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What are Tenant Selection Criteria?
One of the most important decisions you will make as a property owner is whom do you rent to? Whom do you trust with the home you own? What can you do to protect yourself and your property and get a reasonable return from this investment?
Real Property Management’s informative series on rental home management answers many of your questions about being a landlord and this very important topic, Tenant Selection.
Let’s assume you have advertised the availability of your property and people are contacting you or are driving by the home. Now that you have the leads, the most difficult part of the process begins, tenant selection.
Meeting with and touring prospective tenants is a time-consuming and difficult task. You will need to show your home several times, probably at the prospective tenants’ convenience, before you find tenants who are seriously interested in the home and who will complete an application.
Application? Yes, you will need a completed application that provides the prospect’s basic personal information. You will use this information to start your tenant selection.
The tenant selection criteria we will discuss provide the basis on which you, the landlord, will make the decision to approve or deny a prospective tenant’s rental application. Have an attorney review your application and selection criteria to ensure that they are in compliance with federal Fair Housing Laws and local statues.
First, establish that the prospective tenant has the means and intent to pay the home’s monthly rent. Verify the prospect’s employment and that the income amount they specified in the rental application sufficiently covers the property’s rental amount plus the usual utilities and monthly public services. When calculating net income, consider the prospect’s outstanding debts, child support, garnished wages, car loans, and credit cards. This can become complicated and a time consuming task.
Obtain a copy of the prospect’s credit report from a credit reporting agency. If the prospect passes the credit history review with good marks, then you will need to check the prospect’s references and previous rental history.
Contact each of the previous landlords listed in the applicant’s history to verify that the prospect paid rent on time and properly maintained the home.
As a responsible landlord, you may wish to perform a criminal history investigation to protect your property. Not properly screening tenants can lead to significant issues. For example, a tenant with a criminal history of drug use could possibly sell or manufacture illegal drugs in the property and make the home toxic. Do your due diligence to protect yourself, your family, and your neighbors. Doing background research can be a time-consuming and arduous process, but it is necessary to find a quality tenant for your home.
Real Property Management has trained individuals who collect all of the appropriate supporting documents; verify information presented in the application; run and analyze credit applications, criminal history reports, and eviction histories; and make sure that tenants have the means to support rent and other financial obligations to minimize the risks in tenant placement.