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10 warning signs of a bad tenant

Wednesday, November 26, 2014

Because appearances can be deceptive and landlords risk being taken for a ride, here are some warning signs of a bad tenant to watch out for: 

  1. The friend - Pay attention to the old adage that you should never do business with family or friends.  Your friend is not automatically a bad tenant, he is just a bad tenant for you.  Residential tenancy is a business and during the normal course of doing business, you will disagree from time to time.  When that happens it is easier for you to maintain your professionalism as a landlord if you do not have to worry about ruining a friendship. 
  2. The credit-check-maybes - You know that tick box at the end of the tenancy application form authorising you to carry out a credit check on the tenant applicant?  Ever noticed the ones who start dithering about when they come to that box?  Or the ones who ask you if a credit check is mandatory?  If a tenant applicant is awkward about a credit check, chances are they have something to hide.  "I usually ask them straight up - If I credit check you will I find something that will cause concern?" says Andrew Bruce, President of the Auckland Property Investors' Association.  "Normally the first reaction tells me everything I need to know."  
  3. The bond negotiators - Considering the process of bond lodgement is tightly regulated by the Residential Tenancies Act (that no more than 4 weeks' rent can be collected unless otherwise agreed), and you have a tenant applicant who tries to negotiate you down, you really have to wonder about the size of his cash reserve. 
  4. Cash payers - Be wary of cash payers, especially those who pay you rent in cash upfront for an extensive period of time.  The two worst-case-scenario reasons for landlords are: 1). That the tenant has such bad rental history, she is offering you the cash as a diversion. and 2). That your property is being rented for the purpose of carrying out some form of illegal activity and that by paying you cash you tenant is hoping to not be disturbed by you.  
  5. Frequent movers - Make a point of asking for a reason for frequent relocations especially when a tenant has had multiple addresses in the same general area.  
  6. Parent/close friend referees - While there is no legal impediment for a parent or a close friend to act as a tenant applicant's referee, be wary of the references you do get from these referees.  Take a strategic approach to making reference calls and ask questions that will give you relevant information on the applicant.  Examples include: Would you go guarantor for this applicant?  When was the last time you spoke to them?  Can I confirm her phone number with you? 
  7. The hobos - I am not saying that tenants have to be in designer threads in order to be worthy of your property but do take of note of an applicant's general appearance, hygiene habits, the state of their cars, and their punctuality.  A tardy applicant who comes across as dishevelled and unkempt can hardly give you confidence that they would treat your property with respect.  
  8. The speedy gonzales - Don't cut your application process short just because a tenant applicant is in a massive hurry to move in.  Responsible tenants respect advertised move-in dates and those who do not may have ulterior motives.
  9. The drunk - Watch out for breaths that stink of alcohol, dilated pupils, slurred speech, delayed or intermittent response to your questions.  You wouldn't hand over wads of cash to a drug addict, so why would you let her move into your property?
  10. The something-is-up-but-I-can't-put-my-finger-on-it - Finally, always trust your instincts.  If a person is  not inspiring any confidence and giving you bad vibes, politely end the application process and move on.  By signing the tenancy agreement, your tenant is entitled to exclusive possession of your property.  Don't ever leave it in the hands of someone you cannot trust completely.  Be aware of human right and anti-discriminatory laws.  Get into the habit of saying to unsuccessful applicants, 'I am sorry but you are not the best applicant by merit.' and nothing else.  

These signs are general and by no means absolute.  In many cases there may be perfectly innocent explanations but if you take your responsibility and profitability as a landlord seriously, it should at least be incumbent on you to make necessary enquiries before entering into the tenancy agreement. 

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