Occasionally it strikes me that a great deal of the time we spend working is solely because people don't tell the truth!  I imagine that the mountain of extra, burdensome, paper-heavy work that lying causes is second only to the fact that humans have terrible memories.  I have no stats to back this up, but as we print, sort, and file a forest of thinly sliced trees each day I see how much time is wasted keeping people honest.

Here I go, trying to overcome my previously noted bad memory in order to recount these stories accurately...

A real estate agent brought in an lady's application for a fairly nice property.  He had told me beforehand that she was a good tenant with a few bumps on her credit from an identity theft incident a year or so back.  Indeed, the lady had good income, stable work history, no criminal records, and her landlord gave her a good review.  She had documentation of the ID theft, which described someone purchasing various items on credit during a time period, and supposedly renting an apartment temporarily in her name, without her knowledge.  (We have yet to find this to actually be true, yet the ID theft excuse is brought up more frequently than you would imagine).  In this documentation was an address that she did not include on her application as a past residence, claiming it was part of the fraud.  Belinda checked all the other references, including attempting to locate and contact the owner of the property at this address.  Belinda was unsuccessful in finding the owner, and knowing something was not right with the application, told the agent it was denied. 

The agent was furious, and let us know it!

Belinda decided to go through the application again, and this time dug out a copy of the check that the Realtor brought for the app fee.  What do you know...the address on the applicant's check matched the address the applicant claimed was used in the identity theft!!!  Good work!  This lady had gone to extra lengths to provide documentation to cover a flimsy story, in order to deceive both us and her real estate agent.

I called the lady's real estate agent to confirm that she was denied.  He let me know how upset he was at us- especially since he mentioned the ID theft issue to me before he submitted the app!  I calmly interrupted to say that that she lied to us, that the address on her check matched the address she claimed was rented fraudulently.  The phone went silent for a moment.  When he started speaking again it was in a much quieter tone.  "Oh...", he said slowly, "...I guess she lied to me too." 

There are really only a few keys to having successful lease property. The first rule, of course, is to pay a good price. The second rule second is keeping it occupied at a good rate, and the third is keeping your expenses down.

Pretty basic.

The reason placing well screened tenants is so important is that it makes or breaks the 2nd and 3rd rule. If you don't screen tenants, you have a good chance of getting a bad one. Bad tenants are pros at lying, bold faced and believably. They've made a habit of doing it, they know what to say and what not too say, and too many landlords allow themselves to be fooled. Even if you think you're a good people reader, let me tell you- you aren't. Without a proper background check, you're gambling. As tempting as it is to rent to the first person that walks up, hopefully this blog will convince you otherwise.

Bad tenants won't complete their lease. They may move out or be evicted within a few months, and you will have a number of expenses. Eviction costs, cleanup costs, make ready costs, leasing fee costs, advertising costs, plus the cost of lost rent from the time the tenant stopped paying, through the eviction process, through the make ready, through the time it takes to show it and find another tenant and rent it again...in the meantime you're still paying taxes, insurance, and maybe a mortgage.

Not Good. This breaks rule #2, because the house is not occupied, and any rent you received goes right back into getting the house ready and rented again.

Bad tenants won't keep your expenses down. On the contrary, things that should never break will break, and they will leave your house a wreck. Some of the worst ones are vengeful. They will punch holes in the wall, break windows, steal appliances and plumbing, burn carpet, kick down doors, etc. etc. etc. These aren't even the worst stories. Out of decency I won't say what some tenants have done, and if you think I'm joking just do a quick google search.

Also not good, and breaks rule #3.

Good tenants are just the opposite. They fulfill their lease and sign a new one. This is great for your returns. For example, if you pay a 75% leasing fee to obtain a good tenant, and that tenant stays for 3 years (average for C.W. Sparks Management)...what an incredible investment! That fee is spread out over three years! If you go with another company that can only produce 1 year leases, you would have paid 225%! Even more if the tenants leave early!!

That leasing fee is more than offset by the income you receive each month that it's rented instead of vacant, plus the money saved on releasing fees, make ready, advertising, etc etc.

Good tenants don't tear up your house either. During their stay, they are responsible and caring, keeping your month to month expenses low as well. On their way out, they clean up and do what they need to receive their deposit back. This saves you time and money on make ready and new tenant turn-around.

We are the best screeners in the business. We go through multiple screening processes to determine the probability that a tenant will be long term and stable. The office manager who performs the background checks had FBI aspirations, and takes her job seriously. Not much gets by her, and it has paid off in dividends for our owners.

Now, even though our background checks are extensive, we don't turn down clients for any discrepancies. Through years of experience we have learned what is mostly acceptable, and what flaws are immediate red flags.

Just to clarify- we do not turn away tenants for any minor thing. It's not that our screening process is so much stricter, rather it is much more in depth, and we find things that other companies would not. If an applicant is not immediately red flagged for a serious flaw, we will discuss their application with you, the owner. You as the owner have final say in every decision, and we will only offer our recommendation.

It is easy to see how a good tenant is such a powerful component to having a successful rental. I always say, your tenants will make you or break you.