Tenant Screening Secrets: 30-Min Test for Passive Income | Titan Impact Group

Sam.

There they are.

Hi. How are you?

Okay. I am super excited about our conversation today. This is going to be extraordinary. Do you guys want to share your screen or do you want me to share the screen?

I can share it if you want.

Or go ahead, if you can. Go ahead and control it. And then I will.

Will.

I will start from there.

So, yeah, let me.

I love your background.

Thank you. How are you? How is your.

I'm amazing. It's so many things going on. We'll. We'll catch up on all that. We're recording right now. We've already got people attending, which is very exciting. So we're gonna.

There we go.

Beautiful. Okay. So really excited about this. So let's go ahead and dive into all the things. So for all of you who know all of my people who follow and watch and listen and all the things. You guys, I'm super, super excited for what we're bringing you here today on this webinar. It's literally going to blow your mind. And here's the thing to know is that Ashley and Michael, we're going to actually have a series of these that we're going to be doing, which I'm really, really excited about. So having you guys on and just collaborating, connecting, I know my audience is going to absolutely love you guys. Well, I love you, so they're gonna love you. That's the cool part. And I mean, we could go through your resume and all the extraordinary things that you've done. And I think, more importantly, I think why I fell in love with you guys is why and how you actually got started. So I know we're gonna talk about all the tenant stuff, and I would love for people to just know a little bit about your story and why I fell in love with you. And then we can dive into all the real estate investing stuff.

Absolutely, absolutely.

Yeah. So we met through another mastermind.

Right.

So I always talk about, you know, you are like the five people you spend the most time with. Right. And proximity is power. And so we've been in this other mastermind. And then we ended up finally, like, actually sitting and having an amazing conversation. And it really was about how Ashton got started.

Absolutely. It's a crazy story. I mean, Ashton itself. So I've got four kids total, two older kids, Ashley and Brandon. And you'll hear more about Brandon here in a minute. But Ashton is literally the combination of Ashley and Brandon. And so that's how that. That came about. I've actually got a variety of companies with Ashton, all as part of but the what we're going to do again, getting into kind of the preface for what we're going to talk a little bit more about is giving you a just in 20 minute, 30 minute time frame. Our lessons learned, our personal journey in terms of how we came about, discovering the right ways to do things and the wrong ways to do things. To be quite honest, along the journey.

And always the wrong ways that I feel like we learn the biggest lessons from.

It is. It absolutely is. And the. Oh, why is the screen not changing? All right, there we go. All right, so I wanted to jump into ourselves first of all. Here we go. The of our. As far as how we came about and this journey that we're on right here. So Ashley and I, she's my oldest daughter, I since got divorced, remarried and I've got younger kiddos and my younger kids play with her kids, which are my grandkids, which is amazing.

So this is for people who are doing buy and hold, right?

This is. Yes. Yeah, this is buy and hold. And by the way, this applies to single family multifamily as well. So single family, that's literally single family residences multifamily can be anything from a duplex, fourplex on up. And the, these principles apply across the board, right?

Yep.

So I love this. So everybody, if you're listening, you're going to want to take notes this whole thing because this is packed full of amazing, amazing content. Okay, sorry I keep interrupting but I want everybody.

It's perfect, it's perfect. I mean, screening day, right? Like this is your number one if you're going to get anything right with managing a buy and hold and having a tenant in a property, you want to make sure you get the right tenant. We always joke that would you put that tenant in your parents house? And that makes people cringe sometimes. Hopefully not. Hopefully you're like, yeah, absolutely. They take great care of it. But having that thought in the background of your mind can help with the screening process. So it's number one when it comes to finding a tenant for your property. You want to make sure you get the screening process right because then it'll prevent evictions, it'll prevent all of the other horrible stories you hear. We definitely want to avoid that as much as possible. So if you get the screening right. Stellar.

That is the $3,500 yes. Thing, by the way. That's on average what an eviction will cost you.

So it has, it's. What is it?

It's.

An ounce of prevention is worth a pound.

Of cure.

This is like everything. Yes, absolutely.

And it's all avoidable. And as Ashley will go into more detail about it, but, you know, we kind of freak out a little bit when something's been sitting vacant for a while and we just kind of get in that desperation state. She's going to walk through some very specific things you can do to avoid that. And again, it's all about numbers. It's not emotional. It's about math. She always makes fun of me. I always say it's just math, but it truly, truly is. And so, again, take it away, Ash.

And I love it because I always say, do the numbers and the numbers tell you what to do? Yes, this is you doing those numbers, which is exactly. Yeah, I love that.

So making sure that, you know, the first step, really, with tenant screening, it's not about just saying yes to the first person that you. It's about knowing also how to confidently and legally deny someone.

Right.

Somebody that's not a good fit for your property. So as much as it is finding the right person, you want to also know how you can legally say no to someone, because there's obviously regulations that you need to abide by, federal fair housing laws, discrimination, things. You want to avoid all of that and be able to confidently.

Yes, that is a big deal. Like that whole legally.

Yeah.

Oh, my goodness. Yes.

And it's getting worse. I mean, there's more legislation that's constantly coming out. You have to stay on top of that because there are things that used to be completely legal to go ask them or have those conversations, and now you cannot because, one, it's in violation of fair housing. But then there's discrimination even beyond. Above and beyond that.

So that is crazy.

Yeah. So the biggest thing, I think sometimes I have a lot of. There's. There's landlords that I hear of that do this, where they're like, okay, your property's been on a market, and let's say you're listing it on one site and it's been sitting for a while. So they kind of get to the point where their holdover costs are going a little bit further than they'd like. They're dipping into some bonds, and they're going, well, we need to just get it rented. Let's just get somebody in there. That's. That's your. That's a red flag. You don't want to just approve someone to get them in there. Right. The other issue with that story, too, is, you know, what platform are you listing it on? A lot of Platforms these days are all paid platforms. So, you know, knowing which platform to go on to get the highest visibility to get your property rented faster is going to help with that screening process. You definitely want to make sure that you're not lowering any standards to try to just fill the unit because that could lead to eviction or other issues down the road if you're not thoroughly vetting them.

We've got specific checklist in terms of the types of checks that we do for each. And there's a reference here that you'll see at the end where it's actually got the checklist and actually resources that you can use to be able to do these types of things. The red flags that Ashley was talking about are pretty. Even though there's all these fair housing laws and all these other regulations, it's still good to engage in the conversation with them because oftentimes people will start talking and they will tell you things that are very telling. So for example, we had a situation where somebody came and they said, well, yeah, I need to be out by Monday because my roommate's kicking me out. And it's like, oh, really? Tell me more. And so they'll volunteer. Well, I had this big party and I was doing this. Oh, okay. Good to know.

Good to know.

Yeah. And so definitely engage in the conversations with them. Be aware that with every story you hear, there's probably some truth in there, but there's also probably some not so true items in there. And so you need to be aware and watch for that. One of the specific ones actually is the cash up front.

Oh, yeah. You hear this one? I hear this one a ton. It's amazing how many times I've heard this one. But I've got six months in advance to pay you. I've got, you know, a year, you name it. Or I'm coming into this big amount of cash and I can pay the whole entire year up front, you name it. That's usually if you dig a little deeper. In my experience, I've seen it to be a negative thing where it's actually shown either a previous eviction and they're trying to buy their way into the next property before they actually get evicted. I've seen that before. In my other experience, I've seen where they've had other legal issues, so it's been more criminal based and they haven't been able to get into a property. So they're trying to show that, you know, whether that money is actually there or not. The actual root of the issues are the Eviction or the criminal background and whether or not that's allowed in your property. So something to think about with those stories. There's one in particular I remember going to. A lot of people do either group showings or self guided tours. You'll hear a lot of that these days. Both are great. You know, I personally love the group showings as well because you can physically be there and talk to somebody. It's a little bit different than just doing a self guided tour, but when you're in a group setting, it's, it's pretty great. Not only does it build incentive for somebody to go ahead and apply because there's other people seeing it and they're there at the same time. Competition. Fair. Fair competition. Right. But it also, you can just get in front of them and just have a conversation. You know, just like my dad was saying with asking those questions and things. There was one that I remember and I just started asking, I was like, you know, why are you, why are you looking to move? What's your current situation? And I'm not sure they realized that I was screening people while I was there. But yeah, yeah, they were in an eviction, they were getting evicted. And they're like, yeah, we'll, we'll be sure to apply. Well, we don't allow evictions, but you know, so just having a conversation, you'll find out a little bit more about what somebody's situation is when they're looking to move. You know, if they have pets, you know, if they walk into the showing with dogs and your, you know, listing doesn't allow pets. That's another one I've seen before. Everyone has an emotional support animal these days. And so just some things that when you're, when you're at a group showing, it's pretty great. You can be on site and truly just kind of have a conversation with people, right? Yeah.

And some of the references that you get, I mean, part of it's the screening process. And again, next we'll get into more details in terms of the specifics of that process. But truly getting everything in writing, getting everything documented, making sure you have the questions that are out there that you can then go validate later in terms of their employment record, in terms of their previous landlord, making sure it's not Cousin Louie that, whose phone number that they gave you and said, oh yeah, they were a great tenant, you definitely want them. And so some of the other things that you want to take into account, you know, in terms of the actual listings that you create, making sure, they're in compliance in and of itself, but it's the scoring system. I mentioned earlier about it not being emotional and that and truly true. I remember when I first did it, I got my first property and I was like so excited. I mean, this is great. It was my baby and I was hand holding everything and it was like a little disappointing because I was so naive to so many different things when I first got into it. And when you truly just take a step back and realize, no, this is a business, this is just like my other businesses that, you know, I've been very successful with. And it is something that you just go by the numbers, you go by the methodical systems and processes to make it happen. And so we look at a variety of different factors and consistent criteria for that.

Yep, yep. So this one's hard because sometimes taking the emotion out of the picture can be difficult for especially first time landlords. Right. It's your baby project. You've, you've gotten all of the rehab done, maybe you've spent months on, you know, bringing it up to speed, redoing the place. And you've got kind of a sentimental value. It's sentimental to you, right. You've got a connection to it and you want somebody to take care of it. So it can be difficult when you hear stories from people about their situation and their hard times they've fallen on and you want to lend them a hand, you want to help them, but you also, when you take it back to just facts and just numbers, it completely takes the emotion out of it and definitely helps in terms of not getting you into situations that you don't want to be in. The scoring system's key. It also really helps in terms of auditing. So if you ever get audited or if there's ever somebody says, you know, you were discriminatory because you didn't, you know, let them rent your rental, then having a scoring system shows it takes all the emotion out of it and it breaks it down to numbers. So you can see how every person is scored the exact same in terms of who actually wins the right to rent the property. So makes it really nice there, protects you legally, which is really big.

Well, and again, it's that part of taking the emotion out of it. Just do the numbers. Numbers tell you what to do. So I love the scoring system inside of like doing the numbers. That's genius.

And by the way, the, everybody likes to be online these days with all their social media and everything. And it's really funny because they will present a certain Persona to you when they're applying.

Right.

And as you're doing your background checks and everything else with that, check out their social media, it is very, very.

Yes.

I love that it is one of those tidbits. It's like people don't even make that connection. They don't even think about it. Just like the person that said, well, I need a place by Monday because my roommate's kicking me out. It's like they didn't quite understand how that would be interpreted.

Right.

But likewise their social media, they're just free for all and you know, living their best life and oftentimes that does not match their story that they're telling you. So.

Yeah, that's powerful. Yeah, yeah.

And then touching on like creating strategic listings. I just kind of want to highlight this for anybody. So because before you get to group showings or self guided tours or however you're setting that up, you know, whether you have an agent going and doing your showings for you, you want to make sure you are crafting a compliant listing when you're actually advertising your properties. So figuring out what platforms like Zillow, Trulia, maybe hot pads, rent.com syndicates out to a lot. But whichever platform you're on, you're going to want to make sure that you don't post discriminatory language. So they're big on this one. This is a big no, no, you don'. You want to just state facts. So you're not going to say, you know, perfect for families or calling out specific groups, people, you name it. That's a big no, no, same thing. You know, if your listing says no pets, but you get a service animal that's obviously a one off, they're not considered a pet. So just paying attention to how you're listing that property is going to help repel the tenants that you don't want because they're going to be looking at that and saying, okay, monthly rent, you know, listing facts, security deposit, utilities, what's included, where is it at? You know, are pets allowed? Those are going to be basic facts that you're going to want to list and have on there. And as a result you're going to repel tenants that that doesn't fit with and attract tenants that it does.

Right.

Narrow down that pool.

So in terms of how we score them and specifics behind that, these are the top things that we look at. There are actually there's a whole list of things that we look at specifically to include criminal checks and that sort of thing. But these are the top four for that. So there's guidelines. One is the income verification, where it's three times the monthly rent. And again, you can verify through that by contacting the employer. You can look at tax returns, you can look at pay stubs, but very specifically, look at them carefully. Make sure that people are not fabricating, because in the digital age that we are in, people are getting extremely creative. Wow.

Yes.

Crazy. So make sure that you. Even if you're looking at pay stubs, make sure that you then also contact the employer because you know those pay stubs could have been doctored such that. Really. Well, that was two years ago. That's not current. And so you do need to double check and verify everything.

Yeah, same thing. If you see gaps. If you see certain gaps. And let's say they upload a pasta, but it was from three months ago and that was the most recent call. Just in case. Those are always going to be good. We do credit checks, background checks, criminal. There's a terrorist one now. Eviction.

Wow.

There's.

It's getting way more complicated, getting detailed, that's for sure.

Landlord verifications, employment verifications, references, if they have them. One of my favorites is the landlord verifications. Because when you call a previous landlord, they have nothing to gain but, like, they'll tell you everything of how their experience went with. With the tenant. So. Or with the applicant. So they're usually the most insightful in to how their experience was with that person. Were they on time? Were they ever late? Did they have compliance issues with their lease agreement? Did they have unauthorized pets? You know, were. Did they sublease the property the whole time? You know, you'll find all of that information out. So calling at least two previous landlord references are huge.

Wow. And actually calling, like, not just being like, okay, they provided it, but doing.

Actually calling. Yeah. You can send them a form as well. I know. Especially if it's a property management company or a company like that that will manage a property, they'll want to see like an application statement that says the tenant's good with releasing that information to him. So you might request that you send them that. But aside from that, you can send them a form. You can call them. I always like to have dialogue. You just get a little bit more sometimes than having them just fill out a form because they'll only just answer that versus kind of have a little bit more dialogue.

Right, That's.

And you hear it in their voice, too. Usually when you say the name of the tenant, they'll be like, yeah, or, or you'll get, oh yeah, I love her. Or, you know, it's, it's, it's pretty great.

That's funny.

Yeah, don't remember that. It'll either be a good experience and.

You'Ll find out real quick which one.

Which one it was.

But the one thing I want now here as well, in terms of, you know, we talked about having a process and very methodical and following all these steps that applies to family as well. You don't want, you know, cousin Jeff who is, you know, in need of a place and oh, it's all great and I've known them forever and it's going to be great. They're family and please don't fall into that. I know it's family and all that, but it's also business. It's your income, it's your property, it's your asset that is supposed to be doing something positive for you. So don't fall into the trap of, oh, it's family, it will all be okay. I mean, ask me how I know. So this is one of those that you don't want to learn the hard way. And so everybody gets the same, same criteria. Yeah.

Treat everybody the same and, and it'll work out. Yeah, absolutely.

Let's see.

Yeah, so part of our policies too. I know we've spoken a little bit about the evictions and things, but you know, finding out whether what your policies are, keeping them standard across the board. If you're not allowing evictions, if you know the, if you're not allowing sex offenders, if there's felony violations, that you're just absolutely no go. Obviously in my experience it's always better to say no to those, but you know, making sure that you have those standard policies set in place. So everybody's screened the same way.

So this, this chart that's up there now, it's just this one was a big one that again, early on I learned that, you know, it seemed like such a great deal and they always have a story behind it. They always have, well, I just sold my company or I just did this or I just did that and I've got this money, I can pay you up front. The lesson learned there is it's probably going to be the last money you ever see. And with all of the legislation and the rules that are in place right now, it's harder and harder to get them out. So in the six thousand dollar example, guess what? 3, 500 of it just went for your eviction costs, not to mention anything that has to be done to repair the property, fix it up and then just the time that goes by to be able to get them out. Right. Oh yeah. So what seems like it might be a good deal. That's why we wanted to make sure and hammer that one home. That one seems to come up quite a bit, surprisingly enough. Yeah.

And calling those references is huge.

There you go.

Again. It's that whole like what you. There's what they say and then there's what they don't say. Like Ashley, what you were talking about about the tonality.

It is. Yeah, absolutely. Well and the other thing too is we've seen where a. Somebody gave a landlord verification. It was their friend. It wasn't even the previous landlord.

Wow.

The other thing you'll see is people will purposefully put in their own information. I've seen this a lot of times in an application where they don't list the landlord and then we do a background check and then it comes up on Rent Bureau that they have an ongoing eviction and that they have, you know, X amount thousands of dollars that are past due and owed and in collection.

Wow.

It's super critical to just make. Take the time to really do the screening. Right. Because it'll just. It will save you so much money, so much time and so much headache if you just take the time to make sure you screen them. Right. And it doesn't take that long. These are some of the systems that are out there. So if you don't have a property management software it's totally fine. You don't need one. There's different sources out there where you can go have people fill out rental applications and get quality screening reports back that are going to do credit. Criminal terrorists, all of them. And the best thing is you can obviously charge that to the tenant tenant for whatever the report actually costs. So they're paying that. That's passing completely through. That's not on you. Rent Prop is one of them. Amer USA Buildium does have some. They're also. They have an additional management for rentals that are great for first time landlords in our experience right now we're using appfolio but there's a ton across the board. These are some great ones. If you're not looking for specific property management software and you're just like I want some rental applications to send to people. Where can they go fill them out. That I'm going to get quality reports from.

Yeah, right. And follow these guidelines for sure. I mean make sure these are some very specifically that pull from the national data by basis. But you want to verify, you know, their name, address, all the specifics that they're giving you and always get all of the details. Social Security, you know, all of the different alias aliases that they go by, making sure that cover everything. Because there's all kinds of little loopholes that people will try and you just want to make sure and shut them down and make sure that everything is above board when. When you get in.

Yeah. And in connection with the screening reports, if somebody is denied, so you definitely need to notify them. Right. There's regulations that say, okay, you have to notify them within 30 days after they apply, apply for your property if they're denied. And you have to give them a report that says this is exactly why you were denied. It meets the standards obviously for non discriminatory. And if they ask for a report that you can send them the report. There's a new one Colorado just enacted that if they've already filled out an application and they have that application, they can actually provide that to you. And you can't re screen, which is very interesting. So. Yes, yes. So it's very interesting. Depending on your state, you're going to want to double check what you can accept or have to accept and definitely make sure that you're in compliance in terms of all the regulations with notifications of denial and acceptance and that you're keeping everything on that scoring system the same.

And you still, even if you're required to take that other application. So again, people are very creative these days. Make sure that that application covers all of your checklist items as well. Don't just take that at face value. And what it is, you still need to do the full screening and the verification behind the scenes with that. And if it's missing anything that you would have normally on your checklist, make sure to add that as well. So always go by yours, even if you're forced in whatever situation to take some other documentation along the way.

Yep.

So.

Yep.

Wow, this is okay. Yeah, keep going.

So there's this checklist again. We can make this available. We will make this available to everybody as well. But this checklist that we're talking about, literally you can download it here, it will bring, it'll walk through everything so that you don't miss anything. That's the key is making sure that you take the time to be able to weed out the people you don't want and attract the people you do want. You do this multiple ways. I mean, we, we have another. I could Go on forever about the types of properties and the locations of properties and the. The kinds of things you do and do not want to do to the property and how you attract the right kinds of people for that. But this screening process is really sort of the common denominator across everything where you want to make sure that you get the right people in there. We've been fortunate enough that we've actually got some people that have been with us many, many years, because, again, they're the right people. We provide the right property for them. They in turn, appreciate that, take care of the property, and again, provide their payments on time. And so it's a reciprocal thing. I really, like. You said it earlier, Catherine, about paying it forward, providing a place that you would put your parents, like Ashley said, is this someplace you would have your parents live? So from a rental property, if you're looking to get into rental properties, is this a place that you would want to live yourself? Is this a place that you would put your parents in? And then from that, you again, attract the right kinds of people and screen the right kinds of people to make sure that they also satisfy that. That.

So when we were talking previously, before this, you had shared a story about, like, some of your tenants had circled back around to come from you, from other properties and then even refer their friends and family. Like, that is powerful inside of, like. Yes, we've talked about some of the nightmares that happened. But let's talk about the other side. Like, let's talk about the. What if it all goes right?

It's a relationship. Yeah. Honestly, it's my favorite part. It's the relationships you build with people that are truly just awesome. And everybody comes across the board. You're winning because your place is filled. You're getting cash flow on your rental, so it's becoming profitable. You can go and do what you'd like with your family. They're getting a place that's safe. It's exactly what they need and for their family. And it's just amazing the relationships you built. So we had a gal that she ended up moving out of state for work. And I think it was like two or three years later, she circled back, she called me and she was like, ashley, tell me you have a rental in this area. And I was like, I do. And she's like, thank you. She's like, because I don't want to rent from anybody else. But, you know, you build those relationships. And it's funny because, Ashley, you just.

Said something really powerful. I don't want to Rent from anybody else.

Yes.

That right there speaks of volumes.

Yes. Right? Yes.

Yeah. I don't want to step over that because it's powerful inside of what you guys have created in the checklist and all of that. But again, it comes down to the relationships. And again, when you have that loyal of following, so to speak, and people are like, like emotionally, like, I don't want to rent from anybody else like that. That is an emotional decision. Right.

So, yeah, it's just amazing.

That's huge. That's huge.

Yeah, it absolutely is.

And the best part is now her son is going to college and he's looking for a rental. So they just reached out to me.

Love that.

So it's pretty amazing, like I said, the relationships and the connections you can build with people from this. I mean, there's another family that they've rente us for 10 years now. Yeah, I think going on 11. Yeah, it'll be 11 this year. So it's just pretty amazing. And, you know, obviously, when you have that and you can just have those connections with people, it's pretty great.

Absolutely.

It really is. I love this.

Everybody always the horror stories, but there's good sides.

Everything said really good.

Again, you, you, you eliminate or at least mitigate the horror stories by doing the important work up front. Do the numbers, and the numbers tell you what to do. And because you did that, now you reap the rewards of all of that and have these loyal tenants that love you, you love them, like, and keep coming back and bring their friends and family. Like, that's pretty cool.

Yeah, it's pretty amazing. That's really where once you, you dial this in, you're golden, right? It. Keep it numbers and. And you'll be great.

Yeah, yeah.

It's amazing.

I love this. Okay, so are we at the end?

We are, yeah. With the checklist, I did want to bring up a couple things. So this is one that we've created, and it gives a scoring system. So it's a great template to start with. If you're like, gosh, you know, I don't even know where to begin. Scoring system. She keeps saying this, and that's great, but what does that mean? This is a great template to start with, and it will tell you exactly how to score each category from credit, background, criminal, eviction, everything. So you don't have to put any of that. It's just numbers. In addition, it also gives four different links for tenant, landlord, state laws. So depending on where you're at, be super helpful to look at those sites It'll also give some more details on those federal fair housing regulations. If you're like, what in the world is that? So some good stuff on there.

That's amazing. So the link for this, for the people who are watching the recording, I'll have it in the description. So make sure you go there and you can get the link there. And then of course, we're having our follow up webinar for this, this on Thursday. So we're going to do a Q A session because I'm sure all of you are going to have a ton of questions about this that we can come back to and, you know, keep digging in. And here's to know again, like I.

Said at the beginning, we're going to.

Be doing multiple of these because there's so many layers to be a buy and hold. And I just want to put it out there. We're not here to sell anything. However, if people wanted to, I think you guys have, don't you have a company where they, you will actually manage other people's properties? Am I wrong?

Am I right?

We do, we do, yes. Yep, yep.

So act in property management. We've got $65 million portfolio right now that we manage that consists of industrial, multifamily and single family properties across the board. So, yeah, we do that as well.

So people can reach out to you to learn more about that. Okay, well, this is so exciting, you guys. Like, this is. Thank you. I love the whole do the numbers and then again you're just leaving every person, property and community better than you found them. So I cannot wait for the rest of our webinars that we're going to do together. Be there for the Q and A, get yourself registered and yeah, you two are magnificent. So thank you for who you are and what you do and on behalf of all your really great tenants. Just thank you for being amazing landlords. The world needs more of you.

Thank you, Catherine.

Thank you, Kathy. Thanks for having us.

Yeah, absolutely. Okay, we will see you guys in two days and then we're gonna keep going with all of these as the weeks come. I love it.

Perfect.

Okay, thank you guys.

Bye. Bye, bye.