One of the things you learn from real estate investing is the importance of SYSTEMS. Systems are standard ways of doing things, and systems are usually passed down to new investors from experienced investors. Experienced investors, when they make expensive mistakes, create a system to help ensure they don’t make those mistakes again.

Having said that, I just spent $2,500 that I shouldn’t have, and it’s completely my own fault…

It was a sad sight…
One year ago they were huddled in my rental, desperately looking for a place to live. They were a nice looking couple with two daughters and a son and a baby on the way, and they didn’t have a place to stay. Due to unforeseen circumstances they were forced out of their house and had no place to go.

I felt the need to help them out. His kids seemed well-behaved and he looked like a responsible family man. So I rushed the application process to get them in quickly.

Therein lies my mistake, and the moral of the story.

The application process I (usually) follow includes:

–Talking to past landlords (I require the previous 3, he only gave me one, and I never was able to get a hold of that landlord–it could have been a wrong number)

–Doing a background check (I ran it quickly, but I only glanced at it because I had already allowed them to move in)

–A credit check (I usually have a minimum credit score I require, but he had no credit history)

What did I require from them, you ask? I got first and last month’s rent and a deposit. That’s all.

And they paid rent late more often than not, trashed the house over the course of a year, and left me with a $2,500 clean up bill.

Moral of the story: The rental application process is a system. Like all systems, it is there to help you weed out bad renters. If I had stuck to my system, I wouldn’t have rushed things and I wouldn’t have let them into my rental. I wouldn’t have let their emergency rush my due diligence process and I would not have had to ask them to leave when their contract was up.

So it was my own darn fault.

To wrap things up, I saw them in a parking lot a couple of days ago. Apparently they’re still living in the neighborhood. Their new landlord didn’t call me to ask what kind of tenants they were. I can only imagine that landlord was rushing their application because they looked like a nice family and, due to unforeseen circumstances, were suddenly homeless…

Quick tip: If you’re considering a new tenant, ask for their current landlord’s number AND the information on their past 2 landlords before that. If they are bad tenants but are still living in a rental, their current landlord might be trying to get rid of them and might not be completely honest with you about how bad they are. But any past landlord will be more than happy to give you the full details. That would have been a life saver for me.