How to Spot a Bad Tenant

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someone handing someone the keys after a rental or home buying purchase

Not every red flag is a deal-breaker, but some will cost you. It’s important to remember that a low-risk tenant makes the highest profit. 

Bad Credit Score

A bad credit score indicates risky behavior, such as a late or missed rent payment. The applicant should be rejected immediately if they have a D-rating for their credit, which is anything below a 620 FICO credit score.

Criminal Activity

Nobody wants a criminal for a neighbor. To avoid the liability of having a tenant with prior convictions, incorporate county-level criminal checks into your application process. 

A high frequency of criminal activities is another red flag. If the applicant has more than 3 convictions in the last 4 to 5 years, you should reject the applicant. Frequent convictions show that the applicant isn’t mindful of laws or authority. 

However, do not penalize the applicant for non-convicted charges, traffic tickets, or expired cases.

Domestic Violence Convictions

Domestic violence convictions are a deal-breaker. If the victim currently lives with the convicted abuser, you should reject the application immediately. This is a recipe for disaster, due to the high risk of a repeated incident

Frequent Moves

If the applicant has moved residences more than 2 times in the last 3-4 years in the same general vicinity, there is a high likelihood that the applicant could be problematic. Another thing to consider is if the applicant is prone to moving frequently as a personal preference, this could mean a future vacancy on the horizon. Low occupancy rates can be a burden for the property manager, and should be avoided when possible.

Low monthly income

An applicant’s monthly income communicates their capability to pay rent consistently. The proper tenant will earn close to 3 times the amount of their monthly rent. For example: if rent is $1,500, the applicant’s monthly income should be about $4,500, if not more. If the monthly income of the applicant is too low, it will cost you financially further down the road. 

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