It’s no surprise that the economy is still trying to recover from the covid-19 lockdown. Many landlords had to endure months of rental arrears without being unable to evict defaulting tenants. At the same time, homeowners still had to keep up with their utility and mortgage bills. Thus, many landlords seek real estate strategies to save their business post-pandemic. If there’s one thing investors cannot afford right now, it’s terrible tenants.
Do you ever wonder how to identify a lousy renter? Or what the most common red flags are? This article delves into high-risk tenants and how to spot them during the screening process. We’ll also highlight the importance of a strict application process and tell you when to hire a professional.
How to Spot High-Risk Tenants
A typical screening process often involves a soft pull, which gives landlords an idea of the tenant’s credit score. If one of your applicants has a low score, it could indicate they’re not financially stable. Huge debts and late payments are some factors that contribute to a low credit score. In other words, if a prospective renter has bad credit, it could mean they’ll struggle with paying rent on time or at all.
Another tall-tell sign of a problematic tenant is if they have a history of evictions or rent filings in court. People have a way of repeating their past behaviors. Thus, if a tenant admits they’re relocating because their previous landlord evicted them, you should be wary. However, be sure to ask more questions about the circumstances, so you get the full picture of what happened in the past. If they affirm it was due to financial instability, you may also inquire about their current state. Although, remember that not everyone would own up to such a shoddy history. Thus, getting in touch with their previous landlords would be best.
Negative Criminal Record
Besides a credit report, your rental process should include a criminal background check. As we highlighted earlier, past behaviors could indicate a crucial pattern. In other words, if a potential tenant committed a crime in the past, there are chances of a repeat offense. You can protect your rental investment with the help of an experienced rental management team. These experts can help you run a thorough criminal background check and eliminate potential hazards. That’s not to say you can give people second chances. If a renter owns up to their past mistakes and they pass your other criteria, you can sign a lease with them.
Real estate experts recommend asking for references during your screening process. Some would even insist that references are the most crucial part of an application. You can learn so much about a tenant’s temperament from their previous landlords, employers, family, or friends. If potential tenants get good endorsements, they’re likely to be high-quality tenants and vice versa.
Problems Proving Income Source
Finally, poor-quality tenants might have problems proving their source of income. As a landlord, you can ask potential candidates to provide evidence of their monthly income. You may also ask for an employer reference to ensure they’re being honest. However, if a candidate has problems producing such information, it could be because they are up to something shady or lying.
Why is a Strict Applicant Screening Process Important
- Avoid Late or Non-payment Issues
One of the main reasons a strict application process is so crucial is to avoid late or non-payment issues. Money is often the root of most disputes between landlords and tenants. Thus, it would be better to identify financially unstable renters early on and avoid them.
- Maintain Your Property in Good Condition
Another reason you should prioritize a strict screening procedure is to maintain your property’s condition. If a homeowner evicted a tenant for property damage, they would likely repeat such behavior. Also, your investment could be their next crime scene if they have a track record for vandalism.
- Keep Your Other Tenants Happy
You’re not the only one that could pay for the wrong tenant placement. If your renter is problematic, it could also become a nuisance to other tenants. This problem is particular to landlords that own condos or multi-family complexes. Your other renters might be unhappy if the other one disrupts them with loud music or doesn’t abide by other building codes. But when you have responsible tenants, it reduces the chances of a fight.
When Should You Hire Professionals
- When You’re Too Busy
If you’re too busy to take on the responsibility of an intense screening process, don’t skip it. Get a professional property manager to do it for you instead. This solution is efficient for long-distance landlords that might be living far away from their properties.
- If You Want High-Quality Tenants
You can also leave the screening to the experts if you want high-quality tenants. Many reputable professional management companies even offer landlords a limited-time guarantee for renters they fill. If the arrangement doesn’t work out, they can find you someone else at no extra cost.
- When You Want to Avoid a Suit
Finally, leaving the screening process to a professional might be best if you want to avoid a lawsuit. Sometimes landlords get in trouble when a potential candidate feels the process is unfair. Such scenarios are common if you ask questions against fair housing policies. Trained experts are skilled at avoiding such situations and will ensure a consistent process fair to every candidate.
Tenants can either make or break your rental business, which is why landlords must pay attention. Knowing which red flags indicate a person is a high-risk tenant can save you a lot of stress in the long run. Since we’ve highlighted the most significant signs, you should be able to spot potential challenges during the screening process. However, if you’re too busy or want a more thorough job, you should consider hiring a professional property manager.