How to Minimize the Risk of Renting to Problematic Tenants

There are over 100 Reddit threads designated for tenant horror stories. The fiascos are few and far between—receiving late rent payments, paying for pricey damages to your property, discovering items that have been stolen, having to pursue legal battles, etc. To be clear, none of the examples listed are the landlord’s fault. In fact, one of the most challenging features of the job is vetting future tenants. Knowing where to start is essential to minimize the risk of renting to problematic tenants.

via Pexels

Undergo a lengthy screening process

First things first, do your research. You are not just renting out your property; you are also signing up for a long relationship with the person you are renting to, depending on the lease agreement. It is critical to take the extra time to discover who your tenant is. Each person must always submit an application before any further talks. This may be obvious, but sometimes tenants try to get around it by only filling out one application despite seeking residency for multiple adults, perhaps a couple, for example. Ensure every person who is going to be living in the unit fills out their own application form. The form itself should include basic information such as rental history, employment status, any prior criminal history, and past references.

The next step in the process is requiring a credit history check. Even if you know the future tenant personally or they have been upfront about their credit score, skipping this step can become the most problematic for landlords. The credit report can be a valuable tool that will give insight into whether the tenant could become financially troublesome in the future. This step is optional but could save you time and money down the road- a background check. It sounds taboo to pay to know about someone’s personal history, but you never really know someone. Finally, verify their employment directly through reaching out to the employer themselves. It is not uncommon for tenants to embellish their financial status, so it is better to be safe than sorry. Oh, and also contact those references while you’re at it.

Ensure you have a clear and legal lease agreement

This one also seems self-explainable, but research shows one of the most common mistakes landlords make is using generic lease agreements. This leaves room for error, blame, and confusion. Tenants can become problematic to the surrounding area through loud noises, excessive vehicles, frequent parties, trash in the open yard, and much more. You should include these stipulations in a lease agreement to avoid conflicts. If you do the work of outlining and agreeing on it before, there’s no room for any arguments. You can easily choose to give a warning or eviction depending on the severity and frequency because it was an agreed-upon clause in the agreement.

Another potential problem can be DIY-ing. The art of DIY-ing your living space is hot and on the rise. Just check Tiktok, where you will see thousands of tenants turning the place upside down through DIY projects. While we all love a good at-home hobby, there is a place and time, and it shouldn’t be on the landlord’s dime. Just take a look at this DIY renovation from a tenant gone wrong. You should take the steps ahead of time and outline the rules for unit alterations in the lease agreement. It’s a good idea to research items marketed as renter-friendly, but they actually cause damage to the wall or unit somehow (trust me, there are a ton of them).

Conduct regular property inspections

No tenant will be happy about regular property inspections, but they are necessary for both parties involved. You should first check the state and local laws/policies about proper property inspections and notices. Then, speak with your future tenant directly about what they can expect from you throughout the lease concerning the inspections. A tenant can easily be problematic, but you haven’t been made aware because you haven’t inspected the space. A few examples are having undisclosed animals or someone staying long-term that you are unaware of. To ensure they are honest, you may have to do the uncomfortable thing and conduct visits more than annually if the law allows.

Being a landlord is both rewarding and testing, especially with tenant relationships. While we all hope most people are good and honest, that isn’t always the case -just check out those Reddit threads mentioned earlier. Some steps, like background checks and crafting lease agreements specific to each tenant’s rental situation, can seem overkill, though no landlord has ever said they prepared too much. Tenants can become problematic and challenge your authority in various ways, but you can take these steps ahead of time to minimize the risk and guarantee the reward.