Tenant Screening Risk Factors
David Borden - May 15, 2015
What level of risk is acceptable ? – This is an important question that is made up of many factors including:
Number of properties managed – The more properties a landlord manages, the more risk he can take on with each tenant as the level of risk is divided by the number of properties in the portfolio. Those with only a few properties or only one, have to make decisions that involve less risk. One default on a small portfolio of properties can be truly devastating, so careful tenant screening is a must.
Strength of the Rental Market – In strong rental markets, landlords can be more careful as housing is in greater demand. In weak rental markets, landlords might need to take greater risk to fill their properties.
Quality of Property – Generally, more expensive rental properties can attract more qualified, and less risky residents. The opposite is true of cheap or run-down properties. Well qualified applicants will generally avoid these types of properties.