While most people who jumps into the real estate investment arena wants to partake from selling their properties, some prefer to enter the world of land lording. Just like buying and re-selling properties, land lording also promises a good source of lifetime investment. The key, however, to successful land lording depends on an investor’s ability to have a thorough process of screening tenants. Yes, it is practically easy to find people who like to rent your real estate properties, but it is truly difficult to know whether they are a good payer or not.
Within years of experience in the real estate industry, I have mastered the art of land lording and put it to practice. There are many other properties I own that I chose to rent out so I can have a monthly source of income without having to work at all. This is one of the greatest benefits of real estate investment – you take the courage to put on some hard earned money for a property, develop it, and watch it make you money by itself. Real estate properties appreciate with time.
Now, to help you with your woes of screening renters appropriately, here is a simple do’s and don’ts for you to remember:
Do’s and Don’ts of Screening Renters
DO review the potential renter’s application carefully. Make sure that all of the necessary and required information has been filled out correctly. Incomplete information or omitted details is a sign that the renter may be hiding something about his past tenant history.
DO obtain a credit check. This is one of the most important processes of screening renters. In most cases, when the tenant had a bad rental history, he is not going to spare you the agony of going after them for rental fee. So, do yourself a favor and run a credit check. This will save you both time and money for court eviction when the renter proves himself incapable of paying his monthly dues.
DO verify the prospective renter’s employment background. Make sure that this person is able to keep a stable job and can pay the rent. You can also include requisition of several past payment stubs as part of your process of screening renters. I also suggest that you actually call his employers to verify the information you gathered. As the saying goes, “better safe than sorry”.
DO request for the potential renter’s company I.D., social security I.D., passport or any other proof of identification. Effective land lording means verifying your renter’s legitimate identification. This is a good land lording practice that will allow you to track down your renter in case something comes up during his rental contract.
DO obtain a security deposit on the rental unit. Most land lords ask for security deposits to be held in case the tenant causes damage to the property during the time the unit is rented.
DON’T allow the tenant to move in without signing the lease contract. Contract signing is the most important part of screening tenants. The contract should indicate the security deposit fee, monthly rental, and any other pertinent agreement about your property.
DON’T select a tenant who has lied on his application, chances are he will come up with excuses when rental payment date is forthcoming.
DON’T select a renter with no good land lording references. This step in screening renters is as crucial as performing an employment check. Talking to the potential renter’s past land lords will give you an idea of what kind of renter he is.
DON’T consider choosing relatives or family members as your tenants. I am speaking here in a business stand point because it is usually easy to have a heart for your kin, which may not cater your best interest at all. Unless you know that they are good payers, then forget about this idea.
DON’T hesitate to ask your potential renter any questions you have in mind. You definitely would like to establish a good business relationship with your renter.
Land lording can be very a lucrative business. You can just sit back and relax while watching your investment dollar bring you monthly profits. However, in order to ensure a continuous real estate investment success, you have to place a standard process in screening renters.