Many Hawaii multifamily owners are struggling with delinquent tenants as the economy puts more stress on renters. Ensuring you have high-quality tenants is key to a successful investment and ease of management. Here are some best practices for screening and qualifying tenants.
Comprehensive Application: Start with a detailed tenant application. Collect essential information such as photo ID, employment history, rental history, income, and references. This forms the foundation of your screening process. An application fee is recommended.
Credit Check: Run a credit check to assess financial responsibility. Look for a good credit score 680+, timely bill payments, and any red flags like bankruptcy or excessive debt. This helps gauge a tenant's ability to pay rent consistently.
Employment Verification: Verify employment status and income. A good rule of thumb is that tenants should have a monthly income that's at least 3 times the rent. Contact employers directly to confirm job stability and salary.
Rental History: Check the tenant’s rental history. Contact previous landlords to ask about their experience with the tenant, including payment timeliness, property upkeep, and any issues that arose. Past behavior often predicts future behavior.
Background Check: Conduct a thorough background check. This includes looking for criminal records and any past evictions. Safety and security are paramount for all residents in your property.
Personal References: Personal references can provide additional insights into the tenant’s character. Speak to previous landlords, employers, and personal references to get a well-rounded view of the applicant.
Clear Criteria: Establish clear tenant qualification criteria. This includes minimum credit scores, income requirements, and acceptable rental history. Consistency helps in making fair and objective decisions and compliance with Fair Housing Laws.
Meet Face-to-Face: If possible, meet the tenant in person or via video call. This allows you to gauge their demeanor and ensure they are a good fit for your property. Trust your instincts along with the data.
Consistent Process: Apply the same screening process to all applicants to ensure fairness and compliance with Fair Housing Laws. Consistency is key to maintaining an equitable and legal tenant selection process.
By following these best practices, you’ll improve the quality of your tenant pool, reduce turnover, boost your income, and ensure peace of mind with a smoother management process.
Kynan Pang, CCIM
RB-23513
808-225-8776