Red Flags

  The tenant selection process is a time-confusing process that needs to be performed thoroughly when selecting tenants for your rental property. What are some of the red flags you should look out for? 

Recently we were reviewing an application for one of our clients. We contacted the tenants’ references and most were good references. The tenant landlord refused to speak with us until they had given notice, which made us wonder what the relationship is between the two parties.  

Due to the landlord not speaking with us we requested further information and the tenant sent us six months of bank statements showing they have paid their rent on time each month. This was great. We could easily see that they had paid the rent on time. What the tenant didn’t notice or realize is that two of the six months his bank account was in a negative balance, meaning they had spent more than they brought in. On one of the statements it was clear that their car payment was NSF, the most recent month.  We elected to perform the credit check and found further information that made us elect not to move forward with this applicant.  

The credit report does start with a “score” but that is not the only thing one should review on the report. In this case the score was poor.  The report also showed that they had a high ratio of credit utilization used. It showed two credit cards and another loan, which with some online research you can see this is from a short term payday loan. All of the debt added up to more than one year’s salary for the applicant. All of this information allowed us to make a decision not to rent to this person who was showing high risk of not paying the rent on time.   

It is not one thing that makes a decision, it is all the factors involved in the process of selecting a tenant.  

Our advice to tenants would be not to submit bank statements that show your account in a negative balance. This is not the first time I have received information like this from an applicant. 

Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com