When it comes to discussing the most important factors that lead to success in real estate, one thing tends to be left out. That factor definitely isn’t location, as that’s the first thing you’ll hear about. It also isn’t investment property type, such as single-family homes, condos, etc. It isn’t even rental strategy either.
Give up? Here’s a hint: it begins with ‘t’ and it is the focus of this blog.
Having suitable tenants renting your rental property is key to its success. A good tenant could be the difference between rent paid on time and no rent paid at all. So, how do you select a good tenant? One way to do so is to have a strong and effective tenant application form that will help identify great tenants.
Related: 8 Types of Tenants to Be Aware of When You Rent Out Your Property
Here’s what to include when creating the perfect tenant application form:
-
Identification Information
First things first, you need to identify who the tenant really is.
Obviously, you need to know the tenants’ names. Ask for their full name, including the first, middle, and last name. Also, ask if the tenant has used any different names previously and what they are. You’ll need to know how old the tenants really are, so ask for their date of birth. How do you know a tenant is not lying when revealing this information? You ask for a government-issued ID. The first form of identification to ask for is the tenant’s social security number. You should also ask for his/her driver’s license number.
If multiple tenants are applying to rent the investment property together, be sure to ask for what relationship the tenants have with each other in the tenant application form.
-
Contact Information
In addition to identification information, you will need to ask for contact information in a tenant application form. Ask for the tenant’s mobile phone number and home phone number. In today’s world, everyone is using the internet, so you should also ask for the tenant’s email address.
-
Rental and Residential History
It’s important to know where a tenant has previously resided, especially if the tenant has resided in a rental property. To find out where a tenant has previously lived, ask for the residence’s or rental’s address. Along with the address, this should include the city, state, and ZIP code of the rental properties he/she has lived in previously.
Also, ask for how long the residency lasted for each residence. If the tenant resided in a rental property, ask for how much the monthly rent was set. Again, if the residence was a rental property, ask for the names of the owner and landlord along with their phone numbers or other basic contact information. You could also briefly ask why the tenant left the previous rental, but this question is typically included in another part of a tenant application form.
-
Employment
A tenant application form is a great way to find out if the tenant will be able to pay the monthly rent amount. One way to figure this out is to learn about the tenant’s employment status.
Related: Rentology – How Much Can I Rent My House For?
Ask for his/her current and any previous employers. Also ask what the tenant’s duty or occupation was in the job. Ask how much he/she was paid monthly. This bit of information will give you a strong indication of the tenant’s ability to pay the monthly rent.
Don’t forget to ask about the employer’s address and phone number. Be sure to ask how long the tenant worked for the employer. Also, ask for the name of the tenant’s supervisor. The supervisor may serve as a reference.
-
Credit History
Another deal breaker in the tenant application form is the credit history of the tenant. Along with employment status, this will give you an idea as to the tenant’s ability to pay his/her rent.
When asking for credit history, ask for the tenant’s savings account number, checking account number, credit card, and auto loan. You could also ask if they have any additional debt. For each of these, ask for the corresponding bank or institution and the balance on the deposit or balance owned.
Once the application is up for review, screen the tenant’s credit by performing a credit background check. Do not get scammed when searching for sources of credit reports! The three major credit bureaus – Experian, Equifax, and Transunion – offer credit check services. If you opt for any other credit report sources, make sure they are reliable and trustworthy first.
Related: The Most Common Real Estate Investment Scams
-
References and Emergency Contacts
Having references and emergency contacts is vital for any tenant application form. References, such as employers and other landlords, as previously mentioned, are good sources to learn about the prospective tenant. Do not give the word of a previous landlord too much weight, however. Sometimes landlords may strongly recommend a tenant just to get the tenant off their back, giving you a bad tenant.
Emergency contacts will be contacted when the tenant cannot be located or reached. To be able to contact these emergency contacts, you will need their phone numbers and physical addresses.
-
Detailed Information
Finally, in the last part of a tenant application form, you can ask prospective tenants certain questions as evaluation questions. A perfect example of this is to ask why the tenant has decided to move out of their previous rental. You can also ask questions that will serve as responses to any background check, credit or criminal, you will run. For instance, you can ask the tenant in advance if there is anything negative they would like to comment on related to their credit history or background check. Also ask if the tenant has been in any lawsuits in the past.
You could also ask questions to see if your marketing strategy is working well. For instance, ask the tenant how they heard about the rental property.
There are many application forms on the Internet that can give you an idea of what to ask exactly. Once the questions have ended, ask for the tenant’s signature. Also specify the rental application fee.
For more on how to create a tenant application form and anything else with real estate investments, head over to Mashvisor.