Tyler’s Mistake of the Month Newsletter
Monthly Solutions FOr Real Estate Investors
Vol.1 Issue 3
Not having a good tenant screening process
How it happens…
- Not understanding the importance of tenant screening. Many investors believe that they can simply rely on their gut instinct when choosing a tenant. However, this is a risky approach, as there are many factors that can contribute to a tenant’s reliability.
- Not doing their research. There are a number of resources available to help investors screen tenants, including credit reports, criminal background checks, and rental history reports. However, many investors do not take the time to do their research, which can lead to them renting to unreliable tenants.
- Not being thorough. Even if an investor does their research, they may not be thorough enough. For example, they may only check a tenant’s credit report for recent bankruptcies, but not for late payments or other negative items.
Ways to avoid the mistake:
- Understand the importance of tenant screening. Tenant screening is not just about avoiding bad tenants. It is also about finding good tenants who will be reliable and pay their rent on time.
- Do your research. Use a variety of resources to screen tenants, including credit reports, criminal background checks, and rental history reports.
- Be thorough. Don’t just check for recent bankruptcies. Look for late payments, evictions, and other negative items on a tenant’s credit report.
How to deal with the mistake:
- Assess the situation. What are the specific problems with the tenant? How are they impacting the property?
- Develop a plan to recover. This may involve evicting the tenant, finding a new tenant, or working with the tenant to improve their behavior.
- Take specific steps to recover. If you decide to evict the tenant, you will need to follow the legal process. If you decide to find a new tenant, you will need to start your screening process again. If you decide to work with the tenant, you will need to set clear expectations and consequences.