INVESTORS’ CORNER: Dirty tricks tenants play :: Metrolina REIA

Editor’s Note: This is the first of two stories. 

Poor property management can take one of the most stable, secure and profitable investments you can make and turn it into a feat which is, as Earl Nightingale was wont to say, “More difficult than trying to juggle two skunks and a bobcat.”

The majority of people you will rent your investment properties to will be decent, hard-working, honest folks.

The problem is that the other category of tenants moves around more frequently, so you have a disproportionately high chance of having one of these “professional tenants” apply for your property.

Here are some of the most common “tricks” they will use to muddy the waters of their past history and therefore current stability.

Falsified rental history

If done cleverly, this can be very difficult for the untrained landlord to detect.

A common technique is to list their rental history for a long period of time as “living with relatives.” This is a favorite of the unscrupulous and unsavory because it is very hard to verify. A slight variant is use of an address at which they have never lived and giving you the name and cellphone number of a friend or close family member. Both of these techniques can be easily overcome by pulling credit reports and seeing if the address history on their credit report matches that which they have listed on your application.

Do not hesitate to look up the phone number of the person who actually owned each property listed on their credit report at the time they listed it as a residence (a good application will grant you permission to do this) and ask the true owner if they did indeed rent to that person. I have uncovered some disturbing rental histories with this technique.

Disguising applicant

Some renters will attempt to put the lease in the “good applicant’s” name. With this technique, your applicant will attempt to apply for only one adult, saying either that they want the lease in only one of their names or that the other person is just living with them for a “little while.”

Don’t fall for it.

I require permission to pull credit and criminal history for every adult that will be living in the property. No exceptions.

Best that you know who will be residing in the immensely valuable asset that you are “loaning” to your applicants. If they balk, there is almost certainly something they do not want you to see.

Lou Gimbutis is director of education at the Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region. He can be contacted at [email protected]. For more information, visit www.MetrolinaREIA.org.

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