How do you protect against bad tenates?

21 Replies

Hi, I've been doing a lot of research in my Area, and the surrounding area, and I have spoken with 3 different landlords who have given me a similar answer to the question above:

Q: "How do you protect against bad tenates?"

2 out of 3 said "You just can't", the third said "Run rent about 15% higher than you initially plan to rent your property for, nobody's going to want to destroy something they pay more for. Run a credit check, and if you want to rent at $650, rent between $725 and $750",

One of them went on to say "The quality of your property is the quality of your tenate",

I feel a little less than satisfied, as I know of one who had 6 rentals, and his horror story was people stripped everything out of the properties, and ultimately caused him to go bankrupt!

How do I, as a soon to be landlord, filter out the hooligans and protect myself from bad tenates? I am eagerly seeking as much advice as I can find! Thanks!

Screen, Screen, and screen

Credit checks, background checks, employment checks, reference checks...

Originally posted by @Craig C.:

How do I, as a soon to be landlord, filter out the hooligans and protect myself from bad tenates?

It depends on what type of property you invest in.  Here's a couple approaches:
1. Invest in quality properties in quality neighborhoods and charge accordingly.  You're not going to get nearly as many "hooligans" reaching out to rent a property that is double the price range they're looking for.

2. Screen, credit and b/g check, then screen some more.  If you invest in low-income properties, you need to significantly increase your efforts on the front end to make sure you get a decent tenant.

I follow the first approach and invest in quality areas and further improve my tenant pool by doing significant renovation and charging at or above market rents (the good tenants that can afford it come out of the woodwork).  If you take care of the property the tenants will be more motivated to do so.  If you let the property go, why should the tenant care about it?

As I read thru the forums, I certainly see/understand the validity behind proper checks/screening when searching for tenants.

My question is, what tools/resources, is everyone using with their potential tenants, to help safeguard your investments?

I would not listen to the landlords you spoke to apart from this quote "The quality of your property is the quality of your tenate".

Raising the rent with no extra value to the tenant will only cause them to leave once they realize they are over paying. This will cause much higher vacancy rates which in turn will cost you more than the unjustified 10-15% rent increase.

If you buy a really nice property you are more likely to get a better tenant. However myself and 1000s of other investors are willing to take on the risk of lower and middle grade properties for the higher returns. 

everyone preaches screen screen screen and I agree that is half of the picture. the other half is in the management. Think of it this way, your tenants are like children. Children's behaviors are formed from nature(genetics) and nurture(how their raised). You can screen a quality tenant and accept them but if you don't  manage well and let little things slide more often then not the great tenant will slowly take advantage of your leniency and lack of structure. Screening is vital but it is not the only step. 

Be careful of your screening practices "hooligan" is not a protected class but the people you label as hooligans may be.  

@Brandon turner says it better than I ever could in this post:

Work history,  rental history, income key(stability factor)...Meeting the tenant directly allows me to use my 6th sense as well...Yes, I missed a few along the way, but that comes with the business..

I make sure I am knowledgeable on the laws regarding landlord tenant relations. I screen well but I also don't get doctors and business professionals renting from me in my demographic. Management is the most important safegaurd in my mind. I visit my properties monthly so I can see what is going on. If I see something that bothers me I schedule an inspection. It is a lot easier to keep a property in good shape if you can stay up on maintenance and repairs insead of being surprised when you get a property back after 3 years and realize the inside is trashed.

@Brandon Turner, Thank you.  I am Honored! 

@Craig C. & any other new landlord I have been tinkering with a way to remove ANY chance discrimination from screening while also helping me make the best tenant choice. I do this because one day I will hand my screening off to someone less careful or some form of automation and I do not want a lawsuit. I haven't put this into action yet in my business because I keep tweaking the weights to fit my needs just right.  I also have it in a spreadsheets so i type in the variables and out pops an accept or reject. If I have multiable qualified applicants It will be very easy for me to decide because the high score wins. 

Remember this is just an example and the scores only fit for my market and my strategy.  I think It's a good place to start creating your own if you like the idea. 

I included a link if the pic is too blurry.

All good comments. Collect a sizable security deposit as it's the only realistic tool you have to compel good tenant behavior.

Originally posted by @Craig C.:

Q: "How do you protect against bad tenates?"

2 out of 3 said "You just can't", the third said "Run rent about 15% higher than you initially plan to rent your property for, nobody's going to want to destroy something they pay more for. Run a credit check, and if you want to rent at $650, rent between $725 and $750",

Did you mean "tenants" when you wrote "tenates"?

If you run rent about 15% higher, you will most likely attract those individuals who cannot rent at normally-priced places because they've had evictions or a criminal history.  Those type of individuals, if they've had evictions elsewhere, will likely have an eviction with you.

Get a good tenant and bend over backwards to keep them happy. Let them pick out blinds, paint color in kitchen, plant a tree or something that gives them some psychological ownership.

Watch out for crappy property management in crappy areas as they tend to go hand in hand from what I hear.



I really want to thank all of you who have replied to my posting, it means a lot to me, and it is all terrific information! Thanks!

I agree with many of those who commented.  Thoroughly screening your tenants is so important...when they fill out the application call the employers, call the credit and personal references, do a criminal background check, check their credit.  All of these things will help to avoid tenants that will make your life horrible.  I don't think there is a 100% way to avoid these things happening, but being diligent in your process can help tremendously! 

Happy investing!

The major keys to being a landlord is to not overpay for a property and have a comprehensive and consistent screening process.

If you overpay in my experience you will be in a rush or lax your tenant quality requirements just to get someone in there who is paying. Why? Cause you can't afford not to. That is not a place you want to be and is the downfall of many.

Michael Noto, Real Estate Agent in CT (#RES.0799665)

Don't accept people with evictions. Run credit checks and look for a pattern of late payments and judgments from landlords. Most people will let their department store credit card lapse before they stop paying rent.

I also require that people completely fill out the application and MAIL it in. Too often the people standing there with the cash deposit are trying to break a lease or have been kicked out. 

Where a lot of new landlords get in trouble is using credit scores to place a tenant in their unit. 

Joe Gore

@Craig C.  

Protecting yourself from bad tenants depends of how you screen them.  

1. Check previous landlords, personal & work references. 

2. Ask for an extra month of deposit before moving in. 

3. Check criminal record. 

4. Check late pattern on credit score. 

Taking this few steps, can help you save headaches on the future. 

Hope its helps, 

Kenndy Mendoza 

@Craig C.  

All you can really do is minimize the possibility and it's impact, utilizing the variety of suggestion already given.  The "just in cases" were not mentioned, if you get a bad one:  utilize your lease to remove tenant/s for violations, make sure properly insured, follow laws, have lawyer and/or police contact info if needed, etc.

Screen, screen, screen.  Learn the red flags of problem tenants and take heed!  Maintain reserves so that you don't have to accept the first person that walks through the door.  My motto, which has been tried and true, is I'd rather have a vacant property than a bad tenant.

I actually believe you cant prevent bad tenants, but these things help a lot

Screen- criminal, background, credit.



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