As an Orlando rental property owner, you want to minimize how much effort you put into making it profitable. Arguably, this begins with securing the right tenants. To do that, you need to have a good tenant screening system that identifies who will make the best renters. Knowing some of the potential red flags to save you thousands (maybe tens of thousands of dollars) in the long run.
Proper Vetting
Landlords often get excited and accept the first interested party in renting their home. This can cause a lot of problems without proper vetting before signing a lease and accepting funds.
A good screening process of every applicant can help you weed out potentially troublesome tenants. At the very least, checking credit scores and background checks can prove to be well worth the time and effort.
If you don’t work with an Orlando property manager, set baseline criteria and be consistent. Not only will this ensure you don’t let emotions (“I really like this couple”) take over your decisions, but it’ll boost your defense should someone accuse you of discrimination.
Tenant Screening Red Flags
While professional property management companies thoroughly vet applicants, many self-managing landlords do minimal, if any, applicant vetting. While seeking tenants there are some possible red flags to beware of, which we list below. Keep in mind, that these are not absolutes, but merely things that could be indicators of a problematic tenant.
- Eager Beavers
Normally, this would sound like a good thing. You’re excited to have a tenant. They’re really excited to be your tenant. Like REAL excited. Why? It’s usually not until after they move in and establish residency that you discover the problems.
- Let Me Give You More Money
Again, this sounds like a good thing on the surface. You don’t have to chase someone for rent money if they pay for several months’ rent in advance, right? But what happens after those pre-paid months have elapsed? Many times the tenants offering to pay three to six months in advance are doing so because of other issues within their applicant profile, such as unemployment.
This would be different than a tenant offering to pay the entire lease up front. Usually those tenants have recently sold a house or may be moving from another state. Paying the entire lease up front is not a concern because the owners receive all of the funds owed under the terms of the lease.
It is the partial payments that may be concerning. Just be cautious and ensure the rest of their renter profile is free of red flags.
- Can We Stay Longer?
Tenant turnover is expensive. Most leases run for 12 months and typically include an early termination clause. If a new tenant(s) wants to sign a long-term lease that sounds great, right? But just like the Eager Beaver in Red Flag 1, if someone wants to sign a longer-term lease before they move in, you may get more than you bargained for.
We cannot necessarily explain why but it seems like most owners who sign a new tenant to a two-year long lease end up regretting it for one reason or another. And you may not find out why until they move in… and then you’re stuck for even longer than the normal lease agreement. A one year lease gives you the ability to separate from a problematic tenant.
Now, if your current tenant wants to sign a lease longer than 12 months, that is less concerning because you are already familiar with them as tenants. There may actually be benefits to a 15-18 month lease duration, if your tenant requests it. If the lease expiration ends at a slow time of the year, or if the property typically takes longer to rent, it may not be a bad idea to offer a good tenant a longer lease term. It is the brand new tenant that you want to be cautious with signing an extended lease term.
- All About Those Benjamins
If someone insists on paying solely with cash and avoids banking institutions altogether, it’s advisable to decline their offer. Sure, they could be a conspiracy theorist worried about government tracking but more likely it’s someone conducting criminal activity who doesn’t want a paper trail.
For example, a landlord was having difficulty renting his property at the list price until a single female applied. She was employed at a local hospital but wanted to pay exclusively in cash. It was not until a few months later when law enforcement served a search warrant on the house for narcotics that the owner learned the female’s boyfriend was not only living there but selling drugs from the residence… hence the cash.
Even people in service industries who receive tons of cash in tips typically have no problem making deposits or getting a money order or cashier’s check. Either way, keep things above the board.
- One of These Things Is Not Like The Other
Some applicants will use fake IDs or fraudulent identities when applying. Therefore, when screening applicants, ensure their information remains consistent. Does their employer information match their bank records? Is their home address the same on all three pieces of information? Does their employer information match what it should? Do they provide a direct supervisor or the main phone line to the business?
Have they provided their current and any previous landlord’s contact information? If you’re not getting complete information from an applicant, or they are hesitant when you ask for clarification, it’s for a reason.
It’s important to remember that selecting a good tenant is arguably the most important aspect of owning rental properties. The red flags on this list originated from things our leasing team has observed, or experiences self-managing landlords have mentioned in conversations with our sales teams. Often, novice self-managing landlords encounter these situations, and there are typically multiple red flags.
However, they may not consider them red flags until after the problems arise. The red flags are usually coupled with a poor tenant vetting process to begin with. A possible red flag existing doesn’t necessarily mean you deny the applicant, but instead make sure to thoroughly vet them.
Property Managers
When you use an Orlando property management company like The Realty Medics, we’ll do all the applicant screening for you and identify any red flags on applications. We aggressively market your property, host showings, gather feedback and follow up with prospective renters.
We then process applications, conduct background checks and procure the highest-quality tenants for your property. Ready to experience this peace of mind for yourself on your property? Call us today at 407-315-1126 or complete our online form for a free rental analysis.
