Avoid the NIGHTMARE tenant and eviction: My Tenant screening process

What's up you guys, it's Graham here. So, so many of you have requested I make a video about how I properly vet tenants to avoid the nightmare tenant situation where I had an eviction and the tenant was absolutely crazy.

So these are a few of the things that I look out for when I try to find a tenant now, and some of the red flags that I see that I like to avoid. So I'd like to share exactly what I do with you guys, and hopefully this is helpful.

And by the way, I've had a lot of experience when it comes to tenants. The first four years of my career as a real estate agent were pretty much like 80% dealing with tenants and leasing. Then, when I started buying my own properties, I started dealing with that firsthand, which presented its own little challenges for me, especially in the beginning.

But I've had a ton of experience with applications, probably in the hundreds if not thousands of applications that I've seen over the course of the last almost ten years. So from all of these applications and from all of these people that I've dealt with, these are a few of the red flags that I see that I like to avoid or things that could be an issue later on.

This is also how I research tenants to try to find the ones that I think are going to be the best fit. If you want to get into real estate one day, or you want to be a landlord one day, please watch this because I promise you it's gonna end up saving you a ton of money in the future when it comes to finding a tenant.

So the first thing I recommend looking at is having a good credit score. If a tenant has a bad credit score, that's usually a bit of a red flag. No, I don't always require a 100%. In a lot of the scenarios, a tenant has like a 740 credit score or above. I take it on a case-by-case basis, but it's so important to look at the credit report and the credit score, and this is going to tell you a little bit about how responsible they are paying their bills on time.

So basically, like I just said, a credit report and a credit score really just show you how responsible the tenant is managing their payments and managing their debts. A credit report is going to show everything from credit cards, maybe past due medical bills, car payments, a mortgage. Basically, anything that's owned in terms of debt or credit is going to show up on a credit report.

You can tell a lot by looking through a person's credit report. It also shows you often how leveraged they are. If they have five credit cards and they're all maxed out, that gives you a very good indication of how financially responsible they're going to be, and therefore how responsible they're gonna be with your lease payment.

Now again, I don't 100% base my decision only on a credit score. Now the thing is, there are some things that I'm able to overlook. The first might be a foreclosure; if it were like 2009, 2010, 2011, some of those things just actually made sense at the time to just let the property go into foreclosure. Other things, like maybe a divorce, I can somewhat look past some of those things.

But generally speaking, if they have a bad credit score, if they have late payments, if they just have a history of just not paying things at all, if they have any judgments against them for money, I usually just pass. There are plenty of people out there with a really good credit score that are looking to lease, and it's just a matter of time to find these people.

The next red flag is when I see a tenant has a lot of unreported cash income in deposits. Now, I always like asking for bank statements just so I can get an idea of how much money is going in their bank account each month and how much money is coming out of it. I like to get, if I can, the last two to three months of bank statements just for me to look over, just to get an idea of what their financial situation is like.

Because what a lot of people write down on their application is not an indication of what is actually going on from their bank account. So, if I see a lot of regular cash deposits, it's usually a sign to me that something a little sketchy is going on. And especially if they're doing this for the purposes of avoiding the IRS, this usually is not the type of person I want to be working with or the type of person who I want to have as a tenant.

And also, with cash income usually comes in frequent income. So even if they're putting, let's say, like 10 grand a month in cash in their bank, in the back of my mind I'm thinking, how sustainable is this? How much is this going to vary? And what happens if they have a few months if they don't make these deposits?

So it's usually something that is a bit of a red flag to me that, again, you want to look into a little bit further and find out why they're depositing regular cash deposits in their bank instead of, you know, something that's maybe traceable. It's definitely something to look into, but it is a sign for me that there might be something deeper going on that I just don't want to know about.

They might also be trying to hide from someone who has a collection or judgment against them by keeping their money in and not putting it in the bank. This is a very common one: they'll just put whatever they need to into the bank for whatever bills they have, and then everything else they keep separate just in case someone goes after them; they don't have all of this money sitting in a bank account.

Again, this is something that for me I'm just a little bit sketched out about it, especially after my whole last experience with having this crazy drug dealer as a tenant. So, I like to, if I can, avoid anything that could possibly resemble anything that's sketchy or anything that could lead to you not getting rent on time.

The next one is when a tenant just wants to move in as soon as possible. Now, this isn't something that, again, is 100% true 100% of the time, but in a lot of the situations that I've seen, the tenant who's just like, "I want to move in tonight, I want to move in like tomorrow, get me in as quick as possible, let's do it, I'm ready to sign," a lot of times, the tenant who's looking to move in as soon as possible just to get keys, like moving the next day, there's usually something deeper to that story.

And in a lot of times, from I've seen, they're just in a hurry to get out of their current place. Sometimes they've just been given a notice to pay or quit, and they're just like, "I gotta get out of here." Sometimes they're overextended on their lease and the landlord's trying to get them out; they're just trying to move out as quickly as possible.

There are a lot of weird situations where tenants just want to move in as quickly as possible, but it is really important just to be weary and just to find out the motivation behind the tenant moving in as soon as possible, and again, taking that on a case-by-case basis.

I've seen many other people that just sign the lease beginning immediately, but they don't actually move in for another few weeks, and they like having that overlap. Not really talking about these people; I'm talking about the people who are like, "I'm ready to move my stuff in tomorrow." And that, to me, is usually a bit of a red flag.

And then also, find out if you really trust that reason that they're giving you and if that's actually the truth, and do that also by verifying that with their current owner and doing some research on the current owner to make sure the information that they gave you is the actual owner's information and that's their actual landlord.

Now, speaking of landlords, the next red flag I see is them not providing their landlord's information on the application or providing fake information, which is extremely common. Now, this is a big one here: many tenants refuse to put their landlord's information on the application for a myriad of different reasons.

Sometimes they say the landlord doesn't know I'm moving and I don't want to give their information. Other times, they might say something like, "The landlord and I aren't on good terms because the landlord is a slumlord, and the landlord hasn't been taking care of their stuff, and you know we don't speak anymore and I'm trying to like I'm in the right, but the landlord's in the wrong."

They'll give you a whole bunch of different reasons about why they don't want to give you their landlord's information. And the way I see it, if they're not providing their landlord's information, they're actually withholding information on the application, and that is not good for you as a landlord.

And another one that I've seen that happens a lot is that they will put a friend's phone number as their landlord. So they might actually put their landlord's real name on the application but put a friend's phone number who will pretend to be that landlord. It happens all the time; I see it a lot.

And the way I usually figure this out is you type in the phone number that they gave you on Facebook. Now, most people register their cell phone number on Facebook. I think a few years ago, Facebook asked you to like sign up your mobile number with your accounts. And so now, for most accounts, if you type in a cellphone number, their Facebook account will show up.

I always will Google and Facebook whatever phone numbers they provide me, and in a lot of situations, I've seen it to where you Google the phone number or you type it in and like a totally different name comes up than what they submitted on the application. And usually for me, this is like an immediate red flag.

That was a realtor. What I like to do is look up the owner's information on public records, so I can actually go and look up the property that they say they're living in, make sure the owner is who they wrote down and make sure that matches on public record.

Then, I will often just Google the number of the owner on public record and see if I can find their information. A lot of times, a lot of people's information is pretty public, so I recommend always doing some research on the landlord just to make sure you're actually speaking with that person and not with a friend or family member, someone pretending to be that landlord.

It happens all the time. If a tenant ever lies about something like that, you immediately cut them off. I mean, that is the lowest of the low of the low, and that's usually a sign that they're not going to be a good tenant, that they're not trustworthy. And if you don't have that sort of trust going on, especially with your tenant, it's just not going to work out; it's not going to be fun.

And by the way, this is something that happens more than you think. Even now, in this last year, I probably dealt with maybe 50 to 60 applications over the course of a year through my real estate business. Of those, I have seen several where they have purposely lied on their application, and I've caught them with just a very simple Facebook search that took up maybe a few minutes.

So, it's so important you do this and try to avoid the type of tenant who's lying on their application at all costs. So the next one that I see is the tenant that doesn't show up on time or doesn't pay their deposit on time. I've also seen this happen a lot.

The type of tenant who shows up late to their appointments, who's supposed to meet at a certain time but shows up like an hour late. The type of tenant who just continually cancels and reschedules is usually not the type of tenant who's gonna be prompt with other matters, including paying rent on time.

And hopefully, all of this happens before you actually sign the lease. Another one I've seen too, even after the lease is signed, is a tenant who takes their time to pay their deposit or pay their rent. I've seen this happen all the time. They'll even show up to appointments and make sure everything is good, and then when it comes time to pay the deposit, they're like, "Oh, you know what? My bank is closed tomorrow, and then I'm going off for a few days, and you know I got XYZ. How about I pay you on this date?"

And then that date comes around and they're busy that day. They're like, "I don't know, how about the next day?" If they're not ready to pay at the time of signing, these are usually tenants who I personally don't like to take. I've seen so many excuses, so many different things that have to happen in order for them to get the money to pay the rent; usually, it’s not a good sign, and I usually like to avoid these people from the very beginning.

The next thing is just to trust your gut. A lot of times, I feel like if you're just kind of weirded out by a person or they just seemed a little sketchy, or something seems a bit off, I've usually found that my gut and my intuition is correct. So I highly recommend for any landlords out there to meet the tenant in person and just get a feel of who they are as a person and if this feels like someone you can trust and have as a tenant.

If you feel like they're just gonna be a little weird and you don't fully trust them and you're just a little bit unsure about them, take that as a sign that you should just continue looking for a better tenant.

So then, as far as what I look for in a tenant, given all of those red flags, what I personally like to see—and everyone's going to have their own criteria of this—I like for the tenant to make three times the monthly rent. So if the rent is a thousand dollars per month, I like them to make at minimum three times that, which would be three thousand dollars per month. That's my minimum income requirement to lease any place.

I also like to verify that they're actually making this money. If they have an employer, I like just to check that they're actually working where they say they're working. I also like to check the last few months of their bank statements or get some sort of pay stub just to make sure that they're making the money they say they make from where they make it.

The next thing is I like a credit score above probably about 720, but again, it's a case-by-case basis. I'm not gonna turn down an otherwise great tenant who has a credit score of 680, for instance, you know, if I can look and see exactly what's bringing them down to that score. Ideally, the best tenants have over about a 740, but again, it's not a hard rule for me.

I also like to speak with the previous owner just to find out what type of tenant they are and if they've had any issues. And from what I have seen so far from my own experience is that landlords all tend to watch out for each other.

Every time I've called the previous landlord, they have been so helpful. As I do to other landlords who have called me as a reference, I think generally all the landlords know what's up. They've all had bad tenant experiences in the past; they're all trying to look out for each other.

I have yet to have an experience where the landlord pawns off a bad tenant on me just because they want them out. I've yet to see that; I'm sure it happens, but I have yet to see that. From what I've seen, everyone has been super helpful and I ask questions like, "When did the tenant move in? How long have they been there for? Do you know why they're moving? Have they paid on time? Have there been any issues? Anything else you want to say about this tenant?"

I just like to talk about their experience with the tenant and make sure that their story lines up with what the tenant said. And also, because I'm a realtor, and like just in case they've managed to slip through the cracks and fake all the information, I like to ask them a little bit about their home as well just to kind of throw them off so I can see on public record—you could also probably see this on Zillow or Trulia—that landlord originally bought the home.

So throwing questions like, "How long have you owned the home for? When did you end up buying it? How big is the home? How many bedrooms is it?" Questions like this that it's easy to throw someone off if they're pretending to be the owner. But again, I've yet to have an experience so far where a real owner didn't know this information, so this is something definitely to consider.

And then finally, in some situations, I do like to meet the tenant. There are a few tenants that I have actually that I've never met because I've had someone else handling it for me, but the vast majority of tenants I do like to meet just to at least get a bit of a feeling about who they are.

And again, if they feel like someone that I can actually trust and work with, because when it comes time to getting a tenant, it is a very long-term business relationship that you have with this person. It's not just someone that you're just going to be getting a check in the mail every single month, and you'll never hear from them, and then they move out, and then they're all peaceful.

It's important that this is a person you can trust, and this is important that this is the type of person that you can work with. And if all of that checks out, then I am more than happy to have them as a tenant.

And for me personally, I like doing long-term leases. You know, I prefer signing two years sometimes just because that gives me the reassurance that they're not just gonna up and leave after a year, and then I have to pay to like repaint stuff and get it ready.

So anyway, this is exactly what I look for. I hope this helps, and trust me on this one, if you ever want to be a landlord one day, this is really gonna come in handy. And at least learn from my terrible experience in the past of dealing with some crappy tenants because overall I would say there are a few bad apples in a bunch.

There are like a small percentage of tenants out there that are going to be absolutely nasty, that are gonna be a nightmare. My vast experience has all been incredibly positive, and the few bad apples—they're there. I mean, they're all out there. It's about weeding through those people and finding the ones that are going to be phenomenal.

Because I have to say, of the now seven or eight tenants I have right now, all of them are absolutely phenomenal. Every single one of them now pays on time, just the nicest person. You know, I have nothing but amazing things to say about all my tenants.

Now, this took a while to get it to the point where now they're all great. I might spend maybe an hour a month in terms of managing properties, and most of that is really just depositing rent checks and making sure all the bills are paid and just like checking up on like little things here and there, and mostly accounting.

And that might be honestly about an hour a month at this point; it's pretty low-key, and it's been like that for like the last two years overall. It's a great experience, but you just have to be a little bit weary not to take a tenant who's just gonna totally freak you over, and then you're gonna be screwed. Don't do that.

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