Posted July 19th, 2012 No Comments
It might have been a place you called “home” for the longest time but now it’s time to pack up and move on. Whether it is a move to a different city, downsizing to a more affordable place, or growing your family into the extra bedrooms you have been missing, this home will now become a rental property and you, you are about to become a landlord.
When we conducted a survey from our users back in April 2012, 58% of respondents claimed that finding the right tenant is the most challenging task of being a landlord. Perhaps a lot of emotions go into renting out your house.
Landlording is not a science; it’s an art. Here are a couple of rules of thumb to go by when deciding on the next person, group of friends, or family who will live in your property.
1. Income-to-Rent Ratio
Can your applicant afford to make your rent payments every month? Good rule of thumb is for the tenant to make at least three times more in monthly income than the rent amount is. Make sure to combine the income of all tenants responsible for the lease payments.
2. Income-to –Trade Payments Ratio
Perhaps your new tenants make three-times the rent every month, but do you know what their monthly financial obligations are? Do they have enough money left to pay your rent? Divide their combined monthly income by the sum of all monthly trade payments. This information is available in any personal background check.
3. Criminal & eviction history
You don’t want to move a sex-offender next to a family with kids. You don’t want this liability. You don’t want to rent to a serial tenant either. You won’t know, unless you run a background check and eviction check. Make sure it’s national – criminals are mobile, too!
4. Identity check
Is this person who she tells you she is? You may ask to see a valid driver’s license from all of your applicants. You don’t want a criminal hiding behind stolen identity living/hiding at your property. You don’t want this liability and possible criminal charges on your record either!
5. Gut feeling
As much as you can’t put your finger on it, there is something to it. There many questions to ask yourself when you are making the final pick. Does everything on the application make sense? Are your new applicants easy to communicate with and are they responsive? Is the applicant excited to turn your property into his or her home? Have you found out what they do for leisure? Lifestyle is another important fact in regards to your property and the neighbors. All the above matters as this person will be your customer and your property care taker for at least the term of the lease.