Guide to Avoiding Bad Tenants | Harrisburg Property Group

System - Wednesday, September 26, 2018

guide to investing in property in central pa

Nightmare tenants keep you up at night. You take pride in the quality of your properties and the residents who live in them — you just wish they did, too.

Whether they don't pay rent on time, mistreat their rental units, falsify background information — or any other red flag waving during the tenant screening process —  it falls on your shoulders to thoroughly find, vet, sort, and verify the good renters from the bad. As a current landlord yourself, these worries can lead to many headaches — and, worst-case scenario, legal battles and corrupted property portfolios.

In our tenant screening services for Harrisburg, Pennsylvania, and the surrounding areas, we've collected dozens of tricks, tips and legal advice to pick the right tenants for your rental property. We've condensed some of the best into a guide so you can steer clear of bad tenants who glitter but aren't gold.

1. Keep Your Ads Professional

Let's start off with a tip well within your control — your property's advertisements.

Irresponsible tenants or those with a history of not paying rent strategically look for ads signaling easy prey based on language and ad design. 

This isn't a scare tactic to make you second guess your online and print marketing. Rather, it's an easy and effective practice to attract good tenants with squeaky-clean credit scores and background checks.

Ensure all of your ads — digital and print — appear clear and professional. Use industry terms and upscale language when describing rental units. Include high-quality photos and even a management logo to signal your professionalism as a property owner or manager, as well as contact information for any property management companies that help oversee your complex.

Do not mention if your property has been vacant for extended periods of time, advertise numerous price reductions or state you're looking for an "immediate tenant." Sure, these might be true, but broadcasting this information is like taking bad prospective tenant's hands and personally inviting them to start a lease. Serious and responsible renters respond to serious and responsible advertisements. The opposite is also true.

2. Conduct a Strategic Prospective Tenant Screening Process

Many current landlords and property management companies understand the importance of screening tenants yet struggle to find natural yet thorough methods.

These early background checks are essential, providing your first line of defense against bad tenants.

Setting up an early meeting between landlords and prospective tenants is the best way to assess red flags before lengthier vetting procedures. Try any of the following depending on what works best for your schedule and comfort levels:

  • Face-to-face meeting: Perhaps most constructive, a face-to-face meeting with a prospective tenant allows you to review the written lease, rent payment and collection protocol, income restrictions, and tenant jobs, plus answer any questions the prospective renter may have, such as whether you require renters insurance. You're also afforded a direct interaction with this individual, which managers know can prove invaluable.
  • Phone call: If a brief face-to-face meeting isn't possible, opt for a phone call. These give you the time to explicitly relay lease expectations and get a sense of an individual's communication style and personality.
  • Email: The courteousness and promptness of an individual's emails can say a lot about their potential as a renter. Consider email as yet another method to screen tenant applicants early.

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3. Avoid Yes or No Questions In-Person and in Rental Documents

Does your written lease or rental application include a generic list of yes or no questions? If so, you're missing a great way to sort good tenants from bad — especially those who will pay rent on time. 

Consider all the ways you can craft specific yet concise vetting questions across lease documents and in-person interactions. For example, rather than inquiring if the prospective individual has enough money to cover the first month's rent, application fee, and security deposit up-front, ask when they will be sending you these deposits. Instead of asking if they've rented in the past, ask for past landlords' contact information.

Tailoring written lease agreement and rental application language is an under-the-radar tip to avoid nightmare tenants and plays a huge role in qualifying. Yes-or-no questions will only go so far in making confident and comfortable resident decisions.

4. Use the First Showing to Steer Clear of Bad Tenants

There are so many ways to use the first showing to learn about the potential and pitfalls of a tenant. Seasoned current landlords and property managers should note the following when showing a space to a prospective tenant for the first time:

  1. Timeliness: It's not exactly a ringing endorsement if a prospective tenant arrives late to their showing. Sure, it doesn't make them a bad person, but it does tarnish the impression of them as a responsible and proactive lessee you want to rent to.
  2. Demeanor and appearance: Does the prospective renter appear happy to be there and genuinely interested in the rental unit? do they ask questions and remain positive across tenancy agreements, application forms, and background checks? Or do they carry a "let's-get-this-over-with" mentality that's stand-offish and alarming?
  3. Shoes on or off: This is an industry trick as old as renting itself. Many managers assess the conscientiousness of renters by if they remove their shoes or not after entering the room. Decide for yourself if this means something and take note of other ways they interact with the space.
  4. State of their car: See if you can sneak a peek into the potential tenant's car. Is garbage strewn about, wrappers and bottles on the floor, and forgotten items stuffed into the back seat? It's likely the way they treat their vehicle reflects the way they'll treat your unit.
  5. Reactions when discussing rules of lease qualifications: How someone reacts when you review lease rules, tenant's credit scores, collecting rent payments on time, and any other renter requirements says a lot. Is the individual terse or responsive, casual or engaged, or perhaps even visibly annoyed or verbally hostile? Don't need to settle for the latter.

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5. Write a Rental Application Protecting From Terrible Tenants

At this point in the tenant screening process, you should hopefully have an indication of what kind of tenant an individual will be. Rental applications are not the only source of this information — or the last. But they are invaluable to deep-dive into history, qualifications, and the likelihood of paying rent on time.

The best rental applications will ask for the following:

  • Full name, birth date, and social security number 
  • Applicant's current job 
  • Applicant's monthly income and proof of income
  • Applicant's supervisor and their contact information
  • Current address and proof of address
  • Rental history, typically the last two to three places of residency
  • Landlord references
  • Other character references outside of family
  • Next-of-kin or primary and emergency contacts 
  • Permission statement to run full credit and background checks, including a criminal background check
  • Any additional information you may need to gather an informed renter's profile, such as pets, lawsuit history, and if they've sued past property managers.

Remember to go beyond blanket "yes" or "no" language with questions. If an applicant skips or keeps a section blank, don't jump to conclusions. Dedicate form space for them to detail extenuating circumstances or offer explanations for things that may not look great on paper.

6. Don't Slack on Research and Rental Application Verification

Another tip well within your control to avoid bad renters? Actually conduct a full-scale background screening with a credit check and eviction report.

While at times tenant screenings might seem alarmist and time-consuming, conducting the following background checks is the only way to verify a tenant's application. It backs up their answers and gives you confidence that you're renting to someone reliable — all because you yourself support a thorough screening process.

  • Look them up on social media: This nifty little trick isn't just for hiring managers. Landlords can learn about a person's lifestyle and what kind of renter they might be from a simple Facebook, Twitter, and LinkedIn search.
  • Income and supervisor follow-up: While it would be nice to trust the number the applicant reports, do your homework and call their employer directly. If an applicant is self-employed, a freelancer, or works as part of the growing gig economy, you'll need other means to verify income. Request a copy of last year's tax returns, employment contracts, bank records, or even the contact information of freelance clients so you can double-check numbers.
  • Job follow-up: Does the job or company named on the application actually exist? Yes, it seems unbelievable, but we've heard some landlord horror stories. A simple Internet search should suffice.
  • Past landlord follow-up: Just as you contact supervisors, reach out to their most recent landlord or two. Keep questions open-ended rather than yes or no, and ensure you're getting a sense of the prospective tenant's personality and reliability with paying rent. Note that if the tenant hasn't rented before or has moved around a lot, though it's not an immediate red flag. Just ensure you get an explanation of why.
  • Thorough background check: Conduct a nationwide criminal background check either on your own or with the help of a tenant-reporting agency.
  • Nationwide eviction history report: These can be run through a number of agencies, ensuring you have the real picture of an individual's rental past, plus match the information they provided on their application.
  • Full credit report: Both the tenant background check and a full credit report can be run by partnering with a credit bureau directly or a tenant-reporting agency.

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7. Include a Mandatory Two-Way Move-In Report

Move-in reports are a great tool to further trust with your prospective tenants.

First, you'll want to conduct a private report using landlord forms immediately after the previous tenant moves out. You'll thoroughly review and take note of the condition of the rental unit, noting anything beyond normal wear and tear. Then, have the new tenant conduct their own report as early as possible after settling in. Review the two reports together for discrepancies.

A mandatory two-way report between a landlord and tenant has several benefits. For starters, if the tenant balks at reviewing reports side-by-side, this could be an indication they may be challenging down the road. Second, it provides a written and binding rental agreement that can be consulted later in the event of property damage disputes. Third, it gives you even more time to assess how the tenant takes responsibility and initiative — all win-wins on how to avoid bad tenants.

8. Conduct Regular Rental Site Inspections

Last but not least, it is essential to set up and maintain an annual or biannual rental unit inspection.

These inspections are not meant to be intimidating or overbearing for your tenants. They're a way to actually discourage nightmare tenants from applying to live in your properties. Instead, occasional site inspections are meant to bolster mutual respect for a space, both on your end and the tenant's. Good tenants understand this.

Ensure you provide written documentation and advanced notice of your site inspection schedule with tenants, then stick to it. While many landlords conduct a standard 24-hour's inspection notice, you can set yourself apart and further emphasize the responsibility you bear as a landlord by having a set inspection schedule. While under certain circumstances, landlords can enter residencies without that 24-hour notice or set schedule, these cases are rare and not something you want to operate under.

9. Partner With a Property Management Company With Experience in Tenant Relations

Whether you're new to real estate investing or an experienced investor, finding a property management partner will assist you with nearly every aspect of tenant applications, screenings and lease drafting, and it will lend greater peace of mind for all parties involved.

Opt for property management companies located where your properties are. Local rental management companies are more familiar with state and local property statutes, fair housing laws, taxes, ordinances, legal advice, real estate investment logistics, and more, which vary by region.

You'll also want to note their portfolio of managed properties. A company with a vested history in commercial real estate, not residential rentals or single-family homes, is likely not the right fit for you. They can also provide the following services to lighten the daily load of your current landlord obligations:

  • Thorough tenant screenings, including background checks, credit reports and eviction history
  • Property accounting services, from managing rental payments to municipal account payments
  • Written lease preparation with accredited legal counsel and advice
  • Maintenance and emergency repairs, ideally around the clock
  • Tenant eviction and documenting eviction reports

Manipulative individuals or those with a track record of lousy leasing habits tend to stay clear of properties with an explicit management company relationship. Since these companies offer an extra layer of procedural and legal protection, it is much less likely that a bad tenant can get away with noncompliance.

Explore proper management companies in your area to see who fits your service needs and regional expertise. In many cases, you'll wonder how you ever got by without one.

Experienced Property Management Partners and Tenant Screenings in Harrisburg, Hershey and Beyond

Landlords in Pennsylvania have enough on their plates without the added anxieties of dealing with bad tenants. Harrisburg Property Management Group understands this. For years, we've been helping property owners in Harrisburg, Hershey, and other Central-Pennsylvania regions attract and retain their dream tenants — without bending over backward to do so.

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From Pennsylvania tenant screening to lease preparation drafted with our knowledgeable legal counsel, we can offer some of the state's leading compliant property management services. Contact us today to see how we can help you find the perfect tenants for your hard-earned properties.

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