If you followed our earlier articles in this series “The Craig’s List Ad“, “ list of 7 great questions “, “The Showing Appointment” and read our articles on Overcrowding, Renters Insurance and “My Tenants’ Dog Ate My Hardwood” you should have a good idea of what lies ahead as a landlord and be prepared for the final step – qualifying and selecting your tenants!
So, lets say you met some nice tenants at your property and one you particularly liked fit one or more of the following:
- They were as polite can be – they came on-time (actually it looked like they had already been there for a while checking it out) and spoke about how great tenants they are and how much they care about the homes they rent.
- They had all the paperwork pre-filled and ready. Even had a printouts of their own credit reports and a pre-filled lease ready for the landlord to sign.
- They said they were handy and not to worry about the last few repair items. They also offered to paint the “bland and boring” walls and to do any other repairs necessary.
- They offered to pay two or even three months rent upfront – they offered to write a check right there to prove they were serious.
- They could move in right away – you don’t have to worry about the house being empty anymore.
- The current landlord gave glowing reviews (landlord may have called even before you showed the home to say how great tenants they are.)
Some may snicker and know where I am going with the above (and probably won’t need to read this article.) For those think the above would make great tenants, please please please read on.
So, it is great that you managed to find a tenant. I would suggest calling the person a prospect for the time being though. There are lots of different people renting from Craig’s list, so it is imperative that you check out the prospective tenant thoroughly. If you are renting out your place yourself, you are really putting yourself up as a target – problem tenants will seek out first time landlords that are lax in their tenant verification and qualification. I get calls from prospective tenants all the time that ask if I am agent or the owner. When they realize I am an agent they will excuse themselves from the call.
The basis for any proper tenant qualification should be the rental application. Make sure *all* prospective tenants fill out an application form and that they submit a copy of their drivers license or other valid id as well as paystubs etc.
Some sample rental applications:
For Qualification and Verification Purposes, I suggest landlords make sure they do at least the following:
- Run credit on the tenants (have them order it online themselves and email you the login and password – i.e. on creditreport.com ) Print it out for your records and compare with copy of drivers license. Make sure they don’t have outstanding judgments, late payments, bankruptcies etc.
- Be clear on who and how many will be staying in the apartment, pets etc. All adults should apply and have their references and rental history checked.
- Be sure to get at least 1 month’s rent and one month security deposit up front (in certified funds if you don’t have at least 2 weeks before you hand them the keys). DO NOT accept people that cannot afford to pay you the whole amount up front.
- Verify their employment (call supervisor/HR) + get copies of recent W-2’s.
- Get copies of their drivers license so you know they are who they say they are and the same person as on the lease.
- Make sure they understand they have to pay utilities. move-in fees, trash fees or whatever else is required.
- If they have dogs/cats, make sure they understand the building rules and that they pay you for example a $500 move-in deposit.
- Call the last 2 landlords. If they are problem tenants, the current landlord will probably lie just to get rid of them.
- Don’t make friends with your tenants. You should be honest, fair, courteous and friendly. If you are looking to keep your rentals an investment, don’t mix business and pleasure.
- Don’t let your tenants paint or make improvements. They may not finish or may feel you are indebted to them and ask for slack when they are late with their payments etc. Or may just do a bad job or have horrible taste.
- Verify all information – income, employment, name on credit report/social security number etc. Look for red flags and inconsistencies.
- Use a great lease.
- Use us to find a great tenant instead of doing it yourself. We have done a lot of rentals and know what to look for. It will save you money and lots of grief.
- Most Importantly – tenants are people that are looking for a clean and safe home for themselves and/or their family. Life can be hard and bad things happen to good people. Also people struggling has to live somewhere and most people are worthy of respect and kindness (whether you are willing to rent to them or not.)
Regarding leases – there are plenty of sample leases online you can look at:
Regardless of what is available online – if yo are doing this on your own you should always have an attorney review your lease and paperwork.
Also, make sure you provide the renter with the various disclosure/disclaimer forms as well as the led based paint pamphlet (info and download from http://mrlandlord.com/lead/.) Their may be other forms necessary from your homeowner association, local jurisdiction and state.
The above may seem like overkill to some, but it takes only one bad tenant to give you unlimited hours of wasted time, destruction and lost income.
So, what was wrong with the prospect at the beginning of the story?
Well, tenants that pre-fill in a lease and bring to the showing are generally trying to run the show and are hoping to the owner will skip some of their due-diligence. Never take personal checks when giving the keys – they may bounce and after you have given the keys your legal standing is diminished. The glowing reference from the current landlord? If you had a nightmare tenant that wasn’t paying – and a new landlord called you for a reference – how far would you go to get rid of that tenant? (not saying you should lie – just saying that some/many would) Then, the fixing up part – yet again sometimes a ploy to make the landlord be enthusiastic about a less than ideal tenant (woow, he/she will fix up my place for free – managing this home will be sooo easy!)
We hope the above will help you get started. We do a lot of rentals and will be happy to help you find a great tenant if the above seems overwhelming to you. We also run an affiliated property management company and can help you manage your rental.