Every time I hear someone say, “It’s just a rental,” I’m reminded of how foolish I used to be as a landlord/investor. I wonder how much money and equity I have unknowingly left behind? “It’s just a rental” reveals an attitude that far too many landlords mistakenly hold.
I received an email from a friend and student whom I will call “Tom”. His email was regarding a recent webinar I did on the eviction tsunami that is soon coming. He shared that all five of his doors in Florida are not only fully occupied, but every tenant has been able to make all their monthly rent during the COVID-19 shutdown. He attributed this to the simple fact that he extensively screens and interviews all rental applicants. He wisely chooses those tenants who have a demonstratable history of stability in their earning ability so they can continue to pay the rent despite the ups and downs in the economy.
You see, Tom accumulated the capital to buy these rentals through massive hard work and investing done during the great recession. He did a number of short sales from which he took the proceeds and bought these rental properties. Since then, he has had significant equity appreciation, as well as consistent, predictable cash flow.
Most importantly, while in the eyes of the world and on the balance sheet and tax return, the property itself might be listed as an asset, Tom recognized that the true asset is really the tenant’s ability to pay. Hence, he would screen for tenants who have the ability to consistently pay by looking at their job history and rental history over the last several years. That diligent, long-term-thinking attitude flies in the face of the short-sighted-thinking, “it’s-just-a-rental” attitude.
If what I’m saying about the importance of tenant screening and selection resonates with you, do yourself a favor and check out my friend David Tilney. His information can be found at davidtilney.com. David is a mentor and friend of mine, and he’s one of the best people I know when it comes to property management and tenant screening.