Make sure you ask the best questions you are legally entitled to ask so that you can determine if this prospective tenant is qualified to sign your lease agreement.
There are some basic things you need to collect on your rental application, such as: full legal name, current address and social security number of your applicant-but, you should also collect his or her current earnings statement (pay check stub) AND bank account information. Income verification and the length of time the applicant has been at their current job, can give you a better sense of the applicant's financial strengths.
TIP: A good rule of thumb is to make sure they are currently grossing THREE times the amount of your rent on their monthly paychecks.
However, if the applicant has changed employment often or has suspicious gaps in their job history, you may want to pause. A regular pattern of changing places of employment may mean less stability with financial situations, and a pattern of moving locations in general might raise a red flag for you. However, don't jump to conclusions. This is where the applicant's banking information can prove fruitful. Banking information can give you a basic overall idea of the applicant's big picture financial stability. The more assets, the the better you should feel about his or her ability to come up with rent should that person lose their job.
Something else to consider:
What other financial obligations does the applicant have? Do they owe credit card companies, auto companies, banks for student loans?
If they do, you must consider this in your decision. Remember all of these bills have to be paid out of their income to, so how much room does it leave them to pay you?
You want to gather information on the following:
- Credit cards: How much do they owe each card each month? Are they behind on payments?
- Other loans and loan balances: how much do they owe and to whom?
- Do they have any other debts?
Your intention here is to establish a pattern of payments and to see if there is enough left over to pay your rent with a little left over.
But where do I find this credit information?
You MUST do a credit check for each and every applicant. Period. No questions asked.
Just bear in mind that your applicant can have excellent credit and barely be making enough to pay your rent.
In order to screen your applicant in the best way possible, make sure you ask the following questions:
- Have you ever declared bankruptcy?
- Have you ever had a home and gone through foreclosure?
- Have you ever been evicted?
If anyone says yes to either of the first two questions, let them know they still may be able to rent from you, but that you may need to collect more information from them. You will let them know.
If their past history shows financial instability and mountains of debt at various junctures in their life, you will want to check out their current job and do a thorough income verification procedure on them. The past doesn't always equal the future, but you need to make pure positive that they have turned their money situation around completely.
Now, you know the ways to better protect yourself when screening an applicant's rental application.
Stirling_Gardner
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