Four Essential Steps
It is every property owner’s dream to fill vacant spaces as soon as possible, but it is worthy to note that leasing your rental property is just as crucial as renting it to the right tenant. Most tenant-landlord issues can be avoided by just finding the right tenant in the first place. In our previous blogs, we looked at what a good tenant looks like and where and how to find a good tenant. Finding that good tenant can be stressful and time-consuming, but in hindsight, it is nothing compared to the nightmare of getting rid of a bad one.
With a good tenant, you can rest assure that your property is safe and well-maintained. Unfortunately, the opposite is also true in the case of a bad tenant. Now, here comes the big question — how do you tell between a good tenant and a bad tenant? The truth is that it is impossible to know a good tenant by just looking at the faces of potential tenants viewing your property, but with the right screening method, you are sure to eliminate over 90% of your doubt.
Although your screening process actually starts when you meet the prospective tenants for a viewing, or even before that with a ‘pre-screen phone call’, I will only be looking at what to do after the viewing was carried out. Come along as I take you through some of the essential steps in tenant screening that are sure to help you to separate the good eggs from the rotten eggs.
Step 1: Request an Application
The standard first step in getting to know a potential tenant is to request them to complete a property application form. Preferental simplifies this step where landlords can send a quick link, containing a comprehensive application form, to the tenant. They can then quickly complete the form online and submit it for screening.
This form should be drafted to contain necessary information about the tenant like personal details, employment, references, occupants, and it should request individual documents to conduct a screening. Be sure to state — in the application — that you will be seeking a credit check, background check, and criminal record, and that the tenant agrees to this in writing.
Step 2: Run a Background Check
Running a background check is the most effective way to learn more about a potential tenant. Thankfully, there are credit bureaus available to ease the process. The background check is a thorough screening of a renter’s personal information including but not limited to public records, criminal records, identity verification, and eviction or default history.
Step 3: Risk Rating
Learning about the tenant’s current financial status is not enough. Be sure to check other associated risks such as account arrears, previous legal action, and any debt counselling. This last step leaves you with a level of certainty that the renter can or cannot meet up with the payment of rent.
Step 4: Conduct a Credit Check or Payment History
Running a credit check holds as much importance as running a background check does. This check helps you to learn about the credit history and potential future payment behaviour of the tenant. The credit check highlights any debt, credit percentage used, payment habits and any major defaults on previous accounts.
As you can see, tenant screening is an essential step in getting the right tenant into your property and by making sure all the right boxes are ticked you will save yourself countless hours of stress and possible financial losses.