Everything you are about to read is true. I know we all hear stories of terrible tenants and eviction notices, but to experience the horrors of renting out property first hand is an entirely different scenario. Different and somewhat intriguing (but not worth the headache). To me, it’s mind-boggling the degree to which people will color their stories to get what they want; convincing an unknowing landlord to agree to rent a property. I didn’t think that I would be tricked, but I was— almost. Hopefully, you can learn something out of my experience to avoid being fooled by less than ideal tenants.
Looks can be deceiving.
The potential renters that I met looked great! I couldn’t believe my luck in finding such excellent candidates to rent out the home. Part of my process, when choosing tenants, is to pre-screen over the phone. This way, I can save time and whittle out those who are unqualified or may include characteristics of a difficult renter. The mother of the family fit the necessary prerequisites during our phone call; produced 3x net monthly income, good rental history, work history verification, and good references from former landlords. It appeared that I hit the 'tenant jackpot.'
Setting The Stage
The family, which included the stay at home mom (whom I spoke with), the father who was a long-time post office worker, newborn baby, and grandmother came to the property for a walkthrough. They loved the property (for good reason as it was stunning), and I thought they were a great fit, believing that I wouldn’t find better tenants anywhere.
Since all went well during the viewing of the home, the family wanted to continue the process— moving forward with discussing the terms and conditions of renting this property. This was when things started to become interesting. It was at this point that the true colors of my ‘perfect tenants’ began to show.
Truth Is Stronger Than Fiction
The family’s rental application included their current address, in addition to the contact information of their current landlord. After doing my standard investigative work on the application (like I do with every tenant application), I discovered that the family was being evicted from their current rental. I immediately contacted the family again and was reassured that nothing was wrong. My concerns were only a miscommunication. The current landlord could verify that they were, in fact, great tenants. This was the point where I learned how important it is in real estate to cross-check the facts; getting multiple angles of information. The current landlord, in question, was truthfully another family member who had been asked by the tenants to pose as the owner. They needed someone to vouch for them and hoped I might never catch on to their strategy.
Some investors might make the mistake of ending the screening process of potential renters after only speaking to the former landlord, but I took the added step and made another phone call. I dug deeper by taking a look at the public tax records. The public tax records gave me the contact information for the real landlord and his actual address. The owner I had spoken with first on the phone (the family member posing as the proprietor) had claimed that the family had been good tenants and would not question renting to them again if there was the opportunity. This claim was not reality.
Getting The Facts
I knew better than to take someone’s word as the sole proof in the face of an eviction showing up during the background check. I took the time to meet with the current landlord, asking him about his tenants and their eviction. He mentioned that they were in desperate need of renting somewhere. The tenants were several months behind on rent and had been living at their current residence for free. If they didn’t get my place, the family feared that they would have nowhere to go, as the current landlord was evicting them. Although all of the facts warned that this family could cause me trouble in the future, I decided to approve their application to be generous…
I didn’t rent to this family and ultimately declined their request. It would have been a terrible idea to approve a move-in. I couldn’t forget that if they lied at the beginning of our interactions, the lies would most likely continue. In a dream world, I would have loved to show this family generosity, but it would have been to the detriment of my state; financially, emotionally, and entrepreneurially. I couldn’t afford to put myself out there to lose not only money but also peace of mind.
What I learned
The process was mentally taxing. I like to believe what people tell me at face value, but in real estate investing, it’s necessary to do your due diligence; double-checking and cross-checking the facts. Situations like the one I just told you about happen. I share this with you so that you won’t be surprised if you one day face a similar scenario as a real estate investor or landlord.
No one likes to doubt people, but a savvy investor takes the time needed to protect their business, time and reputation.
Due diligence is not an afterthought, but a must. One of the most important things to do as a landlord is to protect yourself from a tenant that has a history of rental problems. A trouble inducing tenant can result in cash flow concerns (a bad scenario), unnecessary stress, and deplete your time and energy. It’s just a good idea to avoid applicants who are questionable.
The moral of the story is to research and search out the facts before renting to anyone. I know that if I didn’t continue investigating this family’s rental history, I would have been fooled.