Costly Mistakes Landlords Must Avoid During Tenant Screening

Tenant screening is one of the most crucial steps in securing a reliable renter, but even seasoned landlords can make costly mistakes that cause problems. A single oversight can lead to selecting a bad tenant, resulting in property damage, unpaid rent, or legal battles. 

In our previous article The Ultimate Guide to Tenant Screening, we have covered everything in detail, however, this article separates the mistakes part from it so that you can focus on that exclusively. 

In this article, we’ll highlight common but costly mistakes landlords make during the tenant screening process and, more importantly, show how to avoid them. By understanding these pitfalls, you’ll ensure a smoother, more successful tenant experience, protecting your investment and minimizing risk. 

10 Costly Mistakes Landlords Make During Tenant Screening and Their Solutions 

The following is a list of all 10 costly mistakes that you might end up making during the tenant screening process alongside suggested solutions by our experts: 

Mistake No. 1: Skipping the Background Check 

One of the biggest mistakes landlords make during tenant screening is skipping the background check. This step might seem time-consuming or unnecessary, especially if the tenant seems trustworthy or in a hurry to move in. However, neglecting to investigate a tenant’s criminal history or rental record can lead to serious issues. 

Without this check, landlords may unknowingly rent to individuals with a history of damaging property, evictions, or even criminal activity. These kinds of tenants can create financial and legal headaches down the road, from property damage to missed rent payments. 

How to avoid it? 

To avoid this costly mistake, always perform a comprehensive background check on every applicant. Use reputable tenant screening services like RentRisk that cover criminal records, eviction history, and any lawsuits. 

Ensure your background check complies with local and federal regulations, such as the Fair Housing Act, to avoid any legal issues. Taking this extra step may require time and resources, but it will help you filter out high-risk tenants and protect your property in the long run. 

Mistake No. 2: Not Conducting a Credit Check 

Failing to conduct a credit check is a significant oversight many landlords make during the tenant screening process. A tenant’s credit report reveals crucial details about their financial responsibility, including how well they manage debts, pay bills on time, and handle other financial obligations. 

Without this information, landlords risk renting to someone who may struggle with rent payments, leading to potential financial losses or evictions. Overlooking a credit check can result in accepting tenants who are financially unstable, increasing the chances of unpaid rent or delayed payments. 

How to avoid it? 

To avoid this mistake, landlords should make credit checks a non-negotiable part of their tenant screening process. Use reputable services to run credit reports that provide a clear picture of the tenant’s financial background. Pay close attention to factors like outstanding debts, payment history, and credit score. 

Establish a minimum credit score requirement to set a clear standard for tenant eligibility. Communicate these criteria upfront with potential renters to ensure transparency and avoid wasting time on applicants who do not meet the requirements. 

Mistake No. 3: Ignoring Employment and Income Verification 

One of the most common and costly mistakes landlords make is failing to verify a potential tenant’s employment and income. Some landlords take a tenant’s word for it or accept vague information without proper documentation. 

This can lead to renting to someone who lacks the financial stability to pay rent consistently. When employment and income are not confirmed, the risk of late payments, partial payments, or even non-payment increases significantly, leaving landlords in a tough financial spot. 

How to avoid it? 

To avoid this mistake, always request official proof of income, such as recent pay stubs, tax returns, or bank statements. Additionally, contact the tenant’s employer to verify their employment status and income consistency. 

Establish a minimum income threshold, typically 2.5 to 3 times the monthly rent, to ensure the tenant can comfortably manage the rent payments along with other expenses. 

Mistake No. 4: Accepting Incomplete or Inaccurate Applications 

One of the biggest mistakes landlords make is accepting rental applications that are incomplete or contain inaccuracies. This can happen when landlords rush through the process or overlook missing information, such as employment history, previous addresses, or references. 

Accepting an incomplete or inaccurate application increases the risk of renting to unreliable tenants, as it leaves important details unchecked. Ignoring these gaps may lead to unpleasant surprises later, such as tenants who are unable to pay rent or have a history of property damage. 

How to avoid it? 

To avoid this mistake, landlords should thoroughly review every application and ensure all required fields are completed. Any missing or unclear information should raise a red flag and be addressed before moving forward. Implementing a standardized application form that collects detailed information on income, rental history, employment, and references can streamline the process. 

Mistake No. 5: Making Emotional Decisions 

Many landlords fall into the trap of making emotional decisions when selecting tenants. This often occurs during interviews when landlords might feel a connection with a prospective tenant based on personal anecdotes or shared interests. 

While it’s natural to want to foster a friendly relationship, allowing emotions to overshadow objective criteria can lead to poor choices. A seemingly charming applicant may mask troubling behaviors or financial instability, which could surface later. 

How to avoid it? 

To prevent emotional bias from influencing your decisions, establish a structured tenant screening process that prioritizes objective criteria. Create a standardized checklist that includes essential factors such as credit scores, rental history, and income verification. By focusing on these measurable aspects, you can maintain a more rational perspective during the selection process. 

Mistake No. 6: Neglecting to Follow Legal Screening Criteria 

One of the gravest errors landlords can make during tenant screening is neglecting to follow legal screening criteria, which can lead to serious consequences. Fair housing laws prohibit discrimination based on race, color, religion, sex, national origin, familial status, and disability. 

Landlords who fail to comply with these regulations risk legal action and significant fines. By not adhering to legal requirements, landlords expose themselves to the risk of lawsuits and can inadvertently foster a discriminatory environment. 

How to avoid it? 

To avoid this costly mistake, landlords must familiarize themselves with federal, state, and local fair housing laws. Establish a standardized screening process that applies equally to all applicants, ensuring that criteria such as credit scores, income levels, and rental history are consistently evaluated. Document the screening process meticulously and maintain clear records of all decisions made. 

Mistake No. 7: Relying on Gut Instinct 

Many landlords fall into the trap of relying solely on their gut instinct when choosing a tenant. This subjective approach often leads to hasty decisions based on initial impressions rather than thorough evaluations. While it’s natural to have a sense of comfort or discomfort about a potential tenant, basing a decision solely on feelings can overlook critical information that could indicate a tenant’s reliability. 

How to avoid it? 

To steer clear of relying on gut instinct, landlords should establish a structured and consistent screening process. This involves implementing standardized criteria for all applicants, including thorough background and credit checks, income verification, and reference checks. Create a checklist to evaluate each tenant objectively, focusing on quantifiable data rather than feelings. 

Additionally, consider involving a trusted third party, such as a property manager or a tenant screening service, to provide an impartial perspective. By grounding your decisions in facts and objective assessments, you can significantly reduce the risk of selecting a tenant based solely on instinct. 

Mistake No. 8: Overlooking Red Flags in Interviews 

When conducting tenant interviews, landlords may inadvertently overlook significant red flags that indicate potential problems. Signs of dishonesty, evasiveness, or inconsistent information can easily be missed if landlords are overly focused on making a sale or simply looking to fill a vacancy quickly. 

This oversight can lead to selecting a tenant who may not fulfill their obligations, resulting in a range of issues, from late rent payments to property damage. 

How to avoid it? 

To avoid this mistake, landlords should adopt a structured approach to interviews. Prepare a list of questions that cover critical aspects of the tenant’s history, such as their rental experiences, employment status, and reasons for moving. Paying attention to inconsistencies in their answers and observing their body language for signs of discomfort or evasion can help you avoid this mistake with ease. 

Mistake No. 9: Making Handshake Deals instead of a Lease 

While it may seem convenient and foster a friendly relationship, it leaves both parties vulnerable. Without a written lease, there are no clearly defined terms regarding rent, duration, responsibilities, or what happens in the event of a dispute. 

This ambiguity can lead to misunderstandings, disagreements, and even legal issues down the line. If a tenant fails to pay rent or violates other terms, a handshake deal offers little recourse for landlords, leaving them unprotected and potentially facing financial losses. 

How to Avoid it? 

To avoid this costly mistake, landlords should always require a written lease agreement for every tenant. This lease should clearly outline all terms and conditions, including rent amount, payment due dates, security deposits, maintenance responsibilities, and procedures for terminating the agreement. It’s also wise to include clauses that address common issues, such as late payments or property damage. 

Mistake No. 10: Failing to Enforce the Lease 

After selecting a tenant, it’s easy to become complacent and overlook the importance of strict adherence to the lease terms. This oversight can lead to various issues, such as late rent payments, unauthorized pets, or even property damage. 

When landlords allow tenants to bend the rules without consequences, it creates a precedent that undermines the lease’s authority and can lead to more significant problems down the line. 

How to Avoid it? 

To avoid this mistake, landlords must establish clear expectations and consistently enforce the lease terms. Start by conducting regular property inspections to ensure compliance with the lease agreement and promptly addressing any violations. 

You should also maintain open communication with tenants, allowing them to voice concerns while also reminding them of their responsibilities. If a tenant breaches the lease, take immediate action, such as issuing warnings or, if necessary, pursuing legal remedies. 

The Bottom Line 

Tenant screening is a critical process that landlords cannot afford to take lightly. By avoiding mistakes like skipping background and credit checks, ignoring employment verification, making emotional decisions, and failing to enforce the lease, you can protect your property and ensure a smoother rental experience.  

Each of these missteps can open the door to unreliable tenants, resulting in financial and legal headaches. The good news is that by following the strategies we’ve outlined, you can avoid these costly errors and make informed decisions when selecting tenants. 

If you want to make tenant screening even easier and more reliable, consider using a professional service like RentRisk which offers comprehensive tenant screening that covers background checks, credit reports, and more, taking the guesswork out of the process. 

FAQs

1. What happens when you don’t properly screen your tenants?

   Failure to properly screen tenants can lead to issues like late rent payments, property damage, eviction processes, and even legal disputes. 

2. What are the common mistakes first-time landlords make?

   First-time landlords often skip background checks, fail to enforce lease terms or accept incomplete applications, leading to tenant-related problems. 

3. Common Mistakes Landlords Make in Property Management?

    Common property management mistakes include poor tenant communication, neglecting maintenance, failing to enforce leases, and improper financial management.