What I look for in Tenant Applications

Congratulations, you have a rental going on the market!  You determine the price, get the marketing done, and the tenant applications are coming in. 

Now everyone has their own process of what they look for in tenants.  This also depends on the demographics (tenants in Beverly Hills might be different than in Pacoima).

However, here are five things I keep in mind when looking at the applications:

1. Tenants getting paid in cash.  This can be a red flag because you don’t have the paper trail.  It’s common for people to get paid in cash, and then in turn buy their groceries, gas, etc. with that same cash.  It never enters the bank account.  Unless they have contracts, consistent bank statements or receipts, they cannot prove their income.  This is dangerous because the tenant may be telling you what you want to hear, which puts you as the landlord at risk. It can also be risky because not everyone manages their money well and they may think they bring in a certain amount of cash but actually dont.
2. Focus on credit history, not necessarily a credit score.  Think about it, who would you rather have as a tenant: A tenant with a 650-credit score because she is 20 and hasn’t established credit or someone with a 700-credit score but has two collections.  It’s really about the history than the number.
3. The prospective tenant asks to not sign a lease.  I kid you not, this happened to me.  They didn’t want to sign a lease.  That is a huge red flag.  If they don’t sign a lease; it becomes extremely difficult to almost impossible to evict them. 
4. Tenants who want to pay a year upfront: Sounds glorious, but actually a red flag. This is usually a need, not a want from the tenant. Tenants may use this tactic as a distraction from a bigger issue, such as poor credit, insufficient income, or bad references. You still have to do your entire due diligence, no ifs, ands, or buts about it.
5. Landlord References: It’s common to speak to the last landlord. But really you need to speak to the last TWO landlords. Their current landlord might have incentive to lie, whether it is to keep them or to get them out. However, the one before doesn’t have any skin in the game because that tenant is already out. Always get the last two.

Of course, every landlord is going have their own criteria and you need to decide what is best for you.  However, these are some things that I’ve noticed come up in my years of experience through being a landlord.