Challenges of being a landlord – Applications Edition
People really just don’t apply themselves to their applications.’.
When it comes to being a landlord, each part of the process of having a vacancy and renting a property can have each of its own unique challenges. This series allows us to talk about some of those major challenges and how you can overcome them, or at least, be better prepared for them! This edition is all about applications, and one of the most time consuming challenges out there!
So in a land of unicorns, rainbows, and sweet fairies who help you do your chores, ideally this is what every single application would be accompanied with:
For starters… a completed application with all fields filled out with proper, comprehendible information.
After that you’d want to see:
- Proper identification, 2 forms ideally
- Complete income information including 3 months of paystubs, W2s, 1099s, Tax returns, military benefits, savings, and retirement accounts
- Supplemental income such as social security, child support, or trust fund information, or other legitimate documentation to show where your income comes from
- Banking information – you really do need to know that your potential tenant can utilize and has a bank account to securely pay rent from
- Job offer letters if there is a transfer happening that states the promised wages
- Pet information, including up to date shot records, and photos
References, including all contact information, phone and email for character references as well as previous neighbors and landlords … and no… their mother doesn’t count.
Once you have ALL the documentation you need, the next part should go…. Fairly…. Easily
You begin the verification process of all information supplied to you.
They key verifications being the likelihood of continued employment, and verification of actual earnings
Previous landlords are also a BIG verification process. You want to make sure that you are actually speaking to a landlord, and not a friend…. And you want to get them to feel comfortable enough to give you information that is crucial in your decision. One landlord reference is never enough!
Additional verifications include:
Previous employers
Character references
Vet references if applicable
While you work on all of those things, you need to screen them for credit and criminal. As a landlord you NEED to have application approval guidelines to ensure you stay compliant with fair housing laws, as well as your state and local ordinances for tenant landlord rules.
Credit score is very important, but so is what’s on it. There is a big difference between a low score because they are new to the credit world, and someone who has a low score because they have a lot of accounts charged off. Carefully calculating if the applicant is able to easily pay rent for the term of their lease is crucial.
Be careful about letting sob stories change your screening criteria. You want to treat everyone equally and fairly. That doesn’t mean it’s not OK to give someone a chance and has really shown in recent history they have a desire to be better and be responsible with their financial obligations.
Remember those unicorns I mentioned earlier? Yea… all of that is in a perfect world!
Challenge #1 – Getting Documentation
99% of our application come in without proper and full documentation… we have a very strict policy about the timeline in which documentation must be turned in by to be considered a complete application or we will move onto the next application. Set timelines and expectations up front!
Following up on items needed for a complete application is crucial within the first 24 hours. Especially in a world today where you are likely to see more than one application come in at a time! Setting those expectations upfront will create the sense of urgency needed so they do not miss out on a property love. Being diligent in following up with those expectations is your key in making sure you don’t miss out on an excellent tenant!
Challenge # 2 – Getting people to return your phone calls.
While most of this process can be automated and electronic, there is still a human element. Verifications. You often need a real live actual person to respond to you somehow to verify the documentation that you were given. This can drastically increase your approval times for being able to review the application. This also leaves a frustrated applicant. If you are having a really hard time with getting an employer or previous landlord to call you back, don’t hesitate to ask the applicant to assist in those efforts and sharing the sense of urgency.
What to do to ensure that your application screening process goes as smoothly as possible:
- Have an application that is easy to fill out electronically and that gives the tenant the ability to attach all required document along with it.
- Set clear expectations of timelines upfront, including your end, and the applicants. (And it’s ok if you have to move onto another applicant!)
- Have very clear and written application screening criteria for approval.
- Utilize multiple ways of communication, phone, text, and email can help in getting those verifications!
Stay tuned for our next landlord challenge and tips to make it easier!
Visit our Education Center and Video Library for additional tips, tools, and resources to help you accomplish your rental property goals!
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