It’s important for property investors to find tenants who’ll treat their rental as their own and pay their rent on time. It can be difficult to assess this before your tenants move in, but you’ll have a much better chance of success if you look out for these red flags.
1. Poor Finances
A renter must be in good financial shape to make their payments on time. While it might seem discriminatory to eliminate a rental candidate because of his or her perceived financial state, you’ll be doing yourself and the tenant a favour in the long run. Assess each applicant’s income and decide whether paying the rent you’re asking is feasible. Look for gaps in employment, as this could indicate your applicant could be without an income at a future time. You are also within your rights to ask whether potential tenants have any debt, as any amounts owing could impact their ability to pay rent on time.
Past behaviour is one of the best predictors of future behaviour. If a potential tenant has been evicted in the past, it should give you reason to pause. If employers or past landlords have negative things to say about an applicant, you should also take their experiences under advisement.
There can be a fine line between eagerness and pushiness, and when an applicant crosses it this should also raise a red flag. It’s standard procedure for time to pass before landlords make their decision. At best, impatient applicants may not have organised their living situations well enough. At worst, they may hope you’ll make a decision in haste and overlook something they’re trying to hide.
Moving is a huge hassle that most tenants would rather avoid. So if an applicant has moved more than twice in the last five years, you have every right to wonder why. Maybe the tenant has had strained relationships with neighbours which make staying put difficult. Clearly the tenant isn’t invested in any one place; maybe he or she will disrespect your property as a result.
This red flag might also seem discriminatory, but studies show the kind of people who own pit bulls, Rottweilers, and other aggressive dogs tend to lead riskier lives.
There are exceptions to the rule of course, but it’d be naive to dismiss this fact. Large dogs like great Danes and St. Bernards can also be problematic as they have the potential to do serious damage to your property. You have every right to question why renters would take on large or aggressive dogs before they are settled in their own property.
Rather than dismissing a potential tenant’s application on the basis of one red flag, use these points to help inform your decision and find areas to discuss with the applicant. There may be legitimate reasons for a red flag or two, but if you see too many areas for concern you have every right to be cautious.