Picking Good Tenants Requires Some Discipline.

Finding a qualified tenant for your rental property can be a challenge at times. Although I've come close, I've never had to evict anyone from my rental properties. When talking to fellow investors about tenants and eviction, it's clear that my track record does not fall within the norm. I'd like to share with you a few guidelines I use in the tenant selection process. These guidelines may help you avoid the hassles involved in evicting future tenants.

1) One-Third Rule: People will often try to live beyond their means. The rent should not be more than 1/3 of the tenant's gross income. Requiring your future tenants to earn 3x the monthly rent will help assure consistent and timely rent payments. Tenants that live beneath their means tend to be the best tenants.

2) Landlord Reference: I've never understood the value of personal references on rental applications. Why would the applicant put down a reference that would speak badly of them? Right? References should be chosen by the landlord. You should always ask the applicant to list their last landlord as one of the references whenever possible. If the applicant can't give you this information, clearly this is a RED FLAG.

3) The Subtle Oral Interview: Liars will be very inconsistent with the things they tell you. During rental property showings, I ask many questions. Often, I will ask the same question in many different ways. It's amazing how often applicants will give you different answers to the same question. Again, another RED FLAG to watch out for.

4) Distance From Employment: Renting can often be an emotional decision for tenants and lack logic. If an applicant works 45 minutes to an hour away, there's a good chance they will tire of the drive and eventually want to live closer to their employment. This may not lead to eviction, but it may force the tenant to try to get out of their lease early.

The more common methods for assessing a tenant's qualifications such as credit score and criminal background checks are obviously useful, but the fore mentioned guidelines can be easily implemented to assess the likelihood of future problems.