The real estate market is doing very well right now, particularly the Orange County rental market. This means the tenant pool is highly qualified, but it’s still easy to be stuck with a bad tenant.
The real estate market is doing very well right now, particularly the Orange County rental market. This means the tenant pool is highly qualified, but it’s still easy to be stuck with a bad tenant. Before you let a tenant into your property and you sign a contract, make sure you have a system in place to look at applicants. We look at a few key areas when we’re conducting our screening.
The person who rents your property likely does not have perfect credit. They may not make a ton of money and they probably don’t have a lot of funds in the bank. If they did, they’d probably be buying a property. So instead of looking for perfect credit, look for a tenant with good credit. There may be some dings; a lot of people had financial issues during the recession. There might be some overdue hospital bills if the tenant has health issues. There might even be a bankruptcy, and that’s not always a bad thing. Bankruptcy gets rid of all their debt and they can’t file again for five years. What you want to be careful about is a credit report with too much credit, recent late fees and collections or unlawful detainers.
It’s critical to verify a tenant’s income. You don’t want to trust what they list on the application. Verify that they earn at least three times the gross monthly rent. That means if you rent a property for $2,000 a month, you want to see an income that is at least $6,000 per month. Make sure the tenants you select have the capacity to pay the rent on time.
Check Criminal Background
As a landlord, you don’t want to put a criminal in your property. It increases your liability and puts your neighbors at risk. So do a full criminal background check before you approve your tenants.
Understand the Tenant Story
The final thing we look at is the full tenant story. Not many people want a rental property; they want to own their own homes. So find out why they’re renting, where they’re coming from, and what their future plans are. Find out if they are married, divorced, or moving out of their mother’s house.
This system works because our eviction rate is less than 1 percent. If you have any questions about avoiding bad tenants, contact us at Progressive Property Management.