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.