Tenant Screening:The exhaustive list of 16 red flags
Any property manager can tell you how critical tenant screening is to
successful property management. The wrong tenant in a property can create
enormous losses that could take a landlord years to recover. A good property
management company cannot afford to take on risky tenants, and neither can a
landlord. However, with proper diligence and knowing what signs to watch out
for, the pendulum swings way over to the landlord’s side, making it possible
for real estate to become a very successful investment.
Below, then, is our comprehensive list of sixteen warning signs when
screening tenant applicants. Each of the following carries different weight in
the screening process. Be aware that while some can be automatic deal killers,
others must be considered only in conjunction with the other red flags.
(Dan: A note about edits below: Using “tenant” in the singular sounds good,
but the problem is “he” or “she” must be used with it. The old style is to
always use “he,” but this bias toward men can mislead owners to think women are
more trustworthy – Not! So I chose to put “tenant” in the plural and use “they”
rather than bounce back and forth between “he” and “she,” which is irritating
to the reader.)
1. Bad credit. By far and away, the single predictor of tenants who will
pay their rent on time is their credit report and credit score. A bad credit
score is a deal breaker in itself. Bad credit score? STOP. Don't rent to these
people! In general we look for a minimum credit score of 620. A credit score of
620 is like getting a C- in school. It's a passing grade but not great, so it
must be supported by the absence of any of the other items on this list.
2. Low income. You don't have to be a mathematician to understand
that if tenants are not making enough in their monthly paycheck, they will not
be able to pay the rent. In general, look for a minimum income that is at least
2.5 to 3 times the monthly rent.
3. Criminal history. A criminal conviction can be a huge red flag.
Get more information and evaluate carefully.
4. More than 3 convictions in 5 years. If has applicants have
more than 3 convictions for anything other than traffic violations, it is an
indication that they cannot obey rules. Do not look for them to obey your
lease. This includes any disturbances, DUIs, driving without a license or insurance,
or worse. Count all cases, including any that are “dismissed with conditions”
or similar. Do not count speeding tickets or expired tabs in this category.
Open and/or pending cases should be counted as convictions until they have been
completed in their entirety.
4. A prior eviction. Such applicants might as well be wearing a sign
that says, “I don’t care about ripping you off.” These are people who defaulted
on their lease but would not make good on it by moving out voluntarily.
Evictions kill profits, and you can’t afford to take the risk.
5. Bad landlord references. First of all,
if this is your main indicator for determining eligibility of applicants, you
are making a big mistake. Far too many landlords ask tenants to leave, only to
give them a great reference. Further, tenants can ask friends to pretend they
are a landlord and say great things about them. Still, sometimes you can get
Was the entire deposit returned? If not, why? Not getting most of the deposit
back is a huge red flag. Late payments are a problem. Terminating a lease early
is a problem. Not giving proper notice is an issue. Move on to someone who understands
how to be a renter.
6. Aggressive or large breeds of dogs. Pit bulls are
illegal in Prince George's County. Tenants who own pit bulls, rottweilers,
chows, akitas, any cross-breed with wolf, or any mix of the above could be a
problem. Odds are, your insurance company doesn’t allow many or all of these
types either. There have been studies about what kind of people are likely to
own these breeds, and these people tend to favor riskier lifestyles. You do not
want those types of people.
More people probably get bitten by chihuahuas than by other breeds, but they
do not get killed by them. Make no mistake, the nature of the dog is built into
the breed; all an owner can do is depress it or enhance it. If you are going to
get killed by a dog, there is a near 70% chance it will be a pit bull or
rottweiler. You will have a difficult time teaching a pomeranian to fetch a
duck; you will also have a difficult time keeping a pit bull from killing with
the right set of stimuli. Far too many young toddlers are killed by their own
family pit bull, and the kid did nothing wrong except act like prey. If your
tenant applicants have an aggressive breed of dog, avoid them at all costs.
7. Asking to pay the deposit after move-in. If tenant applicants don’t have the full
deposit at move in, do not rent to them. You will likely never get the full
deposit. And you will have a very risky situation.
8. Looking to move in less than a week. If tenant
applicants need a place right away, it may not be a godsend for your vacant
rental. Instead, it could be another red flag. Why do they need a place so
soon? Did they just get a cure/quit notice? Did they realize they couldn’t pay
their rent and needed to move out? Are they going to stiff their current
landlord and move out without notice?
Yes, there are legitimate reasons for tenants to need to move in less than a week,
but it is a bit suspicious so check out the reasons.
9. Living with relatives or in a motel. When people are living with
relatives or in a motel, it is a red flag. Did they just need a fast place to
stay because of a cure/quit and did not have time to look? This is a common
theme among people who are getting evicted. They move in with relatives and try
to save money. After a few months, they attempt to move out. Solid tenants
always have a place, and it is usually not with friends and relatives.
10. Owing money to the state. If tenants have unpaid traffic
tickets or fines, it is a problem. Do you think that they will pay your past
due rent if they risk being arrested for having an unpaid fine?
11. A tax lien. This is a big
red flag. If the IRS can't collect on your tenant applicants, how do you
suppose you will?
12. Incomplete application. People who won’t fill out the complete
rental application should be turned away. It’s a sign of false identity, a bad
history, or just plain apathy. Whatever their reason, they are not the right
applicants for you.
13. Needy, demanding. If your very first interactions with tenants leave
you wanting to pull out your hair, just imagine what it will be like when they
have a legal right to the property. Save yourself the headaches.
14. Planning to move mid-lease. If their rental application shows
they are looking for a place well in advance of their current lease
termination, they may repeat the pattern. Find out more before you get into
15. Not likely to follow your rules. If you smell cigarette smoke on applicants
who are renting a non-smoking unit, or they are covered in cat hair but swear they
don’t own a pet, you have a problem. Casual liars make bad tenants.
16. Changing jobs too often. Prefer applicants with careers, not
jobs. Look for applicants who are employed at places that have paid vacations,
sick days, health insurance and paid holidays. Otherwise you may find rent late
due to Christmas, kids getting sick, taking time off to go to a wedding, etc.
Prefer not to rent to applicants who are a cashier today, a tire changer
tomorrow and a burger flipper in six months. If they change jobs that often,
you will soon be without rent when they are between jobs. Look for at least 12
months at the same job or career. It is a lot tougher to track down a judgment
and get a garnishment with a job hopper.