Choosing the right tenant is an essential decision for any landlord. While finding a good property and negotiating good mortgage rates are considered vital for your success, all these efforts will go to waste if you rent your unit to a tenant who will eventually be evicted. At the end of the day, you need a tenant who you can trust to take care of your property and pay rent on time. However, this is easier said than done, especially when most prospects tend to put their best foot forward only during the screening process.
In this article, we list down some actionable steps that you can take to ensure an effective, fail-proof tenant screening process.
Pre-Screen Your Tenants
You can save yourself a lot of time just by pre-screening your prospective tenants. After all, why invite people who don’t even meet your criteria? You want to create a solid listing that includes the details of your property as well as the kind of tenants who are interested in the unit. There are some factors that you need to consider when coming up with your criteria, such as property location, benefits, renovation history, value, and more. If you plan on attracting higher-income individuals, you may want to stage the property in order to attract the right people.
Know Your Target Tenant Before You Even Consider Advertising
Of course, pre-screening tenants wouldn’t be successful if you don’t even know who your target tenant should be. As such, it would be wise to take a few minutes to list down the characteristics that you are looking for in an ideal tenant. While we all want well-off, established professionals who are too busy to even stay at home but at the same time, manage to pay rent on the dot every time—that might be too unrealistic. With such a criteria, you might end up with little to no prospects at all. Instead, you should consider your property and assess who will most benefit from it.
Here are some of the things you might want to consider:
1. Income
This is probably the most obvious but definitely the most important consideration. You do not want to be put in the situation in which you’re chasing after clients for overdue payments. But what is considered a good income to rent ratio? A good rule of thumb would be to find tenants with a salary that is three times more than the monthly rent. So if you have a property that’s renting for $1,000 per month, you might want to look for tenants who make $3,000 a month.
The rule, however, is not absolute, as not all properties are created equal. If your rental property is located in an expensive neighborhood, you need to take into account the lifestyle that comes with living in that place. In this case, you might need to increase the ratio to 3.5 times or more. On the other hand, if your property is located in a financially struggling part of town, you might want to consider lowering your ratio to 2.8 times or lower in order to accommodate more applications.
2. Rental History
Most landlords consider it vital to look at a tenant’s rental history, as this is a good indicator of the tenant’s ability to pay. However, this may not always be the case, especially if your property is in an area populated with immigrants. This is the same case if your property is located near colleges and universities. A lot of first year students won’t have any rental history that you can review, but this does not mean that they are not potential tenants. The bottom line is that you need to be flexible when it comes to screening tenants so you can be sure that you are advertising to the right ones.
Avoid Things That Can Get You in Trouble
Asking the wrong questions, especially ones that can be offensive, can possibly lead to legal implications. Questions such as ‘do you plan to have more children’ or ‘are you married?’ are sensitive issues that are covered by the Human Rights Acts. It is illegal to screen tenants based on race, religious belief, ancestry, place of origin, nationality, gender, marital status, disability, age, and the like.
Acquiring a tenant’s credit information through illegal means is also considered a breach of that tenant’s privacy. It could also land you in jail in extreme cases. This same principle applies to acquiring a tenant’s social insurance number (SIN).
Conclusion
Tenant screening can be an overwhelming process, but it doesn’t have to be. True Property Management works closely with property owners and landlords to help them find the right tenants for their New York City properties. Get in touch with one of our representatives to schedule a consultation with one of our True property managers today to see how we can help.