Retaining the tenant you already have is probably the easiest and most cost-effective way of leasing your property. It saves you from the hassles of advertising your unit, screening prospective tenants, and the potential of losing income in between tenants.
When you already have a tenant that wants to renew their lease, it makes sense to go ahead with it, unless you have your own reservations.
That said, don’t just rush into renewing the lease for another term if you haven’t done a lease renewal screening. You want to make sure that the tenant you want to renew the lease with is of high quality.
Among other things, you want to make sure they paid rent on time, cared for their rented premises, and observed all terms of the agreement.
Renewing a lease with a great tenant will ensure peace of mind, consistent rent payments, and an overall great landlording experience.
Read below to learn everything you need to know about renewal screening checks.
How Beneficial Are Renewal Screening Checks?
Renewal screening checks are beneficial to landlords for a number of reasons.
You’re able to achieve peace of mind. By doing a screening check on a tenant, you’re able to find out if it’s worthwhile to retain them for another term or not.
You’ll learn things like: did they pay rent on time? Did they take good care of the property? Did they observe the rules under the lease? Were they respectful? Did they live in harmony with their neighbors?
It’s easy to do. Unlike the initial screening process, a screening check for a lease renewal isn’t costly or time-consuming. All you have to do is check the tenant’s history and inspect the condition of your rental property.
Renewal screening checks show that you care for your tenant’s well-being and your property.
What Do Renewal Screening Checks Include?
The following are some of the things that you should examine when conducting a renewal screening check.
The Tenant’s Credit Report
You only want to continue renting to a tenant who is creditworthy. A high credit rating usually indicates that a person has their financial matters well sorted out. They are likely to pay rent on time and care for your rental property, among other things.
A low credit rating, on the other hand, simply indicates that the tenant may not be able to pay their rent on time, doesn’t have a steady income, or isn’t financially responsible.
As a general rule of thumb, only consider retaining tenants who’ve been able to maintain a credit score of at least 620. You can use credit referencing bureaus like Experian, Equifax, or TransUnion to obtain credit reports.
The Tenant’s Income Level
Just like with credit scores, a tenant’s income level can change between leases. A tenant’s earnings can indicate their financial ability when it comes to paying rent.
You can verify a tenant’s income level in a number of ways. For instance, asking the tenant to provide their most recent pay stubs, a W2 tax form, or simply making a call to their employer.
Broadly speaking, only consider tenants making 3X the monthly rent amount. If, for example, the monthly rental price is $1,500, then only consider renewing the leases of tenants making at least $4,500 per month.
The Tenant’s Criminal History
Criminal history is another area you should pay attention to when it comes to renewal screening checks. Make sure to run a background check to see whether the tenant has been involved in any past criminal convictions.
Please note, however, that criminal records and arrest records are totally different. You must not use an arrest record as a basis to reject the tenant.
How Do You Ensure the Renewal Screenings Are Easy and Non-intrusive?
Familiarize Yourself with Fair Housing Laws
This cannot be emphasized enough. As a landlord, you need to ensure the screening process abides by the dictates of the state and federal Fair Housing Laws.
The Nevada Fair Housing Law requires landlords to treat tenants fairly and equally regardless of certain protected classes. The protected classes are: race, color, religion, nationality, sex, disability, and familial status.
You must therefore be cautious when not only screening tenants, but also during your day-to-day interactions with them. For example, you’ll want to be consistent in the way you respond to issues. Treat everyone equally and avoid responding quickly to one tenant but not the other.
Make Important Disclosures in Your Rental Lease
In addition to making the state-required disclosures, you’ll also want to disclose other important information in the lease. For instance:
The terms of renewal. Are you looking to raise the rent for the next term? If so, let the tenant know beforehand.
What the renewal screening process will entail. Let the tenant know that a renewal screening is part of the lease renewal process.
Tenants will appreciate the heads-up, which will help make the lease renewal process smooth for both parties.
Minimize Evictions with Professional Property Management
This is arguably the best way to conduct a proper renewal screening check. A good property manager will have years of experience in the industry and will know exactly what to look for during a renewal screening check.
You may also benefit from their enormous experience in ensuring consistent rent payments, prompt maintenance response, and effective marketing skills.
Not to mention, a professional property manager will help you keep evictions to a minimum and save you the legal headache and lost rental income that comes with it.
As you can see, renewal screening checks are important for landlords. Done well, they can help you avoid a much larger cost in the future. If you have any questions or need help managing your property, Evolve Nevada can help.
We are a top property management service provider in Reno and surrounding areas. Get in touch to learn more.