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A Residential Rental Application helps landlords make the decision about whether to allow a prospective tenant to lease a property. This rental application template collects data about employment and credit background. Landlords often charge a fee (between $25-$75) for performing a background check and then make a decision on whether to approve the lease. The next step is to complete a lease agreement.

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What is a Rental Application?

The best rental application will protect the landlord by helping them to figure out if a tenant is financially and socially stable.

The application will ask the prospective tenant for a lot of personal information, such as full name, address, social security number, and more. A credit check may also be included with the application to screen candidates.

Since the rental application is so important for both the landlord and the applying tenant, it is crucial that it has all the required information from the start. Look over the application carefully to ensure you ask all required questions so your application is valid. 

What are the Components of a Rental Application? 

There are a few basic elements to a successful rental application:

  • Applicant’s Personal Information
    • This information can be a little more “personal” than the usual name, address, phone number, etc. It should include driver’s license information, date of birth, social security number (for conducting background checks) and whether or not any of the prospective tenants smoke. There should also be a section inquiring about the applicant’s current employment and employment history. Very often, an income verification is required along with the application (standard practice is to include the two most recent months’ pay stubs). There should also be a section for the applicant’s current address, including questions as to whether the address is rented or owned, how long he or she has been living there, and contact information for the landlord (if applicable). This enables you to get in touch with the applicant’s current landlord and verify that he or she can pay rent on time.
  • Details of Address Being Applied For
    • If you are renting out multiple units, be sure to have applicants clarify which unit it is they are applying for and their desired date of move-in.
  • Prior Residences
    • This is fairly straightforward – include sections for previous addresses, the nature of living each living arrangement (rent vs. own) move-in and move-out dates, and contact info for each landlord.
  • Other Applicants
    • Here, the applicant should write the full legal names of any other applicants who plan to live in the apartment. Bear in mind - it is wise to make each applicant fill out a separate application, even if they are applying as a unit.
  • Pets
    • If you will allow pets in your building, require applicants to specify all pets in this section (species, number, ages, and any other information you will need).
  • Vehicles
    • This only applies if your rental includes parking. Applicants should describe the model, make and size of their vehicle, as well as its condition. Vehicle information is important because it helps you know which cars should, and should not be on the property. Additionally, this will inform you on whether your property will accommodate an applicant's car, should it be electric and require charging or require special parking due to its size.
  • Tough Questions
    • These include questions like “Have you ever been evicted?” “Have you ever been convicted of a felony?” and “Have you ever filed for bankruptcy?” Provide your applicants space to explain each answer.
  • References
    • Have each applicant provides names and phone numbers of at least two references. These may be professional references, such as a supervisor or coworker or personal references, like a relative or close friend, but they should have known the applicant for a reasonable amount of time.
  • Emergency Contact
    • This may seem like a silly question, however, the reasoning behind it is not as obvious as it may seem. Asking for an emergency contact is a way to track down tenants should they skip out on a lease. If they suddenly leave without paying rent, or cause severe damage to the unit and disappear, referring to who they listed as their emergency contact is a good start to tracking them down.
  • Signatures
    • As usual, the application must conclude with the signature of the applicant as well as the date that the application is completed.

Why Do I Need a Rental Application? 

A rental application is, in short, your number one tool for weeding out unsavory tenants. By requiring potential tenants to fill out a rental application form, you are able to get a sense of who each person is, as well as perform a full background check on each of them. This enables you to avoid sheltering serial killers, sex offenders, and juvenile or financial delinquents.

The Landlord's Guide to Rental Applications

May 1, 2018

Introduction

The following guide is for current and prospective landlords. It outlines how to become and stay a successful landlord by establishing prudent and profitable rental application processes.

If you’ve listened to talk radio, you’ve heard someone praising the income they get from being involved in the real estate industry as a landlord. Real estate, including owning rental property, is something that many get involved in for the purpose both future investment income and as a supplement to their current income. This guide is designed to help you explore the essential topics related to becoming a landlord. If you’re a new landlord, this guide will help you find resources about legal dilemmas that you may face in your new venture. First, you’ll learn about the advantages and disadvantages of becoming a landlord. Then, you’ll learn the basics about the essential issues that you should know about including security deposits, late fees, and evictions.

It is important to note that this guide does not constitute legal advice. It is meant only as an educational reference. Laws that govern what landlords can and cannot do exist in every state. Make sure that you retain an attorney who is not only experienced in landlord-tenant law, but one that focuses on helping landlords. Only a licensed attorney in your state can give you legal advice. Although it may seem like an added expense, keep in mind that it is to protect you and your business. Simply looking up information on the Internet isn’t enough. The legal world changes much faster than one would think, so it is imperative that you consult with an attorney regarding your obligations as a landlord.

Pros and Cons of Being a Landlord

Advantages of becoming a landlord

So, why would anyone become a landlord? The basic answer is simple. Rental property produces income. This income may be supplemental to one's current monthly income, or it could help provide an investment income. Rental property may even serve as income for someone when they retire.

  1. Rental income isn’t the only way that someone can make money on rental property.

Think about the process of flipping houses. Of course, there are television shows that glorify the process and make it seem quick and easy. One buys a property, remodels it, and then sells it for a profit. Buying and then selling a property outright wouldn’t bring someone any long-term income. They would have to continue to buy, remodel, and sell the homes. When someone buys a rental property, they want to keep it for a long period of time. Over time, they must keep it in good repair. In addition to keeping it in good repair, the owner may add on to the property in some way. The entire area may go through a period of resurgence. Between adding new elements to the property and a new interest in the area, the property value may increase. This is known as appreciation. Sometimes, landlords will decide to sell a property and reinvest the money into a new property if they can make a big enough profit.

  1. Real estate ownership is a form of leverage for an investment portfolio.

When a person is approved to buy a home, a traditional financier tells them how much they will approve a mortgage for. Many times, people have 10 – 25% of a purchase price to put down as a down payment. Some people don’t have to put any money down on a house although they are approved for a home loan. Even if the seller of the home agrees to finance the price of the home, it still acts as leverage. Regardless of the amount of money that is put down on a home, they get to take possession of the home while they are paying it off. Even if they only put 10% down on the purchase price, they get 100% possession of the home.

  1. Sometimes people who buy houses to use as rental properties have investors.

Those investors are the individuals who pay the initial costs of purchasing the home. The person with the investors will pay back the investors over time.

  1. There are also tax advantages of buying property to use as rental property. 

There are several tax write-offs that come from owning rental property. Of course, a landlord may not be able to take every deduction every year. If you purchase property to act as a rental, it is important that you consult with a CPA to determine which deductions you can take on your taxes. The most common deductions are:

  • Interest paid on the home loan
  • Depreciation of the rental
  • The cost of ordinary repairs made to the rental
  • Travel done for rental purposes (either actual expenses or the IRS standard mileage)
  • Long distance travel for rental purposes
  • Home office expenses
  • Wages of employees and independent contractors
  • Certain losses caused by casualty or theft
  • Insurance premiums
  • The cost of legal and professional services

Disadvantages of becoming a landlord

For you to make an educated decision about whether you should enter into the real estate industry as a landlord, you should be aware of some of the disadvantages involved. Like all businesses, being a landlord has risks. In this section, we’re going to talk about some of the most common risks you would face as a landlord.

  1. Liability is one of the biggest risks.

Although you are renting the property to another person, you are the one who remains legally responsible for the upkeep of the major components. You must keep the property habitable and up to code. Habitability varies from state to state. It is important that you know what you are required to keep in working order. In many states, if repairs aren’t made by the landlord, the tenant has the legal right to either make the repair and deduct the expense from their rent or they may withhold the rent until the repairs have been made. Make sure that you understand the codes in your state and that your property meets those standards.

  1. There are unexpected expenses that often pop up.

Even if the house you purchase passes inspection and you’re happy with it, bad things can happen. Are you prepared to replace the wiring or the plumbing? When the shower stops working or if there is a leak in the house, you are responsible for fixing those issues. You must also consider potential expenses that you’ll face to renew the property once the tenant leaves. Normal wear and tear can’t be deducted from the security deposit. Also, keep in mind the expenses that may be involved if the property has severe damage. You must be prepared to at least initially cover the repair of the damage even if you choose to pursue the tenant in court to recover that amount. That is another expense. You may have planned for the fact that you’ll have to make the occasional court appearance for an eviction. However, these legal expenses are often more expensive than what people realize. Although you may be able to represent yourself in housing court or small claims court, more complicated matters, including if a tenant chooses to sue you and you must develop a defense strategy, you may need a good attorney.

  1. Bad tenants are another disadvantage for landlords.

Even if you put in the best legal screening process possible to minimize the likelihood of renting to a bad tenant, it can still happen. Bad tenants can cause property damage. They can take advantage of housing law (and take advantage of you). They could simply not pay you. Then, you’d not have the income that you planned on, have court expenses for an eviction, and winning your eviction lawsuit is no guarantee of you receiving the money that is owed to you unless you spend more money to either send them to collections or attempt to garnish their wages (if they are working).

  1. Rental property that remains vacant is also a disadvantage.

People become a landlord to bring in an income. When your property is vacant, that means no income. If you continue to hold the property out for rent, you may be able to deduct your ordinary and necessary expenses (including depreciation) on your taxes. These expenses are associated with managing, conserving, or maintaining the property. However, landlords cannot deduct the loss in rent as an expense.

Download a PDF or Word Template

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