Rentals are the way to freedom? Looking to remain inspired.

[Callie Mahoney]

We all know the process of real estate helps when there is a construction knowledge background. My first experience as a landlord turned into a mess and my inspiration is dwindling. 

A year ago I listed my first rental property. Pre-screening was seemingly adequate, and everything came back accordingly. This family was moving into the area due to having a new coaching position at the local university. 

They were AWFUL and created issues from the beginning. 

Long story short, I have learned to add additional pre-screenings to my rental applicants. At the time I did background and credit check. I know that doing this for all adults in the residence will possibly not be as efficient as necessary.  

Do any of you have tips on pre-screenings? Do you ask for references on your tenants? When you have issues early in the lease do you get rid of them sooner than the end of the lease agreement?

[Jim K.]

@Callie Mahoney

When I started as a self-managing landlord, I firmly believed everyone ought to manage their own properties until they got big enough to train their own dedicated employee properly and put her/him on the payroll. I still very much believe this is the best way to do things, if you can.

But in the years since, and largely with the help of reading Bigger Pockets posts, it's become obvious that I am in the minority, something of a throwback in this business. To do things my way, as @Bjorn Ahlblad has pointed out earlier in this thread, you will have to do a deep dive into local laws, the local housing authorities and their resources, and build a relationship with a good real estate attorney. As @Nathan Gesner has also pointed out here, you need a solid lease and, if you go looking for one, minimal expectations that you'll find a great third-party PM right off the bat.

Not everyone can make the initial time commitment necessary to self-manage effectively. I was lucky. I had a stay-at-home job, the financial support of my wife when I needed it, and plenty of time on my hands. Not everyone has the personality  type necessary to effectively self manage their first rentals. Again, I was very lucky. I came to self-managing real estate from the unlikely work backgrounds of a self-employed handyman and an adult classroom instructor, with a research background as a humanities grad student.

Just what is someone supposed to do if they realize the value of REI for them but doesn't come from that sort of background? It doesn't make sense to self-manage and "save money" when, in any portfolio over six units or so, you're going to blowing whatever you save in management fees on evictions from poorly-screened tenants every three months or so. So yeah, self-management was right for me, but it's obviously not right for everyone.

But, if you're still keen on self-managing, my big tip for you is to looking into online court records. Here in Pittsburgh, we have two websites that are absolutely invaluable to the screening process. First there's the local Allegheny County court records page where you can learn a huge amount about someone, and the unified PA justice records portal, where you can learn pretty much everything else of value about someone who has lived all their life in our area.

My second tip to you is to make sure you run your possible tenants through TransUnion SmartMove. SmartMove is used by a lot of people to get an accurate credit, justice, and eviction report on possible renters AND IT WORKS.

The third tip I have is to meet your tenants face-to-face and extensively mine social media, especially Facebook, for information about them, their close friends and associates, their work friends, anything and everything that might look like a red flag. All this information is up there for public consumption, and Millenials and Gen Z especially really just don't seem to mind that it's out there, so use it.

Fourth tip, go the extra mile and them some to verify employment, check references and sources of income. It's a lot more important than most people understand. When you call their boss and check a reference, the tenant-candidate is going to get a call that you checked. This makes it clear to them that you dot all your i's and cross all your t's, and should they screw up in the future, you will surely do the same.

My second-to-last tip is to follow the law and make it clear that you will always follow the law, ESPECIALLY when it doesn't profit you. Here in the Pittsburgh area, there's a three-day grace period on paying rent. There are more stringent protections on protecting a tenant's right-to-quiet-enjoyment than the rest of the state. Explain these things to the tenant. It makes it perfectly clear that you know the law, that you follow the law as a professional in your field, and they will understand that if it comes time to evict them, you will also follow the law to the letter and not do anything stupid to sabotage your own case.

My last tip is to treat your relationship with the magistrates and court staff in the jurisdictions where your properties are as business associates. I have never lost a night's sleep evicting anyone. Because in Pennsylvania, it's not me doing the evicting. It's a judge and a court system that makes the decision. I just bring a contract dispute to their notice. Every single contract dispute they have ever seen out of me has been a clear cut-and-dried dispute in which I am obviously high on the Mountain of Right and the tenant is low in the Valley of Wrong. That's how it has to be. Don't take a case to an eviction court when it's clear you need to do more to make sure there isn't a fair way out of the dispute. Don't be the kind of slumlord which the tenant can tearfully complain to the judge about, with pictures of your sloppy or nonexistent maintenance. Judges remember faces just as well as the rest of us.