Screening a buyer is extremely important, and yet some of us investors still go by instinct or illegal decisions. Screen a tenant by reviewing their application thoroughly. Check it for accuracy and make sure they did not lie to you. If someone lies to me, they are denied the occupancy. Check their name—get a copy of their driver’s license. Check their landlord history. The current landlord may want to get rid of them, but the previous landlord has nothing to hide. Call them both. Confirm it is the real landlord in one of two ways: check it on county records, or call the person and mention a different amount of rent than on the rental application.
Check their employment, too. I use the same technique when I verify their income as I do their rental amount. When I contact the employer I say “Joe put on his application that he is making $16 per hour—is this correct?” when he actually put $12 per hour. If the person you reached is his employer and not his buddy, they will correct you on this one. On occasion I will also ask the applicant for recent pay stubs to put in the file. This information is also handy to have in case you ever have to garnish wages. Be sure to verify the hours they work and time on the job as well. Also check their banking information—you might need it later.
Excerpt from Investing in Real Estate with Lease Options and "Subject-to" Deals.
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