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Tenant Application and Verification

You've got someone interested in renting your investment property.  Congratulations!  Now comes the "hard" part--getting the prospective tenant to complete an application and then verifying the information.  I say it's hard not because tenants don't want to give the information (they're actually used doing this) but because many landlords are uncomfortable asking strangers for their personal information.  Believe me, this step in the process is crucial.  It lets prospective tenants know that you treat this as a business and that you're not going to let them live in your property unless they qualify.  Once you've gathered this information, let your prospects know you will be verifying it.  If a tenant complains or hesitates about verification, that in itself is a big red flag.  You may want to pay close attention to people relocating from outside the area.  Ask for and verify the reason for relocating.  Four steps that should be followed are shown below.

1.  Have them fill out an application.  Questions they need to answer include:  Names; addresses covering two years along with amount of rent, landlord contact information and reason for leaving; dates of birth; social security numbers; driver's license numbers and state; telephone numbers; names of other occupants that will be living in the house; number and type of pets; employment information covering two years along with contact information for supervisors and current income; emergency contact information; type of vehicles and license numbers.

2.  Have them provide copies of paystubs for the past three months to verify employment as many employers will not give references.

3.  Call their landlord references to verify current and past rental information.  This step is very important as it can provide the best indicator of how your prospective tenants will pay their rent.

4. Check their credit.  Being an individual instead of a company, your obtaining a credit report on someone may not be possible.  But at the very least, ask the tenants how their credit is; do they have late payments; have they been bankrupt; have they had a repossession or foreclosure.  If there are red flags, get an explanation as to what happened.

Remember, there are various federal and state laws protecting the rights of tenants.  The screening and verification process must be done in a non-discriminatory basis.  This process is only to provide you with information to come to a decision regarding the tenant's ability and willingness to pay their rent on time.  It is not to be used to find an excuse to refuse to rent to someone because of a biased or discriminatory reason.  Try to remain flexible with your standards.  While you might not be ready to compromise on a bad credit history, you may, for example, want to consider minor late payments with a good rental reference.

Finally, no matter how uncomfortable you feel asking prospective tenants for their personal information, this is a vital step in the rental process that must not be ignored.  Unless you ask for and verify information about the tenants, you don't really know to whom you're giving control of your house for the next year.

Published Sunday, November 21, 2010 7:06 PM by R&B Properties, Inc.

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