Among the various business opportunities, converting your ready-built house, workspace, or plot into an investment property is a profitable venture with minimal effort. The survey result on real-estate-rental statistics demonstrates the demand for this business in the market. It says the renter stats in 2023 have risen to 44 million, accounting for 35% of the population. Have you noticed the increasing popularity of this trend?
When you can enjoy the benefits of renting schemes while still owning the property, a simple careless decision can mess everything up. Yes. It is all about the tenant you choose to rent on your property. If the person is unreliable, your profit might be useless. This article will help you pick the right tenant to make the best out of this rental business.
Tenant Screening Is A Big Task
The process of renting your property is not just about making money. Some will choose to rent their unused property so that it does not become abandoned. Here, more than money, they will look for someone who can maintain the property like theirs and keep it usable and fresh anytime.
In such cases, the tenant who pays more is not the best choice. Instead, you should perform background checks to ensure their reliability and see if they can maintain the property without any risks. So, it is always best to select a trustworthy tenant for your earnest homes and make it beneficial for you in terms of economy.
Quite a few property management companies can map you with the right tenants who can care for your property like theirs.
Checklist For Screening A Reliable Tenant
Having an extensive checklist, which may include a polygraph test, to screen your tenants might seem cumbersome. Additionally, incorporating a polygraph test into your screening process can help verify the authenticity of the information provided, promoting trust and security for both parties. This might disappoint those searching for a property in an emergency.
Rental Agreement
Have a ready copy of a rental application, whoever your tenant is. Based on each tenant and their characteristics, you can modify any information based on your communication. It is always best to keep everything recorded in this document and sign it from both ends. This will save you from any future quarrels. It should involve details like:
- Date of Agreement
- Terms of Agreement
- Tenant Name and Details
- Landlords Name and Details
- Rent Amount
- Eviction Policy
Identity Proofs
The next item in the checklist should be identity proofs. The tenant may fake their identity to keep you from knowing their tenant history or other activities. So, collecting their identity proofs to confirm their birth name, nationality, and other details is always advisable.
Tenant Insurance
Though this is not compulsory, you can suggest your tenant own one. This will act as an identity of tenants to claim themselves as a trustworthy tenant. This will save you from when your tenant disappears and fails to pay you on time.
Credit Check
A credit report is the best option to know their financial status, their records of bankrupts, and other financial information. This will let you analyze their potential to pay your rent.
Rental History And Eviction
It is always best to check your tenants’ previous rental history. By checking their records, you can understand why they vacate from other locations. You will also identify if they were evicted because of misbehavior.
Employee Income Verification
Ask for their income certificates to see if they can afford the rent you fix. If not, skip the person, and go for the one who can pay the rental amount.
Criminal Background Check
To ensure a safe living environment, you must check if there are any criminal cases filed against the tenants. This can keep you and your neighbors safe from collaborating with a criminal.
Pet Policy
You must also check if they are on the same page about your pet policies. You can also record this as your rental agreement mentioning the decision made.
Tenant Interview
A quick interview of your tenants to check if they match your criteria will also help. Though this is not necessary and neither has to be performed like a serious one, it is best to have a quick chat to understand them.
Social Handles
On top of all these, you can follow their social media pages to understand their lifestyle and check if it matches your policies. This will also let you be in touch with them and save you from being contactless.
Benefits Of Screening Your Tenants Before Lending Properties
You have spent a whole lot of time screening for the right one. Isn’t it? But how did it help you? Here are a few reasons.
Maintains Your Property
The foremost benefit is that the right tenant will put you away from the worry of maintenance. When you leave your property unused for a long time, it is more likely to get damaged. When you have a reliable person living there, they will take care of the building and save it from any possible damage.
Source Of Income
Another significant benefit is the potential income. This rental business is simple as it requires less investment and effort. An already-built home is enough. You can invest in one if you don’t currently own a property. By carefully screening and selecting the right tenants, it can become a reliable source of income.
Reduced Risk
When your tenant background check is free from any negative marks, or case records, you can rent your property to a trustworthy one. You can stay calm, knowing your tenant will not be at risk at any point.
Long-Term Tenancies
Choosing the right tenant makes you less bothered about the turnover time. In other words, the chosen tenant is more likely to stay for an extended period, preventing your source of income from remaining idle, as often happens with short-term tenancies.
Healthy Neighborhood
You will have a peaceful neighborhood if you stay around the property you rent. Even if you live far away from your property, the local community deserves a peaceful neighborhood with trustworthy and friendly residents. This is another benefit of picking the right tenants.
Property Management
Verifying the previous records of the tenants and considering their credit history will ensure their reliability. From this, you can conclude that the tenant is worthy or otherwise to manage the property with utmost care.
Compliance With Housing Laws
Screening the tenants before letting them rent in your property is crucial to check if they pass the criteria of the housing laws laid by the regulation act. To ensure this, you can rely on the laws to save you from ending up with an unlawful one.
Tenant Screening As A Service
Bemoaning the loss after renting your home to an inappropriate tenant serves no purpose. Instead, conduct a thorough, sensitive screening and background check to assess potential tenants. This will save you from many possible losses and risks. While the screening process might be tedious, you can leave it to a property management team, who perform tenant screening as a service and provide the right tenants.
