Interviewing a Prospective Tenant: Can You Spot These Six Red Flags?

Credit is not the only factor in screening a tenant.

Truthfulness, respect for your property, and a willingness to cooperate are also crucial predictors of how the rental relationship will go.

Much of the information you need to know comes from the initial contact with the tenant. Do you know what to look for? Here are some tips:

Your Initial Impression Is Usually Correct

Sure, that sounds a little “touchy-feely”, but it’s true! Your first impression, or “gut feeling” is usually the most accurate, even though you may not realize why immediately. If you have some reservation, it’s because some subtle message was communicated, some hint of a bad attitude, for example, or some other red flag.

Most of the time the first contact is made on the phone. Are the phone manners appropriate for the situation? Do you detect an attitude? Are they overly enthusiastic? Is the person you are meeting with the same person you spoke with on the phone?

Is a Car a Clue to Character?

We’ve all been taught to look at the prospect’s car - a messy car means a messy apartment, right? Well, not always. Many managers find that a tenant could easily pay too much attention to their car, and not enough to their rental home. What is relevant with a car is not what kind of shape it’s in, but if it jibes with the information provided in the rental application. Is the license number the same as the car they list on the application? Is it from the state they say they are from? Is it brand new? Does the loan show up on the credit report?

Showing Up On Time a Sign of Cooperation, Responsibility

Whether your prospect is prompt tells you how interested they are in this relationship. Remember you first impression. If you are feeling frustrated that you’ve waited a half hour with no explanation, your “gut” is trying to tell you something.

Meet everyone who is going to move in. Watch how they relate to one another. Obviously you can’t analyze the relationships in a short period of time, but you can ask questions to get a sense of whether they’ve lived together successfully before, if they each have a commitment to stay. Speak to each of them about their plans and expectations.

Discuss the Prospect’s Motives for Renting

Ask questions to glean the prospect’s future plans:

• Why are they looking for a rental?

• Why are they looking in your neighborhood?

• Do they have bad things to say about the previous landlord?

• Are they leaving the previous rental early?

Maybe you will find out they are in the market for a new home, and will rent just until they find it. Maybe they are about to be evicted. On the bright side, maybe they will tell you about a favorite restaurant nearby, and you can give a gift certificate as a lease incentive or anniversary gift.

Do a Drive-By

Drive by their current property if you want to see how it is kept-and if they live there. Consider going to the tenant’s home to drop off the application or lease.

Talk to Someone Who Knows

While it is critical to speak with the current landlord, it is just as important to speak to the previous landlord, who does not have an ulterior motive of getting the tenant out of their property. A common fraud is the give false landlord references. Use your detective skills to discover if the number you are calling is the landlord’s, not a friend’s. For example, have them call you back to see how the number registers on caller ID. Check the public records to see if the previous property is registered to that name.

While a successful initial interview paves the way for a smooth relationship, it is no substitute for a thorough background check. Click here to review what kinds of tenant screening reports are available.

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

To subscribe to our blog, click here.

Tags: spot+red+flags+tenant+interview, how+to+interview+a+tenant, tenant+screening, tenant+background+checks, landlord+associations, apartment+owners+associations

Posted by Kim Ezzell on 05.29.2008. CLICK to Leave a Comment »

Filed under: AAOA Forum, Credit Screening

Are Your Tenants Screening You?

The Tables Have Turned: Your Tenants May be Screening You!

With foreclosure numbers continuing to hit record spikes, the real estate industry is in flux.  Just under twenty percent of foreclosures are rentals.  In some areas, that number may be double. Most often, a foreclosure trumps a lease, although some states have stricter requirements on such evictions. Lenders are often not in the landlord business. When the home forecloses, the tenant is cast out so the property can be sold or auctioned vacant.  In worse cases, the tenant may have only three days notice to vacate, or suddenly find their power turned off.  

This phenomenon has morphed into a crisis, with many states taking action to slow the eviction process for the tenants to give them time to find a new home.  Congress has recently attempted to require a 90-day notice period for tenants at risk of evictions because of their landlord’s foreclosure. 

Read the rest of this entry »

Posted by Kim Ezzell on 05.26.2008. CLICK to Leave a Comment »

Filed under: AAOA Forum, Credit Screening

Interviewing a Prospective Tenant: Can You Spot These Six Red Flags?

Credit is not the only factor in screening a tenant. 

Truthfulness, respect for your property, and a willingness to cooperate are also crucial predictors of how the rental relationship will go.

Much of the information you need to know comes from the initial contact with the tenant.  Do you know what to look for?  Here are some tips:

Your Initial Impression Is Usually Correct

Sure, that sounds a little “touchy-feely”, but it’s true! Your first impression, or “gut feeling” is usually the most accurate, even though you may not realize why immediately.  If you have some reservation, it’s because some subtle message was communicated, some hint of a bad attitude, for example, or some other red flag.

Read the rest of this entry »

Posted by Kim Ezzell on 05.19.2008. 1 Comment »

Filed under: AAOA Forum, Credit Screening

Foreclosure Numbers Are Driving Up Rents

The foreclosure crisis is still raging, according to statistics from Realty Trak, an online foreclosure marketplace. 

They reported nearly 235,000   proceedings for March.  That’s an increase of 5% from February, and 57% from March, 2007. This trend is creating an influx of renters, most of whom lost their homes, but many who were evicted when the landlord faced foreclosure. 

A Landlord’s Market

Vacancy rates are low.  According to the National Association of Realtors, the average vacancy rate is 4.7%. Five percent is considered a “landlord’s market”. Read the rest of this entry »

Posted by Kim Ezzell on 05.12.2008. 2 Comments »

Filed under: AAOA Forum, Credit Screening

Tenant Background Checks: Tenant Bank Accounts

A prospective tenant that does not have a checking account is a red flag.

An adult without a checking account is probably a very high risk tenant. They either could not get an account due to improper identification or their account was closed by the bank for bouncing too many checks.

In either case, landlords beware!

Assuming your prospective tenant has a bank account, check it out:

Read the rest of this entry »

Posted by Kim Ezzell on 03.31.2008. CLICK to Leave a Comment »

Filed under: AAOA Forum, Credit Screening

Screening the tenant before you rent is only half the battle. Circumstances can change, and your ideal tenant can become a potential rent collection problem. Maintaining a current and complete tenant file is a simple way to protect your valuable investment. 

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Posted by Kim Ezzell on 03.19.2008. CLICK to Leave a Comment »

Filed under: AAOA Forum, Credit Screening

Tenant Background Checks: The False Positive Criminal Report

“You’re trying to tell me you don’t know your date of birth because you were too young to remember?”

A false positive criminal report in your tenant background check can cost you a valuable prospect when his only crime is having the same name as someone who has a criminal record. 

• While credit information relies on social security numbers as a virtually fool-proof identifier to distinguish one person from the next, criminal reports are not indexed by social security number.
• The only information that can distinguish a person on a criminal report is full legal name (See What’s in a Name), a full and accurate date of birth, and accurate address information (See Previous Address Tenant History). 

Without this information you may obtain a false positive report, and turn away an otherwise good prospect.

Date of Birth. Although a fairly simple request, a prospect’s date of birth is often incomplete on the application, or inconsistent with other information. To avoid headaches later on in screening and debt collection, make sure:

• To get a complete date of birth - month, day, and year. Very often this is the only thing to differentiate people with similar or common names. 
• The date of birth you receive is consistent with all of the prospect’s other information. Compare it to a driver’s license and any other information available. Click here to view a chart of states which incorporate the date of birth within the drivers license number.

Place of Birth.  The city and state or country of birth is valuable information for additional cross-checking or other data.

• Remember, every piece of information must be consistent with every other. The place of birth may reflect an inconsistency with the origin of the social security number (see SSN state codes) or list of previous residences.
• An accurate place of birth also will help locate relatives in case the need arises, or to locate the tenant for collection purposes.

Mother’s Maiden Name

• Along with place and date of birth, knowing a mother’s maiden name can be the most important piece of the puzzle when searching for assets in the event you have to turn the tenant over for collection.
• A mother’s maiden name not only helps confirm the applicants background, but may be the difference in locating assets and detecting fraud.

Previous Address Tenant History Report

Always order a Previous Address Tenant History (PATH) Report when you order a criminal report.

With this information, you can:

• Evaluate if the prospect is telling the truth on the application.
• Eliminate shared names from the criminal reports by comparing to known addresses.
• Discover if the prospect lived outside the area of the criminal history report you ordered — that way you can broaden the search.

Follow this link to see a sample Previous Address Tenant History Report.

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

You have a great story to tell about tenant screening.  Please share your insights by leaving your comment below.

To subscribe to our blog, click here. 

Posted by Kim Ezzell on 03.15.2008. CLICK to Leave a Comment »

Filed under: AAOA Forum, Credit Screening

Tenant Screening Lessons from the Trenches

Do You Have the Techno-Savvy to Screen Younger Tenants?

Veteran property manager Wallace Gibson of Gibson Management Group, Ltd., in Virginia responded to our article Is Your Lease Application Falling Short? with his own list of great tips, gleaned from forty years in the property management business.  Here’s some of his sage advice:

Tenant Credit Checks

Running a credit check with a FAKE SS# with the information on an application actually CREATES a “credit identity” for that person - so that the NEXT time the information is requested it is actually THERE with ‘no credit’ reported….this should be a danger sign for would-be landlords…

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Posted by Kim Ezzell on 02.28.2008. 2 Comments »

Filed under: AAOA Forum, Credit Screening

IS YOUR LEASE APPLICATION FALLING SHORT?

Find Out If You Are Making These Common Mistakes

Like a house built on a strong foundation, your rental application can make or break:

• Your ability to effectively screen your prospective tenant.
• The likelihood you’ll collect your rent.
• Your chances for recovery if you have to turn the tenant over for collection.

Is Your Lease Application Up to Par?

Compare yours to this checklist to see if you are leaving anything out:

Read the rest of this entry »

Posted by Kim Ezzell on 02.27.2008. 3 Comments »

Filed under: AAOA Forum, Collections, Credit Screening, Forms

TENANT BACKGROUND CHECKS: What’s in a Name?

TENANT BACKGROUND SCREENING: What’s in a Name?

Although a prospect’s name typically is the first thing a landlord asks for, it is often incomplete on the application and lease.  This presents a problem for enforcement of the lease agreement, evictions, subsequent collection efforts, and investigations.Make certain that you recorded the prospect’s full, legal name, including their middle name. This name should match all of the ID.

It is also important that the signature contains the full, legal name.

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Posted by Kim Ezzell on 02.19.2008. 2 Comments »

Filed under: AAOA Forum, Collections, Credit Screening