Choosing a renter for your investment property is an opportunity, not a daunting task. The key is to know how to leverage your screening criteria effectively. This not only streamlines your tenant selection process but ensures you're meeting state and local laws. For instance, in Texas, landlords must follow specific guidelines for tenant selection.
Start with offering comprehensive details about your property for prospective renters. Include the property's address and the name of the landlord or property management company. Create an accurate description of the property that will help applicants self select. Be explicit about your policies regarding smoking and pets, and any applicable policies like late fees or pet deposits.
Looking into a renter’s rental history can reveal a wealth of useful information. Feedback from previous landlords about rent payment punctuality, complaints, lease agreement breaches, and security deposit deductions can be crucial. Pairing rental history with credit history can yield even more insights. For example, an applicant with less-than-perfect credit but excellent rental history might still make a great renter.
Income verification is a non-negotiable part of any rental application. Income can come from various sources, including salary, child support, and Social Security. Adopt the general practice of using a rent-to-income ratio, ideally 3:1 or 30% of gross income, to determine affordability. For multiple applicants like roommates, consider the total income. With Clara, you get access to verified income data from paystubs, W2s, or renter’s payroll providers.
Consistent employment signifies financial stability. A steady work history, without frequent job changes or gaps, is always a good sign. Employment verification is straightforward – just reach out to the employers. For self-employed or commission-based applicants, tax returns or bank statements can serve as proof.
Credit scores are a part of showing a renter’s financial responsibility. Apply your credit criteria consistently across all applicants. Include civil judgments, lawsuits, and liens in your credit history assessment, but also consider older judgments followed by subsequent financial responsibility.
While handling criminal records requires sensitivity, it's an essential part of the screening process. Remember to comply with fair housing guidelines – you can't reject applicants based only on their criminal history, and only specific offenses may legally justify rejection.
Rental screening criteria is your ally in the renter selection process. It ensures objectivity and prevents discrimination. Familiarize yourself with legal requirements in your state and local area and utilize Clara to provide an accurate description of your property and criteria.
When you start receiving applicants, clear and prompt communication with all prospective tenants is paramount. Once you identify a suitable applicant for your property, let them know they're approved without delay. As long as you comply with all relevant fair housing laws and state landlord-tenant laws, it's perfectly fine to decline an applicant who doesn't meet your standards.