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Fail-Proof Your Tenant Screening With Prior Landlord Checks

by Eric Drenckhahn on May 19, 2014 · 51 comments

  
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I have already written about the two most important facets of Tenant Screening, credit score, and income:

You will never get paid if you do not have tenants that make enough money. You will be continually chasing rents, and other issues, if your tenants have low, or non-existent, credit scores.

This article will focus on the third pillar of tenant screening, past landlord checks.

I am a low-risk landlord. I used to be a Section 8 landlord, read my previous posts, or posts on my own blog to get a feel for some of my past adventures.

I like 100% of my rent paid and deposited by the second of the month, every month! Typically all of my rents are paid on or before the first day of the month.

How To Make Paying Rent Easy

I make it easy for my tenants to pay rent. I send an automated text to all lease signers on the 28th of the month, at 2:00 PM.

Related: How to Automate Your Rent Collections Using Dwolla

It is a simple text message, “Group Text. Reminder, Rent is due soon, if you have already paid, thank you”.

I collect rent in various methods, and am always open to more. I have rent boxes in each building. I take PayPal (free option); I collect cash if necessary, some tenants use BillPay direct from the bank.

Some use USPS mail. Some tape it to the door. I do not mind going to the property, most of my units are in the same complex. I can park once, and walk, to 21 of the 25 units I own and/or manage. They are only three miles from my house.

If I do not get the rent on the first, I send another text to the tenants that have not yet paid. Sometimes the rent check was in the box, but I missed it.

Sometimes the tenant had it ready, but it was on the fridge. With solid tenants, late payments are a rarity. Remember, rent is due on the first; it is late on the second.

A late fee applies on the fifth. An eviction follows shortly thereafter. I have not had a missed day of rent in many years. I have only had one eviction in the last 4 years, despite having 24 tenants now.

Be Picky With Who You Rent To

I turn down many renters that might be great renters, in someone else’s apartment. It is impossible to screen out all of the bad renters and yet allow all of the great renters in.

People that have never been declined by a housing provider in their life I may decline, and I am OK with that. I am a lazy landlord; I want all of my rent with the least amount of work.

I will be the first to admit, I do not actually physically do most of my tenant background check verifications myself anymore. I use a full service company that not only provides a credit score and criminal backgrounds, they make the calls necessary to verify income employment and rental history.

To get that set up, it cost $100 for a one-time, on-site inspection, and it is worth every penny. I used to do my own checks, and have seen tenants provide their friends and relatives as references.

Tenants use addresses that they have never lived at. I have had tenants that forget about the nine times in the past seven years that they were evicted. I have seen tenants that forget about the eviction that was filed against them in the past week.

Regardless of who actually gathers the information, the rubber meets the road after you have the information in hand, not gathering it. How you interpret the background check information will make or break you.

The background checks I get cost ~$40, which include everything I need to make the decision to accept or reject a tenant. They include a full FICO credit report, county level criminal check, Transunion Rent Bureau check, employer verification and income verification.

I charge my incoming tenants $40 to apply. If they bring in the application with $1,000 to hold the unit, I may waive the application fee; but if they fail the check, I send the money back less the application fee.

If they pass, the money is applied to the incoming funds that are due. If they do not rent it is my money.

The ‘holding fee’ (not deposit) locks up a tenant until you have the background check complete.

Contacting Prior Landlords

Contacting past landlords is an art in itself. What you do with the information is also variable. Some landlords, especially current landlords, will give a glowing reference to their tenants so that the tenants can get accepted at a new place.

Related: 3 Simple Landlord Mistakes Costing You Big Money

Even past landlords do not want to say anything bad for fear of being sued.

Generally, if you are not asking the correct questions, you will not get the information that may be pertinent to your decision. I have had private landlords ask me about rent payments, but not about damages.

They ask about police calls, but not about extra tenants moving in. They ask about how long the tenants were living there, but not why the tenants are leaving.

Below are some typical questions to ask a previous landlord.Remember, you need a signed release to get information from most of the larger complexes.

  • How long did the tenants live there? (less than 2 years is a red flag)
  • How much was the rent? (If it was less than what you are charging, it is a red flag. Can they afford it on their same wages?)
  • Did you refund the entire deposit? (anything less than a 100% refund is a red flag)
  • Were there any pest issues? (anything other than No, is a red flag)
  • How many times did the tenant pay late? (anything other than ‘never’, is a red flag)
  • Were there any damages? (anything other than ‘No, is a red flag, although the deposit refunded will give you another clue)
  • Would you re-rent? (Anything other than ‘YES’, is a red flag. A ‘free to re-apply’ is a red flag)
  • How many occupants lived in the unit?  (if there is more than what applied for your place, it is a reg flag)
  • And, as a Hail Mary, “Tell me what kind of tenants they were”. (Small landlords will spill their guts, many complexes want specific questions.)

Despite all of the questions, I generally discount what both the current and previous landlords say. For any tenant that I would consider moving in, I expect all of the past landlords to say the payment rating is prompt, and that they would rent to the tenant again.

I do the past landlord checks because I have seen some comments that are a definite help. When a landlord says they would rather stick a knife in their own eye than rent to that tenant, it means something.

It is always suspect to call the past landlord listed on the application unless you can verify that they are the property owner or manager of that address, and the address shows up on the tenant’s credit report.

Always Verify No Matter What

Use the county records to verify the property owners. Calling the number on the application may be your only hope, but it is suspect information at best.

Good tenants put the correct information down, but you do not even need to verify good tenants. You need to verify the tenants that are trying to fool you.

You can also do some ‘tricks’, such as stopping by the tenants old address to drop off an application, if you have time. I do not have time, so I do not do it. But in my early days, I have.

When you have tenants from out of state moving in it is near impossible. Use the tools at hand and are readily available: credit score, income, rental history, criminal background and employment. Make your life easier, not more difficult; get a great tenant from the start.

I generally only rent to class A and B tenants. Solid credit score, solid income people. I re-positioned my property from a D to a B property, and for a while it was difficult to get solid tenants to rent there.

I had to upgrade my apartments, and give some rent concessions to attract quality tenants. It was also a gradual improvement, as quality neighbors are a prerequisite for quality tenants.

Conclusion

Once you get solid tenants their friends want to live there too. When they leave, they still recommend you to their friends. When someone they know needs an apartment, that person gives you a call.

Make your life easier. Match the tenant quality to your rental and get the best renters you can find. Know how to market to them and how to recognize them on paper, before you ever meet them.

What do you use as criteria to validate a prospective renter?

What horror stories have you had and what could you have done to prevent them?

Share your comments below!

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{ 51 comments… read them below or add one }

Jason May 19, 2014 at 6:58 am

I don’t think I caught the name of the service you use. It sounds pretty solid, and that would be what I’m going for myself!

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Eric May 19, 2014 at 8:14 am

It is always best to use a service. You get consistent results, and they are the experts. There is no way you can make the calls as fast, or as accurate, unless you are an investiagior yourself.

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Jason May 19, 2014 at 8:16 am

Does that mean I should be searching online because you can’t really mention it by name?

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Eric May 19, 2014 at 8:22 am

I use a company called MccGRP. I am not sure if I can post a link, but you can google it. There are others that do great too. I have also used Rental Research and Trak-1, I have heard good things about RHR, but never used them.

James May 19, 2014 at 7:08 am

Eric, another great post.

From your article:

“Even past landlords do not want to say anything bad for fear of being sued.”

If I am asked the question, for example, “Would you rent to this person again?” I wait a few seconds and when the other person says, “Hello, are you still there?” I say, “Yes, I was just thinking about your question.” This method applies to any question asked. That way you never say anything bad that could come back to bite you. Most screeners quickly say, “Oh, okay, no problem. I get it.” Meaning your hesitation explains everything. As much as the temptation may be there to spill your guts, do not take the bait. Take the high road instead.

You never know, a past tenant could have a friend call just to see what you will say.

If I am doing the screening, I always open with “Hello, my name is ….. Can you tell me how long you rented to…” If the questions are not simple yes/no, then a friend coached to give responses will have a harder time telling the truth. Ask the past landlord for the address where the tenant lived. If he/she cannot rattle it off right away….well, you have your answer.

Spotting liars in the rental property game is a key skill and one that must be developed. Having teenagers is good training for this kind of thing :-)

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Eric May 19, 2014 at 8:19 am

Past landlord checks are totally different than past employer checks. As far as I am aware, you cannot get sued for speaking the truth. I always tell it like it is.

Even if you were to get sued, it would take District Court, not small claims court, and the proof and legal expense to prove damages would be huge. And damages are just having a hard time finding a place. And no attorney would do all that for a renter, that by most definitions does not have a lot of money.

Having said that, many landlords just say the tenant is “Free to re-apply”. That indicates a red flag. If the tenant was great, they say “Yes”.

Of course when I have a great tenant that is leaving, and I want them to stay, I am tempted to say things to keep them… (joke).

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Kimberly H. May 19, 2014 at 7:59 am

Hello Eric, thanks for the post. Who do you use that does all that for $40? Does that include applicants who have TheWorkNumber employers?

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Eric May 19, 2014 at 8:21 am

Thank you for the comment Kim!

I use a company called MccGRP. I am not sure if I can post a link, but you can google it. There are others that do great too. I have also used Rental Research and Trak-1, I have heard good things about RHR, but never used them.

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Kimberly H. May 19, 2014 at 9:42 am

Thank you so much! I will check them out; I haven’t been happy with the company I use.

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Sharon Tzib May 19, 2014 at 9:41 am

Giving a glowing recommendation just to get rid of a tenant – geesh, Eric, we landlords need to stick together, this is a brotherhood. I hope other landlords don’t do that – I wouldn’t be able to look myself in the eye.

Anyway, what did you mean by this when discussing the screening company: “To get that set up, it cost $100 for a one-time, on-site inspection, and it is worth every penny.” Are you saying the screening company charges an up-front $100 fee for them to start providing screening services for you, and then they charge a subsequent $40 per tenant after that? And what’s with the onsite inspection? Not sure I understand.

Also, do you charge $40/per adult that will be living on the premises? I would assume so. Thanks!

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Kimberly H. May 19, 2014 at 9:57 am

Sharon- What I have seen is that technically, the screening companies are not supposed to give you an actual detailed credit report without doing an onsite inspection to make sure you keep your files locked and your computer has a screensaver password. If you don’t have the onsite inspection done then they are only supposed to give your green,red, or yellow light summaries.

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Sharon Tzib May 19, 2014 at 9:59 am

Interesting, Kimberly. I’ve always had my PM’s handle tenant screening for me, so I wasn’t sure what that meant. Thanks!

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Eric May 19, 2014 at 11:52 am

What information do they give you? I know most PMs do not really care as long as the tenant pays their commission.

Who determines whether or not to accept the tenant? And what criteria do they use?

Sharon Tzib May 19, 2014 at 1:16 pm

I’ve been with my PM since 2007, Eric. I’m a long-distance landlord, so if I had a PM pulling that crap, they’d be fired real quick. Their screening process is very close to yours and I have no complaints. I will be moving back to the States soon (been in Belize the last four years) and handling my own rentals again (when I first started investing in 2000, I handled my own rental since it was only 3 miles from my house), so I was curious why a screening company would need to do a site visit. Now I get it – good to know. Thanks!

Eric May 19, 2014 at 11:51 am

Thank you again for the comment!

I am in business for myself. I am not part of any ‘cult’ among other landlords. If I can save $500+ by getting rid of a problem tenant without an eviction, that is OK by me. If another landlord is using a past landlord check, rather than run a decent credit and income check, that is their downfall, not mine. MANY other landlords do that; it’s part of the business. Get used to it.

I rarely rely on another landlord’s assessment of their tenants, unless it is real bad. I know what a great tenant is, and the other landlord may not.

The screening company charges $100 for an on-site visit. They asked about computer security, house security, etc. They want to make sure you are a legitimate business, not a scammer. So it cost $100 up front; then $40 for each adult. Each adult is a separate application.

I generally charge $40 for each adult, which is about what it costs me. Tenants from out of state cost me more, as I do more criminal checks for each state. Each state costs ~$15 more. I often tell prospective renters to bring in $1,000 as a holding fee, and I waive the background check money, if they pass.

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Sharon Tzib May 19, 2014 at 1:30 pm

I’m sorry, Eric, but I don’t think lying, under any circumstance, is acceptable. It’s your business, however, so run it the way you choose. I was just surprised someone would admit that in writing on a website that promotes investor camaraderie.

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James May 19, 2014 at 2:11 pm

I agree with Sharon 100%. Lying is never good. Landlords, most of the time, get a bad rap for not being very ethical. I was lied to by a landlord which is why I do not hold a lot of value in what they have to say about their tenants. Unfortunately, my own opinion of landlords is very low because of this kind of behavior. I think we should hold ourselves to a higher set of standards. I try to run my business on the straight and narrow. You can’t ever go wrong taking the high road, but that’s just me.

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Eric May 19, 2014 at 3:25 pm

I am going to have to defend myself here just a bit…

Most of the time, a bad renter coming is the landlord’s fault, it is not the tenants fault. They took in someone who had a history of not paying, as evidenced by the credit score. Or they took in someone with less than 3.5X the rent in income, indicating they would struggle to pay rent, or would not have an adequate emergency fund if something goes wrong. Do the tenants get penalized their entire life?

So, if things are not working out, it’s time for the tenants to go. Evicting them or giving them a bad reference because of your own ineptitude is unfair to them. If they do not go, that is a different story.

So, why not let them go, find a decent place that they can afford, and everyone part ways amicably. Giving them a bad reference, because you did not screen property in the first place, doesn’t help you, or anyone else.

I have had tenants lose their job, and tell me they had to move, breaking the lease. If I give them a bad reference, who does that help? Tenants whose kids get beat up at the bus stop and want to move, am I doing them any favors by making them stay? What about a tenant that wants a divorce, and has to move out? Life sometimes falls apart on the best tenants, and you need to be able to adjust, look for a solution that benefits everyone, and move on.

Landlords need to look at the information available and make up their own mind, just like a bank. That is why I use credit score and income mostly. When the banks loaned money for homes people could not afford, it was the greedy bankers at fault. When a landlord ‘loans’ a home to a tenant that cannot afford it, it is somehow the tenants fault?

Now, if they had a meth lab, or were obnoxious to the nth degree, that’s different.

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Sharon Tzib May 19, 2014 at 4:05 pm

I’m not sure how placing fault with one party or another justifies lying. And we’re not talking about good tenant’s who are leaving based on understandable and extenuating circumstances. You clearly said:

“They want to get rid of tenants, without the expense of an eviction. I am guilty of doing that myself. I have even provided a written letter indicating that the tenants were paid in full, and were great tenants, when in reality I wanted them out as soon as possible.”

Obviously you wanted them out as soon as possible because they weren’t good tenants, so lying just to get rid of them, as I’ve said, is really unethical. You can try to spin it any way you want, but what you are doing is pretty obvious. You’d be better off not saying anything at all than writing a glowing review for tenants that were anything but.

James May 19, 2014 at 4:38 pm

Eric, I enjoy your articles and I appreciate your honesty about how you run your business. You are providing advice and in doing so, a person has to be honest and upfront, which you were. I don’t, however, agree with you on this subject.

How about this for a response.

Potential Landlord: Did “x” pay their rent on time, every time?

You: No, unfortunately they have not. I did not do a proper job of screening them and allowed them to move in at rent rate that they could not afford. When I was asked to lower the rent to an amount that they could afford, I chose to evict them instead. Now, depending on how much rent you are charging, they may be good tenants. I, otherwise, never had any other problems with them.

That (to me) is this correct response to such a scenario. I rented to them and now if I must evict them to get them out, those expenses are on me and I learn from the experience. This is what my parents taught me to do and it has served me well in all of my interactions professionally and personally. Always take the high road AND be responsible for your own actions and mistakes. But that’s just me. My 2 cents.

Eric May 19, 2014 at 4:42 pm

As long as you know there are landlords out there who want to get rid of tenants, you will be fine.

Use the reference to validate what credit score and income are already telling you, do not use it as a sole indicator.

Deanna May 22, 2014 at 8:02 pm

Leases aren’t sacred — they are just an agreement between two parties, and fully changeable as long as all sides agree (in writing, of course)

Eric May 22, 2014 at 8:35 pm

Very true, but a Judge will more likely hold a landlord to the letter of the lease, than they will a tenant.

It’s all about getting great tenants to begin with, and the lease becomes just another document that no one needs to refer back to.

Eric May 19, 2014 at 4:22 pm

I did want the tenants out. They moved out in Feb 2012 and as far as I know, have stayed there since. So, now they are a different landlords great tenants.

But the original point of the post is to use other forms of verification, not rely on past landlords. If you do rely on past landlords, know that the information could be suspect. Some landlords use rental history as a main indicator, because it is free.

Tenants that do not pay, need to move on. If I ever have tenants that cannot pay, I will move them out in the most expedient manner possible. That lets them start a new life, somewhere else.

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James May 19, 2014 at 5:30 pm

Eric, with all due respect, the title of the article was:

“Fail-Proof Your Tenant Screening With Prior Landlord Checks”

That sounds pretty significant and important and as a “pillar” one that should not be overlooked. However, based on the information that you have provided and by condoning lying to other landlords, I think that this article was (almost) a complete fail.

After I was lied to by another landlord, I quit wasting my time calling them. Most landlords are self-serving. I don’t go to any of the landlord association meetings in my area either.

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Eric May 19, 2014 at 6:27 pm

Actually, I did not create the title, and titles are meant to get SEO traffic…

Past landlord checks can be valuable, if done right. You are looking for confirmation of the other information, not making decisions based on it. If a landlord has a very bad reference, that might be enough information in and of itself.

Some landlords do not even do a credit check. All information is important, but knowing how to use it is even more important.

The next post will be in Criminal backgrounds… Be sure to look for it.

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Jon Kepler May 19, 2014 at 6:20 pm

Eric, I was surprised to read that you accept PayPal. Working with PayPal is usually problem free until the day you encounter… a massive problem! They are notorious for locking up business owners’ funds, often for 180 days. There is almost never any warning. Their customer service is marginally good, but they are never negotiable when they decide to hold your funds.

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Eric May 19, 2014 at 8:08 pm

I had a renter who had an issue, but I never have had one. If there is a PayPal issue, I would still expect the rent on-time.

I have one renter that uses it now. In the past I have taken holding fees, etc. it’s easy to scan email an application, but he money thing is more difficult. That’s where PayPal comes in. There are a lot of other similar options too.

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Dave May 20, 2014 at 9:33 am

Great article Eric. I’ve really enjoyed reading your articles.

I think the people who are taking shots at you because you have occasionally lied are ridiculous. I’m NOT recommending anyone lie, and I am honest and upfront about 99%. But, if tenants can lie to us, and treat us horribly just to get into our places, then we have a right, on occasion, to lie to get them out.

Like you said, now that you have figured the game out and know all the steps to finding great tenants, you won’t need to lie anymore. But, it took you many years to learn your formula, and by sharing and being brutally honest here, you are helping us all

Good Work!

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Sharon Tzib May 20, 2014 at 9:44 am

The problem is he’s not hurting the tenants with his lies but the landlords, so your reasoning falls on its face (along with the 2nd grade mentality of two wrongs do not make a right). I’ve been called worse than ridiculous, however, so not too bothered by your opinion of advocating dishonesty via name calling.

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Eric May 20, 2014 at 10:22 am

Once again, the purpose of the article was to let new landlords know about the hazards of relying on another landlord’s assessment of a tenant. You would not rely on the tenant’s word either, so why would you do it for a landlord you have no connection to. It’s part of the business risk you take when you own rental properties. No matter what I do, or do not do, the risk is there.

You must verify, confirm, and corroborate the information that you have that is readily available, then make a decision. By focusing on a landlord’s opinion on whether or not a tenant was good, you miss the other information that is less manipulated. Once you get a number of rentals, and have to get multiple tenants per year, it will make more sense.

For landlords that only have a few single family units, in which tenants live in for years at a time, it may not make much of a difference. You can get lucky and hit the 70% of great tenants out there.

If you own multifamily units, like I do, and the entire population of your buildings may be affected by a single bad tenant, you already understand that a tenant or landlord’s word is always suspect.

Use the tools that are objective, and unable to be manipulated, set your criteria, and you will have great success in tenant screening.

Please look to my next article which will be about criminal records and tenants.

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Sara Cunningham May 20, 2014 at 10:10 am

If nothing else I guess I know that I need to stay on my management company more. They do screen and they do send 5 day notices out and I always get the rent, but I would love to get it on time every month.

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Eric May 20, 2014 at 10:24 am

Exactly. I got rid of two weak links this year, and my rents are in-hand early. I never get late fees anymore, but that’s OK. Use text messageing to remind tenants. Some just get lazy.

I may do a post on the hazards of property managers later.

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Kimberly H. May 20, 2014 at 10:35 am

Would love to read a post on the hazards of Property Managers!

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Dave May 20, 2014 at 10:22 am

The problem is that you are missing the whole point. People Lie. Tenants Lie. Landlords Lie. Politicians Lie. This is a fact of life.

Do you think that you will ever get all the landlords in the world NOT to lie about past tenants? Of course not. That would be silly. Even a 2nd grader can figure that out.

Thus, he is just sharing what actually happens in the real world. He admitted that he has lied. He isn’t proud of it…..he isn’t saying he will do it again, but it happened…..and it will continue to happen even when that 2nd grader graduates from college.

So, as a smart landlord, you have to be prepared for other landlords to lie. I’m pretty amazed you don’t see the true point of the article.

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Eric May 20, 2014 at 10:26 am

Exactly! If we could be assured that tenants do not lie, we would not even need a background check at all.

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Kimberly H. May 20, 2014 at 10:44 am

Several years ago when my husband was a newbie accidental landlord, we had an applicant that my husband wanted to approve because our place had been empty for 2 months, and I didn’t because the applicant’s application put up red flags to me. Applicant said he was moving because the owner was selling. I encouraged my husband to call the current landlord. The current landlord of that applicant spent 45 minutes on the phone with my husband, in a round-a-bout way saying that he thought the applicant was a drug dealer and all about the problems he was causing, he was just telling the tenant he was selling to get him out without pissing him off, and basically coached my husband how to screen tenants. Thank God for that guy’s honesty! All he wanted in return was that we don’t let the applicant know what he said which we were able to do. I do have to say I appreciate Eric’s honesty. I have not been in the situation where I need to get someone out, and honestly don’t know how I will handle it. I guess I will just hope the new landlords don’t call me.

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Eric May 20, 2014 at 11:24 am

Thank you for the comment!

Another reason why not to trust the previous landlord’s advice, is each landlord has different tolerance levels. Each property has a different risk level. One person’s ideal tenant might be another person’s nightmare. The ideal tenant for a small apartment might not be the ideal tenant for a fancy place on the lake.

If I owned property in a neighborhood that was plagued by drugs, I may tolerate a ‘nice’ drug dealer. If my rent was $1200, and the tenant was moving to a $900 per month rental, slow rent payments might not be as much of an issue. If my ‘nightmare’ tenant calls 3x a week to complain about things that needed to be fixed, and your place is all fixed up, they might not be a ‘nightmare’ there. (For the record, my places are fixed up). A good SFH tenant, might be a nightmare multifaily HOA tenant.

A landlord has to make a business decision. Do they help the tenant get out of their place, or potentially pay $1,000+ to evict a tenant because they gave a bad reference and the tenant could not move anywhere else? Just because the tenant was bad for them, doesn’t mean the tenant is bad for everyone, forever.

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Brandon Turner May 20, 2014 at 11:30 am

Hey Eric,

I appreciate your point that landlords, even good ones, lie to get a tenant out. I’ve had it happen to me many times, “oh yes, they are wonderful” and I find out upon more digging that there are major problems. That said, I’m with Sharon on this one – even if it causes loss on my part, I still wouldn’t lie to another landlord just to get my tenant out. Call it karma or luck or judgement or whatever, but I think if you make that a normal practice you will have problems for your whole career.

Now, I know you aren’t advocating everyone lie about their tenants, and I know you are just being honest about your experience, but as a BP rep, I have to say I don’t recommend it.

I am doing an eviction right now, and it’s going to be a mess (professional tenant who knows the law and how to work it) and if another landlord called me I would want to say “yes, she is great” but I couldn’t, in good conscience, do it, even if it would save me thousands of dollars in legal costs. Yes, it’s a business, but I if we abandon the things that sets us apart from unethical tenants, we are no better than them – just richer. Not a good trade in my opinion.

Thoughts?

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James May 20, 2014 at 12:12 pm

I’ve been a landlord of multiple units for 15+ years (it’s not my primary job though. I work a regular job also). Not once have I had to evict a tenant!

There are ethical ways of dealing with issues that come up. I personally speak to my tenants and explain to them that an eviction on their record will be a huge black mark, so how can we work together to avoid that and get them somewhere else. This DOES NOT include lying to other landlords to get rid of them! These were situations early on in my rental business and I learned from those situations while maintaining my integrity and good name in the community.

Don’t let greed get in the way of doing your due diligence when it comes to screening your tenants in the first place. Evictions = landlord incompetence. My tenants tell me that the PM for the landlord across the street will stop them and try to get them to move to their units for cheaper rents (which will be jacked-up once they move in). My tenants know better.

When I see the landlord across the street paying to have his units sheetrocked again and again, I chuckle. He will charge the same rent as me and rent to drug dealers, because these people can’t pass the screening process anywhere else, thus they must pay a high rent for a crappy slum. I heard that the landlord even takes a cut of the drug deals. Then when a drug deal goes bad, the tenant brings in his ‘thugs’ to bust up the place. It’s a vicious circle for him. He has stopped me and asked me how come I never have the same problems when I am right across the street. The local landlord association is filled with slumlords complaining about their horrible tenants as they trade stories on how to circumvent laws, lie to people, hire lawyers to get even with people etc.. All of that turmoil because they are not ethical people and the kicker is, they just don’t get it and never will. Scumbag landlords attract scumbag tenants. You reap what you sow!

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Eric May 20, 2014 at 12:38 pm

Evictions = landlord incompetence => I agree.

What do you tell the prospective landlord(s) of tenants that you were/are going to evict if they do not move? If you do not want the tenants, why would anyone else want the tenants?

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James May 20, 2014 at 1:38 pm

Eric,

From your post below:

“I think an eviction is a failure to be able to resolve an issue between the tenant and landlord. It is necessary sometimes, but should be rare”.

I completely agree with you! I picked the tenants, so I have to be responsible for my choice and why I made that choice, or I hired a PM to be responsible for that decision with the same sense of responsibility.

Things happen in people’s lives. We are all human. I am doing well, but some people are really struggling. Paying it forward should be the rule not the exception, so I let them know my human side (without being a pushover) and tell them that we can work together to put a plan in place (one involving not more than a month) for them to find a new place.

This has not come up in a long time, not since 2007 when a tenant lost her job and I initially rented with my heart and not my head at the time. Tenants expect the relationship between landlord and tenant to be adversarial, because that is what they have experienced in the past and we both know that tenants have their share of “Landlords from Hell” stories to share. I try not to be one of those landlords, by having regular communication with my tenants. I tried a PM and found that I paid someone and had more issues. Now I manage even more units by myself with no PM and a lot fewer issues. Direct communication with tenants has aided my success. For any long-distance landlords, direct communication is still possible. I managed my rental business (with a little help from a friend) while I was on a work assignment out of the country for 3.5 years. Again, direct communication with tenants is the key to success, in my opinion and with today’s technology it is even more manageable.

To answer your question, I have never had a tenant that I needed to evict. If I have asked them to leave and they replied, “Well, I like it here and I’m not going anywhere.” I meet with them to discuss the options of moving AND the consequences if they don’t. The last time that I had to do that was in 2007 and that young lady moved back to CA to live with her folks. If it’s a potential landlord, for that person, that I am speaking to, I tell the landlord the truth like I stated in one of my previous posts. Maybe I just wasn’t the landlord for them and their next landlord will be a better fit. If a bad tenant has given notice and is leaving and I get a call from a landlord, I don’t and won’t say anything bad about anyone. But I also don’t say that they were a slice of heaven as a tenant. I say nothing. Again, maybe I just wasn’t the landlord for them and their next landlord will be a better fit. I don’t want to take away an opportunity for them to be happier somewhere else. Have I been burnt by some tenants, sure, but I took it as a learning experience to make me a better landlord. That is why you don’t find me at the landlord association meetings that I spoke of in an early post!

Eric May 20, 2014 at 2:35 pm

My next post on Criminal Reports with be fun as well!

Eric May 20, 2014 at 12:32 pm

Thank you for the comment Brandon!

Once you are in an eviction, it’s too late to say anything good about the tenant. It’s all public record, and any landlord can see the eviction. The legal process will take care of itself. You have the tenant on the ropes, and they will be gone in time.

When I see an eviction, and I have had a few of my own, I always think why the tenant could not have just moved out prior to the eviction. That would have saved a lot of pain for everyone. I think an eviction is a failure to be able to resolve an issue between the tenant and landlord. It is necessary sometimes, but should be rare.

My current tenant crop is excellent. But my previous tenant crop(s) I had to cull several tenants that did not behave like I wanted. So I moved them out at the end of the lease. Some were moved out after a couple of years of living in my apartments. As I upgraded my tenant base, these tenants no longer were of the caliber that I wanted. Some landlords take the coward’s way out, by just raising the rent, so the tenant moves out on their own. Or they tell the tenant that they are selling, or moving in themselves.

With bad tenants, it is not always the tenant’s fault, often it is the landlord’s expectations. The landlord took in a tenant that was a high-risk, and it went bad. Either the income or credit score indicated that there would be an issue, and the landlord had a vacancy. Either way, this tenant might be able to good somewhere else.

It is OK to negotiate a move out plan, offer decent words about the tenant to a new landlord, and give the tenant a fresh start in a new place. It doesn’t do anyone any good, to crush a tenant that actually wants to move out and is attempting to. It saves an eviction, and the expenses that go with it, and prevents an adverse relationship that happens with an eviction.

So looking back at your tenant, how would you avoid a tenant like this in the future?

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Jason May 20, 2014 at 12:00 pm

Ya’ll are crowding up my inbox with this tired issue!

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russ May 20, 2014 at 8:24 pm

Eric,
It will be a great help if you can you post the below:

1. The Application form that you use?
2. The tenant/Pet Lease Form that you use?

I am hard time what to put in the Application and Lease forms so that it includes the main things w/o too verbose.
Also, how much do you deduct or for what repairs after a tenant leaves from the deposit?

Thanks in advance.

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Eric May 20, 2014 at 9:01 pm

I cannot post any links, but if you go to my blog, I have some free landlord forms. Most of the information you are asking for would be there.

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Kay Khan May 22, 2014 at 9:00 am

Eric,
It seems like you strike a cord every time with your posts because I have not seen so many comments on blogs like on yours’ and you have only a few. Thanks for another very informative post. Please expand it to how do you find the deals and how do you fund them.

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Eric May 22, 2014 at 10:03 am

Thanks for the comment!

I try to explain how to be a lazy landlord. That is, getting great tenants, so I can make money without too much work. I would rather spend my time depositing all of my rents on the first of the month, than spend time chasing tenants. I am not in the business of providing free housing.

If you have looked at my profile on my own blog, I have a full-time job, own 24 rentals which I do my own maintenance and apartment turns. I market and fill them myself.

I am also president of an HOA, and a Property manager of the self-managed HOA complex. I have my small lawn mowing and snowplow company. I also manage another unit for another investor.

So I stay busy. But being a lazy landlord doesn’t mean skipping on maintenance or basic landlording. It’s just that I spend the time doing the things that are needed to get and keep great tenants, not doing things to correct self-induced pain caused by bad tenants.

I have post about about finding investment property on my own blog, but perhaps I will put up a post here in the future.

Please be sure to read my next post, about screening for criminal backgrounds coming in the next few days.

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Deanna May 22, 2014 at 9:19 pm

I’m all for “lazy” with good long-term tenants –
The “extra” $ not spending on dealing with bad tenants stays in the rental account, so the odd plumbing or appliance repair is pretty painless, & I get to do the long-term maintenance items before there is a problem. There’s even money for a few nice little upgrades here & there (new range hood even though the ugly old one still worked, new shower plumbing rather than fixing the 25 year old set, & a porch light with some style replacing the cheapest-possible jam jar).

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Eric May 22, 2014 at 9:30 pm

Exactly. And when you have a nice place, tenants want to stay. And it is enjoyable when you do have to meet with them, or talk to them.

There is no substitute for a great tenant, it’s just finding them that makes the difference. And recognizing them. Far too many tenant horror stories begin with a greedy landlord.

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