Bad tenants can cost your rental business a lot of money. Best case scenario, you’ll have easy access to positive monthly cash flow. Worst case, you’ll end up paying for expenses from your own pocket. This is why it’s important to have an effective screening process in place, to help find potential red flag tenants and decline their application before it’s too late. Here are a few things to look for to make sure you end up with the best tenants possible.
Low Credit Score
Always do a credit check on prospective tenants. It’s a simple process that can protect you from chronically non-paying or late-paying tenants. Be wary of people with a score of 620 or less. This can be indicative of many things such as struggles with budgeting, keeping a job, or taking on too much debt. Whatever their reasons, a good rule of thumb is to avoid these tenants.
Suspicious Behavior During Interview
It can be hard to spot every red flag in an application, which is why it’s important to meet potential tenants in person. If schedules or locations don’t allow this, phone interviews are the next best thing. Does the person seem nervous or avoid answering a question? Do they repeatedly reschedule or appear late to the interview? Is their story consistent with what they told you on their application? These are all red flags that suggest they may become a problem tenant.
Asking Inappropriate Questions
Pay attention to the questions they ask during the showing and interview. These questions will indicate what’s most important to them and what they prioritize in a property. Are they asking if their neighbors are ones to complain about noise? Do they mention their friend might stay the night a few times a month? If so, these could be signs of upcoming conflicts if you accept their application.
Eager to Move-In
A quick move can be a big red flag. It can signal a lost job, unexpected move, or an eviction from their current property. Unless the prospective tenant can prove they have a reasonable explanation for their rush (e.g. they’re starting school soon, their house burnt down, etc.), consider this a red flag.
Unwillingness to Offer Information
People that have nothing to hide don’t try to hide anything, plain and simple. Incomplete or ambiguous answers on applications or during interviews usually indicate there’s something in their history worth hiding. Many people are reluctant to share their social security number, which is understandable. However, it’s a necessary part of running a credit check. For this reason, if someone refuses to give you this information, you should consider it a red flag.
Attempting to Delay Deposit or First Rent
If a prospective tenant shows any hesitancy about making their initial payment, this can be an indication of a bad financial situation. Promising they’ll give it to you after they move in or asking you to “hold their spot” until they can get you the money is a pretty good sign you’ll never actually see that money.