Real Estate investing can be financially rewarding if done correctly. What does correctly mean you ask? Well, there are many things to consider when deciding to be a landlord such as rental value, handling repairs, rent collections, property management and lease signing. The first and most important decision is placing the right tenants in your property. With proper screening, the experience can be hassle free and a great investment. The only way to insure you are attracting qualified tenants into your property is to complete a comprehensive background check.

The biggest mistake a landlord can make is not screening a tenant before he or she moves in. Many times we hear about this happening and the landlord states that it was a friend of the family, or a member of the church, and so forth. The screening wasn’t done because they didn’t want to offend anyone or they just didn’t think it was necessary because the prospective tenant seemed like a good person. Just because you feel the prospective tenant will not take advantage of you does not mean that they will not and have not done it to someone else before. This property is your investment and you have to protect it from potential threats by undesirable tenants.

Screening tenants does not mean asking if they are going to be a good tenant for you because everyone will say yes. Prospective tenants should fill out an application and complete a comprehensive background check on each person.

Properly screening future tenants will spare you hardships that may follow. For example, late rent, complaints from neighbors or HOA’s, property damage, and the dreaded eviction. Screening will save you stress, time, and most definitely money!

Screenings will provide a glimpse of what type of tenant you will have. If a prospect has had an eviction or several collections, stay away! If they are fine with one eviction/collection on the record, they are fine with more! If an eviction is filed you will be responsible for costs which can be $600 just to file, as well as past due rents, additional court costs, and possible damage done to the property if they become disgruntled. If a tenant has a criminal record such as arrests or drug possessions, be very weary. This could cause problems with neighbors and additional problems for you. If they are on the sex offender or child predator list, take extreme caution in your decision if you allow them as you are taking on the liability of their actions. Individuals have a way of repeating behaviors and when it has been done before, the next time becomes much easier.

If you have made the decision to become a landlord and not hire a property management company, various sites offer screening services for a fee. Depending on the quality of the check, it can be costly but worth every penny! If you are working with a property management company, make sure they are conducting an in-depth background check including; credit, civil, criminal, eviction, employment verification, previous rental history, sex offender, child predator. Property management companies that are not conducting a thorough screening should be reconsidered. This should be your number one priority as well as your property management company’s to ensure qualified tenants are placed in the property and are free from a colorful and checked past.

Protecting yourself from the first pitfall of investment property ownership is simple. Screen every person who will reside in the home over 18 years of age always, every time, no exceptions! Serious applicants will comply. uncooperative prospects are typically not the best tenants for your property. Screening shows past behaviors and is very indicative of the future.

No one is perfect and most reports will have flaws. That being said, there are plenty of great renters! You can decide what your non-negotiables are on the reports. You do not have to decline everyone who has a collection but you can and should protect yourself.

Bottom line, getting the right tenants in your property is the first step towards a financially rewarding and hassle free investment property ownership.