There are many things that can go awry on a property. If you don't thoroughly screen your prospective tenants, you can cause serious damage to yourself, your property, and your budget.
1. Your Property Gets a Bad Reputation
No resident wants to live in a property with sex offenders, criminals, obnoxious neighbors, etc. If that becomes a significant population of people on your property, your property will suffer in attracting quality residents. The property might become more run down and less people will feel comfortable being in proximity to your property.
2. Your Property Becomes a Liability Instead of an Asset
Bad tenants are a major liability; especially criminal ones. If a major crime happens on your property by a person known to have a criminal history, you can be sued. Even if you claim to have not been aware of the criminal history, you can still be sued for negligence because you did not perform a background check. This is true for all kinds of crimes such as:
- Drug use
- Drug dealing
- Personal Violence
- Other Sexual Offenses
3. Your Property Becomes a Cost Instead of Income
When it comes to rent, landlords should be screening their prospects for two main objectives - one is to make sure the prospective tenant has sufficient funds to pay rent. The second is to make sure that the tenant has a history of paying their rent on time and no outstanding debts.
Failure to conduct proper tenant screening may lead to potential risk of tenants moving out without payment. Try to imagine a tenant destroying much of your property and then leaving without paying for it. The deposit isn't always sufficient in covering these costs. The deposit also needs to cover the cost of marketing the vacancy and the theoretical unpaid rent of the next month. Your likelihood of going over the deposit are fairly high.
It’s up to you how you deal with your investment, how you screen your prospective tenants and how your reputation mirrors your investment.