Landlord’s Guide: 3 Essential Tips for Screening New Tenants in 2024
Did you know that 95% of property management headaches can be avoided with proper tenant screening? As a landlord, you’re not just renting out a space – you’re entrusting your valuable investment to strangers. That’s why doing your due diligence upfront is crucial. At Saltark Property Management, we’ve seen it all, and we’re here to share our top three tips for considering new tenants. Trust me, these insights could save you from countless sleepless nights and potential financial losses!
1. Verify Identity to Prevent Fraud
In today’s digital age, identity theft has become a growing concern, especially in rental applications. As a landlord, it’s crucial to be vigilant and take extra steps to verify the identity of potential tenants. This isn’t just about being cautious; it’s about protecting your valuable investment.
One of the most important things you can do is to double-check photo ID against the person presenting it. It might seem like a simple step, but you’d be surprised how often this basic precaution is overlooked. Take the time to really examine the ID. Does the photo match the person standing in front of you? Do the details on the ID align with the information provided in the application?
When verifying identity, keep an eye out for common red flags. These might include IDs that appear altered or damaged, inconsistencies between the ID and the application information, or a reluctance from the applicant to provide additional verification. Trust your instincts – if something feels off, it probably is.
It’s important to note that while identity verification is crucial, there are legal considerations to keep in mind. Make sure you’re familiar with fair housing laws and privacy regulations in your area. Implement a consistent verification process for all applicants to avoid any accusations of discrimination.
2. Conduct Thorough Reference Checks
References are a goldmine of information when it comes to screening potential tenants. At Saltark Property Management, we always recommend conducting at least three reference checks for each adult applicant. This might seem like overkill, but trust us, it’s worth the effort.
Why three references? Well, one reference might be a fluke – good or bad. Two references start to paint a picture. But three references? Now you’re getting a solid understanding of who your potential tenant really is.
Don’t just rely on written references, though. Phone references are equally important. They allow you to ask follow-up questions and gauge the tone and enthusiasm (or lack thereof) in the referee’s voice. When calling referee’s, have a list of key questions prepared. Ask about the applicant’s reliability in paying rent, how they maintained the property, and if there were any issues during their tenancy.
When interpreting reference feedback, look for consistency across all references. Be wary of overly glowing reviews that seem too good to be true, as well as references that seem hesitant or evasive in their responses. Remember, what’s not said can be just as telling as what is said.
3. Always Perform a Credit Check
A credit check is an essential tool in assessing a potential tenant’s financial habits. It provides valuable insights into their payment history and overall financial health. At Saltark, we never skip this crucial step in the screening process.
When reviewing a credit report, look beyond just the credit score. Pay attention to payment patterns, outstanding debts, and any history of bankruptcy or evictions. A late payment here and there might not be a deal-breaker, but consistent late payments or significant unpaid debts are red flags.
It’s important to understand the legal aspects of conducting credit checks. Always obtain written consent from the applicant before running a credit check. Be aware of fair credit reporting laws and ensure you’re using the information appropriately and legally.
Common credit issues you might encounter include low credit scores, high debt-to-income ratios, or a history of collection accounts. While these don’t automatically disqualify an applicant, they should prompt further investigation. Consider asking for a guarantor if you decide to move forward with a tenant who has credit issues.
The Importance of Professional Property Management
As a landlord, you might be wondering if all this screening is really necessary. Can’t you just go with your gut feeling? The short answer is no. Proper tenant screening is crucial for protecting your investment and ensuring a smooth tenancy.
Self-managing landlords often face numerous challenges. From keeping up with changing laws and regulations, to dealing with maintenance issues and problem tenants, it can quickly become overwhelming. This is where professional property managers like Saltark come in.
Professional property managers have the expertise and resources to streamline the tenant screening process. We have access to comprehensive background check services, established relationships with credit reporting agencies, and years of experience in interpreting screening results.
By outsourcing your property management to experts, you’re not just saving time – you’re potentially saving yourself from costly mistakes. A bad tenant can result in thousands of dollars in lost rent, property damage, and legal fees. When you consider the potential losses from a poorly screened tenant, the cost of professional management starts to look like a bargain.
At Saltark Property Management, we understand the importance of doing the work upfront. As we like to say, it’s like buying a house – you make the money when you buy, not when you sell. The same principle applies to tenant screening. By investing time and resources in thorough screening, you’re setting yourself up for a more profitable and stress-free landlord experience.
Remember, your property is a valuable asset. It deserves the best possible care and management. If you’re feeling overwhelmed by the complexities of property management, or if you’re simply looking for a more hands-off approach, it might be time to consider professional help.
Do you or someone you know need a rental appraisal on one of your properties? CJ and the team at Saltark can do one at no charge. Get in touch today and let us help you maximize the potential of your investment property.
Screening new tenants effectively is the cornerstone of successful property management. By verifying identities, conducting thorough reference checks, and always performing credit checks, you’re setting yourself up for a smoother, more profitable landlord experience. Remember, the work you do upfront can save you countless headaches down the road. If you’re feeling overwhelmed by the prospect of managing your property and tenants, it might be time to consider professional help. At Saltark Property Management, we’re dedicated to protecting your investment and finding the right tenants for your property. For a chat with CJ click here.