Regarding milestones in the real estate investment game, it doesn't get much bigger than finding perfect residents for your investment property. Finding quality residents who match your rent criteria is a dream come true.
However, you'll need to dig through a pool of rental applications before this can happen and have a clear picture of what you're after. Failure to undertake due diligence when screening applications can result in evictions further down the line or even legal issues during the rental application process itself.
Follow this quick guide from our Salem property management experts for a foolproof strategy for processing rental applications and a top tip to make the whole procedure as stress-free as possible.
Your rental application process should be streamlined enough not to take up too much time while covering the most important details to show if the potential residents will meet your rental property standards and lease agreement requirements.
Follow the steps below for a rigorous and fair screening process.
First, property owners must not breach any federal or state laws regarding the tenant screening process. For example, the federal Fair Housing Act prohibits discrimination against seven protected classes. The seven protected classes listed in the Fair Housing Act are:
Make sure your rental application doesn't ask any questions that could be perceived as discriminatory.
1. Run a Credit Check A credit check will allow you to research any financial mismanagement of applicants, such as debt or failure to make payments on time. Evictions are also shown on a credit report.A credit check is a standard process for a rental application, and, as such, the prospective tenant's approval to run this screening should be part of any rental application template.
Ensure the rental application form provides a place for a signature permitting your background screening process.
Running a criminal background check was previously considered one of the easiest ways to help you steer clear of problem residents. However, be sure not to impose a blanket ban on all individuals with a criminal history.
Consider each applicant on a case-by-case basis. Real estate investors are not permitted to have a 'blanket ban' system to deny housing applications to individuals with a criminal history without risking discrimination claims or lawsuits.
When verifying past rental history, reach out to previous property owners who rented their property to your prospective renters. It's a chance to confirm that the occupancy was legitimate and to ask follow-up questions regarding the period of occupancy.
Be sure to ask questions about the state of the property and if there were any outstanding complaints filed against them by neighbors.
As a real estate investor, conducting employment and income checks for prospective tenants is fundamental. After all, you want to know that the rent will be paid on time and in full. Employment and income can be checked by requesting payslips from the applicant.
The industry standard is to ask for three months of previous concurrent income. Another way this can be achieved is through a W2 or tax form.
This is a general step to reach out to any additional references, such as professional or personal contacts. Requesting professional connections (instead of friend or family references) is advisable as they may be less inclined to provide an unbiased account.
As a final tip, solicit the services of the right companies to conduct the rental application screening and then ensure that they abide by FCRA regulations to protect data.
After completing the steps above, you're ready to choose the best candidates to place in your rental properties.
If you're unsure how to set up a rigorous and legal rental application, store the details, and assess the applications appropriately, then a property management group can help.
CHARLESGATE is a property management company that can help reduce the risk of legal violations, place fully vetted residents, and reduce overall vacancy times in your property.
Property managers know what to look for and flag all potential warning signs that inexperienced property investors may miss when processing rental applications. Be sure to go local, for example, finding Salem property management professionals if you've bought investment properties in this area of Boston.
A rigorous and legally sound rental application process can save you from adverse events and financial troubles. By following the steps above, you'll be able to pinpoint the perfect residents for your investment property.
If the idea of rental application screening fills you with dread or you're worried you might mess something up, the right property managers can help. CHARLESGATE Property Management has the background and experience to vet and place the perfect residents for your asset. So reach out to a team member today to put your applicant vetting process in safe hands.
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