Realty Insider Blog

For some, that is the extent of their tenant qualification - tenant seemed nice and had a prefilled lease ready for me, said they would help fix the place up, gave me a personal check at move-in for two months rent and the current landlord gave glowing reviews. Excellent - no problems - being a landlord is great!

For the people that snicker, you know where I am going with this and probably won't need to read this article. For those that see nothing wrong with the above, please please please read on.

So, it is great that you managed to find a tenant. I would suggest calling the person a prospect for the time being though. There are lots of different people renting from Craig's list, so it is imperative that you check out the prospective tenant thoroughly. If you are renting out your place yourself, you are really putting yourself up as a target - problem tenants will seek out first time landlords that are lax in their tenant verification and qualification.

To weed out the riff-raff, try adding something like the following to your craigslist ad. You won't get as many responses, but those that do contact you know that you mean business:

"Sufficient credit, income, employment & rental references are required and will be verified. All adults living in the property will have to be on the rental application. $32 application fee per adult."

Make sure all prospective tenants fill out an application form and that they submit a copy of their drivers license or other valid id as well as paystubs etc. Some rental applications:

http://www.independent-pm.com/Blank%20Rental%20Listing%20_%20Rental%20Application%20(14)%20-%2008-01.pdf

http://mrlandlord.com/rentalapplication/app1.pdf

For Qualification and Verification Purposes, I suggest landlords make sure they do at least the following:

a)      Run credit on the tenants (have them order it online themselves and email you the login and password - i.e. on creditreport.com ) Print it out for your records and compare with copy of drivers license. Make sure they don't have outstanding judgments, late payments, bankruptcies etc.

b)      Be clear on who and how many will be staying in the apartment, pets etc. All adults should apply and have their references and rental history checked.

c)       Be sure to get at least 1 month's rent and one month security deposit up front (in certified funds if you don't have at least 2 weeks before you hand them the keys). DO NOT accept people that cannot afford to pay you the whole amount up front.

d)      Verify their employment (call supervisor/HR) + get copies of recent W-2's

e)      Get copies of their drivers license so you know they are who they say they are and the same person as on the lease.

f)       Make sure they understand they have to pay utilities. move-in fees, trash fees or whatever else is required.

g)      If they have dogs/cats, make sure they understand the building rules and that they pay you for example a $500 move-in deposit.

h)      Call the last 2 landlords. If they are problem tenants, the current landlord will probably lie just to get rid of them.

i) Don't make friends with your tenants. You should be courteous and friendly, but if you are looking to keep your rentals an investment, don't mix business and pleasure.

j) Don't let your tenants paint or make improvements. They may not finish, may feel you are indebted to them and ask for slack when they are late or may just do a bad job.

k) Verify all information - income, employment, name on credit report/social security number etc.

l) Use a great lease.

m) If you don't want to go through the trouble of qualifying your tenants, use a realtor and a property manager. It will save you money and lots of grief. 

Plenty of leases online you can look at:
http://www.besthomeagent.com/forms/deed_of_lease_tenant.pdf

http://www.legal.sga.vt.edu/LEASE_VRLTA_2006.doc

http://www.arlingtonva.us/Departments/CPHD/housing/housing_info/page57910.pdf

http://www.rainespropertymanagement.com/pdf/Sample%20_%20Residential%20Lease%20(11)%20-%2008-04.pdf

http://astorpropertiesllc.com/forms/sample_lease.pdf

Among additional things, make sure you provide the renter with the led based disclosure/disclaimer form as well as the led based paint pamphlet(info and download from http://mrlandlord.com/lead/.) Their may be other forms necessary from your homeowner association, local jurisdiction and state.

You will want to get a book on how to become a landlord - plenty of good ones at Barnes and Noble to help you learn how to qualify tenants and managing them for maximum profit! Also, you should have an attorney review your lease and paperwork to make sure you comply if rules and regulations.

The above may seem like overkill to some, but it takes only one bad tenant to give you unlimited hours of wasted time, destruction and lost income. So, please make sure you take the time to read up online and in books on how to find and manage good tenants.

So, what was wrong with the prospect at the beginning of the story? Well, tenants that prefill in a lease and bring to the showing is generally trying to run the show having the owner skip some of their usual due-dilligence. Never take personal checks when giving the keys - they may bounce and after you have given the keys your legal standing is diminished. The glowing reference from the current landlord? If you had a nightmare tenant that wasn't paying - and a new landlord called you for a reference - how far would you go to get rid of that tenant? (not saying you should lie - just saying that some/many would)  Then, the fixing up part - yet again sometimes a ply to make the landlord be entustiastic about a less than ideal tenant - woow, he/she will fix up my place for free! 

Ok, hope the above helps some of you get started.