What should I look for in a new tenant? How do I qualify new residents?
This age-old question, you would think, can, and should have a single straightforward answer. It doesn’t because each rental property is as different and unique as those we rent to; some are credit-worthy, and some are well below par. Some have significant income, while others are barely making it.
If you are employing professional property managers and professional property management software, then a lot of the guesswork is removed. These professionals, along with their systems, have resident qualifications figured out. From initial applications to acceptance or denial, the applicant can expect to get a favorable response or answer why they were turned down, with grey areas removed and fair housing laws are taken into consideration.
If you can’t assure following fair housing laws on your own, consider hiring professionals to do your leasing. Leasing is just one part of managing, so I’m not suggesting if your properties are self-managed that you need to turn over all management – just the leasing piece.
Running a successful rental property business requires having reliable leasing standards in place. As much as every property manager would like the option to only leasing to the resident with a six-figure income and rock-solid credit scores, the spectrum of properties and tenants is much broader. For example, older assets are without upgrades for the last 20-years attract an utterly different resident-base than new shiny hi-rises or lifestyle properties with every known amenity known to man.
So how do you select tenants? Tenant selection requires a plan. Having a systematic method provides every applicant with the same opportunity to gain residency. Why? First, to ensure fair housing standards, and second, because fair is the right way to do business.
Implementing a leasing system that meets fair housing standards creates an initial step towards making the property and new resident successful. Some people will not qualify because of either income or credit. But that’s ok – because the standard is applied to all applicants.
Excluding the pros, there are general rules of thump that can still be applied, but they are short on depth. Just guessing about how to gain tenants opens up the asset and property owner with spotty paperwork or worse. Just saying to anyone that calls in that you need to have 3X the monthly rent to qualify isn’t an appropriate response without a body of work – paperwork – to make that statement stick.
What about pet policy and the maximum number of occupants and cars on-site? What about quiet hours and a number to call for emergency maintenance? If 3X the rent is all people know, then four adults can move into a 2-bedroom, bring their pets and four cars to your property!