Finding good long term tenants is 40% Skill and 60 Talent!! Everyone can be thought to ask the right questions to screen the tenants, but what can not be taught is people skills to recognize which tenants are going to give you trouble long after the ink on the rental application has dried. Here are some obvious criteria to screen for the right tenants, but they don’t cover the 60%.
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
Credit History: You should use a Credit Reporting company that will provide you the rating from all 3 major credit agencies including TransUnion , Equifax and Experian. As a landlord you are making a similar decision about your tenant’s ability to make payments for the rent.
Employment History: The longer your tenants have stayed in a position might be a good indication job stability, but this is very subjective in this day and age since most employers have At-Will contracts with their employees. In fact, in Silicon Valley some of the brightest people are self employed and work with multiple companies. So, your screening process should allow some flexibility to accommodate these kind of employment situations as well since you don’t want to over look some good tenants simply because they don’t fit the profile of a good employee that stays at the SAME job for 20 years.
Landlord References: This is one of the most critical pieces that we use in determining the suitability of a tenant for our clients. During this difficult foreclosure crisis 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. For instance you should be able to evaluate an applicant that might have bankrupcy of Short Sale on their credit history a bit differently since one out of 4 homes are now under water and it’s quite possible that these folks could be your future tenants.
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.
Bank or check writing history: If there are irregular bank transactions in your tenant’s background it might be a good idea to keep interviewing more tenants. For instance you should be able to evaluate an applicant that might have bankruptcy of Short Sale on their credit history a bit differently since one out of 4 homes are now under water and it’s quite possible that these folks could be your future tenants.