Whether you’ve been renting properties for years or you’re in the early stages of preparing to rent a property, there’s something you want to safeguard yourself against at all costs: squatters.

It’s a property owner's nightmare to rent out your property, hoping for a straightforward tenant-landlord relationship, only to find out you've unknowingly leased your property to serial squatters. This recently happened to a couple in Sacramento, California, and it serves as an awful, yet crucial lesson for real estate investors and landlords. When you rent a property, due diligence can never be overstated.

In this blog, I will:

• Define what a serial squatter is and why they are so problematic

• Describe 6 essential screening techniques to minimize the risks of encountering bad tenants

What is a Serial Squatter, and Why Are Squatters in California a Problem?

Serial squatters, as defined by RentRedi, are “squatters who move from rental to rental without ever being a legal tenant. Typically, they target small, independent landlords or roommates who don’t run background checks or require leases.” They typically take advantage of landlords with minimal, lenient screening processes and may even provide fake documentation in order to get the keys to a new rental property – only to then avoid rental payments.

The tricky thing is that in the state of California, there are various layers to the legal process for evicting squatters and processes that must be followed. So, like in the case of the couple in Sacramento that were stuck dealing with serial squatters in their property, they weren’t able to evict them and get their home back in their own possession for nine months. In this instance, by the time they got the squatters out, they were owed $15,000 in rent. On top of that, they were left to deal with the expense of fixing up the property that was treated poorly by the squatters occupying it for nine infuriating months.

As a landlord (or future landlord), you do not want this to happen to you. The importance of thorough tenant screening cannot be emphasized enough, which is why I’ve got this checklist for you.

Your Go-To Tenant Screening Checklist

When looking for a new tenant, your goal should be to gather as much information about potential tenants as possible to make an informed decision. Here are the six key steps you ought to follow.

✅ 1. Meet the Tenant in Person

Meeting potential tenants face-to-face can provide valuable insights into their character. While it’s certainly not foolproof, it is harder for people to deceive you when you have a direct interaction with them. Conversations in person and out loud with the opportunity to notice non-verbal communication (ie: facial expressions, gestures, posture, tone of voice, etc.) are incredibly important. You’re able to pay attention to and notice things that simply can’t be identified via email, text, or even a phone call. Surprisingly, people often even get more comfortable in person and say things in conversation that you probably wouldn’t pick up on otherwise. 

Additionally, if there are multiple potential tenants, you can hear them interact with each other, how they comment on the home, etc., that can provide you with helpful information. Property management is a contact sport! Don’t sit back on your heels. You’re bound to get beat out every time that way. Be proactive. Meet the people you’re about to go into business with!

✅ 2. Verify Tenant Identification

Always ask for valid identification to ensure that the people you're dealing with are who they claim to be. This is your first line of defense against fraud. If someone is committing fraud, they generally aren’t going to be open and upfront with their identification. Also, if someone puts a certain name on an application or hands you a credit report, you want to make sure that they are the person who’s on the paperwork.

✅ 3. Conduct Credit Checks

Running a credit check will give you a snapshot of the tenant's financial stability. Low credit scores or a history of late payments can be red flags.

That said, credit score shouldn’t be the sole determining factor if you rent to someone or not. If the tenant has a low credit score and can provide a sufficient reason, they may be perfectly safe to rent to. However, the opposite is true, too. If you ask a potential tenant to explain some aspect of their credit report and the story doesn’t seem to add up or make sense, this could be a red flag. What I’m trying to say is – it’s not just about the information on the report but how the tenant communicates and behaves when you ask them to give more context about any questionable information that shows up.

✅ 4. Perform Background Checks

A comprehensive background check will provide information on a prospective tenant's court history, including any eviction proceedings or criminal activities. Frequent evictions are a strong indicator of problematic behavior. Just like the credit report, we believe in giving people second chances, especially if they have a good explanation or have paid their debt to society and worked to rehab their past behavior. It’s important to be informed and pay attention to the information provided in a background check; yet again, what’s even more valuable is how the tenant talks about and explains past issues. A lot can be learned about someone when they talk about their past. For example, if a tenant puts on their application that they’ve never been convicted or committed a crime, but then one pops up on the background check, you have a huge red flag. The importance of completing multiple steps in the process of evaluating a potential tenant is key because that’s how you start to get a more accurate picture of who they are and what their character is like.

✅ 5. Call References and Past Landlords

This is perhaps one of the most overlooked steps. PLEASE DO NOT SKIP THIS STEP! 

Always ask for at least ten years of rental history, and then actually pick up the phone and call the provided references. The current landlord might paint a rosy picture just to get rid of a problem tenant, but past landlords have no such incentive. They may offer a more candid assessment, which can be invaluable in your decision-making process. 

I often get asked, "Why do I request ten years of rental history?"

The answer is simple: the more information you have, the better. By speaking to multiple past landlords, you're likely to get a fuller, more accurate picture of the tenant's history. Not to mention the practicality of the fact that you might not be able to reach some of them, so the more you have on the list to call, the better. It's a safeguard against potential false positives or negatives. Get the list of references and give them a call.

✅ 6. Trust Your Gut

This level of intuition comes with some experience, but at the end of the day, human beings are wired for community. Our brains have biologically developed to seek out danger and make relationships with those who are “safe”. This is part of the reason why meeting in person is so important. If you get a bad feeling about someone, trust that. Also, if you get a real good feeling with someone who has marginal credit or a background check, you can lean on that intuition to make a decision. Don’t rely solely on the paperwork. Just make sure that when you are doing this, you are abiding by Fair Housing Laws and not letting implicit biases put you in a position where you’re violating the law. Be fair and be wise.

To wrap it up…

While no screening checklist can be completely foolproof (because, like it or not, there are scammers and criminals out there who are experts at taking advantage of people), following these steps and taking them seriously can significantly reduce your risk of falling victim to serial squatters or other troublesome tenants.

Remember, due diligence is your best friend when it comes to property investment and management. Take the necessary precautions, and you'll be well on your way to a successful (and far less stressful) tenant-landlord relationship.

Brent Edwards (aka Brent the Broker) is a residential real estate agent and Realtor in San Diego, CA who helps clients buy and sell homes in San Diego, California and all surrounding areas. Brent is a highly-recommended Realtor in San Diego by family, friends and past clients. Call Brent today at 619-550-8070 if you have any questions about real estate in San Diego or you'd like to buy or sell a home.

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