If you're looking for a way to invest your money wisely, real estate is one of your best options. Renting out a property can be a good way to bring in extra, passive income. With the right strategy, you can even make it a full-time venture.
That said, the key to making money through rental properties is learning how to find good tenants.
A desperate landlord might think that any tenant is better than no tenant, but this isn't always true. A bad tenant may not only be late on rent but may also damage your property. In a worst-case scenario, they could engage in risky or illegal activity that could leave you liable.
This is why screening tenants is always a must for landlords. Luckily, we have three tips to help you out.
1. Understand the Laws
While it's important to be careful to choose tenants who are ideal for your property, it's also important to be aware of the laws that outline rights for both tenants and landlords. The Fair Housing Act forbids property owners to discriminate based on certain factors when renting. It is important to be aware of these requirements.
For instance, under this law, landlords can reject a potential tenant based on past criminal history or drug use. They could not do so, however, based on religion, gender, race, or country of origin. Also be sure to look at local ordinances, as there may be more regulations.
2. Check References and Perform Background Checks
You've heard of references for hiring, but prospective employees are not the only ones you need to do some digging on.
Finding out about a tenant's previous history can be an important indicator as to how they might behave when they rent from you. For instance, if you speak to a previous landlord, they may be able to tell you about their consistency with payment, or the state they left the apartment in.
In addition to a criminal background check, make sure to do a credit check as well. This will give you an idea of their typical patterns in making on-time payments. A credit check will also alert you to whether a potential tenant has an eviction on their record.
3. Ask for a Large Deposit
Sometimes, a renter may not have a history you can refer to. And, even if a renter has a good history, that does not guarantee that they will be a good tenant now.
Asking for a large deposit, such as 2-3 months rent, can be a good way to protect yourself. This way, if the tenant misses a few payments and you choose to evict them, you can keep the deposit and not be out that money. The same goes for if the tenant causes damage to the building.
Learn How to Find Good Tenants Today
With these tips in hand, it will be easier to learn how to find good tenants and start making money from rental properties.
Are you looking for help with property management? Contact us today to learn about the services we can offer.