How to Rent Your House to the Best Tenants
The most important decision you make that will determining the success or failure of your rental is the person you put in. A bad tenant can potentially cause years of stress, headache, and financial loss – while a great tenant can provide years of security, peace, and tranquility. Don’t underestimate the important of renting to only the best tenants.You are reading this guide because you want to learn how to rent your house.
The following are three easy ways to attract tenants. Learn the common abbreviations in order to minimize the length of your ad, but be sure to include all the important information. It is recommend NOT putting the address in the newspaper, so people are forced to call and talk with you first.Save money on Loan Agreement
The biggest drawback to a sign, however, is instant notification of a vacant house to anyone driving by.
Applicants must be employed and be able to furnish acceptable proof of the required income.
We limit the number of occupants to two per bedroom
You can read this list over the phone to the prospective tenant and ask them if they meet these qualifications. These qualifications are designed to take the emotion out of renting to someone, so stick with them. By allowing tenants to move in who don’t meet your minimum qualifications, you are only setting yourself up for failure later on. Federal law defines seven protected classes of people that you cannot discriminate against, which includes a person’s race, skin color, sex, national origin,religion, disability or familial status.
You cannot even ask questions about these terms without appearing discriminatory – so don’t do it.Showing units can be a pain because 50% of the time, tenants will not show up.
Showing the Property to the Tenants
This eliminates the people who are disinterested because of the location. I will tell all the callers that I will be at the house from 5:00 to 5:30 on Friday afternoon, and if they want to see it – advise them to show up then.
Having multiple tenants look at a property at the same time can be a little bit awkward, but it creates a sense of competition and scarcity which allows for more applications. It’s also a good idea to include the criteria and application process with the application.
This makes it easy for the prospective tenant to understand how the process is going to work and gives you yet another way to pre-screen for duds.
Always give an application to every single person who is interested, even if you are not interested in them
Encourage them to fill it out there, but you will probably find that the applicant will usually want to fill it out later and drop it off or mail it to you.
Don’t even bother processing any part of the application unless the tenant has paid the «application fee». This amount can be whatever you’d like but I recommend finding out what the local property management companies are charging and charge a similar amount. Be sure to check with your State laws and make sure there are no laws dictating how much you can charge. The application fee should be reasonable.
When you receive back an application from a tenant with the application fee, look over the document and look for the important things before bothering with a background check.
Applicants must be employed The number of occupants is to two per bedroom or less
If you can quickly see that the rent for the house is $1000 per month and they only make $1800 per month in gross income, they clearly did not pass the income qualification.
If the tenant’s income is high enough and you feel confident moving forward, it’s time to dig deeper.There are many different sources you can use to run a background or credit check on a tenant, but I recommend using SmartMove. SmartMove is offered as a service through TransUnion and is great because all you need is your tenants email address. If you have a lot of applicants to choose from,you can be more picky and only accept the highest qualified tenant.
However, if you are struggling to get applicants, you may need to loosen your standards slightly in order to move someone in. For me, I look at the rental history and income with a lot higher regard than I do credit – because I live in a lower income area where the vast majority of prospective tenants have terrible credit. Your area might be different, so if possible, talk with other landlords in your area or ask for advice on the BiggerPockets Forums.
Verifying Income and Rental History
The application should include the name and phone number of their current employer, so call and speak with the manager, owner, or human resource manager. Many times you will be required to fax over the release of information signature.
Is this job considered temporary?
Don’t simply call their current landlord – because many landlords will lie or embellish the truth in an effort to get rid of bad tenants.
Sometimes, you will receive applications from multiple parties who both qualify. If someone doesn’t qualify, move on to the next. When you deny an applicant, it is important that you clearly document your reasons for why you are denying them to avoid discrimination complaints. Always inform the tenant with written notice.
I always send a letter to the tenant stating that they did not meet the minimum requirements for tenancy for «such and such» reason. When you find an applicant that meets all your requirements,you can verbally let them know that they are approved. This deposit will turn into their security deposit so it’s not an unexpected cost for the applicant. When you collect this deposit, be sure to sign two copies of a deposit to hold agreement that states what the deposit it for and what the terms are.
The applicant has until such and such date to sign a lease agreement. If not signed by that date,the deposit will be forfeited to the landlord. Both you and the prospective tenant will receive a copy of this agreement, which will serve as a receipt for the applicant. Typically, I will not hold it longer than two weeks unless I absolutely love the tenant and don’t want to lose them.
This is up to you and your discretion.