If the thought of a vacant rental property scares you, consider asking an experienced landlord or property manager what a troublesome tenant feels like. Chances are that the horror stories they could tell you will make you rethink complaining about your vacant property.
One of the most consistent and important things anyone in the property rental business will tell you is that one of the main goals they would like to achieve for their property is to always have it occupied by a tenant and/or to reduce the amount of time their property is vacant. On the flip side of that coin, they will readily tell that one of the most challenging things about their business is having to deal with difficult tenants.
Unfortunately, given how challenging difficult tenants are to deal with, there is practically nothing you can do to completely eliminate the chance of such a person being given tenancy. There are, however, certain things that you can do to reduce the chances of letting out your property to such a less than ideal tenant.
This is where in-depth tenant screening comes in.
Anyone can behave like the ideal tenant you’d love to have while applying for your property, but once they move in, it is not uncommon or impossible for things to go south. This is exactly why you should spend as much time, energy and other resources to conduct as in-depth a tenant screening as is possible. While such thorough screenings do not guarantee that you will not end up with a ‘nightmare’ tenant, what it does is that it reduces the chances of that happening.
What is Tenant Screening?
A tenant screening involves the process of evaluating the applicants to a rental property to determine their suitability or otherwise, and the likelihood of them adhering to the terms and conditions of the property as stipulated by its owner or manager.
Arguably, one of the most important reasons behind the need to carry out a thorough screening of potential tenants is that it acts as a form of risk protection for your property (business). In the same way that you would likely buy some form of property insurance to protect against damage to the property, or when you buy rent guarantee or tenant default insurance, so also will a thorough tenant screening serve to potentially prevent you from letting in a “nightmare tenant” onto your property.
Who is an ideal tenant?
An ideal tenant is one who has some of the following traits:
- One who abides by the laid-down rules.
- Pays rent consistently and on time.
- Is respectful and considerate of their neighbors.
- One who does not conduct illegal activities on the premises.
- Who maintains your property in a good and clean condition.
However, these traits do not fully guarantee a successful landlord-tenant relationship. At the very least they reduce the chances of tenancy nightmares such as frequent property damage and costly repairs, lawsuits and eviction costs, late or infrequent rent payments, noise complaints from neighbors and more.
While screening applicants for your property, it is important that you not only evaluate the information they have provided and take them at face value. You should also independently verify any information that they have provided where possible such as references, current or previous jobs, credit score, rental history report and more. Just as importantly, you should also seek to gather and analyze as much publicly available information about them and see if there is a mismatch between the persona being presented on the application and what you see on their social media profiles or what you observe in a face-to-face conversation.
5 Reasons why a meticulous tenant screening process is in your best interest
- You get a clear picture of their financial history
Arguably, one of the most important things that a landlord wants from any tenant is to be able to pay their rent as and when due. To this end, a credit check on your potential tenant is perhaps one of the most important things that you will want to do to help you get a sense of their ability to consistently pay their rent and/or their general financial health.
With a proper credit check, you can ascertain how financially sound the applicant is, if they meet your rent-to-income ratio, how consistent they have been in meeting their financial obligations and more. Additionally, a credit report can give you an idea of how heavily indebted they are, if there is any history of missed and/or late payments, any past bankruptcies, and any other similar information.
- 2. You get a clear picture of their rental history
In a similar vein, any rental history they may have might give you a good picture of the kind of tenant they were at their previous occupancy. The consistency and timeliness of their rental payments, the absence or otherwise of any (major) complaints by their ex neighbors or landlords, as well as a lack of a previous eviction are some of the things that you will be particularly interested in.
It is, however, important to note and be aware of the fact that not every applicant will necessarily have a rental history and that the lack of one does not mean that the individual will not be a good tenant. It, in all likelihood, simply means the applicant has never rented before. This would clearly apply to students, or people who have just left their parents’ house for the first time, for example, the so-called Gen-Zs.
- Keeps you, your community, and neighbors safe
The last thing you as a landlord or property manager want is to rent out your property to someone whose criminal history is less than desirable. This is not to say that everyone who has a criminal record will automatically make for a bad tenant, but it may mean that someone with multiple minor offenses or a lengthy criminal history might be a red flag you should not ignore.
There are some types of criminal records that you might potentially be wary of letting onto your property. This might refer to repeat offenders of serious crimes or (serial) pedophiles.
Therefore, a criminal history report that includes records at the federal, state and county levels will come in handy in your assessment of the applicant and will help you determine their suitability for occupying your property.
It is important to state here that you should be quite careful about rejecting an application on the basis of a criminal record, especially if it pertains to minor discretions like being arrested or charged but not convicted and cases that happened in the distant past. This is so that you don’t violate any applicable fair housing laws, and consequently, open you up to a lawsuit.
- Gives you a little glimpse into the personality of the applicant.
No one likes to be associated with terrible people. Unfortunately, all the credit, rental and criminal reports you can lay your hands on will not give you any insights into the personality of the applicant. This is where finding out any information that you can, over and above what the applicant provided can come in handy.
This might include things like scanning their social media profiles, where possible, to read the kinds of things they say and opinions they express. Or it might be what other people have said about them on social media.
If, for example, the individual has consistently expressed racist or anti-Semitic views on their social media profile, or worse has been called out for it by other people, this might easily be a red flag for you if you think that letting such a person onto your property might be problematic for you.
Additionally, while the applicant might provide references, it would be great if you can speak to other people besides those he or she put down as references. This might include work colleagues or former neighbors.
Then, of course, engaging in a face to face interview with your potential tenant to get a “first hand” feel for who they are.
- Helps reduce your liabilities
A famous saying has it that “ignorance is no excuse.” So while you may have created an LLC or any other business entity and operate your rental property under the umbrella of this structure and the limited liability protection it provides, there are certain instances where the veil of that protection might be pierced and you could be held liable for certain actions that are carried out from your property.
It may seem hard to fathom but there are certain liabilities that landlords can be faced with as it pertains to what happens on their property.
The reasons and scenarios where this liability might come into play can vary, but one simple example can be where a landlord is held liable for negligently renting out a property to a (known) repeat pedophile who ends up molesting a child in the same building. Or allowing and/or not taking adequate steps to evict a tenant who is known to be conducting criminal activities on the property that ends up causing harm or damage to someone else.
While it is frustrating for a property owner to have their property vacant for long periods of time, it is perhaps more frustrating for a landlord or property manager to go through the trouble of marketing their vacant property on major real estate listing websites like Zillow or Redfin, and/or engaging in some other forms of marketing like networking at events or performing local SEO for their property, only for them to finally get a tenant who ends up being a nightmare tenant, only because they failed to conduct a proper and in-depth tenant screening that potentially might have saved them the trouble of taking in the tenant in the first place.
As a landlord, tenant screening is critical and can help you make a prudent decision on who to allow to occupy your property. It will also help you avoid the stress and costs you might have to incur if you decide to go through the eviction process.