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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.

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!

Are you aware of some lifestyle changes that save money?

credit: freedigitalphotos.net

credit: freedigitalphotos.net

Contributed by Amy Nickson

There are endless things which you have to buy daily- starting from the morning coffee to gasoline on the way back home.

Yes, everyday life becomes expensive. But, the truth is, we’re making it expensive every day.

How?

Some people can’t imagine their life without a car. Some people feel bad without wearing latest fashion clothes. Some even hate generic brands. Due to these expensive habits, many people fail to save money at the end of the month. They’re living paycheck to paycheck, which is a dangerous loophole for the savings goal.

However, to save money, you have to make a lifestyle change. In turn, it’ll create a good impact on your savings goal.

What kind of changes do you need to make in daily life? Here you go:

1. Stick to one car

As per the AAA report 2014, Americans spend an average of $8,876 to own and maintain a car every year. If you have multiple cars in your garage, then just think how much money you can save by sticking with one car or having no car.

Taking public transportation, cycling, walking – all help to save money and also improve your fitness.

If you don’t think you can live without a car, then use it less to see significant savings.

Remember, the maintenance cost will be less if you use your vehicle less frequently; so you’re saving money on costly maintenance.

2. Live on less

You don’t require more to live happily. Consider a recheck on your shopping list.

For example:

You might be able to spend the whole winter wearing the old booty. Your spouse doesn’t complain wearing an almost new jacket that you bought several years back and forgot.

Before buying an expensive piece of furniture, try to organize your things, in a better way, in your old furniture, to find your stuff more conveniently.

Just reinvent your closet and house to find out more reasons to live with stuff that you already have.

3. Grow your own and eat homemade

Food costs are high, and it becomes double when you eat at restaurants. Try to cut down food costs to save more money.

Do you have a large front yard? If yes, start growing vegetables and raising chickens.

You’ll be surprised how good they are compared to those expensive frozen items. Grow seasonal items and also buy from the local market to eat good food without spending a lot.

Restaurant food is costly, which may be good in taste but bad for your health. So, by growing and cooking on your own, you can save a lot and can also improve your health.

4. Consider stockpiling

Stockpiling is a good way to save money on everyday needs. You need to buy items that you need most in bulk. Try to buy in large quantities when items are offered at a discount. Thus, you’ll be able to save some extra money.

Buying in bulk or stockpiling also helps to save gasoline on a daily basis. You need not drive every day to visit the grocery store. So, from now on, try to practice stockpiling to save some extra bucks.

5. Keep a splurge fund

Don’t forget to keep a splurge fund in your budgeting plan. Set aside a small amount for that every month. Use the money from the splurge account to buy items that you want. Thus, you’ll be able to put down the urge of drawing money from the savings account.

6. Take advantage of automated savings

Automation is the smartest way to manage money because it doesn’t require human effort. Include automated savings in your strategies. Allocate money and automate your bills, mortgage payments, savings account, and investments.

Every month as you get paid, you’ll know that a significant amount of money is going to the particular account where you want it to.

7. Go generic

You don’t have to buy name brand products. Going generic can save a lot of money. Go generic for items like food, clothes, toiletries, school supplies, pet supplies, etc. You’ll hardly notice the difference

8. Ditch your morning latte

Remember, saving a small amount over a long time can create significant savings. Ditching the morning latte can also help you save money in the long run.

The calculation is easy to understand.

Ditching latte that costs $4 helps to save 30*4= $120 in a month. So, just think how much you can save in a year.

Break your habit of buying expensive coffee from Starbucks. Buy a good coffee maker and make your own.

9. Visit only your bank’s ATM

Do you know that consumers are spending an average of $4.35 every time they use an out-of-network ATM?

Maybe due to the laziness and lack of awareness, they’re wasting money consistently. Make sure you’re not one of them.

Use only your bank’s ATM to value your hard-earned dollars.

Final thoughts

See, the idea is simple; spend less to save more. At first, it’ll be difficult for you. But, if you determine to see the changes in your saving goal, put your effort with a determination to get the positive result. As I said earlier, living a happy life doesn’t require many things. You still find many things to get pleasure in life.

Author bio: Amy Nickson is a web enthusiast. She shares her expertise through her crisp and well-researched articles based on money management, money saving ideas and so on. She is associated with Oak view law group and contribute articles.