Protecting landlords from bad tenants
Q. If you own an income property, how to protect yourself from renting to bad tenants?
A. There are never any guarantees when you’re a landlord, but there are steps you can take to protect yourself.
Start by spreading the word about your rental to your network of friends, family and colleagues. A referral will probably give you a reputable candidate, said Jim McCarthy, a certified financial planner with Directional Wealth Management in Rockaway.
Then, check out the prospective tenant.
He recommends you use a detailed rental application form that collects information about employment (past five years), previous landlords’ contact info (past five years), personal references (at least three) and authorization to run credit, eviction and criminal background checks.
You can run credit, eviction and criminal background checks using a reputable company. He suggests looking at National Tenant Network (NTN).
Then, McCarthy said, take the time to call prior landlords, employers and references.
You can also use a real estate broker to help you find your next tenant.
“In New Jersey, tenants often pay for the brokers’ commission,” McCarthy said. “While it may be more expensive for the tenant, the process of widely advertising the rental property in the Multiple Listing Service may bring in more qualified applicants.”
While there is never any guarantee, doing your homework thoroughly should help reduce the level of risk, McCarthy said.
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Karin Price Mueller writes the Bamboozled column for The Star-Ledger and she’s the founder of NJMoneyHelp.com. Click here to sign up for the NJMoneyHelp.com weekly e-newsletter. Like NJMoneyHelp.com on Facebook and follow it on Twitter.