Why Tenant Screening Is Important
Tenant screening is the critical component of a positive rental experience for landlords. Both experienced and new landlords make mistakes with this every day.
The result is a negative experience that can often end up in court. If you own an investment property you must screen potential tenants carefully. Consider this – you are allowing a stranger to use your property. You want that property cared for appropriately as much as you want rent checks on time.
You also want to be fair to prospective tenants. While every landlord has legitimate concerns about a tenant, it’s also important to be clear about your expectations and requirements.
Renting in Bergen County
This can sound very self serving but it makes no sense whatsoever to not hire a Realtor if you’re a residential landlord. Why? Because in Bergen County tenants pay the broker fee. As a result, landlords can list a residential property for rent, have the broker do all of the work and it costs them nothing.
So I ask you, why wouldn’t you hire a real estate agent to list your property for rent? It makes no sense to me at all. But it’s your choice. You can still do it on your own. However, whether you use an agent or not, all NJ State and Federal laws and regulations still apply.
New Jersey limits rental security to no more than 1.5 month’s rent. The most a landlord can ask for a security deposit, for example, on a $1000 per month rental is $1,500. I am often asked about pet security. That’s fine as long as the total security amount does not exceed 1.5 month’s rent.
Security deposits are subject to strict NJ regulations and must be deposited in a separate bank account for this purpose by the landlord. Tenants must receive that security back (with applicable interest) within 30 days of the lease expiration assuming no damage to the property has occurred.
Your Listing For Rent
Mistakes start with your listing. This sets the tone and your expectations. What you want and don’t want should be clearly spelled out so there are no mistakes. This is in many ways your initial tenant screening. Allow me to explain:
Do you or don’t you allow smoking? Do you or don’t you allow pets? What about renter’s insurance? What about utilities? If you have a 2 family that’s a top and bottom, do you want the 2nd floor folks to have area rugs on wood floors so the tenant below has a quiet environment? What about parking? Where and how many spaces? Is on street overnight parking allowed?
Here’s an example to consider: A tenant has 4 cars. The listing specifies 2 outdoor parking spaces. The tenant moves in and is ticketed every night because the town doesn’t allow overnight street parking for the other 2 cars. Nothing was in the listing to tell a tenant that there’s no overnight street parking.
Be specific in the listing about things and you’ll avoid trouble for both you and prospective tenants. The example above would not end well for both tenant and landlord.
By the way, if your so called professional agent tells you they can’t possibly get a tenant with all of this in the listing, fire the agent and find a professional who knows what to do.
Background Screening Is a Must
Most landlords get a basic credit report and a filled out tenant application form. This is never good enough. Require a background check too because that tells you if they’ve had bankruptcies, a criminal record, are classified as a sexual predator etc. Do your due diligence.
While a completed tenant application form is nice to have, it’s just a piece of paper if no one calls to verify what’s on it. Make sure your agent does that. Your agent should report back to you that he/she has verified things like employment and previous landlord experience.
I always tell people what I know is true – nothing in life is guaranteed or perfect. However, setting your expectations and parameters clearly in your listing and doing your due diligence gives you the best opportunity to get a great tenant. Proper tenant screening involves more than you might think but it is the road to a great tenant.