Landlord Fraud Prevention Tips: How to Avoid the Tenant from Hell

Posted on 09. Mar, 2011 by in General

The most costly mistake a landlord can make is to cut corners with the tenant screening process. An empty rental unit means lost income, but rushing to fill it could land you with an undesirable tenant. A tenant screening process helps you find a renter who pays rent on time and doesn’t trash the apartment.  

Delinquent or bad tenants don’t give a hoot about The Tenancy Agreement, it’s a contract meant to be broken.  They tend to use landlords as a revolving line of credit, they go from property to property without paying any rent and they successfully do it for a living, leaving behind a trail of landlords in debt. 

How can this happen?  Delinquent tenants often have several phony I.D friends lined up to give them suitable tenant references as well as phony resumes and employment records supplied by dubious online companies. This is how the fraud rental game is played and if you haven’t been subjected to this in the past, there is a good chance that you will be in the future.

Landlords can minimize risk by conducting a tenant screening program that includes credit history report, eviction records, criminal records search as well as employment verification.  We’ve all heard horrendous stories about the tenants from hell.  Here are some valuable tips to prevent that from happening to you:

1. Never, ever believe anything you are told or what is listed on the Application to Rent Form – yes I know this is difficult, especially if you tend to believe that everyone is honest and trustworthy (I fall into this trap, so have to ensure that my due diligence is ruthless)

2. A partially filled application form is not good enough, it has to be fully completed and if this is not the case, alarm bells should be ringing!  Delinquent or bad tenants generally leave out the most current address where they have not paid rent or had difficulties with the previous landlord.

3. A credit history check is vital. Yes, it costs a couple of dollars but it is worth every cent!  The credit history will verify the information that was given to you on the Application to Rent form, you will be able to compare the information and determine if your prospective Tenant was truthful or not. 

4.Check with two previous landlords. Find out if the prospective Tenant paid rent on time, was there any damage upon departure, did he/she disturb other tenants and did he/she meet all the obligations on the lease agreement? Some Landlords just want to get rid of their problem tenants and will therefore give good references. Ask probing questions like “I was told there were a few problems with the neighbours” and see what the response is.  This is a game, depending how you play it depends on what type of tenant you may end up with.  

5. When the alleged landlord answers the phone ask what he/she has available for rent? If it is a friend that you are calling you will catch them off guard and they will tell you that you have a wrong number.

6. Check with current and previous employers. The Human Resources or Accounting Department should be able to advise you what you want to know. They may want you to fax them a copy of the rental application that has the consent/release clause prior to giving you any information. Find out the monthly income – is it enough to pay the monthly rent and bills?  Do not rely on documents to support this evidence – as mentioned previously, these can easily be faked.   The employer should be able to answer your questions without hesitation.

7. Ask to see a current utility or telephone bill.  You can use this to compare to the details on the Application to Rent form. If the name and address details don’t match, why not?  If the prospective tenants claimed to have rented previously, there should be a bill available. Again, if not, why not?

8. Get to know your prospective tenant by asking pertinent, screening questions to include, for example – “have you ever been late making rental payments?”.  There are rules around what you can and can’t ask – a previous blog post covers this, check it out.

9. If the application to rent is accepted, complete the Tenancy Agreement together with the tenant as soon as possible so you can be sure of the rules regarding the lease.  That way there can be no misunderstanding.

10.  Know your rights and responsibilities.  Review the provincial Tenancy Act in detail, back to front, inside and out.  Educate yourself and educate your tenant.  

Conducting a credit and background check on a prospective tenant is a fundamental step in income property investment. Anyone contemplating purchasing rental property should do this. There are several verification companies that provide landlords with the reports necessary to help with their tenant screening needs.  Criminal record and eviction searches are available in the USA only.

To Your Investing Success!


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