How to Avoid Risky Rental Situations

How to Avoid Risky Rental Situations

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When your property is vacant, you may be inclined to accept the first tenant that applies. While vacancies can be a financial burden for any landlord, there’s nothing riskier than accepting an irresponsible tenant.

From cash flow issues to property damage, approving the wrong applicant can result in enormous losses that could take a landlord year to recover.

However, the ability to identify potentially problematic tenants can significantly lower the chances of a risky rental situation.

Beyond a criminal background check, here are five key warning signs to be aware of during the tenant screening process.

 

  1. Poor credit score

 

 

Credit score is a good indicator of a tenant’s ability to pay their bills in a timely manner, so performing a credit check is a key part of the screening process for landlords.

An acceptable credit score doesn’t necessarily guarantee a perfect tenant, but it will give you a better understanding of the applicant’s suitability for your property and how they manage their finances.

 

  1. No verifiable income

Even if an applicant’s credit score is satisfactory, it’s important to verify whether the applicant has a steady stream of income and makes more than enough to pay rent. As a general guideline, your tenant should have a monthly gross income which is at least three to four times the monthly rent.

Additionally, be sure to request copies of recent pay stubs, contact the applicant’s employer, and conduct your own online research to confirm all the information provided on the application is legitimate.

 

  1. Incomplete rental application

 

As a landlord, it’s difficult to make an informed decision about a potential tenant based on an application unless it has been completed accurately.

If an applicant has failed to disclose certain details, there’s a good chance they’re trying to hide certain information about their past work experience or rental history. On the other hand, an incomplete application could also signify apathy or the inability to follow simple directions – neither qualities of which you want in a tenant.

Whatever the reason, they’re likely not the candidate for you.

 

  1. History of evictions

While very few people will have a spotless history, one red flag you can’t ignore is a past eviction. Regardless of the circumstances, a history of previous evictions is an indication that your applicant is less likely to follow lease terms and make payments on time.

 

  1. Bad landlord references

Previous rental experience isn’t always enough to prove an applicant will be a good tenant. A landlord reference can reveal important details about an applicant, including their behaviour, cleanliness, and ability to pay on time. If you learn of any problematic tenant behaviour while speaking to a previous landlord, you should continue your search for a more qualified candidate.

 

In conclusion

You may be tempted to cut corners throughout the tenant screening process – after all, you’re losing money every day your rental is vacant – but this will only lead to problems in the long run.

If you don’t have the time or resources to thoroughly screen tenants, a trusted property management company can help with the process. These companies can effectively vet prospective tenants, so you can rest assured knowing each applicant has been carefully screened before approval.

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