Today I'm talking about how to properly screen for tenants moving into your rental property so that you can manage your properties with ease and minimal stress and headache.
I have to say the biggest mistake that I have made in my entire investing career is not properly screening for tenants. I acted out of a place of desperation, I was desperate to get somebody into my property so that it could be fully rented, and I didn't go through any of these steps. I met people, if I got a good vibe, I would accept them as tenants. That's just not the way to run a business. It's not a way you should run your investments. This is a very simple process, but it's a process that a lot of property owners overlook. Even if you are planning to have a property manager manage your property for you, these are things you want to make sure that they're doing to properly screen for tenants before they move in to your property.
Your property is your asset and the tenants, are going to be your customers and your clients, and they're going to be renting your biggest asset from you, so you want to make sure that this process is rock solid, that you don't skip any steps, and you make sure that you follow through with all of them to ensure that you are doing everything that you can to choose the best tenants for your property.
The first thing you're going to want to request is a rental application. There are many you can find online. It's just a very simple application with basic information. That's going to be the first thing that they are going to be filling out, and it's going to be an opportunity for you to review basic information on them. Second thing you're going to want to request is an employment letter. Every time I request an employment letter I make sure that they have included in the employment letter how long they've been employed at their current job, and what their salary is because I want to make sure that they have been there for a while and that they have enough money to cover the rent.
I also request references. This is something I know a lot of people request, but no something everyone follows through with. It's a bit tedious because getting a hold of people on the phone today is a little difficult, so there's some back and forth, but I need you to just commit to the process and to follow through until you speak to people and get your questions answered. I ask for three references for each tenant that will be living there. So if it's a couple I ask for three references from each of them, preferably a previous landlord or a previous employer. Just make sure that you actually call!
The other thing I want to be clear about in the tenant screening process is that they are going be responsible to give me first and last months rent when the lease is accepted. A lot of people overlook this step, it's sort of like a heads up because maybe they aren't aware that they should be giving first and last months rent. Then they're scrambling and they're feeling stressed out, so I want to be very up front with that at the beginning so that they can, during the due diligence process, make sure that they have that money ready.
I also give them a copy of the lease that I want to be using. I try to provide the lease myself as opposed to having them or their real estate agent provide it because I want to be in control of what is in that lease. But I also want to give it to them up front so that they have enough time to review it while I'm reviewing all of their information. If there's any questions or concerns that come up along the way, they can let me know and we can go over everything. You want to make sure that everything is above board. You're going through all of the things that you need them to provide you.
Another thing I request is a credit check. That's something that some landlords can do on their own, or it's something that you can request that the tenant or the tenant applicant provide. It's pretty easy to get. You can get it online. Usually it's about $20 or $30. This is something you are definitely going to want to request and make sure that you go through it carefully.
Those are all the things that I ask for and request. Sometimes I even call the employer to make sure that they are actually employed there. I also do a quick Google search. We live in an online world. It's fair game to be able to Google somebody's name and if there are any red flags that do show up it's better that you know now before they move into your property.
Once a tenant moves into your property, it's very difficult to remove them. The tenant laws are very much in favour of the tenant and not the landlord. Whether that is fair or not is not a topic for today's post, but you do need to know that this process, before the tenant moves into your property, is so important and you have to take it seriously because this could be a relationship that lasts for many years to come.
Follow these steps carefully and methodically so that you can feel good about your new tenants moving in and having a successful relationship moving forward!