When it comes to actively managing a rental property, it’s often the smallest of details that count most. This is especially true of the screening process. Seemingly insignificant issues, if ignored, can eventually lead to big trouble for those who own and rent out investment properties. Here are three make-or-breaks for landlords:
Pay attention to state and municipal laws. Some regulations may seem small and insignificant. But if you ignore them, you can end up with big financial and legal troubles. For example, when screening tenants, you need to base your decisions on things such as credit history, income and debt levels, and past rental history. You’re not allowed to take into account (or discriminate against) a rental applicant’s race, religion, national origin, gender, age, family status or sexual orientation. A small slip-up such as asking an applicant’s age or marital status – and using it to make a tenant decision – could lead to big problems.
Always complete a rental application. You just met who you think is the ideal tenant. Maybe your neighbor’s grandmother wants to rent from you. What harm could there be in skipping the formal rental application? Don’t skip any steps in the screening process, no matter how well you think you know someone. Always ask prospective tenants to complete a rental application and provide you with information such as name, address, work and rental history, and references.
Check and verify references. You’ve reviewed the rental application and your prospective tenant looks great. You’ve done all the “big” things, such as verifying income and inspecting their credit report. So is it OK to skip a few of the small things, like calling all the references? That’s not such a great idea. Sometimes, it’s the very last detail you check that could help you steer clear of a bad tenant.
