As a landlord or property manager, you know that the right tenants can be worth their weight in gold. The wrong tenants, on the other hand, can cost you time, money, and peace of mind.
So how do you ensure you’re getting the best tenants for your property? By looking for red flags during the tenant screening process.
In this blog post, we’ll discuss some of the most common red flags to look for when screening tenants. In addition, we’ll share tips for encouraging responsible tenant behavior and explain how to deal with difficult tenants.
- Tenant screening helps landlords find responsible tenants by conducting background and credit checks.
- Landlords can encourage responsible tenant behavior by offering online rent payments and keeping the rental property well maintained.
- It is vital to address problems immediately to avoid further problems.
- Being a responsible landlord and setting clear expectations from the start can help you ensure that your tenants will be responsible.
How to find a responsible tenant
Tenant screening can reduce the chances of renting to a tenant who may damage the property or not pay rent on time.
Follow best practices to find responsible tenants:
Collect information from the applicant
When screening tenant applications, landlords typically request 4 types of information: employment history, rental history, credit report, and criminal background check. Here’s what each of these can tell a landlord about an applicant:
- Employment history. Get insight into an applicant’s stability and income. Consistent employment history is often seen as a sign of a responsible tenant.
- Rental history. Get a sense of an applicant’s rental history, rental payments, and whether they have ever been evicted.
- Credit report. See an applicant’s credit score and credit history. A high credit score is often seen as a sign of a responsible tenant.
- Criminal background check. In some states, you may view criminal convictions that an applicant has on their record for tenant screening purposes. The U.S. Department of Housing and Urban Development has published important guidelines on how landlords may use criminal histories without violating Fair Housing laws.
An online tenant screening service can help you with this process.
Several services are available, including RentPrep (a Roofstock company), E-Renter, and TransUnion.
All 3 of these services offer access to credit reports and, where permitted, criminal background checks. Tenant screening fees may be paid by a landlord or passed through to the prospective tenant.
Verify the accuracy of the information
Verify current and past addresses, employment history, and rental references. Checking references can help you avoid renting to a tenant who may cause problems down the road.
There are a few red flags to look for. If a reference refuses to provide their contact information or seems evasive when asked questions, it could be a sign that they’re not being truthful. Additionally, if a reference can’t verify that they rented to the applicant or has only negative things to say about them, that’s another red flag.
When speaking to references, ask specific questions about the applicant’s rental history, employment history, and personal character.
Decide on the applicant
First, establish tenant selection criteria. This could include things like a minimum credit score or a minimum rent-to-income ratio. A rent-to-income ratio is the percentage of someone’s monthly income that goes toward paying rent. For example, if someone has a monthly income of $3,000 and pays $1,500 in rent, their rent-to-income ratio is 50%. Generally speaking, you want your tenants to have a ratio of 30% or less.
Next, treat all applicants fairly and equally. Comply with state landlord-tenant laws and federal housing laws. Landlords cannot discriminate against tenants based on protected characteristics like race, religion, national origin, or disability.
Additionally, it’s essential to be consistent in your tenant selection criteria; if you reject one applicant for having poor credit, you shouldn’t rent to another applicant with similar credit problems.
Encouraging responsible behavior from tenants
Here are 5 tips to encourage responsible behavior from your tenants:
- Communicate. Let your tenants know what you expect of them, and be available to answer questions.
- Establish ground rules. Let your tenants know what is expected of them in terms of rent payments, quiet hours, property damage, and other important topics. You may be able to prevent misunderstandings and potential conflicts by setting clear expectations from the beginning.
- Create a positive tenant-landlord relationship. Get to know your tenants and be quick to respond to maintenance issues or concerns.
- Use online rent collection. Encourage on-time rent payments with online rent collection like Stessa’s feature. Tenants can easily and conveniently pay rent from anywhere at any time. Additionally, Stessa’s platform offers features like free Automated Clearing House (ACH) payments, which can help you ensure that your tenants make their rent payments on time.
Stessa, a Roofstock company, offers free cloud-based software that helps real estate investors maximize profits through smart money management, automated income and expense tracking, personalized reporting, online rent collection, and more. More than 100,000 investors already use Stessa to track over 250,000 properties with more than $60 billion in asset value.
- Be consistent with your rules. Allowing one tenant to break the rules sets a precedent for other tenants to do the same. However, if you consistently enforce the rules, your tenants will be more likely to respect and follow them.
Dealing with difficult situations
As a landlord, you will inevitably encounter difficult tenants at some point. While it’s not always possible to please everyone, there are some best practices you can follow to minimize conflict and keep your tenants happy.
First, try to be understanding and flexible. Difficult situations often arise from miscommunication or misunderstandings. If you can have an open dialogue with your tenants, you’ll be more likely to resolve any issues.
Second, be firm but fair. If a tenant is causing problems, it’s important to take action quickly. However, you should also avoid being too heavy-handed.
Finally, remember that difficult tenant situations are often temporary. With a bit of patience and understanding, many problems can be resolved.
While it may take some effort to find responsible tenants, screening applicants and resolving conflicts quickly can go a long way in keeping your property in good condition and your stress levels low.