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Tenant Screening Secret Number 1
Tenant Screening Secret # 1

You are screening all the time.
Until you agree on the terms of the lease with your prospect, and have signatures of both parties on the agreement, you should be carefully evaluating the applicant . After you've completed all the steps of your tenant screening process, the final decision is made the moment the lease is finalized - when it is signed and all the required funds are paid.

I know it may seem harsh to kill a deal during or just before the lease signing, but I've been able to uncover disturbing knowledge about some prospects just before or during lease signings.

What do you do if you come to realize at the last minute that this is not the qualified tenant you thought you had for your rental property?

A: If this new knowledge is a deal breaker, you must for your own protection kill the deal.
How do you kill a deal?
There are 2 ways you can kill a rental deal at the last minute or during the lease signing.

1) The direct way. Confront the prospect with the information and explain that you can not proceed any further. or

2) Reschedule the appointment while you reconsider.

It is important to always do your best to eliminate the chance of renting to someone who is already showing you that you can expect problems from them.

***

Good Screening Process Identifies Good Tenants

By Melissa M. Ezarik Bankrate.com

When John Nuzzolese found a tenant for a high-end home on Long Island, N.Y., during a slow winter season -- a tenant with an excellent credit report in hand who was willing to not only accept full asking price but also to pay six months upfront -- the experienced real estate broker figured he had a landlord's dream come true.

It didn't take long for his nightmares to begin. Looking back, Nuzzolese can recognize the mistakes he made and says they should serve as a lesson to other landlords:

  • Mistake 1: He didn't check the tenant's driver's license to verify he was the person on the credit report.
  • Mistake 2: He skipped the reference check because an employer and past landlord were unreachable.
  • Mistake 3: He got fooled by the offer to pay extra month's rent upfront, a ruse to make the prospective tenant sound qualified.
  • Mistake 4: Handing over the keys before the checks had cleared because the tenant, from California, "needed to move right now."

    Almost immediately, Nuzzolese says, "Mr. Hyde emerged and started making all kinds of threats and demands. Only one of his checks cleared. He began working me over like a pro."

    While Nuzzolese consulted with an attorney, his luck improved. "By a miracle, I was saved when the FBI arrested him while he was on a business trip in California. Taking back the property at that point was very easy."

    The experience was partly what led to his launching The Landlord Protection Agency, which aims to help make managing rental property profitable, enjoyable and safe for owners, in the late 1990s.

    As a landlord and property manager for some 250 tenants over the years, Nuzzolese has certainly had his share of successful tenants who pay on time and take good care of the property. He especially likes to see tenants take pride in their rental as a home. For those renting out a part of their own home, that factor is all the more important.

    As a landlord and property manager for some 250 tenants over the years, Nuzzolese has certainly had his share of successful tenants who pay on time and take good care of the property. He especially likes to see tenants take pride in their rental as a home. For those renting out a part of their own home, that factor is all the more important.

    Selecting the right tenant makes the difference between loving real estate and hating it," says Timothy Spangler, the CEO of a real estate investment company and author of "From the Rat Race to Real Estate.

    Finding good tenants is not just happenstance. It can take time and it usually takes considerable effort, both in learning the ropes of being a landlord and in selecting the right renters.

    "Just because a landlord can get a tenant to pay high rent doesn't mean he should take it. All too often, landlords are willing to forego the screening process to take an unqualified tenant who agrees to a higher price," Nuzzolese says.

    The best way to avoid mistakes like that is to learn the ins and outs of choosing renters.

    Here's a crash course.

    Search for a Star

  • Taking out an ad -- and wording it well -- can be the first step to finding a good tenant, but screening out bad ones. "It's not the quantity of potential tenants that apply, but the quality of tenants that counts," says Spangler. In his ads he states the basic details about a rental unit, and stresses that a credit check will be done. "Most people with bad credit won't even call." Even the hint that you report on tenants to a credit bureau often will send a deadbeat looking elsewhere.
  • Holding an open house can also save the landlord time and give you an early opportunity to look over your prospects.
  • Only one out of five people who make an appointment to see a rental unit will show up," says Spangler. And meeting someone face to face is always the best way to start the screening process.

    Make a Clean Screen

  • Devise a checklist and ask qualifying questions, such as whether there are smokers or pets, upfront -- before taking the time to advise them about the security deposit and other policies. "Serious customers want to make a good first impression on you and should be happy to answer your questions," says Nuzzolese.
  • Look for telltale signs of good and bad tenants. These can include: personal appearance (an unkempt person keeps an unkempt lifestyle and home); transportation (a well-kept vehicle with a clean, uncluttered interior tells you as much as a dirty and neglected one strewn with fast-food bags); and attitude (people who don't wipe their feet or put out a cigarette when stepping into the house are tipping you off to the level of respect they have for your property).
  • Keep in mind that eligibility, income and other requirements must be applied to everyone. Screening someone out on the basis of belonging to a specific group is discrimination. The penalties are severe, Nuzzolese reminds.

    Narrow the Playing Field

  • To keep all prospects straight and get the ball rolling on selection, have prospects fill out an application. If a credit report, background check and other recommended actions will be taken, charge an application fee to cover the process and make it non-refundable and cash only.
  • Don't skip or underestimate the credit check. Neglecting it is the most common mistake landlords make, says Spangler. Not paying their current bills? It's likely they won't pay the rent.
  • Examine the rental application carefully. "If they have a hard time following instructions on the rental application, they may have a difficult time adhering to the lease," says Spangler.

    Picking a winner

  • Ranking the applicants comes next. Nuzzolese seeks a neat, truthful rental application and prospects with solid employment history and good income, references and credit. Previous homeowners might get bonus points because they've demonstrated that sign of responsibility. Auito sees credit history as the top consideration, followed by length of expected stay, honesty and the reason for wanting that particular rental.
  • Congratulations are in order for the top applicant, so let that person know that he or she stood out. That's not just a feel-good measure, Nuzzolese says. "If the tenant feels lucky to be chosen above other applicants, he is less likely to be aggressive in negotiating for concessions, such as price reduction new carpeting."
    Finishing touches
  • You're close, but the screening isn't over yet. Can and will the applicant deliver? Showing up on time and with required paperwork and identification is a start.

    Before you both sign the final documents and turn over the premises, watch for these red flags:

    • Dispute over the late fee clause. Take it as a sign the prospect plans to pay the rent late.
    • Disagreement over cleaning fees when professional help is needed. Most people will assure the landlord that they will leave the rental as clean or cleaner than they found it. Why, then, would they argue over this clause?
    • Argument over attorney's fees in the case of eviction. Eviction must be a real possibility to your prospective tenant.
      If any of these disputes occur, tear up the agreement and move on to the next prospect, says Nuzzolese. "Say goodbye to that nightmare waiting to happen."
    • Once the lease is signed, of course, the landlord's job is really just beginning. The job comes with rewards beyond the income, though. "I love being able to make a positive difference in someone's life," Nuzzolese says. "Where they live -- their home -- is one of the most important things to people and their families. So it gives me great pleasure to make someone's life better and see their happiness.

      Melissa Ezarik is a Connecticut-based freelance writer.



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