Are you a real estate investor who offers rental properties of some kind or another? Maybe you have retail or commercial properties and work directly with renters whenever a vacancy occurs. Perhaps you own apartments or single family homes and you need to work with your potential renters in order to keep the properties full. Either way, there is one step that you must take, but which can become a make or break issue.
What is it? A renter’s past rental history. Without it, you run the risk of major issues that could range from non-payment to property damage. You also run the risk of alienating or losing other renters if you allow a less savory renter into the building and they proceed to break rules or make everyone around them unhappy. The easiest way to dodge this issue is to just run the most thorough rental histories possible, and it is not always as simple as a credit report.
Let’s look at the six steps to check any potential rental’s rental history and background.
- Willingness – How would you feel about phoning various landlords and references? If you are unwilling to make these calls, you are setting yourself up for trouble. You have the right to make these calls and you owe it to yourself and existing tenants to follow through on each reference or landlord listed.
- Unwilling applicants – What should you do if you run against an unwilling applicant who refuses to supply references? The only reason this is acceptable is if someone is a first-time renter. Even then, personal references are a perfectly acceptable request. What should you do if you get bad feedback? Assess it! Feel out the person offering the details. Did they just have a personal dislike for the renter(s)? Did they take offense from complaints or maintenance demands? Never take negative or positive comments at face value. Instead, take the time to discuss them and flesh them out a bit.
- Obtain consent – Be sure written consent is granted to dig around in any renter’s history. In some places this is a legal obligation, but whether written consent is required, it is best to get key details and written permission to ask about their previous behaviors as a renter.
- Have pointed questions – Never “wing it” when questioning previous landlords. Instead, create a formal questionnaire that you keep on hand during the conversation. Make notes about points of concern. Verify all of the facts an applicant has given, and then find out about their behavior where rent was concerned. What about their notice of vacating the premises? What sort of condition did they return the property? Were any legal matters required to get them out? If you discover lies, be sure you are getting facts from the former landlord and then determine if you should pass on an applicant based on any half-truths or lies.
- Have a script – Don’t just have the questions in front of you. Instead, follow a polite script that allows you to explain who you are, why you are calling and asking if they are willing to answer the questions you present. If they cannot, ask if you can fax them or if someone in management will speak with you.
- Use calls to network – This may sound like an offhand step in clearing potential renters, but it is a great way to get leads on future properties you might add to your assets or holdings. For example, while speaking with a landlord, it is entirely acceptable to ask them about their property, other properties they own and if they are actively investing. You may learn they are eager to sell or know of other landlords doing so.
It is not rocket science to check up on potential renters. The key is to actually do it, and in a way that is super productive. These six steps ensure you get accurate information and increase your chances for leads on investment real estate in the area at the same time! If you are a real estate investor curious about leads in your area, you don’t have to wait to find them. Get in touch with real estate investment clubs and hear what they have available.