Thursday, November 20, 2008

How To Avoid A BAD Renter

If you can't judge a book by its cover, then how can you judge a tenant before you hand over the keys? Even the best property manager gets burned from time to time, but there are some warning signs that should tip you off to impending trouble.

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Step One
APPEARANCE
As obvious as this sounds, looks can be deceiving. A potential renter's appearance should give you a general idea of the person's income level. If a man arrives in a three piece suit to rent a delapidated trailor, you have to wonder what is going on. Is he trying to go over the top with his appearance to scam you into renting to him? On the other extreme, someone who shows up for an interview in their pajamas might signal a problem too.
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Step Two
BODY LANGUAGE
You can tell a lot about a person by their body language. How does the renter react to your questions. Do they crossing their arms defensively or avoiding eye contact? Are they open with you, keeping their arms at their sides? Notice the way couples look at each other as they look around. Take note of any whispered conversation that would alarm you to a potential problem. If they seem secretive, then they probably have something to hide.
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Step Three
NEATNESS OF APPLICATION
Did the person take time to write neatly while filling out the rental application? Are any questions left unanswered or filled out improperly? Make sure to point these things out and request a completed application before you go any further in the rental process.
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Step Four
CREDIT CHECK
After the application is completed, do a credit check to make sure there is not a history of unpaid debts or bankrupcy. You should set certain credit standards for the tenants you accept. This will give you an easy out when someone doesn't check out.
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Step Five
BACKGROUND CHECK
Beyond knowing the financial history of perspective tenants, you need to know if there is a criminal history. Do a complete criminal background check and run the tenant's name to see if it appears on the national registry for sex offenders.
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Step Six
REFERENCES
Require applying tenants to give you contact information from prior landlords. Do not accept only personal references. Verify that the people are indeed landlords and not just a friend doing the tenant a favor. Once you have spoken with prior landlords, do a driveby of the property where your tenant is currently living. See how it is maintained to be sure they will not trash your property.
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Step Seven
CHECK WITH THE BANK
Verify information from the application with the tenant's bank. Do they actually have an account with that bank? Is it in good standing? You certainly don't want the first rent check to bounce!
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Step Eight
REQUIRE A DEPOSIT
Set a significant deposit fee to weed out those tenants who are not looking for long-term arrangements. Make sure your contract states that the deposit is non-refundable if the lease is not honored or if the property is damaged.
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Step Nine
REQUIRE A LONG-TERM LEASE
Leases should ideally be for a minimum of one year. This insures that you do not have a constant influx of tenants. If a renter is serious about the property, this should not be an issue worth arguing over. Most good renters understand that a lease agreement is standard procedure.
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Step Ten
GUT INSTINCT
When all else fails, go with your gut. If something inside of you says that this renter will be a nightmare, then find a reason to turn them down. Somewhere along the way, you will find a reason to turn the renter down. If they check out as perfect, but you still feel uneasy, just take someone else instead. Then you can let the renter know that the apartment/house has already been leased. You can offer to keep their application on file if it will ease the blow. Just make a note on your personal records of your uneasiness so you will remember them when you go throught your applications in the future.
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