Tell me where I messed up?

Question

I’m obviously new. I don’t know if I messed up or just happened to grab the best rotten lemon tenant.

I purchase 4 units. 3 of them already filled.

I did the best screening I thought.
had them pay to do the credit/eviction/criminal/ personal check.
everything came back fine! Zero issues. She proved her income. No evictions or criminal. I called her previous landlord where she lived years. No issues.

She seemed very courteous, paid her deposit. Paid her prorated for March (10 days).

Then hell.

April 1 - no pay. She wrote 3 bounced checks (thanks Innago) I finally got card payment april 23. She didn’t not pay any of her fees. (3 NSF and 1 late fee)

May 1. No payment. I reminded her she has until may 3 to submit CArD pay. May 6 she pays with a check. It bounces.

I just got back from courthouse filing eviction process.

Only thing I will do better next time is - get previous previous landlord and ask them.

But other than that? What can I do differently? I’m feeling so discouraged. Only 2 months into my journey and I’m feeling so worn down.

Was this just a bad tenant that just happens? Or do I need to learn some things?

Tim Miller · Answer

Katie, welcome to the school of hard knocks! Lifer here but I don't get knocked as much now (thankfully). Here's some more things to be cautious of.

1. How did she prove her income? I can go online and create really great pay stubs to say anything I want. Here, you need to google any future applicant employer and call them to verify income.

2. You called previous landlord? Where did you get his/her info from? The tenant? You could have been talking to a friend of hers and not the landlord. Again, Google the home address and she what comes up. Check the local tax records, that will tell you who owns the property.

You didn't say anything about checking with her employer. Again, Google the employer information and call them. Take any information the applicant provides you with a grain of salt. Always, always verify the information yourself and do not use the applicant provided information. This will help going forward but just know, nothing is 100% full proof. Good Luck.

Nathan Gesner · Answer

You ran her credit score and it came back "fine"? What does that mean? A good score would be 700+. I suspect her score is low and probably shows some collections or judgments.

Did you get a government-issued picture ID to verify her identity matched the application and background check?

How did you verify her income? Did you know people can buy fake paystubs online? Did you check for that? Call her employer? Did you call the number she provided, or did you look it up yourself to confirm it's legit?

Did you call the Landlord number she provided or did you look them up? Did you match the addresses on her application with the addresses on her credit report to see if she's hiding something?

There's no way to know exactly what you missed without seeing all the details, but you clearly missed something. Good renters do not behave this way right after moving in. She cheated you and now you've paid the price.

Here's a detailed guide on how to screen applicants: https://www.biggerpockets.com/...

Justin Hammerle · Answer

@Katie Williams - It looks like you did more than your fair share of DD to screen the tenant.  Sometimes we just get unlucky, or perhaps this tenant experienced some type of unfortunate life event.  I wouldn't let this discourage you from continuing on.

all the best

Benjamin Aaker · Answer

Here are a few extra things you can do:

1. Mandatory direct debits for rent - won't stop the overdraft return of funds, but will stop the people who tend to forget (by that I mean prioritize other things).

2. Don't accept any payment that doesn't bring the balance to $0. It's really tempting to get something, but then you rarely get what is owed you and you limit your options for eviction.

3. It's possible she has been a great tenant in the past and has fallen on hard times. Do the above and consider setting up a payment plan that could help her get back on track.

Kevin Sobilo · Answer

@Katie Williams, here is a small thing you could do better.

It sounds like when the lease was signed they only paid a prorated 10 days of rent. I ALWAYS collect 1 FULL month's rent at lease signing!

However, you can prorate what you receive and apply the excess to the following month. So, if rent is $900 and they move in on the 21st (10 days left), they pay $900 and the extra $600 gets applied to the next month. So, come the 1st, they only owe $300.

I would also look to see if your state has a court website where you can do additional background checks for free. I have found in my state (PA), that many paid background checks are unreliable but my states website will show me evictions, civil judgements, criminal cases and even summary offenses like a speeding ticket.

Also, keep in mind its a numbers game. EVERYONE will have bad tenant experiences a small portion of the time no matter how good you get at screening applicants and managing tenants. I tell people to try to scale up to at least a few units quickly because it will help the numbers even out more faster and also help you get the experience to become more proficient faster as well.

Alecia Loveless · Answer

@Katie Williams I bought a SFH in 2008 and rented it to a family that TRASHED it. My experience was so bad that I sold it and got out of real estate investing until 3 years ago when I started again. Housing prices in my area never really recovered from the crash in 2008 and if I’d have not gotten discouraged I could have easily had 50 properties for less than $75,000 by the time I started again and today they’d be worth $400K or more.

Don’t let one bad tenant get you down. Get rid of them and fix the place up again and get another tenant. You just learned the hard way what every landlord does at some point, you just learned it sooner.

Stay positive! You’ve got this! Continue to build your portfolio! Keep on the track to becoming a real estate millionaire!

Jamie Banks · Answer

Hi Katie,

Keep your head up. Real estate investing comes with many ups and downs. Unfortunately, you experienced a bad situation however look at it as a learning opportunity and know you’re equipped to handle anything that comes your way!

Katie Williams · Answer

Thank you

I’m definitely going to be a bigger butt at digging deeper. I originally felt kind of bad asking all the info I originally asked! Not anymore!

Caden Wakim · Answer

I second @Tim Miller... If you did all these correctly, you could also have just gotten unlucky... it happens.

You can never do too much due diligence, always dig deep and verify what they tell you...

Best of luck!

Tell me where I messed up?

Most Popular Reply