5 Things I Wish Someone Had Told Me Earlier about Real Estate Investing… (Part 4 of 5)

by Vena Jones-Cox

4. People are liars.

Somehow, I grew up with the idea that lying was a bad thing to do and that getting caught lying was embarrassing and could get you into a lot of trouble. Somehow, people who apply for rentals missed this lesson growing up, or have unlearned it in adulthood.

Because no one ever told me this, I spent the first four years of my real estate career checking applications only superficially, and as a result ended up giving over control of my houses to some real tenants-from-hell. I actually believed that my properties were cursed, since perfectly good applicants somehow self-destructed just weeks after moving in.

The first thing that clued me in was when I got not one but three separate calls from collection agencies about one tenant within a few weeks of having rented to her. I kept telling the callers that they had the wrong lady, since my tenant’s record was clean when I checked it.

Finally, one of the creditors gave me a description of the tenant and her car, and I realized that I’d somehow missed something.

A little detective work uncovered the fact that I’d actually checked her sister’s credit, since the name and social security number on the application were hers.

Furthermore, the “boyfriend”, whose $35K/year job in a nursing home qualified her to rent the home, was actually an ex-husband who had no intention of living in the home OR of helping with the rent, and the “prior landlord” who gave such a glowing reference was actually the tenant’s mother. Needless to say, she was evicted a few months later having paid only the first month’s rent.

Since learning this lesson, I’ve become an application-checking fiend. I look at driver’s licenses. I cross-check current addresses with those on the credit report, then cross-check owner’s names with those of landlords on the application.

I use the Criss-Cross directory to make sure that the work phone number actually belongs to a business. And I have a firm policy that NOBODY gets to live in one of my houses if they’ve told a major lie on their application.

After I discovered that something like 60% of my applicants were giving false information on their applications, I developed a full-page instruction form explaining to all potential tenants that lying about their rental, credit, criminal, or work history would result in automatic rejection and loss of their application fee, and you know what happened?

Not a thing. I’ve rejected 8 out of the last 10 applicants I’ve had due to falsification of the application. Go figure.

Reprinted from the Real Deal, a monthly newsletter for Real Life Real Estate Investors with permission of Vena Jones-Cox. Get a free 3-month trial subscription by clicking here. One per household, please.