Last week, we went over 5 main components of a tenant rental cycle. Today, we will go into a little more depth regarding the first component, tenant qualification. We will also include some more links to our resources about this component of the rental cycle.
Tenant qualification begins with the first inbound phone call from a prospective renter. Although this is usually a quick call, much can be assessed during the call and asking the right questions in the right way can save you time and spare you grief.
On the first call from a prospective tenant, you are mainly attempting to quickly survey these three important factors:
1. Rental History
2. Income and Job Security
3. Credit History
It is best to ask the prospect in a series of questions. How you ask each question is as important as what you are asking.
For rental history, you could ask “How is your rental history? “. However if you phrase it like this, you will probably get a lot of general responses like “ok” or “good”.
We have found it much more effective to ask the rental history question in a way like this: “When we call your previous landlords, will we find a record of any late payments in the last 3 years”? Asking the question like this makes the person be specific with you and it also shows the prospective tenants that we will be checking on them (in case they have any thoughts BS’ing us).
Once you get an answer for this question you can then evaluate the response. For a good explanation of what you should be considering, you can refer to this video http://bit.ly/1wwgboj.
The same questioning approach applies to the Income and Job Security question. You may be tempted to say something like “Do you have a job and do you make 2 ½ times the rent price“? You will find that if you ask the question this way you will get a bunch of “yep” or “uh-huh” responses.
The best way to phrase the Income and Job Security question is something like the following: “Can you tell me how long each person on the lease has been with the same employer and can you ballpark the combined gross amount that we will see on the W2’s of all of the tenants that will be on the lease?”
It may take a few seconds for the prospect to do the math, but this will help you get the most accurate information you can and also show the tenants that you will be checking on this as well. We go over what is acceptable regarding income at http://bit.ly/1oRMGxx.
If you have proceeded as suggested above and at this point in the conversation the person starts to object your line or the detail of our questioning, they probably are hiding something and would be wasting your time if we took things further.
If we get to the next step, the credit question is asked in a similar manner. If you ask a general question like “How’s your credit” you will get a lot of “good” or “ok” responses.
It is better to phrase the credit question like “When we run your credit report, will we see that you are paying on time on a car or credit card and that there are no late payments or outstanding debts?” You will find that phrasing the question like this will engage the prospect and they will be more likely to giving you the truth and the details of their situation.
The credit report is the most complex and subjective piece of the tenant qualifying triple, but we give you an analysis trick here http://bit.ly/1vJEGiP.
You will find that if you handle the tenant qualifying stage correctly and start on that first phone call in, you will get the best information you need to analyze the prospective tenant’s worth. If you follow our advice, you will save yourself a great deal of time and stave off potential problems by ensuring that you are showing and renting your property to the right people.