What Makes An Ideal Tenant? A Landlord's Perspective
When you need to find a new tenant for your rental property, you can't just place a rental listing that echoes an old dating ad:
"Desperately Seeking
Good Tenant Who
Will Pay Rent On Time.
Open To A Long-term Relationship."
Of course, every landlord assumes that a new tenant will pay rent on time, but other important factors combine to define an ideal tenant.
Landlords and property managers identify good tenants based on eight factors.
1) Employment
At the very top of the list, as a landlord, you look for tenants with steady employment. After all, most people need a job to generate income and pay rent regularly. Unless a family member pays a tenant's rent (in which case it's necessary to verify the family member's employment status), you need proof of steady employment or documented government assistance to qualify a tenant to rent your property.
2) Income Level
A tenant's actual income level could mean the difference between paying rent on time each month or the need to work through late payments and secondary payment arrangements – not a desirable situation for either the tenant or landlord. Many property managers use a rule of thumb that says rent should not exceed 30% of a tenant's income level.
The federal Housing and Urban Development Act of 1968 established the first such rent threshold at 25% of a family's income. In1969 the Brooke Amendment raised this threshold to 30%, and it remains the rent standard for most rental housing programs today. To help keep your rental property in line with local rental rates, you can use a rent valuation tool like Rentometer. When you keep your rents at reasonable levels for your area, you can attract good tenants who can afford to commit 30% of their income to rent and find themselves facing an undue financial burden.
3) Willingness to pay
When a tenant signs your lease, they agree to lease language that states the amount of rent, and the date payment is due each month. A tenant's credit report is a good indicator of their payment habits. If the prospective tenant pays their consumer credit obligations consistently, and those payment amounts are not high enough to make paying rent a burden, you can safely assume the tenant will pay their rent.
4) Clean criminal background
If a criminal background check reveals that a prospective tenant has past criminal convictions, what is to keep them from breaking a lease? Depending on your assessment of the person and the circumstances, you may want to take the time to search for a tenant with a clean background. A lease is, first and foremost, a document of mutual respect. The landlord commits to keep the property in a safe, functional, and habitable condition, while the tenant agrees to do their part to keep it that way, pay rent and live a law-abiding lifestyle. Any background information that indicates a different pattern in the past is a huge red flag.
5) Lease Compliance
A lease is a legally binding document. It contains stipulations for:
-the condition of the unit
-who can live in the property
-the use of the property
-obligations for maintenance, repairs, and upkeep
-overall responsibilities expected of both tenants and landlords.
If a tenant has been evicted for violating a lease once, this could be a red flag that their lifestyle and behavior might lead to a need to evict again. Of course, people can change their habits and successfully follow legally binding agreements. However, if they've violated lease terms once, it's reasonable to be concerned that they might do it again. Talking with the tenant about this issue and past circumstances can help you decide if their transgression is a deal-breaker.
Casting a wider net in search of a tenant with a clean background, someone more likely to honor a lease might be worth the time and additional expense rather than incurring hefty legal fees to evict a problem tenant.
6) Willingness to communicate
A screening question you want to ask tenants when they apply is: "How did you handle repair issues or concerns about the property?" If the tenant is open and communicates proactively when there is an issue, you know they will call you with problems. This willingness to communicate is a favorable quality.
Of course, there will be some tenants who take this communication to an extreme, calling weekly about concerns outside of a landlord's control or responsibility. This, too, is a red flag. You'll want to find out about both a tenant's communication style and the type of issues that concern them before you rent to them. If they watch out for the property and take their share of its care by communicating when they see a potential problem, that is a good thing for both parties.
If a tenant is clearly high-maintenance – let's say the blinds hang a little to the left and want you to install brand new blinds – you could be setting up a nightmare situation where the tenant's expectations are not realistic, and you are always on call. Ask plenty of questions during the screening process to understand a prospective tenant's priorities and communication style.
7) Willingness to keep the property clean
When you call a tenant's references and speak with their previous landlord, you can ask about whether the tenant kept it clean to reasonable standards. When a tenant shows a healthy respect for a rental and treats it like it's their property, you have the signs of a good tenant. As a landlord, you have kept the property safe and clean for a tenant to live there. It's fair to expect the same consideration from your tenants.
If the previous landlord comes back with a good report about tenant cleanliness, you have a suitable applicant. On the other hand, if a tenant left the property with ruined carpets, dirty walls, and an array of trash for the landlord to remove, it might show a lack of respect – for both the property and the landlord – from that tenant's behalf. A report about a dirty rental unit is a red flag.
8) Honesty and Transparency
When interviewing a tenant, you can take the opportunity to verify what references told you. Trustworthy tenants are those who value honesty in all forms of communication. If they are honest about past rental situations – even those that didn't go so well – and if they work where they say they work and offered you references that answered the phone, this should prove they're honest.
Finding good tenants is one of the essential parts of a landlord or property manager's job. A bad tenant can be a drain on all resources – your time, money, patience, and even the goodwill and longevity of other tenants if you're renting a multi-unit property. A good tenant can be a breeze to work with, and the cash flow will keep coming in as long as they are happy. When you are thorough and patient and take the time to find a suitable tenant, the effort should pay off with a smooth operation and long-term tenancy that works well for everyone involved.
This article was written by the Rentometer Content Team. The Rentometer Blog features fresh takes and insights on rental housing topics, services, and technology. If you liked this article, subscribe to Rentometer's email newsletter to stay up-to-date on the latest trends in rental housing.