Property Management

How to Spot Troublesome Tenants Before They Move In

• by Aaron DiCaprio
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A well-documented and consistently used screening process can help you select better tenants. Residential landlords dream of renting to the right tenants—conscientious individuals or families who care for their rental property, notify the landlord of maintenance issues and pay rent without causing problems. But if you’re in the business of owning or managing residential rental property, you know that tenants don’t show up with a neon sign flashing either “I’m the ideal tenant” or “I’m going to cause trouble in the building and for neighbors.” In fact, a person or family can appear to be a good tenant at first blush and then show signs of trouble after they move in. Four Types of Troublesome Tenants There are four types of tenants who cause the most trouble for residential property owners and managers: The Destroyer. This is the tenant who damages property. This type of renter can cost hundreds, if not thousands, of dollars in repairs, legal fees and eviction costs. The Rule Breaker/Ignorer. These tenants don’t seem to care too much about the rules that tenants must follow when renting a house or apartment. The Tardy Player. This tenant doesn’t pay rent on time. He or she also does not answer calls, phone messages or emails. But they must think they’re better late than never, as they tend to pay the rent late (rather than on time). The Non-Payer. This renter stops adhering to the terms of the lease, including failing to pay the rent on time. They fail to pay, even after numerous knocks on  the door, missed phone calls, ignored messages and disregarded email messages. Tenant Screening Many residential property owners/managers have a tenant screening process. This screening can minimize the odds that a troublesome renter gets a foot in the door and causes a costly situation for you. If you do not have a documented screening process, make it a priority to create one. Using one can heighten your chances of spotting bad tenants. To better assess any tenant’s risk, residential landlords can look at three key items of information before offering a lease. Use all reasonable means needed to discover whether the potential renter: Earns the income they say they make (which is ideally no less than two-and-a-half times  the rental price). Has a good credit history. Has a good rental history that can be verified by previous landlords. Additional Considerations Besides using a screening process, keep an eye out for other warning signs. For an informal-but-also-informative process, try using these three questions to spot an irresponsible tenant before you offer a lease: Does the prospective tenant have trouble with questions on the application? A solid prospect typically can fill out an application in the rental office with only routine effort. They may need to verify contact information for previous landlords or double-check their credit score. But if they leave multiple spots on your application blank or seem unwilling to fill out the application after the initial showing, they may be trying to hide something, or they just may be disorganized and unprepared. Similarly, if a prospective renter cannot give you clear, straightforward answers to routine questions or if they grow defensive and evasive, that is also something to consider. Prospective renters might merely be nervous and unsure of how to answer, or they could have something in their history they don’t want you to know. Are they rushing to rent? A potential renter who is clamoring to move into a rental unit in less than a week could have a troublesome issue such as: Eviction from a previous rental property (or having been served a cure-or-quit notice). Inability to pay rent at their current residence, leading to desertion. A plan to leave a current residence without notice. A lease ran out and the tenant didn’t make living arrangements ahead of time. A disorganized, ill-prepared prospect is unlikely to be a reliable tenant. Is the prospective tenant complaining, demanding and haggling at every turn? Prospective renters tend to show best behavior during initial showings and meetings to impress a future landlord. But some display “not-so-best” behavior, such as: Being overly negative (especially if they only have negative comments about all their previous landlords). Making demands before they’ve signed a lease. Relentlessly pushing for a reduced rent price. These signs point to a tenant who is likely to make excuses instead of timely rent payments. Verify rental history with at least one previous landlord for another side of the story. What’s more, in both formal and informal screening of prospective tenants, consider what your “gut” is telling you. My own experience as property owner, attorney and insurance professional verifies that besides getting the right information, paying attention to your professional instinct helps minimize tenant risk. A robust, thorough screening process can keep troubled tenants from the doorstep. But even with the best process, you might still bat below 1.000. In  that case, the best-case scenario is that a “bad tenant” will be a little messy, a little loud and a little late on rent payments. The worst-case scenario is, well, much worse. Tenant risk is not diminishing. In fact, it’s growing with the market. Between 2006 and 2016, the number of single-family homes available for rent increased by nearly 4 million, lifting the total to 18.2 million  in the U.S., according to the Joint Center for Housing Studies of Harvard University. Tenants’ unpaid rent and property damage can stick you as the property owner or manager with high costs, even after the tenant vacates, fails to renew or is evicted. In that case, consider protecting against property damage and financial loss—and not just with a standard rental deposit and lease terms. One lesser known but emerging option for today’s residential owners and property managers is rent default insurance. When purchased in advance of a lease, it reimburses for loss of rental income and certain eviction costs in the event a tenant defaults.