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7 Tips to Avoid Bad Tenants


I’m sure everyone has heard of the tenant from hell, well we’ve experienced many tenants from hell!  Those are the ones that don’t pay rent on time, smoke in the property, damage property, etc.  This is one of the major fears that investors have when it comes to real estate investing but in time we’ve learned from those mistakes and mistakes of other landlords.  If you Google ‘tenant from hell’, you will read some horror stories but all could of been avoided if the landlord was diligent in their renting process.  All these landlords made a crucial mistake which I will get into but first the positive side of real estate investing.

What keeps me motivated in real estate investing with all the problems?

Don’t sweat the small stuff – relative stress isn’t as bad as it seems. With going through the ‘tenant from hell’ experience, I seem to have the mentality of ‘Don’t sweat the small stuff’.  I’m sure it can become stressful at times but it is just like any other job.  The major difference is that a 9 to 5 job is a constant daily stress whereas a rental property is an occasional stress.  For me, it is more of a once a month stress which equates to an income of a months rent (For ex. $1500).  Would you rather have constant daily stress or once a month stress to make $1500?  I don’t know about you but I would rather the latter.

Tenants are your long term investment. This is a business after all and just like your savings account, you can count the pennies you earned a month versus the dollars you earned in a year.  So instead of looking at it as $1500 a month, if you signed a year lease, you would earn $18,000 a year.  On top of that, this is just the minimum because I didn’t factor in appreciation of the property.  Sometimes looking at the big figure just makes the stress well worth it.

Right Tenants

Have hope in people. I know the ‘tenant from hell’ seems like a horror movie but people aren’t that bad.  There are some good tenants out there and aside from having the tenant from hell, we’ve gotten some pretty awesome tenants.  We’ve had tenants whom barely complain, garden the backyard, made us fresh pesto, completed some renovations, etc. So don’t get discouraged because there is hope.

Now that I have talked about what motivates me to keep investing in real estate, I will get in to pitfalls to avoid when renting your property investment.  If you  Googled ‘tenant from hell’, there is one crucial mistake from all these landlords – their screening process was weak.  This is the most important factor of choosing the ideal tenant for your real estate investment.  Remember it is more difficult to evict a tenant then to screen them out from the beginning.

Tips to Avoid the Tenant from Hell | Smart Renting Screening Process

Just like applying for a  job, the process of choosing your ideal tenant should be followed in the same manner.

1. Ask important questions. When you meet possible tenants to show the property, ask important questions like ‘Why are you leaving your current place?’, ‘What do you do?’, ‘Do you smoke?’, ‘Do you have any pets?’, ‘Who is going to live with you?’, etc.  Don’t be afraid to ask questions for showing the house is like your chance to interview your possible tenants.

2. Rental price is non-negotiable. Unless you price your rental property too high which I am highly against, there is no reason why a renter should negotiate a lower price for rent.  This type of renter is the type that will be pestering you about the small things and who really wants someone like that?

3. Contact legitimate references. So you finally got a possible lead on a tenant and they fill out an application form.  Make sure you get contact information for at least 2 references outside of friends and family.  Legitimate references is a key requirement in my rental process and includes past landlords and employers.

4. Verify income source. Ask for an employment letter, T4, pay stubs, government assistance pay stubs, guarantor income information.  If you plan on receiving rent, the possible tenant must be getting money from somewhere, so get their income verified.

5. Get credit checks. You can either get the possible tenants by telling them to send you that information from Equifax, you can pay to get that information from Equifax, or you can work with your real estate agent to get it for you.  I suggest the latter for usually real estate agents get discounts on getting credit information.  This is a good check to see if they are paying their bills on time and are good with their money.

6. Get a deposit. I have read one of the ‘tenant from hell’ horror stories and I can’t believe they were hustled to not giving last month’s rent or a deposit.  I know this is common sense but don’t fall in the trap of not getting a deposit.  I had an application from a tenant who filled out all the requirements I listed above.  Though we signed a lease, she did not fill the lease terms of the deposit therefore the lease was considered void.  I’m not handing the keys to my rental property if I don’t get any money!  That is just crazy!  Though we lost a month’s rent, we avoided the stress of a bad tenant.

7. Don’t be desperate, be patient. With all the bills associated with the house, don’t feel desperate to choose the first renter who comes knocking on your door.  This will result in bad decisions and bad tenants.  So be patient and follow through with your screening process.  If a renter can’t fulfill your requirements – they aren’t the tenant for you.  Trust me, I’ve made that mistake before.

I hope you have learned from these 7 tips to avoiding the tenant from hell!  I know that real estate investing can SEEM problematic but if you do all the leg work in the beginning, it will pay off in the end.

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