I had nearly identical conversations with two new landlords this week.  The conversations went roughly like this.

 

I found someone to rent my house.  I just need them to sign the lease. I am not sure if I want to spend the money on running a credit and background check.  I don’t want to change the applicant an application fee and scare them off either.

 

What do you suggest?

 

Of course, I suggested they run background and credit checks.  You might say, you suggest that because Renting Authority makes money from background and credit checks.  That is true, but it is a necessity.  When the economy is unstable, you must stick with the basics.

 

• Have applicant fill out and sign a complete rental application.
• Run background and credit reports
• Do employment and rental verification.
• Have applicant sign a rental lease agreement.

 

Here’s another strange occurrence.  Unfortunately, I keep hearing stories like this more and more. 

 

A friend of mine has had financial difficulties.  He sold his house and decided to find a lease to own property.  He found one that was a new spec home.  The builder was making $3,500 monthly mortgage payments on this property.  My friend offered him $2,500 per month.  The contractor said, “That’s great.  At least I can cover most of the mortgage.”

 

Now my friend is happy, and the contractor is better than before.  So what is so terrible about this?  The contractor did not have my friend fill out and sign a rental application, get his SSN or even verify employment and pay.  Without a SSN and authorization to run background and credit reports, you don’t know who you are renting to.

 

Let me put it this way.  The house is valued around $500,000.  The contractor turned over a half million dollar asset to who knows who.  He doesn’t know if he has a job, if he has ever been evicted in the past, has a criminal record or what kind of credit he has.

 

This is a potential landlord nightmare story waiting to happen.  The contractor could have spent $25 and 30 minutes to protect a $500,000 asset.

 

There are a lot of new landlords today, because they can’t sell their home, built a spec home, inherited a home or see a good opportunity.  What ever the case may be, there are a lot of new landlords who need help form more experienced landlords.  We try to help as much as possible.  We are now asking everyone to help each other.

 

How can you help someone else?

Use the Forum and Blog that Renting Authority created.  You can create a subject, and write about it, answer someone else’s questions. 

 

Together we can help each other and help the economy.  Tough times are ahead, we need to make prudent decisions and help other make them also.  Good education and implementation will make a difference.

 

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Renting Authority’s Forum

 

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This entry was posted on Thursday, October 16th, 2008 at 1:07 pm and is filed under How to Screen an Applicant, Landlord Basics, Landlord Nightmares. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.