As a property Manager with over 20 years of experience in the real estate business, I have found that there are three major things that Landlords look for. The first is good credit, second is good work history and third is a good rental history. And an informed Landlord is going to verify those before approving a Tenant. As a Landlord, you want to make sure that you are renting to stable, responsible person who will pay his or her rent on time.
A Landlord should always research a Tenant’s criminal background and credit report before approving the lease. Having a stable credit, income and rental history means that the applicant will most likely be a good Tenant. You can check several consumer reports to check a person’s credit and rental history. You definitely want to pull a credit report from a credit bureau such as Equifax, Experian or Transunion. While a few unpaid bills or slow payments may be understandable, more serious credit blemishes such as evictions,charge-offs or judgments should raise a huge red flag and you should exercise caution when renting to the applicant. If, however the person has made payment plans with their creditors or is making an honest effort to pay off his debts even you may use your discretion to decide if it is worth giving them a chance. If so, you may want to consider doing an even more thorough income verification or ask for a co-applicant or a larger security deposit.
You also need to verify their income. This may seem as easy as giving their boss a call and asking a few questions, but an age of corporate privacy policies, self employment and convoluted employment verification services have made this process much more difficult. To avoid ending up in a red-tape nightmare, make sure you ask your applicant who exactly is the person or office responsible for employment verification, instead of just asking for their supervisor.
Many companies also require written consent from their employees before verifying any employment information so be prepared to provide some documentation to the employer. A signed rental application or release form is usually sufficient enough. Pay stubs and tax returns can also be used as proof of employment if you are having difficulty getting through to anyone at the applicant’s job. If the person is self-employed, taking a look at their tax returns will also help verify their income as well. After you have determined that the applicant is actually receiving income, you also want to make sure that the income that they are getting is sufficient enough to pay their monthly rent. In general, a person’s monthly pay should be about 3 times more than what the rent is in order to comfortably make the payments. So if you are charging 700 dollars a month in rent, then you should rent to people who make at least 2,100 dollars a month.
You will also need to decide what your policy on pets will be. If there are pets, how large the pet is, what kind of pet references are there. Can the previous landlord say that, “yes the pet was okay”?
If an applicant makes a decent salary and is responsible and credit worthy, then they should have no trouble getting an apartment or renting a home. From the tenant’s perspective, if you satisfy those three credit items — credit, work and rental history — you are probably going to be in a very good position to be approved for the lease.