Finding Quality Tenants; Learning to Pre-screen Our Applicants, Part 2

for rent (9_12)By the time Kid Saggy Pants left, we’d learned our lesson: it was time to pre-screen our applicants.  Up to this point, we’d simply agreed to meet everyone who showed interest in our Craigslist ad … And our apartment, being only 850 sq ft and with a rent of $565 per month, was attracting the interest, thus far, of a group of people that we, in turn, had no interest in.

A quick google search of “how to find quality tenants” confirmed that we were skipping the essential — and simple — step of pre-screening interested parties.  After reading a few articles, we sat down and made these changes:

  • We raised the damage deposit from $250 to $400: initially, we were going for affordability; we decided, however, that a stronger “skin in the game” factor would sweep some “fluff” away.
  • We asked for an application fee of $10: not much, but it covered our costs and required a small investment on the part of the prospective tenant.
  • We asked emailed inquiries to provide the following info:
    Name:
    Number of People & Relationship to You:
    Intended Rental Term:
    Pets:
    Your Occupation(s):
  • And finally, once we had a prospect on the phone, we asked 1) why they were moving; 2) what was they’re credit like; and 3) could they proved a positive rental history?

Along the way, with our quick phone pre-screening, we were able to wish good luck to a few people who didn’t match our desired tenant profiles. Simple changes, really — common sense stuff — and suddenly, within days, we landed three wonderful prospects.

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Purchasing Our First Rental Property, Part 2

for-rent-signOnce we found a property we liked on the Fannie Mae Homepath website, our realtor put in our bid (only licensed realtors can submit bids).  Like I said in Purchasing Our First Rental Property, Part 1, we’d been window shopping the website for at least a year before we found a property that was right for us.

What we liked about this property:

  • Bang for the buck: at the asking price of $51,000, this property would be affordable for us to finance; at this price, we could carry the mortgage during unoccupied times.
  • Move-in condition: this property was move-in ready; we only needed to add a stove and fridge and clean up the floors.
  • Condo unit: as a single unit in a small condominium complex (14 total units), we liked that the exterior — lawn, roof, sidewalks, etc. — would not be ours or our tenants responsibility.  Plus, the HOA fees are only $50 a month (less than a lawn service if we purchased a house).
  • Condition of the exterior of the building: brand new roof, brand new paint, well maintained common areas and parking lot.
  • City schools: location, location location — where we live, the county schools are overcrowded, underfunded, and notoriously low achieving.  The city schools, however, are the complete opposite: great reputation, well funded, and high achieving.  From the front door of this unit, you can toss a tennis ball onto the city high school courts.
  •  850 square feet, concrete subfloors, top corner position: at 850 square feet, routine maintenance — new carpet, new paint, new countertops and the like —  won’t break the bank.  Also, the subfloors of the unit are poured concrete — hard to screw that up, even with a blown water heater.  And finally, this is a top corner unit, attractive to tenants because of the low noise exposure from neighbors.

Our bidding strategy, recommended by our realtor, was a bit counterintuitive from the normal house-buying techniques.  Rather than lowball the offer, our realtor suggested we offer $51,110.  As a property investor himself, his feeling was that several offers would be extended on this property, especially since it was priced so low, in a great building, and move-in ready.  The extra $110 would put our offer, we hoped, at the top of the heap.

Was his strategy right?  We have no way to know, but our offer was accepted and a closing date set.  Fannie Mae also wanted to set a date one week before closing on which we’d provide proof of secured financing.  No problem, right?  Our mortgage broker, who’s handled all our home financing, is a buddy — we played high school basketball together — so I assumed I could just call him up and set the ball rolling.  Our credit is excellent; we have plenty of equity in our home; and we have enough in our retirement portfolios to pay off the property should we ever get stuck between a rock and a foreclosure.

We all know, though — don’t we? — what assuming does …

Stay tuned for Purchasing Our First Rental Property, Part 3, in which we get into securing financing for an investment condo … which local banks, at least in our area, won’t do these days.

Bust a Sag; or, Learning to Pre-screen Our Applicants

Dodge-Charger-2011-cars-front-left

Whipping his silver Dodge Charger into the lot, the kid parked at an angle, occupying two spots.  New York Yankees hat on sideways — a wide flat bill overhanging his left ear like an awning — and busting a lowdown sag in his skinny jeans, he jumped from the driver’s seat and darted up the stairs.

“Nice!” he said when I opened the door.  “Nice!”

We introduced ourselves and shook hands; his clammy grip felt boneless.

“C’mon in,” I said.  “Look around.”

“Nice!”

With jerky movements and a caffeinated energy, he fluttered through the 850 square feet.  Everything was “Nice!” — including the new fridge, which he yanked open and slammed shut like a hungry teenager.

“So,” he said, “what do I do if someone parks in my spot?”

I looked out the window: he was parked in two spots, neither of them his, nor would they ever be.

“And the price?” he asked.  “Any way we could get that lowered?”

Once we were rid of the kid, we locked up, and, having shown the place three times at this point — and to the first three interested parties — we realized we needed a refinery, a filter, a way to pre-screen before we unlocked the doors.  My wife and I both have day jobs; the trips to show the apartment consumed off-time hours: we wanted them to be quality, not quantity.

So what did we do?  How did we learn to weed out the no-brainers?  Google, of course.  A quick search of “how to find quality tenants” came back with several hits, and a few easy tweaks to our process floated to the top.

Stay tuned for How We Learned to Pre-screen Our Applicants, Part 2, in which we discuss our refining techniques that worked overnight to leave us with qualified, interested applicants.

Craigslist Advertising: Pig in a Poke, Part II

Advertising on Craigslist is a win-win prospect from our perspective: 1) While our local newspaper charges two arms and leg for a few measly lines of print, Craigslist is free and we can post a complete description, including a link to a google map of the rental address 2) we can upload as many as 8 pictures (you should always post at least one photo — ads with pictures get more traffic); and 3) we can repost every 72 hours, thereby moving our ad back to the top of the chronological list. In a period of 8 – 10 days, we’ve received a dozen inquiries and shown the place 6 times. Plus, we have a few more showings on the schedule.

One thing to beware of, however: The Craigslist scammers … They’re like buzzy little mosquitos, and they zip your email box regularly, looking for naive blood … Here’s one example:

Hi

Good day. I am very much interested in your rental apartment. I read through the details on craigslist and i am highly interested in renting it.
I work with the united nations development program(UNDP) Edinburgh Scotland and i just got a transfer that is bringing me down to Tennessee
in the states.I am still single plus I do not smoke neither do i keep pets, so i am sure you would not have a problem with me.
I would be in the states in 2 weeks time but would really appreciate it if you can hold the place for me till i get there.
My transfer would be for a period between 3-6 years, so i would definitely be renting for more than a year. But we can start by signing a 1 year lease. I would also be paying for the whole year in one lump so you might not have to bother yourself with a credit check except you have to. I would also bring all proof of employment(letter of employment and letter of transfer) with me, and show them to you on my arrival.
If the rental is still available, i would like you to take it off the market and further showing. Please let me know so that we can make further arrangements for a holding deposit to be sent to you so that you can secure it for me till i arrive.
I sincerely look forward to hearing from you.

Regards

Jonathan Roberts

Right. And pigs have flown, hell hath frozen over, and the sun has set in the East. I must admit, though, I find the attempts entertaining. Here’s my reply to Jonathan Roberts.

Johnny,

One full year upfront? Shazam! With that kind of money I can buy me a whole lotta good Tennessee whiskey! I believe I’ll just go ahead and book me a cruise to the Caribbean, too; mamaw enjoys working on her tan down there in them blue waters.

You should know, Johnny, that this apartment shares one leaky toilet with six other tenants. Also, with a full year paid up front, me and mamaw will throw you in some bedbugs for free. Is this to your liking?

Sincerely,

Uncle Festered Blue

I never did hear back from J R …

Purchasing Our First Rental Property, Part 1

The housing market sagged like a hammock, property values hit the ground, and we here at The Fishcreek Outfit had our hands on a small amount of liquid cash: We’d always talked about investing in a rental or two … Say hello to the FannieMae Homepath program.

Let me clairfy: a “small amount of liquid cash” for The Outfit — a married couple, no kids, both school teahcers — equals a few thousand dollars; and, of course, eyes bigger than our stomachs, we bit off more than we’d originally planned to (more on this later) … Alas, we scavenged a couple thousand more from other designated pots, and now we’re the proud, trepidatious, curious, excited owners of an 850 square-foot condo in a working class downtown neighborhood — great schools, walking distance to the park, pets under 35 lbs accepted … Need a place?

How did we begin? The FannieMae Homepath website is a catalogue of foreclosed properties across the US.  We searched through the listings in our area, visited a few, and waited patiently for a property that 1) needed minimal repairs 2) fit our projected budget 3) was in an attractive part of town and 4) inspected well.  Over the course of a year or so, we kept our eyes on the revolving properties until we found one that matched our criteria.

(Had we a bigger budget, I should say, we could have snatched up several different properties along the way; the website is full of great deals on homes that need updating and repairs.)

Once we found the property that worked for us, our realtor* put in our bid and the waiting began …

Stay tuned for Purchasing Our First Rental Property, Part 2, in which we’ll discuss the bidding process and securing a mortgage for a condo investment in the Age of Stingy Banks.

[*We highly recommend using your own realtor as opposed to the listing agent: in our area, at least, the listing agent appears to have her hands full; we wanted someone who could walk us through every step.]

Detective Landlord: Screening Tenant Applicants

Social media, of course: A recent prospective tenant had an open Facebook page – listed at the top of her favorite things to read: Hightimes magazine; and her favorite movie: Blow

Not necessarily bad, right?  Well … One look in the photo gallery … A caption below the first picture — of her holding up a giant margarita — read, “Gettin it krunk b4 gettin my club on.”

Stamp it: DENIED.

A thorough application: Another prospect left part of our application blank, so I called and explained that in order to review her application, I’d need the answers to a few questions she “forgot” to fill in: Do you smoke? Yes.  Have you ever been evicted from a property? No.  Have you declared bankruptcy in the last ten years? Yes.

A little fishy, right?  So I called the listed current landlord for a reference.  Somewhat suspicious at this point, I started with, “Are you listed as the property owner in the courthouse tax records?”

“Uh, no, I, uh, he owns a lot.  I, uh, manage a few.”

“I see.  Could you give me his contact info?”

“Yeah, sure, I’ll call you right back with it.”

I never heard back.  Stamp it: DENIED.

Keep em coming …