Some investments seem like abstract market plays, where you can buy shares in a company whose product you only vaguely understand and watch your profits go up or down. Investments like real estate affect people directly where they live.

Buying an investment property is a wonderful decision — nobody can build new land, and in certain markets, property is all but assured to increase in value. However, there is a human variable in the equation that needs to be considered. 

The tenants who live in your investment property need to be carefully vetted, and this takes work and experience to do properly. Get professional assistance to make managing your investment property and screening tenants simple and do them more effectively.

Here are a few ways that property management companies help you screen tenants.

1. Employment Letter

Employment letters give landlords important information. First off, they verify that the tenant actually works where they claim they work. This verification is important because you need to know that they do, in fact, have a source of income.

It also supplies the landlord with income verification. If the one-bedroom unit you’re renting costs $2,000 a month, how much should you expect a prospective tenant to make each year?

Economists usually suggest that a person spends no more than about a quarter of their income on rent. Knowing how much income your tenants make allows you to roughly calculate how much they’re devoting to paying you each month.

If the rent you’re charging exceeds more than 25-30% of their income, you may feel more comfortable renting to a candidate who can pay you without stretching themselves so thin. 

It’s essential to confirm that the prospective tenant is an employee in good standing with ample income to make their payments before taking them on. This begins with knowing they have a job.

2. Credit Check

Sometimes, people have a good amount of money coming in, but they have considerable debts requiring payment. Landlords will feel assuaged after confirming that the tenant they take on has no outstanding debts and has a track record of making all their payments in full.

Somebody with a good credit history makes a more reliable tenant. Landlords need to invest some degree of faith before renting to a stranger, but knowing their credit history eliminates a lot of concern. 

3. Reference Check

There’s more to know about tenants than just their economic health. Someone will be living on your property, so it’s reasonable to want to know what kind of person they are.

Sometimes prospective tenants put down the names of friends or relatives in their reference check — the best investment property managers always get past this level of feedback, which is sure to be positive, by getting in touch with past landlords.

Even if it takes a while to get past landlords on the phone, it’s important to speak to them directly. Some prospective tenants have reliable jobs and have always paid their rent, and their application form may not otherwise suggest that they hold loud late-night parties.

Former landlords will have a full and more objective perspective and can fill you in on vital details and personal information about the tenant you’re considering. Former landlords know if a tenant has paid every month’s rent before, and they also know what the person is actually like.

Of all the references a landlord receives, the one from past landlords is most important.  

4. Rental Application

Finally, industry-leading investment property management companies handle rental applications for their customers. These are forms filled out by prospective tenants, which indicate their rental history, the reason for moving, and important contact information.

Experienced landlords who have been through this process may know what to look for in a candidate. Still, finding a suitable candidate involves sifting through many documents, which can be time-consuming and tiring.

The real estate specialists at professional investment property management companies know how to identify ideal tenants by their rental applications because they have been doing so for years. They know what to ask and what to look for, and they can find you great tenants even when the market makes that difficult.

Investments such as real estate are not quite like other investments — they directly involve a human element that needs to be factored into a commercial equation. Once you secure yourself a responsible and respectful tenant, you’ll enjoy sitting backing, knowing you’re providing them with a comfortable and safe living situation. 

On the flip side, even if the money comes in steadily each month, you don’t want to worry that your tenant may damage your investment property or that they’re liable to miss a payment. Eliminate this concern today by hiring an investment property management company to do this hard work, so you can feel assured that your property is in good hands.