According to census data, almost 200,000 tenant evictions took place in 2009. This is an increase of 127 percent from the previous census survey. Meanwhile, the number of tenants paying more rent than they could afford (defined as 30 percent or more of their income) rose to a record 50 percent by 2010, according to a study from Harvard’s Joint Center for Housing Studies.

A recent New York Times post, Evictions Soar in Hot Market, indicates that in many parts of the country, this trend has continued in the years since.  Between 2010 and 2013, tenant evictions increase by 21% in Maine, 11% in Massachusetts, 8% in Kentucky and 9% in Georgia, this at a time when foreclosures have decreased by some  50%.

Balancing Act

If you invest in a rental property, you want a reasonable return on your investment, and that means keeping your rental units filled. However, you also want tenants who will be respectful of your property and your landlord rights. A comprehensive tenant screening process for your tenants helps you achieve both goals.

Fortunately, there are tools to facilitate effective tenant screening and property management, as well as best-practice strategies and protocols to ensure you collect rent on time and minimize evictions.

Here are five steps recommended by the Landlord Protection Agency to effectively approach tenant screening.

  1. Maximize your prospects: The more prospects you have, the more likely you are to find qualified tenants. You need a smart advertising strategy to get your listings on multiple websites in order to cast a wide net and find a suitable tenant.
  2. Ask the right questions and be observant: When you meet with prospects, get basic contact information and ask how many people will be occupying the unit, why they’re moving from their current address, contact information for their current landlords, when they want to move in, how long they intend to stay, and what their credit history is like. You also need to be observant. Red flags include prospects who appear sloppy as well as those who seem disrespectful of either you or your property.
  3. Require a formal application: Have every prospect complete a comprehensive application. At minimum, the application should ask for the prospect’s history of employment and credit, as well as any bankruptcies, his/her Social Security number, any previous evictions, and several references. Take the time to verify these answers and run a thorough credit check. Red flags include applications which are not returned in a timely manner as well as any inconsistencies you discover in reviewing the prospect’s answers.
  4. Use a robust approval process: Just because an application is complete doesn't  necessarily mean that it's ready for approval. Schedule a meeting for the time when the lease will be signed. At that meeting, require your prospect to pay all upfront costs, generally the first and last month’s rent and a security deposit of one month's rent. If your prospect pays by check, don’t sign the lease until the check clears.
  5. Create a solid lease: Courts will probably not recognize verbal agreements. Ensure that your lease includes all of the elements that form the basis of your contractual agreement, such as the amount of rent and the security deposit, rent payment deadlines, conditions for maintaining the property, subleasing conditions, and actions that can lead to eviction. Take the time to review the lease with your prospective tenant before signing.

Finding responsible tenants is imperative to gaining a return on your rental property investment. Evictions are both time consuming and costly. You can avoid the issues that lead to evictions by thoroughly screening tenants. By employing a few best-practices when screening, you can fill your rental properties tenants who will pay rent on time, as well as respect your rights and your property.

 

POSTED December 03 2014 10:49 AM
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