Today’s most profitable multifamily rental properties are the result of meticulous research, hard work, and foresight. A truly profitable investment requires several variables coming together, each playing their part in the successful operations of the property. However, there is a single variable that is more important than all others: tenants. A property is only as good as the tenants that reside there.
Tenants have the power to transform a property, for the better or the worse. Investors depend on their property management company to mitigate the risks by implementing extensive screening measures.
- Detailed Application
- Background Check
- Credit Report
- Landlord Check
1) Detailed Application
The rental application should provide all of the necessary information needed to conduct a thorough background check. Personal information, personal references, banking and credit inquiries, proof of income and past living arrangements are just some of the topics the application should require.
2) Background Check
A verified background check will offer details about an applicant’s criminal record, rental history, and more. A tenant background check will help you find those that have demonstrated a propensity for being good renters, and enable you to avoid potential bad apples. According to the Consumer Finance Protection Bureau, the background check must be done by an approved Consumer Reporting Agency.
3) Credit Report
In order to gather the applicant’s credit information, permission must be granted to run a credit check. The Fair Credit Reporting Act (FCRA) requires landlords to get signed permission to run such a check. Once the authorization has been completed by the tenant, a credit check can be completed.
While often biased, personal references can offer landlords with some valuable information. The right questions can shed some light on the applicant’s character, habits, demeanor, and manners.
5) Landlord Check
Previous landlords may serve as the best source of information for learning what kind of tenant you might be getting. They offer first-hand accounts of how he applicant was to work with. Ask questions that will give insight into how good of a renter they will be. This is your chance to learn if they paid rent on time, what condition the property was left in, what kind of problems, if any, the previous landlord encountered, etc.
Tenant Selection and Retention
It’s not enough to find the best tenants, without a plan in place to keep them. A resident retention program aimed at boosting occupancy levels and rental rates goes hand in hand with a thorough tenant screening process.