That’s harsh I know. And the way that I run my business it’s not at all accurate, because I have some of the best renters that you could imagine.
But think about it – you have a house that’s worth, say $100,000. You’ve bought it, done some work to it, and you’ve made sure that you’ve complied with the rental-unit laws in your city.
Then you spend time looking for someone to GIVE the house to. Someone that has absolutely no vested interest in your property whatsoever. And someone that’s not going to tell you about anything that needs to be done until it directly inconveniences them.
How’s that for a fair trade-off?
While that may sound harsh, it really is the truth. And if you choose poorly you can end up with a very unpleasant and expensive situation.
And in my view that’s what has spawned the “tenants and toilets” phrase and it’s the primary reason that most people are scared to death of owning rental properties.
Which is a crying shame, because it doesn’t have to be that way.
And even with all of this, most of the rental property owners that I know STILL, unbelievably, don’t put much effort into screening their tenants.
As I discussed in a prior post, Critical Success Factor #1 for being successful in owning rental properties is property selection. That included not only area, but configuration, condition, and amenities, such as a/c and appliances, as well. My strong belief is that it you get this right you can substantially reduce your risk of getting a bad tenant, because a better house draws better tenants overall.
Since I define success in this area as tenants that pay on time and never call me, I therefore categorically state that Critical Success Factor #2 is Tenant Selection and Screening.
And if you get CSF #1 right, this part is actually pretty simple to accomplish with a couple of steps.
1. Set expectations up front
I have a detailed rental application, and I do a strict background check that includes credit, employment, past rental references, and a nationwide criminal and sex offender search. I charge an application fee, up front, in cash, to cover the cost of the background check, and I charge the maximum security deposit allowed by law in the state of Michigan. I tell my tenant prospects all of this up front, and this screens out a significant number of people.
Stay tuned for Part 2 of this Post . . . . .
If you need to know more about my particular strategy and methodology for pursuing residential rentals as a business, then you need my “Set and Forget Metro Detroit No Hassle Suburban Rental Property Bootcamp”. It goes through the rent-up and EVERYTHING else that you need to know to be a successful rental property owner.