by Alex Hemani - Forbes
You wouldn’t invest in a property without first investigating the premises, comps and details of the deal. So don’t count on the performance of that investment without conducting some due diligence on the people who will be providing the revenue: your future tenants.
Thorough tenant screening is critical to protecting your investment, helping you treat everybody equally and avoiding a potential fair housing inquiry or violation. Large property owners do it, and singe-family rental owners should too, especially since people who know they have a credit or rental history problem will look for properties from independent investors hoping you won’t check to find out the sordid details.
There’s no way to be certain whether a tenant-landlord relationship will work out, but that doesn’t mean you should simply flip a coin or “go with your gut.” People who seem personable and responsible in an interview can turn out to be difficult renters. Giving somebody a break could mean they just became your newest charity case, or reveal a pattern of inconsistent decisions you’ve made that could lead to a fair housing complaint. That’s why you have to perform your due diligence on people you are considering renting to, just like you would on a property you are considering buying. Fail to do so, and you increase your risk and jeopardize your rental revenue stream.