As a landlord, a good tenant is what you need to sleep easy at night. This is because you are guaranteed that your rent will be paid in good time and your property will not be damaged. When you have a bad tenant on the other hand, all you think about is the state of your property and investment while constantly receiving calls from angry neighbors.
Any prospective tenant can act as the best tenant in the initial stage of application, but to be sure that you are getting the best tenant, ensure you check rental history to be safe.
When finding a new tenant for your property, there are two choices, you can either hire a rental property management company to check for you and pay them a certain amount, or you can do it yourself.
In the case where you have to carry out credit check for renters yourself, the following are some of the steps you can follow to guide you:
- Application request
You can do this by asking all the potential tenants to complete an application. You can either create your own personalized application or request for one from a real estate company. Ensure that your application form covers all the details you want to find out about the said tenant, especially the financial information, personal information and employment information.
Also, be sure to note that you might require to carry out a background check if necessary and that by signing that application form, the tenant grants you the authority to check into his or her personal, employment and financial history.
In any rental application, the following details should be presented in the form:
- Financial information such as credit cards, bank accounts which include minimum monthly payments so as to provide an oversight on the tenant’s ability to pay rent every month.
- Current level of income- the duration that the tenant has been employed in his place of work and whether he has switched jobs and if so, find out why.
- Current level of income- does the income cover monthly rent payments and other living expenses.
- Previous landlords contact information and amounts of rent previously paid and the reason why the tenant left the previous property. This helps you assess whether there are any gaps in the tenant’s rental history.
- Details of their lifestyle which will help you find out whether they have pets, and the number of occupants.
- Personal references of the tenant.
After the tenant has filled the application form, read it through carefully to see whether there was any information omitted as this may be a red flag that the tenant is hiding something.
- Credit Check
It is always a good idea to check the credit of a prospective tenant. This check reveals details about the tenant’s previous credit history. Some of the things to consider when reviewing a credit report include:
- Credit history- look out for any late payments, charged off credit cards, collections accounts, etc. This will help you not to entrust your property to a tenant with serious delinquencies.
- Current Debt- a tenant with maxed out credit cards or unpaid hefty loans may have a difficult time keeping up with rent payments.