Accessory dwelling units can bring a lot of benefits to homeowners, for example, improve the quality of life, increase the number of square feet, or allow you to realize many long-standing dreams. However, undoubtedly the best advantage is the possibility of obtaining additional income from renting out ADU.
At this stage, landlords are so inspired by this idea that they forget about the importance of selecting future residents. However, if you do not pay enough attention to the screening process, then after signing the lease agreement, you may face many unpleasant consequences, from property damage to refusing to pay money for rent.
In this review, we will talk about which screening criteria will help landlords select qualified tenants, with which sources you can evaluate the reliability of applicants, and what ethical frameworks exist in this survey.
When you want to rent out an ADU, this is a very good idea because it can bring you an impressive passive income, as well as quickly compensate for all construction costs. However, to enjoy all these benefits, it is necessary to take a very responsible approach to the selection of tenants.
Many homeowners neglect this, and now we will tell you why this is a mistake and what is the main importance of tenant screening:
If a cold is the most common disease, and a puncture of a wheel is the most frequent breakdown of a car, then problems with paying for housing are the main topic of disputes when renting out property. It is very crucial to make sure that tenants can pay rent and you can receive monthly income without disputes and courts.
Very often, when the lease term ends and homeowners take the property back, they cannot recognize it because tenants make a mess, break furniture, and leave dirt and ruin. To avoid this most unpleasant scenario and prevent housing insecurity, it is necessary to determine the quality of tenants in advance.
Almost every third or even second tenant wants to remove ADU for a very short period, even up to 1-3 days; however, are you interested in this option? An endless change of tenants will lead to a deterioration in the condition of your ADU, and no passive income will be enough to make repairs every six months. In this regard, to maintain ADU quality for as long as possible, use tenant screening, as this will increase the chances of renewing long-term relationships.
Imagine that you rent out your ADU to the first tenant you come across; what will it lead to? To the fact that every call will add gray hair to you and take away your nerves because you will worry that you will get bad news about a breakdown in a residential building or a household accident. Careful selection of tenants provides landlords peace of mind because they can be sure of the responsibility of those to whom they rent their property.
Overall, after reading these four reasons, all homeowners will understand how important it is to resort to tenant screening because it is better to spend a few days on selection than pay for fines or new furniture. And now, we turn to the specific criteria for selecting the ideal tenant.
If you start visiting sites dedicated to rental properties, you will realize that there are a huge number of criteria that contribute to the search for qualified tenants; however, on almost all sites, you will not find information about which aspects you need to pay attention to in the first place. We decided to provide landlord support in this issue, and therefore, now we will tell you about the essential points. These points will permit you to keep every square foot of your accessory dwelling units safe and greatly simplify the application process with future tenants.
If the landlord decides to rent out the ADU, then the screening process of potential tenants is best to start with the study of a person's biography, that is, to conduct a background check. You can object and say that this is impossible without direct contact. However, modern databases, primarily state-owned, allow landlords to find out enough biographical factors to refuse tenants to rent their ADU. Firstly, you can make a criminal record request and find out about all crimes that a person has committed or has not committed, as well as specific laws that he has violated.
Secondly, quite legally, you can specify the Social Security Number because, unfortunately, there are people who live under someone else's or non-existent numbers. Finally, one of the ways in which you can evaluate a person's solvency is a credit history. If an applicant has a poor credit score, an outstanding loan, or a rich relationship with collection agencies, then such an individual can be classified into a category of unreliable applicants.
Continuing the topic of solvency, it is important to devote a separate part of our review to such screening criteria as the working status of the applicant. Why is this important? The answer is simple: if a person does not have a stable income in a legal job, then the probability of non-payment of monthly rent for living in your property increases.
There are several ways how homeowners can verify this aspect:
All in all, one of the main characteristics of a qualified tenant is transparency in matters of job availability; such a person will not disassemble and will provide you with all the necessary documents related to occupancy and income. Thus, the tenant will have more chances to rent a home, and you will be sure that he can pay every month.
Background checks, occupancy status, and criminal record verification are all very important steps in the screening process. However, we dare say that the most informative document is the rental history report.
All eligible homeowners undergo the process of receiving receive this report because it contains the following data:
The property owner can dispose of this information as he likes, can just get acquainted, can use it as a lever of pressure in negotiations with potential applicants. He can go to the previous address to talk with the landlord and take into account some details about the person and his behavior. In any case, the study of the rental history report is the most important screening criterion, which gives a lot of benefits.
This is not the most popular step in choosing a tenant. However, it is extremely informative and useful. Firstly, during the interview, you, as a conscientious homeowner, can present all existing property information up to each square footage to demonstrate openness. Secondly, you can discuss some points about which it is impossible to find information, e.g., who will pay utility bills or how the payment will be made. Finally, if tenants agree to come for an interview, then this is an excellent indicator of transparency and honesty of their intentions.
We have already mentioned the main aspects that will help you determine a highly-qualified tenant. However, there are a few more points:
Overall, the analysis of these factors very often helps homeowners to make the right decision and not regret choosing a tenant in the future.
There are situations when applicants face various types of discrimination when looking for housing. Unfortunately, some landlords divide people on certain grounds contrary to the Fair Housing Act, which was adopted more than 50 years ago. According to the existing wording, all tenants are protected by law from discrimination based on race, skin color, gender, religion, disability, marital status, and national origin. Moreover, the specific points of this law vary from city to city, so be sure to consult with your lawyer.
Eligible homeowners always draw up a lease agreement according to the letter of the law, and this principle does not bypass the issue of discrimination. However, the best advice we can give landlords is to treat each applicant equally, study his or her background, negotiate honestly, and discard all prejudices.
Very often, homeowners do not have time to spend a lot of time checking each rental criteria because almost all of them are working people with a lot of household and family chores. In this situation, property management companies come to the rescue, which helps to find qualified tenants and provide landlord support on all issues of interest. What are the main advantages of cooperation with such companies? Firstly, if your existing accessory housing unit is idle without residents, then company representatives will find them as soon as possible.
Secondly, they will help you with all the formal paperwork; for example, they will make applications for receiving application reports, prepare rental listings, and also prepare a draft of an ADU lease agreement. Thirdly, the company's specialists can arrange a meeting between the landlord and the applicant and mediate in negotiations. Finally, they will work out each screening criteria in detail so that the potential tenant meets all your requirements.
Many landlords choose to cooperate with property management firms, and this greatly simplifies the task of finding the perfect tenant, which means that additional income will be received very soon.
It is undeniable that homeowners receive benefits from rental property. In this regard, it should be mentioned once again that not only the tenant but also the landlord must be at the highest level, especially in terms of the law. The rental of an accessory housing unit is recommended to be issued by all laws so that you fall into the category of eligible landlords and into the group of those selected homeowners who pay fines for violations.
There are several steps that each landlord needs to take before renting out accessory dwelling units. First, conduct a background check and study the criminal history of an applicant. Secondly, all homeowners are advised to check the solvency of the applicant to understand that he has enough money. Finally, you can conduct an interview, as well as check the rental history of your applicant.
In the case of interaction with such companies, homeowners receive benefits in terms of a faster and better search for an applicant for renting an accessory housing unit. Specialists from the property management firm will post information about your ADU, verify all the basic information, and determine the prospects for interaction with a specific applicant. They can also arrange an interview with a potential tenant for landlords.
When making a lease agreement, you need to analyze several legal aspects that are relevant in your city. For example, square footage limits depending on the floor plan, accepted norms in terms of the maximum rental period, the possibility of making a pet deposit if there is a pet policy in your city, and so on. Not all homeowners can understand all the legal nuances, so it's best to consult with a lawyer.