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How to avoid renting to nightmare tenants

Experienced property managers know they need to take steps to deter and detect tenant fraud before it turns into income loss. Fortunately, those same professional strategies work for any landlord business large or small.

Confirm the applicant’s identity.

The reason online renting is risky is the lack of verification of the individual applicant’s identity. The only way to be sure that the information in the rental application and the tenant credit check match the applicant is to verify identity first with a photo ID.

Broadcast tenant background check required.

Small landlords are the most likely to be targeted by habitually bad tenants because these landlords tend to be lax on tenant screening. The rental ad is the first communication from the landlord, so it is important to establish in the ad that a tenant background check will be required. Problem tenants are less likely to apply, reducing the risk of renting to one.

 

 

Include a warning on the application.

Not all applicants who are tempted to cheat are going to go through with it. Others may not realize that they are committing fraud by misstating facts on a rental application. Spelling that out on a cover letter attached to the front of the application can deter fraud by warning tenants in advance of completing the application that there will be consequences for misrepresentations or omissions.

Include a declaration.

The rental application should contain a statement above the signatures that requires tenants to attest to the accuracy of the information provided. This can be useful in deterring fraud and in prosecuting it.

Request a rental application from each adult occupant.

When a tenant has bad rental or credit history, a common workaround is to move in with someone else. But that unsuspecting landlord soon may find the tenant they approved is nowhere to be found, and a stranger is living in the unit. By demanding a completed rental application from each adult occupant, it is possible to avoid this problem. Even if the other adults do not have income or are not qualified on their own, it still pays to know who is living there and to make all adult occupants bound to the terms of the tenancy agreement.

Reject incomplete applications.

Omissions on a rental application speak as loudly as false statements. While “not applicable” may be appropriate for some questions, do not accept applicants who are refusing to provide material information.

Request supplemental documentation.

Ask tenants to provide additional documentation regarding important qualifications such as income. While it may be easy to fake information on the rental application, falsifying income records takes the fraud to a whole new level — something most applicants are not willing to risk.

Check references.

Landlords who are victims of fraud often report that they did not check with the current and previous landlord before renting to a nightmare tenant. Rental history is as important as income verification and good credit when it comes to screening tenants.

Run credit.

A tenant credit check is the final step in tenant screening, and can expose tenant fraud including identity theft, inadequate income, and a lack of financial responsibility — problems that inevitably lead to income loss for the landlord. The credit report must come from an independent source, not from the tenant directly.

Conclusion

The best way to avoid a tenant who is going to cost you money and cause you headaches is by having a thorough (but fair) tenant screening process.  Whether you manage one property or hundreds, these simple strategies can help you avoid landlord nightmares and keep your rental property business profitable.

 

 

 

 

 

 

 

 

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.