Qualifying Perspective Tenants
If you’re renting out a property yourself – or are involved in making the decision with your property management firm – there’s some basic pieces of information one should consider when qualifying tenants for your property.
- Income – the combined gross income of the perspective tenants should be approximately three times the size of the rental amount. Make sure to verify this through copies of paystubs or through tax returns. When looking at income – also try to evaluate the stability of the income sources (has someone worked at a company for years – or did they just start).
- Past landlords – check with at least the last two landlords (assuming they’ve rented in the past). Ask for factual information (i.e. did they pay the rent on time, did they maintain the property) but also try to get a read on the landlord’s perspective on them.
- Credit and criminal checks – run a credit and criminal check on all adults living in the household. You’ll need to come up with your own criteria to evaluate this information– but also make sure that the application that they complete allows you to do this. There are several credit companies that can do this for you.
- Interactions during the application process – although it’s difficult to quantify this, make sure that you’re comfortable dealing with your perspective tenants. Have they provided all the information requested, was it consistent with the reports that you ran, etc. Also, were they pleasant to deal with. There will be issues during a tenancy – even if it’s just maintenance problems – so if they’re hard to deal with during the application process…it’ll be even more difficult if/when tangible issues arise.
Do your homework and take the time to get the right tenant. Having a problematic tenant is worse than having the property vacant for a slightly longer time frame in order to get the right residents in your property.