Every landlord wants their property to be occupied by a good tenant. A bad tenant can be a pain in the neck if they pay their rent after it’s due or not at all. Or, worse, they damage the property and then vacate leaving you to fix the mess and fit the bill.
Finding a good tenant for your rental property requires patience. Most landlords are in desperate need of tenants, usually because they need to service the loans they took out to buy their rental property. This may cause them to neglect some of the most crucial factors in identifying a good tenant versus a bad one.
If you are managing your rental property on your own, here are some tips that can help you find a stress-free, reliable tenant.
Avoid Jobless Tenants
As a landlord, the last thing you need is to have a tenant in place who does not have a steady income and may not be able to afford their rent payment. Before you allow any tenant to move into your property, you should first confirm that they are involved in gainful employment or that they have a sustainable business. To verify, you should ask the tenant to give you the contact details of their employer, and to send you copies of their last two months pay stubs.
Keep in mind that some tenants lie about their source of income. Once you get employer details, you should call them right away and ask them about the conduct of the tenant. If the tenant is an entrepreneur, you should find out whether they operate a legitimate business or if it is an inconsistent side-hustle. In fact, you should ask for their license from registering their business.
Consider Tenant’s Employment History
It’s important that you pay attention to your potential tenant’s employment history because it can give you some clues on how long they will stay on your property. If the history shows that the tenant has not switched jobs for at least 5 years, you can reasonably assume they are not going to spontaneously move out, and you should therefore give them the first priority.
However, if the applicant’s employment history shows that they have been changing employers like diapers, it’s fair to assume they won’t stay on your property for more than just a few months. To avoid high turnover, you should try to avoid tenants with a spotty work history.
Get in Touch with Previous Landlords
Why learn from your own mistakes when you can learn from the mistakes of others? One of the biggest errors a landlord can make when leasing a property is to not consult a tenant’s previous landlord. Rental history will give you all the information you need to make an educated decision. For example, if they damaged the property of their previous residence or refused to pay rent, you can safely presume they will treat you and your property in the same manner.
A good tenant will not hesitate in referring you to their previous landlords.
Run Reports on Your Tenants
The majority of landlords don’t bother to run a credit report or criminal background report from their tenants for various reasons, but knowing these things can help you determine whether they will be paying rent on time, or if there is something to be of concern from their past history. If the credit report is positive, it means that the tenant prioritizes their financial obligations, which is of utmost importance to a landlord looking to make a consistent ROI. These tenants are easier to manage and probably won’t need constant reminders that their rent payment is coming up or past due.
Get Rent Default Insurance
Most landlords and property managers deal with tenants that default on rent payments at one time or another, and the chances only increase with the number of properties you manage. Whether it’s intentional--such as a tenant skipping out on their rent obligation and vacating the property--or not--such as an active military tenant getting deployed--you will be forced to accept the deficit and incure loss of income. Fortunately, you can avoid such problems by
getting rent default insurance
.
The insurance is specifically designed to protect landlords from the losses incurred after a tenant stops paying rent. When you report a tenant that has defaulted on rent payment, companies that offer this form of insurance, like
Steady
, will cover the shortfall, ensuring that you are paid the rent you are owed so that you can make your profit and service any debt you may have on the property.