A rental property’s occupancy rate is an important factor that can either make or break its profitability. A property with a high occupancy rate means that it’s generating income for the rental property owner.
On the other hand, a vacant rental property is not generating cash flow, but the owner still needs to pay the costs associated with owning one.
While many rental property owners would want to see a high occupancy rate, they should also practice caution and prudence when it comes to finding tenants. After all, your property is one of your biggest income-generating assets, and you’d want to make sure that you entrust it to good occupants.
This is the reason why landlords should create an extensive tenant screening process to effectively select highly qualified tenants. This guide will help you screen your applicants efficiently to avoid having to deal with problematic renters.
Here are the important steps in screening tenants that landlords should consider:
1. Identify Quality Tenants
With an effective marketing plan you’ll start generating interest from prospective tenants. Before you start screening your applicants, you need to know how to identify a quality tenant. Each landlord may have different standards of what makes a good tenant.
In general, quality tenants are those who regularly pay their rent in a timely, take care of the rental property like it’s their own, and comply with the terms and conditions of the lease agreement.
Being able to identify such tenants is the first step. It can help you protect your Regina investment and reduce your risk. When screening your applicants, make sure to pay close attention to these factors:
- Financial resources - Check the business or employment history
- Ability to pay the rent - Is the income sufficient enough to pay the rent?
- Past tenancies - Were they involved in any eviction case?
- Criminal records - Were they involved in any illegal activities or legal issues?
- Rental background - Did they have a good relationship with past landlords and neighbours?
2. Create a List of Minimum Criteria
As mentioned, each landlord may have a different idea of what makes a tenant highly qualified. After you have learned to identify factors that can determine the eligibility of a tenant, you’ll be able to easily filter applicants who can meet these standards. For instance, you can filter tenants according to:
- Credit score - Performing a credit check can help you identify whether or not a tenant is responsible for meeting their financial obligations.
- Past tenancies - You want to look for tenants who have a good rental history and solid references.
- Income - By setting a minimum income requirement, you can ensure that you only choose tenants who can pay the rent consistently each month.
3. Pre-screen the Applicants
To avoid wasting time, you need to pre-screen your tenants using your non-negotiable requirements. That means that when an applicant can’t meet one of your highlighted requirements, that applicant is automatically eliminated from contention.
Ask important questions during your initial conversation to help you determine if they are qualified or not. Meeting them in person at the property showing allows you to catch potential red flags.
Pre-screening is a great strategy to discourage unqualified applicants from pursuing the application, saving you time and energy. Those who cannot meet your initial requirements will voluntarily withdraw their interest.
4. Review the Application Carefully
The next step is to review the rental application thoroughly to check the applicant’s information. Make sure to ask for the following information in your rental application:
- Authorization for credit and background checking
- Contact information and current address
- Current landlord’s name and contact details
- Past residence history and past landlords’ contact information
- Employment history, including the names and contact information of current and past employers
- Income range
Note that many landlords prefer to accept tenants who are earning at least three times the amount of the rent. However, this is not a hard and fast rule. Some landlords still accept applicants who do not earn three times the rental price, as long as they meet the other important eligibility requirements.
5. Verify the Applicant’s Employment, Income, and Credit History
Make sure to verify an applicant’s employment and income. Verifying the employment allows you to identify whether an applicant has sufficient financial capability to afford the rent. To avoid getting tricked with fake references, do your research and find the contact details of the employer.
You can also perform a credit check as part of the tenant screening process. Most landlords would prefer a score of at least 680. The credit score requirement may vary depending on your personal preference. Make sure that the applicant doesn’t have any overdue debts, prior eviction cases, relevant criminal records, or other legal issues.
6. Get in Touch with Past Landlords
The best way to know if the applicant is a good tenant is to talk to their past landlords. By doing this, you’ll find out if they missed rent payments, were negligent or abusive, damaged the property, or were involved in any other issues.
7. Accept or Deny the Application
You can accept or deny an application in writing. If you decide to refuse an applicant, you don’t need to state the reason for your rejection.
After accepting an applicant, make sure to create a detailed rental agreement and include all the terms and other necessary provisions relating to the lease.
With these steps, you’ll be better equipped to thoroughly screen prospective tenants. Still unsure if you can perform the tenant screening process on your own? No worries, there are reliable and experienced rental property managers who can help you with this!
Cressman Realty & Property Management can help you, screen tenants, carefully for your Regina rental property. We also offer full-service property management solutions to our valued clients. Contact us at (306) 584-7368 and we’ll be happy to assist you!