Thorough tenant screening of all prospective tenants is critical to the success of your rental property business. If you place the wrong tenant in your property, you could face enormous financial loss, damage, and even the collapse of your rental property business altogether. Today, we’re reviewing six red flags to look for in the tenant screening process.
Contents of This Article:
- Why Is Tenant Screening Important?
- 6 Red Flags to Look for During Tenant Screening
- Hire Property Management to Help Find Tenants
Why Is Tenant Screening Important?
Tenant screening is crucial for your rental property. However, how do you know which criteria to consider? Sometimes, it can be tempting to ignore some of the red flags so you can place a tenant in your property more quickly. However, you don’t want to get caught up in working with a horrible tenant.
It’s important to find a tenant who will pay rent on time and respect your property just as you would. Placing the wrong tenant in your property can cause you to lose income and damages beyond normal wear and tear, costing you even more money.
That said, there are several red flags to look for during the tenant screening process. Even if you have property managers in Washington, D.C., conducting tenant screenings for you, it’s crucial to have a thorough tenant screening process to weed out potential bad tenants. Typically, you’ll want to find someone with good credit, consistent income, a good rental history, and no criminal background. Next, we’ll review some of the top red flags to look for and avoid.
6 Red Flags to Look for During Tenant Screening
Every landlord wants to find the “perfect” tenant for their property. However, the perfect tenant can be hard to find. It’s important to know which red flags to look for during the tenant screening process so you can choose only qualified renters for your properties.
Here are a few of them that may stand out.
- Poor Credit
- Inconsistent Income
- Prior Evictions
- A Criminal Record
- Bad References
- Moving Too Often
Poor Credit
A potential tenant’s credit score is one of the most surefire ways to tell whether they are a quality prospect to lease your property. After all, a credit score provides a great overall view of a tenant’s financial stability. Plus, it provides insight into how they handle payments and the debt that comes with them.
Ultimately, the lower the credit score, the less qualified the tenant is for leasing your rental property. Although location and demographics may play a role in the exact credit score number you look for, anything below 650 is typically considered a red flag.
Inconsistent Income
Next to credit score, a tenant’s income and employment verifications are major factors when deciding whether they are a good fit for your property. In fact, it is not unusual for property owners to require tenants to make 2-3 times the monthly rent per month in income. Though this seems steep, with so many people floundering in debt, this value comforts property owners in knowing that their tenant makes enough money to pay their monthly rent.
If your prospective tenant cannot verify the amount of income they make each month, take this as a huge red flag. If your tenant does not have enough income, your monthly rent requirement will likely come up short at some point.
Prior Evictions
If your tenant has failed to pay in the past or has broken a signed lease agreement so severely they were evicted, chances are high that they will do the same to you. You may implement a zero-tolerance policy regarding prior evictions and leasing your rental property.
However, if you want to include a bit of flexibility when it comes to past evictions, aim for no prior evictions in the last five years. After all, sometimes things that are out of people’s control happen, and evictions occur. However, be very selective when it comes to this and make sure your prospective tenant is flawless in every other aspect.
A Criminal Record
If a tenant you are screening has a criminal history, you might want to reconsider placing them in your property. Any prior convictions such as disturbances, DUIs, drug offenses, and driving without a license or insurance may indicate the tenant is unable to follow the law. In fact, you may even want to include multiple traffic stops and dismissed charges in your assessment of them.
Bad References
If you reach out to a reference that your potential tenant listed on their application and you receive bad news about them, this is a major red flag. Rarely will a listed reference say anything against a potential tenant if they are listed on the application.
However, that is not to say you cannot gather some useful information, even from a good reference. Make sure to ask critical questions such as whether the tenant paid on time, if they ever caused any disturbances, and what the condition of the place was when the tenant left.
If your tenant’s reference reveals things that do not sit well with you, count that as a red flag. Moreover, if your potential tenant resists providing you references, especially previous landlords, take that as a red flag as well.
Moving Too Often
A tenant that moves a lot may turn out to be a bad tenant. There are questions to ask when it comes to a frequent mover, such as why they move so much and whether the moves were on their terms or their previous landlords’ terms. This is where having previous landlord references is helpful. While it’s not always a reason to turn down a potential tenant, a tenant that moves a lot can signal a red flag and is something to consider carefully.
In addition to moving a lot within a short period of time, a tenant who was previously living with a friend or relative can be a red flag that needs further evaluation as well. True, many millennials are living with their parents longer than ever. That said, this does not necessarily signify that they will be a poor tenant once they decide to move out on their own.
However, many people move in with friends and family after an eviction. This could end up being a big problem later on should you decide to place this tenant in your rental home. So, make sure you investigate closely and find out exactly why a potential tenant had non-traditional living situations in the past.
Hire Property Management to Help Find Tenants
Finding the perfect tenant for your rental property can be hard to do if you are inexperienced at tenant screening. Thus, hiring a property management company to help you with tenant screening and everything else property-related can be a lifesaver.
If you’re looking for help placing high-quality tenants in your properties, contact Bay Management Group to help. Not only do we know all of the red flags to look out for during the screening process, but we also understand how important it is not to discriminate against potential tenants during the screening process. Following the Fair Housing Act during the tenant screening process is essential to avoiding a lawsuit and ensuring the screening process is performed legally.
In addition, Bay Property Management Group can help you manage your rental property after placing a high-quality tenant. From rent collection to routine inspections, on-call maintenance support, and transparent bookkeeping, BMG takes all the hassle out of owning and leasing a rental property.
