You are reading: Watch Out for Professional Renters
Daniel Berlind
CEOIn this article
The tenant screening process is a vital part of property management. It ensures that your rental units are inhabited by responsible tenants who will not only pay on time but also maintain your property and stick to the lease terms.
This blog post aims to help property managers and landlords navigate this process, especially those who are new to the business and feel overwhelmed when hearing warnings about “professional renters.”
Who Are Professional Renters?
Professional renters take advantage of the rental system by securing a property. They often pay the first month’s rent but then avoid future payments, exploiting legal loopholes and unethical tactics.
These individuals are skilled at manipulating the legal system, typically making it quite difficult for property managers to evict them, all while staying in a property rent-free for many months or even longer.
As a landlord or property manager, it’s critical to be cautious about this category of scammers and implement comprehensive screening processes to prevent costly headaches and avoid empty rental units.
Here are some common tactics used by professional renters:
- Delaying rent payments
- Exploiting rent control laws
- Filing complaints to housing authorities to delay evictions
- Repeated requests for repairs
- Filing bankruptcy just before an eviction to get an automatic stay
- Disappearing after legal notices
- False payment promises
- Using multiple identities to deceive (especially if they have a history of eviction or unpaid rent)
Red Flags to Watch For
It’s crucial to be vigilant for numerous red flags that could point to a professional renter who may try to abuse the system.
Here are some common red flags:
Inconsistent or Suspicious Rental History
Gaps in rental history, vague, unverifiable references, and inconsistent details on the rental application may be signs that the applicant is trying to cover up past issues. Use caution if you notice frequent moves or multiple short-term rentals. Also, be cautious of claims the individual rented from friends or family members.
Financial Red Flags
Although unusually high or poor credit does not necessarily signify a problem tenant, professional renters tend to have low credit scores due to unpaid bills or evictions. Exert caution if a prospective tenant has no credit history, offers large sums of cash upfront, or wants to pay several months in advance. In addition, applicants who hesitate to share proper identification, such as proof of income or employment verification, may have something to hide, like evictions or poor credit.
Behavioral Red Flags
Suppose a tenant seems overly eager to move in immediately, without concern for the typical screening process and proper vetting. In that case, they might be trying to take advantage before their rental history is uncovered. Pay attention to evasive or aggressive behavior and reluctance to provide necessary documentation or references during the application process.
How to Verify Information Effectively
As a landlord or property manager, you can protect yourself from “professional renters” by thoroughly verifying the information provided by prospective tenants.
Here are some key strategies to ensure that you verify all information effectively:
Thorough Rental History Verification
At a minimum, contact two previous landlords with specific questions, inquiring about the renter’s payment history, behavior, and the property condition when they left.
It’s also wise to cross-reference contact details provided by the tenant with what the landlord shares. Never rely solely on the current landlord, who may give a positive reference to get rid of the individual sooner. In addition, look out for people who share false landlord references, often using friends or family pretending to be past landlords.
Lastly, if any part of the tenant’s application can’t be verified or appears falsified, think about employment, income, or rental history. This is a significant red flag.
Employment and Income Verification
Call the employer directly using a verified phone number (not the number provided by the applicant) to confirm their job position and status (i.e., full-time, part-time, or contractor), length of employment, and monthly or annual income. Be wary if the prospective renter shares vague job details or the employer is challenging to reach.
Always ask for the last two to three months of pay stubs – they provide proof of consistent income and show how much the tenant earns regularly. It’s also important to request recent tax returns (Form 1040 or Schedule C for self-employed individuals) to verify total annual income. This is especially useful for self-employed renters or freelancers who may not have official pay stubs.
Conducting Comprehensive Background Checks
Utilize reliable tenant screening services that offer comprehensive reports on credit, criminal background, and eviction history. These services help filter out difficult applicants early in the process.
When conducting background checks on possible tenants, you may come across discrepancies or negative results that require careful examination. Here’s how you can assess and respond to these red flags:
- Cross-check all information provided
- Evaluate negative credit report results, paying special attention to missed payments, high debt, or accounts sent to collections
- Review criminal backgrounds carefully, contextualizing offenses – minor, non-violent crimes from many years ago versus serious offenses
- Follow-up on discrepancies in employment verification
- Look for pay stubs or bank statements that seem altered
- Ensure the applicant’s ID matches the name on their application, credit report and employment verification
Legal and Ethical Considerations
As a landlord, it’s important to always adhere to fair housing laws while screening for professional renters. The Federal Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, familial status, or disability.
Ensure a consistent, non-discriminatory screening process. What does this mean? Always use the same screening criteria for every applicant to avoid accusations of discrimination. For instance, if you require credit checks or job verification from one prospect, you must require the same from all the others.
Additionally, be sure to document all decisions and maintain records, including background checks, income verification, and references. This helps protect you from legal disputes and provides documentation if issues arise. If you are unsure whether specific actions could violate the law or tenant rights, check with a legal professional.
Best Practices for Avoiding Professional Renters
Avoiding professional renters requires thorough screening and proactive management. Here are some best practices you can follow to protect yourself and your bottom line:
Set clear and strict tenant selection criteria. To filter out unqualified applicants early, let applicants know upfront about your requirements for credit, income, and rental history. Develop clear, non-discriminatory criteria like minimum credit score, verifiable income, and clean rental history and apply these standards consistently to all applicants. Use the same screening criteria for all potential tenants to avoid discrimination claims. Professional renters may specifically identify those landlords who make exceptions or skip steps in the process.
Regularly review and update your screening procedures. It’s a good idea to evaluate whether your screening criteria are effective periodically. For instance, you may tweak minimum credit scores, income thresholds, or background check procedures based on lessons learned from previous renters.
Educate staff on identifying professional renters and enforcing criteria. Train your team members, especially those directly involved in tenant screening, on how to look for professional renters. Give them real-world examples of common red flags, like inconsistent rental history, unverifiable references, or shifty answers during interviews.
Tools and Resources to Assist in Tenant Screening
Stay informed about new tenant screening technologies or services, such as enhanced background checks, eviction databases, or fraud detection tools, that can improve your ability to identify red flags.
For example, Snappt analyzes thousands of metadata elements to detect even the most minor document manipulations. Its fraud detection algorithm examines and compares document patterns to catch the latest types of fraud. Additionally, Snappt allows you to quickly confirm your applicant’s identity with a secure identity verification solution.
Checking a potential tenant’s eviction history and any rental disputes is a key part of property management. Platforms such as Experian RentBureau, TransUnion SmartMove, or CoreLogic Rental Property Solutions provide tenant screening that includes eviction records. These platforms compile nationwide data from court records, credit bureaus, and public records.
In addition, some counties and states allow public access to court records online. Use these databases to search for past eviction filings or rental disputes tied to the applicant. Some helpful tools include PACER (Public Access to Court Electronic Records) or local court websites.
Staying updated on tenant screening laws and best practices is essential. Here are some key resources and strategies to help you stay informed:
- Industry associations and organizations, such as the National Apartment Association, the National Association of Residential Property Managers, and the Institute of Real Estate Management
- Government websites, including the U.S. Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau
- Legal and compliance blogs, like Rentec Direct Blog
- Legal and property management publications, such as Property Management Insider
- Webinars and conferences – Join webinars and conferences hosted by industry experts to learn about recent changes in tenant screening laws and best practices
Know the Signs
Screening tenants is one of the most essential elements of managing rental properties successfully. Being able to identify professional renters is a key part of this process and your overall risk management strategy.
By recognizing these individuals’ red flags and signs and implementing a comprehensive screening process, you can protect your investment and avoid expensive, time-consuming eviction processes. The key is not cutting corners to find good tenants—your ultimate success as a landlord or property manager depends on it.
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