With rent growth hampered by increased regulations, it’s more important than ever for landlords to minimize potential losses. Tenant fraud, property damage, and tenant defaults are the main reasons for income loss. Here are three strategies that can help minimize those risks:
1. Verify the information in the rental application.
Tenant fraud is a problem for all landlords, big and small. In fact, many smaller landlords are targeted by fraudsters due to the perception that these landlords are lax.
While demanding that the applicant complete and sign a rental application form is a good first step, the work of screening tenants doesn’t stop there. That information must be compared to an outside source for verification. A landlord cannot rely solely on information provided by the applicant.
Verification doesn’t need to be difficult or time-consuming. The simple act of speaking with references is an easy way to verify information. Another is to speak to the employer or simply call into the employer’s main line and ask for the applicant’s voice mail. Those are easy ways to discover whether a tenant is telling the truth — or pulling a scam.
2. Conduct routine property inspections — or hire someone else to do it.
According to Jim Garnett with Canadian Tenant Inspection Services Ltd., the dangers of failing to conduct regular inspections are all too real. Garnett has witnessed a variety of problems, including marijuana grow-operations and tenants who have vacated and sublet the property to strangers. In one case, a water leak was detected before causing extensive damage.
Those landlords who don’t wish to conduct their own inspections can hire a firm like Garnett’s to do the work. Failure to perform those periodic inspections can result in damage that is not covered by insurance, so ignoring this crucial step in property management is not an option. For more information, see our blog post Understanding the Risks of Failing to Conduct Regular Property Inspections.
3. Take legal steps at the first sign of trouble.
No one wants to go through dispute resolution but profit margins are too tight to play games with bad tenants. At the first sign of trouble — missed rent, chronic late payments, property damage — research the legal options, serve the notice, and get a hearing date set. There is always the option of settling with the tenant before the hearing, but landlords can’t afford to fall for a tenant’s empty promises. This strategy not only minimizes lost income in the event a settlement is not reached, but it also provides a negotiating advantage by creating a sense of urgency. Given the delays in landlord-tenant tribunals, it is imperative to get in line as soon as possible.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.
