39) How to Screen for the Perfect Tenant & YIMBYs

Real Estate Investing with House Money

House Money Weekly

In this week’s House Money Weekly segment, Lauren and Alan bring back their special guest, James, from Rethink the Rat Race. They discuss blog 137, How to screen for the perfect tenant. Screening for tenants is very important and it will save you headaches in the future. The first step is to create clear rental guidelines you’re comfortable with and stick to them, for example: 1) monthly earnings must be 2.5 or 3 times rental amount, 2) no evictions, and 3) credit score. James clearly lays out his criteria in a form so that people self-screen and therefore often eliminate themselves. You must not change your criteria based on whether you like the tenant or not. The second step is to use a 3rd party screener that the tenant pays for. Alan uses an app called TransUnion My Smart Move. Alan uses Tenant Turner to help facilitate showings, and it also functions as a screening tool. The last step Alan discusses is to confirm that they in fact meet the requirements.

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Mortgage Minute: Jasmine answers the question: What is a lender’s relationship with an appraiser?

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Real Estate Is Easy Interview

Lauren interviews Tanya Rooney, a short-term rental host in Minnesota. Tanya defines short term rental as a furnished house or apartments that people book for 29 days less. It is like a daily rental which is popularly known as Airbnbs or VRBOs. Tanya actually started out with flipping houses for a couple of years and when one wasn’t moving, one of her friends suggested she try short-term rental and now she has 5 short-term rental properties. Tanya shares some numbers with us, including some of the ups and downs of the last few years. Tanya shares some of the craziest things that happened to her short-term rental property. Tanya believes that short-term rental is not passive because STR is a very active work and Lauren agrees and added that short-term rental is passive aggressive because there are times where you go for a while where there's nothing but then suddenly there’s a problem. Lauren asks Tanya what she loves about STRs and for her it’s the guest interactions, it's her favorite part because she likes to be able to talk with her guests (even though a lot of her communications are automated. Lauren also asks Tanya what is something that she doesn’t like about short-term rental hosting and Tanya answers that it’s those “gut punches,” like the first time you have to call the cops. But the thing that she dislikes the most about hosting is the contractor coordination. Tanya has an assistant that does cleaning and laundry coordination because she doesn't want to deal with that part of the business. And lastly, Tanya answers that she makes real estate easy by automating and networking. Alan points out that automating is important, but you should probably dive in manually first. James agrees, and adds that there are always iterations when automating.

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Guest Host's Segment

Guest Host James discusses an article that talks about how certain cities are changing their zoning rules to allow for more density. James is hoping it will happen across the board because it will add more affordable housing and it will add more opportunities for real estate investors. The article talks about Minneapolis and how they are changing their zoning rules to allow for ADUs. Alan shares that Atlanta is struggling with this and notes that 80% of the lots are for single families and everyone complains about traffic! There are so many walkable cities where you don’t even need a car because they’re so dense. Lauren likes the idea because the demand for houses is increasing (there’s a lack of supply) and the lack of housing contributes to the affordability crisis. Also, ADUs would provide a lot of opportunities for house hackers. James adds that we’re talking about mom-and-pop landlords here, versus a large syndication. Alan reminds us that you can live in the ADU and rent the house too. James shares his story about doing exactly that. At the end of the day, we’re talking about being a YIMBY (Yes In My Back Yard).

Article: https://www.npr.org/2024/02/17/1229867031/housing-shortage-zoning-reform-cities

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