As you are well aware, the key to successful leasing is the application review process. It’s important to make sure that each applicant is processed the same way as every other applicant. It’s critical that your applicants are qualified in order to avoid collections and eviction issues down the road. When you’re screening, make sure potential tenants meet the qualifications based on your rental criteria. The best way to stay out of HUD’s (Department of Housing and Urban Development) sights is by being consistent with every applicant.
Establish Tenant Criteria in Advance
One of the things we do is set up criteria in advance. We have income standards and criminal background standards, and we look at rental history and credit. These are important things to determine, and you have to look at the application as a whole.
We follow the standard of looking for income that is three to four times the amount of monthly rent. So, if rent is $1,000 a month, a tenant will need to earn at least $3,000 a month to qualify for our property. We ask for at least two or three paystubs, and we make sure they’re still employed. You can contact the HR department at their place of employment. Verify how long they have been employed and make sure the information you receive matches what’s on the application.
Rental history is one of the most critical things to do. A lot of tenants don’t have great credit, so we rely on rental history more than anything else. As a landlord, you want to be sure the tenants will pay rent on time every month. Talking to former landlords will tell you than more than a credit score will. This can be tricky because tenants don’t always give us accurate information. You want to be talking to actual landlords, not friends and family members who are posing as landlords. Look up the apartment community’s phone number and check the county tax records to be sure you’re talking to the person who owns the property that your tenant was living in. You can check the credit report for former addresses as well. Send past landlords a written form to fill out, asking if they were good tenants, if they paid rent on time, if they smoked, had pets, and had any Insufficient Fund notices.
We look at the credit report to get an idea of how they pay. It’s not one of our main guides because we do understand that tenants don’t have great credit, but we do want to see consistent payment histories. All the judgments and evictions are also found in a credit report. Credit reports also shows a history of last lived addresses. This gives us a way to match up what their application says.
We have to be careful with criminal histories, because HUD wants to make sure we’re not discriminating based on criminal history. So, it’s important to consider how long it’s been since the last offense. If it’s been six or seven years, we might want to give them an opportunity. Look at national and local or sex offender lists. This is important because some offenders are banned from being around children. So, look closely and don’t discriminate.
Property Management Houston
A good property management company can help you find a great tenant. We know that being thorough with our applications is important. Once a tenant is in a property, there’s a process to get them removed. Do the legwork ahead of time. Be consistent and qualify your tenants based on criteria and nothing else. It will save you time, get you a great tenant, and protect you from discrimination.
If you have any questions about the lease application process, please contact us at ELDA Management Services.