Diving into rental property investing is an excellent way of earning more from your money – or so some people claim. On paper, it seems like a surefire bet: the right property + a decent occupant, combined with a smidgeon of good luck, and voila! You’ve built yourself a thriving buy-to-let empire.
In reality, however, things are a tad different. Being a landlord can be a pretty formidable line of work, and there are about a gazillion tenant horror stories floating around the Internet to prove just how easily an investment property can go from money-spinner to money sinkhole. These stories also demonstrate that quality tenants are the lifeblood of a successful rental business.
But how do you find a quality tenant? It’s simple: by asking them all the right questions. Scroll down to learn what you should ask a potential renter to avoid becoming yet another cautionary tale on Reddit.
The importance of implementing pre-screening questions
Your search for the right tenant starts with knowing what questions to ask an interested party before they apply. Pre-screening questions help you learn more about those interested in renting your property and get a feel on who they are and whether they meet your requirements. As a result, you should determine if you want to spend the time on the next steps – the application process and further screening.
What is not a great practice, and why?
Although this helps streamline the process of weeding out the potential dream tenants from the potential nightmares, it’s important to note that meeting prospective tenants face-to-face isn’t always a good practice. The reason why it’s not advisable is the risk of violating Fair Housing laws.
Whether knowingly or unknowingly, this could hurt your reputation as a landlord and your business. Plus, it could cost you thousands. Therefore, sometimes it’s wise that landlords perform their pre-screening interview over the phone or with the help of their property manager. Once the prospective tenants provide the necessary information, you’ll want to look at them on paper. Letting their financial and historical performance data determine their eligibility will make sure you treat everybody equally.
Below you’ll find the examples of questions you should ask your potential applicants.
Can you meet my income requirements?
Survey finds that investment property owner‘s number one concern with new tenants is rent payment. Naturally, any landlord would be interested if their tenant could afford the rent and make timely payments. So, you might want to make this one of the first questions on your radar as well. The industry standard is three times the rent price, but the higher – the better.
Can I ask for references from your employer?
But don’t simply take their word for it. It will be up to you to verify the information potential tenants have given you about their current income and employment. So, make sure that you request income documentation and issue an employment verification request. You may also request that the tenant provide you with an employer reference.
Are you fine with undergoing a criminal, credit, and eviction check?
To make sure they’re reliable and trustworthy, make sure you ask your rental applicants for a credit and background check. If they choose to deny, you should immediately take that as a red flag. On the other hand, if they allow you to conduct these checks, you want to have that in writing.
By conducting a thorough credit check, you can ensure that they have a good record of payments and are therefore reliable on rental payments. But that’s just one piece of the tenant screening puzzle. To keep your record clean, another thing you must consider before accepting an applicant is their criminal background. You’re going to want to find out the true depth of their criminal report. See whether they have a clear criminal history nationwide, check the state sex offender registry, etc.
The final piece of the puzzle and something you should ask a potential renter is whether they’ve been evicted before. According to TransUnion data, past evictions are indicative of future evictions, and that’s something no landlord wants to worry about. A full rental background check should always include eviction records. However, by inquiring further with your prospective renters, you offer them the opportunity to explain their situation.
When are you able to move in?
You’ll want to establish the tenant’s desired move-in date ahead of time. This is important because you want to make sure that both of your timelines coincide. Say that the renter is applying for your available unit in early March, yet their existing lease agreement doesn’t end until June. This then means that your unit will remain vacant longer, and you’ll be losing out on three months’ worth of rent. And, if you’re looking to fill the property as soon as possible, such a tenant might not be the best choice.
How long have you been living in your current residence?
Verifying an applicant’s rental history can give you a sense of their intentions, character, and habits as a renter. For instance, if you find that your prospective tenant has a history of multiple short-term tenures, this pattern will likely continue. So, you must consider their answer and compare it with your desired lease duration.
Are you willing to sign a 12-month lease agreement?
For landlords, long-term tenancies can offer stability and financial certainty. That’s why they are usually a better choice, as long as they end during the spring/summer months (April-July) – peak season.
Will your current landlord give you a good reference?
Besides looking into a prospective tenant’s past residential history, it may also be a good idea to follow up with any of their previous landlords. And if they’ve previously rented more than one property, they should also be able to provide you with a landlord reference. You want to know about how they treated the property, if they broke a lease agreement, whether they could afford the rent and make timely payments, etc.
Why are you moving?
It’s one thing if any of your prospective tenants are moving because they wish to move closer to their new job or school, and it’s an entirely different thing if they’re moving because they got kicked out of their last rental. So, listen to their response carefully because it just might be a deal-breaker and could help you avoid headaches in the future.
Next, some of their answers may come in the form of a request for you as a landlord. For instance, they may be moving because they feel that they’ve outgrown their current apartment and need more space and in-home storage. In that case, you may want to look into some options ahead of time to make sure they have enough space for everything when they move into your unit if you decide they’re a keeper.
Do you have any pets?
Although you’ve probably let the interested parties know about your specific pet policy, always cover your bases. If they have pets and your unit is not pet-friendly, you have saved both of you some valuable time and effort. If your property is pet friendly, inform the applicants ahead of time if you have any restrictions on the number or size of pets.
A few more questions to ask a potential renter
Other questions you may want to include:
- What kind of work do you do?
- How many people will occupy the rental unit?
- Does anyone in your household smoke?
- How many parking spaces do you require?
- Etc.
In essence, you should feel free to ask a potential renter for any information you find is pertinent to your property and your municipality, as long as they don’t violate Fair Housing Laws. Finally, remember to ask them if they have any questions for you too!
As always, 1836 Property Management is here to help take the hassles and risks of being a landlord off your shoulders. If you’re investing or looking to invest in the greater Austin, Tx area, contact us today! We’re your go-to Austin property management provider.
Contact Us:
bdm@1836pm.com
512-994-4323
By: Kayla Gonzales, 1836PM Marketing Manager
