One of the effective means to reduce vacancy and turnaround rates is by doing a proper tenant screening. A brief meeting will help you know the type of person you are dealing with. For that reason, it is important that you do a thorough evaluation of every potential tenant because first impressions can deceive.

The Disastrous Effects of Bad Tenants

Understanding why you should secure the right inhabitants is essential before you approach the screening process. Ponder why and how terrible inhabitants can be instead of why great renters are so incredible.

Bad tenants can easily break your contract, spoil your property, they will possibly default paying rent on time, and above all it is very difficult to get rid of them easily. They literary destroy everything you have worked hard to build. In addition to the financial nuisance bad tenants can bring, they also cause emotional stress. Handling bad tenants often lead to anxiety, stress and even depression. Instead of enjoying the cash that your rental property generates, you are constantly dealing with problems.

Avoiding bad tenants

One of the best ways to provide security for your business’s future is through sound investment in property. However, there can be a number of risks involved.

As a landlord, picking the best tenant can be helpful in escaping most of the potential risks you can face. You might end up losing thousands in lost rent or property damage if you pick a bad tenant.

It is not a rare thing to have appropriate measure in place to insulate you from such dangers; a good example of how to insulate yourself is through landlord insurance. Nevertheless, what other things can you do to minimise the stress and damages caused by having a bad tenant?

Here are some useful tips that might be helpful when renting out your property.

# Know Your Rights

Every region has laws that govern landlords and tenants, having a good knowledge about these laws can help in making sure that you act responsibly within the law, furthermore they guide you not only to select the right tenants but also on how to deal with potential issues caused by bad tenants.

# Use the Skills of a Professional

Property managers with the experience and skills in tenant handling are important to any property owner. They are knowledgeable in what to look for in good tenants and they give advice on the set of questions to ask a tenant, this helps a great deal in avoiding potential risks.

# Employ Tenant Screening Software

Modern technology has changed the face of property management. Saas for property managers allows users to control and maintain many of the aspects of their jobs, including tenant screening. All programs ae not equal so you should seek out the best online property management software.

# Send the right signals

Be specific with you expectations to avoid confusion later, some of the issues you should be clear about are:

  • Going through reference checks
  • If smoking or pets are prohibited
  • In case you will be conducting regular property inspections

Do research in the market to help you set the right amount of rent. If you charge to low it will show that you lack confidence and on the other hand if you charge too much it might scare away potential tenants.

Be proud of the property you own and present it in the best way possible to portray how you want it maintained by the tenants. A house that is well maintained, is clean and secure will definitely attract a tenant who is able to maintain such standards.

Why Good Tenants Matter

By understanding the bad habits associated with bad tenants, you can easily see the positive side of good tenants. They are act responsibly, pay rent on time and abide by every rule you set. Not only does your bottom line appreciate, you will be rarely worried or stressed about your property. Though there would be many good tenants in an ideal world, there are not. You will have to be selective in order to get promising ones.

Good tenants do following:

They chiefly pay attention on their tenant rights. Though that is important (you definitely don’t wish to be ill-treated by the landlord), tenants should therefore consider forging a good relationship with their neighbours and landlords. Why? This is due to the fact that tenants have an added advantage when it comes to the rental process.

A happy landlord translates to peaceful living and no surprise inspections, additionally happy neighbours translate to few or no confrontations in public places. When the time comes to renew the tenancy, a good tenant knows that the landlord would not chase them away and they are also in a position to re-negotiate the terms. Furthermore, a good rental history could probably guarantee sometime enables managers to lower rent rates.

Here are a number of tips that can make a good tenant.

1. They Read Lease Agreements

Good tenants carefully go through their lease before they sign it. Therefore enabling a tenant to look over an agreement for a few days before you accept it is a good idea. Afterwards asking them a few questions may reveal if they have read over the agreement.

2. They Don’t Break the Lease

Most tenants only think of breaking a lease as cutting out early, not paying rent on time or subleasing without consent. However, minor tenancy points also count. Though a landlord has the capacity to evict a tenant for violating any term of a lease, most landlords do not. When you are screening tenants ask any previous landlords if the applicants abided by all of the terms of their lease—even the small ones.

3. They Pay Rent on Time

A renter who always pays rent on time will always please landlord. A good idea is to make renting easy by having an online rent payment system. Even good tenants may all have financial hardships at some point in life, but they let their property managers aware early if they pay rent on time. As a property manager, you will most likely be considerate and understanding to good tenants who are upfront about their situation.

4. They Treat Rentals Like They Own It

It is easier to get send deposits back when tenants move out when they paid rent on time. Though wear and tear is normal in rental houses, good tenants do not cause extreme damages to the rental. Most local laws require that the tenant pays for any repairs by themselves. In addition, good tenants keep the rental property organized and clean.

5. They Get to Know Neighbors

Getting to know my potential neighbors is always a part of my game plan when I am finding an apartment to rent. Part of which is due to the fact that I like meeting new people and I have a dog. I believe when I met my neighbours in person they will complain less about my dog.

When tenants get to know their neighbors, other benefits arise. They watch out for each other. They also help each other do small tasks, (like regularly signing for my neighbor’s UPS package since they know each other). Friendly neighbour rarely raise issues to their landlords about each other.

Have Standards in Place

The main problem for landlords is that they are not sure of what they are looking for, and end up settling for anyone who is willing to sign a lease. It is risky to go by this trend; instead you should consider having pre-set standards in place. Most landlords have lists that resemble this:

  • Spotless background. The potential tenant must have a clean record. They should not have any crime charges, felonies or any other unlawful activities.
  • Reliable references. The likely tenant should be in a position to provide three good references, two of which should be from previous landlords.
  • No evictions. The potential tenant should have completely no evictions before.
  • Steady income. The potential tenant must be able to show a verified pay slip and it should prove that their monthly pay is three times more than the rent.

These four stipulations should be included at a bare minimum. However, other terms can be added. You will be astonished at how many likely tenants you can cancel of your list with these simple checks in place.

How the Process Should Work

We will discuss some of the main issues you will want to look at in a moment, but first let’s check on the overall process. This should guide us on how to carry on:

  • Pre-screen. For this stage, you basically check if the prospective clients meet your criteria. This will definitely reduce the number while others may try to lie. Nevertheless, it gives them an idea of where you stand and prevent time wasting.
  • Application. For those who meet your standard criteria ask them to fill out an application form. At this stage you can ask more personal questions, references, employment details, a social security number and a signed release of information.
  • Verification. This is the right stage to verify if the potential client was honest during the earlier stages. Contact their references, check their employment information and run a background check
  • Negotiation. For those who pass the verification stage, discuss the lease agreement together and raise any relevant concerns.
  • Approval. If all goes well, approve the tenant and let them sign the lease agreement.

Tips for Screening Prospective Tenants

Though you may know what you are exactly after, here are some useful tips on how to get that information:

  • Ask references the right questions. Do not hesitate to ask tough questions to their references. If they are a landlord, they will be honest with you because they understand where you’re coming from. Some of the questions that you should ask include: does the renter owe you any unsettled balance? Does the tenant have a tendency to pay rent late? Did the tenant have issues with neighbours? Would you recommend the tenant to another landlord?
  • Directly contact the employer. As long as the renter has signed a release of information, you will not be violating their rights by contacting their employer. The employer should be able to verify the employment details or verify that they are their current employer.
  • Avoid discrimination. Though you have the right to deny a prospective tenant portal if they do not meet your standards. You cannot discriminate based on age, race, disability, gander or other similar factors.

When choosing a tenant, be sure to consider the following best practices-

  • Check credit, income, and references. Currently you can certainly run a credit check at a very minimal fee. You should also contact the tenant’s references, particularly former landlords. Make sure you validate an applicant’s employment, bank account information and employment. When screening tenants be consistent. Make it your policy, for example, to constantly necessitate credit reports; do not just get a credit report for people of a particular nationality or a single parent.
  • Make decisions based on business reasons. Legally, you are allowed to choose among potential tenant based on authentic business principles. Avoid making decisions based on personal reasons. A landlord is permitted to dismiss applicants with income that is not sufficient to pay rent, bad credit history or bad past behaviour such as late payment of rent consistently or property damage. It is not a secret that you can legally reject an applicant who cannot pay the required security deposit or meet the set standards and conditions of tenancy.
  • Train your staff to understand the rules too. Everyone who deals with potential tenants should adhere to fair housing laws. This comprises of the owner, managers, landlords, real estate agent and all their workers. Being the property owner, you may be held liable for discriminatory conduct and statements made by your employees.
  • Be consistent. Consistency is important when handling potential tenants. If you do not handle all renters more or less equally- for example, if you subjectively set higher standards when leasing to members of a racial minority — you will be breaking federal laws and exposing yourself up to court case. Additionally, if you discriminately give a certain person a break (for example reducing the security deposit for a widow but not for other renters), you will also risk lawsuits from other renters.

Also Read – Five Tips for Starting a Property Management Company

Have a Screening System

Treat your property like a business. The same way you would expect when applying for a job, you want to be sure you are choosing the right tenant for your tenancy position. There are a number of background checks you can use to pick out unqualified tenants. Here are some that might be useful:

# Authenticate the employment information they gave to ensure they have a steady source of income
# Contact former landlords and ask questions like ‘would you recommend this tenant to another landlord’ and ‘ why and how they moved”
# In case you use a property manager, they are in a position to get tenancy databases that show if a tenant has ever been blacklisted.

Document the condition of your property

After you have selected an ideal tenant and he/she is ready to move in, you can came up with a Property Condition Report also known as PCR, it documents detailed description of the property’s condition before the tenancy starts. This is settled on between the tenant and the landlord and can be used as proof to show the extent of damage.

After your tenant has moved in, you can deal with issues before they become big by doing regular inspections and updating the PCR annually or during the lease renewal.

If all else fails, have a backup plan!

Sometimes the unexpected can happen even after you have done everything possible to avoid bad tenants. If you have not encountered any, landlord insurance might help you a lot. It can provide insurance for your property against theft, loss and accidental damage. Additionally, it can cover tenant damage, loss of rent and legal liability. Policies do differ, it is therefore important that you are cautious so that you get the right insurance.

Tenant Screening and Resident Screening Benefits

  • Credit, Eviction, Sex Offender, Criminal, and Suspected Terrorist reports are done instantly and are accessible anytime. Exclude waiting days and hours – reports are provided in less than a minute!
  • Promptly sign tenancies based on authentic information – the early birds catches the warm – and fill vacancies faster.
  • A recommendation to rent to the prospect is delivered immediately based on customized conditions set by you.
  • Moderate the possibility of costly Fair Housing grievances with a regular recommendation on each applicant.
  • Spend more time with potential residents of your community by minimizing the time used by your staff to screen applicants.