Much of the financial success that comes from a rental investment property depends on a landlord’s ability to secure great applicants and then tenants. You want to find a tenant that will not only pay the rent on time but one that will keep your property in good condition.
Do not leave accepting a renter to the luck of the draw. There have been many a landlord that quickly accepted the security deposit and first month’s rent only to spend thousands in repairs and legal fees. There are some steps that you can take that will help to ensure that you find a good tenant.
Tip #1-Get a Credit/Rental/Background Check
Important: Each applicant MUST clearly grant authorization to any personal (credit/rental/criminal) run history report.
A credit check is not just for bank loans and credit lender history; it’s an integral part of the leasing process. A credit check will tell you if your applicant pays their bills on time, which bills (if any) were paid late, ‘charged off’ lines of credit, or if any utility company has had previous discrepancies. Typically, we also tend to see that a large pool of applicants has either medical or student debt that should also always be considered when reviewing applications. These, ultimately, are just a few aspects a credit history report can offer. Victory as a whole takes every aspect of an applicant’s credit history into consideration when helping our owners decide who would be their ideal tenant. Our expertise and experienced guidance have created thousands of tenant/owner matches over the past decade-plus while others immediately accept the ‘first to apply’.
Once you’ve tentatively approved your applicant(s) from their credit history, its time to dig into their rental and personal (potential) criminal background history. Yes, they are two different categories and no, most major credit scoring agencies like Equifax.com and TransUnion.com DO NOT report negative rental history unless specifically requested and often at an additional cost. Equally so, criminal background reports would come at an additional cost to anyone managing their own rental home. While both rental and criminal histories are not required to rent to an applicant, these reports allow every true property manager to honest and accurately screen each candidate thoroughly and confidently.
Tip #2-Check Their References
Remember when you ‘fluffed’ your resume to get that perfect job? That extra experience or your professional reference (best-friend) that sealed the deal on your promotion; rental applicants can do the same. While it’s rarer with property management companies, from time-to-time there are tenant leads and applicants that drastically lie on their applications. Often times, honest applicants will provide direct contact information to their former landlord or rental agency. Asking questions such as, ‘Would you rent to them again?’ and ‘How many late payments were made?’ are only a few of the key questions every past/future landlord have for one another. However, without thorough rental history checks, it’s difficult to confirm if an applicants volunteered rental history aligns with their true history.
The security deposit is one of the many primary ways to ensure that your rental property is returned to you in the same condition as when you released it to your tenant. In the best-case scenario, one month’s rent or less should be taken as a security deposit. Worst case scenario, North Carolina does allow any landlord or property manager to collect a maximum of two months’ rent for any lease lasting two months or longer. Any security deposit collection amount should be considered based on the applicants’ rental/credit/criminal background and the decision should be weighed heavily as it could deter wonderful tenants. The collected security deposit MUST be kept in a national bank trust account for the duration of the lease and cannot be used for anything other than possible reasonable tenant damage.
Tip #4-Get to Know Your Applicants
It’s as easy as it sounds; Be friendly, open and considerate! Once you narrow down your list of candidates it’s important to spend 10 minutes of your time communicating with your list of soon-to-be tenants. Showing a true interest in your future tenant is an easy way to build tenant/landlord trust and respect. Be aware though, not ALL questions can just candidly be asked. The Fair Housing Act directly states the dos and don’ts on what a landlord can and cannot ask or discriminate on when searching for a tenant.
Tip #5-Hire a Reputable Property Manager
Finding a great rental tenant can be one of the most stressful parts of being a landlord. Between the rental reference calls and copious background checks included, why not pass that responsibility on to a progressive, passionate property management company? With full rental/credit/background checks included (along with much more!) and top of the line marketing techniques, there’s no reason to sacrifice your personal and family time!
For more information on how we fill our rentals within roughly 30 days, read here.