Caution should be exercised when renting a residential property, as choosing the wrong tenant can cost you. At the very least, you want to be sure that the entire rental amount is paid on time. In addition, you also want to avoid the cost and hassle of clearing and avoid costly repairs due to damage or neglect.
The tenant screening process actually begins when you publish your rental listing, which should indicate when it is available, whether pets or smoking are allowed, maximum occupancy, and other important terms. The more questions you can answer in advance, the more likely you are to sort out those tenants that may not suit you well.
When potential tenants contact you, have them fill out a rental application. You can use the information gathered in the application to conduct a credit and criminal background check. You can also request a reference from a current or former landlord.
Here are some key questions you can ask potential tenants to make the right decision.
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1. How long have you been in your current place of residence and why are you moving?
There are countless reasons why someone needs a new rental, but the potential tenant's answer can be insightful. For example, it's not a good sign when a potential tenant says, "I'm moving because I didn't like my landlord." Look for answers like "I'm changing jobs" or "We need more space".
If you are in your current place of residence for a short period of time, or if there are other signs that you frequently move from one rental property to another, this could be a sign that you are problematic tenants. However, you should not accept this and may need to consider other evidence that would support this claim. If, for example, they avoid giving landlord references or vaguely state the reason for the departure, this can be seen as a red flag.
2. Have you ever broken a rental agreement or been expelled?
Here, too, the context is key. Unexpected life events such as moving to a new job or taking care of an older parent are definitely valid reasons for terminating a lease. If they say yes and give a fair reason, you may want to ask how they canceled the agreement. If you can speak to the landlord whose rental agreement has been broken, this is even better.
Whether a potential tenant has been evicted is much easier. If they say yes, in most cases you want to move on to the next applicant. However, this should not always disqualify a potential tenant. You may have had a financial emergency and, for example, could not pay the rent. If they say no, they will not be driven out. Just make sure you check this when doing the background check.
3. Is your monthly income at least three times the rent?
One of the biggest problems for landlords is late payment and other problems related to rent. As a rule of thumb, a tenant's income should typically be three times the rent, which may not always be realistic in certain high-priced rental markets (such as San Francisco or New York). If they prove (i.e. pay stubs) that they have a stable monthly income that is at least three times the rent, they should be able to pay you in full each month.
You should prepare a credit report as part of your background check. However, if you ask them to approve a credit check in advance, this can also be revealing (especially if they refuse or evade).
4. Do you have animals?
If you don't allow pets, you should still be prepared for applicants who have the “cutest kitten in the world” or a pet fish that they believe should be exempt. Even if they make a solid argument that their pet is not a problem, special exceptions can lead to resentment from other tenants, create a bad precedent, or otherwise backfire. For example, this harmless-looking aquarium could break and flood the unit.
If you allow pets, make sure you have a clear and consistent pet policy and include it in a pet add-on to the lease. You can also ask potential tenants to submit a pet application form. Because pets can wear out the rent or represent other liabilities, you can add an additional pet deposit to clarify what this deposit covers (damage, pet stains, etc.).
However, keep in mind that not all animals are pets, even if they are dogs, cats or hamsters. A potential tenant can have an emotional support animal or a service animal. For example, some dogs are trained to recognize changes in blood chemistry and to make their owner aware that they need to test their blood sugar levels. According to state housing laws, landlords may have to allow service animals. So make sure you understand these laws before you start reviewing applications. Ask a lawyer if you are unsure.
5. How many residents will you live with?
The occupancy limit of the device should be specified in your rental contract and in your rental list. Apart from the additional costs for utilities (if you cover water, electricity, etc.), the additional wear and tear and additional vehicles (especially if parking is limited), it may be against the law if there are more occupants than one unit.
Tenants also have personal lives, so you should expect visitors from time to time, perhaps occasional overnight guests. For the same reasons that you want to keep a strict occupancy limit, you may want to prevent guests from exceeding their greeting.
In addition to the occupancy limits, the guest policy should also be clearly stated in your rental agreement. Rental agreements may indicate that guests who stay at the property for more than two weeks within a six-month period, for example, are considered tenants and have to submit a rental application and pay additional rent (if approved). This not only protects you financially, but can also protect you from liability for the actions of the long-term guest. How strictly you enforce this policy is of course up to you, but you want to apply it consistently.
Protect your financial and legal interests as a landlord
In order to protect your property and rental income, it is important to be clear, fair, and confident when reviewing tenants. Also keep in mind that asking these questions is just a first step. Make sure you actually do these background checks, call up your references, check paystubs, and get everything in writing with a rental agreement once you've chosen the right tenant. If you have additional questions about tenant reviews or other legal issues related to rentals, check out Rocket Lawyer's other online rental resources or ask a lawyer.