Great tenants contribute to a successful investment experience. They can be counted on to pay rent consistently and on time, take care of your New Jersey investment property, and follow the terms of your lease agreement. They allow you to effectively earn rental income while the value of your property increases.
Terrible tenants, on the other hand, are an expense and a hassle. With a bad tenant in place, you’ll waste your time chasing down late rent, threatening to evict, and cleaning up property damage that may exceed the amount of the security deposit that was paid.
To find the best residents, you need a rigorous and fair housing-compliant screening process in place. Here are some screening tips that we can provide as professional New Jersey property managers.
Measure Income and Financial Stability
A financially stable tenant is more likely to pay rent on time. Check employment and verify income. Generally, you want to see income that meets or exceeds three times the amount of rent. You also want to check credit reports for excessive debt, especially outstanding balances for utility companies or money that’s owed to landlords.
Some landlords will establish a threshold for credit scores, wanting tenants to meet a certain number in order to be approved. That’s one way to set a standard. More importantly, make sure there are no past evictions or judgments for unpaid bills against your prospective tenant.
Verify any information that’s provided. Ask for pay stubs or bank statements. Tax records will also work if an applicant is self-employed or retired.
Check Criminal and Rental Histories
You’ll want to run a full background check on any prospective tenant as well. While minor arrests from 20 years ago won’t necessarily disqualify a good renter, you want to be careful of drug-related or violent convictions in the last few years.
Rental history is extremely important. Verify that the addresses on the credit report match the addresses on the rental application. Talk to current and former landlords. Ask if the tenant paid rent on time, took care of the home, and gave proper notice before moving out. Find out if they’d be willing to rent to the tenant again.
Follow all Fair Housing Laws
Your screening process should be in writing, and it should include rental criteria that applies to every applicant. Following state, local, and federal fair housing laws is not optional – it’s required. Expensive mistakes are easy to make, and if you don’t screen every application the same way, you could find yourself in some legal trouble.
Be careful about how you handle pets and service animals. Don’t ask unnecessary and unlawful questions. Screen applications in the order that they’re received, and when you have a tenant who meets your requirements, offer them the home and ask them to sign a lease and pay a security deposit.
We know that screening tenants can seem overwhelming to landlords who don’t do this every day. Working with a New Jersey property management company can provide you with peace of mind and protect you from both fair housing complaints and unqualified tenants.
If you’d like to hear more about how we can help you find and place the best possible residents, please contact our team at KeyVest LLC.
