If you’re planning on buying an investment property in Southern California, you may be asking yourself “what makes a great tenant?”. This is a great question to ask because the quality of the tenants that you rent to will ultimately affect your cash flow and long-term success as an owner.
In this article, we will provide you with several tips on what makes a great tenant so you will know what to look once you’ve purchased a rental property and are in the process of screening potential tenants for that property.
#1 – Financial Qualifications
Since owning rental properties is a business, the first thing you should look for when determining if someone will be a great tenant or not is their ability to pay the rent on time and consistently.
To determine if an applicant will have the ability to pay their rent on time each month, they should earn an income that’s 2 ½ to 3 times the rent amount.
For example: Let’s say that you are renting your property for $2,000 per month, to qualify financially for your property a potential tenant must earn between $4,500 and $6,000 per month in gross income.
#2 – Credit Score
After reviewing their financial qualifications, the next criteria that you should use to determine if someone would be a good fit for you as a tenant or not is their credit score.
Although the actual credit score is important, you should also be looking at the other details of an applicant’s credit report including their delinquencies, on-time payments, and the amount of debt that they have.
#3 – Past Rental History
Yes, a potential tenants’ financial qualifications and credit score are important but another key thing to review when determining if someone would be a great tenant or not is their past rental history.
You should be specifically looking at if they’ve been renting for the past 12-18 months, verify if they paid their rent on time, and confirm that their former landlord didn’t have any issues with them as a tenant
Contact the Fred Sed Group
To learn more tips about what makes a great tenant, view rental properties for sale in SoCal, or speak with us about our property management services via our sister company 24 Hour Property Management, contact us today by calling (800) 921-9231 or connect with us online.