Investing in rental properties can be rewarding and a great way to build wealth. However, it’s not as simple as buying properties and placing tenants in them. Instead, you’ll want to choose high-quality tenants to live in your property. As such, landlords and property managers should look into prospective tenants’ backgrounds and learn more about them before renting out their property. Today, we’ll go over the importance of evaluating tenant applications to find individuals who will care for your rental property. So, read along to learn more about this crucial step in the rental process and which red flags to watch for.
Contents of This Article:
- Importance of Carefully Evaluating Tenant Applications
- What to Include in a Rental Application
- 10 Red Flags to Look for While Evaluating Tenant Applications
- Find Qualified Tenants With Property Management
Importance of Carefully Evaluating Tenant Applications
Knowing who’s coming in and out of your rental properties is crucial whether you’re a landlord or property manager. After all, one bad tenant can significantly impact your rental income, damage your property, and waste your time as a professional. As such, before accepting a tenant, you’ll want to learn more about them to see if they qualify. Usually, this is done with a comprehensive rental application.
Carefully evaluating tenant applications is a critical step in the rental process for several reasons. For instance, you’ll want to identify and select high-quality tenants who are more likely to pay rent on time, care for the property, and adhere to the lease terms. Finding tenants that meet this criteria can reduce the risk of property damage and potential conflicts.
Proper tenant screening can also help you identify potential red flags, like inadequate income, poor rental history, or inconsistent information. Addressing these issues before renting can prevent future problems.
Remember that while it’s important to evaluate tenant applications carefully, you must also adhere to fair housing laws and treat all applicants equally. So, work with a trusted rental property management company in Northern Virginia to establish clear and consistent criteria for evaluating applications. Next, we’ll go over what to include in a rental application.
What to Include in a Rental Application
A comprehensive rental application helps landlords and property managers gather essential information about prospective tenants. In turn, it ensures that they have the necessary details to make an informed decision on who to rent to. Some of the most important questions and details to include in a rental application include the following:
- Personal Information- It’s important that all applicants include their full legal name, date of birth, contact information, and their social security number or other identification details.
- Occupants- All occupants living in the unit, including children and pets, should be listed on the rental application.
- Rental History- Have each prospective tenant fill out their current and previous addresses for the past few years and include the landlord’s contact information. Additionally, learning why they left previous addresses or why they want to move now can help you choose a new tenant.
- Employment and Income- Add a section on the application for their current employer’s name and contact information, including the job title and duration of employment. It’s also helpful to know their monthly income and any additional sources of income.
- References- Request personal and professional references from each applicant, and make sure to contact them.
- Background Information- Ask about any criminal history or prior evictions, and run a background check to be sure. Additionally, get authorization to run a credit check.
- Pet Information- If there will be pets living in the rental, ask for the type, breed, and number of pets, and disclose any required pet deposits or fees.
- Additional Questions- Additional questions you may want to include on a rental application include questions about smoking habits or any specific requirements or preferences the applicant might have.
10 Red Flags to Look for While Evaluating Tenant Applications
There’s a lot of information to evaluate on a rental application. As such, it’s important for landlords and property managers to carefully look over rental applications, not just skim over them quickly. While looking over a rental application, here are ten red flags to watch out for.
- Incomplete or Inaccurate Information
- Unverifiable or Inadequate Income
- Frequent Job Changes
- History of Evictions
- No References or Negative References
- Criminal History
- Poor Credit History
- Unexplained Gaps in Rental History
- Refusal to Sign Necessary Documents
- Moving Too Quickly
Incomplete or Inaccurate Information
Applicants with missing or inconsistent information could indicate a lack of attention to detail. Or, they might be trying to keep something hidden. As such, this could raise concerns about their honesty or ability to handle responsibilities. Without showing the full picture, landlords should be cautious, as it could be a sign of potential issues down the line.
Unverifiable or Inadequate Income
Applicants should generally have a monthly income that’s at least three times the rent amount. That said, insufficient income could lead to difficulties paying rent on time.
Frequent Job Changes
A rapidly changing job history might suggest financial instability and difficulties in meeting rental obligations. When someone switches jobs often, it might mean they struggle to maintain a steady income, making it harder for them to consistently pay rent on time. This pattern could raise landlords’ concerns about the applicant’s ability to meet their lease requirements.
History of Evictions
Prior evictions on an applicant’s record suggest a history of not meeting lease obligations and maintaining a positive tenancy. This pattern of non-compliance with lease terms raises concerns about financial stability, respect for agreements, and property upkeep. As such, landlords should carefully assess applicants with prior evictions before entering into new leasing arrangements.
No References or Negative References
If previous landlords provide negative feedback about the applicant’s rental history, it strongly indicates potential issues. This shows the tenant might not have paid rent on time or taken care of the property. Additionally, if there are no references or the references provided cannot be verified, it’s a potential red flag. Without any references, you don’t know about the person’s background and if they’re trustworthy renting the place.
Criminal History
While adhering to fair housing laws is crucial, some criminal histories can raise concerns. After all, certain criminal history backgrounds might relate to behaviors that can pose risks to the safety and well-being of other tenants or the property itself. So, landlords must strike a balance between respecting applicants’ rights and ensuring the entire community’s safety and peaceful enjoyment.
Poor Credit History
A history of late payments, high debt, or recent bankruptcies might signal financial instability and the possibility of rent payment issues.
Constantly paying bills late or having substantial debts can imply challenges in managing financing effectively.
Additionally, recent bankruptcies might suggest ongoing financing struggles, impacting an applicant’s ability to meet rental obligations. So, if a prospective tenant has a poor credit score or credit history, you may want to follow up with them to figure out why.
Unexplained Gaps in Rental History
Significant gaps in rental history without reasonable explanations could signal unstable living situations, potentially due to frequent moves or even periods of homelessness. These irregularities might relate to financial issues, job instability, or personal struggles. When faced with large gaps in rental history, property owners might raise concerns about the applicant’s dedication to fulfilling rental responsibilities.
Refusal to Sign Necessary Documents
If an applicant is hesitant to sign required documents or provide authorization for background checks, it might suggest they have something to hide. This hesitation may stem from concerns about revealing unfavorable aspects of their history, like prior evictions, legal issues, or financial circumstances. However, landlords rely on certain documents to make informed decisions about potential tenants, ensuring a smooth and secure rental experience for all parties.
Moving Too Quickly
While it’s essential to find qualified tenants who are ready and willing to move in quickly, it’s also crucial to be aware of overly eager applicants. Moving too quickly can sometimes be a sign that an applicant is hiding something or trying to escape a bad situation. As such, property owners must find a balance between efficiency and thorough screening to ensure a trustworthy and stable tenancy.
Find Qualified Tenants With Property Management
Carefully evaluating rental applications is crucial in finding qualified tenants to live in your rental properties. However, when you own several rental properties, looking over each applicant and screening each prospective tenant can be challenging. As such, many busy rental property owners hire professional management to help them find tenants and maintain their properties.
Need More Advice? contact us today!
Bay Property Management Group offers comprehensive rental management services for rentals around Baltimore, Philadelphia, Northern Virginia, and Washington, DC. So, if you’re looking for help finding high-quality tenants, maintaining properties, and collecting rent payments, contact BMG today!
