Renting out property is always risky, it only takes one bad tenant and suddenly you have thousands of dollars in damage that you have to pay for. Tenants can stop paying rent at almost any time and it can take months to get a resolution. Avoiding problems tenants should be the first goal of every landlord and property manager. Let’s show you how to reduce your risk and find some good tenants.
Always ask for References
Find a rental application online or have one made for you and make sure that each and every tenant fills one out. It should have contact information for previous landlords as well as personal references. Verify current employment records as well as identity. You can also run a fairly inexpensive credit check to make sure that a potential tenant pays their bills on time. Never rent to a tenant based on “they seemed nice”, put a screening process in place and stick to it. You won’t regret it.
Be Wary of Cash
There are several reasons why you want to avoid cash. The first is security, rents are expensive today and combine that with security deposits and you are walking around with thousands in your pockets and that can be dangerous. There are plenty of ways your tenants can pay you without using cash that are perfectly safe. Electronic transfers can be done on a smartphone and they are free.
Also be wary of tenants who want to pay several months in advance. They either have very poor credit and that can be a risk you don’t want to take. The other reason is that they are setting up a meth lab on your property and don’t want you coming around once a month to collect rent. There are legitimate reasons that people pay cash or pay upfront, just be cautious.
Have a Lease Agreement
Once the rents and deposits are paid but before you hand over the keys make sure that you have a signed lease that you have gone over with your tenant. That should include what your responsibilities are, what their responsibilities are, when the rent is due and how much, the duration of the lease along with how much notice is required before vacating the premises. This agreement is in place to protect both of you. You can download a standard lease online or get an attorney to create one for you.
Bad tenants aren’t that common, but when they come along they can end up costing you a fortune. Be cautious and protect yourself as much as possible.