Oct 072014

Courtesy of biggerpockets.com


Professional Tenants: 8 Tips For Screening For These Nightmare Renters


screening professional tenantsA couple of weeks ago I wrote an article here on the BiggerPockets Blog entitled Landlords… How To Proceed When The Rent is Late!While the article had some good insight regarding actions you should be taking to protect both your rent and property when the rent is late, one of the comments to that article (thanx Denise) shared a link to the actions of a real life “Professional Tenant.”  You need to read this article: Landlords say Newark man refuses to pay rent, trashes apartments, then ties them up in courtOnce you have read this article I am sure that you are now very prepared to pay attention to those actions you MUST be taking to protect your property from “professional tenants.”  If you don’t think there are professional tenants in your area, just read through the comments of many of the posters — they will scare the &*$# out of you!

Now for some recommendations to arm you to do battle with tenants who believe that by virtue of your ownership of the property you should become their private charity and allow rent free living.

8 Tips For Protecting Yourself Against Professional Tenants

1.  SCREEN, Screen, screen… every applicant… and everyone who is over the age of 18 who will be residing in your property.  And, what do I mean by tenant screening?  Simple…

2. Ensure that your application is completed in its entirety for each applicant.  Be sure to have the applicant sign documents allowing you to pull credit reports and contact current and previous landlords and employers.  If they refuse toss the application.

3.   Call every landlord and employer reference given.  And, if calling doesn’t work then send a referral request… not just asking for a referral, but asking specific questions, like: Has the tenant ever been late on their rent?  Have you ever taken this tenant to rent court?  If so, how many times in the past year?  I think you get the picture here.  These questions are not easy to avoid and will provide you with critical information needed to evaluate the quality of each applicant.

4.   Complete a criminal background check.  In today’s virtual world almost every community now posts information regarding a persons run-ins with the law.  Remember about the only non-protected tenant class left are those individuals with criminal records.  Take advantage of this information.

5.  Do an unscheduled walk-through of their current residence.  If you don’t like what you find…. don’t accept them as your tenant.

6.   Your lease must be clearly written and defensible.  If your lease has not been reviewed by a local real estate attorney, it needs to be.  The last thing you need is some amateur Perry Mason, like the guy in that article, picking apart your lease in front of a judge.

7.  If a prospective tenant passes your muster, (remember many more should fail then pass) then the next step is to sign the lease and have them move in.  This should not be a transaction that is conducted at your local McDonald’s, because this is a critical step.

You must ensure that the lease signing occurs inside the property.  Because, part of you lease signing process will include the tenant conducting their own move-in inspection for the purpose of defining – in their words – the condition of the property on the day they moved in.  And guess what?  While the tenant is busy looking the place over you are going to be taking pictures of them in the property and of course of any deficiencies they may have found.  If there is something that you need to correct as part of this process get it corrected.

8.  Make sure they acknowledge every page of the lease by having them initial at the bottom of each page.  If that is not good enough and there are specific clauses you want them to acknowledge then make sure they initial each clause.

I am sure there are other important insights that others have used and hopefully they will jump and share, but the bottom line here is this…

Your application process is intended to weed out the bad tenants up front.  If you do this right you will succeed most of the time.  For those instances where you end up with the worst case “professional tenant” scenario, the lease-up process is intended to give you ammunition once you find yourself defending the condition of your property in front of a judge.

Be diligent, do your due diligence, use a bullet-proof lease and robust processes and you should fair very well.

Best of Luck!