Tenant screening red flags

Tenant screening red flags

 

Red Flag

Red Flag

Proper tenant screening is likely the most important part of property management.  Property managers and landlords not only have a responsibility to follow a screening process, they have a duty.

Before a tenant is placed, the landlord / property manager has control, however, once the tenant moves in, they are favored by the tenancy board.  We are the professionals, and are expected to know how to properly screen a tenant, not be reckless, and look out for the well being of the other tenants and the property.

When we show apartments and talk to potential tenants, we can often identify red flags.

It starts in the pre-screening that we do before we show an apartment.  It does not end until the application is either accepted or rejected.  We need to ask  lot of questions, just as your tenant will ask you a lot of questions, to see what you are gong to be like as a property manager.

I want to plead my case for doing credit checks, before I get into describing specific red flags.  I believe you should do a credit check on every single potential tenant.  I am aware that is costs money, so I would only check out candidates that you feel are going to be great.  The credit check is important for a number of reasons.  There are two reports we use at tenantverification.com  Transunion and Equafax.  We do not always have to do both, however, sometimes it is necessary.  The Transunion report is more detailed on the payment history, however, the Equafax report uses a rating system, A, B, C and shows a risk rating based on beacon score.  When a tenant fills out your application, they provide information that is sometimes contradicted in the report, or is consistent with the report.  Items like previous addresses, number of debts (good or bad), and current or previous employers.  I have had some people tell me that I will see a few glitches over the past year on their report, then when I take a look, they have bad history for several years.  A credit report is about much more than a Beacon score.  I have had some property managers tell me, they do not bother because they rent to low income people and they all have bad credit, I have had others tell me that they do not want to pay the money (the cost can range from $10 – $25 per report), I have had others say they do not bother, because it is a waste of time,  others say they are uncomfortable asking for things like social insurance numbers, birth dates, etc. that are required for a report. The list goes on.  The reality is that now that we are in the information age, there is really no excuse for a property manager to not do a credit report before they approve a tenant.

Now, for the red flags.  What I mean by red flags, are signs of an application challenge that may lead to turning down an application.  We often see the red flags at the pre-screening level.  We often ask questions over email and the potential tenant will not even respond.  We have also had some potential tenants not follow through with there application when they find out we do credit checks.

Red flag number one:

Prospect does not want to provide social insurance number – so you can do a credit check -I remember asking a gentlemen for his social insurance number on an application and he got very defensive, saying things like, rent is not a loan, why do you need to check our credit.  A person is not required by law to provide a social insurance number to a landlord, however, it is a very important piece of information when doing a credit check.  If you do not have it, you could get a negative report on a prospect, by having mistaken identity.  I have never had a problem getting this information from qualified prospects.  I would consider it a red flag if they do not want to provide it.

Red flag number two:

Employment reference phone number is wrong, or fake – We always do an employment verification check.  I am aware that most organizations are not very open with employee information.  Here are a few tricks:

always google the employer.  Try to match up the phone numbers or people with the pictures / writing on the website.  Does the company exist, do they or the contact person they gave you work there.

Next use the phone number from the website (the prospect may have given you a fake number) Call and ask for your prospect (we have had employers say, we do not know who that is).  When you do reach an employer ask how long they have worked with the organization and how much they get paid (companies usually do not provide this information, unless the prospect asks them to.)

Make sure you have your prospect talk to his HR department, so they are expecting a call from a property manager.

Another tip is to call and ask a random question –  Shelly called an employment reference once and it appeared to be a friend of the prospect, who she caught off guard since she asked a random question.  Something like Do you have any water heaters in stock?  Use a question that relates to the business.  She called another one and the person only just started (they wrote down one year on their application).

Red flag number three:

The tenant provides too much information – This next one contradicts what I am always preaching “gather information”.  We have had cases where the prospect gives you too much information.  The great thing about people is that they love the sound of their own voice.  We have had several cases where the prospect will tell us terrible stories about there current land lord and living conditions, or how they have withheld rent from the current landlord, or how they were recently bankrupt, just lost there job, how they are social and like to party, how they are not concerned about giving proper notice to the current landlord, how they were evicted, etc. I am amazed at some of the things people will tell us.  It is important to listen to your prospect, however, be carful.

Red flag number four:

Not showing up – when you book an appointment for a viewing, we expect the prospects to show up.  The reality is only about half even show up at all.  I would not instantly dis-qualify a tenant for being a no show, however, I would tread lightly.  If they do not respect your time, how can you expect them to pay on time., now they could get in a traffic accident or something drastic.  If that is the case, you may wan to give them a second chance.

Red flag number five:

Prospect will only provide vague information –  They seem a bit uncertain when you ask simple questions like What is your current address?  Where did you live before that? I am not talking about a shy person, I am talking about a person who does not seem to know where they have been living the past few years.  We always like to contact two landlords, the current one may lie, because they could be trying to get rid of them.  Make sure to get a complete application.  Explain to your prospect why you need the information you are asking for.  Make then aware that having complete information will make the approval process quicker.

I am sure there are other red flags when you are screening tenants.  Sometimes you need to use your gut.  Professional tenants can be great story tellers.  Have a process, and do not stray from it.

Do at least the basics:

Application form – with names, employment, two past addresses, number of occupants, references, signatures

Do a credit check

Call current employer

Call all references

Call current and previous landlord

Get a copy of ID when you sign the lease

Use your intuition

If you do all of the above you will limit your exposure to negative tenant experiences.  I will tell you the good news, the majority of tenants are great.  They pay the rent and look after there homes.  I know when I was a tenant in the past, I never caused any trouble and always paid the rent on time.

Michael P Currie

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