Everything you need to know about insurance basics, like coverage types, limits, cost and more.
Interviewing Tenants
How to Screen Your Tenants and Find Great Renters
As a landlord, investing in rental property requires you to manage applications from potential tenants. Because you want to maximize your return on investment, you’ve got to take this step seriously. If you’re new to landlording you also need to know how to screen prospective tenants. But how do you make the call when there are so many factors to consider? This guide is designed to help you do just that. From reviewing applications to running criminal background checks, we’ve got the tools you need to get it right the first time.
The Importance of a Tenant Background Check
Getting the critical details right on prospective tenants before they sign is an important job for landlords and property managers. By partnering with TransUnion’s SmartMove, we’ve made it simple to get the information you need to rank candidates and select the best tenant for your rental.
A predictive method to help you make the right choice, TransUnion’s ResidentScore combines many factors to determine a leasing recommendation. It’s tenant screening report insights like these that help you make the right call and avoid common landlord mistakes
Questions to Ask Potential Tenants
Because first impressions are so important, it’s key to be ready with a list of pointed questions that help you to verify your prospective tenant’s trustworthiness. Equally important, you want to be sure that the space fits their needs and that they’re aware of all your rental has to offer. Take extra care to stay within the limits of the Fair Housing Act but inquire about what your tenant’s looking for.
Because first impressions are so important, it’s key to be ready with a list of pointed questions that help you to verify your prospective tenant’s trustworthiness. Equally important, you want to be sure that the space fits their needs and that they’re aware of all your rental has to offer. Take extra care to stay within the limits of the Fair Housing Act but inquire about what your tenant’s looking for.
Tip
Ask about their pre-tax monthly income.
Even though you’ll be verifying these numbers later, you can get an understanding of the total income of all named lessors.
Discuss Your Subletting Policy Now
Asking the tenant if they plan to sublet can help you understand their long-term intentions. Compare their answers with details you received from TransUnion’s SmartMove, and you may find yourself with a time-tested picture of who your tenant is. Consider our helpful tips as you’re discussing your subletting policy.
Be sure to reference your lease when discussing any terms. That way, you’ll be aligned with that language and the tenant will have a clear understanding of what’s allowed.
Why You Should Require Renters Insurance
Advertising that your rental will require the tenant to purchase renters insurance helps filter out tenants that don’t want to pay for added security if the unexpected should occur. You’ll also find renters are more willing to pay for damages they cause when they’ve got the added support of a policy that only requires a deductible to be paid. And that can save your financial reserves for other, more important purchases.
Calculate Their Rent-to-Income Ratio and Verify Financial Health
By getting a full understanding of your prospective tenant’s financial wellbeing, you’ll have the details you need to make an informed decision. Our advice on how to calculate their debt-to-income ratio can help you see if they’re able to afford the rent and stay afloat financially as well.
Do the math and factor in other monthly payments. By adding up the total monthly obligations or payments — as defined in the tenant credit check — you can get a picture of their financial wellbeing.
Know How to Prorate Rent When Your Tenant Starts Mid-Month
Prorating rent may be necessary if your tenant’s move in date doesn’t coincide with the first of the month. It’s a simple formula that breaks your rental cost down to a per-day fee. Here’s how it’s done:
Divide the total monthly rent by number of days in the month. If rent is $2,500 per month and May has 31 days, the result is $81.65. That’s your per-day rate.
Multiply the per-day rate by the total number of days that the tenant will be occupying. If the tenant moves in on the 14th, then there are 17 days left in May. 17 x 81.65 = $1,388.05 is the total due for that month.
Lease Addendums and Pet-friendly Rentals
Those furry friends are loyal companions and many consider them part of the family. But they’re occasionally naughty — scratching up hardwood floors or clawing at window sills — and the damage they cause can be extensive. Be sure to discuss your tenant’s pets and any guidelines you have regarding a pet in your rental home.
Reach out to your American Family Insurance agent to learn about how bundling your insurance products can save you money. Our agents are specifically trained on all the ways to offer discounts and can help better insure your rental business as well.
This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal advice. You should contact an attorney for legal advice specific to your situation.
Additional Reading
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