We promised a more detailed post on screening tenants, so here you go!
Make sure you screen your tenants thoroughly and don’t just accept the first person who shows interest in your unit (unless you’re lucky enough to have hit the jackpot early on your tenant search). Remember that you are going to be dealing with these tenants for a long amount of time and you don’t want to deal with them pestering you or not paying on time. Tracking tenants down to pay their rent is a full time job, avoid having to do this at all costs. I hesitate to even mention the E word (eviction), nobody wants to deal with that, so take the appropriate steps right off the bat to avoid this type of future!
After creating the most professional and detailed post you can (which we describe in more detail here), the emails and calls (depending on how you set it up because you can choose one, the other or both) will begin pouring in. A lot of people will ask to see the apartment, so make appointments in 15 minute intervals (I made the mistake of making them in one-hour intervals before; big mistake and waste of your time), but have low expectations on people actually showing up to see the unit (this varies based on price, location, and other factors). The more appointments you make, the higher chance you have of finding the right individual/family/group to rent your unit. It’s a numbers game, right?
Multitasking Your First Meeting
The next phase of the rental process (after creating a great online ad and staging the apartment) is tough, yet extremely important. When meeting and weeding through potential renters, you need to make clear what your expectations of the tenant are while screening them at the same time, all while attempting not to scare them away. In other words; you are going to be multi-tasking when showing the unit by:
Managing the potential renter's expectations;
Screening them as individuals as they tell you about themselves that requires making educated decisions;
Reading their personalities to gauge if they are someone you don’t mind dealing with for the long haul (almost like hiring an employee; are they someone you wouldn’t mind grabbing a beer with after work?);
Talking up the unit and its benefits of its location, the amenities it has to offer and what amenities surround it and make it their ideal place to rest their head at night.
Creatively Using Your Rental Application
After you meet them and show them the unit, the next step is getting them to fill out a rental application (you can easily find stock versions of these online). There are two ways you can do this:
By handing them the application on the way out the door. If they fill it out on the spot or send it back to you, you know they have put the time in and actually care to make the effort of living there. This helps to weed out non-candidates and the uninterested;
By having them email you. This is similarly effective, making them first go out of their way to get a hold of you by email and then adding another barrier with filling out and getting your application back to you. By doing it this way, you know they went out of their way and are actually interested;
Lastly, There are also a bunch of websites that can assist you in this by having stock rental applications that charges the potential tenants fees for their services as well as for credit checks. One of these sites is called Turbo Tenant and cost nothing for you as a landlord.
The Important Questions
Once you get a few applications in, it is time to sift through them and find the right match (I am making it sound easy, getting people to this point takes time and effort unless your apartment is pristine and a good deal, which it is most likely one of those and not the other). Calling references is essential to determine if other landlords/people think they are solid tenants. Shy away from calling family members since they are biased. Another important thing to do is check their credit and work references. Questions to ask yourself, the tenant and their references:
Are they employed? If they don’t have income coming in, how are they going to pay you their rent and support themselves? If they are young, have their parent co-sign so you can hold them liable, but don’t assume their parents are well enough off; do a background check on all involved and be strict in your credit/income screening process;
Can they afford this apartment on what they are making and still have funds left over to save/ spend? If they have a job, that is a great sign, but does their job(s) lend the support that they need to pay rent/security, utilities, car bills, student loans, everyday living; like food, and sill leave them money to save? We like to think of having between 30% and 50% of their NET income for their rent;
Is their credit at least fair/good? You should also be checking to see what other expenses they have on their credit report like car loans, student loans or any other liens. Credit proves if they can and have paid their bills in the past. It also tells how much recurring debt they have. Only in rare situations can this be overlooked;
How many apartments have they lived in the past? This question is if you are looking for someone to live there long term. If it looks like they are moving every year or less, maybe the person who has lived in their last apartment or last few places a few years or more is more likely to save you the trouble next time around and keep the unit occupied on a more long-term basis. But again, the rest of the criteria in the application needs to make sense too;
Other things may be important to you personally such as if they are smokers or if they have pets; make sure your application covers these things. If it is important to you, don’t settle until you are happy. Remember, these people are living in a property YOU own; you will be dealing with them long term, you need to make sure they fit with you and you fit with them.
Once you have chosen your final pick, make sure you get the lease signed on each page and dated. Before keys are handed over, make sure you have you first month’s rent (and last depending on the state you live) and whatever security deposit has been agreed upon. Once they move in, there is less urgency to get you that money, so make sure it is in your account before they move in.
Of course, writing a lease is a whole separate issue and if you don’t have one already written, you can look up stock leases online. We will elaborate on writing a good lease and what needs to be present in that lease in a later post. Your lease is THE contract between you and your tenant. It is the only line of defense you have when it comes to the details in the responsibilities of yourself and your potential tenant. If one line is worded wrong, you can be in big trouble if you run into many issues (so consult an attorney, we are not one).
As always, if you have any questions relating to screening tenants, renting apartments, buying real estate, or any real estate questions in general; please feel free to contact us at any point. We love to help people in any way we can. Our expertise is at your disposal!
Chris and Joe have years of knowledge, stories, and experience to share with you. This is where you can access their minds, to learn about what they do and how homeowners can be more effective when in tough situations.