Do you own a second home you never use and want to get some income from it? Are you thinking of getting into rental property as a business? One of the first questions that'll spring to mind is probably, where do I find potential tenants.
After that, you'll probably start wondering about screening those tenants. After all, you want the best tenants you can get. Of course, you also must make sure you steer clear of the legally protected classes as part of your screening.
Wondering what you get from tenant screening? Keep reading for five benefits of screening tenants before you rent.
1. Limit Criminal Activity
Those with criminal histories need places to live just like anyone else. That means that you'll see applications from those with criminal backgrounds occasionally. Rejecting anyone with a criminal history can seem like the best way to limit criminal activity on your property, but consider a more nuanced approach.
For example, non-violent offenders and those without drug convictions might well prove perfectly good tenants. Use a case-by-case approach and evaluate individually.
2. Avoid Serial Eviction Tenants
Evicting someone is a huge expense in terms of money, time, and paperwork. Avoiding evictions makes your life a lot easier. Screening out tenants with a history of multiple evictions just makes sense.
However, given the economic upheaval in the last 15 years, don't overreact if someone has a lone eviction in their background check. Ask about it. It might have come on the heels of a sudden job loss.
3. Reduce Turnover
Turnover in a rental property is another costly problem for rental property owners. You must advertise and clean the unit. Plus, it's not bringing in any income while it's empty.
You want to find a tenant that will stick around for a while. A good tenant screening process handled in-house or by a third-party property management firm can help you find those tenants.
4. Protect Revenue
Before you get your letting agent to finalize an agreement, you want to know your new tenant will pay. Screening tenants lets you evaluate their finances. Do they pay their rent on time and in full?
Picking tenants with a good payment history protects your revenue stream.
5. Legal Denials
A well-rounded screening process helps you avoid legal actions over questionable denials. It gives you legitimate and justified grounds for denying problematic applicants. It also ensures that you don't deny anyone in the seven protected classes.
Tenant Screening and You
Owning a rental property can provide you with a source of additional income or even operate as a full-time business. Like most businesses and second income streams, you must protect that investment.
Tenant screening helps you protect that investment by winnowing out bad applicants. It lets you decline those with a bad criminal history or a history of multiple evictions. It also lets you evaluate how they do with paying their rent, which protects your revenue stream.
Investor's Realty offers property management services to Denver-area property owners. Need help with tenant screening, contact Investor's Realty today.