Can a strong rental market be a bad thing?
It seems counterintuitive, but good market trends can lead to financial losses for some landlords. So can having a successful tenancy. Why?
Because strong demand or good experiences can lead to complacency on the part of a landlord.
Complacency, in turn, encourages these landlords to cut corners on tenant screening policies. Some stop running tenant background checks altogether — after all, they got lucky with the last tenant simply by choosing someone they liked.
And who needs to pour through a pile of rental applications when the first prospect looked good?
Unfortunately, good luck and a strong economy only guarantee that you’ll find more tenants — not necessarily qualified ones. In fact, just the opposite can be true.
As the rental market tightens, problem applicants get more creative as their desperation grows. As a result, they’re more likely to push the limits by providing misleading information on rental applications, and even committing outright fraud in a frantic effort to find a place to live. They will seek out landlords who don’t screen tenants — someone more likely to take a chance.
This can involve phantom landlord references, erroneous rental applications, fake employment references, and more.
It’s human nature to say to ourselves “I have so many applicants, I’ll take the one that I like the best, and if I’m wrong, I’ll just choose another.” It is an easy trap, and its not uncommon for even the most competent landlord to get lured into it.
Unfortunately, when the luck runs out, it can take months — even years — to recover.
It is impossible to find your ideal tenant every time based on likeability alone. The best tenant screening policy is to verify your top applicant each time you fill a vacancy.
The best tenant will have verifiable income, a credit history with evidence of financial responsibility and a solid rental history from real landlords (not their best friend, posing as a landlord).
By ‘sticking to the knitting’ of tried-and-true tenant screening practices, you can enjoy continued profitability without falling prey to an unscrupulous tenant who will cause income loss.
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.