5 Must Knows for Rental Property Owners When Choosing Applicants
Its stands to reason that rental property owners can become quite nervous and anxious when their property is vacant and ready for new residents. You can feel lost in the unknown. Will the new tenant care for the property? Will the new tenant pay their rent on time? What is the tenant’s standard of living? All these questions and more swirl around in your mind and it can lead to poor decision making and the risk of placing trust in the wrong information or more often – the wrong person.
Some owners want to get to know their tenant on a personal level, believing that the tenant will take better care of the property if a relationship is formed. The opposite is actually true! Rental property owners risk being taken advantage of due to feeling a strong sense of wanting to make the tenant happy, and can be cajoled into acting upon requests that are unnecessary – and sometimes very expensive – and become reluctant to take advantage of rental increases when due.
These five pieces of advice will ensure property owners keep a clear mind and make the right decision when identifying a new tenant.
#1 – Rental Agent & Applicant Meeting at the Property
A professional rental agent should meet prospective tenants at the property in person. This is a great opportunity for rental agents to observe tenant behavior, body language, and their expectations as a renter. This not only provides the ideal opportunity for the rental agent to understand the potential new tenant, but also explain what is expected of them should they desire to live in the property and be accepted.
If a prospective tenant cannot meet at the property, the rental agent should conduct a virtual tour of the property with the prospective applicant via video phone. This way the rental agent can also observe them via video phone and the applicant sees the property and knows what they are about to enter into. This meeting provides the first opportunity to start connecting the dots should the onsite tour progress to a formal application.
#2 – A Formal & Thorough Application
Tenancy applications must be extensive and comprehensive. Your mantra should be “there can never be too much information”. I recommend that all rental property owners ask to see a copy of the rental application before they engage the services of a rental agent. The information and data (or intel) collected is used to cross reference information provided against supporting documentation and investigative checking through calling referees, current and past employers, along with current and past landlords or rental agents.
A third party credit, criminal, data checking and matching verification should also be conducted. It’s not enough to simply receive and application. Thorough investigation and then analysis of data should always be conducted.
#3 – Trust Your Managing Agent
The rental agent must never approve an applicant without first discussing the applicant with the rental property owner. This is unless of course the rental property owner has given specific instructions to approve in their absence. If a rental agent is given the power to act on the owner’s behalf, there should always be clear guidelines and directives as to what is acceptable in terms of the applicant, monthly rental, special terms and conditions, and term of tenancy.
Once the application has been processed, the rental property owner should be given all the facts of the applicant so they can make an informed decision and then provide instruction as to whether to approve or decline the applicant. They should never be afraid to negotiate a higher rent, better term, or to say no to special conditions and additions the applicant may be requesting.
A professional rental agent should always provide information about the current market so if the property owner denies the application, they will have a good idea as to how soon they could expect another more acceptable applicant. The rental agent should provide the owner with peace of mind stating, for example, “We see no reason why this applicant should be denied, what would you like us to do?” They should never say, for example, “You should accept this applicant”. The owner must decide based on the information they have been provided by the rental agent and feel confident and comfortable with their decision.
#4 – Be Picky!
If the rental agent is also the managing agent, then the property owner can feel quite reassured the managing agent would never recklessly or intentionally place a ‘bad’ tenant in a managed property. Situations involving ‘bad’ tenants create as much grief and anxiety for the managing agent as it does for the property owner. This is why rental property owners should hire the managing agent to also source and secure the tenant.
#5 – Privacy Matters
Owners quite often ask for a copy of the renter’s application and verification checking report. These reports and application contain a high degree of very private and sensitive data about the applicant and this information should never be shared. A professional managing agency will have procedures in place to store this data under tight security for both paper and digital forms. Applicants provide this information with restrictions on who will see the information and the purpose for which this information will be used.
A professional rental agent will not share the private and sensitive data, however they will share the relevant information such as number of applicants, whether or not they have an acceptable prior rental history, how long they have worked in their current position or industry, whether or not their credit score was acceptable, and more.
Owning a rental property is like owning a business. You have a rental property to earn revenue and for the asset value to grow. By engaging the services of a licensed and professional property management agency to lease and manage a property, you get peace of mind knowing the agent will always act in your best interests.
Before engaging the services of a leasing and managing agency, ask questions about how they manage inquiry, show property, ask to see a copy of the application they use, how they process and analyze information, and how they determine whether or not to recommend an applicant. Knowledge is power!