Avoid Renting to the Tenant From Hell
by Kevin Ortner, CEO of Renters Warehouse
While great success can be gained from the world of investment properties, the hidden (and unsightly) truth is that one tenant from hell can set you back well beyond your wildest nightmares!
Seventy-one percent of landlords confess that they’ve had problems evicting a renter even though the grounds were justifiable. Disputes over damage deposits, late rent payments and broken appliances are listed among the most common issues that landlords face. Even more horrific though is that it’s not unheard of for unhappy tenants to contribute to willful and severe destruction to a home. Whether it’s ‘Sharpie parties’ –where residents invite friends over to vandalize the home with permanent markers, or ‘indoor swimming pools’ where tenants flood the property and then take a swim. There’s no limit to the destruction that renters can cause.
The financial toll that comes with repairing the damage left by a destructive tenant, as well the time, energy and costs required to pursue an eviction is enough to strike terror in the heart of even the most capable property owner.
But it’s not all nightmares and horror movies. With a bit of prevention, you can ensure your property is safe from harm. While you can’t always predict issues with tenants, there are steps that you can take to dramatically reduce the potential for problem tenants to be able to gain access to your property in the first place.
One of the best ways that you can protect against potential devastation is to have an airtight tenant screening process. Let’s examine a few ways you can ensure that both you and your properties are safe.
How to Create a Rock-Solid Tenant Screening Process
- Create a Tenant Application
It’s essential to have an application process for candidates to go through. The correct questions can help you to sort through unqualified tenants right from the start. Draft an application form and have it ready for prospective tenants to submit for your review.
Ensure there is an area for tenants to include basic information such as: their name, date of birth, contact information, emergency contact information, all additional occupants including children, and the date they hope to move in. Be sure to also ask the following questions: ‘Do you have any pets’? ‘Do you smoke?’ and ‘Have you ever been evicted?’ Be sure to ask for references, employment information and contact information for their previous landlord.
Having answers to these questions in writing can help in case of any disputes or issues that arise during the screening process. You may also want to consider having an attorney look over your application form just to ensure that you’ve covered all of your bases, and to make sure there are no questions that could be considered discriminatory.
- Start the Interview Process
The interview is an essential element of the process. This is your chance to screen prospective tenants and discover whether they’re an ideal match. Good questions to ask during the interview include: ‘What is your monthly income?’ ‘Why are you moving?’ and ‘Are you willing to consent to a credit and background check?’ The interview should give you a good idea about whether or not the prospective tenant will be able to afford the rent and abide by the terms of your rental. See more questions to include in the tenant interview process.
- Conduct Diligent Research
Always follow through with any references and conduct credit and background checks. Validate all of the essential information that the tenant provides; especially concerning current employment and their rental history. When contacting references, be sure to ask how long each person has known the prospective tenant and their opinion on the reliability and character of the tenant. It’s essential to reach out to previous landlords, as this will give you a chance to get inside information on the tenant’s track record for renting. Watch out for existing landlords who may be desperate for a problem tenant to leave though as they may distort the truth as a means to get the tenant to move out faster. Take the time to reach out to former landlords who may be more likely to provide a more accurate picture for you.
- Watch out for Warning Signs
Look out for any red flags that can alert you to a potential problem tenant. Check your gut and if the applicant makes you feel nervous, or seems desperate to move in as quickly as possible, these could be warning signs. Be sure to watch out for candidates who question every element of your rental application process as this is a sign of someone who may not be able to abide by your rules. Legitimate rental candidates will understand that it’s important for you to conduct credit and background checks, and will be more than willing to comply with your processes. Make sure to compare what they have listed on the application and your notes from the interview, to what comes up from the background check. Be extremely wary of any discrepancies you notice.
As important as it is to have a solid tenant screening process in place, it’s also essential to make sure that your process is legal. While it’s good to watch out for warning signs and be wary of anything that doesn’t sit right, don’t screen tenants based solely on gut feeling. Make sure to use the same qualifying procedure for all applicants, and treat all candidates equally to protect against accusations of discrimination. Use the same process each time you deny someone regardless of the reason. A simple and to the point email referencing the reason is enough. Having this in writing can help prevent any accusations of discrimination.
Legal side note: if you’re planning on collecting application fees or a deposit, check your state laws first to confirm you’re able to do so.
Lastly, once you have found a tenant for your property, it’s important to have a rental agreement in place for the tenant to sign. A rental agreement contains clear written guidelines, and helps to ensure that you and the tenant are on the same page, preventing any problems from arising due to any future miscommunications. The agreement should include: the names of all the applicants, occupancy limits, and terms of renting –including late fees, acceptable payment methods, and details of charges should a rent check fail to clear.
Although many landlords think implementing a tenant screening procedure is time-consuming and not worth the hassle, in the long run, a solid screening process can save time, and prevent many excruciating headaches. Taking the time to screen applicants upfront will allow you to weed out any potentially problematic renters and save you from costly evictions and extensive repairs further down the road.