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Tenant Selection: Process or Skill

Investors spend hundreds and even thousand on "motivation" and education for real estate purchases. Hours with agents combing property profiles, data and formulations for ROI. Weeks even months evaluating "deals". And in the climate of today, upwards of 45 days in escrow if using traditional financing methods. Yet when it comes to tenant selection it is a few questions and a "how fast can I get a tenant" approach. I'm in the business of minimizing vacancy so I recognize and understand the mentality. Most don't realize tenant selection and screening as a skill or art. By making the right selection initially it can make everything that happens from that point forward much easier to deal with. Most problems with the tenant actually began prior to giving them the keys because they handle the presentation and viewing wrong. You must first eliminate and then investigate. With the initial phone call don't just jump the gun on getting them inside the property. Ask questions based on needs, desires and direction. Identify the motivation for moving, selection of property and area. So unless they lie on the phone or leave "something" out, you can attempt to eliminate and then investigate. During the initial elimination period you can ask questions [with the proper approach] about income, credit, evictions and convictions. Be prepared to say NO. Be prepared to stick to the parameters set to qualify and disqualify. Be prepared to let the "cash in hand" walk away if it is not a right fit. I have always practiced the belief that the cost of vacancy will be dwarfed by the cost of bad tenancy. Be willing to take the time to do the diligence to thoroughly investigate the candidate(s). Take nothing for granted or at "face value". Remember that the mindset [perception] of this tenancy is viewed differently from tenant to landlord. Before the lease is signed the ball is in your court. As the pen hits the paper, it is now a matter of process for alterations or to solve problems. So again take the time to do the investigation. Don't loose site of the "big picture" for the cash in hand and a {wrong} tenant in place. A couple of days or weeks longer on tenant selection will go a long way towards many smooth months ahead. Tenant selection is more than just an applied process, proper tenant selection is a skill. One that will come with great worth for the years ahead in our real estate rental markets. Please visit at: www.RentalPropertyRenegade.com

1 comment
  • Cary Efurd
    Cary Efurd Good article, Renegade. Do you have an answer for areas that have succumbed to poor tenant attraction?

    Cary Efurd
    October 20, 2016
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