Still, that doesn’t mean that an individual with a series of blemishes on their rental application will necessarily cause you grief as a tenant. Nor does it imply that a renter with a cheerful demeanour and squeaky-clean background will be a perfect tenant.
For example, in a recent Toronto ruling, a tenant was convicted on three counts of fraud for failure to pay rent. Landlords had no reason to believe he wouldn’t honour his payment obligations due to his impeccable attire and respectful attitude. Some called him a “professional tenant.” Unfortunately, when it came time to pay his rent, he refused.
For this reason, and many others, knowing how to spot tenant red flags is an invaluable skill to master as a landlord. We’ll discuss the best ways to uncover these warning signs below. Let’s get going!
Singlekey’s 4 Ways to Discover Tenant Red Flags
1) Ask for Tenant Details (and Get Them on Record!)
The rental application is your first line of defence against low-quality tenants. When you meet a prospective tenant for the first time, provide them with a rental application to fill out that covers the basics, including:
- Current address
- Photo identification
- Job history
- Proof of monthly income
- Three to five years of rental history
Once they submit their rental application form, you should first take note of any sections left blank. An incomplete application is the first red flag to look for, especially concerning income and employment history. Follow up with the applicant to determine why they left out specific details.
Next, you must verify whether the rental application information is correct. Proper documentation, such as bank statements and pay stubs, can help validate it, but be aware that it’s possible to forge almost any paperwork.
For further confirmation, contact the applicant’s current employer and landlord. If you discover that their work and rental history don’t align with what’s on the rental application, that’s a red flag.
For example, by speaking with prior landlords, you may learn of tenants’ troublesome behaviour toward their neighbours. A fact like this is a huge red flag and should set off alarm bells. One unruly tenant can dissuade others from renting nearby units, resulting in a lower income for you if you own multiple units in a single building.
Finally, consider the applicant’s overall circumstances. Ask yourself if the information provided indicates a stable and responsible individual. For example, scattered work history and lack of a steady income are red flags to watch for.
A credit check can reveal tenants’ financial situation, which can help you predict if they can manage to pay their rent. By examining a tenant’s credit history, you can gain insight into their payment habits, the type of debt they carry, how often they use credit, and more.
2. Always Perform A Credit And Background Check
A credit report riddled with late payments may indicate a pattern of poor money management, which increases the chance of them missing rent payments. Similarly, the presence of payday loans and other high-risk debt points to a tenant strapped for cash and desperate for credit.
You must first obtain the applicant’s permission before accessing their credit report. If they’re unwilling or hesitant to grant you permission, you should view the response as a red flag. They may have something to hide that’s problematic, like a delinquent account that a creditor shut down for non-payment.
In addition to a credit check, a general background check can also unveil troubling details about an applicant’s past. For example, a tenant with several recent convictions involving violent crimes or drug offences is a definite red flag. They could be dangerous to you and your neighbours, so never take these details lightly.
Manually gathering information about a candidate’s background and finances is crucial, but it’s also tedious and time-consuming if done manually.
With SingleKey’s Tenant Report, you can access all these vital details on your computer or phone in just a few minutes. The easy-to-read report offers a wide range of metrics that will enable you to screen your tenants effortlessly, including a comprehensive Equifax credit report. Our credit and background check reveals a treasure trove of information about tenants, such as
- Records of rent payments
- Accounts sent to collections agencies
- Past-due accounts
- Credit score
- Social media scan
- Public document scan from over 200,000 databases
None of these details will provide a definitive answer about the quality of the tenant in question. However, they’ll help highlight many red flags you may otherwise overlook.
3. Never Rush To Fill A Vacancy
When renting a property, taking one’s time is necessary to ensure things go smoothly and you make the right decisions. Doing proper due diligence is essential, which also applies to tenants.
Typically, tenants begin searching for rental properties six to eight weeks before their current lease ends. If a tenant wishes to move into your unit immediately, you should view their eagerness with suspicion. It could indicate upheaval, a lack of thought and planning, or something even more severe. Not surprisingly, this behaviour is a major red flag if you’re looking for a dependable and responsible tenant.
Similarly, if an applicant moves around frequently, they could be a poor choice for a long-term tenant. Of course, they could have legitimate – even urgent – reasons to relocate, so you shouldn’t disqualify them based on this one red flag alone. It’s important to put things in context. However, it does mean you should be on the lookout for other red flags, just in case.
4. Trust Your Gut
As a landlord, you can make shrewd observations about tenants through interactions with them in person, online, or during a phone conversation.
Let’s say a tenancy applicant arrives late to a property viewing or repeatedly fails to reply to your texts or emails. You guessed it – it’s a red flag.
Similarly, you can learn much about an applicant’s personality when interviewing them. Are they providing you answers that are convoluted, drawn-out, or vague? Do they seem comfortable when speaking to you? Are they rude, demanding, or condescending? If you answered “yes” to these questions, the applicant could be trouble.
If an applicant seems dishonest, there’s a good chance they are. For this reason, it’s not wise to accept a credit report directly from a tenant – it could be fake. You should always obtain one on your own.
As you can see, finding a good tenant is a lot of work. Of course, the savviest landlords avoid the extra stress and time required to vet tenants. Instead, they choose professionals like Singlekey to handle tenant screening.
Our Tenant Red Flag Rundown
Okay, so we’ve gone through lots of potential red flags. Here are some questions to ask as you decide on a tenant.
- Does the applicant’s basic information match your research?
- Do previous landlords or employers speak highly of them?
- Does the credit and background check seem healthy?
- Are they willing to move in at a reasonable time and date?
- Do I feel good about the applicant in general?
Spotting Tenant Red Flags Easily With Singlekey
By following the steps above, you’ll have more success in landing high-quality tenants. But, even with so much information and resources at your fingertips, there are no certainties.
One day, you can wake up and discover that your tenants have no money to pay their rent because they lost their job – or maybe lost it by day trading stocks. Or perhaps they’re causing severe damage to your property and threatening other tenants.
Perhaps the most troublesome situation resulting from taking in a problem tenant is eviction. The eviction process can be messy, tiresome, and costly (check out our eviction calculator to see how much you can expect to pay).
That’s why we created the SingleKey Rent Guarantee program. By signing up, you’ll receive monthly compensation for lost rent, no matter your tenant’s financial situation. You’re covered for up to 12 months of rent, to a maximum of $60,000. And should you have to evict your tenant, we’ll reimburse for up to $1,500 in legal fees, too!
Learn more about the Rent Guarantee program and how it can shield you from catastrophic losses to your rental business.