The single, most important step in managing your rental property is choosing the right tenant. Spending extra time and handling the process carefully will prove to be well worth the effort.
With attention to these details, your investment will be protected and grow in value. Here are few suggestions to help you make the right decision.
¢ Talk with the potential tenant and ask detailed questions. If the answers you receive are not consistent, consider this to be a red flag.
¢ Have [AOA] supply you with a credit report. A credit score is very important; however, it is also very important to examine a potential tenant’s credit history. [Editor’s Note: AOA offers a credit and eviction report for the low cost of only $10 when you obtain both reports together!]
¢ Pay attention to debt/income ratio “ is there enough income to pay rental expenses as well as the tenant’s other bills?
¢ When reports appear border line, consider requiring a co-signer. Make sure that the co-signer is local and process his or her application the same as you do a tenant’s. A co-signer must be perfect to qualify.
¢ Check criminal records. [Editor’s Note: AOA also provides this service to members.]
¢ Make sure to verify current employment, income and rental history. It is always a good idea to get those items in writing.
¢ Request additional deposits in situations that credit/income is not very strong.
¢ Consider charging two month’s rent as a deposit instead of using the term last month’s rent. The dollar amount may be the same’ however, rent payments and damages can be paid from this deposit. When the last month’s rent is collected, it can only be used for that reason.
¢ Do research with Google searching the tenant’s name. You often can find a lot of information. Remember that some information may not be correct “ verify it.
¢ When possible “ visit the home where the tenant currently lives.
¢ If the tenant owns a house outside the area, contact a real estate agent involved in selling or managing that house in regards to its condition. Get those answers in writing.
¢ I suggest taking advantage of non-smoking policies. There are major difficulties in re-renting properties after smokers move out.
¢ If a home has a Home Owner’s Association, please make sure that the tenant has a chance to review documents and regulations before signing the lease.
¢ Request proof of Renters Insurance. It will protect the tenant as well as the owner.
¢ Request copies of important documents “ driver’s license, working visa, employment letters and more.
¢ If your decision is to reject a tenant, make SURE to send a letter informing the applicant about your decision. [AOA’s Notice to Applicant form has all the required legal information you must give for the rejection.]
With years of experience managing property and finding the best tenants, I continue to follow these tips diligently. When you have found the best tenant for a property, you can rest more easily and have peace of mind.
Camille Besset is with Excellence Seattle Property Management, www.seattlepropertymanagementblog.com. Reprinted with permission of UPDATE, the official publication of the Rental Housing Association of Puget Sound.