Want to know more about world travel and tenants?
Welcome to the latest installment of Readers Ask.
Today I want to share two questions that AA readers posed last week.
What Did You Do With Your Stuff When You Traveled?
Noelle wrote to say:
“Hi! You’ve inspired me so much with your drive to be “location independent.” I was just curious about one thing: Did you sell your home in order to travel? Or did you have your own place to come home to?”
(Note to New Readers: Noelle is referring to the time I traveled around the world for more than two years, venturing across the Middle East, Asia, Europe and Australia.)
For the sake of saving money, I didn’t have a home … or anything else.
I sold almost everything I owned, including my car and furniture. I sold some stuff for hundreds of dollars, and other things in $20 increments. All the money went towards my travel fund.
Anything I couldn’t sell, I donated to Goodwill or the Humane Society thrift store. The few possessions that remained, like my snowboard, I stored with friends.
I had been renting, so I timed my departure to coincide with the end of my lease. In the span of one week, I quit my job, moved out of my apartment, and flew to Spain with a one-way ticket.
Of course, I knew I’d be traveling for 2+ years. If I had only been going away for 6 months, I would have acted differently.
If I had owned a home, I would have placed a tenant in it and hired a property manager to oversee the building. In fact, I know a woman who has a handful of rentals in Atlanta, but lives in Paris. Her property manager sends her a check every month, which she spends on bicycles and clothes and croissants and whatever else people buy in France. ☺
If you’re a homeowner, and you lived by The One Percent Rule when you bought your house, you’re in a much stronger position to travel than renters are. Renting out your home is the fastest and most surefire way to retire young, travel anywhere, and live free.
How Do You Lead Tenants from “Showing” to “Move-In”?
Trevor, age 31, wrote to say:
“I have two rentals, and my own home. I love reading about real estate investing, but the thing I have the most problem with … (is) getting people from a showing, to tenancy. Could you write about your process? What info do you give them at the showing? What questions do you ask them? What credit/background check service you use?”
I have the same problem. I’ll do a showing for prospective tenants. The potential tenant “oohs” and “ahhhs” about the high ceilings and big backyard. They start mentally placing their furniture throughout the house – “My couch would look great here! I can put my table there!” – which is a fantastic sign.
Then I never hear from them again. They never fill out an application. So what do I do?
Nothing. If they’re not on-the-ball enough to fill out an application, I don’t want them as a tenant.
Besides, if they really wanted to live there, they’d apply.
As for the second part of your question, regarding tenant screening: I use TransUnion MySmartMove as a tenant screening service. It allows you to view their credit score and their criminal history.
(By the way, that is NOT an affiliate link or any kind of paid promotion. That’s just what I genuinely use.)
I also call their current/previous landlord and get a copy of their pay stub. If they live in an apartment building, look up the phone number of the building yourself rather than dialing the number they gave you. Plenty of tenants have their friends pose as a fake “ex-landlord” reference.
Should bad credit nix the applicant? Sometimes.
One of my best tenants had perfect credit except for a foreclosure. The foreclosure tanked his credit score, but I noticed that he paid all his other bills – credit cards, car loans, etc. – on time. His income was almost four times the monthly rent. So despite his low credit score, I let him move in, and he’s been a perfect tenant ever since.
Of course, your results may vary. This is a judgment call. You have to make your own decisions.
Three More Essential Tenant Tips
UPDATE 2/13/2013: One of my readers, Karen, emailed me the following tenant screening tips. I liked these so much that I asked her if I could share them with AA readers:
#1: Peep Their Ride.
The MOST important other thing to do is look inside their car when they come to see the rental. You will see their attitude towards their surroundings. The way they keep the inside of the car is the way they will keep your premises.
If the car is old, but clean as a whistle, they take care of their possessions and will most likely keep your rental the same way. If the car floor is knee-deep in fast food wrappers, soiled baby diapers, garbage, empty beverage cans, discarded clothes, this is how they will keep your home. Their attitude towards their surroundings is poor. They will also most likely refuse to pay for – or even acknowledge – their damages.
#2: Visit Their Home.
If they live in town, visit their home. The way their home is is the way they will keep YOUR place.
How can you see their home? You can drop by to give them information. You can arrange to sign the lease there. (You’ll still have time to back out if you see that they’ve trashed it!)
By visiting their home, you will also find out if they have pets. This will be especially important if your lease specifies “no pets.” (Incidentally I never allow pets, especially dogs. When the tenant’s dog bites someone, YOU will be sued. The tenant will get off scot-free, as they have no assets which can be taken in the judgement.)
Pets also leave fleas, tear up carpets, damage woodwork, bark constantly, and defecate in and out of the house (which irresponsible pet owners don’t clean.) Your insurance company will love you if you don’t take pets, especially large dogs.
#3: Use Google Voice (or an Answering Machine).
I use an answering machine for calls. If the prospective tenant is speaking over the sound of shrieks and howls and commotion — if they sound like they’re calling from the raptor house at the zoo — you most likely will not find them to be good tenants.
One day I heard two calls on the answering machine. One was from a man who said: “Hello, this is Dennis. I’m a heavy equipment operator for XYZ Construction Company and I’ve worked there for 3 years. I work 6 days a week, and I’m gone from 6 AM until 6 PM every day. I have my pay stubs to prove how much I earn. My boss will give me a reference.”
The second call said, “Yo. I needs the place. Welfare gives me some money and I live with my Daddy. He won’t let my homies hang at his place. Welfare says they give me mo money if I has my own place. Then my homies can hang at my pad.”
When you use answering machine, you can pre-screen. You don’t have to bother calling back the tenants that don’t sound like good candidates. (And if they imply that they’ll be using your place as a party pad, paid on the taxpayer dime, they might not be the tenants you want.)
The reader who contributed these comments, Karen, has been a landlord for more than 20 years. Karen says: “At one time I had 54 tenants simultaneously in addition to my regular business, and I have always been a successful owner of rental property.”
Learn How To Escape the 9-5
Get free updates on building wealth and living to the fullest.