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When it comes to Property Management probably one of the most difficult aspects is determining who you are going to rent. Typically, you place the property for rent on a multitude of marketing mediums and after showing several possible tenants one of the prospects will ask to fill out a rental application. This article will discuss the steps that must be taken in order to weigh the possible risks and to help you become an expert at determining who you should rent to and who you should tell to go fly a kite.
The rental application is the first key to performing a quality evaluation of the prospective tenant. If you would like a copy of my rental application simply go to my website and fill out the contact form.
The rental application should be concise enough that the tenant will actually fill it out and also in depth enough to gather all of the information that you will need to perform a thorough screening of the tenant. (It also should contain information that might help you down the road if you have to perform an eviction and need to be able to collect from wages or from funds the tenant may have.) With that being said, what should be included in a rental application? Below you will find key items to have in your rental application:
Social Security Number, Date of Birth,
Current Address, Former Address, Including landlord numbers
Current Employer, Former Employer, Including Work numbers
Bank account #, Current income
Whether the Tenant has ever been evicted
Authorization to verify all the information on the form and also to perform a credit and back ground check.
The next step after the rental application is actually qualifying the tenant. The majority of property managers will tell you that when you have multiple applicants you should work on a first come first serve basis. Meaning, start to qualify the first applicant, typically I begin with employment and landlord first so as to not have to waste money or an application fee should they not pass those requirements. Now that we have determined the method of processing the applicants we will go through what you are looking for.
Employment Verification: Depending on the property manager, they follow different guidelines when it comes to verifying employment and verifying earnings. At a minimum you want to verify that they are currently employed, I personally recommend verifying a current paystub and a w-2 or 1040. This is due to the fact that you want to be able to determine whether they can actually afford the payment. I use a little higher ratio than most managers. I have found that you can go to a 45% housing ratio and have a very good tenant. Taking that into consideration, you have an obligation to not set your future tenants up for failure and if you know they cannot afford the place your best bet is to find a tenant that meets the income requirements.
Landlord Verification: This verification and the credit check are where I typically put the most weight. The previous landlord can be of extreme help or detriment(see later in this section) to determining a lot of factors about your potential tenant. I always recommend contacting two landlords or if they do not have that much history getting a co-signer on the lease. The previous landlord will know whether the tenant paid on time, how much they historically could afford, whether they breech any terms of the agreement and whether they caused any damage. The reason why I stated they could be a detriment is due to the fact that they could be motivated to get the tenant out of their property and are looking at you as an exit.
Credit check: Credit can tell you a lot or a little. It really depends upon the applicants credit history. Some applicants have a very in depth credit history which a lot of the time there is a reason why they are renting and not purchasing. Even if they have bad credit it does not necessarily mean that you should not rent to them. Many of my best tenants actually have had bad credit in their past but, due to the fact that it was only a onetime event or over a year and they have solved the problem, I decided to rent to them. I do not look for a certain credit score i.e 680 + or 600 + I typically look at their debt load and whether they make their payments or not. There are also other factors you want to use the credit report for such as verifying that the tenant is actually who they say they are and also whether the residence database matches the information disclosed in the rental application.
In conclusion it is during the screening process that 99% of all property management issues can be solved. The most difficult part of property management is finding the right tenant and the only way you can do that is through trial and lots of error, or by hiring an experienced property manager. The steps above are only a brief overview of what you should take and what you should look for in a tenant.
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This content is provided by David Frank and may be used or republished only in its entirety with all links included. David Frank works in Property Management Salt Lake City if you want more information clink on this link: Utah Property Management Article Source: http://EzineArticles.com/?expert=David_M_Frank |
