Jason Hartman advises that you screen tenants well. There are standardized ways to check for good tenants. Much like how selecting a productive employee comes with the process of interviews, background checks and qualifications, checking for good tenants come with similar processes – that have worked for years.
In this post, we’ll discuss effective tactics the Home Owner’s Association uses to check for good and bad tenants. Investors also have the opportunity to join this group to help protect themselves against any indemnities.
Here is a checklist:
The Criminal Background
You’ll want tenants that have no history of domestic violence, sex offenses, drug use and more. Renting to such tenants can devalue your property, which you’ll want to avoid at all costs. You’ll also want to avoid tenants that have been evicted in the past. Records are available from a nationwide or state-specific database.
Match up documents, cross check files, and verify W-2s to ensure that there’s no reason to suspect identity theft. Also, ensure that the tenant has had a stable income for some time. The Home Owner’s Association is known for having a third eye for detecting deadbeat tenants, as well as fraud. To avoid the tiring and expensive process of evictions, this association can help to weed out bad tenants, and select ideal ones. In the long run, joining such groups can save you headaches.
The Home Owner’s Association can also help owners collect delinquent rent – even though this can be lengthy process.
This Association allows investors to report bad tenants, and also help with the process of getting payments owed. Jason Hartman advises that you run properties like a business, versus taking losses as is. If there’s a judgment against the client, the investors, or a third party, the company can go after default tenants’ assets.
Investors, if they’ve taken the financing route, need to pay mortgage as well as monthly and yearly expenses. As such, don’t take your feet off the gas pedal when it comes to driving the payments home. A lease agreement can be also drafted up to notify tenants of the procedures, should delinquency occur.
As a final note, here’s a word to the wise: Most investors tend to prefer investing close to home. It’s really nice to roll up your sleeves and work, but it’s even nicer to delegate, diversify, and reap more rewards. To help manage your property, delegate it into the hands of expert firms to help perform screenings.
(Top image: Flickr |William Brawley)
The Commercial Investing Center Team