The Importance of Property Screening and Management

Boise, Idaho
General Landlording & Rental Properties
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The Importance of Property Screening and Management

Corby GoadeBusiness Member
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes

So many of us, especially newer investors, agonize over the underwriting of a deal, and rightly so. However, often very little thought is given to the screening and management process and that is evidenced here in the majority of the posts. 

I'd go as far to say that screening and management may have MORE to do with the performance and success of an asset than the underwriting. Time is forgiving when we make some errors in underwriting, much more forgiving than a tenant who destroys your property and does not pay rent for six months while you are trying to figure out how to get them out. 

Curious what newbies and some of us older investors think about the topic. 

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Quote from @Corby Goade:

Real estate is a forgiving asset. Most investors don't buy the best deals, but they hold onto them long enough that the market erases their mistakes.

Bad tenants, on the other hand, can completely erase the benefit of even a good investment.

Both are important, but proper screening and management of tenants is more important than underwriting.

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  • Patti RobertsonBusiness Member
    Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
    3y

    Having uninterrupted rent payments definitely impacts a portfolio performance, but making a wrong buy can't be fixed by good management. 

    757-472-2547
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  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    3y

    I don't think it is either or. In order to be successful you need to do the best job you can at buying right and screening diligently. You can be torpedoed by a 500k property that only produces 2-3k rent, a HUD lawsuit, a semi screened tenant who does not pay rent and the property is in LA, NY or San Francisco, or a hundred other cities and communities that think landlords are money sucking pigs!

    Yes, you can use a PM which in most cases will help a lot, but if you did not underwrite properly you may think you can't afford that.

    Hey but if REI was easy everybody would be doing it!

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  • Kevin Liu
    Property Manager · Nationwide · Member since 2022 · 67 posts · 21 votes
    3y

    The application and screening process is critical for ensuring a smoother rental process down the road! Treating it almost as an interview process, I think reaching out to old landlords and work mangers is just as important as a good credit score. Getting that personal sense of what kind of tenant you are about to sign is much better qualitative feedback. 

    Of course life happens and not everyone that "passes" the screening turns out to be a perfect tenant, but as the landlord the risk prevention starts at square one.

    1Reply
  • Corby GoadeBusiness Member
    OP
    Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
    3y
    Quote from @Bjorn Ahlblad:

    I don't think it is either or. In order to be successful you need to do the best job you can at buying right and screening diligently. You can be torpedoed by a 500k property that only produces 2-3k rent, a HUD lawsuit, a semi screened tenant who does not pay rent and the property is in LA, NY or San Francisco, or a hundred other cities and communities that think landlords are money sucking pigs!

    Yes, you can use a PM which in most cases will help a lot, but if you did not underwrite properly you may think you can't afford that.

    Hey but if REI was easy everybody would be doing it!

    All good points! 

    For clarification, I wasn't suggesting that an owner HAS to hire a PM company in order to manage a property professionally- its possible to do it on your own, but not many people do. 
    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Corby Goade:

    Real estate is a forgiving asset. Most investors don't buy the best deals, but they hold onto them long enough that the market erases their mistakes.

    Bad tenants, on the other hand, can completely erase the benefit of even a good investment.

    Both are important, but proper screening and management of tenants is more important than underwriting.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    2Reply
  • Jeff CopelandBusiness Member
    Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
    3y

    Both are obviously important, but I often tell my clients, "Great property management can turn a mediocre deal into a home run, while bad property management can turn a home run deal into a nightmare!".

    Similarly, Engelo Rumora (can't find him, not sure if he's still active on BP) made a great statement here on Bigger Pockets back in 2018 (so much so that I printed it, framed it, and hung it on my wall:

    "The stats and the demographics are not going to make you money. It's the people. It's the team on the ground who you are going to trust with your hard-earned money...You want to work with someone who is going to have your best interest at heart for 5, ten, or fifteen years".

    In my experience, the investors who are most successful are those who establish long term, mutually rewarding partnerships with their team (broker/agent and PM in particular), rather than transactional relationships. 

    This bleeds over into the PM understanding the investor's goals and objectives for the property, and thus screening tenants, maintaining the property, minimizing expenses and vacancy, and maximizing rent collections accordingly. 

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  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    3y
    Quote from @Jeff Copeland:

    Both are obviously important, but I often tell my clients, "Great property management can turn a mediocre deal into a home run, while bad property management can turn a home run deal into a nightmare!".

    Similarly, Engelo Rumora (can't find him, not sure if he's still active on BP) made a great statement here on Bigger Pockets back in 2018 (so much so that I printed it, framed it, and hung it on my wall:

    "The stats and the demographics are not going to make you money. It's the people. It's the team on the ground who you are going to trust with your hard-earned money...You want to work with someone who is going to have your best interest at heart for 5, ten, or fifteen years".

    In my experience, the investors who are most successful are those who establish long term, mutually rewarding partnerships with their team (broker/agent and PM in particular), rather than transactional relationships. 

    This bleeds over into the PM understanding the investor's goals and objectives for the property, and thus screening tenants, maintaining the property, minimizing expenses and vacancy, and maximizing rent collections accordingly. 


    Thanks for the mention mate and agreed 100%

    I'm still here and stalking everything like a hawk from behind the scenes haha

    Opted for the "quite life" as if I contribute more, I feel like I'll get back into the "keyboard cowboy" bantering hehe

    It's always about the people/team.

    I know of folks making millions in ghetto's

    And it's not because of the stats/demographics/growth prospects, etc...

    It's because they have a property manager that's a hustler and bangs on doors to collect rent and doesn't steal the rent lol

    Just my opinion 🙏

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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    3y

    @Corby Goade dude, we wrote blog post series here on BP because it's so important!

    The challenge is getting newbies to invest the time in reading & understanding them.

    Since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:

    https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

    You might want to read our series about “How to Screen Applicants like a Pro”:

    https://www.biggerpockets.com/member-blogs/3094/93296-how-to-screen-applicants-like-a-pro-part-1-verifying-credit-reports

    [email protected]248-209-6824
    Logical Property Management4.9451 Reviews
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