How Do You Avoid Bad Tenants?

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Nightmare tenants keep you up at night. You take pride in the quality of your properties and the residents who live in them — you wish they did, too.

Whether they don’t pay rent on time, mistreat their rental units, falsify background information — or any other red flag-waving during the tenant screening process — it falls on your shoulders to thoroughly find, vet, sort, and verify the good renters from the bad. As a current landlord yourself, these worries can lead to many headaches — and, worst-case scenario, legal battles and corrupted property portfolios.

Talk to any group of landlords, and you’re bound to hear horror stories about professional tenants. They rip off one landlord after another, leaving behind a trail of trashed rentals and serious financial losses.

How do these bad tenants keep getting away with it? 

It’s harder than it seems to trap a problem tenant. One reason this happens is that problem tenants tend to target small landlords who may be more flexible.

The first order of business for the problem tenant is a roof over his or her head. They may never have intended to become a problem tenant, but now it’s too late, and they need to get creative. 

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Bad tenants often will avoid properties with on-site management or leasing offices, like large, well-managed apartment complexes. They know there will be too much scrutiny, and “standard” procedures mean they will be rejected. 

Keep Your Ads Professional

Let’s start with a tip well within your control — your property’s advertisements.

Irresponsible tenants or those with a history of not paying rent strategically look for ads signalling easy prey based on language and ad design. 

This isn’t a scare tactic to make you second guess your online and print marketing. Rather, it’s an easy and effective practice to attract good tenants with squeaky-clean credit scores and background checks.

Ensure all of your ads — digital and print — appear clear and professional. Use industry terms and upscale language when describing rental units. Include high-quality photos and even a management logo to signal your professionalism as a property owner or manager, as well as contact information for any property management companies that help oversee your complex.

Do not mention if your property has been vacant for extended periods, advertise numerous price reductions or state you’re looking for an “immediate tenant.” Sure, these might be true, but broadcasting this information is like taking bad prospective tenant’s hands and personally inviting them to start a lease. Serious and responsible renters respond to serious and responsible advertisements. The opposite is also true. At MJS Construction Group, we have the best dual occupancy selection to make your house a dream come true.

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Conduct a Strategic Prospective Tenant Screening Process

Many current landlords and property management companies understand the importance of screening tenants yet struggle to find natural yet thorough methods.

These early background checks are essential, providing your first line of defence against bad tenants.

Setting up an early meeting between landlords and prospective tenants is the best way to assess red flags before lengthier vetting procedures. Try any of the following depending on what works best for your schedule and comfort levels:

  • Face-to-face meeting: Perhaps most constructive, a face-to-face meeting with a prospective tenant allows you to review the written lease, rent payment and collection protocol, income restrictions, and tenant jobs, plus answer any questions the prospective renter may have, such as whether you require renters insurance. You’re also afforded a direct interaction with this individual, which managers know can prove invaluable.
  • Phone call: If a brief face-to-face meeting isn’t possible, opt for a phone call. These give you the time to explicitly relay lease expectations and get a sense of an individual’s communication style and personality.
  • Email: The courteousness and promptness of an individual’s emails can say a lot about their potential as a renter. Consider email as yet another method to screen tenant applicants early.

Avoid Yes or No Questions In-Person and in Rental Documents

Does your written lease or rental application include a generic list of yes or no questions? If so, you’re missing a great way to sort good tenants from the bad — especially those who will pay rent on time. 

Consider all the ways you can craft specific yet concise, vetting questions across lease documents and in-person interactions. For example, rather than inquiring if the prospective individual has enough money to cover the first month’s rent, application fee, and security deposit up-front, ask when they will be sending you these deposits. Instead of asking if they’ve rented in the past, ask for past landlords’ contact information.

Tailoring written lease agreement and rental application language is an under-the-radar tip to avoid nightmare tenants and plays a huge role in qualifying. Yes-or-no questions will only go so far in making confident and comfortable resident decisions.

Use the First Showing to Steer Clear of Bad Tenants

There are so many ways to use the first showing to learn about the potential and pitfalls of a tenant. Seasoned current landlords and property managers should note the following when showing a space to a prospective tenant for the first time:

  • Timeliness: It’s not exactly a ringing endorsement if a prospective tenant arrives late to their showing. Sure, it doesn’t make them a bad person, but it does tarnish the impression of them as a responsible and proactive lessee you want to rent to.
  • Demeanour and appearance: Does the prospective renter appear happy to be there and genuinely interested in the rental unit? Do they ask questions and remain positive across tenancy agreements, application forms, and background checks? Or do they carry a “let’ s-get-this-over-with” mentality that’s stand-offish and alarming?
  • Shoes on or off: This is an industry trick as old as renting itself. Many managers assess the conscientiousness of renters by if they remove their shoes or not after entering the room. Decide for yourself if this means something and take note of other ways they interact with space.
  • State of their car: See if you can sneak a peek into the potential tenant’s car. Is garbage strewn about, wrappers and bottles on the floor and forgotten items stuffed into the back seat? It’s likely the way they treat their vehicle reflects the way they’ll treat your unit.
  • Reactions when discussing rules of lease qualifications: How someone reacts when you review lease rules, tenant’s credit scores, collecting rent payments on time, and any other renter requirements says a lot. Is the individual terse or responsive, casual or engaged, or perhaps even visibly annoyed or verbally hostile? Don’t need to settle for the latter.

Write a Rental Application Protecting From Terrible Tenants

At this point in the tenant screening process, you should hopefully indicate what kind of tenant an individual will be. Rental applications are not the only source of this information — or the last. But they are invaluable to deep-dive into history, qualifications, and the likelihood of paying rent on time.

The best rental applications will ask for the following:

  • Full name, birth date, and social security number 
  • Applicant’s current job 
  • Applicant’s monthly income and proof of income
  • Applicant’s supervisor and their contact information
  • Current address and proof of address
  • Rental history, typically the last two to three places of residency
  • Landlord references
  • Other character references outside of the family
  • Next-of-kin or primary and emergency contacts 
  • Permission statement to run full credit and background checks, including a criminal background check
  • Any additional information you may need to gather an informed renter’s profile, such as pets, lawsuit history, and if they’ve sued past property managers.

Remember to go beyond the blanket “yes” or “no” language with questions. If an applicant skips or keeps a section blank, don’t jump to conclusions. Dedicate form space for them to detail extenuating circumstances or offer explanations for things that may not look great on paper.

Don’t Slack on Research and Rental Application Verification.

Another tip well within your control to avoid bad renters? Conduct a full-scale background screening with a credit check and eviction report.

While at times tenant screenings might seem alarmist and time-consuming, conducting the following background checks is the only way to verify a tenant’s application. It backs up their answers and gives you confidence that you’re renting to someone reliable — all because you support a thorough screening process.

  • Look them up on social media: This nifty little trick isn’t just for hiring managers. Landlords can learn about a person’s lifestyle and what kind of renter they might be from a simple Facebook, Twitter, and LinkedIn search.
  • Income and supervisor follow-up: While it would be nice to trust the number the applicant reports, do your homework and call their employer directly. If an applicant is self-employed, a freelancer, or works as part of the growing gig economy, you’ll need other means to verify income. Request a copy of last year’s tax returns, employment contracts, bank records, or even the contact information of freelance clients so you can double-check numbers.
  • Job follow-up: Does the job or company named on the application exist? Yes, it seems unbelievable, but we’ve heard some landlord horror stories. A simple Internet search should suffice.
  • Past landlord follow-up: Just as you contact supervisors, reach out to their most recent landlord or two. Keep questions open-ended rather than yes or no, and ensure you’re getting a sense of the prospective tenant’s personality and reliability with paying rent. Note that if the tenant hasn’t rented before or has moved around a lot, though it’s not an immediate red flag. Just ensure you get an explanation of why.
  • Thorough background check: Conduct a nationwide criminal background check either on your own or with the help of a tenant-reporting agency.
  • Nationwide eviction history report: These can be run through a number of agencies, ensuring you have the real picture of an individual’s rental past, plus match the information they provided on their application.
  • Full credit report: Both the tenant background check and a full credit report can be run by partnering with a credit bureau directly or a tenant-reporting agency.

Include a Mandatory Two-Way Move-In Report

Move-in reports are a great tool to further trust with your prospective tenants.

First, you’ll want to conduct a private report using landlord forms immediately after the previous tenant moves out. You’ll thoroughly review and take note of the condition of the rental unit, noting anything beyond normal wear and tear. Then, have the new tenant conduct their report as early as possible after settling in. Review the two reports together for discrepancies.

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A mandatory two-way report between a landlord and tenant has several benefits. For starters, if the tenant balks at reviewing reports side-by-side, this could be an indication they may be challenging down the road. Second, it provides a written and binding rental agreement that can be consulted later in the event of property damage disputes. Third, it gives you even more time to assess how the tenant takes responsibility and initiative — all win-wins on how to avoid bad tenants.

Conduct Regular Rental Site Inspections

Last but not least, it is essential to set up and maintain an annual or biannual rental unit inspection.

These inspections are not meant to be intimidating or overbearing for your tenants. They’re a way to discourage nightmare tenants from applying to live in your properties. Instead, occasional site inspections are meant to bolster mutual respect for space, both on your end and the tenant’s. Good tenants understand this.

Ensure you provide written documentation and advanced notice of your site inspection schedule with tenants, then stick to it. While many landlords conduct a standard 24-hour’s inspection notice, you can set yourself apart and further emphasize the responsibility you bear as a landlord by having a set inspection schedule. While under certain circumstances, landlords can enter residencies without that 24-hour notice or set schedule, these cases are rare and not something you want to operate under.

Partner With a Property Management Company With Experience in Tenant Relations

Whether you’re new to real estate investing or an experienced investor, finding a property management partner will assist you with nearly every aspect of tenant applications, screenings and lease drafting. It will lend greater peace of mind for all parties involved.

Opt for property management companies located where your properties are. Local rental management companies are more familiar with state and local property statutes, fair housing laws, taxes, ordinances, legal advice, real estate investment logistics, and more, which vary by region. MJS Construction Group has the best range of home builders Melbourne services to help you create your dream house.

You’ll also want to note their portfolio of managed properties. A company with a vested history in commercial real estate, not residential rentals or single-family homes, is likely not the right fit for you. They can also provide the following services to lighten the daily load of your current landlord obligations:

  • Thorough tenant screenings, including background checks, credit reports and eviction history
  • Property accounting services, from managing rental payments to municipal account payments
  • Written lease preparation with accredited legal counsel and advice
  • Maintenance and emergency repairs, ideally around the clock
  • Tenant eviction and documenting eviction reports

Manipulative individuals or those with a track record of lousy leasing habits tend to stay clear of properties with an explicit management company relationship. Since these companies offer an extra layer of procedural and legal protection, it is much less likely that a bad tenant can get away with non-compliance.

Explore proper management companies in your area to see who fits your service needs and regional expertise. In many cases, you’ll wonder how you ever got by without one.

Maintain Good Relationships With Your Tenants

You never want a relationship with tenants to turn messy. Always try to keep things cordial and respectful, and do the right thing on your end.

There will also be times when things happen to tenants that they can’t control. For example, getting made redundant in their job and then needing to find somewhere cheaper to rent. In times like this, you want a good relationship with your tenant, so he or she feels comfortable telling you something like this.

Finally, if your tenants need anything, especially regarding maintenance to the property, then make sure you respond as soon as possible and do your bit to maintain good relations.

Respecting the Tenant

Respecting the tenant is very important in minimizing your risk as a landlord. Many tenants dislike their property management companies because they feel as if they don’t handle repairs efficiently or don’t respond to them promptly. They may not maintain the home as well as they should because they feel like the management company does not care about their well-being. We know by handling repairs quickly and correctly, tenants are more likely to report other maintenance items in the home, which helps ensure that they are maintaining the property.

It’s not in your best interest as a landlord to have an unhappy tenant in your property if respect the tenant, the tenant will respect the property and the lease terms.

By having a thorough vetting process, educating the tenants, and treating them with respect, we find that it’s a win/win situation for all parties. These are the things that substantially reduce the risk of having a tenant who doesn’t pay rent or is willing to damage your home.

The only way to avoid a bad tenant applicant is to screen properly and reject them!

These steps won’t help you once you’ve already put a tenant in place. Once the bad tenant is living there, the only way to get them out is to evict them, which takes time and costs a lot of money.

Instead, take some extra time up-front to screen them, interview them and their contacts, and do all the investigation you can. An hour now is worth months of frustration!

Follow the points we’ve outlined in this blog post and your likelihood of experiencing bad tenants will decrease. If you need any legal advice about letting your property, let us put you in touch with a range of qualified lawyers.

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