OfflineI have been managing my own properties now for 13 years and thought I'd start a thread where people can ask me questions about renting out properties. This isn't necessarily for lease options, but for regular buy and hold strategies where you rent out the property and intend to hold it and sell it at a later date. Many other proprietors and property managers are floored when I tell them I haven't had a bad tenant in 13 years except for a family member I tried to help out. (my bad! I deviated from my own rules!)
Best Advice I can Give about Tenants!
BE PICKY! I've been very fortunate to be very picky when choosing tenants; most all of them have cared for my homes the way I would.
SCREEN TENANTS WELL! The old saying is very true! An ounce of prevention is worth a pound of cure. If you get a GOOD tenant upfront, your chances of having problem tenants are lessened severely. Its A LOT easier to get a bad tenant IN than to get them OUT!
DON'T GET ONE APPLICATION AND LEAVE IT AT THAT! As anxious as you may be to get a tenant IN your property, it isn't worth rushing into a bad experience with the tenant from he**.
There is no rule that you must take the first applicant. In fact, doing so in many cases would be a huge mistake. So, if anyone plans to do buy and holds, the best advice I can ever give is to screen tenants well! Get as many applications as you can, run their numbers well using scrutiny and running ratios (much like a bank would do, only more lenient); compare the credit reports to what is on the application; if anything is missing, confront the prospect about it. If they lie or try to cover up instead of explain, NEXT!
BAD CREDIT ISN'T ALWAYS A BAD THING! Many tenants will NOT have good credit. But, this doesn't mean they won't be good tenants! My best tenants have had foreclosures on their records! They know how to care for a house and because they can't buy a house of their own generally have taken very good care of my homes. Bad circumstances hit people, and if someone goes all out to show what they're doing and have done to improve their situation, and are upfront and honest, I find they make wonderful tenants. Trust is an important thing when you are letting someone use your home!
CHECK REFERENCES WELL! If you can, visit the home they are now in and see how they keep the house, talk to ALL references, prior bosses, neighbors and check their address with their local police department to see if there have been any reports or filings.
BE UPFRONT: From the beginning, let prospective tenants know you want serious applicants only. Let them know you do thorough back ground and credit checks, as well as calling references, neighbors and bosses. This alone scares away many of the tenants that would be difficult.
PREP YOUR PROPERTY: My rule of thumb is that I don't rent out a property unless it is a place I would want to live in myself. I want it turnkey, without problems and to look beautiful! The extra effort comes out when you get responsible tenants who CARE for your property. It is important that everything is in good working order. This is how you eliminate a lot of repairs. Things do happen of course, but if you've made the effort to go in and fix any potential problems you see (or a contractor or inspector catches), it will always cost less to fix it before it breaks rather than waiting for it to break. And, you'll have much happier tenants!
HIRING A PROPERTY MANAGER: If you hire a property manager, always interview them well and ask them exactly how they choose a tenant, what their screening process entails, what type of background checks they perform, and how much effort they put into finding out as much about a tenant prospect before hiring them. Finding a GOOD tenant is the difference between loving and hating being a landlord.
Many property managers will not put in all this effort and take the first applicant that comes across their desk, or merely run a credit report. And, the most work a property manager does for you is in the beginning; getting the tenant in the property!
If you maintain your home well, the repairs are not usually a big issue and shouldn't come up often. You can see if you can find a property manger to simply find you a tenant, and many do have upfront fees for that only. Then you can take over from there. If you can justify a monthly fee from a property management company for peace of mind, then by all means do that.
NETWORK: The key, as in all the things Dean teaches, is to network. Have a good handyman to call on a moment's notice in case a repair is needed. Several in case one isn't available. Befriend a neighbor close to your rentals and keep in constant contact with them so they let you know if something is going on that shouldn't be.
This is just a VERY BROAD overview of finding tenants. I hope it helps someone! I'm open for questions should anyone want to ask! 
And, I'm always open for suggestions. I know that no matter how long you do something, there's always room to improve and learn something new!
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UPDATED TO INCLUDE THE WORKSHEET I MADE TO SCREEN TENANTS. Its thorough, and I've used it for years, updating it to keep it current. there are comments in some fields, so makes sure to view them. I've changed info in here to make sure to keep confidentiality, but I wanted to include this for anyone who would like to use it. I've locked only the fields with the formulas. If you want to unlock them or edit it to your preference, PM me. WHEN USING THIS IT IS IMPORTANT TO PUT THE RENT AMOUNT IN THE TOP LEFT BOX.
Thanks for sharing these with everyone. They are some great tips, especially not rushing into something because only one person called or was interested in the apt. It would be worth it to lose a months rent and wait for a good tenant to come along.
Jeremy
This train, Dreams will not be thwarted
This train, Faith will be rewarded
Big wheel roll through fields where sunlight streams
Meet me in the Land Of Hope And Dreams
Bruce Springsteen
Hey Thank you Tammy. I just bought my first property at auction Saturday and I want this for a rental and I haven't a clue what's next. So, I'm going to PM you for the screening sheet. Also, I have a question.
I've looked up my own credit, sorry this sounds ignorant but what does it take to look up someone elses? Is there a form they fill out giving you permission?
Thanks.
Owen Properties, LLC
Tammy,
Thanks for all the information. We are planning on buying and holding rentals under an LLC. We have had rentals in the past and we totally understand the BAD tenant issue. We have a realtor we are working with and we will take your advice on being picky and doing full credit checks. Thanks again!!
Chesloe Properties, LLC
Middlesex County, CT
Thanks for sharing this info with us Tammy! The items i really focus on as you stated on your list is "PREP YOUR PROPERTY." I know all the items you listed are really important, but when you fix your rental properties as if you were to live in it, there a sense of pride and ownership that comes from the tenants. They will in return treat your property as if it was theres. I find it that's very important in my business and so far has a great experience with all my tenants. I've also received not only a good exposure from the tenants by word of mouth, but a great reputation as well for doing the right thing. Real Estate is people's business, and when people are very happy with the service you provided, they will go out of their way to make sure your business becomes successful because of who you are. I've been fortunate enough to have great tenants, and i currently have a long list of potential renters, but the only problem i have now is not buying properties quick enough. So, thank you Tammy for sharing this info with us and wish you the best on all your Real Estate Investing!
Lloyd
I used to charge an application fee and had set up with a credit screening company; which required a full disclosure from the applicant. That provides an extensive credit and background check; I used to charge less than I paid because they were $30 each person; and when you have a married couple, I couldn't see charging $60, so I'd always bite half the cost. You also had to qualify yourself as the owner of the property and that you are renting out the property, and prove you are who you say you are. They keep it on file indefinitel. (I used to use www.accuratecreditbureau.com)
However, this year I found something new and I LOVED it! I didn't need to have an application fee, and the tenants didn't even need to share their sensitive social security number with me! The site is www.mysmartmove.com. It allows the tenant to pay for their credit and background checks, and you the ability to see it! Always opt for the background and credit checks together. The site allows you to set up what you need from the tenant and then they just have to go in and verify, give them a small amount of information, and its through transunion so its safe and secure.
The benefit of the first option is that you have access to all 3 credit bureaus, full relative and neighbor information including phone numbers. However, you can get much of this data online just searching for the street and city, state that your home is on. The transunion site lets you see all the details, but the background check just tells you if there are any records found and if they are found, what they are.
So, if you want to opt for the thorough check and report, start getting yourself qualified on the site immediately as it takes a week or two to process yourself with the company. If you want to use the mysmartmove, just sign up for it. This is the clause in my rental applications that I usually fax along when I use Accurate Credit Bureau (you can google and find many other companies out there as well)
I hereby authorize the release of any information required to complete processing the rental application for the premises at {ADDRESS}. I/We authorize you to conduct an employment/ credit / and background check concerning my/our application and to contact all references (entities) listed and verify all information included herein. I/We authorize Proprietor and/or Proprietor’s Representative to obtain credit reports pursuant to the application at any time. I also authorize Proprietor and/or Proprietor’s Representative to verify any other information contained in this application.
The $30 fee will be used to obtain and verify credit reports and conduct background investigations by Zion Properties or Proprietor’s Representatives. This fee shall be paid upon submitting of this rental application to Zion Properties/ Proprietor’s Representative.
Authorization is further granted to Zion Properties and/or Proprietor’s Representative to use a photo static copy of my signature below, to obtain the aforementioned information."
My disclaimer, have a lawyer check your documents or wording to make sure they comply with all the laws of your state.
And that is the TRUTH! Couldn't have said it better myself! If they're going to live somewhere they're proud of, they have incentive to take care of the property!
I really like the way you go into detail. It will really help a lot of people.
Randy
www.adeptpropertiesllc.com
Thanks Tammy. Folks, check out your RE investment club as mine here in Chicago has a tenant screening service which also checks their credit and does background checks. It could be a real time saver in addition to another part of your team.
lynx! Time is valuable, and this is definitely a great resource to mention! I personally prefer seeing the credit report so I can talk to the tenant directly about anything on the report because MANY times there is wrong information on the credit reports. mysmartmove provides a copy of the TransUnion credit report and does a thorough background check in all states.
Thanks for stopping by the thread Randy.
Another great screening tool is a prerecorded message that not only includes all the amenities and information, but also the notation about application requirements and background, credit and calling referrals. Also, there is a free website www.house.info, where you can put unlimited amount of text. Then, in limited advertising, you can refer to the detailed listing. This has been a wonderful tool, especially for out of state properties.
It is CERTAIN you will succeed!