- How Much Money Is Needed To Invest In Rental Property?
- Should A Real Estate Investor Get An Agent’s License?
- 5 Big Factors That Affect The Costs Of Renovating Your Home
- SIBOR Hike – What You Can Do With Your Current Loan
- 6 Basic Don’ts Of Real Estate Negotiation Tactics
- Will New Condo Relaunches Trigger The Great Property Sale We Have All Been Waiting For?
- 10 Proximity Amenities That Add Value To Real Estate
- How To Get Personal Loans More Easily With Good Credit
9 Standards To Set For Tenant Qualification
Any landlord with a sane mind will prefer to rent to tenants who would cause any problems and pay their rentals fully on a timely basis. But more and more landlords are focusing their efforts and attention on avoiding tenants from hell rather than attracting good ones. This is understandable as the costs associated with undesirable tenants often outweigh the gains associated with good ones. And according to Anthony Robbins, pain is a greater motivator than pleasure.
Here are 9 standards you can include in your tenant qualification
1) Comprehensive application forms that are duly completed by applicants. It is not going too far by asking for every information that can help you as a landlord determine if a prospective tenants is suitable or meets you criteria. You must however, avoid any form of discrimination or you can get into trouble. Include open questions that allow applicants to provide specific information that you are screening through. In effect, applicants are declaring that all information provided are true and not withheld. Include a line that states this declaration.
2) To conduct a comprehensive background check, you should ask for permission from the tenant to conduct them. these checks include those for credit history, criminal records, employment history, etc. You can do so easily by using a specialist service. You would not be happy if someone make these checks on you without your permission in the first place. So it is important to get your tenant’s permission before going through with these checks. Privacy laws may also make it mandatory to obtain permission.
3) Charge a nominal fee for each application to sieve out spam. Charging a fee for processing an application is not out of order. In fairness, you do incur costs in assessing an applicant. It also helps to filter out fake applicants who are just out to test the market. If someone is willing to pay a processing fee, you can bet that they are more likely a serious tenant who is not out to fool around.
4) Depending on the laws of the land, the legal age for someone to enter into a tenancy contract can vary. If a tenant turns out to be underaged, the terms of the contract will not be enforceable at all. Even students who are underaged usually have guardians to help them enter into contracts.
5) Identification documents with recent photograph. Imagine what a nightmare you could get into when your tenant turns out to be a different person to the one you rented to. As people can have similar names, the best way you can verify someone’s identity is by using documents that include a recent photograph. Making a fingerprint test, going through dental records or a DNA test is a little extreme. You are not filming an espionage movie here.
6) Make sure the tenant is a legal resident. The key problem you are avoiding here is housing illegal immigrants. Be it a citizen, a permanent resident, or someone with an employment pass, as long as your tenant is a legitimate resident, you are fine. Housing aliens is illegal. And you will be held responsible if you do not conduct enough due diligence on your end.
7) Credit history. As the tenant will most likely be someone who is a stranger, the only way you can judge whether he is a good paymaster or whether he is in financial trouble, is by doing a credit check. You are not being radical here. Just basic diligence. If a tenant has nothing to hide, he will probably not mind handing over his latest credit record anyway. But you do need to take a look at this on your end to have an idea of an overview of the applicant’s current financial standing. And whether he has a habit of not paying what he owes.
8) Landlord references. If this is available, you will want to find out the tenant’s rental payment history, occurrences of late payments, eviction records, or just generally the types of problems that the previous landlord has with the tenant. Tenants who have had a history of inconsistent rental payments are dealbreakers. Unless you are so desperate to rent to someone who may or may not pay, the best action is to move on to the next applicant.
9) Verify employment income. The common practice to for the tenant to provide a direct line to his human resource department. Then you call up the manager on the other end of the line to ask basic questions on his employment. These include questions pertaining to his length of employment, basic salary, position, and the length of his contract. Verifying income not only helps you to judge whether a tenant can afford your property, it also validates his source of income. You want to avoid tenants who are into criminal activities for their income.
Denying an applicant is part and parcel of live from both the view of the landlord and tenant. Nobody can force you to rent to someone you do not want. You are making a business decision based on what you think is best for your business and what types of risks you are willing to make.
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Saying this, it is common for landlords to reject tenants based on adverse information gathered from credit checks, criminal records, rental history, unverifiable income, low rental offers, etc. Remember no to discriminate in any way. You are running a business that depends on you making sound business decisions.