Tenant and Borrower Screening

[Tom Goans]

Everyone is going to find this crazy, but my experience has been excellent using this screening method.

I never have a potential tenant or borrower fill out an application. I never obtain a credit report. I never do a background check.

I don’t need to. I have a causal conversation with the prospect. This can be done by email, telephone, but seldom in person.

A great question is to inquire about hobbies. This is very revealing and effective. I never ask direct personal questions. I never ask how much they make. (I have had very prominent professionals, such as doctors and lawyers, default). Listen closely to what the prospect tells you. I cannot tell you how many times a prospect all of a sudden told me they have a terrible credit history and then asked if that was a problem. My rule; if you are that forthcoming, you are a terrific risk ... it is the ones that hide the truth that are the problems.

If I do meet with a prospect face to face, I pay close attention to how new the automobile is, the jewelry, the toys, i.e. cell phone, and the clothes - are they designer clothes.

NOTE: I once read more than 50 percent of people making less than poverty level wages own a smart phone. How much is this costing each month?

I guess I have been doing this too long. But this type of screening is far more revealing than an application, credit report, or background check. It will give you a clue as to what might happen in the future - is the teenager becoming a problem child.

[Robert Steele]

Most of us are probably not "applicant whisperers" like you so I will stick to income verification, credit reports and landlord references thanks. However you do make some interesting points.

One thing I like to do is peek inside their car and see if its nice and clean or if it looks like a junk bomb exploded in it. Likely a good indication of how they will keep the property.

I totally agree with the cell phone thing. Up until this year I carried around a $25 cell phone I bought off ebay that's biggest feature was it went "ring ring". I have a fancy company phone now. I always felt a little strange pulling it out to swap contact details in front of tenants who had the latest iPhone.

All of my tenants have flashy big screen HD TVs. I finally broke down and bought a modest HD TV 3 years ago after living with a cathode ray tube TV for decades.