With the intention of renting properties for extended periods most real estate investors buy properties. True passive income comes from investing this way. But finding and choosing a tenant (known as Tenant Screening) can be a challenge if you don’t know what to look for.
Choosing Prospective Tenants – The first step of the tenant screening process is to find people interested in renting your property. This is done by advertising your property for rent. Basic forms of advertising are; the local newspaper, internet, handing out flyers, and using For Rent signs but there are many ways for advertising your property. The properties basic details should be included in an advertisement (number of bedrooms, bathrooms, type of property, etc.), your name, and your phone number. Let people leave messages on your answering service if you can not field the calls all day. It is important to return every call as soon as possible.
Agree on A Meeting Time – The next step in tenant screening involves meeting the prospective tenant at the property. Ask prospective tenant’s when they would like to see the property and the best times for them when you return calls. In case the potential tenant arrives early you should be there 15 minutes prior to your scheduled meeting. Give them your cell phone number, in case they get lost or need directions. Sometimes prospective tenants arrive late, or they don’t arrive at all! A general rule is to wait at least 30 to 45 minutes before leaving. If the tenant arrives, show him or her around the house while explaining the terms of the lease.
Initiate A Credit Check – The next step in tenant screening involves obtaining a copy of the prospective tenant’s credit report. Many companies charge a small amount to perform credit checks (usually around $10 to $35.00). The applicant should pay the fee and it is non-refundable even when you choose not to rent to that person. There is normally an credit application for the tenant to fill out. You then fax that application to the company, and they will fax you back a credit report, and deduct the fee out of your bank account or charge it to your credit or debit card. Credit scores of renters tend to be around 520 to 630. If you find a prospective tenant with a credit score greater than 700, jump up high in the air! Background checks are also offered for a fee.
Contact Previous Landlords -Talk to those who previously rented to the tenant. Ask questions like if the tenant was late, or caused damages. Never call current landlords. If the potential tenant is presently renting a home, you should never call the tenant’s landlord. The prospective tenant could in reality be a aggravation, and his or her current landlord could deceive to you, just to get rid of him or her.
Screening tenants is simple, after you screen a few tenants, it becomes very routine.