When I talk to people about becoming a landlord their biggest fear is always that they will end up with a terrible tenant. In all my years renting properties I’ve never had a serious problem, but I believe the reason for that is that I screen carefully and I’m always on the lookout for red flags.
Your Potential Tenant Has a Low Income
This one is pretty simple. If your tenants don’t make enough money to cover the rent there’s going to be trouble. Of course there are always exceptions. Students for example might not make much money, but in this case you might want someone (like a parent) to co-sign the lease. Ideally tenants should have an income that is at least 2.5 – 3 times the cost of rent.
Your Potential Tenant is Currently Unemployed
If low income is bad, no income is clearly worse. Look, everyone can go through a bad time or have some bad luck, but for you this is a business and you have to protect it. A potential tenant with no job and no income is not a great candidate.
Your Potential Tenant Has Bad Credit
Bad credit is never a good sign. However it doesn’t always have to be a deal breaker. If you have a potential tenant who has bad credit ask them about it. They may have gone through a bad time and are working on fixing it. Find out the reasons, ask to see pay stubs, and look for proof of funds. Then take it into consideration along with everything else on their application.
Your Potential Tenant Has an Inconsistent Work History
People who jump around from job to job aren’t necessarily going to be troublesome when it comes to paying the rent on time, but it’s certainly something to consider. While some people work in industries where this is the norm, for others it could be indicative of an inability to hold down a steady job and paycheque. If you see this on an application be sure to dig in and find out what’s going on.
Your Potential Tenant Submitted an Incomplete Application
If a potential tenant can’t be bothered, or is uncomfortable filling out the whole application, it’s a problem. As a business owner (and make no mistake, renting out a property is a business!), you need to protect your investment. If someone is not willing to answer reasonable application questions, they’re essentially waving a big red flag in front of your face.
Your Potential Tenant is High Maintenance
Never underestimate the importance of your gut instinct. If someone is particularly rude or demanding right from the start, it doesn’t bode well for future interactions. Remember that once you’ve let someone in it can be awfully tough to get rid of them, so if they give you a reason to think they won’t be good tenants, don’t do it.
Your Potential Tenant is Asking to Move In Immediately
If someone needs to move in immediately it’s worth asking why. Did they get kicked out of their last place? Did they lose their job and can no longer afford their current rent? The reason might not be a bad one, but it’s still a red flag that you shouldn’t ignore.
Your Potential Tenant Lied on Their Application
Once someone has filled out an application it’s up to you to check his or her references and confirm all the information. If you find any inconsistencies you should be worried. After all, someone with nothing to hide has no reason to lie.
Your Potential Tenant Has a Prior Eviction
This is the biggest red flag there is. Getting evicted is a big deal. As a landlord it’s a last resort, so if someone else felt the need to evict this tenant you know it was for a serious matter. Don’t brush this off. Call the old landlord and find out what happened.
By keeping an eye out for these nine major red flags, you can protect yourself from nightmare tenants and set yourself up for real estate success!
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