With any investment property, the goal is to make money. Putting a bad tenant into a property will eventually cost you money; not just with your turnover, but also with your downtime. If you have to eventually evict a tenant, it will cost you a lot of time and money as well. Tenant screening is one of the most important things a property management company can help you with.
Landlord Credit Check
At BMG, we do a lot of screening, and the first thing we do is a credit check. When we pull credit reports, we don’t just look at the score. We look at all the obligations a tenant has. We don’t care if a tenant has one obligation or 50 obligations. We are paying attention to whether that tenant is meeting those obligations. That’s a big deal. If the tenant has those obligations and is not meeting them, it gives us an indication of how they’ll treat the rent and your property.
Another thing we look at is collections. If tenants have anything on the credit report in collections related to a property, we won’t rent to them until those things are cleared up.
Rental Application Screening
With the screening process, you want to look at the longevity of their rental history. If they lived at their last property for less than a year, it’s a red flag. Be aware of the rental history, and don’t be afraid to call previous landlords. We like to go back two landlords because sometimes the current landlord will say anything you want to hear just to get rid of that tenant. This is not a situation you want to walk into. So by going back to a second landlord, you can get an accurate story of how the tenant treats property.
Verifying Employment and Income
Another item on your tenant screening checklist is employment. You want your tenant to be able to pay rent and take care of the property. So, the tenant should earn two and a half times the rental amount in income. That income can come from a job, a housing voucher, or unemployment benefits. Make sure your tenants can afford your unit.
Another thing that’s always important is employment longevity. If a tenant has only been in a job for a couple of months, there’s some insecurity there. One of my favorite tenants had just graduated from college with a teaching degree. He was working at a local grade school and had just started there. That’s a great situation even though he had only been employed for a few months. The tenant had put a lot of hard work into his education, so that counted as longevity in his career. This is a great way to get a real look at your tenants.
These are some of the key points you may want to use when screening a tenant or looking for a property management company to screen tenants for you. The whole picture is critical, and a good screening process will save you time, money, and a lot of headaches. If you need any help with tenant screening or you have any questions about Idaho Falls property management, please contact us at BMG Rentals.