how to select good tenant when using property management

Question

Hello to all pro landlords,

We use property management to manage our rental.  Our current tenant (selected by our current property management and we didnt get a chance to choose) has not been paying rent for few months now and we are now going through a long eviction process.  So my question is how do you select tenants when using property management?

Thanks in advance.

Ana Marie B. · Answer

@Athena Lei - I may not be "pro" status on this board, but can say that I do inform my property manager in advance that I want to be kept in the loop as to who the "top contenders" are before a selection is made. My property manager has no problem with this and gives me a call to provide some background on those top contenders (i.e. types of pets if any, special circumstances, potential red flags, etc.).

Of course, my property manager is always careful to remind me that we need to be sure to abide by applicable laws/statutes when making a selection, which we do.

But in the end, I make the decision as to which tenant(s) to rent to.

Of course, my property manager is always careful to remind me that we need to be sure to abide by applicable laws/statutes when making a selection, which we do.

But in the end, I make the decision as to which tenant(s) to rent to.

Eddie Memphis · Answer

Nonsense. There are serial bad tenants, hoping their past does not catch up with them. There are many people that have no intention of paying rent. There are outright criminals that will take advantage of you and destroy your property given a chance.

Hoping people are good is bad management.

To answer your question. The reason you hired a management company is to ensure quality tenants. If you want to second guess their decision, do it yourself. Save money and feel better. If evictions occur, it's comes back to you anyway.

Eddie

Matthew Olszak · Answer

@Athena Lei What @Michele Fischer said is 100% true. You can semi-direct your PM as far as saying you don't want anyone placed with under 3x rent to income, etc, but its really their job to place good tenants. With many of my clients, I present the applicant/lease to them for their final blessing, but they have to trust I've done my due diligence. Beyond that, it'd be like hiring a general contractor for a remodel but hiring all the subs yourself - it defeats a huge purpose of hiring that person. Also, because I stand behind my decisions, I have varying management rates depending on if I placed a tenant or if the owner placed them; because I know the tenants I place won't take up much of my time I can charge less. And I can only do so because I'm not a large PM - any big company likely won't put up with that, they've got their systems in place that make things flow for them and for you.

Keep in mind however, that every bad tenant was once a good tenant. Life changes sometimes happen and that's when you've got to change into damage-control mode and leave the emotions behind with the sole goal of getting them out asap. Now, if your PM missed a history of evictions or didn't check all adults who are living in the unit, that's certainly an issue. But don't fire them because of a single bad tenant, fire them if their process that led to that tenant being placed was flawed.

Michele Fischer · Answer

That's what you are paying the property managers to do.  Let them do their job.  Keep up on the rent coming in and follow-up with the PM on slow payments and follow-ups.

I feel your pain.  Our only eviction has been with a PM tenant. But you have a choice - self manage or let the PM manage.

Matthew Olszak · Answer

@Ray Harrell I agree with you. But on that note of someone without a rental history, I require a guarantor who fills out an application as well. That person with no rental history and nobody to vouch for them financially wouldn't pass my criteria. I know every tenant has to have a first rental at some point, but good people 99% of the time have good family willing to help them out to get that start.

My point was more-so that if the PM and landlord agree on qualifications (which should be driven by the experience of the PM and their market knowledge), then the landlord is in no position to blame the PM if the tenant goes sour - we can't control the tenant's life, only mitigate the risk/damages. Like you said though, if they place a tenant with no rental history or who's guarantor family member has an unstable rental history, or if the required qualifications and investigations are sub-par, IE the PM didn't bother to investigate rental history beyond the applicant's current residence or didn't take into account that they just started a new job in a different industry making 3x what they previously did for the past 10 years - then those are reasons to be upset.

But yet again, if a landlord has to take the time to deeply examine an applicant beyond the PM saying, "yes, the applicant meets our agreed-upon criteria and here is the backup", you are working with the wrong PM because that's a big part of what a PM does. You are paying and trusting them to manage that process. The same as you trust a GC to hire quality subs.

Ray Harrell · Answer

@Matthew, some tenants are trained by parents how to game the system and have NEVER been good tenants. Don't believe the hype that everyone starts out good and because if circumstances turn bad.

Matthew Olszak · Answer

Eddie, I think you missed the second part to my statement or misunderstood me, so I'll re-explain. Every bad tenant, at some point in their rental history, was a good tenant. If the systems are in place to weed out the bad applicants, IE the ones with evictions, transient history, poor credit, poor job history, etc, then you shouldn't blame the PM when a tenant goes bad. We don't have a crystal ball to know that a tenant with no prior evictions and a solid job history would suddenly be laid-off and turn to alcohol and stop paying their rent. Obviously though, if the tenant the OP is referring to has an eviction history or as a package was just a poor applicant, then yes, the PM should be held accountable for just ramming whoever into the unit to fill the vacancy.

how to select good tenant when using property management

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