Ultimate Guide To Finding the Right Tenant
When it comes to renting your property, selecting a tenant is the most crucial step, as it directly relates to profitability. However, there is a fine line between filling a vacancy to maintain cash flow and finding your ideal tenant. At times, it may be necessary to turn away some applicants who do not meet your criteria.
Here at Lofty, we know there are two ways to learn: from the experience of others or from our own mistakes. Since we don’t really like to make mistakes, let’s focus on how best to apply the lessons learned!
There are five basic qualities to look for in your tenant assessment:
- Rent payment is affordable
- Historically pays rent on time
- Stable employment history
- Will treat your home like their home
- Meets or exceeds your verification standards
Getting The Word Out
The right tenant will make your life easy, pay their rent in full and on time, keep your property well maintained, and keep your neighbours happy. There are a lot of renters in your city, so finding the ideal tenant is always possible.
The first point of engagement is the listing you post for the vacancy. Write a listing that speaks to your ideal tenant. Put yourself in their position and try to imagine what might stand out for them about your property, and make it really stand out. Support your well-written listing with photos, and a floor plan if available.
Keep in mind, some renters will not even read the listing if there are no photos. In some cases, they may assume there is something you are trying to hide. Again, think about it from your audience’s position: no one wants to waste their time on a unit in poor condition. In short, bad photos can hurt but not worse than no photos, and good photos are the best kind of all!
Throughout the process, no matter what happens, the key to choosing the right tenant is to pay attention to the facts and be patient—try to avoid acting out of emotion. There are lots of nice, friendly people that may not fit your well thought-out criteria.
Set Criteria That Will Stick
When choosing criteria for your new tenant, there are many things to consider. From local laws to the area of town in which your property resides, the list will vary greatly. The best advice is to keep an open mind and stay aware of the opportunities around you. For example, if you own real estate for rent near a college, consider some of your strongest applicants may not have any credit or employment history so co-signers may be an option.
It is up to you to determine your screening guidelines and consistently apply these for all applicants. On average, applicants are required to earn a gross income of three times the monthly rent. This can be verified via pay stubs, tax returns, bank statements, etc.
Other verifications may include the minimum acceptable credit score, criminal background check, and a check for previous evictions.
Follow A Formal Process
An application form is the most effective way to gather all the information necessary to assess a potential tenant’s suitability. It allows you the opportunity to request the key pieces of data in an organized fashion, which will save both you and your applicants time and annoyances from multiple requests for further info as you process the application. After all, it is your aim to make the selection process as simple as possible, so an online application is highly encouraged.
Vital information includes:
- personal details of everyone over the age of 18 who will be living in the property
- the name and contact details of their current and previous landlord
- and the contact details of their employer.
Make sure to state that only fully completed application forms will be considered to avoid unnecessary follow-ups. One of the benefits of utilizing a property management service like Lofty is paperless applications and record-keeping that saves you time and money. Removing yourself from engaging the entire process directly can also aid your ability to make a rational decision based on evidence.
While we always want to take people at their word, it is imperative that all pertinent information has a data point to backup the information listed on their application. Remember, the success of your investment over the time period of this lease, is directly tied to this tenant selection process.
In order to perform the necessary credit, criminal and eviction verifications, you will need to obtain personal information and employ a very reputable resource to run these reports. Those with a less than desirable past may try to hide it so make sure you verify the details they give you with valid identification to ensure the details are correct.
Your best opportunity to find out how your current applicants might be as tenants may be found by contacting their current landlord. Provided they are honest in their responses, this will be a great insight into your future year with your new tenants. Do they pay their rent on time every month? Has their behavior ever resulted in receiving noise complaints from neighbors? Have they caused any damage apart from general wear and tear to the property? If their landlord could do it all over again, would they rent to them again or for another year? These are the questions you want to ask.
When It Comes To Pets
If you are on the fence regarding an applicant with a pet, it never hurts to ask to meet the animal. An in-person meeting may not always be possible, but with the various methods of communication afforded by technology, there may be a way to set your mind at ease. Pet rent, pet fees and pet deposits will also help you out in safeguarding against damage caused by negligent pet-owners.
Send A Rejection Letter
When you have completed the process and selected your tenant, notify those not chosen in writing. Make sure to provide the reason they were denied in reference to your original criteria. Perhaps it was based on too low of a credit score or not enough income to qualify.
Successfully leasing a rental property is not always an easy or efficient process. However, you can save a great deal of time and money down the road by doing it right.
Here at Lofty, there are two guidelines we are highly focused on:
- Rent gets paid on-time, consistently
- Tenants who will treat your home like their home
Our goal in assessing tenants is to ensure they are best suited to meet and exceed these two overarching points—then everything else seems to fall into place. As such, our owners are delighted with the tenants we have found for them. Join the club with Lofty, Chicago’s top Property Management service.
Whether you just need to find the right tenants for your investment property, or you want everything managed from top to bottom, live the life you deserve and let Lofty handle the rest.