One of a landlord’s or real estate investor’s top priorities is finding reliable and secure tenants who will pay their rent on time and take good care of their properties.
Investors and landlords put a lot of work, time, and resources into their property investments, and they want to avoid renting to unreliable tenants who cannot make payments on time or will damage their properties.
But finding reliable tenants isn’t as straightforward as it sounds. In fact, at least 15 percent of renters in the US are unable to make payments on time.
How can investors make sure they accept responsible tenants? Proper screening and the rental verification process can help. By ensuring applicants meet income-related and historical criteria, these procedures allow you to find the most suitable residents for your properties.
The Importance of Rental Verification: Avoiding the Eviction Process
Although laws vary from state to state, the eviction process can be time-consuming, frustrating, and expensive. In California, landlords must follow several steps to legally evict a tenant. It involves:
- Filing eviction forms in court. Filing fees can range from $385-$435, plus a $40 fee for a writ of execution issuance.
- Serving the tenant with the notice.
- Waiting for the tenant’s response.
- Attending a final court hearing.
How Can Investors Find the Right Tenants?
To protect their properties and avoid the lengthy and costly eviction process, investors should make sure their tenants have:
Are they employed full time? You can assess an individual’s income or a couple’s joint income, employment history, past bankruptcies, and credit score to gauge their ability to pay rent on time each month.
Reliable Rental History
An applicant's rental history can give you valuable insight into their behavior. If the laws in your state permit you to do so, it can be helpful to contact your applicant’s previous landlords. Make sure to look out for certain red flags, such as:
- Any past evictions.
- Any property damage.
- Loss of security deposit.
How can you verify potential tenants? Many different types of rental verification methods can help investors and landlords choose the right people, such as:
- Credit check: Available through Equifax, TransUnion, or Experian, a credit report provides information about an applicant's financial history—including their credit score, credit history, previous bankruptcies, and any outstanding debt. A score of 670 or more is considered a good credit rating and generally indicates financially responsible behavior.
- Income verification: Landlords and investors can verify an applicant’s income using pay stubs, recent tax returns, an employment offer letter, or a verification letter from their employer.
- Rental references: Contacting previous landlords can be helpful to investors and landlords. Ask about an applicant’s rent payment history, property damage, and whether they followed the lease terms.
- Identity verification: You can verify an applicant's identity through government-issued identification documents, such as a driver's license or passport.
- Criminal background check: Landlords and investors must protect their tenants and properties. Running a criminal background check on a potential tenant can help you avoid placing your property or other tenants in unsafe situations.
How Does Rental Verification Benefit Investors and Tenants?
Rental verification helps investors reduce the risk of renting to unreliable or problematic tenants. By selecting tenants with a strong financial background and reliable income, landlords and investors won’t have to worry about late or missed payments, property damage, or going through the eviction process.
Maintaining a standardized screening process also ensures that all applicants are judged on the same criteria. Additionally, tenants will feel safer knowing that other residents have gone through the same rental verification process.
We Understand the Risks of Investing
Although investing in real estate brings many opportunities and benefits, there are also some risks involved. Val-Chris provides real estate loans suitable for commercial, mixed-use, and industrial properties. Contact us today for more information or additional questions. We’re happy to help.