Investment Property Red Flags: Small Pets Welcome, Just Not Boas.

This part of our series is focused on the right questions to ask your tenant over the phone.

You’ve got your property up and running. You’ve had some good tenants as well as some rotten apples. The screening process you use is diligent but now its time to refine the ‘phone game’. I’m a big fan of pre-screening in order to save both the tenant and myself time; our common non-renewable resource.

First, define your perfect tenant profile. This will include age, demographic, type of employment, income, pets, desired lease terms, pets, kids, smoking, need-factor and likability. Now, you will meet plenty of prospects that will fall outside of your criteria and they may turn out to be perfectly good candidates. This first filter is designed to cut the wheat from the chaff and narrow down who you start screening. You may get a ‘perfect’ prospect and find that there rental history is technically perfect, but previous landlords found them to be too high maintenance. So, here you are weighing what you want with what you’ve got.

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Depending on the rental market I use a variety of mediums to advertise, sometimes just one other times a combination of the following: online ads, street signs, bulletin boards, referrals via tenants/landlords/networks, open houses, social media, flyers and rarely newspaper ads.

You’ve written detail rich ads, put plenty of pictures up, and have defined the rent and availability. Now you are generating calls. Here are the questions to ask:

1. How did you hear about the place? Ask this one to gage where your prospects are coming from so that you can learn how much information they have. If it is an online ad they should be fairly well screened. If it is a street sign they will need thorough screening.
2. When do you plan on moving in? Listen carefully to their answer. If they have a clear date (and it matches your vacancy) proceed with ‘are you currently on a lease?’ You want to find out if they have broken their lease or are on a month-to-month term. You probably don’t want a lease breaker unless there is a very good reason for doing so. If they want to move in ASAP, that may also be a red flag as they could be coming from a dispute with their current landlord.
3. How long have you lived at your current address? Let them talk and determine if they move around a lot, change jobs or stay put. Some folks have rented houses for years, keep them in good repair and move only when the owner decides to sell. Others can be more transient. See if they have lifestyle changes that influence their move: “My wife is pregnant.” to “I just got fired” are good examples of what to look for. Ask “How long are you planning to stay?” this helps you determine if they are thinking long-term or short-term.
4. Who will be living with you? Get the number of adults as well as kids. Listen for “My uncle Joe will stay with us for a few weeks until…” . You want to have all adults on the lease and name the number of kids and pets as well. If more people are to move in later and you are ok with this, do so ONLY when they are added to the lease as tenants.
5. Tell me about your job? Let your prospect talk and take notes. You want to find out how long they have been there and field out their employment prospectus. You’ll begin to get a ‘feel’ of their character through this question as well.
6. First month’s rent and security deposit are due before you move in, do you foresee any issues with that? Establish their ability to pay rent. You want to make sure that they can afford your place. You will later run a credit report or at least verify income from their employer. If there is hesitation in getting you the security deposit, ask why. This may be a potential red flag.
7. Do you have previous landlord references and credit references? Encourage your prospect to talk – especially about the previous landlord and their experience. You’ll learn a lot about the relationship. Sometimes a tenant that has a bad landlord experience is a great person to work with provided they weren’t the cause of the issues.

Do you have any questions? If your prospect has made it this far, listen to what they ask you as they have satisfied your preliminary questions. They have invested their time and you have begun to establish a base on which to grow. Questions may be about amenities, location, accessibility, parking and utility costs.

These are great base questions to start with. You can adjust the order of questions to suit your priorities. Use open-ended questions and don’t be afraid to politely stop the screening process if you determine early on that they aren’t a fit. “Thank you, but I’m sorry this isn’t for you, I don’t think this is a good match, I will call you back and let you know, Thank you for your time, etc…” are all good ways to end the conversation while respecting the declined prospect.

We have all tenants fill out applications and check them thoroughly. We will sometimes do a quick pre-screen sheet at a showing that has a series of questions that the tenants sign off on, then we take a partial first month’s rent deposit before running the applicant. This ties up the property for them (and you). If the applicant doesn’t check out, return the money unless you cannot re-rent in time and their application was hiding some negative facts pertaining to previous tenancies (evictions, etc.).