Many of us likely know someone who ventured into the real estate investing world and purchased a property with the intention of renting it. While this can be a very attractive investment vehicle, dealing with tenants can be extremely challenging and a 24/7 job, perhaps even resulting in the proverbial landlord “horror story”.
Recently a friend of mine told me his “horror story” which I believe he referred as “the horror story of horror stories”.
As the owner of a very successful engineering staffing company, he purchased a townhome as in investment with the intention of renting it out. He was especially intrigued as it was configured to accommodate separate tenants in the lower and upper levels.
He proceeded to detail how the upper-level tenant, a single parent with 3 small children, was constantly having issues. From disturbing the neighbors (to the extent that he had to meet the police at the property multiple times) to letting the bathtub overflow (twice). The entire house was flooded, including the lower level where the other tenant resided, and the damage was so extensive that both tenants were displaced. Ultimately insurance covered the damages, but the headaches and hassle of the experience have completely soured him on real estate investing.
As he was explaining the situation, I asked him what his tenant screening process was like. He admitted that he did not do a very extensive screening as she seemed so nice and appeared to be a conscientious parent. He actually drove her and her kids to Walmart for groceries as they were moving in!
He can laugh about it now as he’s sold the property after having to offer her a financial incentive to leave to avoid extensive eviction costs. It’s clear, and he agreed, that had he had an objective, thorough tenant screening process this situation could have been averted and he may still have the rental property. Perhaps he would have added to his portfolio. Improper tenant screening is a common mistake that can result in major headaches, hassle, and expense. A good property manager will thoroughly screen prospective tenants which will minimize hassle and preserve your investment for years to come.
