Tenant Screening

9 Replies

I'm looking to create passive cashflow in the near future instead of only acquiring quick cash in rei. So, I want to rehab and rent out. What are some things to screen my potential tenants for so that I will be protected and have dependable tenants? Any help/suggestions?

You may want to check out "landlording on autopilot" by Mike Butler. He has some pretty good suggestions on how to make the landlording process easier.

Your strategy sounds similar to mine, a couple other good books that were refered to me here in these forums are "Weekend Millionaire" by Mike Sumey (sp) and "Building Wealth one house at a time" by John Schaub.

Bleroux,

Start your screening by looking at their driver's license. Make sure they are who they claim to be. If they don't have a driver's license, they're usually a drunk who has had their license taken away by the state. Have them fill out your application. Start with a criminal background check. You'll be amazed at how many applicants you reject for their criminal history. At the same time, you'll discover whether they've been evicted in the past. NEVER ACCEPT A TENANT WHO HAS BEEN EVICTED (in the past 5 years), or a tenant who's spouse or shackup friend has been evicted.

I had a couple apply just last night. When the man handed me the application, I noticed that the woman's name was nowhere to be found. I told them that her name needed to be on the application. He said that she won't be living there!!!! YEAH RIGHT! They've got a new baby and the mother won't be living there. I must look more stupid than I really am. I insisted that she put her info on the sheet and I checked her state ID card (no driver's license - RED FLAG). I started my criminal background check with her and immediately found that she had been evicted 3 times recently, including on 8-31-07. That was enough for me. I'm not renting to these deadbeat losers!!!

Anyway, after the criminal background check, do a credit check and check their employment, rental history, and references. I could go on and on, but you get the idea.

Good Luck,

Mike

Originally posted by "MikeOH":
Bleroux,

Start your screening by looking at their driver's license. Make sure they are who they claim to be. If they don't have a driver's license, they're usually a drunk who has had their license taken away by the state. Have them fill out your application. Start with a criminal background check. You'll be amazed at how many applicants you reject for their criminal history. At the same time, you'll discover whether they've been evicted in the past. NEVER ACCEPT A TENANT WHO HAS BEEN EVICTED (in the past 5 years), or a tenant who's spouse or shackup friend has been evicted.

I had a couple apply just last night. When the man handed me the application, I noticed that the woman's name was nowhere to be found. I told them that her name needed to be on the application. He said that she won't be living there!!!! YEAH RIGHT! They've got a new baby and the mother won't be living there. I must look more stupid than I really am. I insisted that she put her info on the sheet and I checked her state ID card (no driver's license - RED FLAG). I started my criminal background check with her and immediately found that she had been evicted 3 times recently, including on 8-31-07. That was enough for me. I'm not renting to these deadbeat losers!!!

Anyway, after the criminal background check, do a credit check and check their employment, rental history, and references. I could go on and on, but you get the idea.

Good Luck,

Mike

Mike...so the past evictions show up on the criminal background check? Sorry for the stupd question. I just didn't think that it would show up there. Also, does it only show up if a past landlord sues the tenant? Or does it show up because the sherrif is taking action?

Also, how do you notify the applicant that they have not been accepted? I know I need to learn the law where I'm at, but for you...do you have to send something in writing or can you do it over the phone?

Thank you in advance. -
Rich

Hi Rich,

Yes, the evictions show up when you check the municipal court records (at least here in Ohio). This is the same court where people are charged with misdemeanors. It doesn't have anything to do with suing the tenant for money, although that is attached to the eviction proceedings as a second cause of action.

I tell all the applicants to call me in the evening and I simply tell them whether they are acceptable or not. If they are not acceptable, I'll just tell them why. For example, I'll say "we don't take felons" or "we don't take people who have been evicted in the past 5 years". I do keep their application on file with the reason they were turned down, just in case anyone ever claims discrimination. If you turn someone down because of their credit score, you're supposed to give them written notice to comply with the FCRA.

Mike

Originally posted by "MikeOH":
Hi Rich,

Yes, the evictions show up when you check the municipal court records (at least here in Ohio). This is the same court where people are charged with misdemeanors. It doesn't have anything to do with suing the tenant for money, although that is attached to the eviction proceedings as a second cause of action.

I tell all the applicants to call me in the evening and I simply tell them whether they are acceptable or not. If they are not acceptable, I'll just tell them why. For example, I'll say "we don't take felons" or "we don't take people who have been evicted in the past 5 years". I do keep their application on file with the reason they were turned down, just in case anyone ever claims discrimination. If you turn someone down because of their credit score, you're supposed to give them written notice to comply with the FCRA.

Mike

Whats the best way to do the tenant screening? Do you use a website or a local service?

I would also like to know what is the best source of getting criminal background and credit checks in the most economical way. Any specific websites that you use or do you visit the court house?

Jay in NC

Check the BiggerPockets FAQ for more...

http://www.biggerpockets.com/investing-guide/

Here in Ohio courts have public access on the internet for cases. You also need to check for other names. I had someone fill out an app and he put down his name as D**** his liscence had L**** as the name and I ran that also. 10 years of rubber checks and he was on probation and had warrents because he was not making restitution. No thanks! By the way always check the drivers liscence.

Best to have people fill in the application on the spot. No need to run home, cook up false info and then submit the form.

I publish the house rules. Simple things that remind the tenants what they can expect. No rent check, notice to vacate filed. You need to know your local laws to understand what you legally need to do. In some states you can not process the second application until you have made a decision on the first one if you are charging people. The idea being that you should not be wasting their money if you have already accepted someone earlier. TO avoid discrimination charges process in order based on time the application was submitted (completed application).

John Corey

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