Choosing the right tenants can make or break your rental business. Having reliable renters means generating steady income and avoiding headaches. But one bad tenant can turn into months of unpaid rent, costly repairs, and legal battles. Thorough tenant screening is the best way to protect yourself, but it only works when you know what to watch for.
This is something professional property managers do well. For example, Green Residential, a San Marcos property management company in Texas, provides tenant screening services to all of their investors. As a result, their clients get higher quality tenants.
If you own rental property, here are the most common red flags that you should consider before someone signs a lease.
- Incomplete or inaccurate applications
A tenant who doesn’t complete their application or provides the wrong information is often the first sign of a bad tenant. Mistakes happen and sometimes people skip line items by accident, but you can usually tell the difference.
When an applicant leaves large sections blank, they might be hiding employment history, bad rental history, or prior evictions. When information conflicts – like different job titles between their application and pay stub – it suggests dishonesty.
The biggest red flag in this category is the reluctance to provide references. Tenants who won’t share previous landlord contact information may be hiding something.
- Poor credit history
Credit isn’t everything in life, but it can tell part of a person’s story. When someone has a pattern of missed or late payments, it’s a sign they might fall behind on rent. And poor credit is more common than you may think. According to the Federal Reserve, 59 million people have credit scores under 660, which is considered subprime.
Equally concerning is an applicant with a high debt-to-income ratio where most of their income is committed to debt. In this case, rent could become a low priority. Recent bankruptcies are also problematic. They don’t always need to be a disqualifying factor, but it can indicate financial instability.
- Gaps or frequent changes in employment
Steady income is the key to getting consistent rent payments. When an applicant has long gaps without a clear explanation, that’s not a good sign. Other issues include multiple short-term jobs in a short span of time and income that can’t be verified because it’s cash only. While not everyone with these factors will be a bad tenant, it’s a risk because it’s hard to verify income.
- A history of evictions or lawsuits
Past behavior is a good way to predict future problems. Tenants with prior evictions are a huge red flag, especially if there’s more than one and it was recent. Another red flag is multiple landlord-tenant disputes through small claims court. Although you’d need to pull the case files to get the details, lawsuits usually suggest problems with compliance or payment.
When these issues turn up in the screening process, it helps to talk to an applicant to get their side of the story. However, if they won’t explain what happened or if their explanation sounds off, it’s better to choose a more qualified applicant.
- Negative references
An applicant’s references can provide insight into how they behave in the real world. Be wary of past landlords who hesitate to recommend someone. They might be trying to avoid a lawsuit by not telling you outright, but their silence can speak volumes.
If a past landlord gives a negative reference, don’t think those same issues won’t happen to you. Most people don’t change bad habits that fast.
- Sketchy landlord references
Sometimes people ask their friends to pose as current or former landlords. Fake references are far more common than most people realize. Always verify ownership through property records, and if the names don’t match, be skeptical.
- Roommate references
Many people live with roommates and friends and don’t have any independent landlord references. When a tenant shares a house with their landlord, it’s hard to know for sure if the reference was truly their landlord or not. And when the landlord is a friend, you probably won’t get a realistic picture of how the tenant operates. If you accept roommate references, take them with a grain of salt.
Thorough screening protects your investment
Every landlord wants tenants who pay rent on time and are honest and reliable, but you can’t get those tenants without due diligence. By recognizing signs of trouble far in advance, you can dodge avoidable mistakes. Tenant screening is the most important part of filling vacancies and is the only way to protect your property and peace of mind.
