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“The Technician’s usual experience is one of frustration and annoyance at being interrupted in the course of what needs to be done to try something new that probably doesn’t need to be done at all.” –Michael Gerber, The E-Myth Revisited


You didn’t sign up for this.  When you bought rental property it was to make profitable investments.  When you went into business, it was to be able to do what you loved doing, were good at doing, and maybe even famous for.  It wasn’t to get new tenants or to hire people.  Those just get in the way of doing what’s important.


The result is, you end up with hassles and in having to manage people far more than you ever wanted to.  After all, you can’t make any money screening applicants.  But you sure can lose money.


One thing I discovered over the years in talking to landlords is that they are good with things, but maybe not so good with people.  They get themselves into trouble because they are both nice and worried.  They talk a tough story, but they are usually pretty nice. The only two times a landlord gets into trouble are when he is in a hurry or feels sorry for someone.   He is in a hurry because the mortgage payment is due and the unit is vacant.  “Got to get some rent money.”  He also wants to help, so may be a sucker for a hard-luck story.  The result, bad tenants.


Small business owners are in a similar situation.  They are good at what they do such as electrical, plumbing, woodworking, writing, making videos, marketing, computer programming and everything else that people start businesses for.  Unless they are an employment agency, they aren’t much good at hiring.  They want to get it done so they can get back to what they’re good at.  The result, employees who may not be the best for the business.


The whole time this tenant selection or hiring process is going on, they have this gnawing suspicion in the pits of their stomachs that they aren’t doing it quite right.  It turns out that gnawing suspicion is often right.


Some 95 percent of tenants fall into the category of “good.”  Probably the majority of employees want to take pride in their work and their jobs.  Trouble is, the bad tenants and less-than-exemplary employees are adept at getting places to live and in finding new jobs.


Nationwide the vacancy rate for rentals is about 7 percent with some cities and states under 4 percent and some even lower yet.  There is a shortage of rental housing so there is an abundance of prospective tenants.  That means landlords can be picky.  We’ll look at how in a minute.


In this market, it’s not so easy for business owners looking to hire.   Small businesses especially complain that they can’t find qualified employees.  That may result from several factors, one being how much the business can pay, and another that they are looking for skills that are in short supply.  Construction is having a particularly tough time of it as the housing boom sees skilled workers already working for large construction companies.  I wouldn’t presume to tell a business owner what to look for when hiring.  Obviously, what to avoid is rushing into a decision or settling for someone whom you know will not work out or worse hurt your business.


But all is not lost.  Let’s look at how to set up a system so tenant selection and hiring are less of a blind dart throw and far less of a hassle, but also effective.


No matter what, every application must meet the following standards:

  1. Application completely filled out truthfully
  2. Verifiable source of income (for tenants)
  3. Ability to verify all information from the application
  4. Appropriate identification and able to verify supplied ID information


First and most important is the rule: never decide to hire or rent to an applicant while you are listening to him or her.  Job hoppers and bad tenants are expert at interviewing.  That’s how they get hired and rented to over and over.  They seem like such nice, responsible people, when in fact, they are just good at seeming like nice, responsible people.  Hire or rent on the spot and you will most likely regret it.  If someone has to “know today,” send your applicant on his or her way.  You have a system in place that takes at least two days to complete.


Second, create the system.  Every property and every job has different requirements.  That is, they won’t work for everybody, so the requirements for every property and job need to be clear in the landlord’s or business owner’s mind.  Write them down and create a checklist for screening.  Writing them down is essential. Then, no matter what, do every item on the checklist without fail.


What are the requirements you create? First, think of your best tenants.  What are their characteristics?  Look at income, rental history, credit.  To hire, think of your best employees. What are their characteristics?  Skillset is important, but just as important is the ability to work with customers, if that’s what they do, and with other people.


For both tenants and employees, what are the absolute minimum qualifications you will accept?  In addition, finding nice people is one of the two most the important considerations.  You do that by checking references.  Why did they leave their last jobs?  How did they get along with their previous landlords or property managers?


The other one is honesty.  There can be no substitute for renting to and hiring honest people.  People who constantly try to “get away” with something or for whom honesty only happens when someone is looking won’t be an acceptable candidate—ever.  Of course, having been fired for dishonest behavior is grounds for an immediate rejection both as an employee and a tenant.


A bad hire or a bad tenant can put you out of business.  Sure, repairs and remodels cost as does advertising, marketing, maintenance and every other aspect of running a business, but those are predictable.  What is not predictable is the cost of a bad tenant or bad hire.


A system works every time if done right.  There’s no guesswork, no rush, no more feeling sorry for someone, only expectations.

By Robert L. Cain

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