Tenant Screening Secrets: 3 Keys to Closing
In a previous post, we covered two keys to making the most of your initial introduction to a tenant. The tenant screening process begins even before your first meeting and continues when you first meet the tenant to show the property. It is important to take the insights you learned in this opening stage with you as you move on to closing on a lease.
Remember these three keys to securing the ideal tenant: someone who pays on time, cares for the property, and keeps the terms of your agreement.
KEY 1: Invest in the Time it Takes to Create a QUALITY Rental Application
Take the time to create a thorough and comprehensive rental application that includes the provision of a screening fee. It is entirely appropriate to collect a screening fee at the application stage in order to fund the expense of running a background and credit check on the tenant (which you should ALWAYS do). In fact, requiring a screening fee is a vetting process all on its own, as those who are not serious about your property or know that they will not pass a background or credit check will likely not agree to pay it or sign the waiver.
When you have the results and notice anything amiss, note if they were upfront about any concerns that might appear, and then ask them about it. Let them know that you did in fact run a check, and that you reviewed it. This will communicate to them your dedication and professionalism.
After you’ve received the results of the background and credit checks, if you’re satisfied, move on to the next “key.”
KEY 2: Have a Choreographed Approval Process
What does it mean to “choreograph” your approval process? It means that your process is so regimented and rehearsed that no critical item will slip through the cracks. If you feel good about a prospective tenant, congratulate them for being approved, and then give them instructions on the date, time, and place for the lease signing. Communicate to the exact cent the closing costs and how they should be paid (cashier’s check, cash, etc.). If your tenant is diligent in following these instructions to the letter, it is a good sign that they will be diligent in other areas as well.
KEY 3: Like the Rental Application, Invest in QUALITY with Your Lease Agreement
It is a shocking fact how many rental leases are signed without a thorough understanding of what is in them. More than even the tenant, the landlord should know the details of the lease agreement like the back of his or her hand.
At the time of signing the lease, go through each section with the tenant all the way to the end, even having them initial next to the most critical bits of information (rent amount, due date, etc.). At this point of the process, even though the background checks have gone through, it is important to remember that the lease still hasn’t been signed. You can still back out if at any point the tenant exhibits concerns or behaviors that do not bode well for your future together. For example, if they are unhappy with your grace period (or lack of) or the amount of late charges. If you’re not willing to budge, don’t, and keep looking.