Are your Tenant’s References Bogus?

Are your Tenant's References Bogus?As part of the tenant application, I always ask for 3 references;

1. current and previous landlord/landlords
2. work (boss/colleague)
3. personal (friend, neighbor or colleague)

I do this for the same reasons Human Resources does when hiring employees. Because in combination with the credit check, pre-screening, and the actual meeting, references provide you with a 3-D picture of the person who will be taking care of your investment.

If you’ve got a good tenant, typically their references will say consistently similar things (reliable, calm temperament etc.). With questionable references, I have discovered what people didn’t say or carefully said, exposed some red flags.

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.

Although you will have yes or no questions, it’s always a good idea to ask an open ended question as well, like “Tell me about (insert name here)” and then be quiet. People hate silence, so they might start talking nervously. This is where some good truths might be exposed.

With work references, ask the company name and then look online for the company. Call the listed number (not the one the tenant provides), asking for the name the tenant provided as a reference. If the person actually works there, you’ll be transferred through. If the receptionist says “we don’t have anyone by that name working here” you’ve got yourself a bogus work reference.

With previous landlords, make sure you get the name/address of the apartment or condo building, then look it up online, and call that number, asking for the property manager.

However, people also rent from real estate investors, like you, who lease their condos, townhouses or houses out directly – what then?

Here’s a little trick I learned from Mike Butler’s book, Landlording on Autopilot. on Mike’s website

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!

Personal references are icing on the cake after favorable landlord/employer references. Ask for the story of how many years the tenant has known the personal reference, and in what capacity – as many details as possible. When you call, ask the personal references open ended questions (who, what, where, when, how) to check for consistency. If the stories match, you’re golden.

You may have to do a little detective work or even a little acting to verify the reference information; in the end, doing a little extra for a good tenant is always worth the effort.