Are you moving out of your home into a new place and making the decision to rent out your old property? The choice of renting out a property could work out nicely and add a little bit of extra income to your bank account. There are big risks involved in being a landlord and it can easily become a very expensive venture. One of the trickiest parts of being a landlord is finding the right tenants to occupy your property, because the wrong ones can be very damaging to both property and bank account.
Have a Plan
Find out what the laws in your area are regarding your responsibilities as a landlord and what the tenant responsibilities and rights are. You want to make sure that any questions or concerns you address in an application are in compliance with the rental laws. If you are unsure what you can and can’t ask then seek the advice of a real estate professional. A little bit of time with one could save you a lot of trouble later on.
Have an application prepared for prospective tenants to fill out and have room for them to include any and all information you want to know. Be sure to disclose anything that you are going to do with that information such as running credit or background checks.
Your application should ask for previous addresses and dates of moving in and out, where they work and contact information for the job, as well as their social security number. Work out a list of questions that you can ask them. Good questions include why they moved from their last residence, were they ever evicted, and how long they have had their current job.
You may have decided what your rental costs are going to be, but make sure to figure out what you are going to charge for a security deposit and whether or not you will allow pets on the property and what the pet deposit will be.
Consider a refundable security and pet deposit. The law in your area may require this already so make sure to check, but many property owners say that a refundable deposit usually means less damage from the tenants. It has been the case that tenants care less about the damage they are doing to a property if they know they won’t see any money back when they decide to move out.
Do Your Research
When you have the information from the tenant you need to do something with it. While it is nice to believe that everyone is good and would never lie, the truth of it is that people do lie. Whatever your prospective tenant tells you it is your responsibility to verify the truth of it.
Call their previous landlords and find out what the tenant was like. You want to make sure that you know if this person was a good tenant or a constant nuisance as well as if they were evicted from any of their homes.
Making sure that they are employed is also something you’ll want to verify and how long they have had their job. You of course want to be sure that they have the ability to pay your rent now and in the future. A person who has had a steady employer is more likely to pay rent on a regular schedule.
Do a little bit of internet searching on this person and see if they maintain any kind of online social presence. The tenant you’re screening may have their facebook page plastered with pics of the last raging kegger they hosted. You may want to consider if this is the kind of person you want living in your property.
By taking the time to verify their information such as references, job, and previous residences you’ll be able to screen out the worst of your applicants. A startling number of people are falsifying information when they apply for a rental and these are the kind of people you’ll easily be able to screen with this process.
Observe and Decide
After you have narrowed your choices down to the best candidates arrange a face to face interview if you haven’t already done so. This is the best opportunity for you to make a decision on how you feel about a prospective tenant.
A face to face will give you a chance to talk to the person and introduce yourself to their personality. You’ll get a feel for how they deal with authority. You can also see how a person takes care of themselves. When a tenant shows up in a rusty-clangy-coal-powered jalopy of a car and messy-food-stained clothes this is a pretty good preview of how they are going to treat your property. It may sound a little discriminatory to dismiss messy clients, but a messy tenant now becomes an expensive tenant later.
You will probably have to go through a lot of bad prospects before you find the one that is right for you. Don’t settle, this is your property and your money that you are placing in the hands of another person. It may be time consuming, but an extensive screening process will ensure the best outcome for you as a property manager.
Tim Richmond writes about the mortgage industry, real estate, green building, personal finance and home ownership. He currently writes for the Native American mortgage specialists 1st Tribal Lending.