How to Choose the Best Tenant

When you’re renting out a property, one of the most crucial decisions you’ll make is choosing the right tenant. After all, the ideal tenant can ensure that your property is well taken care of, provide a steady rental income, and make the overall renting experience more enjoyable for both parties. On the other hand, selecting the wrong tenant can lead to potential issues such as late payments, property damage, or even legal battles.

When you have multiple applicants vying for your property, it’s important to approach the selection process carefully. This article will guide you through key considerations and tips for choosing the best tenant for your property.

Why Tenant Selection Is So Important

Choosing a tenant isn’t just about filling a vacancy; it’s about securing someone who will respect the terms of the lease, pay rent on time, and maintain the property. A good tenant is someone who:

• Pays rent consistently and on time
• Takes care of the property and reports maintenance issues promptly
• Follows the rules of the lease agreement
• Has a history of positive rental experiences

A bad tenant, on the other hand, can cause a lot of stress and financial strain. Issues like late rent payments, disputes over the condition of the property, and even legal actions can arise if you don’t carefully vet your tenants. With that in mind, here are some factors to consider when deciding between multiple applicants for your rental property.

1. The Applicant’s Rental History

The first place to start when screening potential tenants is their rental history. This can give you valuable insight into how they’ve behaved as renters in the past and whether they are likely to be responsible tenants for your property.

What to Look For:

• Previous Landlords: Speak with the applicant’s former landlords to get an idea of how they behaved as tenants. Ask questions like:
  • Did they pay rent on time?
  • Did they maintain the property well?
  • Were there any complaints or issues during their tenancy?
  • Did they ever break the lease agreement or cause damage to the property?
• Length of Stay: Long-term tenants are often a good sign. If someone has stayed in their previous rental property for several years, it could indicate that they’re reliable and stable.
• Eviction History: Ask the applicant if they’ve ever been evicted. While an eviction isn’t necessarily a deal-breaker, it should raise a red flag. If you find out that an applicant was evicted from a previous rental, inquire about the circumstances and be cautious moving forward.

Tip:

Check with multiple previous landlords if possible. A single reference might not give the full picture, but multiple sources can help confirm whether the applicant has been a responsible tenant.

2. Employment and Income Verification

A key consideration when selecting a tenant is whether they can afford the rent. This is especially important if the property has a high rent rate relative to the area.

What to Look For:

• Employment Stability: A tenant with stable, long-term employment is less likely to face financial difficulties that could affect their ability to pay rent. For example, someone who has worked at the same company for several years is often considered a low-risk tenant.
• Income Level: Ensure that the applicant’s income meets the requirements to afford the rent. A common guideline is that a tenant should earn at least 2.5 to 3 times the monthly rent in gross income. This ensures they have enough funds to cover their rent, utilities, and other living expenses.
• Proof of Income: Ask for recent pay stubs, tax returns, or bank statements to verify the applicant’s income. Freelancers or self-employed individuals might provide contracts, invoices, or statements from their accountant.

Tip:

Be cautious with applicants who have inconsistent income or are in short-term or unstable employment situations. Even if they can afford the rent temporarily, their financial stability in the long run is key.

3. Credit Report and Financial Stability

A credit report is one of the most effective tools for assessing a tenant’s financial responsibility. It can give you a clear picture of their ability to pay rent and their history with managing money.

What to Look For:

• Credit Score: While a poor credit score doesn’t automatically mean an applicant is a bad tenant, it can indicate financial instability. A good credit score (usually 650 or above) typically shows that the applicant has a history of paying bills on time and managing credit responsibly.
• Debt-to-Income Ratio: This ratio helps you understand how much debt the applicant has relative to their income. A high debt-to-income ratio may indicate that the applicant is already stretched thin financially and may struggle to pay rent.
• Past Due Accounts or Collections: Look for any history of accounts in collections or late payments. A large number of missed payments or unpaid debts might indicate financial instability, which could translate into missed rent payments down the line.

Tip:

If an applicant has a less-than-ideal credit score but otherwise seems like a good fit, you might ask for a larger security deposit or set up a co-signer to help mitigate the risk.

4. References from Personal Contacts

In addition to professional references, consider asking for personal references. These could be friends, colleagues, or acquaintances who can speak to the applicant’s character, behavior, and reliability.

What to Look For:

• Personal Integrity: References can offer insight into the applicant’s honesty and reliability. If a personal reference speaks highly of them and confirms that they are trustworthy, it’s a good sign.
• Relationship to the Applicant: While a friend or family member can provide insight, try to get at least one reference who has known the applicant in a professional capacity or who has observed their behavior in a neutral setting.

Tip:

Check the personal references’ backgrounds, too. A reference from someone with a questionable reputation may not carry much weight.

5. Interview the Applicants

Sometimes, the best way to get to know a tenant is to speak with them directly. Arrange for a face-to-face meeting or a video call if an in-person interview isn’t possible.

What to Look For:

• Communication Skills: Pay attention to how the applicant communicates. Are they open and forthcoming with information? Do they seem professional and respectful? Good communication is essential for a smooth landlord-tenant relationship.
• Behavior and Mannerisms: During the interview, observe how they present themselves and their approach to the rental process. A respectful, responsible applicant is likely to continue those behaviors throughout their tenancy.
• Reason for Moving: Ask why they are moving from their current home. Applicants who have a reasonable explanation for leaving (e.g., job relocation, seeking a better living environment) are often more stable tenants than those who have a history of frequent moves or no clear reason for leaving.

Tip:

Don’t rush the interview. Take your time to get a sense of who the applicant is and whether they would be a good fit for your property and neighborhood.

6. Criminal Background Check

A criminal background check is an essential part of tenant screening, particularly if your property is in a community where safety is a priority.

What to Look For:

• Criminal History: While a criminal record doesn’t automatically disqualify an applicant, it’s essential to assess the nature of the crimes. For example, minor offenses like a past DUI or a misdemeanor might not be a huge concern, but violent crimes or serious felonies can be red flags.
• Safety of the Community: If your property is in a family-oriented or high-end neighborhood, you might want to be extra cautious with tenants who have a criminal history that could compromise the safety or reputation of the community.

Tip:

Be aware of the laws in your state regarding criminal background checks. In some areas, landlords are restricted in how they can use this information in the tenant selection process.

7. Pet Ownership and Other Specific Requirements

If you allow pets in your rental property, you’ll need to assess the applicant’s pet situation. Some landlords have specific pet policies regarding breed restrictions, the number of pets allowed, and additional deposits.

What to Look For:

• Pet Behavior: Does the applicant provide proof of their pet’s good behavior, such as references from previous landlords? Ask about their pet’s behavior and how they plan to maintain the property.
• Pet Insurance: Some landlords require tenants with pets to have pet insurance. This can protect you in case of property damage or if the pet causes harm to others.
• Additional Fees: If the applicant owns a pet, you may want to ask for an additional pet deposit or increase the monthly rent to cover potential extra wear and tear.

Tip:

If you’re uncertain about the applicant’s pets, ask for additional documentation such as vaccination records or proof of neutering/spaying. These can ensure the pets are well-behaved and safe.

8. Lease Agreement and Legal Considerations

Before finalizing any decision, make sure the applicant is familiar with the lease agreement and that both of you are on the same page.

What to Look For:

• Commitment to Lease Terms: Ensure that the tenant understands the terms of the lease, including rent due dates, maintenance responsibilities, and rules about property use. Misunderstandings at this stage can lead to disputes down the line.
• Co-Signers or Guarantors: If the applicant doesn’t meet your requirements (e.g., they have a lower credit score or unstable employment), consider asking for a co-signer or guarantor. This person will be financially responsible if the tenant defaults on rent.

Tip:

Make sure the lease terms are clear and both parties understand them before signing anything. A well-drafted lease agreement can prevent issues later on.

Choosing the right tenant for your property is a critical decision that can affect your investment and peace of mind. By following these steps, you can ensure that you select a tenant who will take care of your property, pay rent on time, and maintain a positive relationship throughout the lease term.