The first couple to visit your rental property seems to fall in love with the place. They gush profusely and apply immediately. Can it be this easy? No, of course not. Forty-eight hours later you discover that the couple is looking for a new home to live in because they haven’t paid the rent on their last dwelling for several months. If this is your first foray into life as a landlord, you’ll discover quickly that, while good and honest tenants are out there, other would-be renters are bad news and to be avoided at all costs.
Watch for the red flags
When it comes to applying for rentals, some people are forced to pay application fees in a number of places, just trying to get housing somewhere, anywhere. Be prepared to encounter overeager applicants who have:
- A record of not paying their rent
- Been evicted from a previous rental
- A judgment against them for past-due rent
- Filed bankruptcy
- Terrible credit
It’s important to note that by no means do these issues constitute conclusive evidence of a renter’s suitability (or lack thereof). A bankruptcy, for instance, may have been related to a medical emergency or a failed business, and have nothing to do with their current ability to reliably pay rent. Furthermore, just because you don’t see any of these red flags among potential renters during the application process, it doesn’t mean there won’t be issues once they’re actually living in your property. According to Jeffrey R. Homapour, a New York City attorney focused on landlord-tenant litigation, you may discover that your tenant:
- Rents the property with the intent to sublet it as an Airbnb or other short-term stay
- Hoards items, which could create dangerous conditions, like fire hazards or insect infestation
- Is a nuisance who disturbs the neighbors with odors, noise, or excessive partying
- Complains about rental property conditions but then doesn’t give access to do the repairs
You and your tenant are both selling
When you have a property to rent, you may be unlikely to point out that the upstairs neighbor walks heavily, or that the tenant across the hall from you keeps odd hours, or that you can hear dogs barking next door most of the day. But while you’re pointing out the best features of your place and trying to promote your rental, your potential tenants may be doing their own form of sweet-talking to sell themselves—or possibly to get in your good graces in an attempt to convince you not to bother with a background check.
“Every landlord should run background checks to determine whether there are judgments against their potential tenants. In New York City, landlords can search computer records against the name of the potential tenant which will show whether they have had any landlord-tenant proceedings brought against them,” says Homapour. “While the searches can be done for free on the court website and in more detail if visiting the courthouse, some companies sell the use of these services, often called ‘tenant blacklists.’ A landlord-tenant proceeding may not be listed on a credit check, so it is important to check these records to determine if you are inheriting someone else’s problem tenant.”
Protect your landlord rights
Make sure your lease is detailed and protects your rights as a landlord so you don’t have to pursue eviction down the road, chase late payments, or undertake other undesirable burdens. Homapour suggests that landlords require a larger security deposit, if possible, and a good “in-state” guarantor. “Besides having the additional guarantee of rent payment, a tenant will be less likely to cause trouble or fail to pay if they know a close friend, relative, or coworker who guarantees the lease will be subject to legal action from the landlord,” says Homapour.
And if your rental situation does become so dire that the tenant is neglecting to pay the rent (or damaging your property, dealing drugs, or otherwise violating the lease) don’t wait to serve a rent demand or start an eviction proceeding, Homapour recommends. “These proceedings can take months due to delays and backups with the court, which can leave a landlord being owed significant amounts of rent. The court costs to commence the proceeding are nominal. If the landlord senses trouble, they should not wait to take legal action to protect their rights.”
Select the least of all evils
So what do you do when all of your rental candidates are undesirable in one way or another? While you want to be very careful to avoid discriminating against someone, ultimately, “it’s really a business decision and a landlord should weigh all the factors, including how desperately they want to rent the property, how stable their proposed tenant’s income is, and what chances the landlord is willing to take,” says Homapour. “There is no straightforward formula on who to take and who not to take. I find that if people have had judgments against them in the past for failure to pay rent, they are more likely to be problem tenants in the future.”
If all of the applicants raise red flags, allow yourself more time, if possible, to find a more desirable tenant. If you need to rent the property now, then assess your choices carefully and pick the applicant who seems the least risky. Many people who seem like bad bets are actually responsible people who have had a run of bad luck, a divorce, or some other complicating life issue from which they are trying to recover. You may find such a person to be the most motivated and ideal tenant you could ever want. So use your own judgment and take your candidate’s overall character into account.