How can you avoid tenants who lie?

Every real estate investor knows that a rental property that sits vacant is a bad investment. But do you know what is an even worse investment? A property rented to a bad tenant. A tenant who skips rent or trashes your property can cost you plenty, so making sure you vet prospective tenants carefully, is key to maintaining a healthy portfolio along with your sanity.

Asking prospective tenants to fill out a rental application, checking their background and credit check, and calling past landlords, places of employment and other references, is a great start. But what about tenants who lie or omit the truth in their applications?

Some tenants may look great on paper, however, they may have lied or stretched the truth to appear to be a more appealing candidate. Some of the things potential tenants tend to like about, and that you should take a closer look into are:

1. Their residential history. Is your tenant employed, apparently stable, but lists their aunt or cousin as their last landlord? Dig deeper. Ask for prior history going back 10 years and ask additional questions to find out what the real story is. There may be a prior eviction, arrest, criminal conviction or other red flag that the applicant is trying to minimize.
   
2. Their income or employment status. People tend to inflate their earnings to seem more qualified, especially when they are moving up to a better property that they can comfortably afford. Make sure you verify their employment history through their supervisor or HR department and ask for pay stubs.
   
3. The number of residents. People may omit certain potential residents from their application either because those resident may not qualify to rent, or because they plan to move in more than the legally allowed number of residents. It is difficult to catch this one, but if you see the same group of people together throughout the rental process, chances are they all have an interest in the property. When you show the property, watch everyone present and their reactions. Someone who will be living in the property will show higher interest.
   
4. Their credit scores/history. Tenants who are reluctant about you running their credit are typically one of two types: those who have had their identities stolen or otherwise their credit histories affected by fraud, therefore  are extremely protective, or those who are hiding a low credit score. If a prospect offers to give you their recently run credit report, make sure you check the date in which it was accessed. ​

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