All Forum Posts by: Dan Perrott

@Steven Lewis - Welcome to BP.  This is a good question asked by me in the past.

This is how I handled this situation... 

I created a one page sheet that lists the Rental Criteria.  On this sheet it lists the criteria that must be met by every applicant prior to showing the property.  It lists items such as credit score minimums, no evictions, proof of 3x income, etc.  It goes into a great level of detail from financial to criminal topics.  What I have found is that when read by the applicant, it eliminates over half of them from even trying to move further in the process.  I do not show the property, until I have agreement with the criteria.  They are told that if they are found not to meet the criteria, it is instant rejection of their application.  Do not budge from the criteria that you create.  So when creating the criteria, you need to think long and hard about the criteria you create.  Of course, you cannot have anything on the criteria that discriminates in any way - no exceptions. 

Additionally, I schedule group showings of the property.  This provides 2 benefits.  First, I only have to go to the property once.  This is because I usually have a applicant on the first showing.  Second, the unit shown less and it disturbs the current tenant less.

Hopefully this will help you to better manage the situation.  You don't need the credit report and application prior to showing.  You only need the agreement to the criteria that they must meet.  I implemented this process about 2 years ago after talking to many BP members and it has provided less headaches at turnover time and better tenants.

The cleanliness that you put into the common areas will most likely be reflected by the tenants in their units.  In most cases, the tenant will treat your property the way you treat it.   I vacuum and clean my home at least weekly - why wouldn't you treat this the same. 

I have heard/read though other conversations on BP that 10-12 units is the optimum level for the do-it-yourself property owner/manager with a full-time job.  I don't know the science behind this level but it seems fairly reasonable based on owning/'managing 6 doors today.

I like properties that need work.  Having the ability to add value to the property through sweat equity is something that I enjoy.  As the market gets tighter with fewer great deals available, finding the right deal has become harder. 

In all cases, I look for deals that are at least 1.7% properties. 

@Alex Hamilton - good point on the identification.  I require a copy of a government issued ID to be submitted with the application.  My credit/background check verifies applicant name against DOB against SSN.  It also verifies known addresses.  Any discrepancies are shown in the reports. 

I have rejected applicants when trying to apply using false identification data.  If I have to rerun based because it was a "mistake", the applicant pays the fees to run another report.

This is my basic order:

• Supply rental criteria to potential applicant and they need to verbally agree to the criteria.  This allows the unit to be shown to the applicant.  No agreement - no show.
• Take the application with the application fee and proof of income (pay stubs, tax returns, etc).
• I perform the credit/background check.  (youcheckcredit.com)
• In my area, I then check criminal and civil court records. 
• I perform an employment check with income verification. 
• I perform previous landlord check. 
• I perform reference checks. 

I do this for all applicants leasing together as a group.

@Bryan Bacallao - Welcome to BP! 

First - make sure you create a documented list of rental criteria.  You need to create this so that you consistently screen all tenants the same way.  You need to make sure you do not discriminate in any way.  Lucas and Michael have given you good starting points for that criteria.  I have a rental criteria list that each potential applicant must agree to prior to me showing the property.  It eliminates the applicants that would never pass my screening process and prevents me from wasting my time.  @Marcia Maynard introduced me in a past pod cast to the use of a standard, documented rental criteria.

Second - find a screening service to conduct background and financial checks on every applicant.  I screen every tenant 18 years and older.  Every person 18 years and older are listed as tenants on the lease.  There are services listed here on BP.  I use youcheckcredit.com to process my screening.

Finally, set your security deposit based on your screening results.  For example, if they have had issues in the screening that are borderline with your rental criteria, then charge additional security deposit.  For example, I have taken a renter that had a bankruptcy in their background.  They provided documentation that it was caused from a medical situation - life happens.  I had them give me 2x rent as a security deposit.  It works and I have a great tenant that had an issue in their past that was out of their control.

Hope this helps.  Good luck and happy investing.

It is not "Illegal" to deed your property to the LLC. The issue is that most bank loans have a clause in them that does not allow the loan to be titled into another name (LLC) otherwise they can call the loan to be due immediately.

In my experience, my bank has allowed me to deed my properties to my LLC. It is all dependent on your financial institution

Buildium is a property management software and quickbooks is accounting software.  Each is for a specific use and would complement each other.

@Chris Sukala

Welcome to BP! Glad to hear that you have started your REI career successfully. It is extremely addictive. Just make sure that you focus on your requirements to prevent yourself from making deals for the sake of making a deal. Be patient and look for the investments that are right for you. Don't let your addictive feelings drive your decisions.

Good luck and happy investing!