Every rent-by-owner I have ever talked to has the same #1 complaint. Prospective tenants often waste the rental owner’s time by:
- Not showing up for the showing when they said they would
- Lacking the necessary qualifications to move forward with a rental agreement
Every time you arrange to meet a prospective renter, you are spending your valuable time and money. Your time is precious. I don’t know anyone in Northern Virginia that has an extra 2 hours to spend in rush hour traffic, just to waste their time with no-shows, and people who obviously do not have the credit or income to qualify for the lease.
So how do you waste less time?
You should perform a pre-screening interview. This interview does two things. First, it allows you to gather some basic information about the applicant to pre-determine eligibility before going through the usual background/credit checks.
Secondly, it sets expectations with the prospective renter regarding your required qualifications. Remember, in our previous blog, we suggested that you put your qualifications in writing, and commit to following them. Often, once prospective renters learn of your requirements, they may opt-out if they know they are not qualified.
Obviously, there will be a few that slip through, because people are not always truthful. But you can certainly reduce the amount of time you waste on non-serious inquiries by asking a few simple questions.
Essential pre-screening questions
These 5 questions will help separate the real prospects from the unqualified ones before you even leave your house.
Questions to ask on the first call:
- When are you looking at moving (or signing a new lease)? This question helps you identify if the prospect meets your time frame. If the property they want to look at is currently vacant, and you want a lease signed ASAP, the you will want to weed out anyone who is locked into their current lease for the next several months. If they don’t know or seem undecided, then they may not be truly serious, and could be wasting your time.
- Are you looking to sign a 12-month lease or longer? Obviously, there are special situations where DIY landlords might consider a shorter lease term. Perhaps the homeowner has a short-term job assignment in another country, and they want to rent out their home stateside while they are gone. Or perhaps the homeowner anticipates putting the home on the market in less than a year, and doesn’t want to be tied into a long lease. But in most situations, as a DIY landlord, you want a year lease (or longer). Longer-term leases mean steady, reliable income. You also reduce your costs because you don’t have to waste resources on additional marketing to keep the home occupied.
- How is your credit? This question is important. If you have followed our previous advice, you will have set minimum credit requirements that you accept. You are running a business, and you must act in such a way which protects your business. If the applicant hedges, starts off with sob-story or excuses, or says “I don’t know”, you are likely dealing with a low-credit situation.Not all people with bad credit are bad people. There are life circumstances that negatively impact people (divorce, medical bills, job loss) and make it difficult to maintain a stellar credit profile. And due to a credit situation, renting may be the only option for some families.You have to be really careful here. If you have stated credit requirements, and you make an exception, then your actions could be considered discriminatory if you reject another applicant with similar credit scores. Talk to your attorney about what is acceptable. Be prepared to ask the applicant to meet additional requirements to justify leniency on credit.
- The minimum income requirement is $x.xx: does that sound like something you would qualify for? Having sufficient income to afford the rent plus other living expenses is critical. The industry standard for yearly income is about 40X your monthly rent. This means that if rent is $2,000/mo, then income levels should be around $80k/year.By maintaining minimum income standards, you are protecting yourself from the expense of eviction and collection in the future. When housing takes up too much of applicants’ income, then they often struggle to meet their other obligations. Eventually, that struggle could translate into missing or late rent payments. Ask the question first. And ask follow-up questions to help you determine veracity.
- Do you have pets? Choosing to accept pets or not is well within your rights as the property owner and landlord. There are pros and cons. Regardless of your decision to allow pets or not, always ask in the screening call. You don’t want to waste your time on showings and credit checks, if you will just say “no” due to a pet situation.
In addition to these questions, let prospective renters know that there is a non-refundable application fee for EACH adult, age 18 and over. That may discourage some people who aren’t serious. Keep asking these questions on every call. With practice, you will quickly develop follow up questions for the answers they give. You will also develop a sense of their seriousness before committing to meeting them in person.
For more on finding a tenant without a Realtor see the other two blog posts in our series:
- Your Investment Property – Tips to Find Your Own Tenant (Part 1)
- Your Investment Property – Tips to Find Your Own Tenant (Part 2)
If you have more questions or are looking to have a professional help marketing and managing your rental property, contact Jason at 703-298-7037 or SandersNoVA@gmail.com.