Your Biggest Tenant Screening Mistake

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Is the Tenant From Hell Moving Into Your Unit?

You hear the stories from other landlords. “My tenant skipped out.” “My tenant destroyed the property!”

So, where do these problem tenants go?

They are out there, looking for another rental. And, chances are, they’re not telling you the whole story. Problem tenants repeat the pattern over and over because they learn how to dodge.

Do you know how to spot them?

“It’s the biggest mistake we see. And we see it over and over again,” begins Bill Gray, with Rent Recovery Services. “We get a file for collection,” Gray continues, “but the information on the application is incorrect. The references don’t check out. That’s when the landlord admits they never called, or they unknowingly got a glowing ‘landlord’ reference from one of the tenant’s friends.”

Due diligence is the single most important factor to tenant screening in today’s market. A problem tenant costs more than a vacancy. Be prepared to do some work when it comes to verifying the application.

Property managers see these problems frequently, and develop their own techniques to weed out these applicants. One manager shared with us that he has posed as a new renter when calling current and previous landlords as a guise to see if the reference is legitimate. “Once, I asked the reference if his unit was available to rent, but the ‘landlord’ said he didn’t own a rental.”

The applicant may be attempting to rent your unit before his landlord files for an eviction, or before that eviction shows up on screening reports.

Another way to catch the applicant in a lie is to order the Previous Address Tenant History report. Check the addresses listed on the application against the verifiable addresses and dates from the PATH report to uncover discrepancies.

Landlord references aren’t the whole story. Valid, current, emergency contact information is crucial to collection efforts, especially now when so many tenants are moving in with family members to save money.

If you are shy about calling references, consider hiring a property manager. You’ll save money in the long run when you don’t rent to the tenant from hell.

“I’ve always said that tenant debt collection begins when you meet the tenant,” Gray continues. “You don’t want to be trying to collect debt from a complete stranger.”

See our feature, The Previous Address Tenant History.

American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.

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Tags: real+estate+forms, tenant+background+checks, tenant+screening, tenant+debt+collection, previous+address+tenant+history, landlords, landlord+associations, apartment+owners, apartment+associations, landlord+forum, landlord+blog

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Posted on Monday, July 13th, 2009 at 11:07 am and is filed under AAOA Forum, Credit Screening. You can follow any responses to this entry through the RSS 2.0 feed.

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4 Responses to “Your Biggest Tenant Screening Mistake”

Roger Sil;ver says:

July 14, 2009 at 7:58 am

I do somewhat the same when calling a Landlord for references. Except I ask if they have any Vacancies. But before I call I go to the Treasures web site in my county to see who the owner is and then I check in the phone book. We Also do a drive-by and see how the perspective tenants home is kept up. If it is in acceptable condition then we do a “knock and talk” and ask to see inside.
Problem Tenant Links « Buildium Property Management Blog says:

July 23, 2009 at 6:47 am

[...] American Apartment Owners Association (AAOA) preaches the gospel of good due diligence before accepting prospective [...]
Sandra says:

July 30, 2009 at 8:30 am

I can’t talk enough about the importance of tenant screening. In order to get a decent tenant you really have to go the extra mile for research.
You May be Desperate, But Don’t Let “Cash in Hand” Distract You | AAOA - American Apartment Owners Association says:

August 10, 2009 at 7:43 am

[...] You May be Desperate, But Don’t Let “Cash in Hand” Distract You by Eric Boyd I got a call on one of my vacant, available rentals today. The caller drove by the property, saw the sign, and called. They wanted to see it “right now”. I told them I couldn’t get over there to show it until 4pm, as I have other engagements until then. They said, “Well, we’re headed back to South Carolina to take care of some business so that wouldn’t work.” I apologized, and encouraged them to take a look around the outside and peek in the windows.A few minutes later, the caller’s wife called and said they like it, and asked what they need to do to rent the property. I said that I could give them an application for them to complete. Then, I would conduct credit and background checks, and employment and rental verification. She quipped that they didn’t have a previous landlord, since they own their house in SC. She then said, they were trying to get this done today, so they can go back to SC. They wanted to get this done before school starts, so they can get their kids registered. She said, “We have cash in hand, and are ready to get this doneI politely responded to her, and let her know that we don’t rush our tenant screening process. I stated that it is our duty to the property owner to ensure that tenants are properly screened, with thorough credit and background checks, and employment and income verifications. I shared that it has been our experience that taking shortcuts in the screening process leads to problems with tenancy, down the road. So, we avoid those shortcuts, at every opportunity. She thanked me, and we ended the call.In today’s housing market, there seems to be surplus of rental property. Because of this, it is taking much longer to get property rented. And, if you’re properly screening your tenants, it could take even longer to get it rented. So, desperation may set in. If you feel like you’re getting desperate, don’t let “Cash in hand” distract you from doing your due diligence. If you do take this shortcut, the upfront money you get, could cost you double or triple that amount down the road. This cost could come in the way of lost rent, or even worse, damages to your property.The caller said they own a house in South Carolina, but they’re trying to rent here in Jacksonville, Florida, 4-5 hours away. If they have a house in SC, why are they moving here, and what are they going to do with the house in SC? If I didn’t screen them, I wouldn’t find out if they have a mortgage on that house, which probably requires monthly payments. Sure, they may have the means to cover a mortgage payment and a rent payment somewhere else. But, if I didn’t screen them, then how will I be able to determine their income? How will I know if they’re 6 months behind on their mortgage? How will I know if they just filed bankruptcy? How will I know if they’re bouncing $30 checks at the grocery store? If I don’t screen them, I won’t know these things.I’m generally trusting of people. But, having been through the tenant screening process many times, I realize that people DO TELL LIES. Fortunately, we landlords and property managers don’t have to fall victim to these lies. Professional property managers have access to tenant screening services, which reveal the truth about tenant applicants’ credit history, debt status, and civil/criminal judgments. Property managers can also verify applicants’ employment and rental history. This information, combined with careful analysis of the provided data can help to place the best possible tenant in your rental property.In summary, don’t succumb to desperation. Don’t allow a tenant prospect to force you to alter your normal screening processes. Don’t let the chance at “cash in hand” to steer you from your due diligence. SCREEN THOSE TENANTS!!Eric M. Boyd, Property Manager, Realtor, e-PRO is with Step One Realty, LLC in Jacksonville, FL See our feature, Your Biggest Tenant Screening Mistake. [...]