Given today’s low prices and interest rates, a lot of people seem to be thinking about real estate investing. It’s also a topic that members of my Inner Circle service ask me about from time to time.

Personal real estate investing certainly has tax benefits. You write off your interest costs against current income; your gains are deferred and are taxed at capital-gains rates. It can also pay off in the long run, helped along by leverage available in a big mortgage. However, you should allow a number of years for any new real estate investment to pay off. Meanwhile, you need to be wary of bad tenants.

First-time landlords sometimes find their tenants include lots of deadbeats, vandals and abusive complainers who are not at all like the tenants they know personally. The experience may be unpleasant enough to undermine their faith in human nature, and to spur them to sell their property as soon as possible.

Profit by purchasing from “don’t wanters”

The whole experience turns some first-timers into classic “don’t wanters” — disgruntled property investors and landlords who just want to sell. When real estate investing, by the way, buying from don’t-wanters tends to cut your costs and increase your chances of long-term success.

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These investors assume their tenant-friends are typical of all tenants, and that they can attract equally desirable tenants with an ad in the paper or on Craigslist. They fail to recognize what you might call the bad-tenant phenomenon.

Desirable tenants tend to stay put for five to 10 years, often with landlord encouragement. So they are rarely in the market for new rental accommodation. In contrast, bad tenants move much more often, sometimes with their rent in arrears. Because they are often back in the market for housing, bad tenants make up an oversized proportion of the people who answer apartment-for-rent ads.

Avoid bad tenants by doing your homework

Successful landlords know or quickly learn that you need to use every legal means available to weed out bad tenants. You need to ask for personal financial and employment information, a history of where the applicant lived for a number of years, personal references and so on. You may also want to run criminal and credit checks.

It’s generally a good idea to decline to rent to anybody without an unblemished record, or who balks at providing all the information you need. Let these tenants rent from major real estate companies who have lawyers and renovators on staff, and who have experience with repairs and evictions.

For small landlords, it’s cheaper to let the property stay vacant for months at a time, rather than rent to a bad tenant.