As a landlord or a property manager, you want to avoid bad tenants and pick responsible, reliable individuals who will take care of the property and pay rent on time. To achieve this, a thorough tenant screening process is essential.
While some tenant red flags during tenant screening are obvious, others may not be so apparent. In this comprehensive guide, we will explore the top 10 warning signs to look out for when evaluating tenant applications, helping you avoid potential headaches down the line.
1. Low Credit Score
A credit score of less than 600, especially combined with bankruptcies or multiple collection notices, can indicate a history of financial irresponsibility and a potential inability to pay bills on time. It can also suggest that the potential tenant has chronic cash flow problems.
In either case, a poor credit report with low scores is probably not the kind of person you want to depend on to pay rent consistently.
► READ MORE: How to Run a Credit Check on a Tenant
2. Insufficient Income
The current best practice for evaluating an applicant’s income is that the prospective tenant should have a monthly income of three times the monthly rent. If potential renters meet this requirement, you can usually assume the rent is affordable to that applicant.
As judged by the above standard, tenants who do not have sufficient income likely cannot pay the rent along with other bills no matter how much they insist they can cut corners.
3. Unreliable References
References from previous landlords can provide valuable information about an applicant’s rental history. Be cautious if an applicant provides glowing references that seem too good to be true, as they may have asked friends or relatives to pose as landlords.
Always follow up with previous landlords to verify the information provided and gain a more accurate understanding of the applicant’s rental behavior.
What should you ask the previous landlord?
When seeking a landlord reference, focus on the applicant’s rental behavior. Ask about any late payments, early lease terminations, and how much of the security deposit was refunded. Red flags include forfeiting the entire security deposit and consistent late payments.
4. Multiple Short-Term Rentals
There could be legitimate reasons for moving several times in a year, but this is something you should investigate. Consistent short-term stays may indicate instability in a tenant’s living situation or a lack of commitment to maintaining a long-term residence. This can be concerning for landlords seeking reliable, long-term occupants.
In addition, frequent moves could be a sign of unresolved conflicts (e.g., late payments; terminating a lease early) with previous landlords or neighbors, making the applicant potentially problematic for community dynamics.
5. Prior Lease Breaches
Tenants may have had cause to break a lease once. However, if they have a habit of doing so, you should be wary of renting to them. Prior lease breaches, whether it be delaying rent payments or having a forbidden pet, indicate a tenant’s history of not adhering to contractual obligations, suggesting potential future non-compliance.
Whether it’s unpaid rent, property damage, or violating community rules, these infractions can result in financial losses or disruptions for the landlord. Moreover, a tenant with a record of breaches might pose challenges in maintaining a harmonious living environment for other residents.
6. Prior Evictions
According to a 2023 study on evicted population in the US, 2.7 million households receive an eviction filing every year — and your potential tenant might be one of them.
Evictions indicate a failure to meet lease obligations and a lack of respect for rental agreements. While there may be legitimate reasons for one eviction, multiple evictions demonstrate a pattern of non-compliance and can lead to future problems. Avoid renting to individuals with a history of evictions to protect your investment.
7. Unusual Employment History
Unusual employment history, such as frequent job changes and prolonged gaps in employment, can both signal potential financial instability in a tenant.
Tenants frequently switching jobs might face difficulties in maintaining a consistent income, jeopardizing their ability to meet rent obligations punctually. On the other hand, lengthy employment gaps, while possibly justified by reasons like travel or caregiving, still necessitate a deeper look into the applicant’s financial standing.
In any case, it’s imperative to verify employment, understand the reasons behind these employment patterns, and evaluate the applicant’s overall capability to fulfill rental commitments.
8. Rushing to Move in
Approach an applicant’s urgency to move in quickly with caution. While legitimate reasons may exist, such as a sudden job relocation, it’s crucial to investigate the situation further. Determine if there are any underlying issues, such as unpaid rent or problems with their current landlord.
Take the time to thoroughly evaluate the applicant’s rental history and circumstances before making a decision.
9. Questionable Application Details
Discrepancies, missing, or inaccurate information on a rental application are concerning indicators. They can suggest a lack of attention, an attempt to conceal facts, or even dishonesty. For instance, claiming no prior evictions but having such a record discovered during screening raises red flags.
It’s vital to scrutinize any inconsistencies between the application and tenant screening reports (and don’t forget to obtain permission before you do a background check to get the reports). Make sure you verify all information to obtain an accurate understanding of the applicant’s background.
10. Criminal History
Every one in three adults has a criminal record in the U.S. While not all criminal infractions carry the same weight, certain convictions, such as domestic violence or multiple DUIs, may indicate aggression, poor decision-making, or substance abuse problems.
Consider the nature of the offense and its potential impact on the safety and well-being of your rental community.
Tip
Keep in mind that some cities and states restrict or prohibit criminal background checks, so it is important to know your local laws and regulations.
In Summary
Investing time and effort in evaluating tenant applications will pay off in the long run. By choosing tenants who meet your criteria and demonstrate responsible behavior, you can protect your rental income and enjoy the benefits of a thriving rental property business. Remember to comply with fair housing laws and treat all applicants equally throughout the screening process.
Learn more about the regulations by creating your rental application to screen prospective tenants with us.
