Renting a property can sound like a great alternative income source, but landlords need to be careful to properly vet prospective tenants to ensure the rental won’t end up costing more in repairs, or even worse in legal fees, should the chosen tenant not meet their end of the contract.
What do landlords need to consider when looking for and approving tenants?
Where to Advertise
Many landlords find renters online, or through advertisements in local newspapers and community groups on Facebook. This can sometimes work, but sometimes open a can of worms to sub-par tenants who won’t respect the property.
There are companies called property management companies, such as Nomadic Real Estate that landlords can employ to help search for tenants, and also facilitate the appropriate background checks and leasing requirements to help landlords secure their interests and protect their rental properties.
Requesting Comprehensive Applications and References
Ensuring applications have more than just a name and phone number is key to ensuring only the best tenants are utilizing your property. By asking for income and credit information, as well as references from previous landlords, it can be easier to divine the quality and respect of prospective tenants.
These comprehensive applications and background checks can help landlords identify red-flags or troubling behaviors. Especially by reaching out to previous landlords, a property owner can ensure the individuals seeking to rent are looking for a place to call home and not a place to disrespect and damage.
Failing to conduct thorough background checks can sometimes result in renting to tenants who may not respect the property. Bad tenants might cause excessive damage, neglect rental payments, or create disputes that can turn costly and stressful. This is why reaching out to previous landlords is crucial. They can provide insights into the tenant’s past behavior and reliability.
However, even with careful screening, there’s always a chance that you may encounter problematic tenants. If you find yourself in such a situation, knowing where to report bad tenants can help protect other landlords from facing similar issues. Many landlords choose to report troublesome tenants to tenant screening services or rental history databases.
In addition to these databases, some property management companies also maintain internal records to track problematic tenants. If you work with a property management firm, they may have their own system in place for documenting such incidents.
Signing a Lease
Once a landlord has ensured the prospective tenant meets the income and credit it is very important to sign a legally binding contract. Should anything go wrong throughout the rental, this is a sure-fire way to have the law on the landlords’ side.
In cases of rental disputes, the lease is the master service agreement and can be the deciding factor in which party is not meeting their obligations. Ensuring the lease details the rules and regulations of the property, the time of occupancy, the cost of occupancy, and the actions a landlord will take should the tenant not meet their requirements, is incredibly important.
A consulting firm, online legal or property management company, can help new landlords generate these documents, and provide invaluable advice on how to proceed with future rentals.
NO VERBAL CONTRACTS!!
Verbal agreements between friends, or family members, can be the worst decision a landlord can make. By not having the terms of the rental listed clearly and concisely, and disputes can turn into drawn-out legal battles, and arguments of what he said/she said. This does not benefit either of the parties and generally, the landlord will be the one to suffer the brunt of the damages, as they are the legal property owners.
A tenant can leave a property in complete disrepair, but without a lease that clearly defines tenant responsibilities the financial and reconstructive ramifications will ultimately fall onto the landlord.
Don’t give the keys to your property or begin the rental process without ensuring you have all your bases covered. It is important to follow these steps to ensure a happy relationship, for both tenants and landlords alike!
I agree about no verbal contracts. These are all good tips for those who wish to rent out a property.
No verbal contracts! Excellent advice. Background checks are necessary.
This was really informative to read thank you for posting it. I have seen some rentals that were trashed by people and it’s so sad for the owners. I like that you mentioned in this post not to use verbal agreements those are never a good idea.