Screening applicants allows the Landlord to enjoy the many benefits of choosing the right tenant.
You may think that the ideal tenant is one who pays a year's advance rent in cash with no written lease agreement and no questions asked. But the landlord should know that in most jurisdictions in the United States, the landlord can be held liable for any illegal activity committed by the tenant at the rented premises. And repairing those bullet holes in the walls and ceiling can take a bit of the gloss off this "ideal" situation.
Experienced property managers know that screening tenants is a must. Selecting the right tenant can make the difference between profit and loss, happiness and heartache. Choose wisely. Learn from your experiences. If you own a rental property for 10 years, you will probably only have between 8 and 15 tenants in that time. It really isn't a lot of experience. Real estate agents will arrange this many leases over a weekend.
Private property managers tend to attract prospective tenants who may not want to go through a real estate agent. Usually the reasons for this are innocent enough. For example, this may be the first time this perspective tenant may have decided to lease an apartment. The prospective tenant may lack previous rental references, which is why an agent may discount him as a viable candidate.
Sometimes you may attract the wrong kind of prospective applicant as a tenant; they can be difficult to identify. They will have conned others before, and you are next on their list. They will have more experience than you in manipulating your emotions causing you to make bad decisions. Beware the hard luck story. Being a landlord is a business, which you can operate successfully or at a loss. Don't operate your business as a charity and feel you need to house the world. You are not the tenant's mother or father.
Advertising for tenants
I have only ever advertised in the local paper where my property is located. In over ten years of managing my own properties, I have never had to advertise for more than 2 weeks to find a tenant.
Prospective tenants are not na´ve. Writing your ad with flowery copy will only add to your expenses and benefit the newspaper's classified ad department. Keep your ad copy concise and accurate. State the location of the unit, number of bedrooms, bathrooms, parking and the monthly rent amount. I have found no difference in response rate regardless of the size of my ad or use of bold and color graphics. A simple 3 or 4 line single column ad works as well as a more expensive one.
True prospective tenants will find your ad and contact you for more information. Every real estate agent in the area will also find your advertisement. Real estate agents will reach out to you offering to find a tenant for you. I pleasantly (sometimes sarcastically) decline their offer. If I haven't got a tenant leading up to the 2-week mark, I am starting to get anxious but experience has shown me to be patient.
Showing the apartment to prospective tenants
When contacted about the apartment or duplex, I generally give the applicant the address and brief description of the place. If I hear any hesitation, I will suggest the applicant drive by the place to have a look from the outside. If they are interested, I suggest that they call me back. I do not want to convince anyone to live at my property. I want them to make the decision that they would be happy to live there.
I make it a practice never to make a special trip to show the apartment to a prospective tenant. I tell all applicants the property will be open for inspection for an hour at a specific time. If they are interested, they need to show up during that time. No exceptions.
When people come to view the premises, introduce yourself and welcome them inside. Tell them to have a look around and if they have any questions, feel free to ask. Let them inspect the property without you hovering.
Some people will thank you and just leave. Other people will come to you and start asking questions. Emphasize the positive aspects about your property. Talk about the benefits of the location of the apartment. Tell them about the proximity to schools, shopping, public transportation, etc. In most instances, people already know about the area and are willing to live there. Ask them if they want to fill out a Rental and Credit Application, which is provided in you Lease Agreement and Comprehensive Landlord Kit. If they decline, you are better off in the long run. This is the proper way to screen your tenants.
You will probably be asked if you have had many people through and has anyone else applied. I always say yes on both counts. I further advise that the apartment is available until I have received a security deposit. I tell them I do not expect it to be on the market for long. I always ask "If I offered the property to you, would you accept my offer?" If they answer positively, I tell them I will review their application, contact their references and employer and give them an answer as soon as possible, typically within 24 hours.
Have the prospective tenant fill out the Rental and Credit Application
You really should have Rental and Credit Application available for prospective tenants. Writing details down on scraps of paper will not help you make a good choice.
Have the tenant completely fill out the form. In the event they do not have all information necessary to complete the application, you should suggest that they telephone you later in the day with the information otherwise you cannot evaluate the application. Once the form is completed, briefly review it to see if you have any questions about its completeness. If you see any issues that need clarification, get them clarified. Tell the applicant that you have the application but need certain items clarified. Advise that you will give the applicant within 24 to 48 hours to provide the needed information. Before your applicant leaves, you should ask how long she wants the lease term. For example, are they looking for a six-month or 12 month lease term?
Ask for proof of identity. Have them show you their driver's license or credit card or something that makes you feel they are who they say they are.
When the prospective tenant leaves, try and score the applicant. Using a scale of 1 to 10, score the first applicant as a 5 and use this applicant as the benchmark. Score future applicant from this benchmark. Make other notes and comments to help you remember that particular person. You must do it at the time you meet the person, as memory will fade the longer you wait.
Carefully Review the Rental and Credit Applications
A good tenant has the money for the security deposit and advance rent. This should be a good indication that the tenant can pay the rent on time and will respect your property. This is the kind of person you are trying to find.
In reviewing your applications, discard right off anyone with a low score. Hopefully you still have 2 or 3 applicants remaining. In the event you have no applicants following this initial review, be patient. You will receive more telephone calls. If you don't, you can run another ad. You should never resort to selecting the best of a bad bunch. You know it will only lead to grief.
Review the applicants that have made it to your shortlist. Are they employed? How many persons will occupy the premises? Do they both have jobs? Have they rented before? Are they happy for you to contact previous landlords or have they given you a tale of woe as to why they had prior problems? This should be a red flag to you that this tenant may not be the best choice.
Factors to consider when Choosing your Tenant
The next step is to follow up with the applicant's references. Contact the applicant's previous landlords. Telephone their employer. Make sure they really have a job. You must do your homework.
It may surprise you to hear that not all people tell the truth on their application forms. If you don't call around to check things out and you choose that applicant, chances are that everything will turn out alright. But if you don't take the time to review their references, you have no one to blame but yourself. It is not just the hassle and potential financial loss of choosing a poor tenant due to insufficient screening.
Contact the applicant's current and previous landlords and find out the following:
- Did the applicant give proper notice to vacate?
- How long has the applicant lived at that address?
- Does the applicant pay rent on time and in full?
- Does the applicant have pets?
- How many people lived in the applicant's home?
- Does the applicant have co-tenants not on their lease?
- Was the applicant's property kept clean?
- Would you rent to this tenant in the future?
Contact the applicant's employer and ask:
Is the applicant's employment permanent or temporary?
How long has the applicant worked for the employer?
Does the applicant report to work regularly and on time?
What are the applicant's prospects for continued employment?
You must make these phone calls.
Informing the Successful Applicant
After you have properly screened your applicants, it is time to decide. Once you have made your choice, contact the applicant. Inquire whether they are still interested in your property. Inform them that their references were satisfactory and congratulate them for being successful applicants. Ask them if they wish to proceed. If so, arrange a time to meet to finalize all the paperwork and collect the security deposit and any advance rent, if applicable.
Advising the Unsuccessful Applicant
It's not over yet. You should contact all the other applicants that you promised to call back with an answer. Do not put this off for another day. It is never easy to tell someone they have not been selected.
Your exchange with this person may go something as follows:
"Hi Mr. Prospective Tenant. I am Mr. Landlord, from the property you looked at on 2700 Somewhere Street, Propertyville. I regret to inform you that your application was not selected. We wish you all the best and good luck with your house hunting. Goodbye."
Keep it short and sweet. They will try to ask questions like "Why didn't you pick me?" or "Who did you give it to?" Politely decline to answer by saying. "I am sorry but my policy is not to discuss these issues. Thanks for your time. Goodbye." No need for conversation. Finish the call and move on to the next one.