5 Ways on How to Have a Standout Rental Application
The US rental market is becoming increasingly more competitive. According to Roofstock, the demand for rental housing has risen by as much as 21% nationally, leading to more and more properties are receiving multiple tenant applications. So what do you need to do to have a standout rental application?
This means that, as a tenant looking for your next rental home, you might have your eyes on the perfect rental property…but so do 10 other prospective tenants.
So, how do you stand out from the crowd? How do you convince the landlord that you’re the one they should pick?
Landlords and property managers often have a thorough screening process. This is because, as a tenant, you’re a critical component in their business—how well you can fulfill rent payments and take care of the property determines their revenue! The more responsible you are, the more assured they are of a consistent cash flow —and the more you will have a standout rental application.
So, how can you impress them with your “rental resume”, and what are the key points they’ll look at in your rental application?
5 ways to have a standout rental application
Although many factors go into the decision, landlords will prioritize certain factors over others. Knowing what these are will improve your chances of successfully renting your dream property.
1. Fully Complete their Application & Submit all Requested Documents
Nothing is more important than fully completing your rental application and submitting all the necessary documents quickly. Without doing this, the landlord or property manager often won’t even consider you, and will move straight on to the next applicant in line – the one who did follow the process correctly.
Get all documents submitted as quickly as possible, and where possible, provide more information, rather than cutting corners. You may lose time by not submitting something or submitting the wrong thing and having to go back and forth with the landlord to get your application completed properly. This just gives another applicant time to complete the screening process before you, and make you miss out on your ideal home.
2. Have a Relatively High Credit Score
Your credit score tells the landlord if you’re a good fit for their rental property or not. If you have outstanding bills, credit card debt, charge-offs, chronic late payments, bankruptcies, eviction history, or judgments against you, this will weaken your application, especially if other applicants have spotless financial histories.
Basically, your credit score will determine the quality of property you’re able to get. Here’s a rough idea of the types of credit scores most landlords and property managers will look for when renting different classes of properties:
– Class A Properties – 680 & above
– Class B Properties – 620 & above
– Class C Properties – 580 & above
– Class D Properties – scores aren’t really used
If your score is significantly lower than this, though, what can you do?
Solution: Aside from paying your bills on time, you should also check your score from the three main credit bureaus (Experian, TransUnion, and Equifax) before applying for a rental. Go through it thoroughly and look for anything that might be lowering your score. Should you find a mistake, contact the creditor and the credit bureaus to resolve the error. If your score isn’t low due to errors, but to something like an outstanding collection for a small amount – get it settled! Then work on building your credit back up again.
You can also go to AnnualCreditReport.com and get a free report from each bureau once a year, but you won’t get the score itself without paying for it.
3. Make Sure your Income Qualifies for the Rental Amount
Most landlords look for applicants whose income is at least 3x the monthly rental amount – so if yours is lower than this, you probably won’t be considered as strong of an applicant as someone with a higher income.
However, some landlords also want to know that you’re able to prioritize paying rent over other obligations, like large debts. Because of this, some will screen your debt-to-income (DTI) ratio, as well. More and more property management companies and landlords are using this method to assess applicants, especially in light of the coronavirus pandemic.
Landlords may calculate your gross income, add up the total debt obligation you currently have, and look at the ratio between the two. Most will accept a DTI ratio of 40% (meaning your monthly debt payments account for 40% of your monthly income), while some will be more lenient by allowing 45-50% ratios, depending on the area.
Solution: Don’t apply for rental properties whose rents are higher than ⅓ of your monthly salary!
Also, one way to make sure your DTI ratio is close to or under 40% is to take all your debts into account before committing to a certain amount of rent. Credit cards, car payments, and child support are just some examples of debt you should include in your calculations.
4. Have a Stable Income Stream
On top of the DTI ratio, landlords will generally check your employment stability, in order to verify your ability to pay rent for the long haul (not just the next few months).
Landlords want stability – so, if you’ve only been working for 2 months after an extended amount of time sitting home or collecting unemployment, they may not rent to you. Provide at least a 2 year work history, even if it’s for different companies. Explain any job gaps of more than a month with solid reasons, not vague ones.
This proves that you’ve had consistent employment, which leads to stability of income, so you can pay your rent – not just one month, but every month!
Solution: The landlord just needs to be assured that you’re not overpromising or hiding any gaps in your employment history, and that you’ll be able to keep up with rent.
5. Submit Current & Previous Landlord References
If you have a good credit score and great depth of trade lines, landlords might skip this step altogether. However, if you have any potential red flags on your application, they may check your rental history over with a fine-toothed comb, including asking your past landlords about their experience with you.
They’ll have you sign a Rental History Release Agreement, which asks about your previous tenancy lengths and total rent amount paid. They’ll also ask for the addresses and contact details of your previous rentals. If there are any gaps between tenancies, they’ll ask you to explain why. Lastly, they’ll call up your previous landlords to ask if you’re responsible with maintaining the property and paying rent.
Solution: Landlords primarily want to be able to verify that you’ve paid your rent on time, particularly at your current and previous rentals. So, make sure you have the contact information for your landlords (and that it’s up to date – so call your landlord to check the number you have for them works, and inform them to be expecting a call from your new property manager), before you provide their details on your application.
TIP: Be a good tenant consistently in all of your rentals, so you never have to worry about previous landlords giving negative feedback. Never have somebody else pretend to be a landlord reference—landlords can immediately tell once they ask rental-specific questions that only another landlord would know the answers to. PLUS, they can also verify the actual owner of the property and contact them directly, so you could easily get caught out.
Summary
Much like any applicant screening, your potential landlord just needs to know that you’ll be a responsible tenant—one who’ll take care of their property and make complete rent payments, on time, every month.
In many competitive rental markets (like Metro Detroit), a good rental application and providing all documentation quickly can make the difference between getting your dream house or finding out that someone else DID. Which could lead to you settling for a neighborhood you don’t even like.
Any more things we can add to this list? Leave us a comment below!
Image Courtesy of Wendy Wei