Renting out your property is a bit like loaning someone your car. But just because they look trustworthy, doesn’t mean they should drive; and the same applies to tenants. So how do you choose a good tenant, and how do you recognise and avoid the red flags? Fortunately, there is a screening process to help you find the keepers and win the tenant jackpot. Just a few simple questions will tell you everything you should know about your rental applicant.
So, are you ready to play Rental Applicant Hotseat?
Here we go…
Why is your rental applicant moving?
This may seem like none of your business, but it can reveal much more about your potential tenant than what you think. Applicants who state eviction or problems with a previous landlord as their reason should raise alarm bells. Be wary of tenants who complain about their current living situation, as bad tenants often bring their problems with them. Reasons such as needing a larger house, changing jobs, or cheaper rent are all worthy of consideration. If you’re concerned the tenant may be lying about their reason, don’t worry, there’s more digging to be done here.
When do they plan on moving in?
Planning is everything; a responsible tenant is a good tenant. If your applicant says they’re ready to move immediately, chances are they’re not good planners (or tenants!) If they can ditch their current landlord with less than 4 weeks notice, they can do it to you, too. This is also a good way of finding out if the timing will work. If a tenant isn’t ready to move in for another 6 weeks or so, you could be stuck with a vacant house, and therefore out of pocket.
What is their monthly income?
Time for some serious questions. Asking an applicant what their monthly income is, is a polite way of asking ‘can you afford the rent?’ A basic rule of thumb is that their income is 2.5 to 3 times more than the rent amount. Even if the tenant is lying about their finances, you can verify this information later in the process. It’s also standard to request the applicant pay bond upon signing the lease. Any applicant who cannot provide the bond amount, or asks to pay it off in instalments, is cause for concern.
Can they provide references from their former landlord and employer?
Here’s the part where all truths are revealed. References from landlords and employers help you gauge if who they really are aligns with how they present in their application. And here’s a word of advice: ask for former landlord references rather than current. A current landlord will be only too happy to be rid of troublesome tenants, and could possibly withhold critical information that would affect your decision. A former landlord is more likely to give you an honest answer. Unless your applicant is someone moving straight from their parent’s home, they should always provide references. If they refuse or make excuses, it’s time to move on.
Will they consent to a credit and background check?
And finally, the million-dollar question. It can be automatically assumed that anyone who will not consent to a credit check has something to hide. In this instance, it’s quite an easy decision for you. Some applicants may just feel naturally uneasy about someone prying into their personal information. But you can inform them that it’s a requirement of all applicants and there are no exceptions. Now is also a good time to ask them if they’ve ever been evicted. It gives them the opportunity to explain any awkward situation which may be revealed in a background check. And as for credit checks, even a tenant who looks good on paper can be caught out by personal debts. This final part of the screening process will give you a solid indication of how responsible your applicant is with their finances.
Asking your rental applicant a few simple questions could save you the headache of dealing with unreliable tenants down the track, and potentially spare your property – and bank account – from damages.