3 Things to Consider When Renting Your Home to Tenants
While commercial property management companies have strict policies in place as to how they screen their tenants for rental applications, homeowners wishing to do the same may find themselves overwhelmed. Renting a property can provide extra income, but renting it to the wrong tenant can result in a waste of time, costly evictions, and/or expensive damages. However, with the right preparation and screening process, homeowners can avoid renting their properties to dishonest and negligent individuals. Here are some tips that homeowners should consider:
Ask the right questions. Screening a tenant begins with the first conversation. Prospective landlords should be upfront with pertinent leasing information, such as financial aspects (rent, deposits, fees) and any factors that may disqualify an applicant from renting the property. Prospective tenants should be willing to answer these pre-screening questions without difficulty, and any tenant who does hesitate may indicate an inability to abide by the landlord’s terms.
Decide whether or not you want to hire a property manager. Property managers will collect a certain percentage of the selected tenant’s rent each month, but he or she will also handle the day-to-day tasks of renting out the property, like rent collection. Sometimes not having to deal with the meticulous details of a rental agreement is worth the money. However, the homeowner should have a clear agreement with the property manager and the tenant on the terms of the lease.
Consider using a third-party verification firm to perform background screenings on tenants. These firms can provide a tenant scorecard that offers an at-a-glance look at whether or not an applicant will be a good fit. They can also provide comprehensive criminal background screenings, credit reports, landlord references, and eviction data. Reputable firms will abide by FCRA standards so the process of screening tenants is fair and within the law. Landlords can even collect a small fee from the rental applicant to assume some of the cost of the screening. These background checks will provide pertinent information regarding an applicant’s character and expose any dishonesty so that landlord’s can make an informed decision.
The most important aspect in renting your own home is to be thorough and safe. Knowing the tools at your disposal and spending a little extra time and money to vet prospective tenants will most likely result in a mutually beneficial tenant/landlord relationship.