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Important Red Flags to Consider When Screening Tenants

Screening prospective candidates for your rental property can be a stressful task. There are rare occasions when you find the perfect tenants immediately, and there are times you may feel like you got a bad batch. If you are a new landlord, finding the right renters can be intimidating—or even impossible at times.

However, whether you are a new landlord or a seasoned one, there are always a few things to look for in your pool of applicants. Keep an eye out for these red flags:

Bad Credit

You probably already know this, but it keeps repeating. You will likely come across a few candidates with much lower credit scores than others. This can be for any number of reasons, but the higher the score, the more confidence you can have in them to pay the bills. Unfortunately, the recent recession has left many younger people without much credit – especially those without parents who support them.

Credit companies have been more conservative about who they give credit cards to, and for good reason. However, that does put the younger generation at a disadvantage – especially those who became financially independent in those first years. However, the economy is slowly steadying so we should see credit scores bounce back in the following years. With that said, while credit scores are important, it’s also a good idea to take a look at other factors. Running credit checks through reliable companies like Transunion SmartMove can aid you in this process; they’ll provide you with not only credit scores, but also criminal histories and any past evictions.

Low Income

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This is a simple one. Can the tenant pay what you are asking for? The general rule is to have an income that is at least 2.5 to 3 times the monthly rent. In many cases, that will include the income of multiple roommates. If there are three tenants, for example, the total income of all three must be 2.5-3 times the rent.

History of Eviction

Evictions are a huge red flag. That means that someone was asked to leave but refused. The landlord had to legally terminate the tenancy, including a written notice, according to state laws. If the renter does not move, then an eviction lawsuit can be filed. This shows that the tenant is an obstinate and untrustworthy candidate, and should be avoided.

Criminal History

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The general rule is that if your applicant has had more than three convictions in the past five years (other than traffic violations), this is an indicator that he or she cannot follow rules. It is wise to also consider any pending cases. Some landlords are even stringent on any dismissed charges, stops, and arrests. This portion depends on how strict a landlord’s qualifications are, although the speeding/parking/traffic tickets may not be considered reasonable unless they are frequent.

Aggressive Dogs

It is likely that your rental insurance company does not allow large dogs. Breeds like Pit Bulls have a poor reputation and can be trained to be fighting dogs (which is a criminal offence) even though the breed itself is not inherently aggressive without training. Others like Chow-Chows are known to be aggressive to all other animals, including cats and dogs. However, even small dogs can be an issue. While some dogs are all bark and no bite—like Pomeranians—other dogs like terriers can be highly territorial and will not hesitate to bite the ankle of a stranger. Some insurance companies like AllState offer renter’s insurance that covers animal liability, so you may choose to have your renters use a similar policy.

Things to Consider or Ignore

Sometimes, so-called “red flags” are unavoidable life situations. While you should take the following into consideration during your tenant search, these factors don’t necessarily mean the tenant is a bad match.

Poor Landlord References

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This is unreliable because the situation is highly variable. You must consider: was the landlord a reasonable person? Did the landlord have inherent biases, or were the tenants legitimately difficult? If you are a former renter, you might understand that sometimes it’s the landlord and not the tenant that was the problem. Furthermore, some landlords will write glowing reviews even when the tenants were asked to leave. This is the same with deposits. While it’s legitimate to be concerned about why the tenant was not given their deposit back, do not assume the negative. There are crooked landlords who got away with not giving back the full deposit simply because the tenant was unaware or didn’t bother to take them to court for small claims.

Living with Relatives

As mentioned earlier in regard to bad credit, there are young people out there who simply couldn’t afford to live on their own before. The recession has caused a massive chunk of the younger generation to stay at home for even a few years after college. This can actually be an indication of responsibility. If the applicant shows that they have gained good credit and income while they have lived with a relative, then this can be a positive sign.

As you begin your search for the perfect tenant, keep these aspects in mind and make a wholly informed decision.

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