On today's episode of the InvestFourMore Real Estate Podcast, I speak with Steve White and Eric Worral of RentPrep. Steve started RentPrep to help large property management companies screen their tenants after working in the debt collection business trying to get bad tenants to pay their bills. I talk with both Eric and Steve about how they screen tenants, how they help landlords find great tenants, what it is like to try to collect debts from tenants, and things landlords need to watch out for when renting their properties. There is a ton of great information on this podcast, and I learned a lot, as I am sure many of you will as well. How did Steve White start Rent Prep after working in the debt collection business? Steve had a debt collection business where he tried to get people to pay judgments and other bad debts for a number of different industries. Steve talks about trying to collect debt and says that tenants who have judgments against them are the hardest bad debts to collect. His company successfully recouped debt less than 10% of the time. Usually, when someone loses their home, they are close to rock bottom and have no money left to pay anyone. I have had bad experiences with tenants, and I almost never get paid back on judgments. Steve was working with a large property management company helping them collect debts when they asked him to help them find better tenants. Since they recovered so little money from their tenants who stopped paying, they wanted to start with better tenants in the first place. Steve agreed to help them screen tenants, and he started a new business. Steve was helping property management companies with more than 1,000 doors when he went to an REI meeting and discovered many mom-and-pop landlords needed his services as well. How to find great tenants. What are some key factors to consider when screening tenants? Steve and Eric have been screening tenants for many years and have learned a lot about the business. The first thing they mention is that while background, credit, and criminal checks are important, you need to do much more. Here are some of their tips: Always make sure the potential tenant fills out the entire application—no blank spaces allowed. Always call all references, past landlords, and employers. Keep track of whether they are on time for meetings or not. Always charge an application fee and let them know you will be checking credit, background, etc. See how they treat the house when you meet them. Do they track mud all over? That is not a good sign. You can use your gut to make a decision, but most of the decision should come from data first. They also have some tips for renewing leases with current tenants and making sure tenants take care of properties after you rent to them, which you can listen to on the podcast. How to screen tenants. Why does RentPrep think it is best to use a property manager? I started using property management after I bought my 7th rental. Not having to manage the properties anymore was a huge relief, and the properties performed much better with a property manager as well. Here are some reason why Steve, Eric, and I think property managers can do a better job with rentals than the owners can: Property managers are not emotional. I used to listen to sob stories, waive late fees, and keep bad tenants in properties too long. Property managers are not emotional because it is their job. Property managers can handle the after-hours calls and maintenance requests. One of the biggest pains with rentals is repairing things that break while tenants are living in a property. Property managers eliminate that headache. Property managers should have a great system for screening and choosing tenants. You have to make sure the property manager you choose does not have incentives to have high turnover on your property. Property managers know all a