I run a property management firm, and the firm has the hardest time predicting good tenants. We have had to evict people of the clergy, old friends of the family, nice students. Predicting who will be good tenants is such a art that it is more like tarot card reading then painting. It is difficult to predict who will be good tenants.
What compounds the difficulty in predicting the tenant’s future is that at this point many people have blemishes on their records. On average, many people who rent often have credit issues, which is why they rented during periods of easy financing in the past. I have learned from experience that finding a credit worthy tenant is extremely difficult.
Therefore, how long can you go before you have to compromise your ideals of the perfect tenant? This is especially difficult if you are seeking to rent out a property and use those cash flows to pay off mortgages. How long can a investor hold out for the Holy Grail of tenants?
Many people often try to blame their realtors or property managers for a tenant who ends up being evicted. If the realtor or property manager does their due dilligence by searching for rental history, verifying application, criminal history, and verifying pay; then this is all that we can do. There are no psychological test that we can run to determine if someone is going to honor their lease. If big companies like Enron, GM, and others can possibly go out of business; then how can any person truly feel comfortable that their tenant will keep their word? As my dad says about contracts, “a contract is only as good the word of the person who writes it.”
Today, in this financial environment; the difficulty in predicting only increases. Whose jobs are really going to be safe? Economist even in the local Houston market are expecting a slow down. With Real Estate slowing down and energy slowing down, the economy is descending (maybe more slowly than other areas). This only creates a environment where job security is not a sure thing.
I am not hear to state that screening is not a preventative. The more time that you do spend up front will decrease the percentage for issues later then those people who do not. To me it is similar to a medical check up, you may never see anything that worries on those visits, but that ounce of prevention may prevent you from developing a far gone case of heart disease later on in life. Along that same analogy, just because you get a check up does not mean you will not develop heart disease. This is the same issue that people face when selecting tenants. Screening may not prevent bad things from occuring, but it can definitely protect you from obvious red flag type tenants (multiple evictions, not enough money to afford the place).
Posted by ashokalion 
