It’s difficult to know exactly what to look for in a potential tenant, but landlords should have a simple set of questions to ask themselves.
Many landlords look for the “four Rs” when considering applicants. They want their applicants to be “revealing, rich, reliable, and ready.” No real surprises there. But what do these words mean when it comes to screening tenants?
1. Do They Voluntarily Reveal Information?
Landlords feel more comfortable renting to tenants who are forthcoming and volunteer information that would be helpful in the screening process. Landlords prefer tenants who don’t try to hide anything but are upfront about letting them know as much pertinent information about them as possible. When you see that a tenant’s credit score is good but not excellent, for example, a forthcoming tenant would explain why.
Another great way a tenant could be forthcoming would be to fill out a rental profile or a rental resume. If you use Cozy, you can let applicants know that they can create a short bio about themselves through Cozy and that you, along with other potential landlords, can look at it to find out pertinent information, such as income, employment and rental history, and endorsements from references.
Landlords also like receiving a customized message when tenants respond to the rental listing versus a canned response. If you receive a note from an applicant that says they’re interested in seeing your property because they’re relocating for a job, and your property is close to work, you’ll probably think this person is serious and has a genuine interest in your place.
When you screen your applicants with credit reports and background checks, I’m always curious to see if they will disclose their criminal or credit issues before I find out in the screening reports. If they disclose their credit flaws, then they get bonus points for honesty.
2. Are They Rich (well, rich enough)?
Although landlords would love to rent to “rich” tenants, if the potential tenant is truly rich, they probably aren’t in your rental market. When they think “rich,” landlords mean they want prospective tenants to make enough money to pay rent along with all their other expenses. I suppose that’s just another word for “qualified.”
Many landlords live by the 30% rule: No more than 30% of income should go toward housing. So if you charge $1,000 for rent, for example, you would want your tenant (or tenants) to make at least $3,000 a month.
This is a great goal, but keep in mind that it’s often unrealistic, depending on your market. In San Francisco and New York, for example, renters often pay much more than 30% of their income for rent. In fact, some recent college graduates in San Francisco are reportedly paying 79% of their salary for rent! It’s always best, however, for your renters to keep this figure down, at least below 50%.
3. Are They Financially Responsible?
Landlords look for reliability. They discover this trait from a tenant’s credit score, for one. The higher the score the more reliable the tenant appears.
Here’s a general rule of thumb for credit scores:
- 750 – 850: Excellent
- 700 – 749: Good
- 650 – 699: Fair
- 600 – 649: Poor
- 300 – 599: Bad
Tenants who provide proof that they paid the rent on time each month at their prior residence also show reliability. So does being on the job for a year or more, which tenants can prove by showing pay stubs.
Do they make decisions on a whim? For example, do they have 42 store credit cards, or just one rewards credit card?
4. Are They Ready to Move In?
Landlords favor tenants who can move in right away, especially in a competitive market. If your rental is ready now, you want a tenant in ASAP.
While you probably won’t get someone to move into your unit on the spot, applicants who can move to your place in a week look better than tenants who can’t move in for a month or more. Assuming they’re qualified, why would you wait for the tenants who can’t move in right away?
You can set any standards you like when you’re deciding whom to rent to. Following the lead of a “typical landlord,” however, seems prudent. A prospective tenant who sends you a customized message, makes a lot of money, has a high credit score, a great rental record, a steady job, and who can move in right away is the gold standard.
What are your must-haves when choosing tenants? Let us know in the comments!