If you are considering renting out your house or apartment, you probably already understand the importance of finding the right tenants. Depending on where you live, the laws protecting tenants may make it very difficult to evict tenants even for non-payment of rent. There are many other reasons that that you may regret renting to particular tenants – perhaps your neighbors have been complaining about them, or you begin to suspect that that they not may be who they say they are. In these circumstances it is often virtually impossible to do anything but wait out the lease and hope for the best. This best strategy to avoid finding yourself in this position is to make sure that you have done a background check to carefully screen your potential tenants so that you can feel confident that you know everything important that there is to know – before you hand over the keys. There are three important things that you should check: former landlords, credit reports, and criminal background.
Past behavior is a good indicator of future behavior, and as a landlord you should be very sure to find out about the applicant’s past behavior as a tenant. Be sure ask for these references and follow through to check them. Make sure to verify the relationship between the landlord and the applicant, and ask about items that are important for you to know. Obviously, you want to be sure that there were no prior evictions and that rent was paid reliably and fully. You should also ask whether a former landlord withheld a damage deposit and why, whether the tenant left the apartment clean and in good shape, whether there were complaints from other tenants or neighbors, and whether all of the terms of the lease were met by the tenant. Any indication of problems should be taken seriously at this point.
It is important to remember that in renting your property to a tenant, you are in effect providing a service up front in exchange for a payment at a later date. This means that you are in a real way a creditor as much as a landlord, and for that reason it is important to know how the applicant has treated creditors in the past. A credit report will tell you if your potential tenant pays their bills on time, if they are over-extended and therefore likely to miss payments to you, or if they have ever declared bankruptcy. There may be legitimate explanations that you are prepared to consider, but you should definitely be cautious about poor credit.
Depending on where you live, you may be responsible for any criminal activity on your property and so you need to be sure that you know if your potential tenant has a criminal past. You may or may not decide that prior convictions are a concern for you, particularly if they are from many years ago. However, this is something that you should be sure you have complete information about so that you can balance the risk.
Before you sign any lease, make sure that you conduct due diligence to protect your interests, your property and your neighbors against the problems that bad tenants can bring.