Working as a landlord is like having a never-ending list of responsibilities.
From collecting rent to cleaning out properties to managing bills, the list is always growing no matter how efficiently you work.
And that work only becomes more complicated when you have to deal with problems caused by unruly or disrespectful tenants.
Whether it’s tracking down late rent or dealing with property damage caused by a previous renter, these complications make an already time-consuming job even harder.
That is why it is so important to find good tenants. Quality tenants can seem like a far-off dream for you if you’re used to dealing with difficult tenants, but it is possible to change the future of your work as a landlord by learning how to find good tenants for a rental property.
Don’t let yourself believe that it’s impossible to have tenants that actually make your work go smoother. While it does take some time to learn how to find good tenants, putting time into this change will see a huge return for you in the near future.
Table of Contents on How To Find Good Tenants
- Create a Detailed Rental Application
- Take Background Checks Seriously
- Hire Some Help
- Keep Good Ones
- Don’t Settle
#1 Create a Detailed Rental Application
Using a rental application to screen potential tenants is a no-brainer, but knowing what to include on the application itself can be confusing.
If you don’t include the right questions, you’ll have no good way of weeding out the potentially great tenants from the potential nightmares.
What To Ask For
Ask for two to three personal references, preferably those that are not related to the applicant. Rather than just look at this information, take the time to call the references.
Ask them how they know the applicant, why the applicant has said that they are moving, and other pertinent questions that can help you get to know the applicant.
Ask for the last two years of employment history. It’s OK if they do not have a lot of employment history, but seeing how often the applicant switches jobs will give you a good idea of whether or not they are a stable, reliable investment.
Previous Rental History
Not every applicant will have previous rental history, but many tenants have lived in other rental housing before. If that’s the case, ask for this information as well as a contact for previous landlords.
Follow up with any previous landlords to ask about timely payments, the housing condition, and any other potential issues that you should know about. Any good tenant will have nothing to fear with you talking to a previous landlord of theirs.
What Information To Divulge
In addition to asking for specific information, it can be beneficial for you as a landlord to divulge specific requirements that you are seeking in a tenant. By giving this information to applicants up front, you will deter anyone who doesn’t come close to meeting the requirements you are currently looking for.
An example of provisions you include might look something like this:
- Minimum household yearly income of $55,000.
- Credit score of 650+
- No pets
- No section 8 criminal charges (in some states, you cannot discriminate based on criminal activity. Check your local laws.)
- No previous evictions
- No smokers
This information makes it clear what type of applicants you will generally decline. You may still receive applicants that do not meet all of your qualifications, but generally, they will explain why they still proceeded with the application if this was the case.
You MUST Follow The Fair Housing Act
It is federal law that you cannot discriminate against people for certain classes of being or behavior. You can ask many questions of potential tenants, but you cannot question about or discriminate based on:
- Race or color
- National origin
- Familial status (families with children)
It is your responsibility as a landlord to follow the Fair Housing Law to the finest detail, and you can be fined or even put in jail if you are a repeat offender of this law.
Make sure to become familiar with the specifics so that you do not put yourself or your business in jeopardy.
#2 Take Credit Checks Seriously
Every landlord knows that they should run a background check on potential tenants, but do you know what to do with that information once you have it?
A credit check is a useful tool for determining whether or not a potential tenant is financially responsible. With the information gained in a credit check or report, you can get a sense for how financially savvy they are as well as whether or not they can be relied on to pay their rent on time.
While there is some information that you cannot use as a landlord, much of the financial data available in consumer reports can help you make wise decisions.
Verify Employment & Income
Call the listed employer to confirm that your tenant works there and confirm their attendance. Ask for copies of pay stubs where applicable.
A general rule of thumb for income is that your tenant should be making 3x as much as the rental cost. This isn’t a hard rule, but this is a good margin to follow.
Confirm Credit Check
Check out the income-to-debt ratio found in the potential tenant’s credit check. If a tenant has a high income but also has a lot of debt, they could still be a risky choice.
Credit checks will also let you know about bankruptcies, prior evictions, and other civil judgments related to their financial history that can help you decide if this tenant is a worthwhile risk or not.
#3 Hire Some Help
You’ve probably already learned how complex it is to find great tenants. From browsing through hundreds of applications to making sense of what their credit check tells you, figuring out which tenant is right for your property can be a complicated, messy affair.
The good news for you as a landlord is that recent advances in services and technology mean that you don’t have to go it alone. Rather than spending years refining your tenant selection technique, you can rely on the quality systems that others have put their experience and knowledge into building.
Tenant Screening Packages
There are many landlord-focused packages and programs out there that give you the option to pay for a company to gather up some of the following information for you:
- Address history
- SSN verification
- Judgments & liens
- Income verification
- Partial credit check to full credit report
- Criminal history
By using our tenant screening service that offers various levels of packages, you can make the selection process much easier. The information gathered gives you the perfect screenshot of each applicant so that you can make a wiser, more informed decision about which tenant will be right for your property.
Property Management Companies
If you want more long-term assistance when it comes to finding tenants, managing their time spent on your property, and other aspects of the property, you may want to look into hiring a property management company.
As a landlord, you can have them help with only specific parts of the rental process, while you may only help with one or two small things.
#4 Keep The Good Ones
In reality, your quest to become a better landlord should be about more than how to find a good tenant. It should be about how to find and keep good tenants!
Finding good tenants, as you have learned, is a very difficult process that can take a lot of time out of your daily schedule. Once you find tenants that are kind, timely, and respectable, you should try to keep them working with you for as long as possible.
To keep good tenants in your rental system, make sure that you do the following:
Treat them well
This is basic, but every landlord should remember that tenants can (and do!) come and go. If you have a tenant that you really like renting to, make sure to treat them well. Speak to them kindly and often. Send them cards for holidays. Be a friendly force in their lives.
Tenants who like their landlords are less likely to move unless they absolutely have to, and this can make your business more profitable in the long run.
Keep communication open
From the beginning, let your tenants know that you are open to any feedback or concerns that they have about your management or the property. You can even set up an anonymous link where they can submit misgivings that they are too nervous to talk to you directly about.
You want your tenants to tell you the things that frustrate them about the property or your management style.
With this information, you can ensure smooth communication between you and your tenants. Good communication leads to good relationships, and good relationships lead to longer rental periods!
Respond to requests in a timely manner
When writing up a rental contract, be sure to include maintenance request times for problematic and emergency issues that may arise in the property.
Go over this information with the tenant before signing so that they know how long it will take you to get back to them.
It’s important that you respond to tenant problems promptly. If they start to feel like you don’t care about how their time on your property is going, they will be less likely to renew a contract with you.
Let them know about your other properties
Even if a good tenant loves your property, they may need to move into a bigger space or to another area of town for various reasons. Make it a habit of letting your tenants know upfront that you have other rental properties around the area.
Keeping good tenants in your business is a great way to secure your future cash flow.
#5 Ask Lots Of Questions & Don’t Settle
Finally, the most important and final tip for you: Ask lots of questions; don’t settle.
When you meet up with a rental applicant to tour the property, be sure to talk about the property with them and ask them questions about their needs, hopes, and rental goals:
- Why are they moving?
- Where did they live previously?
- Have they ever had problems with a property or landlord?
- Do they have pets or smoke?
- How long do they plan to rent?
- Do they have a stable job?
- What do they want in a home?
By asking the applicant many questions and getting to know them, you will gain an instinct about what type of tenant they will be. This landlord instinct will need to be cultivated over time, but it will ultimately help you to be able to choose a great tenant more frequently.
Finally, be patient. The right applicant may not be your 1st, 2nd, or 3rd application, and it can often feel like a waste of time to wait for that applicant to come in.
But it is worth it! Settling for a less-than-ideal tenant often leads to problems such as evictions, late rental payments, and property damages. All of these things will cost you more than simply waiting for the right applicant, so have patience when seeking tenants.
Revolutionize Your Future As A Landlord
There you have it: everything that you need to know about how to find and keep good tenants to change the future of your work as a landlord. You don’t need to spend your valuable time on unnecessary and frustrating problems caused by renting to the wrong people.
Instead, focus on the following, and you’ll know how to find good tenants:
- Create a strong rental application and use the information gathered to make wise tenant choices
- Get help from a reliable tenant screening service
- Use the information in credit checks to verify tenant stability
- Use data and your gut instincts in your decision & be patient
With these changes to your approach to being a landlord, your entire work outlook will be changed, and with that change will come more time, better profit margins, and a happier experience for everyone involved.