If you’re thinking about investing in real estate, you’re probably also researching how to get good tenants. The key to finding good tenants is all about how you scrutinize and review your rental applications. Below, we’ll discuss how to find renters for your rental property and the best way to choose them!
Accept and Scrutinize All Applications
Your rental application should be simple to read, simple to follow, brief, and yet thorough. You don’t need applicants’ entire life histories to help you decide whether to rent to them. The application you use should have sections with information on the applicant’s current and previous tenancies, current and previous jobs, fellow occupants, pets, financial status, vehicles, Social Security number, and driver’s license. If this information is complete, you will have plenty to consider and check in the next step.
Additionally, the application should include the name of a person to contact in an emergency. This information is of no real use now, when you’re still trying to decide whether an applicant would make a good tenant; however, it may prove vital later when the applicant has become your tenant, and he/she disappears without a trace, fails to show up to pay rent, or dies on the property.
As mentioned before, because landlords may no longer refuse to rent to someone on the basis of marital status, you should ask every adult who expects to occupy your rental dwelling to fill out an application. Husbands and wives should fill out separate applications, and adult roommates, regardless of their relationship to one another, should each fill out an application as well.
Check out that live-in boyfriend or girlfriend, by all means, whenever one appears on the scene. You never know if and when the primary tenant may leave you with somebody you know nothing about and wouldn’t have rented to in the first place. You’ll use a good many applications this way, but you’ll be well protected against accusations of unfair discrimination and you’ll have plenty of good information for later reference.
Deposits With Your Application
Some landlords require applicants to submit deposits along with their rental applications. There’s nothing wrong with this practice so long as you understand the implications, and it does make good sense if you’re in a soft rental market with lots of competition and can expect to have only one applicant. The deposit commits the applicant to you, and you to him.
In effect, the potential tenant is saying “I’m so interested in renting this place that I’m going to give you a deposit for the place, and you let me know when you have approved my application so I can begin making preparations to move in.” You, in turn, are saying, “You look like a good prospect to me, and I’d like to rent to you, but I need to check out your application. If everything checks out, then the place is yours.”
The commitment between you and the applicant is temporary, and it can be either exclusive or non-exclusive. Before you accept a deposit, tell the applicants whether you will be accepting several deposits on the same vacant property or just one.
They should know whether you’re asking for their deposit because you’re serious about them in particular or whether you’re just trying to eliminate those applicants who aren’t serious about the place so that you don’t waste any time checking applications from people who can’t afford the place.
This is how some landlords handle applications and deposits. I, on the other hand, believe a deposit involves too much of a commitment too soon (male commitment issues? Just kidding). You know nothing about the tenant and yet they assume you may be “holding” the property for them. If you accept deposits from applicants and later reject them, then you may have to face the unpleasant experience of returning their deposits face-to-face, which inevitably will result in an explanation of why you rejected them. This conversation can sometimes result in an argument.
If you do follow my advice and take no deposits along with applications, you run the risk of wasting your time checking out applications submitted frivolously. These great potential tenants may even decide to check out other properties that require a deposit for commitment.
Nonetheless, you can always keep in touch with the best prospects by telephone to update them on the process. I much prefer this freedom to look over a number of applications without making any commitments, either expressed or implied. This method evens allows for times when one tenant looks great start to finish, and you don’t want to wait for more applications and just rent to them.
When you get the completed applications, look them over quickly for legibility and completion, making sure that they’re signed, too. An applicant’s signature authorizes you to conduct a credit check. Without it, you’re invading their right to privacy if you begin asking for credit checks or contacting their employers.
Next, tell them that you’re going to be checking them out thoroughly. Mention that you will be calling their previous landlords and employers, and you’re going to be running a credit check. Ask them whether there’s anything negative that might show up because now would be the time for them to give you their side of the story. You’d be surprised how many negative things some people will volunteer to tell you about themselves which you never would have uncovered yourself.
Make careful note of this information on the back of their applications, and take it into consideration when you make your decisions. You may find from what they tell you about themselves that you don’t need to pay for a credit check or further investigate because they’ve eliminated themselves from consideration. This certainly helps you save time and money.
Moreover, ask to see their driver’s licenses and credit cards for identification. Ask non-driving potential tenants for some other form of “official” identification with their picture on it, such as a passport, military ID, or other government agency ID. While you have the driver’s license or other form of ID available, make a photocopy and keep it with the application.
Unless you already know the applicant personally, look at each application as if you were trying to collect an eviction judgment. If applicants have no job, no car or vehicle, and no bank accounts to attach, then how will you be able to get any money out of them if they stop paying their rent and you have to take them to court? Some potential tenants may be rejected at this step, and you can “evict” now at the lowest possible cost.
Not only is the information you are collecting essential to the selection process, but also because you have more information to base your selection on than just the obvious things, such as sex, race, or color. This will help lower your chances of being accused of illegal discrimination.