Do's and Don'ts for Selecting Tenants - Investor Insights

Do's and Don'ts for Selecting Tenants - Investor Insights

If you have rental properties and you're using a property manager the property manager will absolutely help you market the property and they will help you screen tenants and place the tenants for you and most property managers have you know specific rules that they've already predetermined like hey this is our minimum credit score this is our minimum income this is who we like to rent to this is you know the type of tenant that we don't want to rent to and so they've already made all those decisions for you.

But, if you're choosing to self-manage your properties I want to just share some do's and don'ts and just share a little bit with you about what I do in my tenant screening and selection process.

Now, first of all, you have to be aware of the course of fair housing if you're not a licensed real estate professional and you're a private property owner and you only own one or two rental properties I don't advocate this in any way but you don't have to follow the same rules that I do as a licensed real estate agent with fair housing but you should you really should and I'm really only interested in working with people who are interested in opening fair housing as well so if you don't like following fair housing then maybe you should unsubscribe from our videos keep that in mind with properties you're definitely not allowed to choose tenants based on race, religion, sex, family status and you know a couple of other protected classes there just you know to treat everyone fairly and the same but you are of course allowed to screen for things like how's your income, what's your job history, what's your rental history,

I personally on the rentals that aren't professionally managed I like to use Zillow's rental manager you can post listings on Zillow for either $10 a week. If you think you might need it on the market for longer than a week then you can post it for $20 for like three months. So I usually go with the twenty-dollar option just in case it doesn't rent out in only one week through the Zillow rental manager they are able to run a background check for me, run a credit check and the tenant's even able to upload their paycheck stubs and everything through Zillow's rental application process and some of the things that I look for on rentals is I definitely want their income to be at least three times whatever the rent is.  So, if the rent is a thousand dollars a month they need to make at least three thousand dollars a month otherwise I'm really not interested in renting to them in most cases another thing that I look for is their job history.

I'm not a huge fan of renting to someone who has changed jobs a lot or who has changed jobs really recently unless their recent job change was after being at their previous job for a long time you know it's a red flag to me when I'm renting to someone and they've changed their job three or four times in the past two years um that's definitely a red flag you know a couple of the things that I look for is regarding their rental history I definitely do not want any evictions or you know hopefully a pretty clean criminal background check.

Now as far as the credit score there are you know a lot of property managers and you know they will have specific minimum credit scores I'm less picky about the credit score if someone has a bad credit score what's the story behind the credit score like in a lot of times I receive a lot of applications from younger people who have extremely limited credit their credit score is bad because they had one bad credit card or a couple of medical collections or whatever it was that they had on there and then after that, they just decided credit was bad and never tried to establish good credit and so that to me is not I don't mind I don't want to make my decision solely based on a lower credit score I want to see what their credit report says to figure out why their credit score is low um but what I tell a lot of people is you know.

I wouldn't be super excited about renting to someone with a 720 credit score why well I'm sure they're going to make their payments on time and that's the nice part but the downside is I'm worried that that person is probably only going to stay for a year they're just getting to know the area and then they plan on buying a house I don't like renting people who are likely only going to stay for a year you don't always know but ideally if I can rent to someone who I think is going to stay in the house for four or five years that is what I would much rather have rather than turning over the tenant and dealing with vacancy all the time so so that is much more important to me than the credit score so those are a couple of things that I look for as far as screening tenants and choosing who I want to rent the properties to I hope you found this information helpful.

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