The following are some great landlording questions from our students:
1. Should I charge an application fee when buyers apply to rent a property?
Yes. This fee pays for your time (or your employee’s time) to verify what the applicant puts on the application. Also, you will pay to check their credit and/or to do a criminal background check and that cost should be covered by what they pay for their application fee.
2. What criteria do you normally use to select who you will rent to?
- employment history
- the amount of money they have to put down
3. Should I send out the rental contract in addition to the rental application in advance to everyone who applies so they can review it and know what they will signing before they’ve decide on the house?
No, you’ll overwhelm them with details they don’t care about yet. Wait until they’ve had a chance to see the house and fall in love with it. Don’t put potential obstacles in their way this early on.
4. I worry about someone willing to sign the rental/lease contract without reading it first.
Unless you read it with them, most people never read it anyway. Ask homeowners if they’ve ever read the documents they signed at their closing. What prospects care about is whether or not they want the house and if they can afford it.
We as landlords, however, should take the details very seriously. I have our residents prepare for a sixty minute “closing ceremony” when they plan to move into one of our properties. At that time, (hopefully they’ve left the children at home), I read over the contract with them line by line and have them initial the main items, as well as the bottom of every page.
Most tenants get antsy and just want to sign and leave. Make sure, however, to go over the details of:
- late fees
- bounced check fees
- pet fees (even if they don’t have a pet now, they may get one in the future and need to know what they will owe you for it then)
- repair responsibilities
- move out and eviction policies
Have them sign or initial all those lines to indicate the information has been explained and understood.
5. What is normally charged for pet fees?
I don’t know that there is a “normal,” but we do charge for pets. Even little Fluffy will cause damage. Many landlords charge a non-refundable pet deposit and some even charge an additional monthly pet rent per pet. Tenants love Fluffy and know she is worth it. These numbers can be negotiable as needed. I highly recommend a fee for pets as you will have additional costs for their damage when they move out.
6. What kind of background/credit check do you recommend?
There are many easy-to-use sources online depending upon what you want to check. One of the first we used was National Tenant Network. Read what these and others have to offer and decide what’s important to you. Fees do vary so check around.
7. What additional criteria do you go by in deciding who to rent to?
They must have a decent job/jobs with income that will cover the rent. They must be employed (do not count unemployment as income). We are more concerned with employment history and income than anything else. If they have a good job, make good money, and can pay their down payment with their first month’s rent, they’re almost qualified. Call their employer to verify employment and previous landlords to check behavior and payment history.
More questions? Check out my book The Essential Handbook for Landords!
What questions, tips, or suggestions can you add to this list?