Did you know that real estate investors scooped up almost two in 10 — precisely 18.4% — of homes sold in the U.S. during the final three months of 2021?
It’s well-known that investing in real estate can be a profitable endeavor over time. In addition to the potential for significant property value increases, real estate investors can also rely on steady passive income in the form of monthly rent from tenants.
But that’s only if the tenants pay on time, and the unfortunate reality is that not all tenants pay on time. That’s one reason it makes sense to screen prospective tenants properly.
There are many reasons to prioritize finding quality tenants for your rental property. You’ll make your life a lot easier by hiring a property manager who understands the ins and outs of finding the type of tenants who’ll stick around for the long haul without causing any issues.
In addition to providing services like collecting rent and booking contractors for repairs and maintenance, property managers also help with vetting prospective tenants. There are laws on the books that must be abided by to avoid possible legal action. And you can be sure that property managers will comply with the law when screening applicants.
So that you understand the importance of screening potential tenants, what follows is a look at four reasons you need a property manager to spearhead the process.
1. You Want to Get Paid on Time
In July 2021, PolicyLink projected that total rent debt across the country was around $20 billion, with north of 5.8 million renters, or 14%, behind on rent payments. Of course, a contributing factor to this problem was the economic uncertainty worsened by the COVID-19 pandemic. Many people lost their jobs, making it hard for them to pay their rent. But besides this, some people simply have a bad track record when it comes to paying rent on time or at all. That’s where a property manager comes into the picture.
A property management firm will conduct reference and background checks with previous landlords, ask prospective tenants to submit letters from their employers to confirm employment status, and even ask for copies of payslips and bank statements to gauge tenants’ financial health. These steps will increase the odds of your getting good tenants.
2. You Don’t Want to Take on Someone Else’s Problem
There are movies and reality TV series programs focused on nightmare tenants. You’ll be rolling dice if you’re not properly screening prospective tenants. Is that want you want to do with your investment property? Chances are that you don’t. If you approve a tenant and later find that they’re not paying rent on time or at all, the process to have them evicted can make you feel as though the law is entirely on the site of tenants.
And remember, you’ll still be on the book for mortgage payments even if you have delinquent tenants. You can well imagine how frustrating and stressful it can be if a tenant is causing you issues. When you hire a property management firm, you’ll have help with screening. You’ll increase your odds of finding reliable tenants you can count on to pay their rent.
The last thing you’ll want to do is accept a tenant who was kicked out of a previous rental unit by a landlord who had had enough. Hire a reputable property manager that has experience screening would-be tenants so that you find suitable tenants. The peace of mind you’ll get by hiring a property manager will make the cost well worthwhile.
3. You Want to Protect Other Tenants and Others in the Neighborhood
One of the benefits of screening prospective tenants is that you can check to see if they have criminal records. While you won’t want to necessarily flag someone who committed a minor traffic violation years ago, you’ll want to flag a serious crime.
Do as much research as possible since you won’t want to rent to someone who could wind up endangering other tenants or other people in the neighborhood. You also need to ensure that you don’t rent to people who could put your real estate investment at risk. It’s a serious matter, and a property manager can help.
When screening prospective tenants, you need to comply with the law. Do you know the acceptable grounds for rejecting prospective tenants? Property managers are on top of things and will know how to proceed.
4. You Want Tenants to Stay Long Term
Yet another reason to screen prospective tenants is that you want to find people who’ll stick around for a long time. You won’t make any money from vacant rental units. So, you’ll want 100% occupancy to reap as much passive monthly rental income as possible. But if you have tenants who don’t stick around long, you’ll end up losing money. Not only will you lose out on rental income, but you’ll also have to spend money to advertise unit availability. A property manager will ensure that the people who want to rent your units are financially stable, have a reliable income, and have a good history with previous landlords. And when there are vacancies, a property manager will likely be able to find new tenants faster than you could on your own.
Consider the Difference Green Residential Can Make
Do you have one or more properties? Are you finding it challenging to own and operate your investment properties while juggling other life responsibilities? If so, one option is to hire an experienced property management firm.
At Green Residential, we have a long track record of helping property owners with all aspects of managing real estate. We can help you screen prospective clients, collect rent, advertise vacant units, and more.
Let us handle your property management responsibilities so that you can focus on other investment opportunities and spend more time with family and friends. Get in touch today to find out why we’re the best option when you need a property manager.