Businesses generally want to make as much money as they can and as quickly as possible. The case is the same when you have a home or apartment to rent. Which is why it might be tempting to sign a lease with the first person that walks through the door. However, there are many reasons why you should consider a thorough screening process on all potential tenants before agreeing to lease them your property.
You might want to ignore it, but a person's past actions are a good predictor of their future behavior. By checking a tenant's history, you can find out whether s/he has been evicted from a property, broken a lease, destroyed property, or had confrontations with the police. The behavior could have happened far enough in the past that it is no longer a problem; it could have happened just once and not be a reason for concern; or it could be a recurring problem that will happen again. In the case of a renter's past, ignorance is not bliss. You want to know their history, and if a negative history is discovered, you will want to assess your risk before agreeing to lease.
The main purpose of owning a rental property is to make money. Therefore, it is necessary to ensure that prospective tenants have the means to pay rent; that they will do so on time. In order to assess whether an applicant is likely to make a good tenant, a prudent property owner will conduct a credit check. By checking the applicant's credit, it's easy to learn of any past delinquencies, other debt obligations and credit worthiness. Beyond a credit check, it may also be necessary to initiate a minimum income level. Experts recommend that a tenant's income be at least three times the monthly rent in order to qualify for a lease.
The habits of potential clients can also cause a property owner to lose money. If a tenant is the type to have loud parties or legal problems, it's the property that ultimately suffers. Complaints from neighbors may be the smallest of worries if the tenant causes a big commotion because some other tenants may just flat out refuse to renew their lease. Also, some habits can lead to the destruction of property. Each time a property is destroyed in some way it costs both time and money to repair.
A wise property owner will take into consideration not only the prospective tenant, but also his or her guest, including friends and family. So, in addition to screening potential tenants, it is a good idea to ask for references from past landlords or professionals that can vouch for the tenant's behavior and his/her trustworthiness, as well as the company that he/she keeps.
Keep in mind that as a landlord, you could potentially be responsible for any legal problem that occurs on your property. Therefore, it is important to screen potential renters for past legal problems and check references to assess whether there is a potential risk of current illegal activities.
Protecting yourself and your investment should be the main priority as a rental property owner. Screening tenants might seem like a tedious process, but is well worth the effort when the potential risks are considered. While it might take a little longer to find a good tenant, in the long run, a stable tenant means more money for you and a safer environment for other tenants. Happier tenants will also refer other good tenants, which, over time, will lead to a complex full of solid, happy tenants. And that is obviously good for business.