OneSource IPS

How Poor Credit is Affecting the Real Estate Investment Industry

good credit bad credit sign

 

As real estate investors, when you rent units to tenants it is common practice to run both a credit and a criminal background check so that we know who these people are before we give them the keys to a unit. What we may not consider though is just how hard it is for those “innocent” people that have big black marks on their credit reports to get it fixed and move on with life. We tried to do some online research about who to turn to for help, what to do and what not to do and what the typical process is and the information is mind-boggling.

 

Google “credit repair” and the entire first page is dominated by sites that are either dedicated to credit repair or improving credit scores. The only site that seems not to be completely self-serving is from the government, but try to understand what they are telling you to do and how to do it and you may be even more lost.  This 60 Minutes story truly brings to life how hard of a problem this is to deal with.

 

Why should we care? After all, it’s not our credit score that’s affected and we don’t want to rent to someone that seems to have a history of not paying their bills. Because we may be missing out on some great tenants, simple as that. Those people that may have a poor credit score may just be as confused as we were by all of the information out there that they don’t know where to turn so they just continue to try to continue on with a poor credit score.

 

If you are going to rent to or consider these people as a possibility for a rent to own program, have you thought about connecting them to a reputable credit repair service and building a completion of their program as a term of the lease?  Would you even know where to turn to do this? We have a network of reputable credit repair companies that can help. Just reach out to us and we would be more than happy to give you some references.

OneSource IPS

Avoid Renting to the "Undesirable Tenant"

Maintain quality housing to attract desirable tenants.

Maintaining quality housing will attract quality tenants and reduce the chances that you will rent to undesirable tenants.

So often we are asked how to avoid renting to the “undesirable tenant”.  Although there really is no clear-cut answer to this or a list of undesirable tenants there are some things that you can do to prevent renting to the less desirable tenant.

Maintain quality housing.  Having a clean unit with quality features including neatly maintained landscaping, flooring, lighting and fresh paint can make all the difference in attracting the tenant you desire.

Make sure all potential tenants fill out the same application no matter how they present themselves.

Have all potential tenants fill out the same application regardless of how they present themselves.

Screen applicants. Don’t be swayed. That person that may present themselves so well being nicely dressed and well-spoken might have a laundry-list of creditors after them, several evictions or even a criminal record. With that being said, make sure that everyone on the lease have their credit and criminal background checks regardless of how they present themselves.

Check the facts on every potential tenant's application.

Verify the facts on the application. Call the tenants employers and past landlords for references.

Fact check. The bottom line is that people can mislead you when they want something and you have the power to reject them. Verify everyone’s employment and call they’re past landlords.

Take a copy of every applicant's photo ID's.

Make sure that you get copies of the applicant’s photo ID. People will try to pull a fast one and have someone move in that is different than the person that actually filled out the application.

Require a copy of a driver’s license, state ID or other valid photo ID along with the completed rental application. Talk to experienced landlords and they’ll tell you that they’ve had the old bait and switch attempted on them. The person that goes to move into the unit is not the same person that you showed it to or the person that you had fill out the application. Without that photo ID how would you prove it?

Ultimately, no matter how many screenings and precautions you take trying to find the right tenant, you never know but treat everyone the same. For additional assistance running credit and criminal checks, visit us online.