Speaker 1: Welcome to How to Money. I'm Joel and I'm Matt,
Speaker 1: and today we're discussing the easiest ways to screen tenants. Joel,
Speaker 1: what's going on, man? What's up? Moundy? Just drinking the
Speaker 1: beer and talking money with you. That's what we do
Speaker 1: on the show. Have you ever watched Black Mirror? I haven't,
Speaker 1: but I've heard good things. Yeah. Well, what they got
Speaker 1: going for them is like this dystopian sort of future
Speaker 1: sci fi thing, which I'm super into. I love dystopian stuff. Yeah,
Speaker 1: you know, except that you don't like you don't like
Speaker 1: sci fi though you like you don't like SciFi, you
Speaker 1: don't like comic books. I'm not a huge car but
Speaker 1: I like dystopian though, like I love I love Brave
Speaker 1: New World. I'm all about dystopian future stuff. Dude. Okay,
Speaker 1: So if that's the case you need, you should probably
Speaker 1: check up Black Mirror. It's a little dark. I guess
Speaker 1: it's aptly named. It's like dark Mirror. It's sort of
Speaker 1: like a reflection of society, but like a darker version
Speaker 1: of it, and specifically there is I was listening to
Speaker 1: The Indicator by NPR. Do you ever listen to that podcast?
Speaker 1: I don't. It's it's pretty cool. They take a number,
Speaker 1: break it down sort of how it affects our society,
Speaker 1: our economy, the markets, different things like that. But they're
Speaker 1: talking about how China the country, you know, China part
Speaker 1: of it. They're rolling out this sort of social credit experiment,
Speaker 1: which I found incredibly fascinating. Basically, it's like an uber rating,
Speaker 1: but for yourself, like as a human being, and so
Speaker 1: whatever interactions you have, whether it be with a business
Speaker 1: or like other people, or whether you stop for people
Speaker 1: that are trying to cross the sidewalk, you get rated
Speaker 1: like there's people on the lookout and it's super big brother. Yeah,
Speaker 1: it's based on a thousand points scale, and so like
Speaker 1: that's where you start out, like at the very beginning
Speaker 1: with a thousand points, and you get deducted for stuff
Speaker 1: and so like say you get a traffic ticket, boom,
Speaker 1: get like fifty, it's knocked off, and your social credit
Speaker 1: score affects your ability to take advantage of like luxury products.
Speaker 1: So they've got like this high speed train and they're
Speaker 1: interviewing this guy and he had defaulted on some loans,
Speaker 1: some business loans. He's a big time business owner, millionaire, guy,
Speaker 1: but he defaulted on some loans and because of that,
Speaker 1: he couldn't take the high speed train. Isn't that crazy?
Speaker 1: That is crazy? Yeah. I read a little bit about
Speaker 1: this and it was fascinating and it was kind of
Speaker 1: interesting and cool but also kind of messed up terrible
Speaker 1: at the same time. And I'd heard people talk about
Speaker 1: specifically that one Black Mirror episode where people were kind
Speaker 1: of being ranked right based on their interactions with other people.
Speaker 1: And so, you know, I could turn in a crappy
Speaker 1: podcast performance here and you could like deduct me. It
Speaker 1: would be terrible. It just it was. It seems awful, right,
Speaker 1: but it also it could be where we're headed in
Speaker 1: some regards. Bizarrely fascinating is what it is. And it
Speaker 1: sounds like it is kind of turning into real life
Speaker 1: in China, and so it seems like a democratization of
Speaker 1: sorts of kind of who you are as a person
Speaker 1: in some ways, which, let's be honest, we've talked about
Speaker 1: this before on our Credit Score episode. Right now, it's
Speaker 1: in the hands of these major three bureaus that get
Speaker 1: to decide whether you're a good person, whether your credit
Speaker 1: worthy or not, even without you having signed up to
Speaker 1: be a part of that system. And so in some
Speaker 1: ways this seems a touch better, even though it's like
Speaker 1: creepy and terrible, at the same time, it seems like
Speaker 1: a little bit better than just these three companies having
Speaker 1: all this power they say yes or no um and
Speaker 1: and in this there's a little more democratized element to it.
Speaker 1: But it's still weird as can be. And I don't
Speaker 1: think I look forward to a day where we were
Speaker 1: all rating each other and saying, you know, whether you know,
Speaker 1: Matt held the door for the elderly lady behind him
Speaker 1: or just completely flicked me off in traffic, whatever it is,
Speaker 1: if I was like speeding or something like that. It
Speaker 1: made it sound like that almost anybody could rank or
Speaker 1: rate somebody that they had an interaction with, just as
Speaker 1: casually as walking past the one in the street. And
Speaker 1: like I said, on one hand, that's crazy interesting and
Speaker 1: it's like something I would want to watch, But what
Speaker 1: I want to live that in my real life? You know,
Speaker 1: day to day do I want my kids sort of
Speaker 1: worried about what their scores are? And to an extent,
Speaker 1: that's what we do as adults when it comes to
Speaker 1: to social media. That's definitely one of the downsides of that,
Speaker 1: you know, it's it's terrible from that standpoint. It's terrible
Speaker 1: how social media and technology is pulling us away from
Speaker 1: real human interactions and we're so worried about our scores
Speaker 1: again talking about things being turned into games. On one hand,
Speaker 1: that's amazing because it makes things interesting, and the natural
Speaker 1: byproduct of that is that things are better, whether that
Speaker 1: be oh, you get points for picking up litter or
Speaker 1: something like that. But on the other hand, it's like, oh, man,
Speaker 1: that's a complete substitute for real life and the real
Speaker 1: human interactions that we have with you know, each other,
Speaker 1: our friends, and as well as with our families and
Speaker 1: our kids. Yeah, I think it's super interesting that, like
Speaker 1: we'll stay on top of kind of what's happening with
Speaker 1: these social credit experiments. You know, Like I said, it's
Speaker 1: weird now kind of the way the way it is,
Speaker 1: and it's this seems even weirder, And I'm just not sure,
Speaker 1: you know where we should reside when it comes to
Speaker 1: determining other people's credit worthiness and rating each other based
Speaker 1: on our interactions. I mean, man, are you even allowed
Speaker 1: to have a bad day in a scenario? Yeah, dude, yeah, exactly,
Speaker 1: or feel paid or anger or anything like that, and
Speaker 1: are you able to be real when it comes to
Speaker 1: real life or he's just so concerned with playing the game,
Speaker 1: playing the social credit game that you're just gonna do
Speaker 1: whatever it takes to make sure, you know, don't get
Speaker 1: points deducted. And it's it's crazy. It's worth mentioning there
Speaker 1: too that it was. It's called it's considered an experiment,
Speaker 1: like there's a few cities in China that are doing it.
Speaker 1: Is not like it's something that they're rolling out and
Speaker 1: they say that, oh yeah, this is going to be
Speaker 1: the solution, but it is an incredibly fascinating approach. Well,
Speaker 1: onto our fascinating beer of the day, Matt. Today we
Speaker 1: are drinking a really interesting one by a brewery called
Speaker 1: Variant Brewing and they're just up the road from where
Speaker 1: we live in Atlanta, uh. And this is called Raspberry
Speaker 1: Johnny Kashmir and it's a New England style I p
Speaker 1: a reform mented on three different kinds of fruits. And
Speaker 1: we will tell you what we think about this really
Speaker 1: fascinating beer at the end of the show, are Joel
Speaker 1: you wanna kick it off? Yeah, buddy, So the subject
Speaker 1: at hand for today's show is the easiest way to
Speaker 1: screen tenants, And Matt, you and I are all about
Speaker 1: rental properties, right. We've talked about this in multiple episodes past,
Speaker 1: and we figured we should dedicate a whole show to
Speaker 1: how to screen tenants, because after you purchase a rental property,
Speaker 1: doing a good job screening tenants is the most important
Speaker 1: thing you can do to make sure that that is
Speaker 1: a success for you. And like most new things, it
Speaker 1: can be scarier, daunting, it might feel even intimidating until
Speaker 1: you actually go through that screening process. But like most
Speaker 1: of those things, also it's easier than you think it is.
Speaker 1: That's right, and this is a great episode. Two. If
Speaker 1: you're not into real estate, this is great too if
Speaker 1: you have a primary residence and you're considering, oh, you know,
Speaker 1: maybe someday I could just run out this house. And
Speaker 1: this is a great sort of introduction to one of
Speaker 1: the biggest things that is Joel said, kind of daunting
Speaker 1: or foreign, but also too if you're a renter er man,
Speaker 1: have a listen. Listen to this episode. You'll pick up
Speaker 1: some tips on what it is that your new potential
Speaker 1: landlord is looking for and you know, that will help
Speaker 1: you to snag that property that you got your eye on. Yeah,
Speaker 1: the as a renter, the way you go through this
Speaker 1: process could be the determining factor of whether or not
Speaker 1: you end up, you know, signing a lease on that
Speaker 1: house that you're interested in or condo or apartment, whatever
Speaker 1: it is, or whether you end up playing second fiddle
Speaker 1: to someone that played the game better. And so, you know,
Speaker 1: as a potential tenant, I think, yeah, you can learn
Speaker 1: a lot from this episode two. All right, man. The
Speaker 1: problem is that it can be tempting to skip screen
Speaker 1: tenants or to do a crappy job. Some nice folks
Speaker 1: might show up to see the place to say they
Speaker 1: make a lot of money and they want to rent it,
Speaker 1: so you go ahead and sign the contract, right, wrong,
Speaker 1: that's right. You do not send a contract. Most folks
Speaker 1: out there are probably great and they're telling the truth.
Speaker 1: They might make a ton of money, but that doesn't
Speaker 1: really matter if it's all going towards U. Yeah, and
Speaker 1: there are a lot of people that talk a good game,
Speaker 1: and it's easy to have a nice conversation with someone
Speaker 1: that is super friendly and assume that they are going
Speaker 1: to be a great tenant. But that doesn't always translate, right, Yeah.
Speaker 1: I mean we try to operate from the standpoint of
Speaker 1: thinking that most folks out there are good, you know,
Speaker 1: and but unfortunately we can't operate from that standpoint living
Speaker 1: in a big city where we don't know someone's grandma.
Speaker 1: You know. If I do someone's grandma, i'd be okay. Yeah.
Speaker 1: And the problem is matter that terrible tenants can cause
Speaker 1: major problems for your house with your neighbors, and they
Speaker 1: can bring down not just your house but the entire street.
Speaker 1: And that's why we think it's so important to screen
Speaker 1: potential tenants well. Because you've got a rental property right
Speaker 1: that you've put a lot of time and intention and
Speaker 1: money and effort into, and you want to make sure
Speaker 1: that you are getting someone that is going to care
Speaker 1: about that place and be a good tenant for a
Speaker 1: long time to ensure that viability of this thing that
Speaker 1: you've spent so much of your life and your effort on.
Speaker 1: Kay man, it's incredibly important to screw and so doing
Speaker 1: a great job when it comes to screening your tenants
Speaker 1: can be the difference between the next twelve, eighteen or
Speaker 1: twenty four months being a dream, you know, where you're
Speaker 1: able to build wealth or it being a nightmare where
Speaker 1: you're constantly on call, you're trying to put out fires,
Speaker 1: hopefully not literal fires, but where it's just sort of
Speaker 1: this constant thing that's kind of hanging over your head. Yeah.
Speaker 1: I was just talking to my friend Tim the other day,
Speaker 1: Matt and he has seven rental properties, and he was
Speaker 1: telling me about the beginning of his rental property career.
Speaker 1: He said that literally the first few tenants were terrible
Speaker 1: and he had to vict every single one of them,
Speaker 1: and it was because he didn't screen tenants well. Right,
Speaker 1: So Tim didn't learn his lesson the first time or
Speaker 1: the second time. But I think the time yeah, I
Speaker 1: think they're time around, he got it and you got
Speaker 1: this to him, and since then, you know, Tim hasn't
Speaker 1: had any problem with tenants. And he explained to me
Speaker 1: that he thought, hey, this person is pretty nice, right,
Speaker 1: they seem good in person, they seem good on paper.
Speaker 1: But it turns out that without this screening process that
Speaker 1: we're going to walk you through, it's really easy for
Speaker 1: people to kind of skip by and go from place
Speaker 1: to place, find a new landlord to kind of prey
Speaker 1: on and take advantage of their kindness, um, and then
Speaker 1: stop paying rent ruin your place. There are so many
Speaker 1: terrible options that could come from from not screening attendant well.
Speaker 1: And the thing is Matt too that it's pretty easy
Speaker 1: to screen a tenant well. And we're gonna get into
Speaker 1: that as well. Yeah, So going back to eviction that
Speaker 1: he had to do a few times, they're like, that's
Speaker 1: the most expensive thing that you could possibly do when
Speaker 1: it comes to working with a tenant. An average eviction
Speaker 1: costs anywhere between twenty five to and that is a
Speaker 1: lot of money. Yeah, not to mention the headaches right
Speaker 1: of having to go through that process. And depending on
Speaker 1: the state that you live in, some states have laws
Speaker 1: that favor landlords and others have laws that favor tenants.
Speaker 1: But no matter what state you're in, even if you're
Speaker 1: in a landlord friendly state, if anything, a tenant is
Speaker 1: not only a pain in the butt, it costs you
Speaker 1: time and money at the same time. And that is
Speaker 1: not a good recipe for succeeding in the investment property game. Yeah,
Speaker 1: I mean that's not why you got into it, right,
Speaker 1: It's not like you got into investment properties and Reynolds
Speaker 1: thinking I want to get some tenants in there and
Speaker 1: then after three months, I want to evict them because
Speaker 1: I want them to be terrible. Yeah, now that's not
Speaker 1: at all. Why why you got into that? Uh, that
Speaker 1: as an investment, right, and so avoiding that altogether is
Speaker 1: certainly the number one priority when it comes to screening tenants.
Speaker 1: Just be sure. We'll go ahead and mention this at
Speaker 1: the beginning, but make sure you're following fair housing laws
Speaker 1: very closely. You cannot discriminate based on color, disability, family status.
Speaker 1: I'm gonna say them all, national origin, race, religion, or sex.
Speaker 1: And this means, whether you do that intentionally or not,
Speaker 1: you can get in trouble if the you know, potential
Speaker 1: tenant that you have is able to sort of document
Speaker 1: how maybe you're screening or not running to them versus
Speaker 1: someone else, and the only difference between them and the
Speaker 1: person that you're looking at is one of those protected classes.
Speaker 1: I remember, dude, early on families at US. That's one
Speaker 1: that surprised me because I remember thinking early on that like, oh, yeah,
Speaker 1: it might be nice to have a younger family in there,
Speaker 1: but like, you can't do that at all. She can't
Speaker 1: discriminate against the single people. Yeah, exactly. From an investors standpoint,
Speaker 1: you think, oh a family stability, You think, okay, they're
Speaker 1: gonna be here for a while. But yeah, a friend
Speaker 1: of mine luckily mentioned to me early on that like,
Speaker 1: oh no, you you can't say this would be a
Speaker 1: great house for a young family, because you start getting
Speaker 1: to this sort of slippery slope, this this gray area
Speaker 1: where someone could point to that and then say, oh no,
Speaker 1: you're trying to market that towards families. It says right there,
Speaker 1: great for young families versus you know, like a single
Speaker 1: person that might want to move in. So make sure
Speaker 1: that you are steering clear of those protected classes and
Speaker 1: that you're making your property available to everyone. Yes. So,
Speaker 1: now that we've kind of seen how expensive in eviction
Speaker 1: can be for a landlord and how much headache it
Speaker 1: could be the months of dealing with law enforcement and
Speaker 1: a tenant that refuses to cooperate, let's cover the nitty
Speaker 1: gritty of how to go about screening screening well so
Speaker 1: that you can avoid those problem tenants right after the break,
Speaker 1: all right, Matt, So back to the break, we promise
Speaker 1: we talked about the stages of screening, and my favorite
Speaker 1: stage of screening is allowing tenants to pre screen themselves
Speaker 1: effectively by putting the requirements that you have for potential
Speaker 1: tenants in the listing of your property. Yeah, and so
Speaker 1: it helps to put your minimum credit score and income
Speaker 1: amount required to rank your place inside the body of
Speaker 1: the listing because people that don't meet those requirements just
Speaker 1: oftentimes won't reach out in the first place when they
Speaker 1: read that in your listing. Yeah, they just need not apply, right,
Speaker 1: You're just wasting everyone's time if you see, or it
Speaker 1: doesn't even have to be income based or a credit
Speaker 1: score based. It can even be a no pets allowed.
Speaker 1: And if you've got five dogs will shoot, just skip
Speaker 1: right over that list because you're just gonna waste your time,
Speaker 1: and you're gonna waste the manager or the landlord's time.
Speaker 1: It's just a way for everyone to save time and
Speaker 1: to keep moving on with life. And so on that note,
Speaker 1: the next step is scheduling showings. And so I don't
Speaker 1: personally do open house showings, Joe, do you know I
Speaker 1: schedule each one individually? Awesome? Yeah, exactly, That's that's how
Speaker 1: it rolled to. And so during the showings, you want
Speaker 1: to ask yourself, do they show up when they say
Speaker 1: they're going to you want to note that if they
Speaker 1: show up late or even are a no show and
Speaker 1: don't communicate that that's a bad start in one way
Speaker 1: to weed out the folks that are just kinda may
Speaker 1: like those aren't the kind of tendance that you want
Speaker 1: to have. It's also a great idea to do a
Speaker 1: pre interview here while they're they're looking at the place.
Speaker 1: You can ask questions about their employments, whether or not
Speaker 1: they smoke, what their income might be, if they have
Speaker 1: any pets. Some folks allow dogs but not cats, or
Speaker 1: vice versa. You can do all these things even before
Speaker 1: they apply again, so save yourself time. There's no sense
Speaker 1: in reading through an application and starting to make the
Speaker 1: calls or sending out the emails when you know there's
Speaker 1: certain requirements where that possible tenant doesn't meet. Yeah, and
Speaker 1: I can't stress enough this part of the phase where
Speaker 1: you're talking to a perspective tenant. You're emailing back and
Speaker 1: forth with them, You're setting up a time to come
Speaker 1: and view the house or the apartment or whatever it
Speaker 1: may be. You know, those email conversations will tell you
Speaker 1: a lot. You know, how they use language, how promptly
Speaker 1: they reply, what sort of tone they use in their emails?
Speaker 1: And then in person, right when you finally meet that person,
Speaker 1: do they arrive on time? How do they present themselves
Speaker 1: in person as well? Those sorts of things will make
Speaker 1: a major impact on how you view this person and
Speaker 1: whether you want them living in the investment property that
Speaker 1: you own or not. And then on top of that, Matt,
Speaker 1: like you mentioned, yeah, some of those pre interview questions,
Speaker 1: you'll get a different answer out of people, and oftentimes
Speaker 1: a much more truthful perspective if you ask those questions
Speaker 1: in person. Via email, it's really easy to present yourself
Speaker 1: in one light and make yourself seem better than you
Speaker 1: actually are. But in person, when you ask those questions,
Speaker 1: just in a nonchalant way, sometimes right, not grilling people,
Speaker 1: not putting them under the coplight and asking them the
Speaker 1: tough questions, but just nonchalantly bringing some of these questions up.
Speaker 1: If you notice a lot of hemming and hawing or
Speaker 1: not even knowing some of the answers to some of
Speaker 1: these questions, that's a really good way to know that
Speaker 1: you are talking with someone who might not be a
Speaker 1: great tenant. Yeah man, Or even something as silly as
Speaker 1: what kind of condition their car is when they pull up.
Speaker 1: You know, if they pull up in something that looks
Speaker 1: like it's in terrible shape. And now I'm not talking
Speaker 1: about a beater right where you're you've got a great,
Speaker 1: dependable car and it's just kind of old. But I'm
Speaker 1: talking like stuff is busted on it, Like there's a
Speaker 1: mirror hanging from the side, like on the car that
Speaker 1: got taken out by like a telephone pole. Fast food
Speaker 1: rappers spilling out onto the sidewalks like they open the door.
Speaker 1: That's not a great sign of how they're going to
Speaker 1: take care of your property. So it's all these non
Speaker 1: verbal sort of cus of well that goes into this
Speaker 1: stage where you're scheduling showings and meeting folks in person.
Speaker 1: So already we've talked about tenant screening, right, and we've
Speaker 1: said that there are two ways that you could have
Speaker 1: already screened really well, right just in your listing, your
Speaker 1: pre screening people by the requirements you list out, and
Speaker 1: then you're screening via email and in person as you're
Speaker 1: getting to know these perspective tenants. That meant that first
Speaker 1: initial pre screening, the next step that you're going to
Speaker 1: want to enact when it comes to tenant screening is
Speaker 1: an initial application, and so that application is where potential
Speaker 1: tenants fill out their personal information, basic stuff, and what
Speaker 1: we're interested in here is their tenant history, right the
Speaker 1: previous five years of rental history with landlord names and
Speaker 1: contact information. And I'll tell you what, Matt, I feel
Speaker 1: like this is probably the easiest way to be able
Speaker 1: to identify a poor tenant. If you can call and
Speaker 1: ask their previous landlord, you know, did they pay rent
Speaker 1: on time? Would you rent to them again? This is
Speaker 1: one of the most important indicators that will help you
Speaker 1: note whether or not this is a reliable tenant that
Speaker 1: you're gonna want to leash your property to. Yeah. Man.
Speaker 1: In my book, this is pretty much the number one
Speaker 1: thing that I kind of go off of is if
Speaker 1: they have been great tenants in the past. I'm even
Speaker 1: willing to take applicants that have a worst credit score
Speaker 1: or that might have a lot of debt. But you
Speaker 1: know what, if their past several years of tenant history
Speaker 1: and I'm if I'm able to talk to their landlords
Speaker 1: and they always pay no matter what, man, that sets
Speaker 1: an incredible track record for them. That tells me that
Speaker 1: you know what, even though they might not have their
Speaker 1: financial game in tip top shape when it comes to
Speaker 1: their credit score or man, they just spend a lot
Speaker 1: of money and they've got a lot of debt, that
Speaker 1: still tells me that, well, they still make rent payments
Speaker 1: a priority and there's just a lot to be learned
Speaker 1: from previous landlords that they have rented from in the past. Yeah.
Speaker 1: Another important checkmark on the list of that initial application
Speaker 1: that you're gonna want a perspective tenant to fill out
Speaker 1: is their employment information. In particular, it's best to speak
Speaker 1: with their direct supervisor if at all possible, or if
Speaker 1: they work for a bigger company, you might need to
Speaker 1: settle for talking to someone in HR, but that conversation
Speaker 1: or email exchange with their supervisor can be really beneficial.
Speaker 1: You can get little clues from how their supervisor talks
Speaker 1: about them or you know, whether they give a glowing
Speaker 1: review quickly or um, whether they're very brief in their responses.
Speaker 1: And I know that that's helped me make decisions. Um
Speaker 1: Us they work here, I believe they come in the
Speaker 1: door sometimes. That's all I can say. Yeah, so you
Speaker 1: do get a lot from that email exchange. UM and
Speaker 1: It's worth noting that you should do all of these
Speaker 1: things because you might not get a great picture from
Speaker 1: just doing one, but all of these things combined, you know,
Speaker 1: our pieces of the puzzle that put together the entire
Speaker 1: picture of whether this person is going to be a
Speaker 1: good tenant or a bad one, and some other things
Speaker 1: that you can have on that initial application. Obviously, you
Speaker 1: want to have their signature on there. That way you
Speaker 1: can verify that the thing that they say are true
Speaker 1: by you know, giving their previous landlords or their bosses
Speaker 1: a call. And other info on there as well could
Speaker 1: be helpful when it comes to make a decision, but
Speaker 1: doesn't carry as much weight, things like their current rent
Speaker 1: or while they're moving. Things like that, it's helpful to
Speaker 1: have that information on there. Uh, just kind of creates
Speaker 1: a more robust picture of of who they are. It's
Speaker 1: also worth mentioning to that this initial application can be
Speaker 1: as simple as just a piece of paper, just a
Speaker 1: form that you created in a word document where the
Speaker 1: applicant just fills out the information. This isn't something that's
Speaker 1: super fancy. You can have a few printed out on
Speaker 1: hand there while you're showing the property, but that makes
Speaker 1: it super easy. But man, lately I've just been like
Speaker 1: texting it, Like when folks show up and just say,
Speaker 1: all right, what's your number? And I just texted to
Speaker 1: them or email it to them, and folks were able
Speaker 1: to print it out either at work or at home
Speaker 1: or just fill it out digitally. It's just so easy
Speaker 1: now to to do that by a smartphone and just
Speaker 1: sign it with their finger and get their signature on
Speaker 1: there and boom like you're you're all set, You're gonna go.
Speaker 1: And so that's the initial application, which again can be
Speaker 1: easy as paper. The next thing you want to do
Speaker 1: with that is to start making the calls. You start
Speaker 1: following up and figuring out if these folks are who
Speaker 1: they say they are. Yeah, Matt, So, I think there's
Speaker 1: a lot of flexibility and how exactly you want to
Speaker 1: handle that application. Like you said, you could just literally
Speaker 1: send an email with four questions and have them respond
Speaker 1: to them. But I think there's something about an official
Speaker 1: form that feels a little more legitimate um and makes
Speaker 1: it feel like they are jumping through a hoop right
Speaker 1: in order to bring your property, and you want that right.
Speaker 1: You want someone to jump through a hoop or two
Speaker 1: in order to feel like they have done the work
Speaker 1: to be worthy of living in your house. Um, I
Speaker 1: don't know. I think there's something to be said for that. Yeah,
Speaker 1: you want to make sure you're approaching it from a
Speaker 1: professional you know. Standpoint, When I when I mentioned texting
Speaker 1: or emailing, I meant like sending the actual PDF of
Speaker 1: the form, because I don't like printing out a bunch
Speaker 1: of paper and then just end up throwing it in
Speaker 1: the trash if nobody takes an application. Sure, but it
Speaker 1: is totally easy to email or text or send that
Speaker 1: PDF and then have them send it back on their
Speaker 1: own time. And again, timeliness, Right, how long does it
Speaker 1: take them to fill that out and get it back
Speaker 1: to you? In a perfect world, it's a it's a
Speaker 1: few short hours for someone that is truly interested in
Speaker 1: running your place. But the timeliness in which they respond,
Speaker 1: how they respond, the level, the thoroughness to which the
Speaker 1: former is filled out, those are all kind of many indicators.
Speaker 1: And then the next indicator is making those phone calls,
Speaker 1: sending those emails, talking with the current, previous and previous
Speaker 1: landlords as well as their boss. Right, And this is
Speaker 1: the easiest step to get sloppy with you see that
Speaker 1: they filled out that they are currently employed, and you
Speaker 1: just decided to give them the benefit of the doubt. Right,
Speaker 1: But you can gain the most insight into a potential
Speaker 1: applicant when you take action on this step and you
Speaker 1: choose to do the digging, do the hard work of
Speaker 1: actually sending the emails, making those uncomfortable phone calls. I'm
Speaker 1: not gonna lie mat Like when I dial up the
Speaker 1: phone to talk to someone like a previous landlord or
Speaker 1: the boss, I feel a little weird, Like I feel
Speaker 1: like I'm digging into someone's private life, but like going
Speaker 1: through someone's drawers a little bit where it's like, oh man,
Speaker 1: I'm gonna have to like tread through this and figure
Speaker 1: out what's been going on exactly. It's super weird. It's
Speaker 1: a little weird. It's like you're a counselor Yeah, like
Speaker 1: I feel like I know a little too much about
Speaker 1: this person, but yeah, exactly. But also I know that
Speaker 1: it is one of my biggest investments in life, right
Speaker 1: is are these homes that I've purchased in order to
Speaker 1: give people good places to live, and and that's the
Speaker 1: only way that I can make sure that I'm running
Speaker 1: out two good people, so I have to do it.
Speaker 1: It feels really weird, But I would say I think
Speaker 1: that's probably the biggest reason people avoid taking the action
Speaker 1: on these steps because it does feel weird, it's awkward,
Speaker 1: but you have to do it in order to make
Speaker 1: sure that you're covering you know, your own backside. That's right, man,
Speaker 1: you gotta do it. The step takes the most manual work,
Speaker 1: Like you said, making those calls or I would also
Speaker 1: totally recommend to make the calls and not just do
Speaker 1: the email because I feel like there's something else about
Speaker 1: hearing somebody talking on the other end of the line,
Speaker 1: Like if you're talking into a previous langlord and you
Speaker 1: asked them the question would you rent to this person again?
Speaker 1: And they if they without hesitation to say yes, absolutely,
Speaker 1: they've been awesome. That's a lot different than someone that
Speaker 1: pauses for five seconds, well, I don't know, and then
Speaker 1: they say yes, yeah, I would rent to them again
Speaker 1: because if they hesitate, there, you know, that's uh, that's
Speaker 1: an indicator, that's a red flag, and you might want
Speaker 1: to make sure that you are doing the proper amount
Speaker 1: of vetting. When it comes to screening, that tenant, and
Speaker 1: so after the break we'll share how to run a
Speaker 1: credit and background check on a tenant. The good news
Speaker 1: is that this just takes a few clicks on the
Speaker 1: computer and usually it's free to you. Yeah, all right, Joe,
Speaker 1: we're back. And before the break, we were just talking
Speaker 1: about how the initial application is the first and best
Speaker 1: way to make sure that you've got a great applicant
Speaker 1: on hand. And you're gonna do all all of that.
Speaker 1: You're gonna make those phone calls to their previous landlords
Speaker 1: to verify their employment, talk to their bosses. You're gonna
Speaker 1: do all that before you do this next stage that
Speaker 1: we're going to talk about. And I feel like at
Speaker 1: this point, you know, not all the puzzle pieces are
Speaker 1: put together, but you've got a pretty good idea picture
Speaker 1: of what's formulating right of, like what's coming together. And
Speaker 1: so you know, Okay, this person seems like they're on
Speaker 1: the up and up, and I'm ready to jump to
Speaker 1: this next step. But I think a lot of people
Speaker 1: in the screening process, they will skip all the stuff
Speaker 1: we just mentioned and they will jump directly to this step.
Speaker 1: And that's where a lot of people screw up ultimately,
Speaker 1: and and maybe they check out on this criminal and
Speaker 1: credit background check that we're about to talk about. But
Speaker 1: if they don't check out on those levels above, then
Speaker 1: you could still be in for a nightmare. So you
Speaker 1: really really do want to piece all these things together. Yeah, man,
Speaker 1: we didn't mention this previously, But one of the reasons
Speaker 1: why I love taking care of the initial application first
Speaker 1: and making those calls is that it's free. It does
Speaker 1: require the most sort of manual labor where you're having
Speaker 1: to make the phone calls, but it doesn't cost you
Speaker 1: anything except for a little bit of time talking to
Speaker 1: someone on the phone, and it doesn't cost the applicant
Speaker 1: any money either. That's something that some landlords choose to
Speaker 1: do where they take the application fee regardless of the
Speaker 1: order that they choose to process the applicant. And a
Speaker 1: lot of times what that means is the first thing
Speaker 1: that they do is they do the tenants screening, is
Speaker 1: that they do the credit report and the criminal background check,
Speaker 1: which does cost money. It costs somebody money, whether it's
Speaker 1: the landlords or typically it's the applicants. But what's the
Speaker 1: sense and having an applicant jump through those hoops and
Speaker 1: pay money when you know that a quick phone call
Speaker 1: to a previous landlord would have easily told you, yeah,
Speaker 1: you don't need to rent to these people. Yeah. And
Speaker 1: I feel like, honestly that the fact that I'm not
Speaker 1: handling any money directly in regards to an application fee
Speaker 1: builds a lot of trust between that potential tenant and I.
Speaker 1: So let's talk about the next step, Matt. It is
Speaker 1: getting a credit report and running a criminal background check
Speaker 1: on someone. Um, the great thing is, I'm not charging
Speaker 1: an application fee, like you said, right, I'm doing all
Speaker 1: this stuff. It is manual labor on my part, but
Speaker 1: I am not charging the potential tenant any sort of
Speaker 1: feat in order to do that. And there are a
Speaker 1: few services that can handle this for you and be
Speaker 1: essentially that middleman between landlord and tenant. And the one
Speaker 1: that Matt and I are partial to we've been using
Speaker 1: for years is one called my smart move dot com
Speaker 1: and it's run by one of the three major credit bureaus,
Speaker 1: trans Union. As a landlord, it's super easy to create
Speaker 1: an account. You enter your applicants email address, the site
Speaker 1: sends them a notification where they can securely enter their
Speaker 1: personal information, including their Social Security number as well as
Speaker 1: the payment information, so they pay for it directly, and
Speaker 1: that's kind of what I love about this. It's a
Speaker 1: beautiful thing. I'm not handling any sensitive information of any
Speaker 1: of these people right already said it feels a little
Speaker 1: awkward that I'm calling to talk to their boss or
Speaker 1: their previous landlords, but at least I don't have to
Speaker 1: ask for their social Security number and credit card information.
Speaker 1: I'd rather not handle that information as well, in addition
Speaker 1: to talk to their past So it's so nice that
Speaker 1: they're entering it into a third party website and then
Speaker 1: that third party website spits the results back out to
Speaker 1: me in email form. So that's kind of what I
Speaker 1: love about handling it this way. It feels so much
Speaker 1: less awkward, and at the same time, I'm getting all
Speaker 1: the information that I need to get. That's right, man.
Speaker 1: So my smart move dot com is that site. Another
Speaker 1: one that's real similar to that is landlord Station. I
Speaker 1: haven't personally used that, but I did some research on
Speaker 1: there and it's set up a lot like my smart Move.
Speaker 1: There's some other sites out there as well, like Cozy
Speaker 1: dot co and that's uh c o z y dot
Speaker 1: c o and those sites are a little more robust.
Speaker 1: The service that they offer also includes free management software
Speaker 1: with with a portal for collecting rent. It makes it
Speaker 1: super easy, especially if you have a lot of properties.
Speaker 1: It's a great way to automate a lot of your
Speaker 1: business if you are a full time landlord. So check
Speaker 1: out cozy dot co or even another side as well, Buildium,
Speaker 1: and they also offer similar services where it's dude. Essentially,
Speaker 1: it's like a one stop shop where if you don't
Speaker 1: want to interact with your tenants at all, use these
Speaker 1: sites which are great for a lot of reasons. And yeah, yeah,
Speaker 1: when you're running a business, you want things to be efficient,
Speaker 1: you want things to be standardized, and and that's how
Speaker 1: you do it. Yeah, and that way, you know you're
Speaker 1: not dealing directly with tenants via text message at all
Speaker 1: hours of the night, right like they're sending something to
Speaker 1: this specific website in order to report their problem. But
Speaker 1: we digress, I guess because ultimately the thing that we're
Speaker 1: talking about in today's episode is the easiest way to
Speaker 1: screen a tenant. And so hopefully we're simplifying these steps,
Speaker 1: letting you know the exact stages of screening, and it's
Speaker 1: actually much easier than it appears. Um, it takes a
Speaker 1: little more time than just typing an email into a
Speaker 1: website or just making one phone call, right, but doing
Speaker 1: your due diligence on the front end can save you hundreds,
Speaker 1: maybe thousands of dollars in eviction fees in dealing with
Speaker 1: a tenant that is just subpar, right that it's just
Speaker 1: hard to deal with. And this my smart Move. The
Speaker 1: reason I love my smart Move site as kind of
Speaker 1: that last final step in tenant screening is because at
Speaker 1: the very end my smart Move really in their l
Speaker 1: that they send to the landlord pretty much gives you
Speaker 1: a green, yellow, or red light and they say, all right,
Speaker 1: this tenant is green. It's good to go. It's clear
Speaker 1: you should accept this person. And based on all the
Speaker 1: other screening steps that you've done, you say, boom, that
Speaker 1: last green light. That's all I need. And if it's yellow,
Speaker 1: there are steps you can take to mitigate your risk.
Speaker 1: Let's say it's yellow because their credit score is a
Speaker 1: little bit lower than you can say, you know what,
Speaker 1: all these other steps that I've gone through make this
Speaker 1: tenant seem pretty trustworthy, and so I'm gonna go with
Speaker 1: them anyway. I'm just going to require a larger security
Speaker 1: deposit just to cover myself a little bit more. But
Speaker 1: I just kind of love that system, and man, that's great.
Speaker 1: We're gonna at risk. Another way, too, is with students, right, Like,
Speaker 1: if you have a student that doesn't hardly make anything
Speaker 1: and they're trying to get a place, if you go
Speaker 1: through these steps, that can be really difficult for them
Speaker 1: to seem qualified, even though they might have a parent
Speaker 1: who's an attorney. It makes bank. Uh. And so there's
Speaker 1: certain situations right that might call for a less than
Speaker 1: traditional signing of the lease, whether that mean having the
Speaker 1: parents sign instead for their student who's in school. Yeah,
Speaker 1: that kind of happened to me once. I had a
Speaker 1: college student wanting to rent from my house that I
Speaker 1: was like, there's no way she can afford. But her
Speaker 1: mom ended up coming with her to the showing and
Speaker 1: wanted her to live there with a roommate. And it
Speaker 1: ended up being this great scenario where it was essentially
Speaker 1: her mom that was the applicant. I ran the mom's credit,
Speaker 1: got this security deposit from the mom, and then also
Speaker 1: the mom was paying the rent every month. And so
Speaker 1: when you're entering into something like that. That's completely fine, right,
Speaker 1: that's a way to mitigate risk. Yeah. Ultimately, as a landlord,
Speaker 1: like the worst thing you can do is to be
Speaker 1: signing a lease with someone that doesn't have the credit history,
Speaker 1: the current cash on hand, or the income that qualifies
Speaker 1: them to ring your place. Yeah. Man, even though we're
Speaker 1: in Atlanta, we actually don't have a ton of students,
Speaker 1: and I think in some cities where it is like
Speaker 1: heavily college town, that's got to be something that that
Speaker 1: folks deal with more. It seems like could just be
Speaker 1: an extra headache, Yeah for sure. Yeah, So in the end,
Speaker 1: it comes down to how you want to spend your
Speaker 1: time and your money. You know, we we've we've touched
Speaker 1: on this, But in the end, you can spend a
Speaker 1: little bit of your time and almost no money now
Speaker 1: while you're screening. Just make sure you're kind of making
Speaker 1: those calls and doing a little bit of that work now,
Speaker 1: or you can spend a ton of time and a
Speaker 1: lot lot more money later on when it's time to
Speaker 1: evict somebody. I would choose the former every single time. Yeah,
Speaker 1: you might get lucky and you might find a good
Speaker 1: tenant without doing any of this work, right, but that's
Speaker 1: also kind of playing a game of Russian roulette, and
Speaker 1: at some point you're gonna get burned by having a
Speaker 1: bad tenant. I will say that this has pretty much
Speaker 1: been a foolproof plan for me in finding good tenants.
Speaker 1: And even when you're doing this right, you're gonna have
Speaker 1: headaches as a landlord. Even when you're screening tenants well,
Speaker 1: even when you're getting people that are qualified that do
Speaker 1: pay rent on time, you're gonna have headaches. Sometimes that
Speaker 1: great tenant is going to pay late, and sometimes they're
Speaker 1: gonna be a thorn in your side asking for small
Speaker 1: ridiculous repairs, you know, on a way to consistent basis.
Speaker 1: But following the uh stages of screening process that we've
Speaker 1: laid out here is going to prevent of the problems
Speaker 1: that you might encounter as a landlord with crumby tenants.
Speaker 1: And so we would say follow these to a t
Speaker 1: and things will go well for you as a landlord.
Speaker 1: Nice man, quick little episode on real estate and screening tenants.
Speaker 1: One of my favorite topics any any day of the week,
Speaker 1: Like I get super excited to talk about real estate.
Speaker 1: And the guy I mentioned earlier in the episode, Tim
Speaker 1: I met him at the three year old birthday party. So,
Speaker 1: and he's got seven properties that kind of gets you
Speaker 1: fired up, right, dude. I love talking with him about
Speaker 1: it because every landlord kind of has their own personal experience,
Speaker 1: has their own parts of town that they love working in,
Speaker 1: has their own kind of story for how they got
Speaker 1: into it's just fun to kind of have those stories
Speaker 1: and to talk about it. And then also you hear
Speaker 1: from kind of the beats that other people will have
Speaker 1: experienced in doing the landlord game. And you know what,
Speaker 1: no matter how long you've been a landlord for it,
Speaker 1: you're gonna have a beat or two right to share.
Speaker 1: And said the learning experiences that happen along the way.
Speaker 1: I think it's just good for us to share with
Speaker 1: each other as landlords, and it's good for us to
Speaker 1: listen to the two people that are maybe a little
Speaker 1: bit further on down the path than we are, because man,
Speaker 1: there's always more that we can learn about being a
Speaker 1: good landlord, about investing in properties well to do well
Speaker 1: for our families, and wealth building over the long run. Yeah, man,
Speaker 1: that's true. And I love what you said too about
Speaker 1: learning from other other folks that are kind of further
Speaker 1: down the path. All right, let's talk about the beer.
Speaker 1: We had Matt variants again. This was raspberry Johnny Kashmir.
Speaker 1: Is it supposed to be like Johnny Cash? So Kashmir
Speaker 1: is a type of hop Johnny Kashmir. It must be,
Speaker 1: It must be. But Kashmir it's like a thing. It's
Speaker 1: like a velvety, smooth Kashmir. True, right, yep. And it
Speaker 1: was honestly kind of a velvety beer. There were what
Speaker 1: three different kind of fruits involved. And the interesting thing is, uh,
Speaker 1: it was what raspberry, raspberry, iguava and passion fruit. And
Speaker 1: the funny thing is what did you taste? What I
Speaker 1: tasted the most was great fruit and that's not even
Speaker 1: one of the listed fruits. I don't know why. It
Speaker 1: was a really really really good beer, but I tasted
Speaker 1: a lot of great fruit in it. You're not gonna lie.
Speaker 1: Maybe that's just the combo of those three fruits. They
Speaker 1: taste like great fruits. Their powers combined equals great fruit,
Speaker 1: I guess. So the poored to I mean it poored
Speaker 1: a really pretty kind of ruby, great fruit color, a
Speaker 1: lot of fruit on the nose, so really heavy in
Speaker 1: the fruit. If you're not huge and I p a s.
Speaker 1: But you love fruit. I would say check this out.
Speaker 1: If you're local and in the Atlanta area, you can
Speaker 1: get these guys. Yeah, because Variant doesn't distribute their beers.
Speaker 1: And you went up to the brewery recently, you picked
Speaker 1: up this crowler of Johnny cash Mere th two ounces.
Speaker 1: You know, I each get a point and that was
Speaker 1: like lovely man. I now I definitely want to make
Speaker 1: the trek up outside of town to check out Variant
Speaker 1: because kind ahead otp because it was a really good beer,
Speaker 1: and I want to try more other stuff. So you
Speaker 1: want to hear a funny story. Yeah, we swung by
Speaker 1: there after. A couple of weeks ago, I took a
Speaker 1: friday off in me and Kate and the girls. We
Speaker 1: went hiking and swung by the brewery afterwards, which is perfect, right,
Speaker 1: beautiful day. You want to go hiking and then you
Speaker 1: want to go drink beer. Well, Kate was wrapping up
Speaker 1: with the girls and before we got back in the car,
Speaker 1: took him to the bathroom and she had her sunglasses clipped,
Speaker 1: you know, like you kind of fold them over and
Speaker 1: hook him on your shirt. And we've got young girls one,
Speaker 1: three and five. But she had the three in the
Speaker 1: five year old in the bathroom and she was bending
Speaker 1: over to kind of help them out get off the
Speaker 1: toilet glasses in the toilet glasses fell into the into
Speaker 1: the toilet, and the girls were freaking out. They're like,
Speaker 1: nor glasses, mom, and the Kate was like staying calm
Speaker 1: and she's like, it's okay, I got this, I got this.
Speaker 1: And so she went and grabbed some toilet paper to
Speaker 1: kind of make a little glove sort of doesn't work
Speaker 1: in the water. Yeah, it doesn't really work, but she
Speaker 1: I don't know, it's just what she had in her mind.
Speaker 1: And when she stepped away to grab toilet paper to
Speaker 1: be able to grab it, it had the automatic sensor
Speaker 1: flush and it flushed her sunglasses down the toilet, and
Speaker 1: our girls freaked out even more, and Evvy, our oldest,
Speaker 1: started screaming, but it's bad for the world, which is
Speaker 1: like the funniest thing ever. She just kept saying, it's
Speaker 1: bad for the world for those sunglasses that to go
Speaker 1: down that toilet. So those glasses are gone. They're not man, Yeah,
Speaker 1: they're totally gone, and they're like New Zealand now or something.
Speaker 1: That's just how I assume the plumbing works here. I
Speaker 1: felt terrible, and so when I was buying the Crawler,
Speaker 1: I was like, Hey, by the way, I just want
Speaker 1: to let you know that my wife accidentally flushed her
Speaker 1: sunglasses down the toilet and there might be a problem
Speaker 1: with that last ball. I'm just giving your heads up.
Speaker 1: I'm out of here at piece, never to be seen again,
Speaker 1: never to be seen. I did tell her after I
Speaker 1: got my Crawler, because I was just like, I want
Speaker 1: to make that quick getaway. That's awesome, and I love
Speaker 1: Eavy's reaction. That's so heavy. Yeah, alright, Joel, it's time
Speaker 1: for our final thoughts again. The reason that we're talking
Speaker 1: about screen tenants is that this can be very tempting
Speaker 1: step to skip when it comes to getting a new
Speaker 1: tenant in your place, and it can cost you a
Speaker 1: ton of money if you have to evict your tenants. Yeah, man,
Speaker 1: in all likelihood, it's going to be a huge headache
Speaker 1: and it's also going to cost you thousands of dollars.
Speaker 1: And we can't promise that you're definitely going to avoid
Speaker 1: leasing your place to a subpar tenant, but we do
Speaker 1: think that if you will stick to the stages of screening,
Speaker 1: that we lay out, you're going to amplify the chances
Speaker 1: of finding someone that is going to treat your home
Speaker 1: well and pay rent on time. So the first stage
Speaker 1: of screening pre screening. Make sure that you have specific
Speaker 1: requirements in your listing, things like your credit score or
Speaker 1: your income requirements. Those things allow your tenants to essentially
Speaker 1: pre screen themselves and they won't be wasting their time
Speaker 1: or yours. And then schedule showings. You'll learn a lot
Speaker 1: by emailing back and forth to set up that appointment,
Speaker 1: and then you'll also learn a lot in person when
Speaker 1: they show up, or if they don't show up and
Speaker 1: they don't tell you anything exactly right, communication or lack
Speaker 1: thereof when it comes to that initial showing of the
Speaker 1: property will be a huge tip off whether you're dealing
Speaker 1: with someone who is responsible and will be a good
Speaker 1: tenant for the long haul in your place or not.
Speaker 1: So the next step. If they like the place, the
Speaker 1: next thing you want to do is get them an
Speaker 1: initial application, and this is where they can fill out
Speaker 1: that personal information, just the basic stuff like tenant history,
Speaker 1: employment information. You want to make sure they have a
Speaker 1: signature on there as well. That way you can verify
Speaker 1: the information with their previous landlords or their place of employment. Yeah,
Speaker 1: and then make the phone calls, send the emails, do
Speaker 1: your due diligence. It's really easy to skip those steps,
Speaker 1: but those are the most crucial parts of this whole
Speaker 1: process in order to make sure that you are gaining
Speaker 1: the most insight into that applicant. You know, verifying their
Speaker 1: employment and good standing with previous landlords is insanely important. Yeah,
Speaker 1: it cannot be overstated, man. And then the final step,
Speaker 1: and once all that checks out, is to run their
Speaker 1: actual credit report and their criminal background check. My smart
Speaker 1: move dot com is a great site to run something
Speaker 1: like that. You don't have to deal with handling your
Speaker 1: applicants social Security number or accept payment. It all goes
Speaker 1: through that website, so be sure to check them out. Yeah.
Speaker 1: The nice thing is you're not handling any money in
Speaker 1: this exchange, and Mike smart Move is doing all the
Speaker 1: heavy lifting for you. But don't skip straight to that step.
Speaker 1: You're gonna want to follow all of these stages of
Speaker 1: screening in order to find the best tenant. Yeah, man,
Speaker 1: that's right, So thank you folks for listening. Our home
Speaker 1: on the web is how to money dot com. We'll
Speaker 1: have our show notes up there for you, where we'll
Speaker 1: have a list of the sites where you can run
Speaker 1: the credit report and criminal background checks on your applicants. Yeah,
Speaker 1: and if you like this episode, well there's a lot
Speaker 1: more out there for you to listen to, So check
Speaker 1: out our backlog of episodes wherever you listen to podcasts,
Speaker 1: and don't forget to hit the subscribe button until next time. Man,
Speaker 1: Best Friends Out, Best Friends Out,