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Warnings for Landlords
Signing a lease agreement creates a long-term relationship between a landlord and a renter. Therefore, it is important that you find someone whom you can trust to take care of the property and pay rent on time, hopefully for many years.
A good tenant provides stability for your investment, while a bad tenant causes legal headaches and financial stress.
So before you lock in the first person who applies to your unit, make sure you have caught any potential problems early. Watch out for the following red flags to avoid long-term issues with your real estate investment.
What You'll Learn...
Tenant Risk Indicators
Finding the right tenant goes beyond reviewing an application. Understanding these tenant risk indicators can help you make informed decisions, protect your property, and foster a more successful rental experience.
1
Poor Communication
While setting up meetings with the potential renter, you may start to notice problems in their communication. They may take a very long time to reply and provide no reason for their delayed responses. If they fail to maintain timely communication this early on, they will likely continue to be hard to reach while renting from you.
You should consider whether this will become a problem going forward, as effective communication is critical to a strong landlord-tenant relationship. While some people are simply a bit disorganized or in a particularly busy period of their lives, if they have a habit of ignoring important messages or fail to report problems, their lack of communication can cause issues later on.
2
Too Eager
The opposite of someone hard to reach is someone who is pushing to sign the lease right away — even before viewing the unit in person! If a potential tenant is coming across as far too eager to rent your unit, going so far as to offer to pay in cash for several months before you’ve even physically met them, this could be a red flag.
While very hot market conditions have led some renters to make bold offers to secure units quickly, they should not be pressuring landlords to skip important background checks. If you feel like someone is acting too eager to secure the rental, make sure it is for a valid reason. Some tenants want to move quickly because they are being evicted, which is itself another potential red flag (more on that below).
3
Bad Credit or Criminal History
While completing a background check, you may discover that a prospective renter has several dings on their credit history or criminal record. You will need to exercise caution and discretion about this information. Some people are trying to pick themselves back up after a low point, but some may cause trouble for those they interact with. While some crimes are not as impactful to someone’s ability to be a good tenant, you should be on alert if you see that they have been convicted of fraud, theft, or assault.
Try to look at the whole picture: if a poor credit rating or criminal activity is the result of something that happened many years ago, and the person is actively working to improve their situation, you may decide that they do not pose a risk. But if their issues are a more recent occurrence, and they are clearly struggling to manage their finances, or there is a history of violence surrounding the individual, you may want to avoid them altogether.
4
Obvious Lies
Part of the background check is confirming that the information that an applicant has provided is accurate. If you discover inconsistencies in an individual’s background or story, you should be very careful. Someone who tells outright lies about who they are is definitely untrustworthy.
However, small errors in exact dates can stem from poor memory (a slightly different concern), which is far less problematic than lying about their identity or having a job and a steady income, for example. You will need to exercise discernment when evaluating any tenant, as it can be very easy for them to lie on their applications.
5
Fake References
When following up with references, including employers and previous landlords, you may encounter obvious deception. This is especially apparent if you call a company directly to request a specific person, rather than calling the number a candidate has provided, and are told that the person you are trying to reach does not work there!
You should also be alert for overly positive references that seem too good to be true. Providing a reference should be a fairly straightforward process, but if the person you are speaking to seems to be exaggerating the candidate's good qualities, you may want to take a step back and cross-reference your research.
If you discover that someone is only pretending to have an authentic reference, that should be an immediate red flag. It is more acceptable for a candidate to be honest about why they may not have a reference to provide to you (for example, they may not have a past landlord because this is their first time moving out) than to lie about having one.
6
Hiding Information
If a potential renter is unusually cagey about providing basic information (such as their contact number), it could hint at a bigger issue they are trying to hide. While some people are simply very private, if you suspect that a candidate is lying about who they are and what they intend to do while living in your unit, you should listen to your instincts. You do not want to sign a contract with someone you do not trust.
Be extra cautious about candidates who do not want you to investigate their financial history or background. They may be trying to hide bankruptcies or substantial debt. They could also be hiding a criminal past (or current illegal activity), which would be a huge red flag.
7
Rudeness
Another problem is bad manners. If a candidate is disrespectful and unpleasant, making demands before they’ve even signed the lease agreement, you can expect this kind of behaviour to continue after signing, too. This rudeness can affect the landlord–tenant relationship as well as the surrounding community.
Once the neighbours start complaining about the renter’s actions, you will have even more trouble on your hands! Skip the inevitable headache from a difficult tenant and find someone reasonable and pleasant instead.
8
Multiple Quick Moves
If a candidate reveals that they have moved multiple times over a brief period, make sure their reasons are good and valid. Otherwise, with an established pattern of moving around, you can expect them to disappear quickly as well, which means you will need to restart the process of finding a new tenant much sooner than you may have anticipated.
It costs time, effort, and money to fill a vacancy, so landlords often seek to secure long-term tenants to avoid the extra hassle. Ideally, a good tenant will stay for many years, providing steady rental income. Of course, there will always be the chance that something unexpected happens (e.g., death in the family, job loss, etc.) and forces a reliable tenant to leave, so do not be too upset if that ever happens.
9
Past Evictions
While digging into a potential tenant’s renting history, you may discover a history of evictions. Although one eviction can happen to even a good tenant (after all, they can happen for many reasons), several evictions point to a likely problem with the tenant.
It's a good idea to investigate further to see whether these evictions were due to the tenant being at fault or to a landlord-related reason completely separate from the tenant. If you find that the tenant is the issue, you will probably want to avoid them, as the eviction process is very costly and tiresome, and you will definitely want to avoid it as much as possible.
10
Employment Inconsistencies
A candidate with multiple, unexplained gaps in their employment history can raise a red flag. If they cannot hold down a job and generate a steady income, they may be unable to pay their rent in the future. You can inquire about the lapses to understand why they have spotty employment, but if their answer does not inspire confidence, you will probably want to find someone more reliable.
Trust Your Gut
At the end of the day, it is crucial that you feel comfortable leasing to someone for the long term and maintain a respectful landlord–tenant relationship that benefits both of you. The tenant’s behaviour is essential to the success of your real estate investment, so you do not want someone with a habit of poor communication, dishonesty, rudeness, disorganized finances, or a criminal history.
A good tenant means that you can count on the individual to pay their rent every month and take care of the property, so you do not have to worry about having to address problems constantly. Once you find one, you should also work towards keeping them, making sure that the unit is well kept, maintenance and repairs are promptly addressed, and rental rate increases are reasonable.
GTA-Homes provides comprehensive leasing services, including tenant screening, so you can have a worry-free real estate investment experience. We will guide you in finding a property with strong rental demand and a steady, reliable renter, so you can enjoy years of passive income.
Connect with us today to start a seamless and successful investment journey!
