Thanks for dropping by Safe Investing South Africa. I am on a journey to build wealth my way. For any questions or comments, feel free to contact me.

9 Sept 2011

How to Screen Tenants

I decided to write a small post on how to screen tenants for rent or rather how I do it. My intern (soon to be ex-tenant) is hard at work showing the place. Isn't it nice that I could just hire her to do that, since she can’t now give my prospective tenants any bad attitude. Not that she would. She is a very sweet young lady choosing to go back home, on mom and dad’s budget. She is as sad as I am about leaving.

We are now getting a great response. Making this look all so easy whilst it’s actually not. I advertise and intern shows the place and hand over applications. One of the people who went to see the place is a single mom. I must mention up front, I have a soft spot for single moms. I heard somewhere that they can be irresponsible, etc. I totally disagree. The stable, working single moms have been nothing but a great pleasure to work with. The fact that they have their kids going to school also makes it harder for them to just up and leave the place too. And mature single moms do tend to take care of their spaces. I can imagine them to have more packed schedules than married moms to take care of the property though. Juggling a job or two, dinner and kids is just too much. I take my hat for them, and yes, I love letting my properties to them, when they have a good credit history and background check. Whilst a bit biased, I still try to stay objective. I will never discriminate against potential tenants. 

How I Screen Prospective Tenants for Rent

Whatever you do, familiarize yourself with the applicable laws in your area (state, country, etc). What I think is important when I screen my own tenants includes:
  • Credit History and Financial Records
I am an investor and the bottom line is very important to me. The tenant has to have a stable work life. A job that pays well enough for him/her to pay the rent. I have signed the tenant who doesn’t earn as much as the other applicants did in the past, but that was a great decision. I followed my instincts, but that had its negatives. The tenant stayed for one full year and couldn’t afford to stay there anymore. But that year was great for the two of us. In all, the salary is not the only variable to be considered here.   
  • References
Calling the references will also help. Your application form should allow your tenant to provide the numbers of the previous landlords. It may be great to call a few of them. This is something I really never do as thoroughly as I should.  
  • Number of Occupants
I set a minimum number of occupants for each property. The higher the number, the higher the maintenance budget, the higher the nuisance behavior and the more unhappy the neighbors. Its as simple as that.
  • Identity
I take it that the tenant has passed this even before you start with the rest. Being legally residing in the country.
  • General Background Check
It’s only fair for you to do a good background check. You may still take a tenant with a criminal record, bankruptcy history, etc, but knowing beforehand helps a lot. You may want to make use of the online services to do a good background check.

I never work against any regulations in my screening. Just stick to the applicable Acts and laws. I never discriminate against a prospective tenant because of their race, religion, sex, disability, etc. That’s my basic list on how to screen tenants. I’m sure it has tons of gaps. It works for me though. 

In the past I wrote about how I prepare my places for rent, how I market my places, and how I determine the rent to charge.


Post a Comment