Avoiding Tenant Troubles
Having reliable tenants is the key to a successful rental business. Screening your tenants properly is one of the best ways to ensure they will be responsible and timely with their payments as well as respectful of your property. But there are certain red flags landlords should always look out for when screening potential applicants—ones that can give you indications of how reliable they might be down the road. Knowing these common red flags can help save you time and energy by quickly deciding who not to let in before it’s too late.
Red Flag #1: NO Credit/ Bad Credit/ Missed Payments
A potential tenant's credit history is a significant indicator of their financial responsibility. If an applicant has no credit, bad credit, or a history of missed payments, consider this a major red flag. Such patterns could be indicative of their inability to manage their finances, which may translate to missed or late rent payments in the future. When screening tenants, always request a credit report to gain a clearer understanding of their financial behavior.
Red Flag #2: Frequent Moves or Inconsistent Rental History
An inconsistent rental history or frequent moving can be another warning sign when screening potential tenants. If an applicant has a pattern of changing residences every few months, it could indicate instability. This could be due to various reasons, like breaking lease agreements, evictions, or conflicts with previous landlords. Keep an eye out for gaps in rental history as well. These gaps may be due to evictions or other unfavorable scenarios. Always make sure to verify the information provided by contacting previous landlords or property managers to gather more insight about the tenant's reliability and behavior.
Red Flag #3: Employer Number Does Not Match the Number Listed Online
When screening potential tenants, as a landlord, it is essential to verify the employment information provided by the applicant. If the contact number for their employer does not match the number listed online or in public directories, this could be a significant red flag. It could indicate that the applicant has provided false information about their employment or income. In such cases, it would be prudent to undertake further investigation or verification to ensure the tenant's ability to make regular rent payments without issue.
Red Flag #4: Employer email is a Gmail account
Red Flag #4: Employer Email Is A "Free"mail Account
While verifying the employment details of potential tenants, it's important to pay attention to the email address provided for the employer. If the employer's email is a generic free email address, such as a Gmail account, this could be cause for concern. Most established businesses will have their own domain for email, which can lend credibility to the tenant's employment claim. A Gmail or other free email service provider could suggest that the tenant has fabricated their employment status or income level. While it's not definitive proof of deceit, it does warrant further investigation into the tenant's employment situation to ensure they have a stable income capable of consistently covering rent.
Red Flag #5: Previous Landlord Reference Is Not the Owner on Public Record
One crucial piece of information to validate during tenant screening is the reference from the previous landlord. If the person listed as a previous landlord does not match the owner on the public record for that property, it is a notable red flag. This discrepancy could suggest that the tenant is trying to give a false positive reference. Always cross-check the reference provided with public records to ensure the legitimacy of the previous landlord. Doing so will help you get an accurate account of the tenant's past rental behavior.
Red Flag #6: Atypical Paystubs with Missing Information or Bad Math
Paystubs are a valuable resource to verify a potential tenant's income and employment status. However, if the paystubs provided have missing information, bad math, or appear atypical in any way, consider it a red flag. For example, if the deductions do not add up correctly, or important information such as the employer's name, EIN or pay period is missing, it could suggest the paystubs have been altered or completely fabricated. Always take the time to carefully review each paystub and confirm mathematical accuracy to ensure income information is valid and reliable.
Red Flag #7: Tenant Is Reluctant to Undergo a Background Check
Background checks are a standard part of the tenant screening process, providing crucial information on a potential tenant's past behavior including criminal history, if any. If an applicant shows hesitation or outright refuses to consent to a background check, consider this a major red flag. Such reluctance could suggest they have something to hide. A tenant's willingness to undergo a background check demonstrates transparency and responsibility – traits highly desirable in a reliable tenant.
Red Flag #8:
Red Flag #8: The Tenant Seems Evasive or Unwilling to Provide Necessary Information
During the screening process, a potential tenant should be open to providing all necessary information that will help verify their reliability. If the tenant seems to be evasive or consistently fails to provide certain vital details such as previous addresses, social security numbers, relevant financial details, or references, consider this a significant red flag. This lack of transparency may indicate they have something to hide or are not serious about the renting process. Landlords should always prioritize open communication with their potential tenants, and any unwillingness from the tenant's side can be a sign of potential issues in the future.
Red Flag #9: The Tenant Pressures for a Quick Move-In
A potential tenant who is pressuring for an unusually quick move-in might be a cause for concern. While there can be legitimate reasons for needing to move quickly, such as a job relocation, it could also indicate potential issues. For instance, they may be facing eviction from their current residence or trying to skip out on their current lease without proper notice. It's essential to maintain the standard screening process timeline and not to allow pressure from the applicant to rush the thorough vetting process, which includes background checks, reference checks, and income verification. It's better to have a vacant unit for a little longer than to end up with a problematic tenant.
Red Flag #10: The Tenant Offers A Large Amount Of Money Upfront
While it may initially seem like a positive sign, a potential tenant offering a large amount of money upfront can in fact be a red flag. It might be tempting to skip the regular screening process when a prospective tenant proposes to pay several months' rent in advance, or offers a higher amount than asked for. However, this could indicate a potential issue. For instance, they may be expecting difficulty in making regular payments in the future or they could be trying to distract you from doing a thorough background check. It's essential to adhere to the standard screening process irrespective of the sum offered upfront, ensuring the tenant's long-term reliability. Remember, a tenant's ability to pay rent consistently over time is far more important than their ability to pay a large amount at one time.
Conclusion:
In conclusion, tenant screening is a critical process that requires due diligence and keen observation. Landlords must look out for various red flags, such as non-standard email addresses for employers, discrepancies in previous landlord references, and abnormalities in paystubs. Other alarming signs can be a tenant's reluctance to undergo a background check, their unwillingness to provide necessary information, or their eagerness for a quick move-in. An offer of a large sum of money upfront should also be treated with caution. These red flags don't necessarily mean the tenant is bad, but they warrant further investigation to ensure you're renting to a dependable tenant. It's always better to take time vetting potential renters than dealing with the repercussions of a problematic tenancy.