So You Want to be a Landlord?

So You Want to be a Landlord?

Several days ago I read a great post by Michigan landlord, Dennis Fassett, in the Biggerpockets blog section (article). It would have been hysterical if only it wasn’t so true. He discussed what he called The Boyfriend Disorder. He wrote about what happens when a prospective tenant shows up to view a property and has her boyfriend tagging along. In between the laughs, I cringed.Having spent two decades as a real estate investor, half of that time as a landlord of properties in a blue-collar mining town, I thought about some of the trouble I’ve experienced along the way. Mind you, I had a plan and procedure to minimize bad tenants – it didn’t matter. Problem tenants seem to have an innate resourcefulness, if only they used it for good instead of evil. What to Believe?The first line of defense against bad tenants is your screening process. It starts with a rental application. The information on there is used to do a background and credit check, verify employment, previous rental history, and personal references. With all of that information, what could possibly go wrong? Believe it or not, everything.A clean criminal background check could just mean that the prospective tenant hasn’t been caught doing anything illegal yet. Credit reports are rarely perfect and tenants usually have a good excuse for whatever is on there. Confirming employment seems straightforward enough, but what if your applicant has arranged with a buddy to lie about his job? Previous landlords may be reluctant to bash a past tenant but they will usually drop hints if you listen carefully. (If you do get a bad report you should immediately be reaching for the giant rubber stamp that says “REJECT.”) Personal references are just about useless; what applicant would put down someone who wouldn’t give a glowing report? All of the above has happened to me at some point.       Trust Your GutI’m not suggesting that you don’t carefully evaluate rental applications, just understand that they aren’t enough. Every one of us has an internal screening device to send us warning signals – ignore them at your own peril. Call it intuition or gut instinct. The feeling in your stomach develops from past experience and you should listen to it. Have you ever been tempted to accept an application from a marginal prospect because a property has been vacant for too long and you absolutely need to get it rented? I have, trust me on this one – don’t do it. Ever get the feeling that the sweet looking couple is lying to you? They usually are, your gut probably picked up subtle signals that your conscious mind has missed. This is a time you should listen to that voice in your head.  Anyone even remotely thinking about becoming a landlord should rent a copy of the movie Pacific Heights.

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