Be Smart Landlord
How to Find The Perfect Tenant
Step 1: Prequalify tenants over the phone
Hearing the phone ring is an exhilarating feeling. That means people are interested in your rental. Don’t immediately invite prospective renters to visit the property, assuming everyone is qualiﬁed for the unit. The rental screening process starts here. Don’t waste your time on people that aren’t serious or are unqualiﬁed for your property.
Frame your questions carefully. The way you ask questions can dramatically affect the way renters answer them. If you say, “This unit only ﬁts two people. How many people will be living here?” it tells them exactly what you’re looking for, giving them the opportunity to be dishonest. Instead, ask, “How many people are looking to move with you?” to get them to disclose their information ﬁrst.
Not qualiﬁed for this property? Wait! If this prospective renter doesn’t ﬁt the property they’re interested in, you may have a unit later on that will be a better ﬁt. Keep track of prospective renters by entering them into a spreadsheet. You can use that spreadsheet to track the progress of each application and compare each prospect’s qualifications. If you have more than a handful of rental properties you will need a lead tracking system to stay organized. Lead tracking systems make it easy to match prospective renters to available properties that ﬁt their needs. That way, you’re not losing a lead.
Invite prescreened renters to the showing. After ﬁlling out the pre-qualiﬁcation sheet for everyone who’s expressed interest, you should be left with the most serious prospects. Invite them to a scheduled apartment showing to give them a tour.
Step 2: Show the property
Don’t skip this step, no matter how perfect prospective renters sound during the pre-qualiﬁcation. Put a face to the person’s name and meet your renter. After your renter signs the lease, you’re going to work with them over the span of the lease, so it’s important for you get an idea of what type of person he or she is.
Add social pressure. Prospective renters that go to open houses with other attendees will feel that they’re in competition. Their interest will increase and it will create an urgency to move through the application process faster than the other prospects.
Keep track of prospective renters by entering them into a spreadsheet.
Step 3: Accept and analyze applications
Some landlords use their gut instinct to choose their next renter. However, a gut instinct won’t protect you in court if you’re facing discrimination accusations or evicting a tenant. Require all interested renters to ﬁll out an application for your records.
Use the same criteria for all applicants. Even out the playing ﬁeld and remain objective when analyzing applications, preventing any discrimination accusations. Use the same application and requirements with all renters. This will allow you to fairly compare all prospective renters and choose the best one based on hard facts.
Check ID. You want to make sure the upcoming tenancy will go as smoothly as possible, so put a face to the name. Make sure you’re not meeting a person representing the actual prospective renter.
Keep a paper trail. The applicant’s paperwork can be used to protect yourself against discrimination accusations. Although it is ultimately your choice in deciding who lives on your property, tenant selection must stay within the the federal Fair Housing Amendment Act (42 U.S.C. §§ 3601-3619,3631) . Also check your local and state discrimination laws for additional regulations. To minimize the chances of being involved with a fair housing charge, treat each applicant equally and fairly and hold onto the paperwork for at least two years. If you end up in a with a fair housing charge, your documentation will support your case.
Check applications for disqualifying factors. Carefully read all the applications and check for any obvious disqualifying factors or inconsistencies. For example, if the applicant is currently unemployed and has no other income sources, that’s an instant red ﬂag.
Be wary of false information. It’s not a criminal offense to lie on a rental application. Some people give false information on their application because they think they can get away with it. Be suspicious of all the information in rental applications. You’ll be able to uncover the truth in the credit and reference checks.
Step 4: Perform reference checks
Even though a rental application looks great, don’t stop your screening process there. As previously mentioned, dishonest people can still slip through the cracks during the application and prescreening process. Checking references will accurately paint a picture of your tenant’s ﬁnancial and rental history.
Check LinkedIn for employers. Search for the applicant and applicant’s employer on LinkedIn. Their LinkedIn proﬁle should match the employment history on their application. Even though not everyone has a LinkedIn proﬁle, nearly everybody is found on Google. If the information you ﬁnd online on the employer or applicant is inconsistent or non-existent, be suspicious and keep this in mind as you further investigate during the reference calls.
Carefully construct questions. Companies have various regulations on how much information they’re able to disclose about their employees. Use employer phone calls to verify information on the application, rather than asking for additional information. Rather than asking an employer, “How much does Thomas Baker earn?” ask, “Thomas Baker stated in his application that he earns $4,550 per month, is this correct?” You’ll increase the likelihood of getting a response if it’s a yes or no answer.
Be wary of impersonators! Landlords and employers can easily be impersonated. Carefully word your questions to make it possible to catch fakers off-guard. For example, don’t tell them what their role is by saying, “Hi, I’m a landlord doing reference checks on Thomas Baker. He listed you as his landlord, how was he as a tenant?” This will tell the person answering the phone who they’re playing to role of a previous landlord. Instead, ask questions such as, “Hi, I’m a landlord doing reference checks on Thomas Baker. How do you know him?” If you hear, “We met in college,” you’ll quickly detect a fraud.
Check for criminal and sex offender history. Unsurprisingly, landlords aren’t very keen on tenants with a conviction history or a record of sexual offense. While some credit checks will include criminal history, it sometimes excludes certain convictions. Use a third party site such as TransUnion’s SmartMove service to conduct a full criminal background check. Use a “Megan’s Law” database to see if the applicant is a convicted sex offender. You may deny applicants for convictions of criminal offenses.
Step 5: Run a credit report
Only honest applicants will admit to a poor ﬁnancial history or a bad credit history. Other renters will try to weasel around their poor credit history and lie. Credit reports can tell you a lot about a renter: payment history, bankruptcies and sometimes criminal convictions and previous evictions. Don’t trust anything until you see the numbers yourself in their credit report.
Perform a soft credit check. All three major credit rating agencies (Equifax, Experian and TransUnion) offer services that allow tenants to initiate a credit report that can be shared securely with a landlord. These soft checks will not ding a renter’s credit. Be wary of accepting a copy of a credit report directly from a prospective renter. Printed and digital copies can be altered. By using TransUnion’s SmartMove or Experian Connect you will ensure you get accurate information from the tenant. After you enter your information, all you need to obtain a credit report through these services is the applicant’s name and email address.
Analyze the report. Once you get the report back, look for any history of poor payment history or a low credit score. Credit scores will tell you if the applicant makes credit payments on time or owes money, and also the length of credit history and the types of credits used. If your tenant doesn’t pay his credit card bills, he might not pay his rent either.
Get credentialed if you run reports often. To run a credit report yourself, you need to be credentialed to access sensitive information. Use a screening solutions company such as NTN Online to get started with obtaining your credentials. You may need information such as a business license to prove that you are a professional in rentals.
Step 6: Make a decision
The applicant is ﬁnally in the home stretch! After reviewing the application, checking references and reviewing the credit report, the applicant will either be signing a lease or receiving a rejection letter.
The rejection letter. Unqualiﬁed applicants that have bad credit history, insufﬁcient income, negative references, criminal offense history or other inabilities to meet your rules and regulations should be turned away. According to the Fair Credit Reporting Act, which is a national regulation, you must provide the prospect with a letter informing them why they were not approved, what agency you used to process their credit report and information so that they can receive a copy of the credit report. You had good reason to turn them away, and it’s all backed by documentation.
Lease or rental agreement signing. Congratulations! You have your next tenant. Make sure you sit down and review all the rules and regulations of your property to make sure your tenant has a clear understanding of your expectations. It’s crucial for the tenant to have all of the funds for the security deposit and ﬁrst month’s rent ready to hand to you before signing the rental commitment. Once you have received all payments, have your tenant sign two copies of the lease. To make it easier, use an electronic lease that can be signed through a tablet like an iPad. Be sure to give your new tenant a copy of the lease for their records.
Make sure you sit down and review all the rules and regulations of your property to make sure your tenant has a clear understanding of your expectations.
Even though we know a lot about rental marketing, we’re not lawyers. If you’re setting up documentation, we recommend consulting with a legal professional.
Content Courtesy : Zillo Company