Great tenants can be hard to come by, but it’s important for your business that you find them. The last thing you want is a tenant who misses rent payments, disrespects your property, and needs to be evicted.
To find the high-quality tenants you want for your business, you must perform in-depth tenant screening. Doing so has become quite easy thanks to the tools offered by property management software.
With that being said, it’s up to you to know what to look for. In this article we’ll be going over some of the traits that a great tenant possesses.
Income of At Least 3 Times the Rent Price
First and foremost, a tenant needs to be able to afford your rent. A tenant too financially burdened by the price of your rent is a lose-lose. Your tenant will be struggling to make ends meet, and you run the risk of receiving late rent payments (or none at all).
A good rule of thumb is that your tenant should make at least three times whatever your rent price is. Make sure you require proof of income on your rental application, whether that be W-2 forms, recent pay stubs, or other relevant documents.
As a sidenote, it’s a great idea to accept your rental application online. This makes it easier for renters to submit these documents, which increases the likelihood that they’ll apply to your property in the first place.
Great Credit History
Even if your tenant brings in a total income of at least three times your rent price, you must make sure that they’re financially responsible enough to be trusted to consistently pay rent on time. This is why running a credit check is so important.
A credit report gives you a comprehensive look at someone’s credit history. While looking at someone’s credit score is a solid starting point to gauge where they stand with their credit, you should find out more about the specifics. Pay particular attention to the frequency and severity of missed/late payments for rent, credit card bills, and loans. Someone who doesn’t prioritize on-time payments isn’t a good candidate for your lease.
No Evictions
Evictions are time-consuming and expensive. You want to avoid tenants who are prone to evictions at all costs. For this reason, make sure your tenant background check includes an eviction history check.
An eviction history check will give you details regarding any prior evictions someone has had. A tenant with a clean eviction history is generally a good sign. With that said, if a tenant with an otherwise promising application has been evicted before, you should ask them about the eviction. There are times when reasonably explained or even wrongful evictions occur.
Positive References
When a tenant provides their employment and residence histories on a rental application, make sure to ask for accompanying references. Not only will these references be able to confirm the legitimacy of the information provided, but they can speak to the applicant’s character.
A tenant’s current and previous landlords are in a unique position to tell you about someone’s quality as a renter. By speaking with another landlord, you can learn if a tenant pays rent on time and respects their landlord’s property and policies. Positive landlord references are an often-overlooked component of tenant screening.
Long-Term Renting Habits
A tenant who’s likely to renew a lease is better for business than a tenant who jumps around from property to property. A tenant who stays with you long term means fewer vacancies where you aren’t collecting rent and must spend time looking for a new tenant.
Furthermore, if a tenant’s residence history suggests that they’re prone to breaking leases, this is an immediate red flag. A dependable tenant who also sticks with you long-term is about as perfect of a situation as a landlord can ask for.
Conclusion
Taking the time to conduct thorough tenant screening is well worth it in the end. This means requiring a rental application, collecting proof of income, running a credit report and background check, and calling references.
Going through these steps is only half the battle. If you don’t know what you’re looking for in a tenant, you won’t be able to make the right call on accepting or rejecting them. By familiarizing yourself with the traits of a great tenant, you can be sure to sign leases with renters who’ll help your business thrive.
