Most landlords will deal with bad tenants at some point—especially if they manage a number of properties or have a high turnover rate. Unfortunately, these bad tenants often cause not only emotional distress but can also damage valuable property and your reputation and put you in financial jeopardy if they aren’t paying on time. But we’re here to help. Today, we’re sharing 11 of the most effective strategies, so you know how to avoid bad tenants once and for all.
How to Avoid Bad Tenants: 11 Strategies
These strategies will help you avoid bad tenants and protect your properties. While there’s no foolproof way to prevent bad tenants from slipping through the cracks, diligently following these tenant vetting tips will greatly decrease your chances of dealing with them.
- Thorough Tenant Screening Process
Start by implementing a thorough tenant screening process. This includes:
- Conducting background checks
- Verifying employment and income
- Checking rental history
- Contacting previous landlords
Don’t skip this step—it’s your first line of defense against bad tenants.
- Require Rental Applications
Require all prospective tenants to fill out a detailed rental application. This will provide valuable information about their rental history, employment status, and financial stability. Watch for any red flags—things like frequent moves or gaps in employment might mean trouble.
- Check Credit Reports
Obtain permission to run credit reports on potential tenants. A good credit score is often indicative of responsible financial behavior. Be wary of applicants with a history of late payments, defaults, or bankruptcy.
- Verify Income and Employment
Request pay stubs or other documentation to verify the applicant’s income and employment status. Ideally, the rent should not exceed 30% of the tenant’s monthly income to ensure they can afford it. There may be exceptions for high-cost areas, but be cautious of tenants with unstable or insufficient income.
- Establish Clear Lease Agreements
Have a detailed lease agreement that diligently outlines the terms and conditions of the rental, including rent amount, due date, late fees, maintenance responsibilities, and rules regarding pets and subletting. Be sure both parties fully understand and agree to the terms before signing. Should any issues arise, having these agreements to look back on can protect you legally and provide a lot of clarity for you and your tenants.
- Conduct Routine Inspections
Perform regular inspections of the rental property to ensure it is well-maintained and address any potential issues early on. This also sends a message to tenants that you’re actively involved in property management and will not tolerate neglect or damage. That being said, be sure to respect your tenant’s privacy and provide proper notice before entering the property.
- Communicate Expectations Clearly
Clearly communicate your expectations to tenants from the outset. Let them know what is and isn’t allowed regarding property maintenance, noise levels, and interactions with neighbors. Encourage open communication with your tenants and address any concerns promptly.
- Listen to References
When contacting previous landlords as part of the screening process, listen carefully to what they say about the applicant. Ask about their payment history, behavior, and any issues they encountered during the tenancy.
- Trust Your Gut Instinct
When it comes to how to avoid bad tenants, trust your instincts. Does something feel off during the screening process or when interacting with a potential tenant? It’s better to pass on a tenant who raises red flags than to deal with the consequences of renting to a bad tenant later on. Over time, and with more experience as a landlord, you will better understand who is a good fit for your rental property, which will become more intuitive.
- Consider Hiring a Property Manager
If managing rental properties becomes overwhelming or you lack the time or expertise to handle it effectively, consider hiring a professional property manager. They can handle tenant screening, lease agreements, rent collection, maintenance, and evictions on your behalf.
- Transfer Tenant Default Risk to An A+ Rated Insurer
We’ve saved what we think is the best for last: transfer tenant risk to a top-rated insurer rather than taking it on yourself with a measly security deposit. Rental Deposits Now allows you to offer your tenants a deposit-free rental option backed by an A+ rated insurer. This eliminates the need for tenants to come up with a large security deposit upfront and protects you against potential default or damage costs.
This isn’t just beneficial for landlords, either. It can appeal to prospective tenants and help you lower your vacancy rate and fill your properties. Without having to deal with rental deposits and corresponding paperwork, it can significantly reduce the administrative load on you or your team, too.
In Summary: How to Avoid Bad Tenants
Avoiding bad tenants requires a proactive approach and careful attention to detail. By implementing these 11 tips, you can minimize the risk of renting to terrible tenants and protect your rental property and peace of mind. Remember, prevention is key when it comes to avoiding the headaches and financial losses associated with bad tenants. Check out this FAQ page next to find out more about how Rental Deposits Now could be the answer you’ve been looking for.
