Investing in a rental property is one of the sought after investment options for most high net worth individuals.
However, getting a good tenant is not so straight forward. You can avoid costly evictions and non-payment headaches if you are able to get the right tenant. So I have listed some of the things you should look for in a tenant before you let out your property.
1. Good Credit
First and foremost, you want to choose a tenant with good credit. Having a high credit score indicates they must be financially responsible, so you know they will pay their rent on time. Whilst this may be difficult in Kenya, you may want to question them on this matter and get some information. You can also check with CRB to see if they are listed.
In order to pay rent on time, a good tenant must have a steady income. You can verify income by asking for copies of their payslips. Ideally, a tenant’s monthly income is roughly three times the monthly rent. However, even if their income is three times the rent, you have to factor in any debt they have. While running a credit check, look for the debt they have accumulated. A high amount of debt indicates the tenant may have other costly bills to worry about each month, potentially making it difficult to make full, on-time rent payments to you. A potential renter that has low debt but does not have an income three times the rent may have a greater guarantee of making full, on-time rental payments in that case.
3. Criminal Background . . . the lack of . . .
Checking the criminal history is vital when looking for a good tenant. In order to check on criminal information, you need the tenant’s name and date of birth. Be sure to check the potential tenant’s ID to ensure the information they are providing is accurate. Criminal information is a public record; however, since there is no nationwide database for criminal records, it may be easier to hire a tenant screening company to search the criminal databases in your state and across the country.
Stability is a good indicator as to whether or not a tenant will be reliable in making on-time rental payments and being a long-term leaseholder. By looking at past rental and job history, you can see whether or not the tenant has a stable life and income. Moving several times or being inconsistent with employment in a short period of time may raise a red flag.
5. Good Rental History
Rental history allows you to get a glimpse on whether the individual made a good tenant in the past. Ask for information on where they are relocating from and why they are moving. You can also ask for contact information to speak to at least two of the tenant’s previous landlords. It is important to speak to at least two landlords because the most recent one may falsify information in order to get the tenant out of their current location. Ask landlords questions such as if their rent was on time, if they gave at least 30 days notice prior to relocating, and if they maintained the property.
A good tenant is an honest tenant that does not lie about making rent, their employment status, and any damages that have occurred during their time as a lessee. During the application process, test the honesty of a potential tenant by verifying the information on their application. Call their past landlords and employers and check their ID to verify information.
They above items may assist you to get the right tenant. Making sure that you have done enough to ensure that the tenant is the best is a recipe for less headaches.