| Investing in real estate can be a profitable way to | | | | can't be leased again until the current tenant is |
| increase your wealth in two ways. The first is | | | | evicted for nonpayment. |
| simply the gain on the property when you sell it. | | | | Most investment companies have a number of |
| The second is that if the property is leased it can | | | | properties and can absorb a loss on an occasional |
| generate an ongoing stream of revenue. In some | | | | basis. Individuals who invest in residential |
| cases that revenue stream can be enough to pay | | | | properties that they intend to lease must |
| the mortgage on the property every month. | | | | complete the required due diligence to assure |
| Most commercial properties depend on rental | | | | themselves that the tenant is credit worthy, |
| revenue as a primary factor in their income | | | | ethical, and doesn't have a history of property |
| projections. The value of the property includes | | | | damage, a criminal record, or prior evictions. A |
| the discounted value of the rental revenue in the | | | | rental application is just the first step in this |
| calculation, as well as the value of the building itself | | | | process. Tenant reports verify that the potential |
| and land. | | | | tenant is who they say they are by checking |
| Residential property, especially single family | | | | social security numbers, driver's license, prior |
| homes, usually sell on a square footage basis and | | | | addresses, and of course that they have the |
| don't consider any leasing income in the | | | | financial wherewithal to make the rental |
| determination of value. | | | | payments. |
| Tenant Screening is a critical aspect of | | | | Tenant credit reports verify any bankruptcies, |
| successfully managing a portfolio of residential | | | | short pays, loans and credit accounts, all important |
| rental properties. The wrong tenant can not only | | | | factors which should be taken into consideration |
| result in lost revenues but property damage as | | | | when signing a rental or lease agreement. A |
| well. | | | | tenant who has not historically been financially |
| Different states (and countries for that matter) | | | | responsible in the past has a much higher |
| have different rules, regulations, and laws which | | | | probability of being irresponsible in the future. In |
| determine when and how a tenant can be evicted. | | | | other words if there have been problems in the |
| The process can take up to a year. Not only do | | | | past with making the rental payments on time |
| you lose the incoming cash flow from the rental | | | | and in full, those problems will most likely continue |
| payments, you have the additional expenses of | | | | in the future. |
| paying an attorney to handle the eviction. A | | | | While in most cases the landlord won't be held |
| pre-leasing investigation known as a tenant report | | | | liable for any criminal activities that take place on |
| can help you avoid this situation. | | | | their premises, their insurance will most likely |
| While it's important to real estate investment | | | | increase. |
| companies to make sure that their tenants are | | | | If you're considering investing in residential real |
| financially stable, it's critical for individual investors. | | | | estate and leasing the properties, there are |
| The loss of rental income from just one property | | | | services which will compile a tenant report for |
| can be devastating to an individual. The property | | | | you. It's money well spent. |