By Karen
If you are a landlord, one of your worst nightmares is a deadbeat tenant. It’s one of the risks a real estate investor takes when renting a property, and it can have a significant impact on your monthly cash flow. However, if you follow our tenant screening guidelines, you can minimize this risk substantially.
If you have a property manager that handles the active screening of potential renters, we highly encourage you to discuss with your property manager their process and criteria for screening applicants. You should also make this discussion part of your standard criteria for selecting a property manager. If their applicant screening is weak, it’s a big red flag and a sign of trouble ahead and our advice is to run, not walk, the other way!
OK, so let’s talk about the screening process. First and foremost, how is their credit? Do they have a long history of debt? A good tenant can face legitimate hard times in dire situations. This is especially true given recent economic circumstances. However, a deadbeat will have a long and continuous history of debt. If this is the case, do you really think they are going to change once they are in your property?
Do they have a criminal record? A background check is essential and well worth the small fee you will pay to a reputable company to find out if the applicant has been arrested or convicted of a crime. If yo are going to run a criminal background check on one applicant, you must run it on all applicants. You cannot decide to run it because one applicant seems suspicious.
Have they had many addresses, moving frequently? If so this is another red flag. Ask them about the frequent moves. Are their stories believable? If their reasons sound fishy, followup and investigate. It’s better to spend the time upfront and avoid a problem than to have a crisis and no cash flow later.
It is very important to talk with previous landlords. Word of caution, make sure they are not giving you the name of a relative or close friend pretending to be a former landlord, it happens! Ask the previous landlords if they experienced any of the following with the tenant and if so how often:
- frequent late rent payments or non-payment
- destruction of the property
- theft of items on the property
- refusal to vacate the premises
- issues with law enforcement being called to the address
- drug or alcohol abuse problems
- complaints from neighbors or other tenants
In addition, by observing the applicants attitude and body language you can determine their respect, or lack of, toward the landlord and most likely the property.
By using this general screening criteria, you’ll greatly improve your odds of finding a high quality tenant.
This article was written by Karen and originally published on summitassetsgroup
