What Drives Landlords Out of Business

By Robert L. Cain, Copyright 2025 Cain Publications, Inc.

Remember when you acquired your first piece of rental property. Maybe you had visions of providing a great place for people to live.? Maybe you looked forward to the thousands of dollars that were going to roll in because of your becoming a real estate tycoon.? Or maybe you thought of how this property was your first step toward a hefty retirement income.? People get into the rental property business for different reasons, all of them valid

But then, after it was yours and after you had put all that sweat and time into making it a great place to live, you rented it out.? If only it could have just sat there and generated income sitting vacant? No problem at all.? It would be like farmers getting paid not to grow crops.? But you do have to rent the property, or sell it, to generate any income and become a tycoon.

Reality set in when you began to look for tenants.? Oh, they seemed like wonderful people who would be ideal tenants but to whom life has just dealt a bad hand.? “But we have it under control now,” they assured you, “our life is turning around.”? Taking them at their word and wanting to give them another chance, plus not wanting to appear to be the notorious hard-hearted landlord of myth and legend, you rented to them.? You were sure they would be wonderful tenants when they moved in and rented from a landlord who had the tenants’ best interests at heart.? But life just kept on dealing them rotten hands, and started dealing you the same hand, too. What with the late or nonexistent rent, the complaints from the neighbors, the trashed property and the calls from the police about these folks. It was as if your tenant’s bad luck was rubbing off on you,

Renting out property requires a shift in thinking from buying property and getting it ready to rent.? No longer are you dealing with things, but with people.? And that’s the most difficult assignment many landlords have.

Things don’t try to fool you, people do.? Things don’t lie to you, people do.? Things don’t try to make you feel sorry for them, people do. Things don’t try to make you be in a hurry so you make a bad decision, people do.

That’s why tenant selection is and landlord’s most important job.? Many landlords never get that figured out.? They go from one bad tenant to the next, eventually reaching the point where they say “bad tenants are inevitable; it doesn’t matter what you do, you’ll always get them.”

Then one day comes the last straw.? It could be anything including that minuscule, nearly invisible straw all the way up to a a two-by-four whacking you upside the head..? It might just be a particularly bad day and a tenant hasn’t done anything worse than he usually does.? But it hits you wrong.? Maybe a midnight move-out with three months of rent still owing.? Maybe the tenant calls and says he can’t pay the rent this month, “you understand don’t you, times have been tough for us lately.”? Or maybe you discover the worst: that a tenant has been cooking methamphetamines and dealing them in your property.? You can’t take any more.

“Get me out of this business!” you scream, as you pound a “For Sale” sign in the front yard.

What drives landlords out of the business?? Mostly it’s poor, or nonexistent tenant selection.? For example, I received a call a few years ago from Greg, a landlord, complaining about the tenants on both sides of his duplex.? He could hardly wait to sell the place.? The rent was always late from both units, one more so than the other.? I asked him, “what about your other properties?”

“Oh, those are great.? I have wonderful tenants who always pay the rent on time and take care of their homes.”

“So would we be having this discussion if you had good tenants in this duplex?” I asked.

“Well, no.”

“Then why don’t you just boot both tenants out?? Give them a 30-day, no cause notice and make them move, then start over with good tenants?”

He did just that.? The woman on one side didn’t think it was real, and the landlord had to do an eviction.? I watched as the sheriff removed her.

A few months later I ran into Greg at a meeting and asked how things were going with the duplex.

“Great,” he said.? “I’ve got great tenants in both units.”? He knew how to select good tenants, he just hadn’t done it.? Selling the property was now the farthest thing from his mind.

I drove by the duplex later and noticed how nice the grounds and exterior looked.? I imagine the interiors look just as good.

Bad tenants were about to drive this landlord out of the business.? These were bad tenants that would have been avoided with some basic tenant selection.

The Good Tenant Selection Process

Good tenant selection is not difficult.? It does require planning, attention to detail and a step-by-step process.? If you expect to have good results every time, select tenants the right way every time.

Create realistic but effective rental criteria.? You do it for three reasons: one you know who is acceptable and who is not, two, it self-screens, meaning that tenants who can’t qualify usually won’t even apply, and three, it creates an aura of professionalism around your business that good tenants welcome.

Most important, though, you know who is acceptable and who is not.? You take subjectivity out of the equation.? Either an applicant is qualified or not.

Regardless of what else you put in your rental criteria, include these four:?

1. Applicant must fill out application completely and truthfully.? That means to your satisfaction not his or hers and there are no blank spaces. Do not accept it until you are satisfied.? Remember, you are in charge here, not them.?

2. Verify the source of income.? Whether it is a job or some kind of government assistance, you must be able to verify it independently.

3. Meet all adults who are moving into the unit.? That includes the adult children of the tenants.? None of this “let me take it home for my husband to sign and I‘ll bring it back.”? You have to meet the husband, girlfriend, or significant other.

4. Appropriate identification.? In most cases that is a driver’s license.? The picture must be theirs and the address or addresses on the license match those on the rental application.

The hard part, sticking to your criteria.? If you are lucky and your property is in a good rental market, you could have plenty of qualified applicants.? However, some of us are not that lucky, and we end up feeling lucky to get even applicants whom we would never rent to.

With bad tenants, as time goes by, as desperation creeps into your consciousness, you start considering the applicants with the lack of qualifications that you turned down earlier.? The mortgage and taxes drive you to accept one of them. Even if you do have written criteria, you might accept one, thinking that you have been too stringent or have expected too much.? Besides, the tenant you’re thinking about renting to is “turning his life around now.” Uh, huh.

Resist the temptation.? Better no tenant than a bad tenant.? If you don’t stick to the criteria you set, you will pay the consequences with a bad tenant, or at least a tenant who tries your resolve about continuing in the landlording business.

Tenant selection is the most important part of our business.? If you want to stay in it, or at least want to get out on your terms instead of the bad tenants’, do tenant selection right.

Sponsored by Zip Reports where they do employment and rental screening. Contact Robert L. Cain at [email protected]

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