Being a successful real estate investor and property owner hinges largely on your ability to successfully lease your units. But spoiler alert: simply keeping your units occupied is not enough. You must keep them occupied with high-quality tenants if you want to truly reap the rewards of being a property owner. Below are some factors that differentiate good from great tenants and how you can go about screening for them.
Why Good Tenants Matter
Securing quality tenants is one of the most important components of being a real estate investor in Franklin County. The best tenants are more likely to stay in your property for years to come (thus decreasing your vacancy rate and minimizing turnover costs). They’re also more likely to take good care of your property while living there, pay their rent on time, and generally be responsible residents.
Throughout our years as a property management company in Columbus, we’ve studied the data and looked at rental applications for hundreds and thousands of rental applicants. After tenants move out, part of our evaluation process also includes looking at outcome data.
Through our analysis, we’ve tried to determine what, if any, tenant factors are correlated with a great outcome for a property owner. Specifically, we’ve looked at things like how likely it is that the tenant will pay the rent on time, not get evicted, and not tear up the unit.
In short, we’ve determined that yes, there are some key things to look for when going through the tenant screening process, and here are five of them.
Five Areas to Evaluate When Screening a Tenant Application
- Credit – The correlation between an applicant’s credit history and their skip and eviction rates has been studied extensively, and there is strong evidence to suggest that using one’s credit report can be highly predictive of their future ability to pay rent on time month after month. That’s clue number one that they’re likely to be a good tenant.
- Criminal history – We look back 10 years for any criminal convictions. If an applicant has a criminal history, you should steer clear of renting to them.
- Eviction history – We look back 5 years for an applicant’s eviction record as past evictions can be predictive of tenant behavior moving forward.
- Rental history – Talk to the applicant’s current and previous landlord to see what kind of tenant they were. You’re looking to see that they paid their rent on time, didn’t leave with a big balance, and didn’t damage the property in any significant way.
- Income – Verify income by looking at pay stubs and bank statements. To qualify for a specific rental property we manage, the applicant needs to show a combined monthly household income of at least three times the cost of rent.
Every property manager or landlord will have minimum standards for screening applicants, but we’ve found that using data to create a consistent tenant screening process has benefited us and the property owners we serve.
If you have questions about tenant screening or questions about the Columbus market in general, contact us anytime at RL Property Management.
