Having the ideal tenants for your property is critical in ensuring the success and profitability of your property investment assets, and it all starts with the proper screening process.
Especially when your property is strategically located in a prime and sought-after area, where you can have throngs of tenant wannabes who want to be selected.
However, not every tenant can be promising and may bring with them some undesirable habits that could cause property managers or landlords more problems down the road.
Screening is critical
Seriously, screening for tenants is one thing that should never be neglected or ignored because it can impact the investment experience in the long run.
You must ask the right questions, whether it is a personal interview or an online application form because it will help you get a picture of your candidate’s profile, rental history, and relationship with previous landlords or with neighbours.
While it may not be a perfect solution to give you the best tenants, it does greatly reduce the likelihood of getting a bad tenant.
Generally, the ideal tenants are those that have good credit and rental history, can pay rent consistently and on time, have great references, and earn income no less than three times the rent rate.
Personal information
This is the first thing that comes to mind when you need information from your potential tenant. It may require key details of the candidate’s data such as their full name, current address, birth date, email, and phone number, as well as other details that may be needed.
This is ideally applicable for application forms where details are written down and filed by the landlord or property manager electronically or in a physical filing system that is only accessible to authorised personnel.
Social security numbers may be sought, however, it is not recommended or required, since there are regulations and restrictions in storing data and could be held against the landlord or property manager in the event of a data breach.
Income and employment history
This will help the landlord or manager assess the applicant’s work history, employment status, and income. For background checks, it is alright to ask for their current employer’s details for reference and background check purposes.
Rental history and references
When doing a background check, it is vital to validate the information provided by the applicant, which is why it is necessary to check on their rental history and references.
Lifestyle
It does not have to be whether they are engaged in extreme sports or something similar, rather it is more on their lifestyles such as having pets, preferring to live in a silent neighbourhood, do they smoke cigarettes, alcohol drinkers, etc.
These are lifestyle choices that may also impact the way their conduct their affairs and behavioural risks to be wary of.
Interview process
With the applicants shortlisted, the next step would be to conduct an interview.
Questions such as their move timeline, how long have they stayed in their previous rental, number of people living in the property together with the applicant.
Finally, ask the applicant of their expectations with their rental options in case they are accepted, so that property managers and landlords may be aware of what to expect with their established tenant-landlord relationship.
Having the right mindset and planning is key to ensuring the profitability and sustainability of your property investments when you have responsible and respectful tenants.