How to Reduce Your Risk with a Questionable Tenant
There’s always a chance that one of your best tenants will be someone who doesn’t have much of a rental history, someone who may have a clean criminal history, who may have a decent job, but who lack any rental history to investigate. Maybe they just got out of a long term relationship and have never rented their own place before, or maybe they’re young and have never rented a place at all.
No matter who you’re renting to, you’re always taking a chance, but you’re taking a bigger chance with some tenants than with others. The concern here is risk management. Some people choose to play it safe by simply refusing to rent to anyone who lacks a rental history or who has had run ins with the law. This is completely valid, especially if you can’t really afford to take a chance, so this is the first point to keep in mind:
- Never take a risk that you cannot afford
If you’re even thinking of letting someone who doesn’t have a solid record and a clean background rent one of your units, you need to be in a position where you can comfortably afford for the worst to happen.
One more thing to bear in mind: as long as you’re pricing your units at a standard that your tenants are comfortable with, rentals are a seller’s market. If someone doesn’t check out, there will be another applicant coming along shortly, so don’t rent to someone just because you “need to fill the unit.”
So let’s assume that you can take the hit if your tenant turns out to be flaky. Maybe you take pity on this 20 year old, because you remember how hard it was to get an apartment when you were that age, and you can afford to give them a chance. Maybe they have a criminal conviction, but it was a pretty minor offense. Whatever the reason, if you really want to give someone a chance, where do you go from there?
Well, after conducting all of the normal background checks, after you’ve looked at their rental history, renter credit, tenant eviction history and so on, you may want to conduct a check of your own. Here are a couple places to run your own check on your applicant:
- Social media
It’s very easy to find young applicants on Facebook and Twitter and other sites. You can gauge what sort of risk they might be by looking at photos, content they post and so on. They may seem fairly clean cut in person, but an endless stream of underage drinking photos might tell a different story.
- Interviewing acquaintances
Think of it like bringing in a “character witness.” Call their employer, emergency contacts and so on and see what they have to say about the applicant. Former employers can be a good way to get the honest truth, as they have no reason to lie to you if they fired the applicant for stealing from the register.
If you do decide to give someone a shot in spite of an imperfect or not-so-comprehensive record, one of the best things you can do to protect yourself is simply offer them a month-to-month lease. If they stick it out for a year with no major problems, you can sign them to a six or twelve month lease.
It’s important to remember that it’s a business, not a charity. Even if a background check turns up a perfect record, if something about the applicant just seems off to you, then it might not be worth the risk. A tenant screening credit check is a great way to measure risk, but at the end of the day, it’s you who will be out the repair costs if they cause more damage to the apartment than their deposit covers, and it’s you who will be stuck looking for a new tenant if they disappear on you. Take background checks into account, but use your intuition, judgment and basic common sense, as well, when taking on a new tenant.
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