Screening tenants properly involves more than just using intuition, instinct, and gut feeling—some of the nicest applicants could be trouble.
You probably understand the importance of getting tenants in your rental properties who’ll pay the rent on time and follow the lease terms. The best way to achieve this is by screening tenants. The wrong tenants in your rental property can cost you dearly. The right tenants should keep you in business.
Here are six warning signs that a potential tenant is likely to be problematic and what you should do about it.
1. They won’t allow a background and credit check
Some tenants are reluctant to allow you to conduct a background and/or credit check, making this a huge red flag. The reason could simply be because of the fee involved. It can get pricey for renters if they are applying to many rental properties at once. But you still need to require all tenants to undergo both a background and credit check. Why?
Because some people are hiding something. They may have a criminal record, have one or more evictions on record, are chronically late paying their bills, have declared bankruptcy, or have other traits that aren’t exactly desirable.
So telling potential tenants that you conduct background and credit checks and having them refuse is a great way to screen tenants.
The gold standard in screening tenants is to use a service that conducts a background and credit check, such as Cozy. It’s free for you, and you don’t need to be involved at all, other than giving potential tenants your application information. If you use Cozy, you give applicants a URL that takes them straight to your application. The tenant does the rest, and you are notified when the results come in.
If the tenant fails either the background or credit check according to whatever standards you have set up ahead of time, you no longer need to move forward with that applicant. It’s time to review the next applicant.
2. They’re too nice
Interviewing applicants is always wise. But you should do this in addition to other screening methods. Why? Because some people lie.
Some people are naturally nice, would make great tenants, and have nothing to hide. Such people will probably make a good impression on you. But people who are hiding something could also make a good impression. Such people are simply on their best behavior in the hopes that you’ll buy what they’re telling you without doing your due diligence (checking up on them).
Checking references is a good practice, but the references could be fake.
If you were a fan of the Seinfeld TV show, you might remember that George made up a person, Art Vandelay, who would vouch for George as a reference. There was no Art Vandelay—it was George himself or a friend pretending to be the reference.
Applicants who are hiding something have been known to use their own “Art Vandelay” to trick you when you call to check references. Make sure you crosscheck references. If a reference is supposed to be the applicant’s boss, for example, don’t just call the phone number on the application. Internet search the place of employment, and then call to see if that person really does work there.
3. Not everyone applies
If you will be renting to people in a roommate situation, get everyone to fill out an application. If they don’t want to do this, it signals a red flag. Even though you could make one person responsible for paying the entire rent, if everyone fills out an application and is on the lease, you’ll have more people to choose from if the rent isn’t being paid.
If you’re renting to young people who will have a parent be responsible for paying the rent, make sure you have the co-signer fill out an application and be on the lease as well.
4. The application isn’t complete
If the applicant leaves out information such as rental history, job history, or references, this probably signals a problem. They may be trying to cover up that they tend to get fired from jobs or leave rentals after a short period. The same goes if they decline the background or credit check, making the application incomplete.
5. They don’t make enough money
Applicants should make enough money to afford to rent your property. They need to show you proof of income, and you should call their employer to verify that they really work where they say they do. Ideally, your tenants should make three times the rent, more if they have a huge debt load.
6. They want to pay the move-in costs in installments
Most landlords charge at least first month rent plus security deposit for new tenants to pay before they move in. If an applicant asks to pay this in installments, it signals that they could have trouble paying rent. Move on to the next applicant instead of trying to bargain at this stage.
The bottom line
Getting responsible tenants in your rental properties is one of the most important things you can do to ensure success with your rental business. Don’t cut corners here, and be on the alert when you see warning signs.