How well your rental business does depends on many factors, including the tenants you rent to. Good tenants will take care of their rental units and pay on time. Bad tenants, on the other hand, can cause problems like property damage and failure to pay rent. There are a couple of warning signs and red flags you can watch out for to avoid renting to bad applicants.
7 Renter Screening Warning Signs
Poor Credit History
One of the first things property managers and landlords check during tenant screening is an applicant's credit score since it reflects their capability to make rent payments monthly. A low credit score can indicate financial instability and might be the only red flag you need to reject them. Not doing so can make your rental income suffer in the long run.
Incomplete or Inaccurate Application
Another obvious renter warning sign is missing or inaccurate information on applications. This appears as inconsistencies or less obvious renter warning signs like falsifications. In some cases, this can be a sign of criminal pasts, which is why you shouldn't skip formal tenant screening so you can discover warning signs in potential tenants.
Unverified Employment or Income
It's fairly easy to verify a potential tenant's employment. By calling current and previous employers, you might find red flags like long gaps in employment or a history of job hopping. This will not be evident in the traditional renter credit check, and payment issues could start once they start renting your unit. It's better to ensure that they can pay monthly than suffer due to lost rent.
No Rental History
While this is not a major red flag with applicants, their history with other rental properties helps you contact previous landlords to ask them about prior evictions and other hidden renter screening warning signs you might miss. It is one of the most important factors in tenant screening since it ultimately boils down to how a tenant behaves once they stay in your rental property.
Asking You to Skip Criminal Background Checks
Something you should never skip is the big three: Criminal, credit, and eviction reports. It's important to understand your renter's criminal history of relevant crimes, credit score, and reasons for eviction, as it protects other tenants in your rental property and your business in general. There's a reason why property managers often include this in the tenant screening process, and you should too.
Suspicious Behavior
Sometimes, a flawless tenant screening process does not mean the applicant will be a perfect tenant. You can find more warning signs beyond a traditional renter screening method. For instance, it might be worth looking into other tenant warning signs if they are in a hurry to move in, or are secretive about basic information like the renter's criminal background.
Unprofessional or Rude Communication
Even if potential tenants are perfect on paper, some warning signs simply go beyond a traditional screening process. Landlords know that credit checks, rental histories, and other common factors are not enough. You can easily tell if an applicant will become a bad tenant by the way they communicate with you, as well as how they react to the screening process.
What Do Landlords Usually Miss?
Applicants Who Seem Like Perfect Tenants
Consistent income and a glowing financial track record do not immediately mean that a tenant will pay on time. The generic credit score measures their financial stability, not how responsible they are specifically with paying rent which is why it's important to uncover previous evictions by calling other landlords.
Job History
Not looking closely at their current employment is a mistake since they help discover hidden warning signs like applicants frequently job hopping, long gaps between jobs, and more. These record searches are essential since they determine whether they can consistently pay on time or if they would end their lease early.
Falsified Records
Information such as criminal records and eviction history can easily be faked, so you should watch out for previous issues by ensuring the applicant's actual record matches available data. These might show potentially destructive tenant warning signs that can disrupt your business and your other tenants' peace. Call previous landlords and cross-check information through online criminal records if they're available.
Fake References
Without verifying references, you might miss an applicant providing you with fake references for past landlords to secure a rental. If you're unsure how to properly verify information, you can use a professional referencing service or hire a property manager who could.
What Are Tenant Screening Criteria I Should Use
Credit Check: This shows their payment history, credit utilization, and overall credit score, which determines whether they would make late payments or not.
Employment Verification: The results will confirm their employment status, job stability, and income level. It might become a problem if their income level does not match your rent price.
Debt-to-Income Ratio: This calculates the percentage of the potential tenant's gross monthly income and how much is used to pay debts. A high debt-to-income ratio may put them under a financial strain, preventing them from paying on time.
Eviction History: This shows how often they have been evicted from previous rental properties, or even what the reason is for the most recent eviction. If they were kicked out for criminal or unethical reasons, you're better off renting to someone else.
Criminal History Check: A criminal background check will ensure your safety as well as that of your tenants. A potentially disruptive or violent tenant can mean more trouble down the road and can cause legal issues you'll have to deal with.
Previous Landlord Calls: Calling past landlords allows you to look beyond obvious factors in tenant screening, especially since prospective tenants may not be who they appear on paper.
Should I Just Hire a Property Management Company?
You might fare better by hiring a professional property manager to handle tenant screening. Companies like Green Tree Property Management conduct thorough renter screening processes. We require records that prove how an applicant can be a good tenant, and we always verify that information.
Tenant screening isn’t all that we do, however! Feel free to explore our services in depth to learn more about all that we can accomplish for your rental property.
