The Importance of Tenant Screening
Renting out property can be a steady source of income, but with the wrong tenants, it can cause more trouble than it’s worth. From late payments to stolen or damaged items, the property can feel more like a burden than an asset. But, looking at prospective tenants holistically before reaching a deal can help mitigate some of these issues.
Scores and Salary
Some obvious things to examine when initially screening possible renters include their income, credit score, and payment history. Income data and bank statements can give a property-owner a decent idea of whether a prospective tenant makes enough money to pay their rent comfortably – the rule of thumb is that rent should be about 30% of one’s income, or else the renter is unduly burdened.
If income indicates whether a renter can afford it, credit scores and payment history indicate whether that money will actually reach you on time, or at all. Simply knowing that one’s income is sufficient won’t necessarily guarantee the person is reliable, but credit scores can give you a bit more insight in that regard. That being said, credit scores can also be deceiving. Some people may not have much credit history, so their scores are deceptively high or low. Others may have a few problems in their deep past that are negatively affecting their scores, although they are currently very responsible. That’s why it’s always important to go beyond the numbers.
Beyond the Numbers
A tenant may look great financially, but that doesn’t mean they’ll necessarily be the right fit. Criminal background checks are also useful tools in making these decisions. Long, recent histories of theft or more serious crimes are obvious red flags, and it’s important to rule those out before making such a big decision.
It’s sometimes wise to get letters of recommendation, especially if you’re on the fence about a possible tenant. If, as mentioned above, someone seems responsible but doesn’t have an ideal credit score, they may be able to provide a letter from a recent landlord, manager, or professor attesting to their dependability.
Too many property owners make snap judgements based solely on basic numbers and end up regretting it. Things break and problems arise, so it’s worth it to find a tenant that’s a good fit. If both parties are a bit flexible and can reach an agreement, the process can be beneficial for everyone.
Property Management in Delaware
As always, if you’re an investor and interested in owning property in the beautiful state of Delaware (or already have one and need help) – we’re here for you! Connect with us for all your property management needs.
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