Updated September 2, 2022.
By far, the most important step in running a successful rental income business is having solid, reliable renters. Finding renters like this isn’t always easy to do—especially when you operate a luxury rental property!
While working with a Columbia property management company could reduce some of this stress right away, there are a few things to keep in mind if you plan to find your renters. Before you dive in, consider the insight of our Rent Estate™ Advisors here at Renters Warehouse to dodge some early investor mistakes when it comes to the screening process.
Please note: This article is not legal counsel. When in doubt, you should always reach out to your attorney or your Columbia property partners at Renters Warehouse!
Use a Reputable Screening Service to Help You
If you plan to screen potential renters on your own, it is essential to choose a Fair Credit Reporting Act (FCRA) compliant tenant screening service. These professionals can handle much of the background work to ensure you know everything you can know about your prospective renter (within the legal limits, of course).
This service type can provide insight into a few key data points that all property owners need to have to evaluate an applicant.
- Credit checks: Knowing if your applicant can make payments on time determines whether they are a high or low-risk candidate for your Columbia rental properties. Credit checks are a commonly-used component in property management because past behavior is often a clear indication of future actions. Look at any credit factors important to you, such as their score, amount of debt, and current income.
- Background checks: Learning about a person’s background is important for most property owners. Your goal is not to pry, but to understand if they have a criminal background that could put other renters at risk. It can play a role in your liability as the property owner, as well.
- Previous rental history: As noted, past actions are often indicative of future actions. Having an idea of their previous rental history can give you an idea of what to expect. You want to know if they stuck to their agreements or owe another property owner a significant amount of money.
Housing discrimination is illegal. The federal Fair Housing Act protects many classifications of individuals from forms of bias in housing. That means you cannot use information related to these factors when deciding who to rent to or how much to charge them:
- National origin
- Familial status
This law outlines some very specific rules. For example, you cannot advertise using or make statements that apply any type of preference in a person’s religion, age, sex, or other protected class—even making claims that the community is 'family-friendly' may be seen as problematic!
- You cannot deny an available rental unit to someone based on 'gut feelings' outside of your established criteria.
- You cannot set restrictive standards on certain applicants over other equally-qualified Maryland applicants.
- It is also not legal to:
- Require larger deposits
- Set different terms for renters
- Provide alternating privileges, or
- Terminate a residency for these factors.
From your rental listings to the contracts you sign, these details matter. If you fail to uphold the guidelines of the Fair Housing Act, you could face legal action that can damage your financial future! Rather than put this future at risk, you'd be better off leaving the screening process in the hands of a capable Columbia property management company.
Hire a Property Partner to Manage It All!
Think about how important renter relationships are. Then, consider all of the rules you have to follow to find your property's ideal renter. This makes it clear: hiring a professional can sometimes be the perfect way to go! The right company can do all of the hard work for you. That includes:
- Finding your 'bullseye price' to set the best rent rate possible to secure high-quality renters
- Creating discrimination-free property listings that appeal to all interested applicants
- Managing the marketing of your listing, including showcasing your property's features
- Meeting with and properly screening applicants as they express interest in your rental property
- Providing access to all applicable research, including background checks, credit checks, and rental history
- Helping you make decisions best suited for your needs without any discriminatory or inaccurate data
- Ensuring your lease is airtight and signed properly to protect you as the property owner.
You can find your own renters and manage them as you elect to do so. However, working with a skilled Columbia property management company like Renters Warehouse can:
- Reduce a lot of risk to you as the property owner
- Speed up the tenant screening process, and
- Resolve the stress you feel in this process.
Becoming an investor in real estate—especially where collecting rent's concerned—means carefully considering each investment and then planning the most affordable (and stable) way to generate a profit.
Every situation is different, but even with a single property to rent and a new renter to find, it is critical to follow the lay of the law to the letter! One way to begin doing so successfully is by utilizing our free resources. You can download your copy of our free Tenant Screening Checklist to get started on finding your next best renter!