Having the skill to recognize a problem tenant before renting to them is perhaps one of the most important a property manager will ever develop. Tenants do not all of a sudden become "tenants from hell". There is a pattern of behavior over their entire adult life that will show up when conducting a thorough background check. A good property management company should be able to identify the signs of a potential "dead-beat tenant" and disqualify their application.
1) The applicant has little or no credit history. If the applicant is young than most likely they just have not established any credit of their own yet. But there are other instances when this means the applicant is using a false social security number. Often times it will be the social security of an elder person who does not check their credit history. Our Tampa Property Management company has even seen applicants use the social security number of a deceased person in an attempt to cover up their own bad history.
2) Verify the Employer information. Applicants who have recently lost their job will often have a friend or family member pretend to be their supervisor. I require our property managers to find and call the main phone number of the business and ask to be patched through to the supervisor or HR Dept. Most legitimate companies will require you to fax in the application before releasing personal information on their employee. We also require two recent pay stubs. If you do these two steps, you will find the tenants who are attempting to lie to you very quickly.
3) Question the Landlord. If the previous address was managed by an individual versus a verifiable property management company, pay close attention to their answers when speaking with them. Similar to their employment history, applicants will put the phone number of a friend or family member as their current landlord so that you don't find out they just skipped out on a month's rent and trashed the unit. The person posing as their Landlord will often pause and use "umm" and "uhh" when trying to come up with an appropriate answer to your questions. They do not know how to answer them in a professional manner. Ask detailed questions and if you feel uneasy you can ask for a copy of the Lease or the rental verification to be sent on Letterhead.
4) The address listed on the application for previous address does not match the address reported on the credit report. Credit reports will show previous addresses reported by the tenant when applying for credit. If the tenant's application says they lived at Tranquility Lakes from 99-2009 but the credit report shows they lived at a different address from 2007-2009, do the research on the address listed on their report so that you can receive the most accurate rental history. You should require landlord information for their two most recent addresses. If those addresses do not appear on their credit report, you should be concerned that the tenant is lying. This is not always the case, but it is better to be safe than sorry.
5) The credit report shows a balance due to a Utility Company. If you ask the prospective tenant, they will usually pretend to be surprised. Owing money to a Utility company is a major red flag. In our experience, 90% of tenants with this kind of history turn out to be serious problems. Do not approve anyone with this issue on their credit report.
6) Immediate Move Ins. It is hard to resist someone with some cash in hand that wants to rent the unit you have had vacant for 15 days, but often times the people looking to move in the same day are hurrying to get in because they have just skipped on their current lease or are hoping to get in before something very negative hits their credit history. Be very thorough and ask a lot of questions.
7) The tenant has no rental history. You will encounter younger people on a regular basis with no previous rental history. I realize that some of them will be decent tenants; however, it is not worth the risk. They should only be approved with a qualified co-signer.
If you keep these 7 items in mind when qualifying your prospective tenants, your property management company will save a ton of money and aggravation by avoiding the dreaded "nightmare" tenants.
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