How do I Screen a Tenant?
That question seems to come up numerously!
It’s easy when they are perfect, you know, they meet the criteria, have great jobs, great credit scores, landlord references, no pets, and 2 kids. Should I go on? Basically they are FULLY qualified to buy and would be the top tier, but for whatever reason they want to rent.
Or when its not simple you say “No Thanks!”
AND You Can get away with doing that! You have a fantastic market, a sought after house and you can tell all those who don’t fit your perfect ideal, who try to negotiate or want you to hold to take a hit because there are 20 other people knocking on your door step.
So here the “tough” question. How do you know what to do when life is not that cut and dry? Because is life that cut and dry?
I have high demand areas and that PERFECT tenant does not EXIST! Good tenants yes, but the perfect dream one, NOPE!
Plus there is a caveat with that PERFECT dream tenant. When I have had them, they have broken my lease with the break lease clause (LIFE SAVER) to buy a house!
First –Supply and Demand
If there is a ton of supply and little demand. Than you will have to be a whole lot less selective in who you choose to rent your home. That is the point- you might want to hold (with a break lease clause of course), negotiate, or you loosen your criteria.
Second – Allow Pets
The stereotype is that pets are are awful damaging creatures. Are they damaging? Yes, cats have awful reputations but my princess has been better than a few friends potty training two year olds. The difference is the fair housing law doesn’t let me discriminate against 2 years olds but it does against pets. (Not that I want to but you get my drift). The point is with a great pet policy I am able to allow pets while getting higher market rate AND still charge a pet fee. So if you won’t allow pets you are going to have even less demand for your home.
Third – Criteria
I require the salary to be 3x rent. This is verified with a W2 or offer letter (if self employed then taxes for verification). I also require a background and credit check. For me this part has always been “figuring” out what it means. That goes from someone with PERFECT credit and stellar wages (why are they renting when they are PERFECT buyer candidates???) to those with foreclosures, bankruptcies or even a DUI, etc. For me the question has always been will their background affect their ability to pay me? I have had some GREAT tenants who have had blemishes and many of my AMAZING tenants have broken the lease and bought a house (did I mention my break lease clause being important??)
Fourth – Gut
What does your gut say? While you cannot discriminate and must treat everyone equally; if you are too comfortable or something strikes you very wrong then move on. Your gut is usually right! If there are red flags then go with it! Don’t be so desperate that you ignore them. While vacancy is not a fun activity and you might need to reevaluate your price; having a non-paying tenant and having to do an eviction is usually worse.
So now that you thought about all the different parts you have to figure out the decision. YES or NO
Here is the thing: EVERYONE has baggage and warts. Everyone has a reason for renting, whether they are going to be professional tenants (luckily I have had AMAZING TENANTS) who are going to be renters forever or the ones who are to going to live in the rental house long enough to find a house to buy and then breaking the lease.
I have done well by identifying the situation and determining if I am okay with the reasons.
What has been your experience? Also check out: Why You Should Screen Your Tenants and How You Should do it.0