IN THIS BLOG:
- Recommended qualifications when screening possible tenants
- Research related to credit scores and eviction rates
- Important considerations for tenant rental history
One of the toughest challenges landlords face is finding quality tenants - who will pay their rent on time, care for your property, and stay for a long period of time. As landlords process applications, there are a set of qualifications that we at Grace Property Management recommend for screening potential tenants.
1. CREDIT SCORE: TransUnion recently released a report showing the relationship between an applicant's credit scores and the applicant's quality of tenancy. The report factored in data for over 15 million people reflecting credit scores and rent to income ratios to show a trend of average evictions rates for each category.
For applicants who had a credit score between 500-599, regardless of income level, eviction rates were at a 5% chance. At Grace Property Management, we believe that that number is too high and recommend not taking the risk.
Moving to the next category, for applicants with a credit score of 600-699, the chance of eviction rate drops to a 2% chance. For those with a 700 or above, the chance of being evicted sinks below 1%.
2. EVICTION CHECK: Has the tenant every been evicted? We recommend that you do not accept applications from tenants who have a history of eviction. It is also wise to consider criminal history, abiding by the guidelines set by the Department of Housing and Urban Development (HUD) to ensure you aren't discriminating against any applicants.
3. SEX OFFENDER CHECK: Do a separate search to check if they are a registered sex offender.
4. PRIOR TENANCY: Be sure to examine their length of prior tenancy for your applicants. Tenants that have a history of long-term residency are highly valuable to you.
If you are a Colorado property investor or have rental properties in the Denver area and have questions about how to process tenants or conducting effective screening, give us a call. The expert team at Grace Property Management is here to help investors with all of their property management needs. 303-255-1990.