Collecting Keys - Real Estate Investing Podcast EP 38 - Tenant Screening: How to Keep Your Rental From Being Destroyed
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Troublesome tenants could cause issues with neighbors, landlords, and expensive evictions. Tenant horror stories are everywhere, but they can be avoided with the right screening process.
In this episode of Collecting Keys Podcast, we discuss our tips on how to screen your tenants and make sure you get the best ones. We also share our thoughts on the current real estate market and the opportunities you can grab.
Here are some power takeaways from today’s conversation:
- With The Economy Changing, Add extra margins to your deals
- Consider purchasing off-market discounted real estate
- When it comes to tenants, character is more important than credit score
- Be firm but fair with tenants
- Try hiring a property management company if its too much
Episode Highlights:
[01:12] Updates on the Market
With the interest change, the market has skyrocketed. People are mostly reactive and no longer make rational, long-term decisions. Markets don’t like uncertainty, so once people know what’s happening, they can move forward.
Rates get brought up and down depending on the needs of the economy. If you’re in real estate, add a little extra margin to be safe.
[09:21] Navigating the Current Real Estate Market
You’ll need to put in money, time, and effort to find opportunities to purchase off-market discounted real estate. But it eliminates a huge amount of risk due to the many options.
The market is most likely going to change around you. It’s essential to find out what your excess and risks are. Demand may drop significantly with the new interest rates. If high prices become the norm, the costs will not come down even if the rates do.
[19:53] Screening Tenants
Be cautious because the eviction process can be daunting and expensive. Screening also helps make tenant turnovers less pricey.
You’ll want tenants that won’t trash the place. You can use these pre-screening questions:
- What’s your base credit score?
- What’s your income?
- Do you have any evictions or criminal records?
Financial indicators are important to determine their ability to pay rent. Follow through with their references. Judging their character can sometimes be more important than credit score. You can also observe them and get a feel for their personality if you can meet them in person.
[35:06] Screening Tenants
Tenants are not your friends. You can be friendly with them, but don’t forget to be firm but fair. It is crucial to have rules and guidelines. Compromise might be on the table, but don’t bend those rules too much for them.
If all this sounds like too much, hire a property management company. It’ll cost time and effort, but you won’t have to worry about the stressful stuff.
Notable quotes from the Episode:
[22:08] “Just because someone makes a lot of money doesn’t mean they’re not going to wreck your property.”
[33:29] “You have to judge the character.”
[35:11] “Tenants are not your friend. You can be chummy with them, but everything should be firm, but fair.”
Resources Mentioned: