It’s one thing to fill a vacancy but another entirely to fill it with a reliable adult who’ll remain living at the property for an extended period. Vacancies cost money. Filling vacancies cost money. Tenants are not only valuable but become increasingly so each period they stay without costing you extra. Choosing quality tenants is crucial because bad tenants hurt your bottom line, and there are a number of common mistakes, or omissions, that new landlords fall trap too and which hurt them in the end.
1. Set Rental Standards
You may have a vague idea of what your rental standards are, but if someone asked you to express them, you might find them difficult to put into words. This isn’t unusual, but it is a problem. Know what your standards are. List them. Prioritize them. Shape them around particular properties. After all, your standards likely need to be later in a low-income neighborhood than in a more affluent one.
2. Vet the Applicant
Perhaps the biggest mistake new landlords make is not having a true screening process. This process is an opportunity to reveal warning signs that a person may not be a good long-term fit. Screening can often reveal cautions that would not otherwise come out or could be easily hid by a charming personality. Establish a process, and refine it over time. If you make a mistake choosing a tenant, determine where you went wrong and introduce a solution into your process.
3. Consider Finances
A background check is a common aspect of a vetting process, and this will often include review of credit history. A person’s credit history gives you an idea of how they handle money. If a person has a track record of making sound financial decisions, then they’re likely to pay you each month too. Don’t ignore the present either. Credit is important, but so is income. A tenant’s monthly salary should be at least twice what the property will cost to rent each month.
4. Follow Up on References
References are very valuable. Just consider what you’d like to say about tenants that have done right by you and those that haven’t. Other property owners feel the same. Many landlords make the mistake of requesting references but never follow up on them, which makes them useless. Bluffing does no good. Bad tenants will certainly call that bluff. At the very least, speak with the landlord at the property the person last rented.