Finding new tenants can get sticky. Obviously, there are many steps for landlords to take that will streamline the experience— from looking at previous rental history to employment verification. The information gathered helps you determine a pass/fail for your potential renter. If they don’t make it, you move on to the next. The outline I just gave you seems like it’s a foolproof strategy, but even with the most perfect set of checks, a bad tenant could slip through your doors. If you want a foolproof process, take your investigations one step further. Sift the good tenants from the bad! Here are the signs you might have a potentially bad tenant on your hands, as well as the indications that you have found someone really great.
It’s not only about how much money your tenant makes, but it matters more how consistently that money comes in. If their income is unreliable, constantly fluctuates, and you can never be sure if they will make rent the next month, you have a problem tenant on your hands. If the deposit required is a significant amount, this will help weed out who will continue to pay and who will not, but that doesn’t really predict your long-term profitability. Keep in mind that a renter needs to be earning 3.5 times the monthly rent for you to sit back and relax.
Someone’s credit score is generally an indication of the amount of risk they are to you as the landlord. What you may not realize is that a bad credit score is actually linked to people who engage in behaviors that are risky or irresponsible. When you decide to check someone’s credit score, which you will do as a landlord, take it as insight into how responsible this person is in their life. Credit scores tell you a renter’s determination to pay rent and shows a lot about future behavior. Utilities that have an outstanding balance are a red flag.
Lack Of Respect
You can trust me when I say that every landlord who has ever encountered a bad tenant—that renter lacked respect. They didn’t even have respect for themselves! People who do not respect others, or themselves, cannot be trusted. They simply are not likely to take good care of your property or anything for that matter. Take time to call the prior landlord and find out their experience. If the renter is new to the scene, take a minute to verify references and employers for a better view of who the person is in their everyday.
The Dream Tenant is an entirely different type. They will have different characteristics than the bad ones; being a stark and welcome contrast. These individuals will most often be upstanding citizens, show a level of honesty that surpasses most, and be cleanly people. Here are the good tenant signs to have on your radar.
No Criminal Activity Or Record
Tenants with no criminal records is obviously a good sign. Check the county level and take a thorough search into a potential tenant’s background. As the landlord, you do want to know everything; even if it’s just an unpaid parking ticket.
Level of Honesty
Someone’s integrity and level of honesty matters, and as a landlord, it should be on the top of your list of renter character traits. You need tenants who are trustworthy, can be counted on, and are decent human beings. Somebody with morals and boundaries will be respectful of your property and you.
If you don’t think that a person’s personal hygiene matters, think again. Tenants with a great level of cleanliness are more likely to keep your property in the best shape and set higher standards than those who are messy. This rule is not a set-in-stone guideline, but many studies have shown that a person’s cleanliness is linked to doing what they say and listening— all great traits for someone renting your units.
In summary, with these great tips, you will have less to be concerned over in your path to becoming a savvy real estate investor. Keep in mind it’s important for you to find high-quality renters, because they make or break your income stream.