One of the most important skills landlords must develop is identifying red flags in their potential tenants. Knowing what warning signs to look for when pre-screening tenants is crucial for landlords to protect their investment, avoid or mitigate the risk of legal disputes, preserve their financial stability and ensure a positive rental experience for themselves and their tenants.
We will discuss the most critical tenant red flags we find in our clients’ pre-screening processes and how to identify and uncover the warning signs that can give you more than a headache as a landlord.
8 Tenant Red Flags Landlords Must Be Aware Of
1 – Poor or No References
Negative feedback from previous landlords is an obvious red flag indicating potential problems with the tenant, and we recommend that landlords rule those candidates out. On the other hand, if the tenant doesn’t provide enough (or any) references, it could be a sign that they are trying to hide something or be untrustworthy.
If you’re not satisfied with the references you get from potential tenants, or you doubt the references they provide are from actual landlords, and you can’t confirm the veracity of the information, move on to your next candidate.
2 – Unstable Employment History or Low Income
If a tenant has an unstable employment history or prolonged gaps in employment, it may be a sign of an inability to maintain a steady income and pay rent reliably. On the contrary, if you’re evaluating a tenant with a stable but low income, we also recommend skipping their application because the risks of not getting the rent payment on time are too high. As a rule of thumb, look for tenants with a minimum income of 2 to 3 times the rent price you’re asking for.
3 – Bad Credit History
Credit score is one of the most relevant indicators to know if tenants will pay their rent on time. A history of late payments, defaults, or bankruptcy is a clear sign of financial instability and irresponsibility and a sure way of getting yourself struggling to get your rent payment.
4 – Criminal Records
Criminal offences, big or small, or a history of disruptive behaviour are major red flags that imply safety concerns for you and other tenants. If a potential tenant has a past of questionable behaviour, get more information and evaluate carefully before doing business with them.
5 – Poor Communication or Unresponsiveness
Potential tenants that are difficult to reach fail to respond promptly to your inquiries or exhibit shady behaviour while providing information should be rejected. Lack of cooperation may indicate that the candidate isn’t committed to the process or has something to hide from you.
6 – Inconsistent or Dishonest Application Information
Discrepancies or inconsistencies in the tenant’s application, such as false information or incomplete details, speak volumes about the candidate’s character and indicate a lack of honesty or reliability.
7 – Too Many Roommates
Housing is expensive, and in a scenario where Canadians are leading with record-high rent prices, more people are renting homes with roommates to alleviate the financial burden. However, applications with too many roommates can be risky because if one of the roommates moves out of the property, the rest may struggle to cover the rent price. Another downside of renting out your property to too many people is that the potential property damage risk is higher.
8 – Bad Behaviour While Visiting the Property
If the tenant has disrespectful behaviour while viewing the property or, worse, causes damage, it is a clear sign to discard their application immediately.
Better Safe Than Sorry
Not being careful when choosing your tenants can be a disaster; that’s why rigorous criteria are essential for a positive and profitable experience in the rental real estate industry. Assessing a potential tenant’s character and doing a thorough background check will be the best way to protect yourself and your investment.
These eight red flags can be the starting point for building your own pre-screening strategy, or you can entrust this process to a property management company with the experience and knowledge to select good, trustworthy tenants. If you own a rental property in the Calgary area, we are happy to help. Contact us to get a free quote.
