Renting your property to tenants can be a great way to make a living or earn extra money on the side, but without proper diligence, it can also be a source of tension, stress, and financial burden.
The biggest way to prevent headaches and stress when dealing managing tenants is to screen them properly before they sign the lease and take control of your rental space.
In this blog, we’ll touch on the main steps of the tenant-screening process.
These steps, plus a background check, can weed out potentially problematic tenants before they sign a lease for your property.
What is a personal reference?
Personal references, usually asked for on rental applications, are people handpicked by the tenant for landlords to contact.
In an ideal world, these people will vouch for a tenant’s good character telling a landlord what a great person and renter a prospective tenant is.
Personal references usually fit in these categories:
• Family members and close friends (this is the dominant category)
• Former roommates and cohabitants of the prospective tenant
• Work associates (either co-workers or supervisors)
These people can give invaluable insight into a tenant’s behavior and help you figure out whether a tenant will be a positive member of your rental community.
Why check up on them?
So why would you call people who are the trusted confidants of a prospective tenant?
Aren’t they just going to brag on the tenant and give you a positively biased account?
Honestly, the answer to that is probably going to be yes, but without doing the due diligence and asking questions, you might squander a huge opportunity to screen out a potential problem tenant.
A tenant’s personal references are supposed to compliment the tenant’s character, work ethic and respect for their surroundings and others; therefore, positive answers from these references really don’t mean much in comparison to the checks you’ve already made.
One of these handpicked references might say something intentionally or unwittingly that casts doubt on a tenant’s character or viability.
Negative references from a trusted source of a prospective tenant, intentional or said in the throes of conversation, can be a bombshell that could disqualify a tenant from consideration.
Think about it. If the tenant’s mother tells you about times when she or her husband paid the tenant’s bills, wouldn’t that make you think twice about that tenant’s ability to pay his or her rent on time?
If the tenant’s friend mentions the tenant’s penchant for playing loud music and partying, wouldn’t that make you question the tenant’s ability to be a respectful member of your rental community?
If the tenant’s roommate mentions a pet that the tenant “conveniently” left off the rental application, would this cast doubt on the tenant’s honesty and integrity?
Those are things you wouldn’t discover without diligently checking personal references.
Tone of questions
Personal references aren’t going to give you dirt on a tenant unsolicited; therefore, you have to know how to ask the pertinent questions.
Before asking questions, be sure to review The Fair Housing Act and use it as a reference to avoid questions that could get you in civil or legal trouble.
Be sure to ask questions that require more than just a yes or no answer.
Questions such as “How many times was [name of tenant] late on bill payments?” are harder for a reference to avoid than “Was [name of tenant] ever late on a payment?”
Checking up on personal references might seem superfluous, but it’s absolutely necessary in the tenant-screening process.
While you’ll receive glowing reviews most of the time, that occasional negative review of a tenant from a personal reference could save you from disaster.