Finding a Tenant for your investment property should be handled with great care. You do not want a “blind-date” experience with your Tenant. This means that you need to know as much as you possibly can about a potential Tenant before you even show them the property.
That’s right…before you show them the property.
When a prospective Tenant calls, you need to have your questions ready. I suggest having an actual written down script so that you do not forget to ask all of the questions.
Question #1: Always ask for a first name, last name, and phone number of the person calling. Never agree to show a home without this information.
Question #2+: Ask all of the “W” questions---who, what, where, when & why…
2a) Who…will be living in the property?(Is it you, a spouse, the kids?)
2b) What…kind of pets do you have?
2c) Where…do you work? (Do they have a stable job?)
2d) When…do you need possession of the property?
2e) Why…are you moving from your current place? And can I talk to your current landlord?
2f) How…do you plan to pay for the first month’s rent & security deposit? Cash, check or payments?
Question #3: Have you (the tenant) driven by to the see the property? (We always require prospective tenants to drive by the property 1st to make sure that they are interested in the property…if you don’t you will have lots of “no-shows”)
If a prospective Tenant seems hesitant or unsure of their answers, then take it as a red flag to ask more questions. If you are still not satisfied with their answers after probing further…remember you have the right to say NO and not show them the property.
So if you feel uncomfortable…don’t do it.
Now if a Tenant answers your up front questions with confidence…you’ve shown the property to them and they are interested in applying for the property, what do you do then?
First…have the potential Tenant fill out an application. Prepare an application asking specific questions like social security numbers, birthdates, and always get a middle initial of the full name to make sure that you have got the right person when verifying. The more info you can get from a potential tenant, the better off you’ll be in case you ever have to go to court for an eviction or file for garnishment of wages.
TIP: When taking a Tenant to court, the Sheriff will require a birthdate & social security number to verify that they are serving the right person. So you need to have that information.
The other important thing to include in your application form is an “authorization statement” that authorizes you to legally request and obtain information from creditors and previous landlords. If you’d like an example of my rental application then e-mail me at 417Dwellings@gmail.com and I will send you an example of the application that we use. Understand that you need to check with your state laws to make sure that you are complying with the questions you are asking.
Once you have an application filled out by the potential tenant, then you should have a simple checklist established for processing the application. Typically what we do is start by contacting the current & previous landlords of the tenant.
Remember specific questions are key: Ask the landlord questions like...
1) Did this tenant have a signed lease agreement with you?
2) How long have they rented from you?
3) Did they pay their rent on time? If not…how many times have they been late?
4) Does the tenant have pets?
5) What kind of condition have they left the property in?
6) Would you rent to them again?
Then thank the landlord profusely for taking the time to answer your questions. Other landlords are your allies…not competition.
TIP: Make sure you are really talking to their landlord or owner of the home. We have had prospective tenants use their friends to give them landlord references.
Once you have satisfactory questions answered by the previous landlord…then continue processing the application by a couple of simple steps:
1) Search the tax records to see if the Landlord you just talked to was the actual owner of the property or not.
2) Search your county’s court records. Most counties have a web site that is open to public access that allows you to search parties by name. This is a good way to find out if a potential tenant has been in court for any reason. Pay careful attention to cases the Tenant has been involved in with drug possessions or court ordered evictions with other landlords.
3) Verify the Tenant’s employment by calling their work supervisor. Take it as a good sign that when a Tenant has been at their job for over 2 years…it usually means the Tenant is established and will have some stability in your rental property. And…it also means that you can easily garnish their wages if they owe you rent! :)
4) If you still have your doubts about a particular tenant, then run a credit check. You can usually contact a credit bureau to do this, but understand that there is a fee attached that you must pay. One thing to remember about credit reports, just because they have bad, or no, credit does not make a person a bad tenant. We, as a property management firm, usually rely on the court record docket sheets more than a credit report.
Last…always trust your “gut” instinct. If you have done your homework, it is very likely that you will have great tenants, and a very pleasant experience.
Click on the picture above to download my video podcast on this topic.
Until Next Time…