How to Avoid Problem Tenants?

by Krantcents · 38 comments

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How to avoid problem tenants? If you ever thought about investing in real estate, renting out your home or a room in your home, you should read this!  Earning money from income property can make you rich or cause you a lot of problems!  So take it seriously!

Details, Details, Details

The best way to avoid  bad tenants is to never rent to them in the first place!  Take your time, do not rush!  Whether you buy an apartment building or rent out your home, condominium or a room in your home, you will have a vacancy at some time.  Every perspective tenant must fill out an application.  A legal application may not include irrelevant information such as age, race, religion, or gender.  Make sure to collect a non refundable fee to check their credit, etc.  Make sure the application is complete and ask questions about any missing items.  Ask for a refundable deposit to hold the space.

Check References

Why ask for a deposit or a fee?  The deposit will indicate how serious the person is about your space and will keep them from going elsewhere.  The fee will reimburse you for your costs to check the perspective tenant out.  How do you check them out?  There are rental property services that are usually available through a landlord organization to check credit, evictions and sex offender registries.  Check their references and past landlords  too.  A current landlord may not be entirely truthful because he/she may wish to get rid of the tenant.  If you can check with former neighbors, it may be worthwhile.

Students are Special

If this seems like a lot of work, think about the three or more months rent lost under eviction.  Unless you live in a college community, you may not want to rent to students.  Students are different and require more management and preparation on the front end.  First and foremost there will be no rental history!  You would want the parents to co-sign the rental agreement and larger deposits are necessary.  Students as a category are not ideal tenants!  They may cause problems in the neighborhood, more wear and tear to the space and require more monitoring.

The advantages of renting to students are you can charge more; the unit does not have to be pristine and location is everything.  All tenants will try to get away with things such as allowing guests to stay too long or adding a roommate or pet not on the lease.  You can catch this behavior by simply visiting the unit with 24 hours notice.  A surprise visit may reveal some of this behavior, but do not expect to be invited in.  This may be tricky; you have to think on your feet to get passed the door.

My Best Trick

You have checked out the perspective tenant with every agency, past landlord and work references.  Now what?  You drop by their home to give them the approval.  Why?  You want to see how they live in their current apartment or home.  If it is a pig pen, a wreck or you just have a gut feeling, you return their check.  If you like what you see and still feel comfortable, you tell them they are approved and work out the details of when they move in.  Why take my advice?  Read “My Journey to Success” and you decide.

Wrap Up

I know it is a lot of work, but believe me this is nothing compared to what you will go through with a problem tenant.  In my experience, you cannot bat 1,000, so expect an occasional problem, but this effort upfront will remove the really bad ones.  Practice makes this process a lot easier and you will develop a feel of who appears to be a problem without doing any investigation.  Investing in Income property can make you rich or drive you nuts!  This advice may help you find better tenants and avoid some of the pitfalls of being a landlord.  Let me know what you think?  How to avoid problem tenants?

Photo by:  Richard

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