6 Insane Landlording Stories That Prove the Importance of Tenant Screening

20

Over the years, I have made many mistakes on tenant selection. There is always value to a landlord education, even if provided by a tenant, and in the real estate game, the education can be very pricy. Almost all landlords have made similar mistakes, and it costs them dearly. Only the well capitalized or lucky landlords live to try it again.

One of my first rental investments was a couple of duplexes. I had one all cleaned up and ready to rent. Since I knew Section 8 was a guaranteed way to get rent, I figured “How can a landlord go wrong with that?” After all, most people are decent people and want to respect the property and the landlord. I quickly learned the hard way that tenants are not always that way.

Download Your FREE guide to evicting a tenant!

We hope you never have to evict a tenant, but know it’s always wise to prepare for the worst. Navigating the legal and financial considerations of an eviction can be tricky, even for the most experienced landlords. Lucky for you, the experts at BiggerPockets have put together a FREE Guide to Evicting Tenants so you can protect your property and investments.

Click Here For Your Free Tenant Eviction Guide

6 Landlording Stories That Prove the Importance of Tenant Screening

The Migrant Roofers

One of my duplexes had quite a bit of work to be completed. The windows were rotted, the place needed carpet, and the built-in kitchen cabinets were from 1920. There was no shower, and the tub was like sandpaper, the finish had worn so much. I was preparing to get it rented when a nice young couple came to rent it with a couple of friends, a total of four people. They were migrant workers and needed a place to stay. I did not know anything about credit scores, background checks, or even what to look for if I had a background check.

They promised to rent the place as-is, and they would help painting so that they could move in that weekend. I received the rent in cash, and they moved in; and now there were six of them. That was two per bedroom, which was OK. Soon after, there were a few more, but the rent was always paid. Then a few more moved in. The unfinished basement had a few mattresses people were sleeping on, and each bedroom had three or four mattresses in it. I believe there were approximately 20 people living there at one point — I was never really sure. My 2-yd dumpster was completely full of beer bottles every week.

Related: 6 Tips to Protect Newbie Landlords Against Bad Tenant Situations

I always got the rent in cash — for about a year and a half. Then the work dried up, and they could not pay. After a couple of warnings, around mid-month I told them, “You all have to leave and cannot sleep here tonight.” They vanished by the morning. I had a mess and a lot of work to do.

Lesson: Always do a background check and know what to look for. Do not rent to people without social security cards, you cannot do a credit check without a SSN. Keep an eye on the number of occupants. Watch out for people who want to move in right away.

The Fighting Neighbors

I had both the upper and lower units of a duplex rented via Section 8. I was amazed at how easy the program was. I passed the inspection without any difficulties, although I worried about the inspection for a month before it occurred. What if I fail? Will I let the renter down if they cannot move in and they are without a home? Lots of items were running through my head.

The renter moved in downstairs, and shortly thereafter her felon boyfriend did, too. They did not get along with the upstairs neighbor, and eventually the two neighbors filed restraining orders against one another. At the court date, both residents wound up in jail for fighting in the courtroom.

Related: 5 Ways Landlords Can Achieve Better Tenant Stability

Lesson: Renting to low credit score tenants is always full of drama. Most people do not act or respond in the way low credit score tenant’s act. Credit score can predict a person’s personal behavior, but I did not make the connection yet.

The Water Leak

There was a day I was over checking on the laundry equipment and furnace in the common area of the duplex, and I saw a water leak. Not just any water leak — it was at least a gallon or two a minute leaking into the basement onto the cement floor and draining to the floor drain. I quickly ran upstairs and shut the water off under the sink. The kitchen sink stop valve was leaking profusely. I asked the tenant how long that had been happening, and he said, “Only for a couple of days.” Wow, thank goodness I had a floor drain.

While I was fixing the valve, I was making small talk with the tenant’s (unauthorized occupant) live-in boyfriend, and I asked if he was a football player in high school. He was a large person, built like a linebacker and was wearing a football jersey. He said he did play football and was going to be drafted to play in college, but he was shot four times and could not play anymore. He said it was a case of mistaken identity.

This was an eye opening conversation. He said he had two other brothers who were murdered, although one was ruled a suicide.

I grew up extremely poor, but I did not know anyone who was shot or murdered.

Lesson: Low credit score tenants do not care about your property; they can just move on to the next property. They have nothing to lose.  Tenants with limited income may move extra people in to help pay bills, without even thinking it might be a lease violation. Whenever you think you have a boring life, talk to your tenants; you will realize how good you have it.

The Kitchen Fire

The upstairs Section 8 resident of my duplex wasn’t too bad, but could not ever seem to pay her portion of ~$50 a month in rent. She received her move-in deposit from the county. Every year or so, she would go to the county emergency assistance and get her outstanding rent paid. At one point, she started a kitchen fire, and it cost me a bit to have it repaired. Luckily for me, it was mainly smoke damage. At some point, after about three years, she moved and left me with a big mess to clean up.

Lesson: Low credit score people have more insurance claims; this is statistically in line with insurance company studies. When a tenant does not have any motivation to get their deposit back, the landlord will wind up the loser.

The Finger Biter

I had a family living in one of my units for a little over a year. They invited their nephew, who was ~40 years old, to live with them temporarily over the holidays. I noticed the extra tenant and inquired about him. They told me he was from Gary, Indiana and was an ex-cop. What better tenant than an ex-cop?

The guy seemed great, but I still wanted him gone. My costs go up when extra people are living in the unit, and there is no benefit to me for extra tenants. After several stories about him leaving in “just a couple of weeks,” the event happened.

My tenants, a husband and wife, were arguing over a video game. The video game was missing, and the husband, who was ~40 years old, wanted to play it. I think it was headed for a domestic abuse situation, but the ex-cop stepped in the way to help his aunt. My tenant attacked him, and in the course of the fight put his finger in the ex-cop’s mouth. The fingertip of his index finger, according to the police report,  was promptly “bit off and spit out.” He grabbed the fire extinguisher and attacked the ex-cop. The ex-cop grabbed a knife, and was fully prepared to stab (and kill?) my tenant. Soon the cops came and hauled the ex-cop away.

He was charged with a felony and served ~4 months in jail awaiting trial. At the trial, he plead guilty and was released with a penalty of time served.

I gave the tenants immediate notice to move out after the incident. I was shorted a month’s worth of rent and took the tenants to court. I received a garnishment and eventually collected on it about a year later.

Lesson: Do not rent to anyone without a stable, garnish-able, income source and a solid credit score. If you have to go after them for damages, you need be able to get the money from them. The tenants need to be concerned how a judgment will impact their credit score.

The Abuser

I was renting to a non-section 8 couple: she had a 750+ credit score, and he had no score. He had dropped off the credit score reporting radar and had many collection items. He had a job making over $100K a year as a headliner at many large blues concerts and festivals. He was out of town on tour for six months out of the year. She had just moved to Minnesota to live with him from another cold weather state.

His credit report was horrible, and the landlord references even worse. He had a domestic abuse conviction from 10+ years prior. Without his partner, there is no way I would have let him rent from me.

I knew the female with the 750+ score was going to make sure the rent was paid. She would also keep the place organized and in good condition. I was a bit concerned, so I required a double damage deposit, which they had no problem paying and kept them on a month-to-month lease. I did not think he would be a problem, as he would be gone most of the time. She would be good as long as she had access to money to pay rent.

After about a year, the problems began. It resulted in a domestic abuse situation, where the male began his physical abuse. This was not just a one-time slap; it was a battle that lasted over thirty minutes, starting before she took a shower, and continuing until after she got out and the police were called. He was charged with a felony and was convicted of a gross misdemeanor. He was never allowed back in the apartment without a police escort after the arrest.

Lesson: All tenants on the property MUST have a decent credit score. A tenant’s criminal record must be looked at for the original charges, not the conviction charge. Limit your risk with a month-to-month lease and a larger deposit. By this time, the correlation to credit score and personal behaviors was pretty clear in my head.

Summary

I have had my fair share of problem tenants — and have had many great tenants. I have quite a few more stories and all the “good” (i.e. interesting) stories are with low credit score tenants. My current screening criterion is working great and is making my life a lot easier. With 25 tenants, I do not have time for drama.

There is no exact line where everyone above a certain credit score number is good — and below that is bad — but the line is somewhere close to the 600 mark. No matter what line you draw, you will exclude some potentially great tenants.  When you turn down good people, it may make you feel bad but in the long run it is necessary.

Tenants with income of less than 3x the rent, and credit scores between 600 and 625, will be late on the rent; it is almost a given. They will not necessarily be a problem other than the late rent. They have difficulty paying due to not having enough income to make the rent payments.

Tenants with a lower than 600 credit score, regardless of their criminal record, are a problem waiting to happen. Extra roommates, guests who are unsavory, and people who are oblivious to damage being done to your building are common of the sub-600 credit score tenants. Avoid them at all costs.

What types of tenants have you had problem with? What ones have you have the most success with?

Leave your best stories and lessons below!

About Author

Eric D.

Eric is a 55 year old, soon to be former, computer professional. He started several years ago to replace his “work income”, with other alternate streams. He is well on his way to retirement at age 56, and is currently making more money at extracurricular activities, than he is working at his full time job. Whether that is Financially Independent, or just old fashioned entrepreneurial spirit, is in the eyes of the beholder.

20 Comments

  1. Edward Briley

    If you going to ask me if this is true or not, I cannot tell you for sure. However, the agent that told me this story is very honest and trustworthy. You may file this under “Urban Legend” if you desire.

    When the agent first started to buy properties, he bought houses that would be easy to rent for a profit. He rented a house to a women that had 2 children and was pregant with the 3rd. Her husband was in jail, and she and her husband had a credit score of more than 700. He was sure that this was a safe rental. The husband was in jail for shoplifting at a major home improvement store.

    Before renting the house, he put in a brand new gas pack unit. The first 3 or 4 months of paying the rent was great. The husband got out of jail after about a month after the women moved in, and he knew this was going to happen. No problem. A few months later, and after the baby was born he got a phone call that they had no heat. He went to the house, and the condenser was missing out of the gas pack. He took pictures of the unit, police report, paid $1000 to the insurance company, and got the heat back on the next day. Now it is at the end of the month. Rent was due on the 5th. He called the tenant and asked when they would be able to pay the rent. They told him, that they did not have heat, and had reported him to codes, because of the heat problem. (This was about 2 weeks later after the first heat call).

    Again he went back to the property, and this time the entire gas pack was missing. Once again he paid the $1000, police report,an increased insurance rate, and replaced the unit. He thought to himself, that these people had to know it was missing. Care to guess what happened the next time? He finally got an eviction notice after the third time within a nine month period.

    A few weeks later, he happened to be at the house when the gas meter reader came by. He told him about the incident, and the gas man told him where his units went. At a duplex not far away, with his past tenants living there. (The gas man told him that this was a common occurance everywhere).

    He did some checking with the owner of the property, and the owner told him that this guy was a maintenance person that he had hired, and part of his salary was rent for the duplex in which he lived.

    Needless to say, that the tenants did not get arrested, nothing happened to the landlord for recieving stolen property, and the agent was told by his attorney, and the Duplexes owner’s attorney, that if he persued this, that he would be arrested for slander.

    The agent did find out later that he was working for the landlord of the duplex when he got arrested for shoplifting. Matter of fact, he was stealing to complete a job he was paid to do.

    Needless to say, this agent owns 10 properties, however, they are all condos. He will not own another single family to rent.

    • Eric D.

      Thank you for the comment. Great story!

      I think it is an urban legend. Based on my experience, I find it hard to believe that a 700+ credit score person was in jail. I also find it hard to believe that anyone goes to jail for shoplifting. Here in MN, most stores do not even prosecute shoplifters. And people with good credit rarely do damage.

      I believe it could have all happened, not not with a 700+ FICO score tenant.

  2. karen rittenhouse

    Great post, Eric.
    I hate you’ve had so many crazies, but that often goes with the territory!

    I agree with your findings, absolutely. We have had hundreds of properties and hundreds of tenants over the past 8 years. (I have some good stories…) We’ve done Section 8 (which we’re done with, by the way) and rents from $500-$3500 per month. What we find over and over is that tenants must have a good credit score and we even do criminal background checks.

    And we’ve found that, for the most part, higher rents get tenants with more of an owner mentality than lower rents which always produce a renter mentality. The higher rent tenants rarely call and, when they do, it’s justified more often than not.

    We trust, but verify, and then still have to trust. I don’t even know how many times 1 or 2 people move in and become 5 or 6. We state in our contracts that anyone over 30 days must fill out application and credit check, and rent goes up $100 per head. We have had success with that clause and I have no idea how much trouble it’s saved us.

    Thanks for sharing your stories. I know you’ve helped many landlords going forward!

    • Eric D.

      Thank you for the comment.

      My life is so much easier now that I only rent to solid credit score tenants. But my life is a bit boring now, I never get great stories to share about murderers and kids that go to jail for robbery.

  3. Great content as usual Eric. I look forward to your posts. Question for you. I have a single family home that I have the tenants pay all utilities directly, so the rent amount is only for rent, not all the other costs. Given this, does the 3x income still apply? I can see 3x if the rent includes all utilities but wonder what might be a better multiplier given your experience?

    Thanks Eric.

    • Eric D.

      The tenant needs at least 3x the rent. I go higher to paying no more than 30% of their gross pay in rent. And that is a bit much for some people. On old-age Social Security, it’s tax-free generally, so you can be more generous. Older people do not spend as much either.

      Never go less than 3x the rent, or you can blame yourself for missed rent payments. Maybe if they have an 800+ credit score, but never charge more than people can afford.

      Ask yourself would you take a mortgage out at that income and payment level?

  4. jen kurtz

    You bring up many good points Eric, just one thing that gave me a bit of a knee-jerk reaction was the advice to not rent to someone without a SSN. This could violate Fair Housing on the basis of national origin. I dont know if this is common knowledge, but someone who is a non-US citizen who is legally in the country for a work visa or anything like that can have a background check ran on them using a federal ID number than anyone can apply for. Of course you will have other stipulations in your selection policy that would mitigate risk- like landlord references, stable job history, 3x rent income or higher. Dont miss out on a good tenant that could be here from overseas working on a masters degree or going to medical school, for example. Then, any of your items that cannot be completed in an application, you can deny the applicant on the basis of an incomplete application. 🙂

    • Eric D.

      Thank you for the comment.

      Yes, you can use the federal ID, it is like a SSN. Same format, same look. I have used it in the past. Most people from foreign countries, here legally, will have the documents that they need to rent. I work with many H1B visa holders and they are all the cream of the crop of their own countries. They can have a high credit score very easily.

      Illegal immigrants typically do not have SSNs, at least not ones with good credit. They are by definition high risk.

  5. Deanna Opgenort

    I’d also like to raise my hand and point out that the exception to the “below 600” rule is that a ZERO credit score is often an excellent tenant, as this is how “cash only” folks look on paper. 0 means you have no outstanding debt, no credit cards — if you have any debt, bankruptcies or write-offs you have a score.

    I had no score whatsoever until after I purchased my first property (then got a credit card in anticipation of possibly needing to refi in 5 years). I’d graduated from college debt-free, never borrowed, always lived within my means, saved a (cash) downpayment & enough for the rehab expenses all without causing a blip of any sort on the financial system’s “credit-o-meter” (currently in year 15 of being a problem-free tenant. ).

    • Eric D.

      Thank you for the comment.

      Yes, they can be great tenants, but are high risk. Everyone starts with a blank credit score, but can get a 700+ score in a matter of months.

      If you take 100 people with out a credit score, I suspect that over 50% will be a terrible tenant. Why take a chance? If you do, make sure you get higher rent, higher deposit and keep them on a month-to-month lease.

      Do not forget, if you take one person without a credit score, and decline the next, you could be in for a fair housing issue.

  6. Georges Arnaout

    A few comments, and please let me know your thoughts as I am not nearly as experienced as you are:

    1- Credit checks aren’t deal breakers for me. If they have a social security, great, I will run it and use it. If it’s low, I will ask for a co-signer (someone who’s willing to share the liability but not necessarily with a good credit). If they don’t have a social security (for being immigrants for example), I will treat it the same and request a co-signer.
    It seems from your past experiences that you have decided to not rent to people without a credit check. In some parts of the country (esp where I live in East Boston), the majority are foreign immigrants that only have an ITIN and you won’t be able to do much with it (except a background check using their names).

    2- I did have an applicant once with an 803 credit score. When I did my due diligence he was actually being evicted. And then it hit me, most landlords believe in Cash for Keys which means it will probably never go on their records. Their credit scores remain intact. In fact, some of them would give them a great recommendation just to get rid of them (which makes our job much harder).

    My point is that all the mistakes you mentioned can be solved with (1) a VERY strict lease (e.g. mine specifies that any person occupying the property for more than 2 days who’s not on the lease will be considered a violation of the lease / or add habituals where if they are late more than twice in their lease period they will get evicted) and (2) with a thorough background / criminal check, but not necessarily a credit check. I know you mentioned that you had good tenants with a LOW credit score, and statistically your generalization is correct. However, as I mentioned above >>>> the area sometimes dictates to you how strict you can be (if you intend to keep the vacancy rate low that is).

    PS: The reason that I don’t consider credit checks to be a deal breaker is that when I first came to the country I had no social security and yet never missed a payment in my life. I was a great tenant and I know I am not the only one.

    • Eric D.

      Thank you for the comment!

      You have never been to an eviction I see. It is near impossible to evict for a lease violation. A judge will generally give the tenant time to fix the violation, and they will stay. They the violation will continue.

      Or, the Judge will rule it is not a ‘material’ violation. Do you think a Judge will make the felon father of 5 kids move out when he is trying to be a dad? Good luck with that.

      Do you think you can evict for a late payment after you have already taken two previous late payments? Good luck with that. Perhaps terminate the lease, then evict – maybe.

      Credit score is about personal behaviors as much as payments. Anyone can be a great tenant, but you want to keep your risks low, and profitability high.

      • Georges Arnaout

        Good to know thank you to shed more light on this topic. If anything, it serves as a way to scare the average (non professional) tenants from doing something that will harm their credit score (cause it will).

        But as I mentioned, with immigrants only holding an ITIN there’s not much you could except a background check based on their full name. Most of the credit check companies I researched require the credit score and will not accept an ITIN

    • Eric D.

      Another note…

      Do not think that a strict lease will help you. A judge will only allow an eviction for a “Material Violation”. Once you ignore the violation and accept rent, it is implied you are now allowing the violation.

      If a female with kids allows the father (who might be a felon) back in the home, a Judge might decide that the kids having a father around is more important than your lease.

      Proving an extra tenant is there is another issue. They might have ‘proof’ they are staying there. Or come to court with an argument that the person is only there a day a week.

      You are right, immigrants do not have credit score, therefore they are high risk, initially. In ~6 months they can get one, a very high one, with a secured Visa card. I work with many H1B visa holders, 100K+ income people. All would be great renters. They are the cream of the crop of their country. Other countries we may not be getting the cream of the crop. Or a US Citizen without a score because they dropped out of the credit system.

      Since you need to treat everyone the same, you need to have consistent methods. No matter where the person is from.

    • Eric D.

      Often, a criminal is charged with a higher charge, and then it is plea bargained down to a lower charge. Or they are “Dismissed with conditions”. In either case, the crime was committed.

      Often, domestic abuse felonies get lowered to misdemeanors. Or changed to “Disorderly conduct”.

      I have seen a sex offender case, originally charged as a Serious Felony, get dropped to a misdemeanor.

Leave A Reply

Pair a profile with your post!

Create a Free Account

Or,


Log In Here

css.php