Every real estate investor wants to find tenants for their properties. New tenants provide monthly cash flow and help you expand operations.
Real estate investing comes with risks. You may get a tenant who doesn't pay rent on time or causes other issues. Tenant screening helps you avoid these scenarios while building wealth.
Quality tenants reduce stress and costs. Your property will get kept in good condition, and you won't chase tenants for payments. It's possible, and it all starts with an effective tenant screening process.
We'll share some of the details so you can properly conduct tenant screenings.
Establish a Tenant Screening Criteria
Establishing criteria helps you find the best tenants for your properties. You can set criteria on various factors, but these remain landlords' favorites:
- Credit Score
You want to ensure a tenant can afford monthly rent payments. These criteria reveal a tenant's financial health. Affluent tenants are less likely to fall behind on rent payments.
Set concrete numbers to gauge each tenant. Use the area to help establish your criteria. Look at metrics such as median income to understand the local market.
Do Your Research on Each Tenant
Some applicants will make it to the next round of your screening process. The next step is researching the tenant. Look for a background check, credit report, and rental history.
Background checks shed light on an applicant's past. You'll see if the tenant got sued and the cause. Legal challenges can put a financial strain on applicants.
A credit report gives you a closer look at an applicant's ability to manage money. Credit scores range from 300 to 850.
A higher credit score indicates stronger money management skills.
Rental history lets you explore a tenant's history with other landlords. The applicant's previous landlord can inform you if the tenant missed payments. Rental history can help you eliminate some applicants and give preference to others.
Meet the Tenants
Meet with your shortlist of tenants to get a better idea of their personalities. You'll get a better understanding of who will live on your property.
Data gives you many insights. However, meeting applicants helps you develop gut feelings. You'll feel more confident welcoming a tenant who you met in person first.
Review Housing Laws
Housing laws limit your ability to reject applicants. You can't use certain criteria such as race, gender, and religion to make decisions. You must look beyond these factors when making decisions.
Federal housing laws apply to every landlord. However, states also have custom laws. Review your state's regulations before deciding on a tenant.
Want Help With the Tenant Screening Process?
Tenant screening takes plenty of time and resources. Many investors prefer to sit back and collect monthly payments. We can make that happen.
We help landlords in Vancouver, WA, and surrounding cities to find and recruit tenants. We handle the tenant screening process so you can focus on other areas.
Contact us today to learn more about our property management services.