Renting

How Landlords Should Investigate Tenants

If you are a landlord it is important to wisely choose your tenants. Just because someone shows interest in an apartment, it does not mean you have to extend a rental invitation. Before doing so, investigate all prospective tenants. Who you do business with can impact your property value, your profits, and your safety.

Before investigating a tenant, you need personal information from them. For that reason, a detailed rental application is advised. On that rental application, ask for all current information. This includes full name, current address, telephone number, email address, and so forth. Next, ask about a criminal record. It is also important to ask about former addresses, former landlords, and employment. Have a section where applicants can provide personal references. In addition to personal references, get contact information for current employer and former landlords.

As previously stated, you need to protect your finances and property. For that reason, contact all references provided. Take special time to contact former landlords. They will be the most honest. Make sure your new renter will pay their rent on time and will not destroy your property.

Safety is another reason to investigate all new tenants. This is not only for your safety, but for other renters and neighbors. Did you know that you could be held responsible for not informing a renter with small children that a sex offender moved in next door? You can be. It doesn’t matter if you didn’t know either. As a landlord, it is your responsibility to know these things.

In addition to contacting all personal and professional references, perform a background check. Online, it is easy to find many companies that offer these checks for an affordable fee. In most states, public records can be searched for free at local or state offices. This is an easy way to search foreclosure listings, civil lawsuits, and criminal records.

For extensive background checks, some companies will not perform the check without having an individual’s social security number. As a landlord, this puts you in a tough position. Yes, you want an extensive check on all tenants, but what if they later fall victim to identity theft? With you be blamed, because you have their social security number? If you are not willing to take the risk, have hopeful tenants perform their own background checks.

When asking hopeful tenants to perform their own background checks, don’t ask everyone. Once you have narrowed the list down to one or two people, make the request. Do this after first speaking with personal references, employment references, and former landlords. If your tenant is worried about the costs, offer reimbursement. After all, background checks can be expensive. Your main goal is to protect your own interests. Just verify the background check is legitimate by contacting the company who performed it.

In most cases, a family moves into an apartment or a group of friends. In these cases, you want to do more than just investigate the person whose name will be on the lease. You do not need to perform a background check on or investigate children, but do so for all adults in the household.

Now that you know how you can investigate future tenants, why should you? Whether you perform your own investigation or buy a professional background check, time and money will be well spent. As a landlord, you are a business owner. Consider it a wise business investment.

Can You Benefit From Renting or Buying

More and more consumers are recognizing that at least for right now they are better of financially renting than buying. This is certainly a departure from the past when most consumers realized that the best financial option would be to buy rather than rent so that their money would go toward creating equity in a home.

Due to the downturn in the economy today that is no longer the case. While rents have continued to rise in many locations, consumers are still finding they are often able to rent for less money than what they would pay for a monthly mortgage payment on a comparable property. In some cases, renters are able to save between 40% and 50% by renting instead of buying.

One of the reasons for this is that in some locations, property values rose quite steeply. Today, buyers who snatched up those homes without blinking have discovered they must now sell. The problem? They need to sell the homes at the prices at which they purchased them two years ago to recoup the balance they owe on the mortgage. Renters just are not willing to pay more money than a home is worth.

Even renters who are able to qualify for mortgages just do not feel as though they are getting enough home for their money, especially when they can often rent a comparable or even larger home for less money.

As a result of the shifting market, many experts are quick to point out that today the market is no longer a seller’s market and it is not really a buyer’s market either. Instead, it has become more of a renter’s market.

Other renters are holding off on the idea of buying because they are concerned that prices have not yet hit the lowest point. They are primarily concerned that if they purchase a home today it may not be worth the same amount just six months from now. They feel it is far more prudent to wait and see exactly where the housing market will land before they consider buying a home. Other renters are concerned about the upcoming hurricane season. Few have forgotten the hurricane season of just two years ago that devastated many areas. Homeowners in those areas, especially those without insurance, have yet to recover.

While some areas are experiencing a deficit in supply of rental properties, in other areas homeowners have recognized the wisdom of holding off on selling their homes. They, too, are reluctant to sell their homes now when it seems more prudent to wait and see when the market will stabilize. To help make ends meet, many of these homeowners are willing to rent out their homes to the scores of renters lining up to take advantage of the opportunity. Even homes that are on the market for sale are also available for rent. While renters must accept the reality that the home in which they are living must be available for showings, they still feel the trade-off is quite worth it.

Would-be investors who attempted to get in on the quick profit potential of flipping homes have also discovered that it makes more sense to rent out their properties right now instead of trying to selling them. In some cases, investors are discovering they simply do not have any other options when they must meet mortgage payments every month and are unable to sell their properties. In some cases, this means renting the properties at a loss, creating a negative cash flow.

In fact, this situation has become so much of a problem that landlords in certain niche markets are finding they must cut rents in order to create even a small amount of cash flow. These investors have quickly discovered that it is far better to rent right away at a loss than wait several months to try and attain the amount of rent they really need. Although landlords are often upside down on most of these properties, renting them out has proven to be the safest method; at least for now.