Placing the wrong tenant in your rental property will not only cause you stress, it could also cost you money. A good tenant will pay rent on time, help you maintain the home, stay in place for the long term, and follow the terms of your lease. A bad tenant, however, will be slow to pay rent or not pay rent at all. A bad tenant may cause property damage and violate the lease or leave before fulfilling the full lease term. Ultimately, you may have to evict a bad tenant, and that will cost you time and money.
So, how do you find the high quality tenants? You need to be intentional with your screening. Today, we’re discussing how we screen tenants before placing them in your Honolulu rental property.
Checking Criminal and Eviction Histories
Many property management companies will check local records for criminal backgrounds and prior evictions. We think it’s important to do a national check. We’ll also do a federal criminal background check and ensure your prospective tenant does not have any patterns of bad behavior. We want to limit your risk by rejecting people who may have drug habits or a history of violent behavior.
Employment and Income Verifications
You need to be sure your tenants can afford to pay the rent. Talk to employers and verify the amount of income that they earn. You can also ask for pay stubs or employment contracts. If your prospective tenant is self-employed, ask to see bank statements or tax filings that show annual income amounts. Ideally, you want your tenants to have a debt to income ratio less than 45%, although up to 55% might be sufficient depend on their credit and other background criteria.
Verifying Past Rental History
We talk to former and current landlords to get an idea of how a tenant has performed in the past. We ask if rent was paid on time, and we ask if any damage was left behind after the tenant moved out. We also want to know if proper notice was given before the tenant moved out, and if there were any pets in the property as well. We ask if there were any lease violations or complaints from neighbors. Make sure you’re talking to the actual landlords or property managers, and not the applicant’s friend or family member.
Checking Credit History
We also look at a tenant’s credit profile. It’s not as simple as looking at a credit score. Specifically, we want to make sure there are no judgments, debts, or court cases involving former landlords, property managers, or apartment buildings. We measure the amount of debt a prospective tenant has against the income he or she earns. We look for late or unpaid utility bills. While the credit score is important, we’re more interested in how the entire credit history looks. We want to be sure the tenant we’re placing in your property is responsible with money and willing to honor their debts.
These are just a few of the things we do to ensure we’re placing a well-qualified tenant in your property. If you have any questions or need any help with tenant screening, we hope you’ll contact us at HappyDoors Property Management.