When considering renting out property, it is important to do your own due diligence to make sure your paperwork is in order and the prospective tenant is trustworthy.
The following are points you should consider.
The first thing you will need is a rental application. The application doesn’t have to be from a specific source. In fact, you can make up your own as a Word document. At a minimum, be sure you request and receive the following information on the application.
Request the tenant’s full name, social security number, last three places of residence, as well as why he is moving from the current residence. Also include the name and contact information of the tenant’s current landlord. Personal references, emergency contacts and the last five years of employment history are important, too.
The employment history should consist of the name, location and contact information for the Human Resources Department. Near the bottom of the form, include a statement authorizing you to verify the prospective tenant’s creditworthiness. I use the following:
I CERTIFY the answers given herein are true and correct. I authorize the property manager/owner to obtain any and all credit information and to verify references. I understand this is an application and does not constitute a rental or lease agreement. I understand the landlord may terminate any rental agreement entered into for any misrepresentation made above. I further understand there is a non-refundable fee to cover the cost of processing my application. Any questions regarding rejected applications must be submitted in writing.
Most importantly, the tenant must sign and date the application. If you need an application, you can go to my Web site at www.EatonPM.com, and print one out for free.
Upon receiving the completed application back from the tenant, you should check out the applicant’s credit, criminal and eviction history. Many companies will provide this service online for a fee. This fee should be passed on to the applicant.
It is important to note some applicants will have credit issues, especially in today’s down economy. Whether or not you allow applicants with credit issues to lease from you is your choice. However, you should establish a standard to which all applicants are qualified so you do not violate any laws regarding discrimination. Also, if the tenant has any criminal or eviction history, you should carefully consider this as a disqualification.
If you are satisfied with the applicant’s credit, criminal and eviction history, you should then verify the employment and reference information. Keep in mind the people listed as references will usually give positive reports. It is important to know how long they have been acquainted and what their relationship is with the applicant. The key is to ask the person questions requiring more than just a yes or no response. If you can get them to open up, they will usually provide you with all of the required information.
Next, the applicant’s employment history should be long and stable. I like to see at least two years at the same job. I will make exceptions to this rule, especially if the applicant has been in the same field, but just recently changed employers. In this case, six months on the job should be the minimum.
Lastly, you should communicate with the applicant’s current landlord. The current landlord should be able to confirm the fact the applicant took great care of the property and paid on a timely basis. I have found most landlords will answer your questions honestly, not telling you what you want to hear just to get rid of a problem tenant.
As you work with these steps over time and gain experience, rest assured, you will begin to get a handle on how to find good tenants. Ultimately, you will be able to weed out the problem applicants.
For more information, call Craig Eaton at (480) 421-8471, or e-mail info@EatonPM.com.