Let me start by saying tenants get a bad wrap, or maybe are stereotyped for being somehow not as worthy or good as homeowners which creates fear amongst owners. Stereotyped as dirty, mean, won’t pay rent, will damage the property, etc.. Sure, it happens, but more often than not they are great, pleasant people, especially if you follow a process in picking them. And just because they’re renting does not mean they are not worthy or even very well off. This last couple weeks I’ve placed an Air Force F-16 Pilot Instructor, a hospital administrator, a college professor and a very well off technologist all of whom could easily buy if they wanted but for various reasons chose to rent for a year.
Finding great tenants is VERY important to protect your investment and your sanity. A vacant property is much better than one with a bad tenant. Over the years we have come up with great criteria and know how to see warning signs of tenants that are likely to be trouble for our owners. I thought I would put together this short list to help you understand some of what we look at.
- Past Evictions- This is a huge red flag. We do not rent to tenants that have evictions or that still owe money to landlords or apartment complexes
- Felony’s- Violent felony’s within 10 years will disqualify applicants (Varies by state please check laws on disqualifications)
- Sex Offender List- For obvious reasons we check for these violations and will disqualify
- Credit/ Credit Score- We like to see 600 or higher but more important is why the score bad. Do they have something like a medical collections dragging the score down or is it someone who owes every cell phone provider and utility company they ever dealt with
- Income- We require at least 3 times the rent in combined gross income
- Applicant need to move fast/ are in a rush to take occupancy
- Cannot or will not furnish proof of income
- Cannot furnish identification
- Has open Bankruptcy
Common mistakes owners make:
- Not having set guidelines
- Bending their guidelines because the person(s) seem nice
- Not running credit and background on all occupants over 18
- Cutting corners
- Not having a solid lease agreement
- Not keeping up with rental comps
- Not maintaining great records such as contracts etc.
As always if you need assistance with a property you own please feel free to contact us.