tenant screening?

Question

I just show the property to a couple that "seemed" to be a good match but I'm leery because I had to evict the last tenants and they tore the place apart--I've  spent alot of money and time getting the house ready--I'm not going to rush and I'm learned to really screen the tenants.

The couple had called a couple of weeks ago to get the information and didn't seem interested. They called 2 days ago and said they noticed that I still had the sign in the yard and saw the house yesterday. Older couple, no children no pets, no smoking.  They wanted to know if I would take less for the rent if they signed a longer lease (2 years vs 1 year). It's only $50 per month less (and I had increased the rent knowing that it's easier to come down than to go up $925 vs $875).

He is self-employed as an auto machanic. Says he makes $4,500 per month gross, she makes $1,200 take home. Told me that the place they are currently renting is only $500 per month so they didn't want to increase their rent to much.  I told them I needed to time think it over and I'm going to let them know tomorrow (Wednesday). Would you even consider them--if all the background and screening check's out?  They want to move in on Dec 1st.

1. How to verify income for self-employed?

2. Don't want to tie myself into lower rent for 2 year (18 months would work because lease would be in spring--easier to rent).

3. If they make $5,500 per month, why are they asking for lower rent?

4. The house shows great and I've done some updating while property was empty, Great neighborhood--mostly quiet, older couples.

5. Not the best time of year for renting--that said, I'm getting still calls about the house and I haven't started actively advertising. Just a sign in the yard.

7. The last tenants also looked good on paper.  Made the neighborhood a living hell and ruined me financially. (I did not run the criminal check on them--lesson learned).

--Any advice would be appreciated.

Account Closed · Answer

My hair is standing up on the back of my neck.  Something doesn't sound right. Makes that much money, but only wants to rent a place for $500 a month.  Wants a 2 year lease.  Looks at your place before, see's it's still available and so stops by again.  (Must not have qualified somewhere else)

Run a credit check on them. Ask to see a copy of their Income Tax Return since they are self employed.

If they don't cooperate, too bad so sad.  Say good-bye

Nancy Neville

Angie W. · Answer

@Susan Pompea  Sounds like everything worked out for the best for you.

In my experience people like this are just looking for someone who they believe they can manipulate. They target individual landlords hoping they will be more flexible and not do much checking, because there is something in their situation that makes it hard for them to rent from other entities.

I've found that if there are more questions on how to qualify an individual, than there are answers to the simple requirements I have, that it is just best just to move on. Never let fear of vacancy cloud your better judgement. Sometimes that is really hard to do.

Good luck to you!

Susan Pompea · Answer

Thanks for all your help and advice. This morning the couple left a message telling me that  they were going to look for a smaller house that was more in line with their budget (my house is 3 bedrooms, 1 bathroom--about 1,000 square feet--not very big)  I think I may have dodged the bullet.

George Paiva · Answer

Susan, just hang in there.  Its a bad time of year for rents with the holidays and the winter months.  I have 2 vacancies, one is under repair and the other is going through an eviction. I will keep them vacant till February before even advertising on Craigslist.  In the meantime I will do some updates/improvements and put the word out within my network.

1. How to verify income for self-employed?

1040 tax return, plus 2 months of bank statements.

2. Don't want to tie myself into lower rent for 2 year (18 months would work because lease would be in spring--easier to rent).

Keep your 12 month or do a 6 month but keep the rent you are asking.

3. If they make $5,500 per month, why are they asking for lower rent?

They don't make $5,500 a month maybe in a good month. 1040 will give you a better picture. Anyways its not what you make but what you spend. (The Millionnaire Next Door)

4. The house shows great and I've done some updating while property was empty, Great neighborhood--mostly quiet, older couples.

Again keep at it as a good tenant will come around eventually.  Are you advertising it in Craigslist & Postlets?  Are there any schools, hospitals, govt buildings around where you can post on the bulletin?

5. Not the best time of year for renting--that said, I'm getting still calls about the house and I haven't started actively advertising. Just a sign in the yard.

Yes, do as above, Craigslist & Postlets as well as bulletins...

7. The last tenants also looked good on paper. Made the neighborhood a living hell and ruined me financially. (I did not run the criminal check on them--lesson learned).

No worries everyone makes some mistake. I sure have and why going forward I use a number of checklists and try to be diligent.  My terms generally scare a lot of the tenants away as well "1 year lease. 1st months rent plus a months security, credit and background check as well as income verification will be required."

Colleen F. · Answer

We make assumptions about tenants and they make assumptions about landlords. Oh its still for rent they must be ready to negotiate they are having problems getting tenants...   If  you are ok getting less do it but only if it suits your needs like the 18 month lease and they check out. If you for sure don't want to lower tell them not at this time and advertise. As for the couple not wanting to spend much on rent some people are just conservative on spending.

I am  trying to fill a place now too and because it is 4 bedrooms the tenant pool is small (middle of the school year) so my property manager brings 1 guy over and says he wants it but he wants $100.00 off the rent .... hello you Mr PM showed it 1 time. ..  and you want me to cut the rent..  Pass

Angie W. · Answer

@Susan Pompea  I can totally understand that you are gun shy after evicting someone who has wrecked your place. I went through this myself in July and my house is still vacant - took me 6 weeks to get the house back in order, and then we decided to take care of some other improvements that we didn't do before the last tenant. I have been trying different things over the last 6 weeks to get the vacancy filled but so far no dice.

1. you could ask for tax returns to verify the self employment income - also does he own his own shop, does he work out of his current homes garage? This would be important info to know

2. If you don't want to rent it for less - don't do it. Some people just want to see if they can save some money. If they really want it they will pay what you are asking.

3. Some people are just cheap - and some people just lie about their income. Won't know until you do the check.

4.If this is true then you shouldn't have any problem finding tenants at your asking rate.

5.If you haven't even started advertising and are getting great response, why lower the rent right now? Sounds like you have a nice house in a nice neighborhood that will rent well.

And to your last point...even the most thorough screening will not root out 100% of problem people but it sure helps. As you have learned always run all the checks, i.e. criminal, credit, rental references, employment/income, social media, etc.

Don't be afraid to deny someone when something doesn't look right. I have denied every applicant so far. I would rather have the property set empty for a little while longer than put a problem tenant in there that will cost me a lot more in the long run.

For this particular couple, my answer to the lower rent would be "I'm sorry but the rent is firm @ $$ and the longest lease I will do at this time is x months. If you would like to be considered these are the things I need from you" I also agree that someone that wants to move in 11 days could be trouble - or maybe they just are last minute people. Who knows what makes some people tick?

Ward Dey · Answer

Good input from both Nancy and Alex. Could be trouble waiting to happen and could be perfect tenants. I've also had prospective tenants that seemed perfect in the interview, but as soon as I did the background check and called their current/previous landlords they were not the kind of tenants I wanted in my home.

I always do a background check on every occupant 18+. I get a nominal application fee (usually $25 per person 18+) and do the check. I've used National Tenant Network and been very pleased. It only takes 10-15 minutes and is a great investment of your time. This website also has a link to the TransUnion SmartMove tenant screening.

https://biggerpockets.mysmartmove.com/

You can verify income by requiring either recent pay stubs (1-2 months) or their previous years tax return.

I would consider giving them a discount for a 2 year lease. I'd probably come in at $25/mo. less than my asking price.

Alex Anderson · Answer

you could ask for proof of income (not sure if this is legal or not) by validating two months worth of bank statements for his business, or personal. but maybe they're just conservative with their money (read The Millionaire Next Door). I would call their current land lord as reference as to why they're moving. Maybe they're looking for stability with a 2 year lease?