Finding the Person Who Won’t (Literally) Burn Your Rental to Ashes

We’ve already seen the tip of the iceberg about nightmare tenants and how to keep them away from you. Now, it’s time to take a deep dive to address some of the questions you might have had about it. What sort of standards do you need in the first place? What do credit and other background checks entail? What are good ways things to note down on your lease agreement? Although kicking out a tenant can be done legally, you’d regret not knowing the person better in the first place.

 

Remember, finding a tenant isn’t a “high-risk, high-reward” kind of ordeal, but more of a “sowing and reaping” type of situation. The more you take your time to polish your screening process, the less risk you have in dealing with seriously troublesome tenants.

 

Set High Standards

Like what personal growth gurus would say, set your standards high. One of the benefits of setting the bar high is you tend to understand your worth. While that sounds a little too far from the realm of real estate, it’s the same idea for your property. If you value your property, people that understand its worth should live in them as well. Just like how animals wouldn’t understand the worth of pearls, some people, while they shouldn’t be treated like animals, certainly act like one and would most likely give you and your property a bad time.

 

Using Rental Application Forms

To ensure that your applicants do meet your standards, you might want to use a rental application. This form can gather up the details about the application to know if they pass the first phase or not. If you’ll be doing background checks as well, which we encourage and will talk about later, there’s a good chance that filling out a form is required anyway. This is also a great opportunity to introduce the terms and conditions of the lease agreement. If they decide to turn away because of some of the terms (occupancy restrictions, no pets allowed, etc.), then that saves time for both parties.

 

Below is a list of the things you can ask for on your forms. If you want free templates, Google is your friend. The following details can also give you an idea of what your own standards would look like.

• Basic details: full name, current address, previous addresses, and contact information.
• ID details: social security number, driver’s license number, etc.
• Employment: company name, job title, previous employment, and income (should generally be two to three times the rent) with proof
• Dependents: age and number of children and the types of pets owned
• References: Preferably from previous landlords (and not friends nor family)

 

When handing over these forms, it’s common practice to charge a fee for the due diligence required. People who don’t want to spend a little to prove their integrity might not be the best for your business. Also, depending on your location, this amount may be nonrefundable.

 

Credit and Other Background Checks

Listen, there’s an easy and lengthy way of going about this topic. The fact that you’re here likely means you want the easy way, right? So we’ll give it to you in the fewest words possible.

 

Go with reputable tenant-screening services. 

 

Too short? Sure, we’ll keep going just for a bit more.

 

These services allow you to review a person’s credit report easily. If you’re born and raised in the United States, not to mention being a landlord now, you should have already learned what credit reports are before you got to say your first word. But for those who might have missed the bus, in simple terms, a credit report is a collection of someone’s information, which may include rental history, employment, spending history, and many more. (It’s as creepy as it sounds, but no other earthly power is stronger than information.)

 

We would also recommend checking on criminal records. They’re available to the public for whatever purpose (unlike credit reports) but can become time-consuming since there’s no sole database with all the information together. For this reason, tenant-screening services also offer this as an additional benefit.

 

Each provider has its own specific set of rules, forms, and packages. Some even offer other tools to help you make your landlord experience better. We’ll leave it to you to do the research on which one suits you the best.

 

But once you have the report on your hands, what do you look at? These reports can get overwhelming, and you might get confused about what’s counted as passable or a bright red flag! Here’s a list of the things you need to look at:

1. Bill payment history. Do they pay their bills on time? If they don’t, who’s to say they’ll treat you differently?
2. Income to debt ratio. Despite having a sizable annual income, they might still be in the red due to debt.
3. Bankruptcies. This should go without saying after talking about debt.
4. Prior evictions, civil judgments, and criminal offenses. Do understand that rejecting a tenant based on a crime they committed may be seen as discriminatory based on the Fair Housing Act or specific laws in some states.

 

Don’t Settle!

If you think your standards are reasonable, don’t go lower than them just to have a tenant onboard! A few months without rental income is often financially better than recovering from an encounter with an uncooperative tenant. Instead of settling for someone who’s not up to par, try finding ways to have more people see your listing.

 

Beyond the Writing

While the written stuff is indeed helpful in your screening process, covering the “verbal” side of things could help you out tremendously.

 

Calling References

As listed on the rental application form, consider talking to two previous landlords and see what kind of people they are. Try to get an image of how they are as tenants, not only if they’re “good” people. You can see what we mean by the following questions:

 

Do they complain a lot? 

Were they consistent in paying rent?  

Are they clean in terms of keeping the property? 

 

Getting the answers to these questions can help you dodge a painful blow to your assets. You also might want to try double-checking the information given to see if they’re the right person. Does the landlord’s information online (if available) match with what the applicant entered? Someone might be saying all these positive things about your applicant, only to discover later that you were talking to their drinking buddy.

 

Reading Between the Lines

During the entire process, you’d obviously get a chance to talk to the applicants by phone, video call, or in person. As you converse to them, how do they respond? Do they look at you in the eye when you ask them a question? Do they find it hard to answer relatively simple questions? Do they ask about things that are already stated on the listing or lease agreement? Of course, it’s quite harsh to reject someone over a seemingly bad conversation, but this is something you can use to corroborate with the other information you have at hand. If you think they’re going to be immature when the going gets rough, you might want to find someone else.

 

Social Media

If employers do this to check on their job applicants, why shouldn’t you? When they say they’re an important person at a Fortune 5 company, does their LinkedIn account show it? Do they say they don’t have kids but have a baby in every other post? Do they seem to be the quiet type but see several wild house parties on their feed? Your rental might be the next one in line!

 

Who knows? Not everyone is active on social media, and some posts that you might consider questionable may have come from a different person at a different time. You’re not supposed to judge a book by its cover, but you’re still the one choosing which book to take home. Fiction or Non-fiction? Just make sure that you’re not deciding based on race, nationality, sex, religion, or disability. Check your area’s rules and regulations and the Fair Housing Act to keep yourself in the clear.

 

Other Solutions Exist

We’ve gone a little deeper than our first article, but there are still layers beneath that are yet to be uncovered! If the sound of all this work seems to be too tedious to continue, then there’s still a few escape buttons to press!

 

The first alternative is rather easy, which is just to get a real estate agent to do all the work for you.

 

But the next option may be much easier, depending on your case. If you think that this “landlording” around isn’t the life for you, you can always sell the property. We’ve talked about the selling process before, and choosing between an agent or investor is up to you whether you’re willing to do the extra steps or not. Should you want to go with an investor, please consider Shorefront Investments! Give us a call at (850) 713-4866, send us an email, or fill a form on our front page.