A landlord’s listing is posted, the inquiries are coming in and we are commonly asked by landlords “what next?”
It’s time to screen the potential tenants and narrow it down to find the right tenant for the rental property.
But how best does one screen tenants?
The screening process is super important to the leasing process and this is where you find out about the tenant(s) before signing a lease. And it’s always better to find out about your tenants before a legal contract is signed and you are stuck with terrible tenants.
So, what should landlords be looking for?
Landlordology has simplified it down to their “four Rs,” where the Rs stand for “Revealing, rich, reliable and ready.” But what exactly do these 4 Rs mean?
Revealing – This means that the tenant is willing offering up information about themselves such as: what do they do for work? Why are they relocating? Have they had credit issues in the past?
Not only does this allow a landlord to get a sense of the person but if a potential tenant is open about their credit flaws and a landlord does run a credit check, the honesty the potential tenant showed will ultimate reflect highly on them.
Rich – This means can the potential tenant afford the rent payments and this is probably the most important factor when screening tenants.
A general rule landlords should live by is the 30% rule, where 30% of a potential tenant income should be able to cover the cost of the rent. However, in markets of higher rents such as San Francisco and New York, potential tenants will often spend more than 30% on their rent. But landlord should be extremely cautious if the rent is going to be over 50% of a tenants income.
Reliable – This means is the potential tenant responsible and reliable when it comes to their money. Reliability is when a potential tenant’s credit score would come into play. The tenant may make enough to cover the rent (and falls within the 30% rule) but they may not be responsible with their funds. They may spend their money frivolous or are continuously late with bill payments.
Essentially, the higher the credit score the better and more reliable the tenant appears. Also, speaking with the potential tenant previous landlord about their ability to pay rent on time will give you a sense of the tenant’s reliability. Another good sign that the potential tenant is reliable is if they have been able to hold a job for longer than a year. To learn more about how a tenant can prove their income and this will be further discussed in a blog to come!
Ready – This means is the tenant ready to move? Does the availability of the rental property line up with when the tenant is ready to move? It’s rare to have a potential tenant that are ready to move in immediately even is the property is available now. Tenants with move in dates that are 1 week away are much more appealing than those looking to move in 1 month.
Revealing, rich, reliable and ready are a great place to start when screening tenants. However, there are many different questions that can be asked to help better screen the tenant and suss out any potential tenant issues. For more specifics on what questions to ask, stay tuned next week as we discuss screening questions to ask potential tenant, previous landlords and employers.
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