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Thursday, 02 June 2022 12:35

Why Tenant Screening Is Imperative for Better ROI

Protecting your investment is an incredibly important part of owning rental properties in Asheville, NC. Renting out your property to mostly unknown tenants can be a nerve-racking experience. You have put in the work and invested your hard-earned cash in a property. It should be well taken care of not only by you, but also respected by the tenants. 

While this may be an anxiety-inducing thing to take on, by adequately screening tenants, you will be able to weed out the best possible renters for your property. Dealing with bad renters could potentially crush your ROI (return on investment) due to the possible damage your property may experience. A well-screened tenant should, in theory, protect your rental, as well as increase your ROI.


Why Screen So Carefully?

1. Good Screening Leads to Timely Payments

By finding responsible tenants through thorough screening, you can ensure that your renters can pay their rent on time. Some of the minimum requirements that we recommend screening for are income and credit rating. Both of these are good indicators of whether or not someone can afford to pay the set rent, as well as if they are good at paying their bills on time. 

We always advocate calling previous landlords as part of the screening process. You might inquire about whether rent was paid on time and whether they had to deliver a notice requiring the renter to pay rent or vacate the premises. Look up previous evictions in the national database.

2. Maintenance and Reporting

Wear and tear is a fact of life when it comes to owning a rental property, but it doesn't have to break the bank. By properly screening potential tenants, you can hold on to more cash due to being able to trust that they will respect the property and report any issues. 

By tenants reporting issues in a timely manner, landlords have an opportunity to get out ahead of problems before they become disasters, thus saving you money and protecting your ROI.

By reaching out to previous landlords and getting to know your potential renter, you can gauge their level of responsibility and respect for the property. Heavy-duty repairs can cost a lot of money these days, and getting out ahead by finding a responsible tenant can save thousands.

3. Good Tenants Stick Around

Keeping turnover low is a great way to hold on to a solid ROI. Marketing a property and taking a tenant through the rental process can be expensive, and having to do it over and over again can eat away at your ROI. 

When hunting for tenants, it’s best to find people who are looking to stay in one place for a while. Finding tenants that can be consistent will make life easier, as there will be less money spent on vacant properties. 

By building a solid relationship with your tenant, you may find that they will want to stick around longer, signing an updated lease year after year. 

Rental Property Tenant Screening 

Now I bet you are thinking, “what is the most effective way to screen possible tenants?” Well, we have a few minimum requirements that are non-negotiable. They are:

  • Income - If a tenant does not have enough income to cover their rent, then you may find yourself in a pickle. Utilize a rent-to-income ratio calculator to see if your prospective tenant can afford rent.
  • References - A good way to better understand your prospective tenant is to gather references from previous landlords and employees. Are they good workers? Are they honest? Do they pay their rent on time? These are some basic questions that can lead to information on whether they will work out.
  • Credit History - By having an understanding of their credit history (typically by way of their credit score), you can learn whether or not they are responsible and prompt with payments.

Gathering this information can give you basic data to begin understanding your potential tenant. In addition to these minimum requirements, it is important to get all of this information along with other general information on a signed and dated application. By signing and dating documents, all ambiguity is removed, which gives you (the landlord) a record in case of any disputes. 

Should Landlords Conduct Screening?

While it is possible to handle tenant screening on your own, a property management company can effectively and efficiently conduct screenings that are backed up with experience and knowledge. Property managers have access to additional tools and data to ensure that you are getting the best tenants possible when renting out your property. 

Using a property manager can also eliminate any impartiality or discrimination concerns for tenants who were not chosen for your property.

Increase Your Property’s ROI by Partnering with Asheville Phoenix Properties

Asheville Phoenix Properties is a well-known real estate management firm that may help you avoid many of the pitfalls of renting out your property. We will thoroughly screen your potential tenants and select only the best for your property. We act as a mediator between you and potential renters, ensuring that both landlords get the best ROI.

We have over two decades of real estate management experience and know-how to assist owners and tenants in all aspects of a rental property. Reach out to us today.