Now that you have decided you want to rent out your home and use it as an investment property, at least until you are ready to sell, you need to have tenants. While there are often quite a few prospects who might be interested in your property, it does not mean that all of those tenants are going to be right for your property. The following are some tips that will help to ensure you have better quality tenants for your property.
The Federal Fair Housing Rules are the legal requirements that landlords need to follow when they are choosing tenants for their property. This helps to ensure there is no discrimination when it comes to choosing or excluding tenants from the property. It is illegal to discriminate based on national origin, religion, race or color, sex, disability, or whether a family has children.
Keep in mind that in Texas, cities, counties, and other municipalities may have additional laws that are in place to protect people who are looking for places to live. You will want to find out about any of these additional regulations for your specific area to make sure you are following the law.
When you are looking for tenants, one of the most important things to consider is the credit rating. While it is true that some great people may have had a run of bad luck that damaged their credit, most of the time, bad credit is due to mismanagement of money. This should strike you as a problem if you are going to be renting to people. After all, you want to make sure they can pay their rent on time each month.
Always make sure you verify their income. You want to find tenants who have an income that is at least three times the price of the rent. You can ask for copies of their pay stubs, and you can get in touch with their employer to make sure they are truly employed, find the length of their employment, their monthly earnings, and their attendance record.
Why would you want to know their attendance record? Simple. If they are not showing up to work, it could be an indicator of not being responsible. It could also mean they will eventually lose their job.
In addition, be sure to run a credit check on the potential tenant. Make sure they pay their bills on time and check their income to debt ratio. Look for any previous evictions and bankruptcies, and to see if they have had any civil judgements made against them.
Even if their credit check is clear, that does not always mean they are right for your property. You should also perform a criminal background check. This can help to make sure the person is who they say they are and whether they have any type of problems in their background that would make them a poor fit for your property. A criminal check should include a state check and a federal check, as well as a county criminal court search and a Department of Corrections Offender search. In addition, check the sexual offender database.
Always be sure to look up the latest laws from the Texas Department of Housing and Community Affairs to check into the legality of what types of criminal background would allow you to deny someone housing.
You will find that trying to conduct criminal background checks on your own can be costly and time consuming. It is generally a better option to hire a professional company who can take care of these types of checks for you.
You want to find a tenant who seems very consistent. This means someone who is able to hold down a job and able to pay their bills and their rent without issue.
Ideally, you will get in touch with at least the tenant’s last two landlords. The reason you want to contact at least two is because if they are a problem tenant, the current landlord might be willing to say just about anything, so you will accept them.
You will want to ask the landlord several questions. You need to make sure they were paying their rent on time, and ask why they were moving. Were they being evicted or were they asked to leave for some reason? Did they provide notice before leaving? In what state is the apartment they rented? Did they damage the place, or did they have a lot of complaints that were without merit?
The more you know about the tenants the easier it will be to make a decision and weed out the good tenants from the bad. Keep in mind that if someone has never rented before, they might not have a rental history that you can check. In those cases, you can protect yourself by having them get a cosigner for their lease.
One of the mistakes that some landlords make, especially when they are just starting out, is renting their place to friends and family. While it might seem like a good idea since you know these people, it can backfire on you spectacularly. What if they are constantly late with rent by a few days or if they ask for special treatment? It is much easier to put your foot down with a tenant that you do not know rather than someone you consider close.
Screening for the best tenants can be a long and time-consuming business, and it might be something you simply do not have the time or inclination to do. If that’s the case, then you might want to work with some professionals who can take care of all of the aspects of screening your tenants for you. They can help you to narrow down the choices to the very best.
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