Let’s talk about tenants. They are why we, property management companies, and landlords have a rental, or rental home business to begin with. Without a tenant, you just have an empty house you are paying for.
They are, in a way, our customer. If you want think about it another way, our product as a property management company is not the house itself, like a home sale, but the space in it. That is what is desirable, marketable, and profitable. We sell and manage space, and we try our best to find the long lasting customers to occupy it.
Because the space is so desirable, we want it to be occupied by the best customer possible. Which is, someone who will take care of that space. With this in mind, we need to make sure our customer has good credit, a good history of payments, that they do not have an undesired criminal background, and of course, that they have a job that can pay the rent, the latter being a bigger factor most of the time. This is not everything, but here are 5 screening methods/tips that we use to create longer lasting tenants.
Does your current property manager talk to the potential customer/tenant? Part of any property management service is to perform pre-screening when meeting potentials. Do they ask them some questions about their previous living space? For any property management company, or landlord, they need to ask them why they are moving. Are they complaining about the previous landlord, what are they saying about him/her? Be leery of complaining tenants, they tend to bring their problems with them. Look for what you might think are legitimate reasons for leaving. Ask when they plan on moving, what kind of job they have, how long have they been at it, who is going to be living with them, what is their history. Pets? Ask them if you can call their previous/current landlord or employer, hear what they say about your potential tenant/customer.
Verification of Rent
Not many rental home management companies and landlords perform a verification of rent. It takes time, and sometimes landlords, and property managers for Apartments don’t respond. You have to hound them. It is important to talk to these folks, as they can tell you if they would rent to this individual again. If not, why? Also verify the amount of rent they pay, were they late paying the rent, what is their history of payments, and did you have any issues with them as a tenant. Maybe they were loud, put holes in the walls, and the cops came repeatedly to tell the band to turn it down. Take the time to do a VOR.
Does your tenant screening focus on credit? Bad credit sometimes comes with the territory. Maybe that is why they are renting in the first place. Sometimes good people undergo tough times and that might cause one to lose a house through foreclosure, short sale, or missed payments. This will affect their credit. That is the best case scenario for bad credit. The worst case being many accounts in collections, charge offs, and just a bad history of being able to pay anyone on time, and at all, for that matter. Screening for credit is important, and you need to look for signs such as bad history of payments, collections, and worst of all, evictions. Having an eviction on your credit is like the scarlet letter of the rental world. It’s like wearing a t-shirt to the open home showing that says “hey look at me, I won’t pay, or leave, so you need to pay extra and force me out”. Credit does not always make sense, but listen to it as part of the overall conversation. It may whisper, or it may yell to tell you something. You can even ask someone with bad credit for a double deposit amount. If you are a tenant and need help reviewing your score, check out credit karma, or another website for free credit score checks.
Doing a proper criminal check is vital. Not only are property managers looking for past criminal history, federal and state, but we are screening for Megan’s Law, which can be a separate search or fee with some of the screening tools available. Do not be cheap with this search category. Pay for Megan’s Law search history, or make sure your property management company is, especially if you have a house in a neighborhood full of children, or you are near a school. We are not saying criminals don’t pay their bills, we are saying that if the neighbors find out who lives there, and they start picketing, there is a good chance your tenant might skip the rent and be gone. Pay for a full criminal background check. Ask your property management company if they do a full search that includes Megan’s Law. Hannibal Lector can probably pay his bills, but it might get messy, if you know what I mean.
As for this rental home management company, we ask for many items when it comes to employment. We want to make sure our tenants pay on time, and our landlords are happy clams. Ask potential customers/tenants if they can supply 1-2 months of recent pay stubs, and I do mean recent, not 3 months old. Ask for bank statements to see those payments deposited. If they are not deposited, ask why you cannot see them. Call the employer to verify time on the job and income. If they are self-employed, ask for banks statements, look for deposits in the amount of the monthly income they are stating. Ask to see tax returns, to coincide with their annual income. How long have they been self-employed, and what kind of self-employment? If they own a business, can we see the business tax returns, and or income statements and balance sheet? Let’s just make sure they can afford the rent, and can afford it for the duration of the lease agreement. Employment and income is important. Even with bad credit, they need to be able to pay the rent. Even if you decide you want to rent to Al Capone, can Al afford the rent? As a property management company, we look for 3 times the rent in income. That can be combined income between all the applicants living in the space.
There is no right or wrong in your decision making when it comes to getting a good paying customer/Tenant. There is, in our book, a bad choice, a good choice, and the best choice out of all applicants. Rental Home Management companies need to decide who the best choice is for their property, so that everyone is satisfied, from the property management company, the customer/tenant paying for the space, the property owner, and sometimes the neighbors, who don’t mind, at times listening to a good band rehearsal. If you take the time to screen, you may find longevity in your tenant, and they just might find a place they will respect, and call home.
If you have a need for property management services, or have any questions related to this article, reach out to us any time. Click here for some additional information on our property management services.