7 Tenant Red Flags You Can't Afford to Ignore

A bad tenant can cause financial losses, property damage, and legal headaches, while a good tenant ensures steady cash flow and property maintenance. To protect your investment, here are seven tenant red flags you should never ignore.

1. Incomplete or Inconsistent Rental Applications

A tenant’s rental application provides valuable insights into their reliability. If an application is incomplete, inconsistent, or contains missing information, it’s a major red flag. Common issues include:

• Missing employer details or vague job descriptions
• Gaps in rental history with no explanation
• Inconsistent income reporting
• References that can’t be verified or seem fabricated

A responsible tenant will provide complete and verifiable information. If an applicant is unwilling to be transparent, they may be hiding something.

2. Unverifiable or Unstable Income

As a landlord or DSCR borrower, ensuring your tenant can consistently pay rent is paramount. If their income is difficult to verify or seems unstable, proceed with caution. Watch for:

• Self-employed applicants who can’t provide tax returns or bank statements
• Frequent job changes with short employment durations
• Discrepancies between reported and actual income
• Refusal to provide pay stubs, W-2s, or employer contact information

A good rule of thumb is to require tenants to have a gross income of at least 3 times the rent amount.

3. Bad or Nonexistent Rental History

A prospective tenant’s rental history can reveal a lot about their reliability. Be cautious if:

• They have a history of late payments or evictions
• Previous landlords provide negative feedback
• They claim to have only lived with family and have no independent rental history
• They refuse to provide landlord references

If a tenant doesn’t have a rental history, consider asking for additional proof of financial responsibility, such as utility payment history or a larger security deposit.

4. Poor Credit Score and Financial Issues

A credit score reflects a tenant’s financial responsibility. While some applicants may have valid reasons for a lower score, beware of:

• Multiple late payments on credit accounts
• High levels of debt with no stable income
• Bankruptcies, charge-offs, or accounts in collections
• A history of unpaid rent or legal judgments from previous landlords

A tenant with poor credit may struggle to pay rent on time. If you decide to approve them, consider requiring a cosigner or a higher security deposit.

5. Criminal Background or Eviction History

While fair housing laws prohibit blanket policies against applicants with a criminal record, you should still conduct thorough background checks. Be cautious if an applicant has:

• A history of property damage, theft, or violent crimes
• Multiple past evictions for nonpayment or lease violations
• Recent or unresolved legal issues

Past evictions, especially recent ones, are strong indicators of rental instability. If an applicant has a record, assess the nature and recency of the offenses before making a decision.

6. Uncooperative or Argumentative Behavior

The application process is an early indicator of how a tenant may behave during the lease. Red flags include:

• Arguing over standard lease terms or security deposits
• Making unreasonable demands before moving in
• Refusing to undergo a background or credit check
• Being overly pushy or rushing the application process

If a tenant is difficult before even signing a lease, they may be problematic once they move in.

7. Too Many Occupants or Pets Not Disclosed

A tenant who misrepresents the number of occupants or pets can cause legal and financial issues. Warning signs include:

• Applicants who claim they are the only occupant but show signs of additional tenants
• Refusing to list all occupants on the lease
• Sneaking in unauthorized pets despite a no-pet policy

Unauthorized occupants and pets can lead to lease violations, increased wear and tear, and potential legal liability.

Final Thoughts

Screening tenants carefully is essential for protecting your rental investment. As a landlord or DSCR borrower, ignoring these red flags can lead to nonpayment, property damage, and legal disputes. Always conduct thorough background checks, verify income, and ensure applicants are transparent and cooperative. A little diligence upfront can save you thousands in the long run.

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