Having a high vacancy rate is one of the worst things that can happen to a landlord. For every day a property stays vacant, you're losing money.
The best way to avoid high vacancy is to focus on tenant retention. Before you do that, though, you must find tenants who are worth keeping. This is why it's so important to have a solid tenant screening system in place.
Want to ensure your tenant screening process is working as intended? If so, here are some essential steps you'll always need to follow.
Set Minimum Requirements
One common reason for high vacancy rates is setting high criteria for applicants. For example, if the median income in your neighborhood is $50,000, it's not realistic to set a minimum income of $60,000.
Of course, setting criteria that are too low isn't the solution either. In fact, this is how you usually get problem tenants in the first place. Look at your rental comps to figure out the ideal tenant requirements.
Request Rental Applications
A written rental application should give you all the info you need on a tenant. It gives you access to their gross income, debts, and job information. This can help you deduce if the applicant can afford your rental.
A rental application can also contain other valuable info. For instance, if you're allowing pets in your rental, ask the applicant to describe it. This is important as some pet types are more likely to cause property damage.
Talk to Previous Landlords
Your rental applications should also include landlord references. If so, call the applicant's previous landlords. Most tenant screening processes include this step because you can find out things that aren't in the report.
The main thing you'll want to know is how well the applicant takes care of a rental. Would the landlord rent out to them again? If the answer is no, you should probably look elsewhere as well.
Run All the Checks
Running a credit check is another important part of tenant screening. Credit scores are a solid indicator of the applicant's financial ability. In general, you'll want to focus on "good" credit scores (670 and above).
You shouldn't neglect background checks either. This will tell you about the applicant's criminal record and other potential issues. For example, you might find out they have unpaid child support or a large medical bill.
Interview the Applicant
If an applicant passes the above steps, all that's left is to talk to them. This will allow you to confirm the information on the application. Discuss any discrepancies between the info they provided and what the checks unearthed.
In general, it's best to conduct this interview in person. Doing so allows the applicant to see the property and makes communication easier. If they have a pet, this is a good opportunity to see how it behaves.
Improving a Tenant Screening Process
Tenant screening is all about following a clear set of rules. As long as you don't skip any steps, you're all but guaranteed to land a good tenant. The above tips should help you get started!
Need some help with finding tenants for your rental? Our experts at Hunter Property Management can help you with every part of the process. Contact us here to learn more about our client-first approach!
