i know a bunch of you guys have rental properties.
we put up our current home for rent a couple weeks back and had a few families through this weekend. we have a number of applications received already and offers to deposit this week.
this is the first time we’ll have had a rental property like this and the home is near perfect.
my plan right now is to go through the applications and then send a second series of questions about things we forgot to put on the first application (smokers?, method of payment, etc).
what kind of due diligence do you guys do and how do you do it? credit checks, background checks etc.
a couple of the families were very nice people.
one concern we have though is that our home has an in-law suite and one of the families will essentially have 4 adults and 2 kids which is quite a lot of people for the space. do you guys usually favour fewer people in the home or do you consider it safer since there are more incomes to support the rental obligations?
we’re also going to have a lot of extra furniture we cannot take to the new home since we’re consolidating two homes into one larger one… extra couches, end tables, wardrobes etc.
we didnt put it in our ad but i’m going to offer our place up partially furnished to the applicants for a few bucks extra if they want it… thoughts on that?
Bing, I agree with Spencer, credit/background checks are critical. Odds are that if their history shows they pay others, they will likely pay you too. Also, checking with their previous landlord, and if possible the one before that too. You seem to be a good judge of character - keep close attention to everything they say to you, bearing in mind that prospective tenants will say just about anything to ensure they are in your good graces when you prepare to select an applicant.
A lot of the things you will learn in this business will simply come through experience though - sadly they are not all great, but they are almost a right of passage when in this business. I learned a lot in my first year. Had a couple situations that I did not see coming - nothing terrible, just some things that made me re-think how I went about certain things…
Most of my units are very nicely renovated, and in premier areas of the city. I get good rents, and so far, quite good tenants. Your location is definately going to be a huge factor in who you get.
Also, how YOU come across is critical too. I am very honest and upfront, I do not make promises I can not keep, and I treat everyone with a high level of respect. From what I have learned, being a good landlord is critical to your sucess in this business. Be prompt/pro-active when things need to be done, be courteous and polite (yet still firm) with your tenants, and keep a slush fund for the unexpected - those 3 things will put you on the path to success in this business…
PM me with any specific concerns, I’ll do what I can to help you.
Definitely some kind of credit and background check. I have been surprised at the history some applicants had after meeting them and thinking they were quite normal- turns out I was wrong.
i get a little concerned when the number of non-related people starts to increase in a larger property. For a 2 bedroom apartment it isn’t uncommon to have a couple of roommates, but for a 3 bedroom I start to get nervous when there are 3 or more unrelated people looking to move in. Sure they may have a greater combined income, but they also have a much, much greater chance of a conflict among them or one just bailing out on the others.
after being forced to negotiate rental splits between roommates, I prefer to deal with the fewest number of people being responsible for the rent.
When you guys pull a credit check what do you actually see? Are we talking just payment history or actual account information like who the accounts are with, how much is on each account…
I wouldn’t mind taking a look if you don’t mind sharing? I won’t need to worry about this until later this year (That’s if the current tenants move out) but it never hurts to start reading up on it early.
With the website I use, when I get a tenant that looks promising I request a credit check from them through the website. Then the prospective tenant purchases their credit report though the website. After that they share the report with me (again though the website) and the site shows me info including credit score, payment history, judgements, collections, etc. Pretty much everything you’d need to make a decision. It doesn’t share the details like exact revolving debt numbers, etc.
Here are some forms. The lease is from a local lawyer and there are numerous highlighted sections that need to be modified per use. The application and deposit are forms I modified from a standard form and the other items I got from someone else when I unfortunately had to use them
I don’t manage any properties directly, but I help my father with quite a few and have some friends with properties. Most of the information shared here is good.
I just wanted to re-iterate 2 points:
Don’t ever be sweet-talked into renting to somebody. Either proof through credit history or background check OR a co-signer with a good history should be absolutely required. Unfortunately, you WILL be burned by someone claiming (or legitimately trying and failing) to be getting “back on their feet”. Don’t trust it. It ends badly for you.
Related to the above. Lots of people look normal and responsible. Don’t ever trust your emotions or instincts that a person is reliable and able to pay. Get proof via credit/background check.
Of course it’s probably different in Canada-land, but the site my father uses doesn’t give any financial details. It basically gives a Letter-Grade rating of the person’s history and that letter-grade is used to determine if the person’s history is suitable.
Whatever credit check site I use- the name escapes me- has an a la cart menu of stuff you can get. I usually always pay to get the credit score since I use it to decide between otherwise equal applicants and I typically get a listing of all their credit accounts with history and balances.
i run into a lot of people with okay credit that have a bunch of medical bills but are current on everything else. I’m willing to consider such people in some circumstances. Someone who appears to habitually not pay their utilities, cable or phone I’ll take a pass on even if everything else looks good.
obviously, I much prefer people who really should just be buying a house instead of renting, but sometimes those applicants aren’t available.
