My $2000 Tenant Screening Mistake-A Happy Ending
At the end of October, I wrote a post about how I cut a corner in my tenant screening process and that mistake was probably going to cost me $2000 in lost rent and/or advertising/placement fees. You can read the full article here, but in summary I failed to connect with the prospective tenant’s Section 8 coordinator on the phone. If I had, I would have learned that the prospective tenant’s voucher had been changed from three bedrooms to two bedrooms. Consequently, she could now not afford the apartment and had to move out 3 weeks after she moved in. I was left with 1 week to rent a 3 bedroom apartment for $1000 per month at one of the tougher times of the year (November).
Quickly I put my standard advertising plan into action including posting the apartment on Craig’s List, taking out an ad in the Star Tribune, putting a sign in the yard, and even reverse prospecting on Craig’s List. I then took extra steps including: calling my current tenants and offering them an incentive to refer a new tenant, agreeing to pay a leasing company the first month’s rent to find a tenant, and posting signs at some of my other buildings that are on busy roads.
All this activity did produce some showings and some no shows. I quickly had two roommates ready to sign a lease, but because I had learned my lesson, I quizzed them hard only to find out that they did not have the security deposit and were hoping to get the first month’s rent from emergency assistance. I explained that having both the security deposit and first month’s rent was a requirement to signing the lease and that I would rent the apartment to the first party that had those and an approved application.
A friend of mine (who owns about 60 rental units) called and said he had an extra tenant that he did not have an apartment for. We set up a time to show her the apartment the next day. The prospective tenant arrive early, she walked through the apartment and liked the updates that we recently did. I quizzed her looking for any red flags and she filled out an application on the spot.
I processed her application and signed a lease with her 2 days later, on October 30. She went to emergency assistance with the new lease the next day, the coordinator called when while the tenant was in her office and confirmed they would pay her security deposit and first month’s rent. I met the tenant and gave her the keys on the November 1.
Despite costing me some money to run the ad in the Star Tribune and beating myself up for my mistake, the situation worked out. In fact, I leased the apartment for $50 more per month to this new tenant than the 3 week tenant. It is a happy ending!
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