Tenant screening is an important part of property management. It can improve financial outcomes by reducing expenses associated with bad renters and save you a lot of trouble in the long run. Is your pre-screening process up to par? Here are 4 warning signs that you may need to up your game.

1. Missed Or Late Rent Payments

One of the biggest concerns for landlords is receiving their rent on time. In the property management business this is by far the largest, if not only, source of income. Tenants that pay on time secure good cash flow and allow for the effective operation of your business.

If you are finding that too many of your tenants are late with their rent payments, or missing them altogether, this may be an indication that you’re not doing enough to pre-screen prospective tenants. It’s smart to do a thorough analysis on the financial health of any tenant you are considering. This should give you some idea of the tenant’s ability to pay their rent.

Ask for a letter from their employer stating their annual income and how long they have worked there. As a rule of thumb, housing should account for no more than a third of income but there are other factors that could affect a tenant’s ability to pay. A credit report should give further insights into money management habits and help assess the risk that a potential tenant poses.

2. Excessive Property Damage

If you are managing rental properties you must be prepared for repairs, renovations, and maintenance of the units. Regular wear and tear is to be expected and is the landlord’s responsibility. It’s standard practice to paint, conduct minor repairs, and occasionally replace appliances and fixtures between tenants.

However that doesn’t mean you should bear the expense of excessive damage due to careless tenants. Most landlords require a security deposit to safeguard themselves against such losses. Accidents can happen and that’s where the security deposit comes in, but in most cases you should be able to return this money to the tenant when they leave.

If you are finding that you often need to use security deposits to conduct repairs, or if the amount of the deposit is frequently not enough to cover these expenses, then your pre-screening process isn’t doing its job. Contacting previous landlords and asking them the right questions can shed some light on a prospective tenant’s patterns. Enquire about what condition they left their previous residence and if any portion of the security deposit had to be withheld.

Watch how potential tenants treat the property while they view it. Someone who treats the unit with no regard while you are watching is likely to abuse it when they are left to their own devices. Aggressively slamming doors, littering, or carelessly tracking mud on the carpet are all red flags.

3. Issues With Other Tenants

Good tenants have a positive relationship with their landlord and with their neighbors. They are courteous, fair, and don’t seek conflict with others. If you’re finding that adding a new tenant often leads to problems with the people around them, then you need to reassess your pre-screening process.

Introducing toxic people into a community can cause previously good tenants to go bad. Increased number of complaints are a good indicator that something has gone wrong. If left unchecked, bad tenants can even cause good tenants around them to move out.

Your pre-screening process should include an assessment of temperament to ensure a good fit with neighbors and the community. Ask prospective tenants about their previous neighbors and pay careful attention to what you hear. Be wary of people who have trouble getting along with others, have nothing good to say about anyone, or those who see themselves as perpetual victims.

Conducting criminal background checks can help in this area too. Individuals who are prone to fighting, have domestic disputes, or tend to have disagreements with people that involve the police may not be good tenants. Look for indicators that they may have issues with anger management, conflict resolution, or have trouble regulating their emotions.

4. Frequent Early Lease Terminations

Most rental agreements are for one year after which they can be renewed or the agreement can turn into a month to month basis. This is necessary because of the expense involved in finding new tenants and the costs of getting units move-in ready between tenants. If a disproportionate number of your tenants are breaking their lease early, it may indicate a problem with your pre-screening process.

When interviewing potential tenants, get to know their plans for the future. Try to assess if they are looking for a long term home or if this is just a stopover on their way to other things. If they are planning major life changes that don’t match the type of unit they are applying to rent, it’s a red flag that the apartment may not suit their needs for long.

Take a good look at their history to see if they have a habit of skipping out on the lease early. If they have lived in other places for less than a year, it’s a good idea to ask why they left. Don’t be afraid to ask their previous landlords the same questions to see if the stories match up.

Sometimes people who are forced to break a lease early do so for financial reasons. It’s just one of the many reasons why it’s important to verify employment, income, and credit history. A tenant that can afford the rent is much more likely to stay.

At the most extreme end of the spectrum, early lease terminations may be instigated by the landlord. Evictions are costly and take time. Your pre-screen process should include an eviction history on anyone that you consider renting to.

Good tenants are worth their weight in gold and bad tenants can leave you in a world of hurt. If you’re seeing a lot of missed payments, high property damage, issues with previously good tenants, and often have renters break their lease, you may need to work on your pre-screening process. Simplify the job with software that can help screen tenants quickly and easily.