One of the things that make people hesitate when it comes to having a rental property is the thought of having to deal with tenants. It’s frustrating to go through the work of approving a tenant, only to have to go through the process all over again if it doesn’t work out. So, what should proper tenant screening entail?
At Rhino Property Management, we screen for the following when managing your rental property:
- Credit Report
- Employment Verification and Proof of Income
- Previous Rental History
- Background Check
We can take care of these details so you don’t have to! The purpose of a property management company is to serve as the middleman so you can enjoy the benefits of having a rental property without the constant stress.
Why Do Property Managers Do a Credit Report?
A potential tenant’s credit report offers a look into their debt repayment habits. A homeowner or property management company can see evidence of prompt versus late payments, and see how reliable a tenant has been overall. It’s essentially a snapshot of a person’s repayment history, which will hopefully serve as an indication of future consistency. Generally, someone with a high credit score is someone who has been prompt with their payments on things such as credit cards, student loans, car loans, and other bills. Depending on the credit model being used (how you’re measuring “good versus bad” credit), an acceptable credit score could range from 670 all the way to 850.
Rhino Property Management services can recommend a good credit score range for you to consider for your property, and help screen potential tenants who fall in that category.
Good Rent-to-Income Ratio
While an applicant might have a great credit score, it’s not always enough to know if you’re approving the right potential tenant. When verifying a tenant’s employment and going over their income, it’s good to keep in mind the rent-to-income ratio. It can be another good indicator of whether or not you’re choosing the right tenant for your property. If anything comes up and a tenant happens to lose their job or is faced with an onslaught of additional expenses, as a landlord you would hope they have enough saved to cover their rent. But how can you judge that when screening your tenant?
A good rule of thumb is to accept tenants who have a high rent-to-income ratio. This means a renter’s monthly income should, ideally, be three times the amount of the monthly rent. For example, if your rental property is going for $1,000 per month, then your tenant should have at least $3,000 per month in income. You can also request employer contact information to verify income and ensure any pay stubs submitted to you are accurate.
Of course, you can set your own requirements when it comes to rent-to-income ratio and, as a trusted Utah property management company, Rhino will ensure they’re met. If you’re willing to be flexible on the ratio, we can move forward with an application and look into other screening categories to round out a tenant’s background.
Much like on a resume, your rental application should include questions regarding a tenant’s previous rental history. Your potential renters should name references, such as previous landlords or rental management companies, who can vouch for their behavior as tenants. We want to ensure the tenants have a history of paying rent on time, of leaving a property in good condition, and of getting along with neighbors. A tenant may never willingly disclose if they have previously been evicted, or if they were unable to reclaim their security deposit. Doing a bit of research about these things beforehand can save you a lot of trouble later. Eviction costs a lot more for a landlord than doing a thorough screening via references.
It’s also important to find out if your potential tenant has a criminal history that could affect you as the homeowner or the neighborhood. While you may have your own standards as a guide, Rhino Property Management can help you make the most educated decision possible regarding a rental applicant. We can help you determine whether past criminal acts are red flags for a renter or not.
Most importantly, our Utah property management services are here to take the guesswork out of renting your property.