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SOLID Tenant Screening: The Key to Hassle-Free Investing | Ep 22

James and Jessi giving a thumbs up
In this episode, we explore the detailed process of tenant screening, emphasizing the importance of early-stage defense in investing. We discuss valuable lessons from our first tenants, and share our 'Solid Screening Method,' an acronym for systematic, objective, lawful, interested, and discerning tenant selection. Learn how our process helps identify responsible tenants, ensuring better property management and investment success.

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Show Notes

Download The SOLID Screening Method

  • 00:00 Welcome & Personal Update
  • 01:25 Transitioning to Tenant Screening Discussion
  • 03:17 Learning from Bad Tenants
  • 04:41 Introducing the SOLID Screening Method
  • 10:41 Criteria and Process for Effective Tenant Screening
  • 16:01 Navigating Tenant Qualifications and Alternatives
  • 20:43 Comprehensive Tenant Screening and Verification Process
  • 25:58 Reflecting on Past Tenant Screening Experiences

Key Lessons

  1. Early-stage defense in investing: Avoid getting into tricky situations by focusing on strong initial tenant screening, just like a jujitsu practitioner avoids dangerous holds.
  2. Systematic and objective: Follow a systematic and objective tenant screening process to avoid legal issues and ensure fairness.
  3. Understand the law: Make sure your screening criteria comply with all federal, state, and local laws, especially anti-discrimination regulations.
  4. Be genuinely interested: Show interest in your potential tenants’ stories to understand them better and make more informed decisions.
  5. Balance compassion and caution: While it’s important to give applicants the benefit of the doubt, ensure your decisions are based on solid verification.
  6. Flexible yet firm: Be willing to make accommodations, like allowing cosigners, if the applicant shows potential despite minor shortcomings.

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Read the Transcript

James: Welcome to the Furlo Capital Real Estate Podcast, where we dive into the intricacies of passive real estate investing. And our mission, our whole goal is to equip people to invest wisely in both properties and people so that together we can build our wealth while improving housing. I'm James, and this is my wife, Jessi.

Jessi: Here, fully caffeinated.

James: Fully caffeinated, huh?

Jessi: Yeah, you know, I've, I've been having to have some caffeine to stay awake in the evening to get stuff done. Yeah, I

James: guess if we were to give like a 30 second health update some of you may know that you were diagnosed with a tumor early part of the year and you're taking meds and we had a whole bunch of side effects at the beginning part of the year, which were intense, but you seem to have leveled out.

Yeah. But like the one lingering side effect is you're just super tired in the evening. You go to bed two to three hours earlier than you used to.

Jessi: Which is strange. Like I, I, I've been a night owl for most of my life, and so I'm like, I put the kids to bed and I'm like, okay, it's eight o'clock.

James: Yeah. But that's like, the weird part is you're also, you're still not a morning person.

You're just, it's true. No, I just

Jessi: sleep more. You

James: just sleep more. And so, but we've learned through some experimentation that if you have a cup of coffee around like seven or eight o'clock at night,

Jessi: yeah, I can make you an extra

James: couple hours, which is kind of nuts. That entire caffeinated cup of coffee gets you a couple hours in the evening.

Yeah. Just tells you where you're at.

Jessi: Yep.

James: But you know, sometimes you gotta do what you can do to like, to make it through. And that is also true when you're investing. Sometimes you gotta go through, you gotta do things that may not seem very obvious on the surface in order to be like, to experience success later down the line.

And this is me really trying hard to make the stretch to talking about tenant screening.

Jessi: Yeah, that was a good, I was like, all

James: right, let's

Jessi: tie

James: in. So this is actually this is the second week in a row now where I'm referencing a previous conversation. So in a previous week, we talked about evicting somebody.

And in that conversation, we talked real briefly about tenant screening and how in some ways I just, I, I relaxed on it on a couple things and it came back to bite me. And so this new round, I'm doubling down on it and they're like, all right, I'm going to do this right. I'm going to do it right. Which is great and which is important.

And so so I want to talk about that and just what is tenant screening like and, and the, the goal here is if you are an active investor to get you thinking like, okay, here's kind of this broader framework and structure for thinking about it. Or if you are a passive investor giving you questions and tools to ask your sponsor, the person who's actually doing investing, Hey, what is your process or what does the property manager do to find good tenants?

So it's just to equip you with the vocabulary and the understanding of the process and If you are kind of waffling between the two either, you know, just help give you guidance on like, Oh yes, this is definitely something I can do or not. I got a couple of books actually on this, on this awesome bookshelf I've created, which is just a TV dinner tray, but I've got a huge yellow book called landlording.

That was probably the first one that I read. That was just like, it had a bunch of stuff. Landlording on autopilot was probably one of my more favorite ones. Cause it's all about automating and how you do systems. And and so a lot of these things are pulled from there and other resources and just our experience.

So real quick, our very first tenants, were they awesome? Were they

Jessi: No. Based on a definition of like, what's a good tenant? Yeah. They were not that. They were not good tenants. But they were great in the sense that we learned a lot. We learned what not to do. I like that growth mindset. What to maybe avoid or ask about.

Yeah, no, they they had kids who were out of control. They colored on everything. They smoked. Yeah, mostly in the garage. Yeah, but still everything kind of smelled. They didn't care for things, you know, everything was just worn and abused and beat up.

James: Yeah. Yeah, we painted when they moved in and then we had to repaint when they moved out.

We had to replace the carpet. We had a few other projects that we'd already had planned that we ended up doing, but we had to replace the water heater, which like, how does that, how did, okay. Yeah. Yeah. And they definitely defined smoking outside as the garage because, you know, it rains in Oregon and it's cold.

Like, come on. Yeah. I still, by the time we sold it, if we closed the garage door and I stood in there, I would And focused, I could smell it. We never fully got rid of that smell, which just bothers me to this day, even though I don't even own it anymore. But like you said, we learned a lot from that and I think it ultimately made us better investors.

And thankfully we learned it when we just had one and we both had jobs and honestly missing out on the rent and doing all those repairs. Like it didn't tank us. And so that was super valuable, but as a result, we came up with something that I coined as the solid screening method and the solid is an acronym and we're going to get into all of them.

But the big goal was to find responsible tenants and the entire premise thought that I had behind this was, so first I had a couple of concepts. Another one I was calling was like this idea of gyroscopic cashflow. We've talked about this in previous episodes. The idea being that this, there's this myth of passive income and that's not a thing you have to regularly put on work.

If I was a Jim Collins good to great built to last, he talks about the idea of a fly wall flywheel where you gotta. Just kind of keep pushing. And eventually the flywheel has its own momentum. That's gyroscopic. And so the idea being, it's like those plates where sometimes you got to put in some effort and then they'll spin on their own for a while and then every once in a while you got to come back to do it.

And if you do tenant screening right, that's given the plates a good spin. And then once you do that, you can walk away for a really long time and they take care of it. If you don't do it and you just pick anybody, it's like doing a little thing and a little twist. Well, and then it's like you find yourself regularly coming back and be like, Oh, having to get a little twisted.

Yeah. Cause it's, now you have problem tenants, wobbly, wobbly. So. So tennis screening is super, super important. My last analogy is I remember I was I used to do jujitsu and we had, we'd have black belts who would come and put on these clinics for us and seminars. And I remember this one guy, he was like, okay, I got myself into like this crazy arm bar and stuff.

Like, how do you get out of it? Cause he had like a Q and a session. And I remember he said something that like it profoundly changed the way that I thought about things. And he said, look. He goes, there's such a thing as late stage defense and early stage defense. He goes, for me, I focus on early stage defense, which means I never get my arm in that position.

He goes, I don't know how to get out of it. The problem with that one is you are so precarious. You are so late stage defense that you have to do the thing perfectly and they have to not counter well in order for you to succeed. He goes, it's a very low probability of success. It was for him. He goes, I practice all the safe stuff.

And I just do the safe things. I never get in that position, which means my probability of failure is very low and my probability of success is very high because eventually the other person gets bored and they try to do something and I got them. You trap them. Yeah. And so for him, he goes, spend all of your time and energy and effort on early stage defense.

And then you'll never have to worry about it. And that's something that I think about for tenant screening. That is also early stage defense. If you get good tenants in, you don't get the late night phone calls. You don't have late payment issues. You don't have eviction issues. Like you just don't have that stuff.

And that allows you to scale a whole lot faster because you just got good tenants because you focused all on the front end. And I think there's all sorts of benefits to that. Areas in life where that's true. It's true with your kids. I think it's true with any investment that you're doing. Like you put in the work to do the underwriting, find a good property, buy a good deal up front.

And now it's easy to make it a good deal on the back end because you did the early stage defense.

Jessi: Which you, you might address this later, but I feel like it's worth pointing out. And I, this happens in parenting all the time too. is this concept that there is still work. And so you, you have to define your terms and you have to tell people no, like, and that's genuinely hard.

James: Yeah.

Jessi: You know, you don't just get to go, oh, I'm going to find responsible tenants. It's all going to be great. There's still hard conversations in there telling someone like, okay, we have this standard and you don't meet it. That's like, you know, that's like, but it's like you sit, You know, goals for your kids are standard for your kids or boundaries and you hold them to them because it's good and It does put you in a place that is better, but it's not necessarily easy that whole time So I feel like that's worth pointing out.

Like yeah, this is a better system. It's still it's so hard.

James: Okay So you mentioned a term there a responsible tenant. That's a term that you and I throw around a lot I know it's been a while since you've actually screened. Yeah, but do you remember what how we define what makes someone a responsible tenant?

It's three things. There's

Jessi: something about communication.

James: Huh.

Jessi: Something about paying on time. Huh. And

James: Yeah, you're close. Yeah, they communicate appropriately with us and their neighbors. Yeah. They pay their rent in full and on time. And They respect people. They take care of the property.

Jessi: Oh, okay. Yeah.

I'm like, I don't know. What else is left?

James: Yeah, yeah, yeah. Yeah, that's that's it.

Jessi: That makes sense.

James: Yeah. Yeah. You can say it even more succinctly. You can say, you just want to find people who respect and communicate, like treat things and people with respect and they communicate like that's a simpler way, but I like the, like the three things.

And so the solid screening method is an acronym and what it is, is it's systematic because that's really important because part of what you don't want to have is there are what am I looking for? People who you're not allowed to discriminate against, anti discrimination, discrimination laws.

Yeah. There's certain things that you're not, that you're not allowed to look at. Yes. And so in order to avoid that, you want to create something that's solid. So it's systematic. It's a process that you do every single time. You just treat everyone the same. It's objective and it's criteria that are based on external measures that are relevant.

Jessi: That's a really

James: important term there. To the property. Like

Jessi: income or

James: Yep. And that's, they're lawful. They must comply with all federal, state, and local laws. And discrimination laws are huge.

Jessi: Yeah.

James: It's a really big deal. Interested. This one is you must show interest. And interest in who you're interviewing and dig deeper when something doesn't make sense.

Like you just got to have that genuine like curiosity interest. Tell me more. And then the last one's just gonna be discerning when validating information, you must be able to tell the difference between what's true and what's false. Cause every once in a while you get. Yeah. Weird stuff where you go, well that doesn't totally add up.

Doesn't add up. Yeah. Yeah. And yeah. And so you have to have those things. And if you do that, it all works out. It all like, it all works. So the first one is you actually got to create your screening criteria and they need to be objective and lawful. And and I've, and I walked through, I created an entire handout because that's me.

Which you can

Jessi: link in the show notes too, I suppose,

James: that people can download and use. And I've given away multiple times because it just helps someone be like, all right, here's, you know, here's how it goes. And I actually, I've changed my process a little bit since then. But that's okay. But yeah, so you got to create those objectives.

Yeah. So things you cannot screen against are any person because of race, color, ethic, background, religion, sex, age, marital or familial status, physical disability, or sexual orientation. Those are all the things outside of that, like you can, you can kind of get after it. And I don't think I printed off our criteria.

Oh no, I did. Cool.

Jessi: Go

James: ahead.

Jessi: I just didn't hear it in the rundown of the list, but you also can't say no because of like a emotional support animal or something like that. Oh, yeah, correct. That is a semi mortar. It's kind of within their It's

James: like gray zone, but yeah. Yeah. Pretty much, yeah. Yeah, so things that you can look at.

You can look at their income. Mm hmm. That's huge. Do they make enough money? As a general rule, we require three times. The rent, in order to do it. You can look at their employment history, which is related to the, so the income and employment history, right? Do they have a job? Have they had it for a while?

And how much do they make? Those are big ones. You can look at their credit and criminal history. What kind of financial obligations do they have? Essentially, if a bank cares about it, you can care about it too. And, because you might have someone like, man, they make a ton of money, but gosh, they have huge payments they're making because they got a new car, or they got medical bills, or student loans, whatever.

And then and then the criminal violations is an interesting one. And again, that's a little bit more squishy, because there's certain things like if you have a speeding ticket, it's fine. If you murdered someone, that's a problem. That wouldn't be renting from you. No, but if it's like, if you have a domestic thing, or what do you do if it's a white collar crime?

They got caught cheating or something like that. It's interesting, usually they're drug related are probably like the most of the ones that I run into and they've gone to jail and they've gone through rehab and they're fully rehabilitated. Yeah. So like, Hey, but what about this? Those kinds of things you can, you can you can look at their rental history, you know, how did they do with their old landlord?

This has become less and less helpful to interview landlords because it's very litigious and you gotta be careful because you don't want to say anything that's going to get them in trouble. And so. But you can ask very, again, objective questions. Did they always pay their rent on time or how many times were they ever late?

Did you have to give any notices? What were the notices? Like those kind of things. Do you still

Jessi: ask, if you do talk to a landlord, would you rent to them again?

James: Yeah, but that question, it's still kind of useless at this point because the standard answer is if they pass my screening criteria, yes. Yeah.

She's like, okay. You can ask, do they have a pet? Did you know about it? Did they?

Jessi: Yeah. Those are all very measurable. Did you return?

James: Yeah. All of their deposit. Yeah. At the end. Yeah. That's like, yeah. Cause what I found too is some of the bigger ones, like they don't know the person you're talking to. Like they have no clue who this is.

Yeah. They're just looking at the file system. Yep. And yeah. And usually they require some like written form thing they won't just even talk to you on the phone. Which is fine. So yeah, so those are kind of like the criteria. The process that I go through now is I have people. I put an ad on Craigslist or Facebook Marketplace because that's what works in this area.

And then I tell people, Hey, apply online, it's totally free. Like it doesn't cost you anything. And so that's what they'll do. They'll apply. And then I get the things and I look at them and I'm first in first out. So whoever applies first, I look at first and I screen them and tell they qualify or not. And well, first step is I'll get on the phone with them and I'll just run through their application and be like, okay, you said this, let me tell you about this.

Like, for example. I was looking at this one person and her income, she wrote that she made 1, 500 annually from her side business and then she made another 1, 300 annually from her disability income. And so I was able to follow up and be like, I know this is annually, but did you mean monthly? She goes, Oh yes, I did.

Right. That's a much better number. Yeah, yeah, exactly. And then other things where like, I have a little box on there that says, do you smoke? And they say, no. And I can follow up and say, does that include cigarettes, marijuana and vaping? And I can ask them that. And I, you know, I've done this enough times now where I can kind of gauge how they respond.

I can ask them about their job. Oh, tell me more about that. Or what's going on here. That so I recently talked to this lady, I'd be really interested to get your, your thoughts on this. Actually. We're gonna do this live. We'll see. So she, in this example, she's got she's got a business that she runs.

It's a dog walking business, 1, 500 bucks a month. And she has a disability income of 1, 300 a month, combined is 2, 800, which is more than three times the rent by a couple hundred, by like 175. So cool. So I was asking her about that. Tell me about your business. Well, she goes, well. Here's the deal. She lived up in Salem and is moving to Albany.

Mm hmm. It's a dog walking business. She goes, so I'm losing all of those clients. Right,

Jessi: she has to find all new ones. Yeah,

James: so she goes, so basically she goes, I know I wrote that down there, but it's going to zero. Mm hmm. So don't count it.

Jessi: Then I would say she doesn't qualify.

James: Right? Because she

Jessi: doesn't have that income.

James: Yes, now she's less than three times, right? Yeah Mm hmm. What is there an alternative that I mean

Jessi: if

James: yeah, here we go. Yeah. Yeah. Yeah, I'm super curious on how you Screening criteria

Jessi: fundamentally, I would say no, she doesn't qualify like that is my gut reaction.

James: Okay

Jessi: If I went through that screening Criteria all the other things and was like so far there are no other red flags checking out with everything else. She's got great references She's mm hmm has good rental history like I would probably ask like what? What's your business plan to switch your business from there to here?

James: Yeah.

Jessi: What's that going to look like? Do you have a process and a timeline and. You know

James: and the answer was like, I'm really just focused on finding a place first, finding out my home base and then yeah, I'll start finding clients magically. Though she's got a proven track record, she knows how to do it because there's no way she's charging a single family that well, I mean, I don't think she'd be charging a single family that

Jessi: much for dog walking.

I don't know. It depends on, we're willing to pay a lot for a dog, so I know some people, not to walk him. Okay.

James: What if I put it out there and said, would you be willing to have a co

Jessi: signer?

James: And she was like, no problem. Definitely. Does that solve your,

Jessi: yeah. Okay. All right. I mean, we've done that before.

Yeah. If like, if there's no other red flags and she's got kind of a plan, but it's a little squishy. Yeah.

James: So, okay. So we started the conversation and she asked. She actually reached out and said, Hey, I have a couple of questions for us before I apply. And, and then in the time it took us to connect, she actually filled out the application.

So we were able to kind of go through the entire process. But her first two questions were how vintage is the building, the unit, you know, 1930s. It's older. And and I gave her, I'm like, eh, in some ways, like it's got cloth with tubs, pretty vintage. Other ways, like wall heater, relatively new. Windows, new.

Or vinyl, I should say.

Jessi: And

James: then she also asked, and how is it communicating with the building management? Oh, because how does that go? You're like, that would be me. I've had, which is what I told her. Cause she said, I've had other experiences where it just didn't go well. And. Does that, does any of that seem like a red flag to you?

Oh, tell me more.

Jessi: Well, I'd want to know how it didn't go well. You know, what was the scenario? See,

James: this is the being interested type of thing, right? Right. I want to know a little bit more.

Jessi: Well, because it's kind of like, if, you know, She had unreasonable expectations and just demanded things to be fixed within five minutes like okay.

Yeah, we might have a problem moving forward

James: Yeah,

Jessi: but if it was genuinely a manager who didn't care or didn't listen or you know Didn't take care of the property. That's that's different. Okay, okay Kind of have to suss that out a little bit without without Yeah. Being accusatory.

James: Speaking of sussing, what about, I just, I'm thinking of what is it?

The, that show that the kids watch where they'll, yeah,

Jessi: imposter

James: and like real life or something. Yeah. What's your status? Red sauce. Anyways, it's pretty funny. We set up a time to take a tour and at first I was like, oh, I can meet you. It's like the day that we had the conversation, I was like, I can meet you today.

She's like, well, I can't do that because I don't drive. But I can do tomorrow. I can get down there tomorrow. Mm

Jessi: hmm.

James: Does that cause any tinglys? Well,

Jessi: I mean, she already is on disability, so depending on why she's on it, she may not be able to drive. She may not physically be able to

James: drive. Right. Oh, I didn't even think that.

Okay. All right. I like that. Okay. I like that benefit of the doubt. I mean. That's good. I don't know. That's good. So, we had this

Jessi: conversation. I'd like to think she's disabled. I'd like to assume she's not irresponsible and lost her license or something like that. She claims there's

James: nothing on her background check that I should be concerned about, because you would think that that might be related to it, so, which I'll eventually find out.

Maybe. So the next step after this conversation is to take a tour. And those tours, I found, last about five minutes, which is only semi annoying when I have to drive the 50 minutes to Sweet Home, and they look at the 200 square foot property and go, you know, Yep, looks like the picture is cool. Awesome.

Turn around and go back home. This is why I bought a motorcycle for the business. Yeah, that's why at least get so she's a couple hour ride in sweet home. No, it's a apartment building. Okay. I'm just saying in general, you're saying in general, when you do that,

Jessi: The tours. Yeah. Okay. Yeah. I get it. I'm following.

James: Yep. And then and then it's like, and then it's going into the the trust, but verify everything with like interest and discernment, you know, and that is like, I have a here I can show on the video here and I will describe it to you. It's a verification and scoring guide. So I have 20 different points that I'm looking at and someone gets a score, either one or zero.

So were they on time for the appointment? Were, are they able to pay the full amount of deposit and rent? Am I able to verify their employment and income? Do they have a satisfactory credit score, which I defined as above 600? Have they been at their current place for a minimum of six months? Which by the way, this person's only been there for a month because she's living in a In a room because she, she moved to the air, this bigger area into Oregon and is now moving down.

It's interesting. Do they not have any prior evictions? But

Jessi: you could ask about previously where she was at.

James: Yes, correct. Yes, yes, yes. Which I actually did. That was another one where she just listed the current place she's at and I was like, well, can you give me the other one? And she's like, yeah, no problem.

Are they non smoker? And for me, if they score at least a 16 points. And it's pretty much a yes. And unless there's some like, you know, if they smoke, I don't care, that's like infinite negative. I'm not even gonna let them smoke outside. Yeah. Part of that goes all the way back to our very first tenants, where they defined outside as the, as the garage, and so I went, well fine, I can play this game.

Yeah. No smoking, period. Yeah, smoking is a

Jessi: definite no. If they, if they don't meet the income requirement and are unwilling to find a cosigner, that's typically a no.

James: Yeah, because we've played around with that three times threshold and we found two was definitely not enough. Right. That caused problems like almost month two and then two and a half is like almost enough.

It's, it's, it's fine. But what we found was like every six months. Something would happen and they would decide to divert funds for this other emergency. And they just were constantly treading. And so we landed on three and that seems to solve all those problems. Which is if you're not, turns out like banks know what they're talking about cause that's, they're like three to four times.

Like that's their, their actual range. So that's what we do for screening tenants. And so if you, if that all looks good, then you're like, awesome, cool. You give them the phone call and like, let's roll. Then you move into onboarding them. And it's really good. And but yeah, that's our process. So it's not terribly complex, but the trick is to just, just follow it every single time go through the process.

For me, having this checklist is super helpful and just saying like, yep, step one is apply step two. We have a phone call. Step three, we take a tour. Step four. I'm just going to verify all the information and then step five and part of that verifying is I'm going to fill out my little score sheet and then.

Step six is like, yay. And, and usually it's pretty rare that I have to tell anybody no, because I'm really upfront before you can apply. There's an entire page that says, here's all our criteria spelled out exactly. And I think a lot of people just opt out right then and there. So for the most part, the only people I get to apply.

are people who are qualified because they get it, which has been super helpful. If the economy ever changes and it's harder to fill a unit, I may have to switch that up a little bit and like give tours first and open houses and try to try to draw interest in. But for the moment there's enough demand that I can just say, no, just apply first.

And by me removing the cost to apply. Yeah. Cause for me, I'm like, this is my time, whatever. Now I do tell them, and I'm very clear about this. Like if they get far enough down the, down the road, We will do that background and credit check and we will have a third party do it. And they will pay for that, but only if we get that far.

And everyone seems to be totally cool with it. They totally get it. And I'm also like, but by then we've talked, you've taken a tour. We both feel pretty good about where we're headed on this route. And so now we're just checking boxes and making sure that things work well.

Jessi: People get

James: it. There you go. Do you miss it?

Do you miss? Cause I know you did it for a while. Yeah.

Jessi: I saw that form. I was like, Oh man, I did enjoy filling that out and like evaluating, like, Ooh, okay. Kind of. I mean, well not the judging piece, but just the, okay, do they like, are they going to make it? Can they

James: do it? Are

Jessi: they hitting all the marks? You know?

And I, some of those conversations too are, they're just engaging, you know, between you and I thinking like, okay, well. Could, could this person figure it out, you know, and is that, should we, should we bend there? Should we not bend there? Yeah. You know, and, and learning. I, I enjoy that learning process. I think now we, it's pretty established, so it's kind of like, you know, you present a scenario and I'm like, yeah, no, that's, that's not a no, like it would just be a no.

James: Yeah.

Jessi: But when we were learning, it, it was kind of a back and forth and kind of a, well, I What about, what if they did this, or okay, why is that a red flag, or why is, why would you, you know, say no in that circumstance, but not this circumstance, or, you know. Because people are, are complex and interesting.

It's not just like, here's a checkbox, like do they, which ones do they hit? It's like, well, I mean, you can boil it down to that, but they each have a story, too, you know, so walking through this process is kind of figuring out their story and figuring out. Exactly. Well, that's figuring out like, okay, well, why are you moving here?

And what's the attraction and what, you know, you get to learn about people. Yeah. I like that. I miss that piece of it.

James: Okay. That's fair. I think our most complicated one we ever did that we ever said no to, there was people we had a three bedroom, one bath, and I think it was five people. It was a guy and his girlfriend.

It was the girlfriend's mother and then like two other friends, if I remember correctly. And they had two. ESA dogs that's the emotional support animal, dogs. And it was like, as a general rule, It's the minimum, the maximum allowable that you have to do is two per bedroom plus one. So, in this case, the max is technically seven,

Jessi: for this particular property. Yeah. Could have been seven people living there. But then there's other weird

James: stuff. If you only have one bathroom, you can make it single gender, you don't have to make everyone share. It's kind of weird. And they had like multiple genders all sharing. And I remember what was crazy about it was.

They barely hit the three X thing. We had five people and they barely made it. And I remember just being like, I was talking to you and was like, oh my gosh, we've got an age thing going on here. We've got animals going on here. We've got like, I think one of

Jessi: them was in a wheelchair or a walker or something, something.

James: Yeah. There was a disability disability

Jessi: to it. Oh yeah. It was

James: like, I was just like, Oh my gosh, this is a nightmare. And I remember we were like, we're going through checking the box a lot and we were doing the math on the stuff. And I'm like, Oh my gosh, like they're going to hit, they're going to hit that 16 number.

What do we do? Because I didn't want to rent to them. And then I remember it was like, Oh, thank you Lord for this. We called their previous landlord to verify. And I remember I got someone on the phone. It was like, Hey, these people have applied. And I think there were, no, they moved out. And I was like just trying to like, you know.

Learn a little bit about them. And he was like, they're horrible. Do not rent to them. Their dogs Destroyed my unit. I would never rent to them again. They are so bad. It

Jessi: was like

James: I was like,

Jessi: oh, oh, thank you for that reference Okay

James: Yeah, I like yeah, it's

Jessi: like wow.

James: I'm like it

Jessi: must have been bad for Landlord, yeah,

James: just give that kind of review.

You're like, oh my

Jessi: word. Yeah, I don't think we've You Ever given a review like that, you know, we've well not like that, but I've definitely

James: given like the no They regularly did not pay the rent on time. No, I did not return their deposit. Yeah. Yes I did give them notices on multiple occasions. Yeah And, and it's usually like, you know, in the way you answer in an

Jessi: objective way, but yes, and,

James: and they like, okay, I get it.

I see where we're going with this. Yeah. Yeah. Yeah. You got that

Jessi: one. I do remember it was like,

James: Oh,

Jessi: wow. Okay.

James: Yeah. That was pretty crazy. It was like, oh, and I remember we had to come back to him and said, ah, unfortunately you just didn't pass our screening criteria. And they were like, okay.

Jessi: Yeah. Just totally cool.

I remember you and I were just kind of like, Oh, this could go really, if they Like asking questions. I think we were willing like totally

James: refund them all their credit and background. Yeah We're like this isn't worth the few whatever it was that yes hundred dollars at the time

Jessi: Yeah.

James: Yeah. Oh man. It gets complicated sometimes.

It has good stories. It's all good. But but there you go. That's a tenant screening 101 for you. Hopefully that gives you either the courage to go out and do it yourself or the information when you're talking to a sponsor to ask questions about how, what is your process for finding tenants or it kind of helps push you in one direction or another.

And if I'm being honest, if you're an Oregon, you probably shouldn't do it on your own. It's like, it's, it's work and there are a lot of pitfalls, but you know, you can totally do it. And so with that, we hope that you really enjoyed this. And if you liked it, we'd love it. If you left a review, wherever it is that you listen to podcasts, and if you'd like to learn more about investing with us, check us out at Have a great day.

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Furlo Capital Podcast

Furlo Capital
Real Estate Podcast

A conversational podcast between James and Jessi Furlo that dives into the intricacies of passive real estate investing. Our mission is to equip people to invest wisely in both property and residents so that, together, we can build wealth and improve housing.

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Let's build your wealth and improve housing, together

Passive Income

Tenants pay monthly rent, which covers expenses and generates a profit for investors. Plus, multifamilies appreciate and usually sell for a significant profit.

Consistent Above-Average Returns

Real estate is less volatile and historically outperformed the S&P 500 by routinely generating average annual returns of at least 10% after fees, inflation, and taxes.

Revitalize Local Communities

We give people a great, safe place to call home. This doesn’t hit the spreadsheet, but every property is managed and maintained with the residents as a top priority.

Extraordinary Tax Benefits

Your income is taxed much lower because of depreciation and because it’s taxed at a lower capital gains rate.

Below-Average Risk

More units mean less vacancy sensitivity. Plus, costs are distributed across a larger number of units, which also allows us to hire a professional property manager.


Unlike stocks, lenders like to finance multifamilies and the loans are tied to the property, not the person. This accelerates wealth building.