Tenant Selection

If you happen to be in a position of interviewing potential tenants, here are some of the possible criteria to use to categorize your tenants.

1. Minimum income requirement

Depending on the monthly payment, you would want to inquire about the income potential of your tenants since you don’t want the applicants to be spending more than 40% of their gross monthly income on housing.  Make sure you are considering the cost of utilities and other charges that will not be included in rent.

2. Credit Score

You should use a Credit Reporting company that will provide you the rating from all 3 major credit agencies including TransUnion, Equifax and Experian.  These are the same credit reports that bank and mortgage companies use when making credit decisions on borrowers ability to pay back the loan they are underwriting.  As a landlord you are making a similar decision about your tenants ability to make payments for the rent.

3. Length of time at job, if applicable

The longer the person has stayed in a position might be a good indication of the job stability, but this is very subjective in this day and age since most employers have At-Will contracts with their employees.  This means that an employer can be fired at any time.  But if your applicants has not moved from job to job every year, that’s a good indicator that they might be a long term tenant for you as well.

4. Previous tenancy information

This is one of the most critical pieces that we use in determining the insatiability of a tenant for our clients.  During this difficult foreclosure crises when some long term homeowners have lost their homes, they are having a tough time providing rental references since they have been homeowners for a long time.

5. Maximum number of allowable occupants

This is a good idea to investigate early since it goes to the wear and tear associated with each occupant’s use of the property.

6. Eviction filings

If there is history of eviction filing in your tenants’ background, this means that a previous property owner or property manager had to resort to an eviction to vacate the property.

7. Bank or check writing history

If there are irregular bank transactions in your tenants background it might be a good idea to keep interviewing more tenants.

8.  References

We don’t make recommendation of any tenants to our property owners without talking to references.   Ask these references if they would rent property to your applicants.  Another good question is to ask these references about the reason the tenants stopped renting from them and the lease termination was not for any adverse reasons.

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