The way you lie
I don’t know if you are country music fans are not but I like listening to it from time to time — especially if it’s from the 90’s era. But there’s a song from the Band Perry titled “You Lie.” The chorus is great and it goes something like this:
‘You lie like a priceless Persian rug on a rich man’s floor.
You lie like a coon dog basking in the sunshine on my porch.
You lie like a penny in the parking lot at the grocery store.
It just comes way too natural to you.
The way you lie’
The reason this is relevant to you as a real estate investor is because one of the major tasks associated with vetting applicants for rental properties is to determine if someone has lied on their application.
So how do you do that?
For us, it’s a multifaceted process that starts with evaluating the application itself. And for us, our whole process is to determine if we believe the applicants can do the four jobs of a tenant. And as a reminder, those four jobs are as follows:
No.1 Take good care of the house. No.2 Pay on time. No.3 Be comfortable to work with, which means using good communication and always being respectful. No.4 Be a good neighbor.
So when we get the application in, the first thing we do is to determine if they have a total household income of three times the rent rate. And then we verify that information with their employer. We also make sure they have been on the job for a year. This is kind of a pain sometimes, especially with larger companies. So if we can’t get the information quickly by calling the employer, we get the applicant to submit one years’ worth of bank statements.
This is a great tactic because you get to verify that they have been receiving a paycheck from the same company for a year, and you get to see what their actual bring home is. This is important because sometimes people will over-figure their pay when filling out the application. And this miscalculation could put them just over the line when in fact they do not make enough for the house.
Now I’ll be honest, most of the time people are not intentionally fibbing on how much money they make. If they do what I mentioned above, most of the time it was a simple rounding error. The main things we see people falsify is job history, criminal history and then information about their pets — which is by far the biggest one.
On job history, we require our applicants to be on the job for at least a year. It says that in all of our ads. And when people see that, and realize they have only been on the job for seven months, I guess they think seven is over half a year and you should just round up. This is why it is super important to get in touch with HR at the company they work for. And if not, the bank statements tell the story.
The criminal history thing is fairly easy to check. There are a number of websites that will pull national data for you. All you need is a name and birthdate, which you get from your application. After that, you can run their name and find out all you need to know.
With pets, however, the only way I know to verify that is to go and meet the people, and the pets, where they live now. We call this the in-home interview and we do it on every applicant that makes it to the last stage of our application process. And the in-home has proven to be the most effective tool we have in verifying that people know how to keep their house in good condition, that they will be comfortable to work with, that they are good neighbors and that the pets they may or may not have listed are in good working order.
The most common application falsification tends to be the confusion of the question we ask on our application: “Do you have a pet?” And there is a drop down for ‘yes’ or ‘no.’ Now the confusion comes with the definition of “pet.” Sometimes people think we just mean cats or dogs.
That is not the case. A fish tank splattering water on the wall for a time can cause subfloor rot, and other moisture issues. Birds, well, they poop. They poop a lot, and that stuff sticks to drywall and peels the drywall paper off when you scrape it. Ferrets, gerbils, mice, snakes, etc, can get lost and chew things up. So most all pets can cause damage.
The next misunderstanding is inside versus outside pets. Notice that our application question did not specify anything about living indoors or not. Outside pets do damage too. I have seen dogs pee through the metal fins on the outside AC unit. The uric acid in the dog’s urine ate through the metal, and the homeowner is the one that lost that peeing contest.
Most of the time, though, people are trying to hide their breed because of a stigma associated with it. In this case, people will say they have a mixed breed animal. Or they’ll put “no pets” hoping to avoid us finding out they have a pit-bull. But here is the thing, if they are falsifying that information right now, they are lying. And a lie is no way to start a relationship.
And that holds doubly true for the landlord-tenant relationship. And the only way I know to discover if they are ‘lying bout the pitt-bull basking in the sun on their front porch’ is to do the in-home, discover it before they get into the house, and make your decision based on that. And for our company, we choose not to work with people who lie.
Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.