Should Landlords meet their renters? / Good vs. Bad Tenant

Question

Hi everyone,

I'm getting ready to rent my first investment property here in Newport Beach, CA. I'm the landlord and am using a property manager while I learn the ropes and finish school. We've gotten a ton of interest in the place and it looks like we'll be ready to go here shortly. The home is in a highly sought after neighborhood with a fairly high asking price for rent.

I had a couple of questions and hoped someone on here would have an answer or give some insight.

First, do you believe the landlord (me) should interview or meet tenants prior to everything being signed? What are the pros/cons to this? What are some things to ask or look out for?

Second, besides conducting background/credit checks and checking references, are there any other things you'd do to ensure you get a good tenant? Anything special that you ask your prospective tenants?

Lastly, I have a pretty extensive 'rules' list - not only to make it easy to terminate a lease with a pesky tenant but to preserve the property. Is this a good thing or can this bite me in the ass in the long run?

I appreciate any advice or insight!

CE

Chris T. · Answer

Congratulations on your first rental. Definitely read as many articles you can find on BP and get some books.

Since your property is in a desirable area with high rents, you should rent it yourself, and leverage BP and other investors in your area. You will learn much more if you do it yourself. Plus you're in a great position to be very selective. Just be careful not to discriminate.

You will probably make some mistakes along the way, but everyone makes them. The goal is to make small mistakes and learn from them FAST.

I like to meet tenants face to face and explain my requirements.  If you have any doubts after meeting them, dig deeper into their application and background check. look out for inconsistencies.

Allen Clark · Answer

If you're using a property manager then why not be a passive investor? If you want to be active then manage your own properties.

Getting a ton of interest, BTW, is not always a good sign. It could mean you have priced the rental too low. I always start VERY high and then inch it down if I need to. If I get more than 5 inquiries then I know I have gone too low. Every single time, I get more rent than I thought I would.

Account Closed · Answer

Hi Chris,  Get this book.  It was my bible.  Easy to read.  Written by lawyers.  Even includes contracts and all the forms you ever need in CA.  I liked their contracts much better than the Apartment Assoc contracts, too.

http://www.nolo.com/products/the-california-landlo...

Penny Clark · Answer

Account Closed, First congrats on securing your first property! Even if you are using a property manager, the property manager still works for you and you will have the final say in tenant placement. Prior to signing any rental agreement or lease, have your written rental criteria set up (make sure it's Fair Housing friendly) and go over it with the property manager. I would also have some of that criteria placed in your ad as well as stapled to the application when the PM is handing it out to the applicants at your property showings. If you don't do this, PMs will use their own which may not coincide with yours. For example, one property management company I worked for, set their qualifying credit score below 650 - even for "A Class" rentals. When in fact, the rental criteria credit score for those properties should have been no lower than 740.

It's actually better if you don't meet the tenants because you'll be assessing their ability to qualify based on your criteria objectively, rather than on their likability factor (tenant scam artists can be quite charming, you know). If you have an "A Class" property, this makes it all the more important, so set the bar high on credit, income and rental history. I would also look at their debt to income ratio, length of employment in same field, and employment references. You may want to have your PM set up a spread sheet with prospective tenants so you can compare them on each category, but it is better to have them screen and send you each tenant profile as soon as documentation to verify is provided. That way, you can go with the first come, first qualified approach instead of wrestling with three or more qualified tenants.

You are smart to consider starting out your tenants on a month-to-month, rather than a lease, because doing so better preserves your rights as a property owner (you can make changes to agreement with proper notice such as rent increases; you can end the tenancy quickly if your tenants situation should financially change, etc.). If the tenant is a real keeper and it looks like they'll want long-term tenancy, you can always switch them over to a lease, but there's really no need.

I hope this helps!

Kimberly H. · Answer

If you’re getting a ton of good applicants, then you are priced to low. And If by interest you mean someone clicked the button that says,”I am interested in this listing” while looking at Zillow or Trulia, those leads aren’t worth much.  We get a ton of interest by us, but interest doesn’t always mean good applicants.

We have a long lease so that there is no claim of miscommunication when someone does something stupid and is then upset that they didn’t get their security deposit back. Hard to argue that they didn’t know when it’s in the lease, and they initialed that page, or even initialed right next to it, etc.

Make sure you got a good PM, to many horror stories on here about people hiring bad ones…

I am the PM and always do the lease signing with the tenant and spend an hour going over the important terms.

Stan Smith · Answer

I'm not expert, but we sound a lot alike. I'm learning as I go and have made some mistakes--like hiring my PM

My advice, try the PM, if you want. But, you'd be better off getting:

1. An atty to do your lease

2. a home warranty

3. require post-dated checks for lease term

Jo-Ann Lapin · Answer

goof afternoon

Small world just came back from 32 nd and pch. That area is very demanded as you know and also is seasonal. Younger crowd as rentals go. I would stay on your path and be catious. Happy to network and assist.

Pete T. · Answer

I don't use a PM, so I always meet the tenants as things come up that can present red flags.  Make sure your list of items are legally enforceable in your state.  Knowing your tenant/landlord act is key.

Jason Hartley · Answer

If you are using a property manager then let them do their job and meet the renters on your behalf.  You are just inhibiting their work flow if you want to meet their clients.  If you are managing it yourself, then absolutely meet them before letting them live in your investment.

If you hire a good property management company, they will take care of the tenant screening by checking everything important like credit and criminal.  Ask them what their process is and feel comfortable with it before selecting a PM.  Then let them do their job while you kick back. =)

Should Landlords meet their renters? / Good vs. Bad Tenant

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