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Guest Post: Bad Tenants Can Cost Thousands: How To Choose Great Tenants

RentPrep - LivingRichCheaply
Editor’s Note: If you own rental properties, you know the important of having quality tenants. Make sure you properly screen your prospective tenants as the quality of tenants will make or break your investment. Check out the following guest post for some tips.

Becoming a landlord that makes a good income off of a few rental properties (or more!) is the dream of many real estate enthusiasts. And it’s a solid dream.

There is a huge potential for making money in the rental market, particularly when rental rates across the US have been increasing between six and eight percent every year.

But being in the business of renting out properties does not come without significant pitfalls. One major cost that many new landlords aren’t prepared for is the cost of renting to a bad tenant. And that cost can be huge.

What Is A Bad Tenant & How Can They Cost You Money?

There’s a number of reasons why you might begin to consider one of your renters a bad tenant. From paying bills late to leaving behind severely damaged property, even the nicest people can turn out to be a not-so-great tenant.

Bad tenants are those who break contracts with you or simply treat you and your property with disrespect.

While having bad tenants wears on you psychologically, it can also wear on you monetarily.

Here are just a few ways that bad tenants can cost you more than expected:

•Paying rent late
If you’re a new landlord or you rely on rental payments to make the mortgage payments on your current properties, late payments can cause you to be short on the money necessary to keep your business running.

•Damaging property
Some tenants may leave behind extreme damages. While their security deposit should help cover those damages, it may not be large enough. Such damages will cost you in both time and money to repair.

•Additional payment avoidance
If you have a renter skip out on you without paying or you try to hold them to their rental contract to pay for exuberant damages, you may have to take the renter to the small claims court. This lengthy process may get them to pay up, but it will take a lot of time, money, and energy. Most landlords absorb the cost of a bad tenant rather than to bother with going to court.

As a landlord, tenant selection can have a huge effect on the future of your business. If you want to avoid the stress a bad tenant can bring to your mind and your wallet, it is important to refine your tenant selection process.

Understanding The General Tenant Selection Process

When it’s time to find a tenant for your property, you’ll want to work your way through the tenant selection process carefully.

Generally, that process will look something like this:

1.Check the local renting laws to be sure nothing has changed.

2.Write up tenant screen criteria for the property that outlines what you are hoping to find.

3.Advertise the rental.

4.Pre-screen applicants on the phone or via email before showing them the property.

5.Show the property.

6.Ask interested parties to fill out a rental application.

7.Verify the info on the application.

8.Run a background check.

9.Choose the right tenant for you; deny the others.

10.Get them into the property!

This process will repeat every time you need to find a new tenant for the property. With time, the process will become like second nature, and you will become good at getting a sense for who will be a good tenant and who will not.

But because that process takes time, we have some tips on how to be more discerning from the very beginning.

Tweaking The Process: Sifting For Great Tenants

While the general tenant selection process outlined above will help you find good tenants that are unlikely to become bad tenants, you can shore up your process even more by being even more careful in your selections.

After all, great tenants will save you even more money than good tenants!

Since learning how to choose the best tenants is a long process, these tips will help speed up your learning track. Use the following tips to choose great tenants that won’t burn a hole in your checkbook.

Tip #1: Follow Up With Previous Landlords

While a potential giving you the information about a previous landlord is a good first step to knowing if they are trustworthy or not, following up with this landlord will be even more telling.

Previous landlords can give you some simple information about a tenant that may be more telling than their entire application. They can let you know:
•If they pay in a timely matter

•If they broke any contractual rules

•Whether or not they received their security deposit back in full

This type of telling information can give you a clear image of if this client is “bad,” “good,” or “great.” Following up with previous landlords is essential for good tenant selection.

Tip #2: Use Comprehensive Checks

From background to credit checks, it can be confusing for landlords to know which information they should be checking when comparing and choosing between nice, potential renters.

Using a tool such as a SmartMove check includes necessary information like a full credit report as well as both local and federal background check information that you might miss if you run these reports yourself. Plus, the system makes it easy to organize and compare between potential tenants.

No matter how you choose to check out credit reports and background checks, be sure that you are thorough and know what you are looking for. Writing bad checks, skipping payments, and being taken to small claims court are all bad signs when it comes to renters.

Tip #3: Look For Long Term

Renters that are looking to stay in the same home or apartment for the next few years are more likely to develop a good relationship with both you and the property. Since they have a greater stake in the future of the property than a short-term renter would, they are more likely to treat it with respect.

If a potential tenant expresses that they like the property and would enjoy renting it for multiple years, this is often a clear sign of a great tenant.

The Wait Is Worth It

While it may be frustrating to feel like you’re holding a property vacant in the search for a great client, the wait is worth it. Renting a property out quickly to a bad tenant is likely to cost you more than it is to hold on to it for a few extra weeks while trying to find a great tenant.

Author Bio

Eric Worral has owned and managed rentals for over 9 years. Currently, he does marketing for RentPrep’s tenant screening service for landlords and property managers. He’s also the co-host of the “RentPrep for Landlords” podcast where he shares tips and insights on managing your rental properties.

I Retired at 25 and Paid Off $100,000 in 2 Years!

No. No I didn’t. My deepest apologies for the click bait title. My blog traffic is in the doldrums and I needed a boost. I’m kidding of course. Well I’m kidding about trying to boost traffic, not kidding about the sad state of my blog traffic.

I’ve seen many of these sensational click-bait titles in the mainstream financial media outlets recently. First, I want to say that I admire those who achieve financial independence/early retirement (FIRE) at a young age as well as those who paid off large sums of debt quickly. It takes discipline, hard work, and sacrifice to achieve these goals and they should be commended. I don’t want anyone reading this to think this is a slight against those who achieved these goals. However, I do think that these articles are generally unhelpful for the general population. But the point of most of these articles often isn’t to help others. They are to get clicks and views.

The gist of these stories is that the person realized that they were buying stuff they didn’t need to impress people they didn’t care about. They stopped doing this, living below their means and they are now retired. Similarly, in the case of debt repayment, they made some sacrifices and put all their discretionary money towards paying off debt. Okay, I’m not saying it is impossible that someone reading the story won’t have an epiphany and actually change their money behavior. It is possible to see someone achieve such a great goal and be inspired to follow in that path, but it’s probably unlikely. Moreover, with these stories, a lot of detail is left out which makes the journey seem far too easy. Also, for many people, living below their means, driving their cars into the ground, bringing lunch to work, and budgeting isn’t a groundbreaking revelation. They already know this and do this. Doing these things doesn’t mean they’ll be able to retire next year. Most of these articles are really geared towards those making an above average income where cutting fat from your expenses can make a huge impact. So, perhaps someone who earns a good income, but tries to keep up with the Joneses might realize there is a better way.

While I know I should avoid the comments section after reading these articles, it is like a traffic accident…you can’t help but turn and look. Most commenters reading these stories will say that the person being profiled in the article is either making it up, privileged, or had some special advantage. The person being profiled, most often a blogger, will call the commenters “haters” and “trolls” who don’t want to fix their finances. I absolutely understand being upset when anonymous commenters seem to be attacking you and your accomplishments. And there are many commenters who really are trolls who have nothing better to do than try and knock other people down. But I can also understand the frustration of some readers when they see these sensational article titles. When most of the people in this country can’t even come up with $500 to pay for an emergency, how useful is an article about someone retiring in his or her 20s or an article about someone crushing an enormous amount of debt in a short period of time. People easily get defensive. It is human nature. Even though these sensationalized articles might include some useful tips, people are turned off because it makes them feel like losers as the goal seems so out of reach and unrealistic. Worse, some of these articles imply that anyone can achieved this goal. And if you can’t, you’re just making excuses.

This is not a grievance or knock at bloggers who accomplished great feats with their money. It is not a knock at them if they want to get more traffic by getting featured in the mainstream media. It is not a knock at reporters doing their job by publishing a story which I’m assuming the editor is looking for. And it is not a knock at the editor who’s trying to get eyeballs on to their media outlet. Hey, people need to earn a living. Businesses need to make a profit. I get it. I am just making an observation, which is that click bait articles about extreme early retirement or getting out of debt quick don’t help most people learn about personal finance.

Now with social media and the decline of newspaper revenue combined with the huge supply of content creators online, everyone is more and more desperate to capture readers’ attention to get that ad revenue. It doesn’t matter that the story won’t help the majority of readers or that the method the person being profiled used to pay off debt or retire extremely early is not relatable or even possible for some reasons. All that matters is the reader is engaged, which leads to more clicks, shares and comments. The question is not whether the article is useful. It is whether the story is exciting.

A couple years ago, a personal finance blogger came on the scene and shared the story of how he became a millionaire at the young age of 27. His story was published in a profile on Yahoo Finance News and someone who knew him called into question the validity of his story. It was later revealed that 80% of his net worth came from an inheritance. Many bloggers in the personal finance space were disappointed that he lied and felt deceived. However, many also sympathized with him, rationalizing that he omitted the inheritance part of the story because he felt more people would embrace him if he had earned the million dollars on his own. They thought he was ashamed he didn’t have a pull yourself up by the bootstrap story. Um, nope, that was not it! The main reason for this blogger’s deception was he wanted to get clicks. He wanted more traffic for his blog from the feature which equals more money from ads. Obviously, I can’t read his mind or know his motives, but a few months prior to his deception, I received a mass e-mail from him. He had a different personal finance blog which he was trying to sell saying that he was too busy to run a blog. However, shortly after selling his site, he went out to build another site when his lies caught up with him. I guess he was in the business of flipping blogs like people flip houses.

I was hesitant to include the above story as I don’t want anyone to think I’m saying that those profiled who retired early or got out of rich quick are scam artists. Nothing can be further from the truth. Most of them have great stories which can definitely inspire those in the right circumstances. I only included it to point out the dangers when there is a narrow focus on stories from this niche. The financial media can play an important role in teaching and promoting financial literacy. Content creators have great influence and with great influence comes great responsibility so hopefully we can see more articles that can inspire and encourage people of all difference financial backgrounds.

State of the Blog


I wasn’t sure if I should just start posting as if there hadn’t been an over three month hiatus since I last posted. Do I owe my readers an explanation? I’m not even sure I really have regular readers for that matter! I started this blog in April 2013. The blog is four and half years old, which is ancient in blog years. Before I started this blog, I was an avid reader of personal finance blogs and would comment occasionally but didn’t really interact all too much with the personal finance blogging community.

One of the reasons I decided to start a blog of my own was because I was so passionate about the topic that I wanted to write, read and interact with others who blogged about it. However, I will be very honest and say that what really motivated me to actually learn how to start a blog and pay for the associated costs was when I read bloggers’ income reports. I was amazed that you could make money from blogging and thought it would be nice to earn a little side income doing something that I enjoyed. Most established bloggers said that many new bloggers don’t last more than six months because it is a lot of work and if your only motivation is money, you will likely burnout. Plus, you weren’t going to earn a decent income from blogging overnight. You’re playing the long game with blogging. That was fine by me as I spent most of my time on personal finance blogs anyway and wasn’t pursuing it purely for monetary reasons.

My first year blogging, I posted consistently three times a week. Even with the birth of my son, I continued at this pace for about a year. I started losing steam as I released all the pent up ideas stuck in my head. Then with work and family life getting busier as well as the birth of my second son, the blog started to take a back seat. I barely made much income from the blog, but I found the interaction with the personal finance community and the creative outlet writing on the blog to be more valuable and motivating.

This past summer, a few of the blogs I followed were sold. They cited time constraints. Brian from Debt Discipline reduced posting to once a week, preferring to help people offline which I respect. Not too long ago, J Money from Budgets are Sexy considered selling his blog. Two bloggers who had sold their blogs, eventually bought them back. Awhile back, I was approached by a blogger who noticed I rarely updated my blog, showed interested in buying it. My immediate reaction was “NO!” This blog is my baby, I wouldn’t sell it. But of course, a part of me wondered about the value of my blog which I had worked on for over four years. Of course, the price put on it would have to do with my traffic and income, so it probably didn’t hold much monetary value. Outside of sentimental value to myself, did it provide value to any readers. I’m not sure. Was it worth it to spend so much time working on the blog rather than a side hustle which would earn a better income?

While I love interacting with like-minded people, there is the Rockstar Finance forum, the Choose FI Facebook group and the Mr. Money Mustache forums which I can visit to talk to like-minded personal finance nerds. I can also continue reading and commenting on blogs. Another thing is that after blogging for a few years, it’s hard to find things to write about that I haven’t already written about. For example, when it comes to investing, I’m a proponent of index investing, but I’ve probably written as much as I can write about it. It’s not that complex. Plus, the Stock Series on JL Collins’ blog provides a much better information than I ever could.

So what does the future of Living Rich Cheaply hold? I honestly don’t know but I think I’ll be sticking around for a while longer. I still feel like I have some things that I haven’t said that I want to say on this blog. I will probably write about whatever is on my mind and whatever personal finance issues or even non-personal finance related issues I’m personally dealing with at the moment. Hopefully others will find it interesting and/or helpful.

For the other longtime bloggers out there, how do you keep consistently producing content? For the ones with a busy job, family, etc., how do you find time to blog? For readers, is there anything you’d enjoy reading about?

Frugal Find: Groupon Coupons

GrouponLogo

Disclosure: This post is sponsored by Groupon, but the opinions expressed are my own.

I don’t always go shopping. But when I do, I always use shopping portals, discounted gift cards and coupon codes. I told a friend recently about a set of presidential blocks that was given as a gift to my son when he turned one. He found them online and said, “hey, that looks pretty cool, I’ll get that for my kid too.” He proceeded to add the item to his cart and was about to click “buy now,” when I practically jumped on top of the keyboard to prevent this from happening. “Hey man, you didn’t look for a coupon code!” I yelled.

I recently found out that Groupon now has a section called Groupon coupons. I’m a fan of Groupon as they made it okay to use coupons. Coupons were no longer reserved for an old granny clipping them from the Sunday papers. Even young millennials would use Groupon deals. I’ve used Groupon for discounted restaurant meals, spa visits, various entertainment activities and even discounted electronics and gifts (Groupon Goods). Groupon coupons offer a list of coupon codes that can be used online as well as coupons that can be printed out to be used at the store.

Whenever I purchase almost anything, I will look for a coupon. It only takes a few seconds to save some money. I used to just Google whatever store I planned to shop at and the word “coupon” or “discount” to find a coupon code or a coupon to print out. It worked with varying levels of success and sometimes some coupon codes just didn’t work. With Groupon, at least it is an established company so Groupon Coupons will be the first stop I make when looking for a discount.

There are many merchants available that offer coupons and discounts such as Amazon, eBay, Home Depot, Hotwire, Kohls, and many more.

Do you use coupons at stores or coupon codes when you shop online?

Guest Post on The Frugal Farmer

credit: freedigitalphotos.net by Stuart Miles

credit: freedigitalphotos.net by Stuart Miles

I have a guest post featured on The Frugal Farmer today which talks about how to invest in real estate. Here is an excerpt of the post, please click on over to read the full post!

There is an allure to making it rich investing in real estate. There are late night infomercials telling you they can teach you to build a real estate empire. There are shows about making big bucks flipping houses. Real estate investing is NOT a get rich quick scheme, but it is a great way to build wealth. If done right, investing in real estate has many benefits including having monthly cash flow, tax benefits, having your tenants’ rent check pay the mortgage, leverage and appreciation. There are many ways to invest in real estate but for purposes of this post, I am going to focus on buy and hold real estate investing.

Click over to read the rest!