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  • Writer's pictureKerwin Donis

Tenant Troubles- The Real Estate Nightmare That Changed Our Approach

Avoiding The Tenant Trap…


Real estate can be a nightmare if you don’t take the necessary precautions. We learned this the hard way - and lost thousands of dollars in the process.


As single family investors, we had a rental only a few hours from where we live in North Carolina. It was a condo, and after cleaning out the kitchen, keeping a few books we found in the haul, and encountering more than a few neighborhood cats, we flipped the unit and rented it to a gentleman.


The first few months were great- he paid on time, we were able to cover the expenses, and we were basking in the glow of adding another property to our portfolio of cash-flowing rentals.


But then, our resident went ghost on us.


We tried calling, emailing, and knocking on the door. We even sent police officers to the unit to do a wellness check, because we were worried that something bad had happened to him. Nada. No answers, and no more rental payments.


But we were still responsible for paying for the debt and other fees to maintain the property. This is any investor’s worst nightmare - to have a property that is not only NOT cash flowing, but is bleeding.


Once we were able to go through the eviction process and legally gain access to the unit, we opened the front door. We weren’t sure what to expect - but what we saw was something out of a horror movie.


Moldy food on the counters. Stained carpets. Many signs that our resident had not taken care of the unit, and left without notice.


We had to pay thousands of dollars to get the property in good condition again, and once we did, we sold it. While we still made a profit overall, this was a painful experience that could have been avoided.


This entire ordeal taught us the importance of screening a resident before handing over the keys to a unit. And now, we go through an extensive screening process for every unit we have -single family and multifamily.





The Perils of Picking The Wrong Resident


We touched on these above, but in case it isn’t clear, here’s a quick run-down of what could go wrong if you don’t pre-screen a resident.



We experienced some of these headaches firsthand during the single family rental experience we shared earlier. It wasn’t pleasant, but here’s what we know to look for now in anyone who shows interest in being a resident at one of our properties.


The Holy Grail of Residents Isn’t A Treasure-Hunt…


What makes an ideal resident is straightforward:


Resident Is Clear of Any Concerning Criminal Offenses

According to SmartMove, about one-fifth of rental applicants have at least one previous criminal offense on their record. As the owner of the property, we’re responsible for the safety of other residents and the community at large.


Resident Has An Eviction-Free History

Previous evictions increase the risk that comes with renting out a unit to the resident, so the previous rental history of every applicant is vital.


Resident Has Sound Financial and Credit Health

A potential resident’s credit history can shed light on their financial habits, and how good or bad it is may indicate if they’ll have trouble paying rent in the future.


Resident Has Steady Income and Employment

A resident needs a job in order to be able to pay rent, so knowing that they receive consistent and reliable income from a verified employer is key. The industry standard follows that any resident must make three times the amount of the rent in income in order to be reasonably expected to be able to afford the rent at a given property.


Resident Has Good Character, Communication, and Organizational Skills.

If we catch an applicant lying about their income, employment, criminal record, or eviction history, this could be a red flag. If they have a bad reputation at the previous rental they lived at, this could also serve as an indicator that they may be problematic at our property.


Resident Screening Essentials


Screening residents is an essential process, but it doesn’t have to be daunting. Outlining a distinct process will help make it streamlined and efficient. Many times, property managers will handle this part, but we’ve found that reviewing their process and ensuring that certain fundamentals are present can have a positive impact on the property as a whole.


Here is some of the common criteria in the screening process:

  • Credit history review

  • Income and employment verification

  • Rental history review

  • Criminal background check


NOTE: Always follow and stick to fair housing laws and practices. Speak to a legal consultant if needed.


How To Screen a Resident in 4 Simple Steps!


Step 1: Market the property using online websites like Apartments.com and social media will get your units in front of a wide audience of prospective renters.


Step 2: Conduct thorough criminal background checks and check applicant references to qualify applicants. Have they been evicted in the past? Do they have any relevant criminal convictions? Did they lie about their income?


Step 3: Review each applicant’s financial history to make sure they have steady income, employment, and financial habits.


Step 4: Assess how the applicant communicates throughout the screening process. Are they responsive, professional, and communicative? Good or bad communication can be a tell-tale sign of the way they will act as a resident at your property.


This is just a general overview of the process, but we hope this gives you a foundational understanding of the process.


Beyond Brick and Mortar…


Residents aren’t just people living in a unit and paying rent each month. They’re the building blocks that make up the communities we invest in. They’re also people whose lives we can impact for the better or worse. The resident-investor relationship is a two-way street, and in exchange for meeting our criteria, we offer our residents clean, safe, and quality housing.


While we’ve had some bad experiences in the resident department, we learned a lot from them, and they’ve all contributed to refining our approach to real estate, and facilitating a positive experience for each resident we serve.


So maybe the nightmare was worth it.


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