Have you recently invested in a rental property? If so, congratulations! It's a great way to make extra income. Now, however, you've got to find tenants -- and finding good ones can be a little bit tricky.
You probably already know how to attract tenants who will be interested in renting your apartment or house. But how does a landlord determine which of the applicants are responsible, reliable people who can be trusted? Read on to find out.
1. Make Sure Prospective Renters Can Afford Your Property
The last thing you need to worry about is chasing down your rent every month. So it is imperative to find a tenant who has a steady job and a good income.
Rental real estate experts recommend that a prospective renter have an income that is three times their rent. So if you are asking $1000 for the apartment's monthly rent, you will want a tenant who makes $3000 or more each month.
A word of caution, however. You will also need to factor in the renter's debt. For instance, let's say that a person who makes $3K monthly also owes some $2000 in credit card, student loans, or other payments each month. They probably won't be as reliable as another candidate whose income is slightly lower, but who carries little to no debt.
2. Run a Credit Check
This leads us to our next tip, which is to run a credit check on all serious candidates. There are several important pieces of information this action will tell you.
First, a credit check will give you an idea of whether or not this person has any evictions, bankruptcies, or civil judgments on their record.
Next, you can get a sense of how well this individual does in terms of paying their bills on time. Someone with a spotty credit history might not be the best one to choose as a tenant.
Lastly, look at the income to debt ratio. This can give you an idea of whether or not the renter can afford your property, as outlined above.
3. Verify Employment
While unemployment is sometimes unavoidable and doesn't necessarily reflect on a person's financial situation or ability to pay rent, it's best if your tenant is gainfully employed.
On the application form you give to prospective renters, be sure to ask about employment. You will then want to follow up by contacting the employer. Verify the individual's income, ask how long they have been employed, and find out if they have a solid track record of being a reliable employee.
4. Talk to the Tenant's Former Landlords
While you're making phone calls, it's a good idea to call the prospective tenant's former landlords. Don't just call the current or last one. Go back several years, if possible.
Find out if the individual has a history of paying rent on time, leaving their rentals in good condition, and being a conscientious neighbor.
Do you feel like you're in over your head? Want some help managing your property? Contact us to ask any questions you may have, or to request a free rental analysis.