Own a real estate rental property? If so, you know there are plenty of challenges. From keeping your property in good condition to paying the mortgage on time, here are a couple tips for making your life easier in the long run when searching for your next tenant.
Find a Professional to Help You
Hire a professional real estate broker or property manager who has the experience and knowledge. It's worth paying a monthly property management fee and a commission to secure a tenant. It may actually save you money and maintain your home value in the long run as a bad tenant can be a very costly mistake.
Finding a Tenant
Should you choose a professional, they'll have access the Multiple Listing Service where they can place your rental. Your property listing should also be posted on top real estate websites such as Realtor.com, Zillow.com and Apartments.com. Sites such as Craigslist.com can be an asset as well. Be sure all requirements are stated in the listing, such as if pets are allowed or not, so as to draw out the best applicants. Once you have an interested tenant or tenants, your broker or property manager can set up the showings. A professional has the ability to interview the tenants at the showings and draw out what type of character they have. You want someone with good communication skills, someone who is reliable and responsible and someone who will take care of your property.
Once the tenant submits an application, the broker or property manager will pull their credit report. This should show any reported rental payment history, car payment history, credit card debt amount and payment history. It will also show any legal or financial judgments against them. The three main credit bureaus are Equifax, Experian and TransUnion. Experian.com states that any score below 580 is considered a very poor credit score. A score of 580-669 is considered a fair score. Applicants with a fair credit score may be required to pay a double or triple security deposit. A credit score of 670-739 is considered a good score. A score of 740-799 is very good. A score of 800-850 is considered exceptional. Applicants with good to exceptional credit scores are a good bet they'll be less problematic with making timely rental payments.
Income and Employment History
You should also consider the applicant's income and employment history. Typically a tenant should make at least three times the monthly rent in income. This will help make sure that the tenant has enough money to pay rent, utility bills, car payments, credit card payments, and also purchase food, clothing and other necessities. If an applicant has only worked at their place of employment for a short time, ask about their past employment history. If an applicant changes jobs often, it may be a red flag.
Savings or Investments
You may also want to ask the applicant to show you proof of any savings or other investments. If they have some money saved, it will help them pay rent if they ever experience a job loss, illness where they cannot work or any other life emergency.
Rental Payment History
Always verify your applicant's rental payment history with their current or past landlords. It's important to find out if they always pay rent on time or if there are late or non-payments. Also, ask the landlords if they took care of the property, kept it clean and whether of not they did any damage. If a tenant takes care of your rental property, it will help keep keep your property or home value high.
Finding the perfect tenant for your rental can take some time and effort. Well worth it in the long run.