How to Avoid Bad Tenants

Renters junk left over in the kitchen
Kitchen Area

I know a lot of landlords that manage their property themselves.  This is perfectly fine, but you need to know how to avoid bad tenants.  Many landlords had no idea how to identify bad tenants, much less how to avoid them.

 

When I first started our HOA Tenant Screening processes, for our Association, many landlords in our complex had no idea how to screen tenants.  These ideas are things I have learned, and mistakes I have seen, after being a landlord for 14+ years, and as the lead tenant screener for our 120 unit apartment complex.

If you only take in a renter every five years, you can get through life being lucky.  When you have to get multiple tenants per year, your luck runs out fast, you need a system.

The Gut Feel Approach

Many landlords use a “gut feel” towards prospective tenants.  That is, if the landlord likes the tenants, they take them.  This is problematic for a number of reasons.

Most people, if they ever had a chance to met Ted Bundy, the BTK Killer, the Boston Strangler or even Jeffrey Dahmer, would think they are great people.  They were personable, had decent jobs or job prospects, and were likeable people.  They would never have the ability to kill as many people as they did, without being likeable.  I myself rented to a person that committed a murder shortly after they moved out.

It is human nature to like people, similar to you.  You already hang around people every day, like yourself.  You work with people that have a similar job.  You go to church with people that have similar beliefs.  You live in the same neighborhood as people with similar incomes.  You marry or date people that have the same sexual preference.  There are many things that attract individuals to each other, and similar habits and personalities to themselves are a major factor.

In a Fair Housing investigation, which I have never been a part of; one of the first things the Fair Housing board may ask is what criteria you use to select tenants.  If you just use a “gut feel” approach, it could be a huge problem.  If you have a solid, non-discriminatory approach, and can document that you follow it, it is much better.  Declining a tenant based on “I just didn’t feel right” about them”, will not fly.

Past Landlord References

Some landlords use a “Past landlord Check”.  That is, they call the previous landlord(s), and ask how the renter was.  Did they pay rent (on time), did they have any police calls, and did they get their deposit back are common questions.  This is a good intention for the new landlord, but I have run into issues with it.

More than once, the tenant’s previous landlord referral was a relative or friend, not a landlord that had rented to them.  I have had landlords give me glowing references, only to find out the landlord was in the process of evicting the tenants.  I myself have even given a glowing written reference to a tenant that I wanted to leave as soon as they could find a place.  Do not ever trust the current landlord’s referral, unless it is a bad one.  Use the one prior to that landlord.  Even then, landlords will say great things, or nothing, to avoid getting into a potential law suit.

If you are calling past landlords, make sure you are calling the property owner of the previous address that the tenant lived in.  Make sure that previous address is on the credit report.

If you get a past landlord reference that says the tenant is “Free to re-apply”, that is a red flag.

Saving Money on a Background Check

Some landlords will take a tenant’s word for things in their background, rather than run a full background check.  It’s cheaper and faster.  Often, tenants will forget about issues their past landlord had with them.

Asking about a criminal record will also lead to tenant’s forgetfulness.  Google the tenant’s name and the word “arrest”, and if the tenant is very bad, it will come up right away.

I had a prospective tenant that said she did not have any evictions on her record.  I had her write down her name and date of birth as I gave her an application.  As it turned out, she had nine (yes 9) evictions in the past seven (7) years!  And to top it off, even though she said her and her fiance had clean criminal backgrounds, he had served 12 years for second degree murder.  He stayed in the car while she looked at the apartment.  NEVER skip a professional background check.

Some landlords do a national criminal check, and neglect to do a county criminal check due to the extra $10 it costs.  Why would you want to skip one of the most important pieces of information on your prospective tenant?  Knowing about recent violation(s) is a key piece of information.  If the tenant had recent DUIs, or assaults, you need to know.  It could impact their rent payments.  A recent violent past could impact other tenants in your building if this tenant moves in.

Know Who is Moving In

Assume whoever looks at an apartment will be moving in.  That is, if a boyfriend is there “just helping”, he is already picking his side of the bedroom.

Anyone who drives the tenant to look at your rental will also likely be there, even if they stay in the car.  They have already figured out that looking at an apartment with the tenant leads to too much scrutiny.  They now just stay in the car, only to move in as soon as a lease is signed.  Send in the TV personality, keep the face for radio in the car.

Do your diligence

Have a process set up to perform a background check, and know what a good tenant looks like on paper, before you even have an application in hand.

Run a credit check

A credit check is the first step.  It will tell you about past addresses, it will tell you about any landlord collection accounts.  It will tell you the applicant’s previous bill payment history.  It will also tell you something about how they will behave.

Get income verification

Bank statements and check stubs are evidence of being paid.  Employer verification is always difficult; employers do not always provide verification.  Self employed people should have tax forms, or bank statements verifying deposit and income amounts.

Call Past Property Owners

Call the past property owners where the applicant lived, as evidenced on the credit report.  Get at least a non-negative recommendation.

Do a county level criminal back ground check

Whether or not you take action on the items on the report is up to you.  But you can assume what the person did in the past seven years; they will do for the next seven years.

Have set criteria, in terms of income, credit score and criminal background.  Let the tenants know before they apply what you are expecting.  Wait for the tenant(s) that can pass your check.

Remember, income will tell you the tenant’s ability to pay rent, Credit score will tell you the tenants desire to pay rent.  Both are needed.

What background checks do you do for your applicants before they move in?  What shows up when someone Google’s your own name?

29 Replies to “How to Avoid Bad Tenants”

  1. I have to admit, I am guilty of the “gut feeling” approach. Fortunately the tenants that I have really liked have worked out well, but of course, you are right. You really don’t know a person. The last tenant that we had I only did a credit check. I will definitely keep this list in mind when we are screening new tenants, so thanks for the information.

      1. Their credit was very close to mine, so I figured that they are really conscientious because I am very conscientious about my score. Also they were selling their house because of a job move, so I assumed they would have enough money to cover themselves for awhile. I actually had never met them until the day they moved in. They have been the best tenants so far. Never complaining and rent always on time.

  2. I once took my boyfriend at the time’s 4 year old daughter to a viewing of a 1 bed apartment. He was in a bind so I offered to watch her and had already scheduled the appointment. While we were at the new apartment she asked “where’s my room?” loud enough for the lady showing the place to hear. Talk about awkward. My previous place had been a 2 bedroom so the 4 year old slept over once in a blue moon and had her “own room”. I assured the lady that it was only me moving in. The relationship with the boyfriend ended shortly after that so the 4 year old never did sleep over.

    1. A landlord cannot discriminate against kids, but I would have assumed that both you and the kids father would be there, once you said it was your boyfriends kid. And he was probably not able to pass a criminal check, that is why he was not there…

  3. Good tips as always. What credit score do you typically look for? Or is it more just to make sure they have a clean history.

    I like using gut feel and credit and of course verifying income.

    1. I avoid credit scores under 600 like the plague. Generally once you get past 620, it is significantly better. Most of my tenants have 700+, and 658 is the national average. So, if the rental market is strong, go with a higher credit score and low risk.

      If you have more time, and want to get a higher rent, a lower score is what you want. It will be more maintenance and probably less profit.

  4. Great info. The methods I use are pretty similar to yours. I was a bit confused on this part, can you explain?

    “If you get a past landlord reference that says the tenant is “Free to re-apply”, that is a red flag.”

    1. Thank you for the comment!

      A past landlord can say Yes, No, or “Free to re-apply”. I like a ‘Yes’ to a question of “would you rent to this tenant again?”. A ‘No’ is a definite fail to being able to rent from me.

      When a tenant was bad, and the landlord doesn’t want to say ‘No’, or is afraid to, they say “Free to re-apply”. That could mean, “If they apply again, I would reject them”. Or not. Either way, it is time to look at how long the tenants lived at past addresses. Do they have a lot of 1-year addresses? If so, that means a lot of non-renewals

  5. Good info…landlords really shouldn’t be pennywise and pound foolish. An extra $10 is nothing when all is said and done. A good tenant is priceless. It’s probably a good investment to do the necessary background checks. Google is not too useful for the most part…my name is somewhat common and when I google it, it’s a drug lord on death row. That’s the number one result and then there are some doctors and other professionals in there!

    1. Thank you for the comment!

      Many landlords just go for gut feel, or skip a check, and those landlord are from what horror stories are made of. I have a few myself, and it is always when you ‘give someone a chance’ you have them.

      Hopefully you are one of the doctors or professionals, or not listed!

  6. Great tips. I’d say things like these only come from an experienced landlord like you are, since I believe many people usually go with gut feeling. Very useful information. Fortunately your former tenant moved out before they committed a murder!

    1. Thank you for the comment!

      The gut feel approach may work, if you are dealing with a close circle of friends, and you only have one place or two to rent. And if you have long term renters. But once you have to go to the general public to rent, all bets are off.

  7. Residential rentals inn the $1,950 – $2k per month range is the least headache prone residential segment. Invest here when you can… Single family homes. Professional high- earning, credit compromised peeps on the mend. They are wonderful to rent to…. 1yr to eyes typical rent terms. They save, repair their credit, and move out cleanly into their own New next ownership home. Life is back to good for this investor.

    1. Thank you for the comment!

      I like people that have been in foreclosure in the past. Or anyone who has owned a home. Their credit was great, and is temporarily down but still OK The other great group is professional people just starting out that have never rented. In any event, solid credit score and income criteria are the number one ways to get a great renter. People with a lower credit score generally just do not have their life together well enough for a hassle free rental

      1. Just wanted to say good tips. However, I recently rented to tenants who had good credit and looked good on paper. But they’re just awful to deal with and have vandalized my property. I know I should’ve seen them in-person and interviewed them thoroughly-but I wouldn’t go so far as to say that a credit score=good tenant. Because my current tenants have a good credit scores, but do not have their life together and have been a nightmare since the day they moved in. If I had to do it all over again, I would say for me was to check not only my gut, but also interview them in-person along with the tips above.

        1. Thank you for the comment!

          Typically, above average credit score tenants (650+) will be good tenants. If they have the money. Most of my tenants have 700+ scores. The problem with the gut feel approach is you can run into Fair Housing Issues if you do not have a consistent policy. And gut feel can sometimes make a bad tenant appear good. I would be OK with declining a great tenant on paper over gut feel though.

          1. Yea I was looking over your past posts and finally saw that you were more specific on the credit score being 650+. And I’m reading your article on The True Cost of a Bad Tenant and wow that is my story to a tee. The reason why I say I should’ve gone with my gut is that my realtor had stated that they had tried to negotiate the rent down. Which to me raised a red flag.

          2. It all depends on your risk. 650 is about average for a renter. I use at least 625, for all occupants. Behavioral issues start when you get much less than that. I do not have time for games if my rent is due, nor do I have time for bad attitudes – ever.

          3. Just wanted to reply to your last comment on behavioral issues. I agree 100%, it is a complete waste of someone’s time-especially when you’ve explicitly have stated all the terms to be rude and obnoxious. But I guess I’m the anomaly because my tenants had a credit score of 620-650 (the C+ grade rating), yet they’ve thrown temper tantrums when I say that things will take time to fix or when I tell them that they may need to pay additional rent. It’s a much more complicated and longer story, but from my experience I would have to disagree on a credit score being an indicator of behavioral problems. But I’ll definitely be practicing some of yours and others advice in the coming month ahead. And if I do ever rent again, it will be M2M only.

          4. You should take a tenant with a sub-500 score, and let me know if their behaviors are the same as a 620+ person… Somewhere above 600 the people have a tendency to get a lot better. Nothing is guaranteed, but lower credit score people definitely have a different mentality.

  8. While your article is great, I’d like to know what established homeowners can do when the next door neighbor rents his house out to the worst tenants. Drug dealers, moms with nine kids and no car, more drug dealers, also with no car. This is a nice house in a great neighborhood with rent at $1200. Clearly all renters are Section 8. Do we the neighbors have any rights against the private landlord of this house? Thank you!

    1. Thank you for the comment!

      Monitor the house for high traffic. You need to notify the cops and create a plan with the cops. The cops already know about the people if they are that bad. If they do not know about them, they need to know.

      Also, call the city code enforcement for anything you can. Trash not being picked up due to no trash service, expired license plates, any deferred maintenance, domestic abuse and noisy people, children being left alone, etc.

      You may be able to work with the owner, but they may not care. If you are in an HOA, get involved and pass rules so you can fine them for violations.

  9. I advertise on Craigslist and ask people to respond with name, phone number & email address, and desired start date. I screen names and numbers on Google & White Pages before responding to them. I’ve now had two separate inquiries from people who are currently listed on the clerk of courts website as having past records and currently facing charges. (Drug-related, mostly.) What is the best way to handle these inquiries?

  10. Thank you so much. That post offers great advice. I only have one unit so I don’t go through this process too often, so this is very helpful.

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