Investor Mistakes that Can Really Bite – Tenant Screening

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Real Estate Agent with Excellence in Real Estate Tm @ Allison James Estates & Homes

Investor Mistakes that Can Really Bite – Tenant Screening
by John Occhi REALTOR
Realtor Consultant to Foreclosure Investors


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If you are going to invest in real estate you are going to have to deal with a tenant – sooner or later. Even in your perfect business model of flipping properties, every now and then you are going to get stuck holding the bag longer than you wanted to and the only way out will be to rent the place.

Perhaps the deal is such a good one that you end up wanting to keep the property – maybe you have some insight on future growth and believe you will see great appreciation in a short time, if you could just hang on to the property.

Tenants are not all bad. Many times they become your buyers and in other circumstances, they have friends who are in similar situations and looking for a good place to live – so they refer them to you, because you are a fair and honest landlord who does a good job maintaining the property.

So yes, sooner or later you will deal undoubtedly deal with tenants.

When you do deal with them never let your first impressions guide you. When folks are looking to rent a new place, they put on their very best behavior – sort of like a first date. Remember, what you see is not always what you get.

You may want to check out the article I wrote about Rental Agreements and repairs – you can follow the link to:

Investor Mistakes that Can Really Bite - Tenants



CREDIT CHECKS

So, you will want to check them out. You should have a local Tenant screening service in your area. This is a service that at a minimum will check the public records for your county to see if the applicants have been evicted form other homes or apartments. You can expand the search to more counties and even the statewide and a national level. Each expansion will cost a little bit more money – but typically well worth it to spend it now, then later.

These services will also be able to provide you with credit checks and even criminal background checks, for an additional fee. If you have many units, you may be able to work out a volume deal.

Don’t be afraid of spending this money – heck, you can even collect it from the applicant as a processing fee, application fee or even call it a credit check fee. In most cases they are not the uncommon – and since it is time consuming, you can even add on a few extra dollars for your time.

VERIFY YOUR APPLICATION

It has always been easy to put in friends as your previous landlord or employer to verify the info that has been submitted to you. Today with all of the cell phone numbers we have access to, it is very easy to verify your won application – so check it out for yourself and not with just a phone call.

To verify the current landlord and the reason they are leaving, you can run a Property Profile that your Title company can provide for the address the applicant is moving from. Contact the owner – by maid if need be, but contact them. Drive by the place and make sure your tenant is really living there. If it is too far to drive by, send a postcard with the words “ADDRESS CORRDECTION REQUESTED” at the bottom of the envelope. If it comes back with any other info – then you have a flaw in the application.

Do the same with the Employer – look them up on Google to make sure they are a real company. Contact the personnel department if they have one or call a publicly obtainable number – not the one on the application. Check out what you need to know. If you need to submit in writing – take the time and do it right.



NEVER MAKE A RUSH DECISION

Finding the right tenant can make or break you as a landlord and real estate investor. In California, a tenant who has been educated by watching Jerry Springer, Judge Judy and other day time TV Shows may be able to successfully stretch out the eviction process for 6 months or more – and that’s six months of no rent, on top of the month they missed before you started the process.

Remember that lost cash flow is gone forever. Yes you may end up with a judgment –but the probability of ever collecting it are slim, so take your time and carefully screen your tenants and select the right one for your investment property.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR

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Until Next Time, Have a Blessed Day,

John Occhi, ePRO & Five Star Certified REO REALTOR®
www.JohnOcchi.Com
Hemet - San Jacinto Valley, CA
The Excellence in Real Estate Team @
Allison James Estates & Homes
2281 W. Esplande Ave, #102-B
Next to "Starbucks"
San Jacinto CA 92582
(951) 654-5550

Excellence in Real Estate,Team Log,John Occhi,www.johnocchi.com,hemet,san jacinto,CA

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This blog and the contents written here is the intellectual property of John Occhi, San Jacinto Valley REALTOR® in the South West Riverside County region of the Inland Empire of Southern California.  The views and opinions expressed are just that - views and opinions of John Occhi and those who comment.  Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance.

This blog is part of the ActiveRain Real Estate Network, which is a social network highlighting the best of Web 2.0.  Information is provided with the intent of educating and assisting home owners, home sellers, home buyers and real estate investors with information the can be used to make better real estate decisions.

I am proud to be a full time REALTOR® who is proud to be a contributing member of the ActiveRain community.

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Show All Comments
Rainer
18,434
Rita Bradley
Laguna Hills, CA
Valuation Consultant in Orange County California 949-916-3263
Great advice John! 
Jul 23, 2007 04:46 AM #1
Rainer
12,282
John Occhi
Excellence in Real Estate Tm @ Allison James Estates & Homes - San Jacinto, CA
ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259
Rita Bradley - Thanks for stopping by and concurring with what I have to say
Jul 23, 2007 04:49 AM #2
Rainer
12,282
John Occhi
Excellence in Real Estate Tm @ Allison James Estates & Homes - San Jacinto, CA
ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259

I was reminded that outsourcing is always an alternative - but one that does cost money and yes the headaches may be worth the money spent.  Just remember though, they have very little skin in the game and if a tenant goes bad on a Property Manager, it is just one of many and part of the normal business cycle.  So do they care, yes, but not like an owner who could literally have his life savings tied up in investment real estate.  So, proceed with caution when looking to outside services, and remember that in most cases you get what you pay for.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR 
Realtor Consultant to Foreclosure Investors
Mission Grove Realty

Jul 23, 2007 08:41 AM #3
Rainer
78,168
David Slavin
Keller Williams Premier - Katy, TX
CDPE, ABR, SRES Keller Williams Premier
This is so true.  You have to do credit, background, criminal and employments checks before renting to a tenant.
Jul 26, 2007 02:36 AM #4
Rainmaker
819,771
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES
Great blog John. Thank you very much for the information.
Jul 26, 2007 10:43 AM #5
Rainmaker
312,455
John Occhi
Mason Real Estate - Temecula, CA
SRES,CPRES.ePRO - Temecula-Murrieta CA Real Estate

David Slavin There is a lot to be careful of - and at the same time you have to make sure you don't violate any of the applicants 'civil rights'.  You can only ask so many questions - ask the wrong person the wrong question and find yourself with a civil lawsuit.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR 
Realtor Consultant to Foreclosure Investors
Mission Grove Realty

Jul 28, 2007 03:32 AM #6
Rainmaker
312,455
John Occhi
Mason Real Estate - Temecula, CA
SRES,CPRES.ePRO - Temecula-Murrieta CA Real Estate

 LANRE FOLAYAN - Thanks you for stopping by and taking the time to read the informationj.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR 
Realtor Consultant to Foreclosure Investors
Mission Grove Realty

Jul 28, 2007 03:33 AM #7
Rainer
12,282
John Occhi
Excellence in Real Estate Tm @ Allison James Estates & Homes - San Jacinto, CA
ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259

Bill Roberts - Just like any other profession, there are the good and there are the bad...not all PM are good at selecting tenants.  There are times when they just want to start collecting the rent and don't care too much. Sometimes a new employee makes the wrong decision and sometimes a disgruntled employee makes the wrong decision for all of the wrong reasons.

No one has your back like you do.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR 
Realtor Consultant to Foreclosure Investors
Mission Grove Realty

Jul 30, 2007 02:07 PM #8
Rainer
12,282
John Occhi
Excellence in Real Estate Tm @ Allison James Estates & Homes - San Jacinto, CA
ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259

I was told that I am right when I say that they don't have a substantial vested interest (the property managers) but they do know how to select tenants so they shouldn't have too many "bad" tenants. The main problem with property managers is that they might be "too selective" causing the unit to remein vacant for an extended time.,

To which I responded...

Just like any other profession, there are the good and there are the bad...not all PM are good at selecting tenants.  There are times when they just want to start collecting the rent and don't care too much. Sometimes a new employee makes the wrong decision and sometimes a disgruntled employee makes the wrong decision for all of the wrong reasons.

No one has your back like you do.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR 
Realtor Consultant to Foreclosure Investors
Mission Grove Realty

Aug 19, 2007 05:58 AM #9
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John Occhi

ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259
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