There is nothing more frustrating than having to evict a tenant, whatever the reason, and the reasons can be innumerable - failure to pay rent on time, abuse of the property, drug use, keeping bad company, etc. Yet this is not the most difficult aspect of property ownership. The most difficult aspect of property ownership, by far, is remodeling and the management of contractors. More on this later. When it comes to managing tenants, however, the biggest advantage that you have is the property that you bought. If it's a great property, your units will attract great tenants and they will always be full. If it's not a great property, then life gets more complicated. It's better to have your units empty than it is to rent to a bad tenant. We know the preceding sentence may be a little hard to digest for the first-time property owners, but it's absolutely the case that bad tenants will cause you more problems down the road than any rent is worth.
Here are some time-proven and foolproof ways to screen tenants:
Be observant! And observation starts from the moment that the prospective tenants walks up to the unit! Observe the vehicle that they drive, the clothes that they wear, whether they make eye contact, what type of questions do they ask, how observant are they, etc.?
Questions. People who intend to be great tenants will tend to ask very different questions from people who don't. The great tenants ask questions like the following:
What are the other tenants in the building like? Do they stay up late, do they smoke, are they loud?
What do the other tenants do for a living?
Where is the nearest park and coffee shop?
If I play my cello at night (which is what I do to relax), do you think I will disturb the other tenants?
Have there been any incidents of crime in this area?
Potentially bad tenants will ask questions like the following:
It's okay if my rent is occasionally late, right? (This will always be followed by some reason like they work in a job that is seasonal so their salaries are unpredictable)
You don't really need three personal references, do you?
You aren't serious about talking to my previous landlord, are you? I can tell you that I'm moving because that guy was a jerk.
When I leave, I'm getting all of my security deposit back, right?
Check all References. Great tenants will have great references and the great references will use descriptive terms, such as, Oh, I've known Frank for 20 years and he's an incredible person! He was the best man at my wedding, and he will be an ideal tenant! Listen carefully to the tone of their voice. If you hear descriptive phrases that are lukewarm or tepid, then you are probably dealing with a person who is a bad tenant. Avoid them. Avoid them. Avoid them. There are many resources for doing a credit reference check and a criminal check if you know where the tenant previously lived. One company that the author has used successfully is Rental Research, Inc. Oftentimes, the report is available on the exact same day. You need to remember that you are not allowed to share the tenant's credit report or credit score with them, although you are allowed to ask them about any discrepancies about which you have a concern (continued late payments, excessive debt, etc.).
Trust Your Instincts! This is, by far, the best advice that I've ever given or received. If, after you've done all of the above, there is something about the prospective tenant that doesn't feel right for whatever reason, don't rent to them. Your instincts are telling you something subconsciously that you need to respect.
What About Pets? Some property owners allow only small pets in their buildings, and we can completely understand why. Large pets wear considerably more on the investment property than small pets, not to mention that poorly behaved large pets cause more damage, not to mention that the pet can annoy other tenants. Our collective experience with pets is that the behavior of the pet tracks closely to the behavior of the tenant. Just like you check references for the tenant, you should check references for the pet. Some time-proven tips:
Call people who know the pet and who have watched the pet in the past, and ask them the same questions you would ask about the tenant.
Meet the pet in person (so to speak). Spend some meaningful time with pet and see if the pet behaves inappropriately while you are interacting with the pet. If the pet jumps up and knocks you to the ground, that is a bad sign. I know an emu named Bob who likes to lick my ear, but that's a socialization behavior of emus, and I don't encourage renting to anyone who has an emu. Speak to the pet and see if the pet responds to your voice.
Observe how the pet interacts with the owner and vice versa. Owners who treat their pets like children will have a higher probability of having well-behaved pets. There are always exceptions, but the odds are in your favor if the pet is treated like a child, but not a spoiled child.
Observe the living conditions of the pet. Personally, I worry about pets who spend most of their time alone or who live outside in the backyard by themselves, particularly if the pet is a dog. Dogs are social creatures -- they are pack animals by nature and they need companionship.
Observe the grooming of the pet. Well behaved pets are typically well-groomed, with clipped nails, brushed hair and no fleas or ticks.
Pay attention to the name of the pet. I know this one is silly, but it makes a difference. I would worry about a dog named Killer, Brutus or Caligula. On the other hand, I like any pet named Muffy or Munchkin.
Peter is an active real estate investor in the Puget Sound Area, specializing in the acquisition and finance of small multi-family properties between 2 - 30 units. Peter has been married to his lovely wife, Grace, for 12 years and they have two young girls, Sydney (age 7) and Ashley (age 2). Peter lives in Redmond, Washington. Find out more information Peter at http://www.peterku.com.
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