9 Tips to Find Reliable Tenants and Steer Clear of Bad Ones

Bend over! Here it comes again.

Your property is going to be vacant soon.

Meaning you have to, again, go through the process of finding and evaluating a new tenant.

You are getting tired of this. You despise this process. There are too many variables.

You have no confidence you’d come to the right conclusion.

You feel you don’t understand tenants. It seems like they rent your place just to harass you. Complaining about the most minor repair issue is their top priority. And paying the rent is the last. They are rude.

 

Why is that so?

It might be tough to swallow, but here is the truth:

Not all the tenants are bad. You got duped while evaluating the tenant application. And you chose a bad one for yourself.

You gotta do the tenant-screening thoroughly.

Tenant screening is the process to choose the right candidate(among several applicants) who has the potential to become reliable, and possibly long-term tenant. This process also helps to weed out the bad ones.

All landlords should learn the process of screening a tenant thoroughly or hire a professional to do it for you.

That’s not necessary though, as this post will show you everything you need to do.

Pre-screening Potential Tenant

1. Screening Starts the Moment You Put Out Your Ad

As your current tenant gives you a notice of vacating, your search for the new tenant begins.

It’s noteworthy the actual screening begins well before credit or background check. It starts when you get the word out or publish an ad for the new tenant.

This is also called a pre-screening.

The purpose of the pre-screening is to stop the wrong candidates from applying for the tenancy application and waste your time. Your marketing (in person or advertisement) should clearly exhibit what kind of tenant you are looking for.

For example, by including the line — Apply only if you have A+ credit — in your advertisement, you can filter out all the prospects with the average or bad credit. You’ll only get the applications with good credit.

 
Pre-screening: Phrasing Craigslist ad with different criteria
Pre-screening: Phrasing Craigslist ad with different criteria

On the other hand, if you don’t specifically mention any criteria, the applicant with a substandard credential may also apply and will produce no good result.

By properly wording your ads, you start screening the candidates before they come into the door.

2. Relax Dude, It’s The First Call

As the prospective tenant sees your ad, you’ll get a call.

Here are the basic pre-screening questions:

  • Why are you moving out?
  • Are you employed with a verifiable employer? And how much you make?
  • Are you ok with credit, background and criminal checks?
  • Are you able to provide 2–3 previous landlord references?
  • Are you able to do one year lease(or whatever the case may be)?

You should make an impression of a professional, but the friendlier landlord. Don’t come out as a non-compromising landlord. It may turn off potentially good tenant prospect.

You should understand, you’d get a chance of thoroughly screening the candidate when you’d receive the tenancy application.

Showing Appointment

3. Be Friendlier, Anticipate Future Relationship

This is your first in-person contact.

You have already qualified a potential tenant by pre-screening criteria and telephonic interview.

This contact mainly serves the following purposes from your point of view.

  • Showing the property
  • Letting them know how you operate as the landlord
  • Having a friendlier conversation
  • Verify the information from the initial contact by asking counter questions

You should ask the prospective tenant to bring in the full tenancy application at this meeting. So if the tenant likes the property, they can go ahead by applying without any further delay.

At this stage, you should have a friendlier conversation with the prospective tenant in the anticipation of a mutually beneficial future relationship.

Screening Potential Tenant

Each of the following steps will secure you to find a reliable tenant and safeguard you from choosing the bad tenant.

4. Policy and Procedure is Paramount

First and foremost, you should have a written policy and procedure for tenant screening. And that should be followed for every application. It’s also important to keep a record of it, whether the application is successful or unsuccessful.

In the wake of not following the tenant screening procedure in its entirety, the mistake may happen. For example, you may come across an excellent looking tenant application. If you’re new landlord, it’s easy to jump to the conclusion without processing all the screening steps. This is where you may expose yourself to costly consequences.

Such a standardized policy and procedure would help you streamline the screening process. In addition, the record keeping will protect you from complaints under the legislation like the Fair Housing Law or any discrimination.

5. Check Credit, Criminal and Eviction History, No Exception

This is the most important step in your pursuit for the reliable tenant. If there is a bad guy trying to sneak through, these checks will ensure that does not happen.

  • Credit check —The good credit score indicates the applicant is responsible with his or her finances. You may expect the same behaviour while paying the rent. If an applicant’s credit is not good, there is no guarantee of monthly rent payment.
  • Background check — provides information about the tenant’s past records like residence history, employment history, eviction records etc. This information helps the landlords to check past behaviour to predict future behaviour. You don’t want to rent out to the person who has changed the tenancy 4 times in the last 3 years or who is evicted even once.
  • Criminal check — You don’t want a criminal as your tenant. If a third party (e.g. your neighbour) is harmed because of the criminal activity of your tenant, you are liable. If your property becomes famous for the drug-related activities, you’d have difficulties in finding the new tenants even after you evict the drug dealer.

6. Plead With Mr. Previous Landlord

How would you approach the previous landlord?

You have to be extra polite and speak with the authenticity of the fellow landlord in an ingenuous manner. Because you’re asking for the information from the person you do not know personally. And that person knows that the information is of great value to you.

It’s a skill you have to develop to extract genuine, truthful information about the applicant.

The novice landlord tends to make a mistake and ask for the current landlord reference only. In fact, you should ask for the current landlord reference as well as 2 previous landlords’ references.

What if the applicant’s current landlord wants to get rid of him because the applicant is, in fact, a bad tenant. In such circumstance, the current landlord has a motivation to lie to you and give the favourable reference of the applicant.

Here are the most important questions to ask the previous landlord:

  • Has he paid on time?
  • Were there any complaints from neighbours?
  • Would you rent to him again?

7. What Income to Rent Ratio Should You Allow While Screening?

There is no strict rule regarding income to rent ratio. If the applicant’s income is more than double the rent amount you are asking, it is sustainable. This is the rule of thumb popular among the landlords.

In the big metros, renters spend 60%-70% of the income on the rent. You may also have to use your own judgement in case the applicant has a good salary but a lot of debt.

If the tenant loses the job, it directly affects your business. But that’s not reason enough to evict the tenant, even though you’d like to. You can only evict the tenant if there is a breach of the lease condition like non-payment of the rent. The better way is to encourage the tenant to move out without the eviction process.

8. The Lease Agreement Is Your Weapon AND Your Armour

You can easily use the lease agreement to keep the troubles at bay, provided you have a strong lease in place.

The thorough screening process helps you to choose the best candidate among the several applications. The strong lease protects you against any adverse actions or behaviour once the tenancy starts.

You can use the lease agreement against the common violations such as non-payment or late payment of the rent. But many lease conditions are embodied into the lease to discipline the tenant from untoward behaviour.

Here are a few examples:

  • List of the tenant occupants (to restrict frequent an overnight guest)
  • Pets are not allowed
  • No smoking inside the apartment

In the wake of such conditions, you may expect the troubles like additional cleaning cost or neighbours’ complaints of overnight parties.

9. Watch out for Pattern of Behaviour

During the screening process, you want to watch out for the pattern of any inept behaviour.

For example, if you see several credit cards listed on the prospect’s credit bureau. That shows bad spending behaviour. If you see the applicant has changed 3 places in the last 5 years, you can conclude he is not the stable tenant.

You want to see qualities like honesty and truthfulness. If the prospective tenant reveals without asking why he has an average credit score with a logical reason like a sickness.

Don’t hesitate to ask the applicant why he should be considered favourably for the tenancy. Encourage them to provide supporting proof like on-time rent payments made in the past.

Find the Tenant of Your Dreams

Choosing a good tenant is the requirement of paramount importance to your business.

Your target is to find a reliable tenant!
Your target is to find a reliable tenant!

So you can’t take this process casually.

The stakes are high here.

You have to commit to a serious approach. You have to focus on the target. And your target is to find a reliable and potentially long-term tenant.

Think about what happens once you have done all the right things. Once you have installed good tenants to your property, your business will thrive because of the steady stream of rental cash flow. It’ll bring you peace of mind. You’d see tangible results and prosperity because of the stable tenancies.

So are you ready to shine?

Pump yourself with the new energy.

Embrace the new possibilities positively and enthusiastically!

Go out there… take it head-on.

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