Reasons to Turn Away a Potential Tenant
When you have a vacancy all you want is to fill it, and filled quickly but that doesn’t mean you should let just anyone in. Of course, you always need to comply with Equal Housing guidelines but there are plenty of reasons to say no to a tenant. It’s not worth having the risk of dealing with an eviction to fill a vacancy with a questionable tenant.
Here are 5 reasons to turn down a tenant:
A Past Eviction
A past eviction is a major red flag that you should do your best to stay away from. You can, of course, talk to the tenant about circumstances and make exceptions but we wouldn’t recommend it. Evictions are costly and time-consuming and you want to avoid them at all costs. A past eviction is a strong sign of a poor tenant and is a legitimate reason for not accepting them.
Insufficient Income
The general rule of thumb is that income should be at least 3x the cost of rent, otherwise, tenants will be cutting it close. Following this rule helps you protect yourself and keep tenants in your units. When pulling a credit report to check out a tenant you can also see how much debt they are paying off. You want a tenant with low debt and disposable income when to keep the rent checks coming.
Questionable Background
We talked recently about how to manage criminal activity on your property and it is definitely not something you want to deal with. When investigating a potential tenant you always want to pull a background check. If a tenant has a recent drug or assault convictions you may want to think twice about accepting them.
No References
Leasing to a tenant with no references can be a risky game. If a tenant has no landlord references you can ask for a co-signer to protect you from non-payment. In this situation, credit history can play a big role in your decision. For instance, they are selling their home and renting for a while, then it is wise to make an exception.
Bad/No Credit
A credit score helps show you the full picture of a potential tenant and their ability to pay. Determine the minimum credit score you this is acceptable and set alternative requirements a tenant would have to meet if their credit score is too low, such as double the standard deposit. You want a tenant with a proven history of making payment.
While turning away tenants can feel wrong, it’s all part of protecting yourself. Remember when you are a rejecting a tenant you are legally required to send an adverse-action notice particularly if the credit score was the determining factor.
If you are tired of reviewing applications and filling vacancies on your own, it’s time to hire a property manager. We serve the Denver Metro Area including Boulder and Broomfield and can’t wait to hear from you. Get in touch today!
