The 3 most important things to check when approving a potential tenant?
Property management is a difficult business. In most States and Provinces, tenants have substantially more rights than the landlords, and once they have keys to your property, you as the property owner are very exposed to risk. Here are a few ways that landlords and property management companies can reduce their risk and the likelihood of approving a “bad tenant”
1. Previous landlord reference
I personally believe that this is the most important background check for property managers. If they didn’t pay their last property management company on time, and left the place a mess, then what are the odds that they’re going to do the same to you? Pretty good, I would say. Just be careful that they don’t give you a fake reference like a parent of a friend, which is very common.
2. Employment verification
This is the second most important piece of the puzzle. Call their employer and make sure that their story matches up. Google the company that they work for, and make sure that it actually exists. If they have a steady, secure source of monthly income, then it’s highly likely you will get paid each and every month. No job, no rent payment…
3. Credit check
This last one seems like a no-brainer, but you would be surprised at how many property managers don’t do this one in order to save the $10.00. Of course a credit score shouldn’t determine your decision, but it will give you a very clear picture of your potential tenant. We have made exceptions and rented to tenants with bad credit in the past due to things like divorce, business bankruptcy, etc, but if they’re constanly burning utility and cel phone companies, what do you think the odds are of them potentially burning you down the road? The other thing I like about a credit report is you can verify a lot of their personal information to see how truthful they actually are about things.
Stay disciplined when it comes to property management and follow your own rules
If you stay disciplined and follow these 3 critical checks each and every time you have a tenant apply to rent one of your places, you will be successful with property management 95% of the time. Of course nothing is foolproof and bad tenants can still slip through the cracks, but this will go a long way to prevent that.
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March 12, 2017