6 Mistakes Landlords Make Screening Tenants

by Chris on April 1, 2013

Every landlord understands the importance of choosing quality tenants. But not every landlord’s tenant screening policy is as effective as it could be.

A landlord who cuts corners with tenant screening is no different than another business owner who hires an employee without first verifying the person’s qualifications.

In both cases, the business owners risk theft, liability and income loss.

But unlike other business owners, who can simply fire bad employees, landlords have a much harder time getting rid of  problem tenants.

Avoid income loss in your rental business by avoiding these common tenant screening mistakes:

1. Not screening each and every tenant.

A landlord cannot predict with absolute certainty whether an applicant will become a problem tenant. But screening every tenant greatly reduces the risk of inheriting a bad tenant. Trusting an applicant’s appearance or demeanor and judging the rental application on its face without verification are risky mistakes. Problem tenants know how to play that game.

That’s why it is important to demand a tenant background check from every tenant, which includes all adults in cases of multiple occupants.

2. Not starting the screening process early enough.

Tenant screening is a process of elimination throughout each phase of leasing, and that process begins with the first communication. The longer the process lasts, the more information the landlord will have to reference, and the more likely any inconsistencies will be revealed. Starting early also discourages bad tenants from applying, and that will save time.

3. Not realizing a vacancy is less costly than a bad tenant.

In the rush to fill a vacancy, especially in a property subject to a looming mortgage payment, landlords run the risk of making mistakes. Professional tenants — the ones who burn landlord after landlord — are watching for this very situation.

Bad tenants don’t just skip out without paying rent — sometimes they fight the landlord’s eviction and remain in the property for months. While they live rent-free, they have no compunction about damaging the property. Because the potential costs to repair property damage or to prosecute a prolonged eviction are virtually unlimited,  it’s safe to assume it will cost less to allow the property to sit vacant a few days — or even a month — while searching for the right tenant.

4. Not applying the same tenant screening policies to everyone.

Screening policies that vary from tenant to tenant can give rise to discrimination claims — and the associated income loss.

What’s more, a standardized policy allows the landlord to use the best screening techniques for each new tenant. That greatly increases the likelihood of discovering a problem tenant.

5. Using the wrong criteria for evaluating applicants.

For screening to be most effective, the landlord must know the end game — the specific qualifications they are looking for in a tenant. Inappropriate criteria that don’t relate to ability to pay rent and care for the rental property limit a landlord’s choices, and can give rise to liability if an otherwise qualified applicant is rejected. For instance, one landlord rejected tenants for not maintaining an open line of credit and was sued for discrimination; another could only envision students in her rental, and turned away all other qualified applicants.

6. Not checking with current and previous landlords.

An experienced landlord writes, “I have rented to over three dozen tenants over the years and never had anyone call to check a reference on a former tenant. It’s scary how lazy and careless most landlords are.”

Harsh words, but they convey an important message. Imagine the frustration a landlord feels when a problem tenant has no problem finding a new landlord.

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 in 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.

{ 4 comments… read them below or add one }

Donna April 2, 2013 at 6:03 am

What rights to landlords have when a tenant wants to move out and break a lease?

Marv April 2, 2013 at 8:11 am

Good article Chris! Time and again we emphasize the points that Chris wrote about. When you consider how easy it is to set up a screening process with criteria that minimizes risk of income loss and discrimination, VS the cumbersome and time consuming eviction process ..why wouldn’t landlords screen every applicant? Perhaps it’s the old adage, ah it will never happen to me! Perhaps you won’t get the tenant from hell by not screening, but consider the wasted resources spent chasing late rent payments, property maintenance issues owing to neglectful tenant, move lease breakers, etc. The other important aspect of not screening each Applicant is the liability factor. Is there a liability attached to a landlord/property manager when something goes awry as in a violent/dangerous tenant assaulting another tenant, or a neighbor or children in the area? Should the landlord have conducted a background screening to determine the suitability or safety factor of the tenant before signing the lease? Could the landlord/property manager be found liable in a civil case for not having taken the necessary precautions to minimize or negate a serious criminal scenario where harm has come to another Individual? Why take the risk? What’s your opinion?

Helen Nguyen April 2, 2013 at 10:51 am

Great article Chris,

I have been use TVS for my client. But there is more to check.
I will look lots closer when time for check on Tenants.

Thank you

Marv April 9, 2013 at 10:19 am

Donna asked the question as noted above…what rights do landlords have when a tenant wants to move out and break a lease. Well Donna not many but…if the lease is broken for no valid reason, then a landlord has options. 1.) get a judgement via small claims for monies owed. 2.) Depending where you are from, you may have an Arbitration Division of the Tenancy Branch that you could go to and present your case 3.) Try to deal with the tenant and minimize your rental income loss by finding a new tenant asap and being reasonable with the tenant that is moving out. No matter what happens when the tenant departs, a landlord/property manager needs to mitigate income loss by advertising and getting a new tenant in asap. The tenant departing is only on the hook for the amount of time it takes to get that unit occupied again. In my opinion, it is best to negotiate with the departing tenant and attempt to get the unit rented again. To answer your question more directly Donna..without causing yourself a lot of grieve and stress, it is best to get your unit rented asap before or as soon as you can after the tenant departs. Even if you manage to get a piece of paper from the Courts or an Arbitrator, there is still the matter of collecting monies owed. So what can you do to prevent this from happening? 1) SCREEN YOUR PROSPECTIVE TENANTS… and find out if they have broken other leases. How? Contact current and previous landlord, order credit report as sometimes collection agencies will report landlord debt as a public record. 2.) Have the Tenant read and sign the NOTICE TO TENANT! Before signing the lease. REPORT the tenant’s monthly pay habits to TVS! This costs you nothing, it will make the tenant think twice before breaking a lease and leaving you stuck with unpaid rent. Why? Because this will affect their tenant history with TVS and they might be inclined to come an pay you to clear the debt.
AN OUNCE OF PREVENTION IS WORTH A LB OF GOLD! Prevent rental income loss by setting up a thorough screening process and report your tenant’s pay habits to TVS.

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