We have been focused on flips for a while but are getting more opportunities for lease option situations. We have no interest in holding and renting, but lease options, yes. Saying all that, wondered if there’s any advice on screening for those of us new to options?
Could you be more specific, please? Screening who, and for what?
Since we are new to this strategy, we do not hold and rent, or owner finance as yet… we haven’t run credit or checked backgrounds before. Just asking for references and verifying them seems insufficient to me. Any pointers or services anyone can suggest we use to check out applicants for lease. Would the person’s signature to agree to a check and perhaps their SS# included on the application be the information we need?
karree, Personally I have a Mortgage broker friend check for me but there are many online sites. thelpa.com is just one of many, just google for more or try a search here. If you join your local REIclub they may provide the service. MrLandlord or landlord411 might be two more but I forget. Herbster
The Rental Application you use should contain a paragraph stating that theapplicant’s signature gives you permission to run any background checks you deem necessary. Without that, you won’t be able to pull their credit.
When it comes right down to it, they are tenants. Screen them like any other tenant. Verify that they have the income to make the payments.
Verify that they haven’t done damage to their previous residences; after all you still own it and will have to repair any damage they do if they don’t fulfil the purchase agreement.
You need their written permission to run credit. You need their full name, AKAs, SS #, date of birth, current and prior address to run the credit report.
I use Kroll Factual Data to run credit and criminal. They provide a full report, which means that you must have an office inspection before they will accept you as a customer.
YOu want to always be more diligent when doing lease options since these folks will have what is called an ‘equitable position’ in this transaction. It’s close to ownership, but not quite.
YOu should have them agree to background checks and go back at least two landlords to see if their application jibes.
Also, insert somewhere in the agreement that you can always pull up their credit as long as you have a business relationship. This works well when you have to track someone down who hasn’t paid for lawsuits.