What Story Did You Listen To and What Did It Cost You?

Question

What story did you listen to, what did it cost you, and what rule or system do you use now because of it?

My first tenant was polite, employed, and showed up when my vacant house was bleeding money, so I skipped the background check and the landlord call. Then she asked me to keep the electric in my name for a month while she sorted out a past-due balance. Six months later she stopped paying rent and the electric.

The utility company could have shut off the power.but I couldn’t. It was winter, and cutting it off would have been an illegal self-help eviction. That “small favor” cost me $278.13 and taught me this: flexibility without boundaries isn’t kindness. It’s financing someone else’s life at the expense of your own.

Carl Millsap · Answer

@Ametria Chaney I lost a deal because I was trying to save $5k. Property was well worth the ask, but I offered $5k less. Can't quantify what that cost me.

Carl Millsap · Answer

@Rosina Persaud that's a long list...the funniest one is the applicant who listed their current landlord information on the application.

What they didn't know was their "current landlord" was also one of our tenants at another property. Application denied.

Most of the time the disconnect between story and paperwork is their address history. Application has one thing, credit report says another, their pay stubs and driver license say something else.

Rosina Persaud · Answer

Carl, the fake landlord reference is the perfect example — the story sounded fine until one phone call checked it against reality.

Address history is the tell we see most. So on every application we line up three sources side by side: what the applicant wrote, what the ID and pay stubs say, and what the report shows. When those three disagree, we stop and sort out why before anything else moves.

And on landlord references: a reference only counts if you can tie that person to the property — owner, manager, someone verifiable. A name and a friendly voice on the phone is not a reference. It is just another story.

Carl Millsap · Answer

@Leo Stein 1000% I changed immediately. Once an approved applicant signs the lease utilities are scheduled for shut-off. The tenant receives an email with utility companies name and phone number with the date service will shut off which is usually 24-48 hours. If they can't get service changed in that time it's not my issue. No need to discuss utilities remaining on or any other arrangement. Live, learn, adjust.

Ametria Chaney · Answer

The most expensive story I see investors believe is the rent number on a listing. Zillow and listing sites routinely overstate achievable rents, and I've watched buyers underwrite deals on fantasy income, then discover the real market rent is $200 less a month — which wipes out the cash flow entirely. The system I use now with every investor I work with: verify rents with local property managers who actually lease in that submarket, never with a website. Get it in writing before you make the offer, not after. One five-minute call to a PM has saved more deals than any spreadsheet trick I know. What's the story that cost you?

Rosina Persaud · Answer

The story that costs the most is always the reasonable one. "The paperwork is coming." New job starts Monday, deposit lands Friday, the landlord reference is traveling. Every applicant has a version of it, and every version sounds fine. The paperwork just never matches.

Our rule now, across 236 doors in Memphis: verified, repeatable income — and the story has to match the paperwork. We don't lean on the credit score alone, because a score won't tell you the pay stubs are real or the employer exists. We verify income independently, and we check the applicant's story against the documents. When they don't line up, we don't debate it. We move on.

Carl's electric bill story is the same lesson from a different angle: the vacancy you're afraid of is always cheaper than the tenant you talked yourself into.

What mismatch between a story and paperwork have you caught?

Leo Stein · Answer

Thanks for sharing the real number, Carl. The lesson that stuck with me is that a small favor with no written boundary tends to become a bigger problem later. I keep the same screening steps and the same move-in paperwork for every tenant, even when the applicant seems great, since it keeps the decision from being personal. Did you change anything about utility setup after that?

Matthew Morrow · Answer

@Carl Millsap the rule we use is the boring one. Same application, same screening, same criteria for everyone, no matter how good the conversation goes. A nice applicant and a reliable tenant aren't always the same person, and the background and landlord checks are how you find out. Utilities in the owner's name are another place it sneaks up on you. If they stay in your name, budget for them and spell out the billing in the lease. Interested to hear what others have learned the hard way.

Simon W. · Answer

Sorry you went through that, and good on you for putting a number on it. A couple of things on the books side. The $278.13 you paid on her behalf is generally a deductible rental expense, since you covered a utility on the property. I'd record it on its own utilities line with the bills and shut-off notice attached, so it doesn't get buried in repairs.

What isn't deductible is the rent she didn't pay. On cash basis, which is what most landlords use, you only report rent when it's collected. So three months at, say, $1,200 is $3,600 you never counted as income, and there's nothing to write off. That's also why the deposit matters. Whatever you keep from it for unpaid rent or the electric becomes income that year.

I'd write down the dollar cost of each tenant problem, rent lost plus what you paid out. After a few of those you'll see which part of screening is worth the effort.

Carl Millsap · Answer

@Leo Stein The only instance that comes to mind was my maintenance coordinator forgot to coordinate a shut off.

In June I paid what should've been the final electric and water bill for a recently leased unit. In July I received bills for that same unit. I asked my maintenance coordinator about it.

He forgot to coordinate the shut off.

We notified the tenant about their balance because it was their usage. We let the tenant know we were scheduling the shut off, it's the only time in recent memory that we gave more than 24-48 hours. We gave 3 days, and put the balance on their rent ledger.

Systems work, but there is human error periodically.

What Story Did You Listen To and What Did It Cost You?

What Story Did You Listen To and What Did It Cost You?

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