How do good property managers help to reduce the risk of problem tenants in your property? They assist you with a thorough screening of potential candidates using objective tools and smart systems. People who apply for your rental should not be considered without checking out their financial and behavioral histories. While there are federal and District of Columbia laws to combat discrimination in housing based on a number of characteristics, having an understanding of how sound the applicant is will be critical to determine whether you wish to move forward with a lease. There are two key areas to consider.
How can you determine the candidate’s likelihood to pay the rent? In this case past behavior is a great indicator of future behavior. If they have a good record paying bills and keeping their credit strong, it is highly likely they will not be late or skip rent payments. The most common tool to assess the past behavior, if sometimes flawed, is a consumer credit report. These reports give an indication of how good the candidate has fulfilled his or her obligations to make payments when due on different credit instruments or bills as well as the debt load they carry at present. At times there are legitimate reasons why someone’s credit is flawed, so be open to explanations from the candidate and consider that in your decision. A marginal credit score can be compensated with a strongly positive report from a previous landlord verifying that the candidate was not late on rent payments. Also, ask for proof of their income to ensure that they receive enough on a regular basis to be able to afford living in your property. As a rule, the gross monthly income should equal 2-3 times the monthly rent.
Another area to screen candidates is to talk to previous landlords. Ideally we talk with two previous landlords if reachable and relevant (we don’t interview family members where they lived). Find out how their payment history was, how well they took care of the property, if they were cooperative with the landlord, if they had consistent maintenance or attitude problems, did they bring in pets or other breaches of the lease, etc. Sometimes it helps just to know what to expect even if you decide the new information is not enough to warrant you declining the applicant. If the candidate does not have a previous landlord because they owned their home, ask questions about maintenance and upkeep to get an indication if they’d be a good fit for your property. In general, homeowners make good renters. Sometimes young people or those from other countries will not have the ability to furnish prior landlord information and in these cases we ask them to provide letters of recommendation.
One can never be 100% certain there will be no problems once a tenant moves into the property however with a concerted effort and a little bit of time, an accurate assessment of the riskiness of accepting each candidate is attainable.