How to Weed Out the Top Tier Tenants From the Rental Destroyers

How to Weed Out the Top Tier Tenants From the Rental Destroyers

3 min read
Sterling White

Sterling White is a multifamily investor, specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling was involved with the management of over $10MM in capital, which is deployed across a $18.9MM real estate portfolio made up of multifamily apartments. Through the company he founded, Sonder Investment Group, he owns just under 400 units.

Experience
Sterling is a seasoned real estate investor, philanthropist, speaker, host, mentor, and former world record attemptee, who was born and raised in Indianapolis. He is the author of the renowned book From Zero to 400 Units and the host of a phenomenal podcast, which hit the No. 1 spot on The Real Estate Experience Podcast‘s list of best shows in the investing category.

Living and breathing real estate since 2009, Sterling currently owns multiple businesses related to real estate, including Sterling White Enterprises, Sonder Investment Group, and other investment partnerships. Throughout the span of a decade, he has contributed to helping others become successful in the real estate industry. In addition, he has been directly involved with both buying and selling over 100 single family homes.

Sterling’s primary specialities include sales, marketing, crowdfunding, buy and hold investing, investment properties, and many more.

He was featured on the BiggerPockets Podcast episode #308 and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single family investing and apartment investing to mindset and scaling a business online. He has been featured on multiple other podcasts, too.

When he isn’t immersed in the real world, Sterling likes reading motivational books, including Maverick Mindset by Doug Hall, As a Man Thinketh by James Allen, and Sell or Be Sold by Grant Cardone.

As a thrill-seeker with an evident fear of heights, he somehow managed to jump off of a 65-foot cliff into deep water without flinching. (Okay, maybe a little bit…) Sterling is also an avid kale-eating traveller, but nothing is more important to him than family. His unusual habit is bird-watching, which he discovered he truly enjoyed during an Ornithology class from his college days.

Education
Sterling attended the University of Indianapolis.

Follow
LinkedIn
Facebook
Instagram @sterlingwhiteofficial
YouTube
SterlingWhite.info

Read More

Join BiggerPockets (for free!) and get access to real estate investing tips, market updates, and exclusive email content.

Sign in Already a member?

When you are on the lookout for new tenants, it can be a tricky business. Sure, the screening process is pretty simple. I mean, all you have to do during the verification process is take a look at their previous rental history, background check, and employment verification. From there, your tenants will be compared with a pre-made criteria, and if they pass, you accept them. If not, you keep moving onto the next possible tenant.

However, even a brilliant set of criteria has flaws to it. So, if you want a foolproof method of weeding out the good tenants from the bad in this gigantic sea of people, then be sure to keep reading to get a better understanding of the different characteristics that each one has. 

The Not-So-Good Tenant

Unreliable Income

Trust me, if your tenant just doesn’t make enough money, or if their income keeps fluctuating and you don’t know whether or not they will be able to make the following month’s rent, then you will definitely be stiffed sooner or later. Sure, a larger deposit does help to some degree, but it will simply not be making a large enough difference between profitability and money loss if you face to possibility of having to evict them. Keep in mind that a tenant should earn at least 3.5 times the rent in net income in order to stay safe.

debt

Related: The Top 10 Rental Features That Attract Cream of the Crop Tenants

Bad Credit Score

While the credit score is generally associated with the risk of a tenant in terms of their ability to pay rent, a bad credit score actually has many studies linking it to an increase in risky behaviors. So the next time you check someone’s credit score, be sure to think of it more as a “personal responsibility score.” The credit score will tell you the tenant’s desire to pay the rent, and essentially, it is a pretty good indicator of their future personal behaviors. If there is an outstanding balance in utilities for the prospective tenant, that is definitely a red flag.

No Respect

Trust me, every landlord who ever had a bad run in with a terrible tenant will say that this tenant had no respect for others. In fact, the likelihood that they had any respect for themselves was pretty minimal. Not only is this kind of person horrible to deal with, if they don’t even have respect for living, breathing people, how can you trust that they will respect your property and take good care of it?

Here’s a neat tip: Why don’t you call their previous landlord? After all, they would definitely have had experience with them in the past. Or perhaps if your potential tenant is new to the rental scene, it would be a good idea to ring up their employers or other references.

The Dream Angel Tenant

No Criminal Record

If your potential tenant doesn’t have a criminal record, then that is definitely a sign that works in their favor. Be sure that you use the county level criminal check that will have a full compilation of every open and dismissed case that your tenant has undergone. Trust me, you will want to know absolutely everything. From parking tickets to violence, this will give you a brilliant indicator of both their ability to abide by the law and their adherence to a structured lifestyle.

Honesty/Integrity

There is no doubt that this is one of the top factors that should be on your list. It is highly essential that your tenant is trustworthy, reliable, and decent. After all, you want to rent your property to someone who will do what he has agreed to — somebody who morally chooses to do the right thing.

why_people_move

Related: 6 Things Every Landlord Should Do to Win Over the Hearts of Tenants (A Renter’s Perspective!)

Cleanliness

Personal hygiene is a major indicator of so many things. Not only will they be able to ensure that your property remains in tip-top shape, but people who are cleaner, neater, and tidier tend to set higher standards than those who are messier. While this rule is not set in stone, many studies have linked cleanliness to a person’s ability to listen to the rules and generally mean what they say.

Conclusion

To conclude, with all these awesome pointers in mind, you’ll definitely have one less thing to worry about on your journey to becoming a savvy real estate investor. Keep in mind that it’s crucial to have quality tenants. This can make or break your cash flow.

[Editor’s Note: We are republishing this article to help out our newer readers.]

What tell-tale signs do YOU look for when screening tenants?

Let me know with a comment!