Qualities first-time landlords should look for in tenants guide, Buying investment properties, Home letting
Qualities First-Time Landlords Should Look for in Prospective Tenants
21 April 2022
Without dependable tenants, keeping any rental property afloat would prove exceedingly difficult. As such, it behoves every landlord to put genuine effort into screening rental applicants instead of simply going with their gut. Depending on where you’re based, evicting tenants who are unable to keep up with rent can be a tremendously cumbersome – if not outright impossible – undertaking, so putting in extra effort at the application stage is essential. So, when reviewing applications and interviewing prospective renters, keep an eye out for the following qualities.
It’s important that every tenant you take on have a consistent source of income. For most people, this means having a job, but some prospective renters are likely to get their income from other sources, such as pensions, disability payments or trust funds. Regardless of where their money comes from, each applicant should make enough to comfortably afford rent.
Although some landlords reject applicants who make less than thrice the cost of rent, this shouldn’t necessarily be an ironclad rule. For one thing, despite cost-of-living being perpetually on the rise in the U.S., wages have largely remained stagnant. So, if an applicant generates enough income to afford rent and various living expenses, has a decent credit history and can provide proof of financial stability, they may be worth taking a chance on.
While most people’s credit could stand to be better, there’s a big difference between having a credit score that’s less than optimal and being up to your eyeballs in debt. So, if an applicant is dealing with an insurmountable level of debt, you may want to think twice before renting to them. After all, if they’re unable to meet other important financial obligations in a timely manner, why would rental payments be any different?
Of course, this isn’t to say that you should only take on tenants with perfect credit. While this would obviously be ideal, it’s important to understand that prospective renters are only human – and most of us lack spotless credit.
You’re also likely to encounter applicants who have no credit history. In many cases, these will be young adults who are fresh out of high school and college. Needless to say, if someone lacks a credit history, it can be difficult to ascertain their ability to keep up with rent. When dealing with applicants like this, make sure to confirm that they make the desired amount of income or have a dependable cosigner.
Reasonably Clean Criminal History
While being hesitant to rent to someone with a criminal background is understandable, there are a variety of reasons for which people have criminal records – many of which are fairly benign. In other words, a criminal record by itself shouldn’t disqualify any applicants right out of the gate. However, if an applicant has committed crimes that could potentially pose a danger to the property or other renters, this should be taken into careful consideration.
No History of Evictions
A history of evictions can be a huge red flag for landlords. If things didn’t work for an applicant at multiple other rental properties, what reason is there to expect that this time will be any different? While it’s important to hear applicants out and get their side of the story, a history of evictions isn’t something that any landlord should simply gloss over. Whether the evictions stemmed from nonpayment of rent, bad behavior or a combination thereof, applicants who have been ordered to leave other properties often represent high risks.
In addition to requesting that applicants include references, you’ll need to check any references they see fit to list. Some people assume that if they present themselves well, landlords won’t bother following up with references – and they’re often right. Despite taking up some of your time, checking references can be a great way to ascertain an applicant’s level of honesty. Furthermore, if you’re pressed for time, you can expedite the process with the help of user-friendly rental registration software.
In the absence of reliable tenants, even the most lucrative rental properties are worthless. As such, first-time landlords should be extra-mindful of the renters they take on. Accepting tenants who regularly fight with other renters or are unable to keep up with rent stands to impact both your financial bottom line and renter retention rates. So, regardless of how eager you are to find renters, it’s in your best interest to avoid approving applicants before you’ve had a chance to do your homework.
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