Owning a property rental business comes with its unique challenges, and one of them is problematic tenants. When assessing applications, there are certain steps you must take to screen your tenants.
Having a thorough screening process not only helps you avoid potentially problematic tenants, but it can save you the costs of eviction and help you find the best tenants, allowing you to get the best value from your property rental business.
1. Start by Identifying Your Ideal Tenant
Identifying your ideal tenant allows you to rule out anyone else who doesn’t fit the criteria. Have you ever seen property listings that explicitly mention who they are looking for? For instance, if you are looking for a tenant to rent out the other room. You can say: “Looking for a well-mannered professional with sober habits”. This is done to let applicants know what kind of tenant you are looking for.
So, someone who has drinking habits and likes hosting parties won’t apply for a property that explicitly rules them out. It doesn’t end here. Other elements you can include in the type of tenant you’re looking for. However, you must ensure that you are not placing unfair discrimination on tenants through race, national origin, religion, gender, disability, or familial status.
2. Conduct a Background Check
Conducting a background check allows you to make sure your potential tenants are responsible individuals who have not been engaged in activities that may have tarnished their reputation or ability to contribute positively to your property.
Additionally, background checks allow you to access eviction records. That way, you can assess their rental behaviour and whether they will be a problematic tenant when rent is due.
You can contact previous landlords to find out about an applicant’s rental history. Landlords may also make use of the South African Police Service (SAPS) or use private background screening companies like HURU.
3. Credit Check
Credit checks are different from background checks. They specifically examine a tenant’s financial habits and credit history. A credit report gives insight into whether the tenant pays bills on time, how much debt they carry, and how financially responsible they are.
You’ll be able to see any judgments, defaults, or accounts that have gone into collections. In South Africa, landlords often use credit bureaus like TransUnion or Experian to get this information.
4. Verify Employment
Verifying a tenant’s employment is key to ensuring they have the financial capacity to consistently pay rent. If they are formally employed, ask for their employment letter, the last three months’ payslips, and a recent bank statement.
If you currently invest in property, this is to ensure that you will receive rent and you can pay the bond for your property. This helps confirm that their income is steady and sufficient for your rental amount.
If they are self-employed, request a six-month bank statement or invoices from regular clients to get a clearer picture. Some landlords may also ask for a higher deposit from self-employed tenants due to income fluctuations.
5. Interview Tenants
Conducting interviews with prospective tenants allows you to get a feel for the type of people they are. Ensure you ask important questions that will give insight into how responsible they are.
These questions should help pull additional information that you don’t have from their application. Avoid wasting your time by asking questions like “Are you employed?” as you would already have that information.
Based on the answers you receive, you can make a decision on whether to continue their application or not. Here’s a list of essential questions to ask potential tenants during an interview:
- Have you ever been evicted?
- Do you plan on having long-term guests?
- Are you comfortable with rules such as quiet hours?
- How would you handle noise complaints from neighbours?
Finding Reliable Tenants for Your Rental Property
Whether you’re looking for tenants for your backroom rental business, for a house you own, or for an apartment, you must screen each applicant. A bad tenant can cost you a lot of time and thousands of rands. Fortunately, you have the tips outlined above to help you properly screen tenants.
