Keeping it ALL Business

[Jenny Drabant]

Just spoke with one of my new investor clients today.  He recently purchased a 2 flat that he is planning to live in and update in one unit while renting out the other.   (NEW HOUSE HACKER, CONGRATS!)  Anyways, we were discussing how to select an applicant to lease.  He wants my assistance (I'm a Realtor) in helping to find a qualified tenant for his unit but before a lease is signed he wants to meet with them first.  Now, I advised him one way and he agreed to proceed with that.  I am proposing the question to everyone else here just to start a friendly discussion and maybe get some different perspective.  I can see that there are definitely points to be made on both sides of the coin.

The question is:  After you have processed an application that meets your credit and income approval, do you have to "like" the tenant in order to proceed with renting to them?  (Take out the way off variables like "political beliefs, crazy cat people, or any other sort of non-conforming oddballs that you meet from time to time in the rental world.)  

Happy Thursday Everyone!

[Jonathan W.]

@Jenny Drabant like? Not necessarily. But if they are a PIA then that’s a different story.

I don’t have to like them but there has to be a mutual respect on some level. Like if they showed up to the showing high, drunk and sloppy but made funny jokes, I’d probably like them but I’d probably not rent to them, obviously

[Anthony Wick]

@Jenny Drabant

How would you even know if you “like” them or not? Are you having a date with them first? Set your criteria on minimum qualifications and rent to somebody that meets or exceeds those qualifications.

[Heath M.]

I prefer to have a good feeling but I inherited a tenant I probably wouldn't have accepted if I went off feelings.  Turns out she's a rock star, she's a super neat freak.  I hope she stays for ever!

But I do prefer to have a good feeling and that they don't roll up in a trashed car or look all shady.

[Jenny Drabant]

I particularly am of the opinion that everyone is on their best behavior during the showing and application processing.  So you really don't get a feel for the kind of person they are until after all the dust settles from their move in.  My advice was to stick to the qualifications he set forth for approval on credit, income, and reference criteria.  Its a better practice to do that anyways as his investments continue to grow.  Thanks for the input everyone.  

Inherited tenants are always a coin toss.  Glad you had a great experience @Heath M.  Its sometimes hard for tenants who get used to practices from one owner and have to get accustomed to a new owners practices.  Sometimes its just better to cut the cord in the beginning.  

[Todd Fithian]

@Jenny Drabant. This response would most likely get a lot of contradictory responses, buuut.. for us when we first started, and we’re obviously very nervous and by the book with finding tenants, and went through many applications, all super by the book, did all research, purely numbers etc etc, over prepared, and to this day, the WORST tenants we’ve ever had were the ones we went purely all business and by the books with. The ones that we brought in that we used much more gut feeling about have (so far) been unreal rockstars, paying rents early, keeping the places nicer than we keep our own place, telling us about problems before they’re massive issues etc etc. Now I’m sure this comes with a ton of luck so far, and of course we still do our due diligence and backgrounds, but sometimes using gut can be your saving grace.

[Jenny Drabant]

@Todd Fithian

That’s why I proposed the question to see how many in the Bigger Pockets world goes by the book or goes by a feeling.  :) It’s common for new investors take a more personal towards their application approval approach.  And yes I would have to agree that going by the book does NOT guarantee a perfect rental situation.   Going by the book, however does avoid any discrepancies of fair housing practices as well as weeds through the prescreening.   Ultimately at the end of the day experience does teach us not to touch the burning pot.   Thanks for your experiences and insight on this.   I can definitely say I have had bad renters that’s more The night met the qualifications by the book as well as great renters that we toolkits a chance on.   

[Dennis M.]

Do I like the tenants ? No not particularly but I like the green they give me very month. I can sit and be friendly with them though but they are not people I’d probably be inclined to hang out with . Most of my tenants are liberal leaning atheists with low motivation and lacking goals in life  . Complete opposite of me... and that’s okay with me . I didn’t pick them to be my drinking buddies or to counsel me on their thoughts on life  . Their job is to pay for my investments so I don’t have to like them . I treat them with respect as if we are equals  and I always fix their rentals up as needed . That’s all that’s required and to be honest that’s much better than my competitors in the area 

[Wesley W.]

There is a lot of information on rental applications and pay stubs, but unfortunately that is not exclusively what makes a good tenant.  Anyone can "sound good" on paper, but there really is something to be said for looking them in the eye and having a face-to-face conversation with them.

How many of us have had an online dating experience in the past where the person presented one way via emails, but quite a different (and usually unpleasantly surprising) way in person?  I know I have!  

It's much easier to tell whether a person is full of s**t or has their act together if you are interacting with them in person as opposed looking at a file (much like the example above).

Landlording is about managing people at least as much as it is about managing spreadsheets.  If your spidey senses are tingling, there is usually a reason.  But you'll miss out on that part of the process if you distill it down to just numbers and never vet them in person.

[Syed H.]

Like? Not really. 

Have a good gut feeling? Yes.