Much of your success in property management comes down to your ability to screen tenants. This is a process that can be difficult given how some tenants would prefer you not know the most unflattering things about them. However, if you do not adequately screen your tenants, you may end up with unpaid rent and property damage. These costs can add up.
Not Following the Law
The most important rule is to have a consistent screening process for each applicant. Otherwise, you may find yourself in violation of the Fair Housing Act. Once you have decided to implement one step of the screening process, you must make it consistent across all applicants. Your process for turning down applicants must be fair and non-discriminatory.
Not Performing Background Checks
A tenant's past is the best way to determine how he or she will behave in the future. Try to obtain your tenant's payment history to find out if he or she has a history of paying on time. Though you may want to save money, there are many services that will obtain this information for you at a low cost. Also, make sure to perform a credit check, background check, and employment check and check all of their references.
Even if the individual on the lease checks out, keep in mind that your property could be damaged by anyone who is staying in your apartment. Find out everyone who will be staying at the apartment and perform a background check.
While having one red flag during the screening process can indicate other possible red flags, this isn't necessarily the case. You may have an applicant who has never committed a crime but who has a lot of debt.
Not Following Up On References
Check all of a tenant's references. A reference is a person who will provide a unique opinion on your prospective tenant that can be more valuable than what is found on a piece of paper.
Not Being Selective with Applicants
Tenants can cause all sorts of problems for your property. In addition to damaging the property or not paying rent, they may damage your reputation by causing it to become associated with crime. Tenants with criminal histories might be more likely to harass other tenants and may make your property less safe to live on. Once your property has acquired the reputation of being unsafe, this reputation is difficult to shake.