Picking Tenants For Rental Properties

Tenants are critical
to the outcome of any kind of rental property. Over time theybuy the real estate. It's left in their possession, normally with nominal direction. Decent tenants play a role in a great investment. Bad renters can certainly turn a superb asset into a bad dream.


How do you pick tenants for a rental property?

You should really appraise 3 issues: character, collateral, capability.

Character is determined by a consultation. Create a credit form that asks about name, date of birth, address, employment, past residences,car, etc. The function of the credit form is two fold. The information itself is worthwhile, but each point offers you the chance to partake in a conversation with the prospective renter. Don't be afraid of asking private questions. Don’t forget that you are considering trusting the renter with a rather important investment over a lengthy period. Its not a one time deal. Actually, it's almost like getting married. Find out as much about the renter as it is possible to, and find out how you get along with them. I like to ask potential tenants to tell me about their work and how their business operates. You'd be impressed how much people will open up about their jobs, and when a tenant can explain the ins and outs of their employment in detail its an indication that they're telling the truth about their job.


Don't be unwilling to inquire about marriage break ups, or relationships, if that comes up. If a single father mentions that they have kids two weekends a month extend the discussion. You may find the kids live very close, and that they used to own a house nearby, or that their credit score has a blemish because of the divorce.

The greatest measure of character is the credit report. Always do one of these. Make it standard operating procedure.

Collateral property is comprised of the security deposit, and any other deposits that can be legally collected, like a pet deposit. Illegal, or off the books deposits are a different story. In some jurisdictions a renter can unilaterally apply excess deposit funds to rent.

In most cases the collateral represented by a deposit will not be sufficient to cover any real problems, so its nice that there is other collateral in case of a serious difficulty. You might not get a charge or pledge against it, but if the tenant owns a car, an RV, a boat and some quads, and they're in good condition, you could assume that he's pretty stable (don't choose a junk collector with a variety of broken toys).


Capability, or capacity, represents the tenants' capacity to to pay the rent. This means getting a look at bank statements or confirming employment. Make sure that the job is real. Google the company. Talk to the tenant's employer. Make sure that the employment on the credit check is the same one as thework on the credit check. If there are multiple tenants make certain that you get job particulars for all of them.

Sometimes renters are on pensions, either old age or disabililty. Make sure you talk with the pension administrator for corroboration. You might need the tenant's permission, so try to get it before hand.

A couple of last thoughts. First, asking personal questions is best done when the tension level is lower and everyone feels comfortable and relaxed. Its your duty to get the renters to that state, because its your job to find the information. If a tenant won't open up, don't rent to them. They'll probably going to be difficult for you to deal with, for whatever reason. Second, references are not worth what some people think they are. People seldom give poor references, so when you call on a reference you can bet that they'll say the property tenant is good. Yet, if the tenant turns out bad, the reference won't cough up the lost income. If you want to check a reference, ask them to be a gaurantor.