Investment properties require time, energy and paperwork. Sometimes it seems like the paperwork is endless, but in the case of a rental application, a savvy landlord knows this paper is beneficial. But what sort of information should the application collect? And what should you do with it?
First off, make sure you're aware of applicable Fair Housing laws. The recommendations in this post can never supersede the regulations of your state.
After that, recognize that an incredible fifty-nine percent of renters prefer to apply online, so you could save yourself some paper if you decide to go that route. But whether or not you choose digital or paper forms, there is essential information you must collect.
Applications Can Save You
A well-crafted rental application will help you eliminate unwelcome surprises from your renters. If you read between the lines and do the proper checks, it can even protect you from the chance of a costly eviction.
In order for the application to serve you well, make sure it includes:
- Complete contact details
- Name, emails and phone numbers for each person planning to live in the rental
- Detailed rental history for the last three to five years with addresses and contact information for the previous landlords
- Employment information with contact numbers
- A recent pay stub that proves they can cover the rent
- Explicit permission to run a background check and credit report
Make sure the applicant knows that anything left blank will signal a red flag to you, so if they have no response, have them fill it in with N/A (not applicable).
Most importantly, charge an application fee ($15 to $45 is standard depending on what agencies charge for the credit and background checks), and use it to make a thorough check of the applicant.
Look for Red Flags
When reviewing an application, it's important to realize that you only have the applicant's word to judge them by (until you fact check it during screening). Let's assume they'll tell their story straight up.
If that's the case, why not ask the following three questions to determine major red flags:
- Have you ever been evicted?
- Have you ever been convicted of a felony?
- Have you ever purposely withheld rent?
A "yes" to any of these questions waves a red flag for you. Leave space for a written explanation if you want, but unless these applicants are the BEST of your prospects, it's in your best interest to pass on renting to them.
With a rental history of evictions and unpaid rent, they are likely to offer you nothing but headaches. Do you really need that?
Screening Doesn't End There
That rental application is only a piece of paper. In the end, getting the right information and tossing out applicants with obvious red flags will only get you so far.
Now the screening process begins. If your process doesn't include these four steps, you might want to revisit it:
- A background check using Leaseze or another service (which might take up to 24 hours)
- A credit report can tell you if prior residence addresses match the application and if the applicant is current on bills
- Verify employment with a phone call to the applicant's employer
- Verify rental history with a call to former landlords
In the end, you're the one taking the risk by renting to these individuals. Once you've qualified an applicant and they've signed the rental lease agreement, you can only hope your process netted you the best renters available for your property.
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