Investing in your first rental property is an exciting experience. You’ve read the books, attended the courses, and now you are ready to launch into your first tenancy. With so much to know, it’s difficult to predict how all that information will translate into realty.
This checklist focuses on the key landlord strategies that will point you in the right direction — towards a profitable and stress-free landlord business:
1. You must screen your tenants. As simple as that sounds, it is surprising how many landlords skip this foundational step.
Let’s say you have the property ready to rent. Have you imagined the type of tenants who would be a perfect fit for the property? If so, toss that notion, bury it, and never think of it again. One of the most common — and most dangerous — mistakes landlords make is creating an imaginary “ideal” tenant. Not only is this practice illegal, it kills profits. That’s because inexperienced landlords will choose someone who fits the profile, skip the tenant screening reports, and then find out their charming rental applicant is the tenant from hell.
Remain objective, and look for tenants who qualify to pay the rent, possess a good rental history, and can pass a tenant background check. A good applicant’s particular demographic is irrelevant. Once you’ve identified a solid prospect, run a credit report, eviction report, and criminal background check. This is the only way to determine if the applicant is a good risk.
2. You must use a rental application. This form provides the information necessary to screen tenants. It also contains a declaration that the information provided is truthful, and provides consent for a tenant background check.
Finally, this form is essential when attempting to track a deadbeat tenant who skipped out owing money. Each adult applicant must complete and sign a rental application.
3. You must check references. Without speaking to the current and previous landlords, you will never know if you are inheriting a nightmare tenant. The rental application will ask for reference contacts. Verify that information. Ask about the tenant’s rental history. Were there complaints from other tenants? Confirm dates of rental. Ask about non-smoking or pets if those rules apply to your rentals.
4. Use a written lease agreement that has been vetted by your attorney. Local and state laws vary, so a standard lease agreement must be tailored to your needs. Once you’ve hammered out the best lease, don’t modify it for an individual tenant without researching how that might affect your legal rights.
5. Conduct a move-in inspection and write up a report. You will use the same report when you do your move-out inspection. This is the only way you will be able to track if a specific tenant causes damage to the property.
Allow the tenants a chance to update the report within a week or ten days of moving in. It is to your advantage to give tenants every opportunity to report damage that was already done. That way, it will be easier to defend against a subsequent claim that the property was in substandard condition.
6. Inspect the property at regular intervals, keeping in mind the balance between the tenants’ privacy and the need to actively manage the property.
There is a lot to know about being a good landlord, but focusing your time and energy on finding the right tenants and then staying actively involved with the management of your property will set the stage for future success.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only). Click Here to Receive Landlord Credit Reports. Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.