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