Don’t make these 7 mistakes if you’re looking for good tenants
It’s obvious -- a good tenant is important because they will take care of your property, pay their rent on time, and be a generally good person to have around. Placing good tenants helps ensure consistent revenue, lower expenses, and ultimately more money in your pocket as a landlord.
Don’t do these 7 things if you’re looking for good tenants...
1. Skip the check on their rental history.
Verifying a potential tenant’s rental history is probably the most important thing you can do, since what they did in the past is an indication of what they’ll do in the future (as a renter at least).
Some red flags in a tenant's rental history might include things like a history of eviction, a history of late or unpaid rent, or a history of damaging the property.
How do you make sure a tenant will pay on time?
There is no surefire way to ensure that a tenant will pay their rent on time, but there are a few things that landlords can do to help encourage timely payments. Be clear about when rent is due and what the late payment policy is. This should be stated in the lease agreement. One option is to offer a discount for tenants who pay their rent on time. Another option is to require that tenants set up automatic payments from their bank account or credit card. You can keep a close eye on tenants' payment history and require a larger deposit from tenants with a history of late payments. Finally, be proactive about following up with tenants who are late on rent. Send a reminder email or text message a few days before rent is due, and then follow up with a phone call or in-person visit if rent still has not been received.
2. Skip the credit and background check.
Skipping this won’t give you an idea of their financial stability and whether they are likely to pay rent on time.
There are a variety of factors that go into a credit score, including: payment history, outstanding debt, credit utilization, length of credit history, and more.
What is a good credit score for tenants?
There is no definitive answer to this question as different landlords and property managers may vary in their requirements, but generally speaking, a good credit score for tenants is anything above 650.
3. Don’t speak to their references and former landlords.
While some references will likely give you BS answers, speaking to a tenant’s former landlords will give you another picture of how they were as a tenant.
Here are some questions to ask their references or former landlords:
- How long have you known the tenant?
- How would you describe the tenant's personality?
- How many times was the tenant late on rent?
- Has the tenant ever caused any damage to your property?
- Would you recommend the tenant to other landlords, or would you rent to them again?
4. Have them fill out a simple application form.
Make sure you have a detailed and thorough application. This will give you an idea of their rental history, credit history, employment history, and more.
What should be on a tenant's application form?
You should at least collect:
- Social Security Number
- Date of Birth
- Current Address
- Previous Address
- Employment History
- Rental History
- Credit History
- References (personal and previous landlords)
5. Don’t speak with them on the phone, do a video call, or meet them in person.
Skipping this will not give you a chance to get to know them and get a feel for whether they would be a good tenant.
It is always a good idea to meet with the potential tenant in person or via video call to get a sense of their personality and whether they seem like someone who would be a good fit for your property.
How many tenants should you screen?
There is no definitive answer, but as a general rule, you should screen at least three tenants.
6. Sign a lease without reading it first.
Before you sign a lease with a new tenant, be sure to read it over carefully. This will help you to understand your rights and responsibilities as a landlord. If you have the resources, having a lease created by an attorney may save you money in the long run. This is because they can craft the lease to favor your rights as a landlord, and ensure everything is enforceable for your state.
7. Forget to set up a renter's insurance policy.
While this is optional, renter's insurance is an important protection for both landlords and tenants. It will help to cover the cost of damages if the tenant accidentally damages the property.
There is no one-size-fits-all answer to finding good tenants, but these are some pitfalls you can avoid to increase your chances of finding responsible, respectful tenants who will take care of your property. In turn, you’ll increase your profits as a landlord.