potential discrimination issues is to follow the Fair Housing Act (as well as state and local laws) and create a set of screening criteria that you apply equally to all applicants. Developing a repeatable process will streamline your application vetting by weeding out potential tenants who do not meet your minimum criteria.
As you are developing your screening procedure, here are some common mistakes you can avoid when it comes to tenant screening.
Not paying attention to red flags
An eviction or a lengthy criminal record (relating to lack of respect for property or safety of other individuals) are substantial issues when screening an applicant, but there are other warning signs to keep an eye out for during the application process. Did the tenant refuse to complete portions of your rental application? Are their past landlord references verifiable? Have they resided at more than two addresses for the previous two years with no reasonable explanation? These less than optimal indicators could potentially be a sign of things to come…or not…but it’s always best to err on the side of caution.
Not screening all applicants
Some rental property owners choose to only screen applicants they are skeptical about. This is not only a short-sighted practice, but can possibly lead to legal ramifications. You can’t judge a book by its cover, so for your own protection, make sure you screen everyone who applies to live in your property. This can also protect you against potential discrimination claims.
Not starting the screening process immediately
Start the screening process as soon as you have an interested tenant, or you’ll risk having an unoccupied property, and vacant properties are the biggest cash-flow killer.
If you’re looking to purchase an investment rental property, and are interested in financing options, give us a call at 877-472-4842.
Also Check Out: Finding The Right Price For Your Rental Property