One of the most valuable assets a landlord can have is a great tenant.
To get the tenants you want, you must perform in-depth tenant screening. By using property management software, you get access to the tools you need to manage rental applications, collect documents from tenants, and run credit reports and background checks.
Ultimately, it’s up to you to make the determination of whether a tenant meets your standards or not. That being said, here are five signs that your applicant will probably make a great tenant:
One of the most important traits in a tenant is that they consistently pay rent on time. Rent payments are the backbone of your business, and if your tenant makes late or incomplete payments, your business will suffer. Running a credit report will help you figure out if someone is reliable when it comes to payments.
While a credit score is a good starting place to see where someone stands with their credit, you want to dig deeper than that. Fraud indicators, tradeline summaries, and basic inquiries will give you a more holistic understanding of someone’s financial responsibility.
Pay close attention to the number of missed/late payments. A late payment every now and then is nothing to be concerned about, but you don’t want to sign a lease with a tenant who consistently misses rent payments, credit card bills, or other loan payments.
Even if someone has a great credit history, they may have trouble paying rent if they don’t bring in enough income. Renting to someone with insufficient income is a lose-lose for everyone; your tenant will be struggling to make ends meet, and you’re less likely to consistently receive on-time payments.
It’s generally recommended that your tenant’s total income is at least three times greater than the price of your rent. This ensures that they’re in a good position to afford your rent with plenty of money to cover their other financial responsibilities.
On your rental application, you should require your applicants to provide proof of income. This could be in the form of recent pay stubs, W-2 tax forms, 1099 tax forms, bank statements, or other relevant documents.
An eviction report is another crucial check to run on every applicant. Eviction reports tell you about a tenant’s prior evictions with dates and addresses.
Generally speaking, great tenants don’t get evicted. Someone who has been evicted one or more times is more likely to repeat bad behavior than someone with a clean record.
With that being said, if you have an applicant who has been evicted, you should ask them for more information about the eviction. Wrongful or reasonably explained evictions do happen, so it’s best to get a more holistic perspective of the eviction before making your final decision.
Tenants who stay in one place for an extended period of time are more desirable than tenants who jump around from lease to lease.
Ideally, you want a tenant who is likely to renew your lease. This minimizes tenant turnover, which saves the time needed to make a new listing and look for a new tenant. And it saves you money because you don’t have a vacancy where you aren’t collecting rent.
On your rental application, you should ask prospective tenants to provide references when you ask for their employment and residence histories. These employer and landlord references will be able to confirm the information your applicant has provided (lying on a rental application is an immediate red flag).
A great tenant will receive positive feedback from their references, especially previous landlords. Speaking with another landlord about your applicant will give you a good feel for what kind of a renter this person is. If their previous landlord says that they always paid on time, didn’t damage their property, and were respectful toward neighbors, it’s fair to say that they’ll probably continue being good tenants.
To avoid bad tenants and sign leases with great ones, you must not only conduct thorough tenant screening but know what to look for when you do. If a tenant possesses the five qualities discussed in this article, they’re more than likely an ideal candidate to fill your unit.