References are an important and informative part of the tenant application/screening process. References not only verify the employment and rental history but also provide a snapshot of your future tenant’s personality, work habits. They are telling for how they get along with people. When Human Resources screens new employees, they ask for references, so should you.
As part of the tenant rental application, two must-have references are ;
- Landlord references (current and previous two)
- Work references (supervisor/manager)
Combined with the credit check, pre-screening, and the actual meeting, references provide you with a 3-D picture of the person taking care of your investment and who you will be working with for the next months or years.
If you’ve got a good tenant, typically, their references will have consistent themes such as reliable, calm temperament, easygoing, etc. It’s usually a red flag when references are very cautious about what they do or don’t say. It helps to pay attention to what people say and what they don’t say.
Early on in my landlording days, I remember talking to several work references who raved about the tenant’s work habits and reliability but were cagey about responding to my question about how he got along with his colleagues. The gist was that he was an excellent worker who couldn’t get along with people because he’d find fault and bear grudges. They all brought up his ongoing battles with his ex-wife. I didn’t think those issues would affect me as a landlord, so I accepted him. As it turned out, he found things to dislike about me, bore a grudge, and was also very difficult to deal with.
You may ask, “How do you know the references aren’t just friends or relatives, sitting on the sofa, smoking pot, and lying through their teeth?”
Here are a few tricks of the trade.
With work references, locate the company online and call the listed reception number, not the one the tenant provides. Ask for the name the tenant supplied as a reference. If the person actually works there, they’ll transfer you through. Or they’ll provide you with a cell number that matches the one on the tenant application. If the receptionist says, “we don’t have anyone by that name working here,” you’ve got yourself a bogus work reference.
Social media is mainstream, and it’s good practice to run social media checks on all work references. Most professionals have a LinkedIn profile that helps you to verify their identity and place of employment.
Arrange to call to speak to references and ask them five simple questions. Remember to let the employer do the talking; your role is to listen. Remaining silent also makes people feel uncomfortable, which makes them talk more to fill in the space; the more they say, the more you will learn:
- How long have you known them in what capacity?
- What can you tell me about them? (look for themes, patterns of behaviour – i.e., reliability, dependability, ability to get work done when promised)
- Tell me about a time they were in a conflict situation and walk me through how they resolved it
- If you were a landlord, would you rent to them, why?
- Is there anything else you want to tell me that I haven’t asked?
For previous landlords, ask for the name/address of the apartment’s property manager, then look it up online, and call that number. Property management companies are used to providing references for tenants and will give you the straight goods.
It’s not always that straightforward, though, because people also rent from individual real estate investors, like you, who own condos, townhouses, or houses.
Here’s a little trick I learned from Mike Butler’s book, Landlording on Autopilot.
Ask your tenant for the name of the home/condo owner, and then call them asking, “How much is the rent for the condo/house you’re leasing?” There’s a good chance you’ll catch the friend/relative off their guard, and they may say, “I don’t have a place for rent.” Gotcha!
Title searches are an excellent method of verifying the identity of the property owner. To get a title, you kneed the legal description or the land identification number code (LINC number). Depending on the municipality, you can either get this directly by calling their planning and development department, online through Spin2, or a registry agent.
The title provides the identity of the property owner/owners; however, titles can be transferred, or the original owner may have changed their last name (through marriage), so the name may differ. I’ve busted a number of potential scammers using this technique.
Social media checks are also a great way to verify a landlord’s identity.
Once you’ve verified their identity, you’re ready to give them a call. These nine questions will provide you with a good understanding of your potential tenant’s behaviour and habits;
- Could you please verify the address of where Jane Tenant rented from you? If they can easily rattle off the address, great. If they’re stumbling, take note, that’s not a good sign.
- How long did they rent from you?
- Did they pay their rent on time every month?
- Did you receive any complaints?
- Did they damage the property?
- Did they have any pets?
- Did they bring in any unregistered guests?
- Were they polite and respectful to you/the neighbors?
- Would you rent to them again? If your tenant has leased from a private landlord (like you), run a title search on the property, and see if the identity on the title search matches the landlord’s name. We’ve busted a number of potential scammers using this technique.
Personal references are not as reliable or trustworthy as work or landlord references and should be avoided. Realistically, is a friend, family, members, parish priest, or coach going to give a bad reference? Not likely.
You may have to do a little detective work or even a little acting to verify the reference information; in the end, doing that extra to ensure you’ve found a good tenant or avoided a bad tenant is always worth the effort.
What is your best method of spotting fake references?
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I am a property investor who is passionate about helping investors who self-manage to have profitable investment properties through resources and education. If you struggle with the wrong landlord forms, or worse yet, no landlord forms check out my 10 Essential Editable Landlord Forms that help you separate the good tenants from the bad and increase your property’s profitability.