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Tenant Screening Best Practices

Our Tenant Screening Best Practices Separate Us from the Amateurs. How?

We operate our tenant screening process like a rocket scientist utilizing:

  • Powerful tenant screening standards.
  • The tenant screening volume equation.
  • Our 3-filter secret tenant screening formula.
  • Effective processing of the tenant’s application.

View Over 100 Google Reviews for Limestone Investments, LLC from Tenants and Property Owners

Cost of Ignoring Tenant Screening Best Practices

Cost of Ignoring Best Practices | Tenant Screening Best Practices | Jim Eagan | Limestone Investments | Real Estate Investment | Las Vegas, NevadaCost of Ignoring Tenant Screening Best Practices

  1. Laws Have Changed – I would like to start off with some facts that people don’t know. Our legislature has become significantly more liberal in the past couple of years. As a result, the laws have changed making it significantly more difficult to attack tenants. What used to take two weeks to get rid of a tenant now takes no less than two months.
  2. Improper Screening Costs a LOT of money  Here is a real live video of an owner who screened his own tenant and tried to save some money by not hiring a property manager. He saved about $400 over the year but it cost him over $14,000 in lost revenue and repairs. He simply did not know that there is actually a benefit to having someone professionally screen tenants and manage property. Most of our competitors lack proper screening techniques which can also result in catastrophic consequences.

Tenant Screening Standards

Tenant Screening Standards | Tenant Screening Best Practices | Jim Eagan | Limestone Investments | Real Estate Investment | Las Vegas, NevadaTenant Screening Standards

Not only are screening techniques more important than before but also the standards. Let’s talk about standards real quickly, We are generally looking for credit scores above 650 income three times rent and two landlord references. The credit score is a function of the neighborhood. Generally our rough neighborhoods start at 600 while bling blings in exclusive neighborhoods start at 750. A tenant with a 750 won’t even finish their lease an a rough neighborhood. Our goal is to match the tenant profile with the property and neighborhood which results in long term tenant stays.

The Tenant Screening Volume Equation

Tenant Screening Volume Equation | Tenant Screening Best Practices | Jim Eagan | Limestone Investments | Real Estate Investment | Las Vegas, NevadaThe Tenant Screening Volume Equation

We are going to begin with when I call the tenant screening volume equation:

More prospects = More tenants to select from = Better quality tenants

Volume is where Limestone Investments is really far ahead of amateurs and ahead of most competitors.

What creates the ideal tenant screening volume?

The volume we get is a result of posting a property with great photos on more than 40 websites. When priced properly, we get inundated with phone calls and emails. Most amateurs and most of our competitors do not have the processes in place to function or process that volume of leads. Most amateurs would lose their minds trying to deal with all of that.

Activity-Measuring Tools & Process Are Key to Tenant Screening Best Practices

I have not met anyone out there who has the tools and the process we have to measure activity.

  1. On Mondays’ we reach out to our vacant property owners and show them the data.
  2. A week after we have a property advertised.
  3. We will provide you with feedback on those numbers.

I am an ex engineer Air Force process freak. These numbers do not lie. I don’t care if you have granite countertops and can lights and upgraded closets, if you have a property priced too high we are not going to get sufficient volume to get you a quality tenant.

Our 3-Filter Secret Formula is Key to Activating Tenant Screening Best Practices

3 Filter Tenant Screening Formula | Tenant Screening Best Practices | Jim Eagan | Limestone Investments | Real Estate Investment | Las Vegas, NevadaOur 3-Filter Secret Formula is Key to Activating Tenant Screening Best Practices

1) Primary Tenant Screening Filter

I called the hopeless filter. We are going to remove all the prospects who are hopeless. This includes tenants who do not have a job, have for credit, or variations are combinations of pets. Since we do not recommend pets this illuminates probably 20% of the prospects. The reason we do not recommend pets is because all it takes is one rat dog to do $15,000 of damage to your flooring. We have seen it happen. There’s not enough security deposit to take care of all of those damages. The other problem with pets is they become a nuisance to neighbors and I can go on and on about my pets are really bad idea. We will absolutely not allow dogs with pools. We have had too many conflicts between pets and pool vendors.

We also don’t take on people who do not live here. We have had too many problems with people who look at property online and then become a pain in the neck when I get here. They do nothing but fight us about the location so we’re done playing with people who try to book online.

2) Secondary Tenant Screening Filter

The secondary filter is where we do a light background check on the prospect. We asked him very basic and simple questions that include why they are leaving a current property, what profession they are in, how long they’ve had their cell number, and how long they have held at their job. These questions are fairly subjective but in summary we are looking for people who have the proprietary tenant profile.

Tenants Must Pass Through Both Filters Before We Show Them the Property

You will notice we have yet to show the property. About 19 out of twenty prospects never get passed this second filter! We are not going to waste their time on showing the property. More importantly we are not going to get into a pissing match if they get denied on their application. We don’t let tenants who can’t pass the secondary filter go to the next step of applying.

 

Our 3rd Tenant Screening Filter: The Application

Mistake of Charging Too Much for Tenant Application | Tenant Screening Best Practices | Jim Eagan | Limestone Investments | Real Estate Investment | Las Vegas, NevadaOur 3rd Tenant Screening Filter: The Application

We have already advertised the minimum requirements on our advertising so we are not dealing with people who don’t already meet our standards. The application is the final filter and really just verifying what we already know about the applicant.  

2 mistakes our competitors make with applications:

  1. They charge too much. I suspect many property management companies don’t have the systems to handle volume and charge more because they want less volume OR they are trying to make money on application fees. Either way, it’s a poor business practice. We only charge $25 for applications because that’s what our vendor charges AND we want more applicants. Not less.
  2. They start with the application. They are forced to review unqualified prospects because now they have to have legal responses. It’s a known fact many property management companies take on prospects they don’t want simply because they met all the parameters of the advertisement.

3 Components to a Strong Application Filter for Tenant Screening Best Practices

3 Components for Strong Tenant Application Filter | Tenant Screening Best Practices | Jim Eagan | Limestone Investments | Real Estate Investment | Las Vegas, Nevada3 Components to a Strong Application Filter for Tenant Screening Best Practices

  1. Credit Check – This is pretty simple as our vendor squirts out a number. Occasionally we will lower our standard on this score if the credit hits are related to medical or student loans. More kids are killed by student loans than anything else and it’s a real tragedy. That’s for another video.
  2. Income Verification – Ya. No brainer. Look at the paystubs and multiply by 3. If they don’t have sufficient income we tell them to look for a cheaper place to live. Someone shouldn’t have to suffer to pay rent.
  3. Landlord Verification – Lately we have had a bunch of landlords throw us under the bus by providing false reviews because they just want to get rid of a terrible tenant. We put more emphasis on the previous landlord who actually dealt with the move out and disbursed the security deposit. The previous landlord also doesn’t have a vested interest on the opinion. Therefore it’s a more accurate reflection of the tenant. We also employ some proprietary methods to confirm the landlord isn’t just some relative or friend.

 

| Tenant Screening Best Practices | Jim Eagan | Limestone Investments | Real Estate Investment | Las Vegas, NevadaSuccessful Tenant Screening Best Practices ARE Rocket Science

Since I used to be a rocket scientist I created a sophisticated and proprietary system that no one in Las Vegas can come close to matching in results. This system is what enabled us to glide right through Covid. During Covid only 4 of our owners of about 200 properties suffered with loss of rent. We rarely have to evict a tenant. Usually about one every 3 months and those I would describe as elegant departures that didn’t involve a lengthy eviction process. 

Nearly all of our evictions are related to tenants amateurs placed. That’s right. About every 2 months we have to toss some naughty tenant because some amateur put them there.

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5 Important Questions for You:

1) Are you a Real Estate investor?

2) Are you managing your own investment property?

3) Have you assumed the burden of marketing for tenants, screening tenants, collecting rent and managing tenant issues?

4) Are the above activities robbing you of the time you could be more profitably performing tasks in your highest and best skill set?

5) Are you experiencing costly mistakes, lost rental income, suffering property damage along the way?

Save Time – Avoid Costly Mistakes – Increase Your Real Estate Investment ROI

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