16 Big Red Flags to Watch For When Looking for Tenants

3 min read
Kevin Perk

Kevin Perk is a full-time buy and hold and fix and flip real estate investor with over 15 years of experience. He and his wife Terron operate Kevron Properties, LLC, a boutique real estate investing company in Memphis, Tenn.

Experience
Kevin was a past president and is a current board member of the Memphis Investors Group. He’s also a blogger and writer who has authored hundreds of real estate investing articles on BiggerPockets and his own blog, SmarterLandlording.com, some of which have been featured on The Motley Fool and MONEY: Personal Finance News & Advice.

Kevin is also host of the SmarterLandlording podcast.

Originally from the Washington D.C. area, Kevin moved to Memphis to attend graduate school at The University of Memphis. After receiving his master’s degree in City and Regional Planning, Kevin climbed the planning career ladder to eventually become planning director of a county in the Memphis metro area. He “retired” from planning in 2003 to pursue real estate investing full-time.

Since “retiring,” Kevin’s main real estate investment strategy has been to buy and hold, otherwise known as landlording. Generally working in historic Midtown Memphis, Kevin is also known to fix and flip grand, historic homes when the right opportunity presents itself. He and his wife Terron (who is the principal broker at Perk Realty) have participated in dozens of real estate transactions in the Memphis metro area.

Kevin has the heart of a teacher and believes in helping others through education. An instructor of college-level geography for over 25 years, Kevin also regularly participates in seminars and panel discussions at such forums as the Memphis Investor’s Group and the Single-Family Rental Summit.

In addition, Kevin has been interviewed in publications such as the Memphis Commercial Appeal, the Memphis Daily News, and the Foreclosure News Report.

Education
Kevin earned a master’s in City and Regional Planning from The University of Memphis.

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Screening tenants for so called “red flags” begins with that first point of contact.  Usually this is a phone call or an e-mail in response to an ad.  That however is only the start.  Your screening process should continue until that lease is signed, they have the keys and are moved in.

You want to keep your screening process in motion because red flags may not show themselves right away.  Potential tenants may sound great on the phone while raising concerns at the showing.  They may even make it all the way to the move in walk through before you decide to reverse course.  Seems a bit harsh, but it is better to reverse course at the last minute than be stuck with a problem for a year or more.

16 Big Red Flags

Here are some of the red flags that have caused us to think a bit harder about a potential tenant.

  1. If they have to give you the back story before they answer your simple questions.  If the response to questions like “Do you work” or “Have you ever been evicted or filed bankruptcy” does not begin with a simple yes or no but with a back story. Red Flag!
  2. If they are past college age, have a job, can qualify on their own and still have to come to the showing with their parents.  Red Flag!  Are they responsible?  Can they make their own decisions?  Do you want to deal with the high maintenance helicopter mom for a year?
  3. If they come to the showing with their parents and the parents do all the talking while the kid seems indifferent.  Red Flag!  What problem is the parent trying to get rid of?
  4. If this is their first home away from home.  Red Flag!  You do not want your place to become party central.  Get references and verify everything.
  5. The guy that moves every year.  Red Flag!  He will leave you in a year too.  Remember tenant turnover is a big cash flow killer.
  6. If they complains about their current landlord.  Red Flag!  Maybe they are justified but you may also have a complainer on your hands that will never be happy.
  7. If they can’t focus on you or your call. Red Flag! If they are talking to others, screaming at their kids or someone else it could be trouble.
  8. If they are obviously under the influence.  Red Flag!!!! Yep, people call us drunk or high or whatever more than you would imagine.  Big Red Flag, especially if at noon!
  9. If they are rude anytime throughout the process.  Red Flag!  Is this their true colors showing through?
  10. If they are evasive.  Red Flag!  What are they trying to hide?
  11. If they cannot tell you or are vague about who will be living there.  Red Flag!  Does their boyfriend, girlfriend, brother, uncle, or whatever have a criminal record or other problem they are trying to hide?
  12. If they ask if utilities can be included in the rent.  Red Flag?  Can they not even get it together to pay their utilities?
  13. If they are calling “for a friend.”  Red Flag!  It might be nothing, but you should be a bit more cautious.
  14. If they are filthy.  Red Flag!  Unless they work at the dump and have just come to meet you after work they should be relatively clean and that includes the car.
  15. If they can’t seem to make an appointment or meet you on time.  Red Flag.  If they can’t get it together to meet you, how will they get it together to pay the rent?
  16. If they lie on the application.  Red Flag!  Actually, this one will likely get you disqualified.

I am not saying all of these automatically equal bad tenants, people can be having a bad day, or be distracted or whatever.  These items just make us take a closer look.  Remember the Red Flag is not screaming “NO” but “WATCH OUT.”  So, be diligent and do some extra checking.

Conclusion

Whatever you do, treat everyone equally and fairly.  Ask everyone the same questions.  Tell everyone about every apartment you have available.  Let everyone know you will be checking credit, criminal and work history.  That will take care of most of the Red Flags.  But some are pretty good at concealing them, so if you sense one, dig deeper!  Remember it is much more expensive and time consuming to get them out than to not let them in at all.

What “Red Flags” have you seen or experienced that caused you to think about a potential tenant differently?  Let me know with your comments.

Photo: fedewild

Screening tenants for so called “red flags” begins with that first point of contact.  Usually this is a phone call or an e-mail in response to an ad.  That however […]