Selecting a good tenant is crucial to the success of your real estate rental business. Here are the ways to avoid nightmare tenants.

Avoid bad stereotypes. As a landlord, you have to believe that there is some ounce of truth in stereotypes.  A young unemployed renter will most likely be more problematic than a middle-aged working professional.  You may decide to give someone the benefit of the doubt, but you are increasing your chances of problems down the road.

Avoid first time renters. Young somethings moving out of their parent’s home can cause problems. More often than not, they like to have parties and are loud in general as they are not used to being considerate of others living nearby.

Avoid new couples. Nothing breaks up a couple faster than moving in together. This is only an issue if you know they won’t be able to pay the full rent individually.

Trust but verify. It’s become incredibly easy for people to give out fake references. These range from friends or coworkers pretending to be landlords or even employers. One easy way to determine if the prospective tenant is telling the truth is to use Google and enter the phone number of the reference.  Does the information that comes up make sense with what the tenant told you?  Is it the correct name, city, employer, etc…?

Phone references. Always ask for references of previous landlords, as well as current/previous employers.  And don’t just relax contently once you have the references.  Phone them. Ask questions. Here is a list of Reference Check Questions.  Make sure the references are legitimate. Professionals may use family and friends to pose as employers or previous landlords.

Be wary of cash payers.  If you meet tenants that offer to pay rent upfront for a large period of time such as 6 months, this is a red flag.  The two most common reasons are: the tenant doesn’t want to be disturbed and wants the landlord to stay away from the property because something illegal is happening; and/or the tenants have terrible rental history so the offering of large sum of cash is a diversion.  While it’s not unheard of for tenants to pay cash up front, just be careful.

Employment records. Ask the tenant to bring along a very recent paystub or a letter from their employer to confirm their employment. Always best to verify important information.

Don’t accept the first tenant that comes along. It’s true that the longer a property remains vacant, the more expensive it becomes for you as the landlord. While it may seem like a financially safe solution to accept the first tenant that comes along, it can often have the opposite effect. The fact is, finding a bad tenant quickly will cost you more than finding a good tenant slowly.

Cover your butt with a rock solid rental agreement. Think of all the things that could go wrong and write a rule about it into your rental agreement. Bad tenants tend to avoid landlords that appear to be organized and have lots of rules. Good tenants don’t mind rules, as long as they aren’t ridiculous. Always hope for the best tenants, but prepare for the worst.

Of course, once you have short-listed a few prospective tenants, you will need to begin to screen them. It’s okay to trust what they write on a rental agreement, but always verify. Read more about the 5 Best Ways To Investigate Prospective Tenants.

Note: According to the Personal Information Protection Act, a landlord should never disclose a tenant on a “Bad Tenant” list or “Eviction List” or similar database… even though you may SO badly want to.