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The Importance Of Qualifying Tenants For Rentals
When you own a rental property, it's necessary to vet potential tenants in order to minimize risk. After all, you are relying on these individuals to pay in a responsible and timely manner, in order for you to meet your obligations.
By: Coldwell Banker Paradise
The importance of qualifying tenants for rentals is more than just about verifying income. There are other factors which are just as important as their demonstrable ability to pay, based on what they earn. (This is why savvy real estate property investors rely on professional property management teams, in order to handle the qualifying process and more, such as routine inspections, move in and move out cycles, as well as things like maintenance, repairs, and even evictions.) So, if you're new to real estate investing, you should know the following about the importance of qualifying tenants for rentals.
• Income verification. This obviously is the most fundamental thing you'll need to do, in order to ascertain the potential tenant's ability to pay their lease on time. Generally speaking, a tenant should earn at least three times the amount of the rental rate, but some property investors require a little more or just a slight amount less.
• Rental history. Of course, if the potential tenant has any rental history, you should know what it is and how those situations worked out. If the potential tenant does not have a rental history, meaning there is a first-time renter, you must usually rely on other qualifiers.
• Credit history. Here again, looking at the potential tenant credit history will reveal their level of responsibility to paying their bills on time. Of course, the higher the credit score and the longer their credit history the better. However, if it is very little to no real credit history, it's advisable to require a larger security deposit.
If you do not take the necessary steps to qualify potential tenants correctly, you're risking quite a lot financially. If the tenant isn't qualified and does not live up to their obligations, you must cover all the carry costs, including mortgage, insurance, property taxes, maintenance, repairs, replacements, and more. Then, there's the matter of legal fees and time and effort going into collections and even eviction. That's why it's so important to qualify tenants for rentals.
For more information about renting a home or selling your home, please contact Brendan Maughan and his team at http://teamparadisepropertymanagement.com/