Qualifying Your Renter

Author: Troy Schuricht
URL: http://www.communityfirstfinancial.com
October 8th, 2008

What Make A Good Renter?
Is a good renter someone with great credit, or large deposit or maybe high income? The approach landlords take in qualifying their renter could be changing because of the housing crisis and the large number of foreclosures.

The main objective of renting your home should be to have a qualified renter that will pay rent on time and take care of the home to some degree. Large deposits can maximize renter’s responsibilities to the care of your home, but what can be done to help minimize renter’s late pay or simple nonpayment and evictions.

The qualifying approach I encourage landlords to take is one similar to underwriting a loan. The question that everyone should ask themselves before renting their home. Can my renter make the payment on a consistent basis and how? This question is always answered by employment. There are a number of ways to increase the odds of finding a good renter just by looking at their employment.

Time on the job- The length time at the current employer is the first thing you should look at. If a potential renter has been employed for a number years this helps build a case that consistent income can help provide for timely rental payments.

Proof of income - Not only knowing where your renter works, but knowing exactly how much he makes is very important. It is not out of the question to ask for the last two paystubs and last year’s W2’s. While this may seem extreme, you have answered two critical questions. Does your renter really work and how much do they make.

Debt to Income Ratio - While pulling credit can give you an idea of credit score repayment history, how are you going to judge individuals that have gone through foreclosures and bankruptcies? Sometimes a bad borrower is a bad borrower and you need to decline them for your rental, but in today’s market place you will find more good renters with bad credit than ever before. My suggestion is to look at credit, income and employment and determined a debt to income ratio. This will illustrate whether they have sufficient income to cover their rent and debts.

This process is very similar to qualifying for a home mortgage. It is up to the landlord to develop their own guidelines as to what is acceptable to their market place. This is a very simple process to help increase the odds of a good renter - check employment, have proof of income, and determined debt ratio.

Five Reasons Start Investing in Real Estate Again

Just like any other financial market real estate continually cycles through its highs and lows. There can be great debate on whether the market as a whole is at its bottom, but there is a growing consensus that many markets have hit bottom and now is a great time to start investing in real estate.

Here are five fundamental reasons to start investing today.


1.Price: The sales price in almost every market has dropped substantially. When your combine the effects of short sales, foreclosures and bank owned properties with an already saturated market this makes for a real steal for those that have a good game plan and care due diligence.

2.Inventory: Inventory is at an all time high in most markets, which only contribute to the falling prices, but also helps with selection. Investors should not only look at the sale price and appraised value, but they should look very care full at the rental market in which they are selecting a home from. Some times passing on a little equity to capitalize on a strong rental market can have both short term and long term benefits, also known as cash follow.

3.Interest Rates: Current economy conditions have pushed interest rate down to historical lows. Investors that are considering long term holds will benefit the most as interest rates and inflation increase over the next few years so will the rents.

4.Seller Expectations: Most sellers including banks are now working hard than ever to move their properties. This not only translates into lower sells price, but more concessions. Sellers are now willing to pay closing cost, pay to help buy down the rate, or help pay for repairs.

5.Renters: As more and more individuals foreclose on their home the rental market will continue to increase. There are a number of individuals bought the wrong home at the wrong time for the wrong amount and that led them to be upside down on their house. Many of these home owners have and will continue simply foreclose. These new renters that have great income can and will be able to afford larger rental amounts.


Keep in mind every market has a bottom; it is up to you to do the due diligence that leads to a successful real estate transaction.