It seems like the perfect path to passive income. Buy a low-priced property, get some tenants and enjoy the money that rolls in.

Unfortunately, it doesn’t always work out that way. If you aren’t careful, your tenants can cause you more trouble than they are worth.

Before you become a landlord, think about how you will vet your tenants.With good tenants, you are paid like clockwork, and you don’t have to worry about damage to your property. Bad tenants, though, cause never-ending problems ranging from late rent payments to ruining the house so that it’s harder to rent to someone else.

Want the first choice? Here’s what to do.

1. Take A Look At Their Credit

Want a tenant who pays his or her rent on time? Require a credit check before you approve an application. You can get permission from potential renters to look at their credit.

Someone with a good credit history has shown that he or she is capable of handling finances in a responsible manner. The better the credit history, the more likely your tenant is to make rent payments on time every month.

You will have to pay for a credit check, but if you are allowed to charge an application fee in your locality, you can have the prospective tenant foot the bill.

2. Run Other Background Checks, Too

There are companies that will run a background check on potential tenants. This can be well worth the cost (again, consider adjusting your application fee to cover expenses). With a background check, you can see what legal trouble and other problems potential renter has been involved in.

There are also companies that specialize in social media background checks. Learn more about the potential tenant by the kinds of things he or she posts online. Also, Google the prospective tenant.

3. Always Check References

Follow up with the references provided on the rental application. Require that at least one of the references is a former landlord. Ask the landlord how the tenant behaved and how he or she left the property upon moving out.

Check into character and work references work. For example, make sure that the applicant has a reasonably secure job.

4. Charge An Application Fee

If you want to weed out those who are not particularly serious and those who might cause trouble down the road, you can charge an application fee. (Remember, however, that there might be regulations about rental application fees in your city or state, so do your homework first.)

You’ll want an application fee that is just high enough to give someone pause, but not so high that you eliminate all possibilities. You can cover some of the costs associated with the tenant search, as well as ensure that only high quality applicants show interest. Offer to apply the fee toward the security deposit.

5. Avoid In-Person Interviews

You can also interview your potential applicants. However, avoid in-person interviews, which can openthe door for Fair Housing suits.

The Investing Answer: The process of vetting a tenant for your rental property can be time-consuming and cost money. However, it makes sense in the long run if you are interested in securing good tenants. Time and effort up front can mean a smooth rental relationship later.

By Miranda Marquit