Landlord Regrets Not Screening Tenant

by Chris on May 20, 2019

A landlord in Ontario told the news that if he had run a background check on his nightmare tenant, he wouldn’t be in the situation he’s in today.

At least three landlords say they were victimized by the same tenant who moved in, stopped paying rent, and called in bylaw officers and police as often as daily. One landlord was reported for an allegedly illegal unit, another accused of crimes. None of the landlords did a background check.

The Lasting Impact of Bad Tenants

Lost rent and property damage are the common results of nightmare tenants, but there are other, more lasting impacts of bad tenants that landlords often overlook. Problem tenants can lower property value.

Savvy investors know the best return is to purchase an under-performing property. They look for bad reputation, poor management, or neglect. Then, they lowball for the best possible price, apply better management policies, and enjoy the highest possible profit margin.

Sellers have little recourse, especially where they cannot show a steady income stream. One tenant who doesn’t pay rent for three months hurts. Imagine what could happen if that pattern is repeated two or three more times. For the same reason — a lack of income stream — a landlord may have a tougher time obtaining financing for repairs or to purchase more properties.

A reputation for crime, police visits, or code violations also gives buyers ammunition to push for a lower price. And then there are the out-of-pocket costs of defending against frivolous claims, and the headache of dealing with disgruntled neighbours.

Tenant Screening Basics

Tenant screening need not be burdensome.  It is the best layer of protection landlords have against nightmare tenancies.

Verify the person’s identity with a photo ID. Have them complete a rental application with a signature allowing a tenant background check. Review that information first to see if it adds up. Then, verify the information by asking for supplemental documentation and checking the references — after confirming that the references are real.

As a last step, run a tenant credit check to see if the individual has sustained judgements or been habitually late on other revolving lines of credit.

Prevention is worth the effort. Just ask any landlord who’s been burned.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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Generally, it is best to avoid renting to people you know. The most obvious reason is that doing business with a family member or friend can damage the relationship. But it’s a small world, and at some point, you are bound to be approached by someone you know who wants to rent your property.

There are two choices: make it a policy to never rent to someone you know or take a chance and find out who your friends really are.

That’s what happened to a Saskatchewan landlord when she tried to help a friend who was displaced by a fire. According to a report, the landlord rented out a home to the family trusting they’d take care of it. But instead, the family trashed the house, possibly manufactured meth, and stole everything of value, including parts from a truck kept on the property.

The landlord didn’t do a condition report and didn’t check references. The tenant didn’t pay rent. The landlord was only trying to help a friend. Now, her community is trying to help her cover her costs.

Before deciding whether to rent to a friend, consider the main reasons not to rent to people you know:

1. When landlords rent to acquaintances, they cut corners and don’t screen. With no tenant background check — and possibly no rental application — it’s impossible to calculate the risks. Likewise, with no move-in condition report, it will be difficult to hold the friend accountable for any damage.

2. Friends tend to take advantage of the situation. A friend is more likely to push limits, like staying longer than the landlord anticipated or asking for concessions when paying rent. Friends are less likely to take the lease seriously.

3. It is difficult for the landlord to enforce the tenancy agreement. Landlords are hesitant to push for late rent, rein in the tenant, or claim deductions on the security deposit because it’s awkward socially.

4. A friend is less likely to report problems. Maybe the friend doesn’t want to seem ungrateful, or maybe the person caused damage and doesn’t want to admit it, but acquaintances are less likely to bring up repairs and other issues occurring at the property. That can lead to increased costs, and possible code violations.

Ultimately, the decision to rent to a friend comes down to how much you are willing to give, and how much you can afford to lose. Consider worst-case scenarios. What if the person pays no rent? What if the property is damaged? Losing a friendship is one thing but losing the friendship and incurring significant income loss at the same time can be devastating. Maybe there’s a better way to help out a friend.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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