12 “Sure” Deal Breakers When Screening a Prospective Tenant

1If you are a discriminating landlord, you surely have a number of conditions on which you will disqualify a prospective tenant. As long as you discriminate legally, and not against any fair housing laws, we may share the same “Deal Breakers” below. Some of these can go either way, depending on the needs of the landlord. Please let us know if you have any “sure deal-breakers” not listed.

  1. Bankruptcy
    Do you know what a person has to go through before deciding to declare bankruptcy? It can sometimes be years of dodging creditors and bill collectors. It is a process that teaches an individual how to get around paying creditors. It is not a pleasant experience, and it usually educates and hardens a person towards all creditors.
    I don’t mean to say people who have gone bankrupt are not nice people or will not be good tenants!I mean to say that I prefer not to rent to people who are not afraid to damage their already damaged credit.

 

  1. Prior Eviction
    Any tenant who has been evicted probably has very bad credit and may feel confident in gaining a few months free rent in an eviction should the need arise.

 

  1. Criminal History
    I’ve been asked by a few landlords, “Am I allowed to discriminate against someone with a criminal history?” Of course you can! Yes, it is legal to decline an applicant because they have a criminal record.
    It may notbe politically correct to decline criminals, but Criminals are not a protected class…. Yet. Obviously, you need to use your common sense on this. A DUI or speeding ticket, for instance doesn’t necessarily make someone a bad tenant, while a conviction for domestic violence could be more of a warning sign.

 

  1. No Money
    Are you a landlord who needs to collect the rent? Or are you a charity who takes in unfortunates who don’t have all the required move-in money?
    If you want to survive in the landlord business, you need tenants who can afford to move in and pay the rent every month.
    It is a major RED FLAG when a prospect is unable to provide you with the necessary security deposit and rent. I am amazed at how many landlords allow tenants to move in without first collecting the rent and a deposit!

 

  1. Bad Credit
    What is the purpose of running a credit report on a prospective tenant? You’d be surprised at how many landlords run credit reports that come up BAD and still accept the applicant anyway. For me, bad credit history is a sure denial. Otherwise, why bother running a credit report? Needless to say, credit history is often indicative of how your rent will be paid.

 

  1. Tenant Unable or Unwilling to provide satisfactory references
    If they’re not willing or able to comply with your rental application, why in the world would you expect them to follow the rules of your lease?

 

  1. Tenant unwilling to agree with your lease
    That’s a no-brainer. DECLINED!
    I am surprised at how many landlords are willing to sacrifice important landlord protection lease clauses simply because the tenant wants them to. Of course, you need to to be sensitive to the tenant’s needs, and weigh certain arguments on a case by case basis.

 

  1. Bad Attitude
    That’s a no-brainer. DECLINED!

 

  1. Alcohol and/or Drug Problem 
    I know you want to be fair and help people, but steer clear of these kinds of problems, especially when they are obvious. You are looking for a responsible tenant who you can rely on.

 

  1. Smoking
    This is a judgment call. I try to keep my properties smoke free whenever possible. I find it is difficult to rent a unit to non-smokers that had smokers in it before. Rental re-prep involves a vacancy and is usually more painting and cleaning, and still may not eliminate the odor.

 

  1. Pets
    This is also a judgment call. I try to keep my properties pet free. I learned that it can be difficult to rent after a pet was there, for allergy reasons, odors, etc. Rental re-prep usually includes more painting and cleaning and often new carpeting, and still may not eliminate all the odors.
    On occasion when I have great applicants and have inspected the previous home and the pet, I may make an exception, but I am still reminded of the immortal words of my landlord mentor, Nick Koon: “No dog every improved the value of a rental property.

 

  1. Tenant Unable or Unwilling to see the rental personally or meet landlord before application being accepted
    Big RED FLAG. Do a search of “Scams” in the LPA Landlord Q&A Forum.
    Even if the tenant is legit, you should not be deprived of the right to do a proper screening, including the opportunity to meet the prospect so you can decide if you will be comfortable renting to him or her.

About the author:
As a Real Estate broker / investor in New York, John Nuzzolese has been involved with rentals and investment property since 1979. Besides owning and operating two real estate businesses, he is president and founder of The Landlord Protection Agency, Inc. , an organization specializing in helping landlords and property managers avoid the hurdles and pitfalls and expensive blunders common when dealing with tenants.

More information on The Landlord Protection Agency is available at www.theLPA.com

 

Traits to Look for in a Potential Tenant

1Finding a good tenant is essential, but it can also be tricky. It requires more than just putting an ad on the internet. To find a great tenant for your rental property, it pays to know what makes a good tenant.

So, we’ve created a list for you. These are 8 traits to look for in a potential tenant.

1. Openness Toward Background Checks It’s important for you as a landlord to know who you are renting to before you rent out your property. This is because you never know when a tenant is going to be reliable and worthwhile or seriously problematic.

A tenant background check is important for the following reasons:
• To find out if they have a criminal record • To choose the best tenants from your pool • To check their work history • To make sure that they will comply with your rules • To confirm your tenant’s rental history • To know which questions to ask during screening • To confirm their identity

2. Reasons for Moving Tenants move for various reasons. For example:
• To change their neighborhood • They had problems with neighbors • A job change/relocation • The need for more space • They had problems with their previous landlord

Contacting their previous landlord isn’t 100% reliable, as some might throw an array of unjust accusations. The only option is to ask them directly. Granted, the tenant may lie but some of the reasons are quite straightforward and oftentimes completely honest answers.

3. Personal Behavior You should call up tenant’s previous landlords to ask how they were personally. Good questions to ask them include:
• Did the previous tenant pay the rent and on time? • Did they do a reasonably good job of taking care of the rental property? • Was the person disruptive towards neighbors? • Was the unit clean and in good order when the tenant left? • Was the tenant evicted?

4. Ability to Pay Rent This is a no-brainer. The prospective tenant should be able to pay rent without struggling. To verify whether they can afford the price of the rent, you need to look at their proof of employment.

Look for a tenant who has good job prospects and a steady, reliable income. A good rule of thumb is that the price of rent shouldn’t exceed 30% of the tenant’s income.

Some red flags to look out for include a person who has long periods of unemployment or if the person changes jobs often.

5. Cleanliness A good tenant maintains cleanliness. It’s every landlord’s dream to get a tenant who will take good care of your property. You obviously wouldn’t want a person who is going to let trash pile up on the patio or leave food remnants building up in the microwave.

You can get a better idea of the way they would maintain your property if you get a glimpse of their car or if they allow you to meet them at their current residence. You could also include a cleaning clause in your lease as well.

6. Subletting When you are a landlord, it’s important to protect yourself against as many potential risks as possible. This is the same reason why you have to do a proper tenant screening before renting out your property in the first place.

But should you allow a tenant to sublet? Subletting happens when an existing tenant lets all or part of their home to someone else.

Allowing subletting is risky. Some tenants want to sublet as a way to earn extra cash or to avoid paying rent on a vacant apartment. Also, there’s no guarantee that they would pay as much attention to the tenant selection as you did.

It would be counterintuitive to be okay with your tenant getting a couple of tenants of their own.

7. Roommates It’s important to know how many people are going to be living with your renter. The tenant might be planning to move in with their significant other or even their entire family.

Should you allow roommates, here’s how to do it smoothly while protecting your investment:
• Consider updating your occupancy limit • Be prepared to consider a unit switch • Be cautious about creating new lease terms • Require potential roommates to be screened as tenants

8. Plans for residence Your final layer of screening is a simple practicality test. If they have a job nearby, verify that your house is not an impractical distance away. If they have a family, check that there is a room for everyone in the home. If they have a pet, confirm that they are willing to conform to the pet clause in your lease agreement.

Generally, tenants will have an excellent plan for residence, but it never hurts to check.

If your prospective tenant possesses most of these traits, then they are a great candidate for a long-term renter. They will most likely keep the home in good condition, and that they will be responsible and well-behaved.

Source: realtybiznews.com

How Tenant Screening Changed In 2017

1One of the most important things that property owners and landlords can do to prevent problems with renters is to conduct a thorough tenant screening. The best tenant screening reports cover areas like criminal record, eviction history and credit score. Without it, landlords increase their risk of dealing with tenants that have a history of unpaid rent, costly damages and evictions.

However, there were two major changes in 2017 that affected the way that landlords get information from tenant screening efforts.

National Consumer Assistance Plan

The National Consumer Assistance Plan (NCAP) is a joint venture between the three credit bureaus, Equifax, Experian and Transunion. The plan stems from a settlement in 2015 between more than 30 state attorneys general and the three major credit bureaus.

The goal of NCAP is to boost the accuracy of the information on the credit report, among other things. One of the ways they plan to do this is by decreasing the reporting of such public records such as tax liens, parking tickets and civil judgments. So how does this affect landlords?

The new reporting changes are especially critical for landlords because evictions are civil judgments and as of July 1, 2017, they disappeared from credit reports of any prospective tenants. If tenant screening companies provide landlords with just a credit report as part of an applicant’s background check, the landlord will have no insight into that person’s rental history.

Landlords need to check with their tenant screening service to ensure that they are now using an alternative source to discover any eviction judgments on an applicant. There are several national companies that do provide information on forcible detainer and unlawful detainer judgements for tenant screening companies. It’s now the only way that landlords can get information on prior evictions.

Because of the extra cost involved in using a national eviction search, many tenant screening companies are increasing their fees and passing the cost on to their clients. Landlords may have to charge more for their application fees (if allowable in their state) to cover their own costs.

Any landlord that wants a thorough background check on an applicant must ensure that the tenant screening service they now use includes this separate eviction search.

Equifax Breach

One of the country’s largest credit reporting companies experienced a data breach that compromised information for more than 145 million customers. The company experienced unauthorized access to data from May through June and key identity information was accessed, including names, birthdays, social security numbers, driver’s license numbers and more.

Because of the massive potential for identity theft, many consumers placed a freeze on their credit report. With a freeze, potential creditors are unable to access someone’s report without the consumer removing it temporarily. This prevents anyone from opening a line of credit with that information, including identity thieves. However, it also prevents landlords from accessing the info they need to get a complete picture of their applicants.

Landlords need to be aware that identity theft and fraud will be on the rise as a result of the data breach, affecting innocent applicants. They should also know that because many people have put a freeze on their report, their tenant screening company may not be able to access anything without consent.

During the application process, landlords can make things go a little more smoothly with any applicants that have set up a freeze. Many tenants don’t think about unlocking their credit report for a background check on a rental home. Landlords can ask applicants or include a reminder on the application about lifting the freeze temporarily. If the applicant can’t or won’t lift the freeze in a timely manner, landlords may have to move to the next applicant.

Despite the freeze on a credit, landlords should never change their tenant screening practices. When looking for the best tenants, landlords need to get a good idea of what kind of renter an applicant will be. Proper tenant screening will always save landlords time, damages and money. However, in 2017, these two factors just made it a little more difficult for landlords and tenant screening companies to get the background information they need.

Source: realtybiznews.com