So You Want to be a Landlord? Really?

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Several days ago I read a great post by Michigan landlord, Dennis Fassett, in the BiggerPockets member’s blog section. It would have been hysterical if only it wasn’t so true. He discussed what he called The Boyfriend Disorder. He wrote about what happens when a prospective tenant shows up to view a property and has her boyfriend tagging along. In between the laughs, I cringed.

Having spent two decades as a real estate investor, half of that time as a landlord of properties in a blue-collar mining town, I thought about some of the trouble I’ve experienced along the way. Mind you, I had a plan and procedure to minimize bad tenants – it didn’t matter. Problem tenants seem to have an innate resourcefulness, if only they used it for good instead of evil.

What to Believe?

The first line of defense against bad renters is your tenant screening process. It starts with a rental application. The information on there is used to do a background and credit check, verify employment, previous rental history, and personal references. With all of that information, what could possibly go wrong? Believe it or not, everything.

A clean criminal background check could just mean that the prospective tenant hasn’t been caught doing anything illegal yet. Credit reports are rarely perfect and tenants usually have a good excuse for whatever is on there. Confirming employment seems straightforward enough, but what if your applicant has arranged with a buddy to lie about his job? Previous landlords may be reluctant to bash a past tenant but they will usually drop hints if you listen carefully. (If you do get a bad report you should immediately be reaching for the giant rubber stamp that says “REJECT.”) Personal references are just about useless; what applicant would put down someone who wouldn’t give a glowing report? All of the above has happened to me at some point.       

Trust Your Gut

I’m not suggesting that you don’t carefully evaluate rental applications, just understand that they aren’t enough. Every one of us has an internal screening device to send us warning signals – ignore them at your own peril. Call it intuition or gut instinct. The feeling in your stomach develops from past experience and you should listen to it. Have you ever been tempted to accept an application from a marginal prospect because a property has been vacant for too long and you absolutely need to get it rented? I have, trust me on this one – don’t do it. Ever get the feeling that the sweet looking couple is lying to you? They usually are, your gut probably picked up subtle signals that your conscious mind has missed. This is a time you should listen to that voice in your head.  

Anyone even remotely thinking about becoming a landlord should rent a copy of the movie Pacific Heights. If you still want to proceed after watching that then you may have what it takes. Don’t get me wrong, being a landlord has been very good for me. I’ve learned to handle the ups and downs and can avoid the pitfalls most of the time. If given the opportunity for a “do over” I absolutely would do it again. Now it’s time to meet with a young lady about a rental – I hope she brings her boyfriend!

 I sold my house this week. I got a pretty good price for it, but it made my landlord mad as hell.Gary Shandling  


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  1. Richard –

    Owning income producing property is definitely a strategy for long term wealth. I do believe however, that most people have no idea what they are getting themselves into when they buy that first property or two. It is an ongoing challenge to attract and keep good tenants. It’s a lot of hard work being a landlord until you get “big”. Having good systems will help you keep your sanity. Great article.

  2. Be careful. If you reject someone based on your gut they may sue you for discrimination.

    Just imagine you had a prospective tenant with a reasonably good application but your gut told you no. So you pass them over and accept the next tenant who also has a reasonably good application but just not quite as good. Perhaps their income is a tad lower. Now imagine that the first tenant is black and the second tenant is white. Race is a protected class and it is illegal to discriminate base on race. You can discriminate based on income or credit score but you accepted the tenant with the lower income.

    Now that said; how will the first prospective tenant find out. Who knows? Perhaps they work in the same office as the second tenants. Perhaps it is a sting operation. I have heard of those happening to a few landlords in the past.

  3. Yes, intuition is the best screening filter – more important than any documentation you may ask your prospective tenants to fill out. If your property is in high demand, you can always ask for referrals or references on top of the usual stuff which will usually put your mind at ease.

    Having clearly outlined documentation complying with rules and regulations regarding eviction and penalties is always good to highlight with those who you may be on the fence about. Either they’ll cringe or embrace this knowing they won’t be in violation.

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