Landlord Basics: Showing Your Rental Property to Potential Tenants

Posted by Teresa on May 29, 2010 under Landlord Tips, Tenant Screening & Background Checks | icon: commentBe the First to Comment

Tenant screening blogYou’ve advertised your vacant rental property, had some calls of interest, and pre-screened the callers to weed out those that aren’t best-fit tenants for you.

Now, you’re ready to show the property in person. Here are a few tips for a successful showing of your rental property:

If you can, schedule an open house to show your rental property to multiple applicants. Not only is it easier on you than running back and forth several times, it also helps create a sense of urgency in the potential tenants. When they see other interested parties, they might be more willing to sign a lease sooner, rather than later.

If you don’t have enough prospective tenants for an open house, you can still try to schedule appointments back-to back, to maximize your time. Of course, you can’t expect your potential tenants to alter their schedules to suit yours; but suggesting a time that works for you is fine—even if it just so happens to be right before or after another showing.

When setting up appointments, get a couple of ways to reach the prospective tenant. If the appointment is several days out, give them a call or drop an email a day ahead, or even the day of, to confirm the appointment. It’s better to take a few minutes to do so than to waste time on no-shows.

Be careful when showing your rental property. Setting up a time to meet a complete stranger is always risky; be smart, be alert, and if possible, don’t go alone—especially if the appointment is after dark or in a shaky neighborhood. You can even meet the prospective tenant in a public place first, then proceed to the rental property. Take precautions—don’t carry cash or credit cards, or wear expensive jewelry. If you ever feel unsafe during the showing, grab your cell phone, call a friend, and walk out.

Assuming most potential tenants mean you no harm, put on your best smile and be 100% professional when meeting them. Greet them warmly, shake their hand, and make eye contact. Introduce yourself and learn their name—even ask for the spelling if you’re unsure of how to pronounce it. Refer to the notes you took during your phone conversations, so the potential tenant feels important.

Don’t let the prospective tenant wander through your rental property on their own. This is a showing, so show it off! Point out the features and benefits of living there. Listen carefully and answer their questions thoroughly.

Pay attention to the first room the potential tenant heads for—this indicates which room is most important, so be sure to describe its best features. If they head for the kitchen, don’t steer them into the bedroom. Take as much time as they need to talk about the kitchen.

Make sure you don’t skip the garage, storage areas, and yard. Take them to the fitness and laundry rooms, and the children’s play area. Be sure that every potential tenant gets the full tour—you could be inadvertently sending discriminatory signals if you do not.

For vacant rental units, a few pieces of furniture helps potential tenants mentally place their own sofa, loveseat, or bedroom suit in the space—taking care of any concerns the apartment or living room is too small.

And encourage the potential tenant to submit a rental application before they leave. Gather all the information you need to run a tenant background check, and you may just have a new tenant for your vacant rental unit!

How to Deal with Cosigners on a Residential Rental Lease

Posted by Teresa on May 25, 2010 under Landlord Tips, Tenant Screening & Background Checks | icon: commentBe the First to Comment

iStock_000002437760XSmall-300x199Every landlord has his or her way of dealing with potential tenants who have less than stellar credit histories, or whose income is lower than the required minimum for a rental property. Many just outright reject the tenant applicant and move on until they find a better fit. Others take into consideration the tenant applicant’s work and rental history and character, and try to work with them. Requiring a larger security deposit is one way a landlord might feel better about a lower-quality tenant.

What about college-town landlords? They routinely deal with young students who’ve yet to establish credit histories. How do they get around it?

For many a landlord’s anxiety over young tenants or tenants with poor credit scores, co- signers are the answer. Requiring a co-signer is your prerogative; however, dealing with co-signers brings its own set of potential problems.

Here are a few tips for dealing with co-signers on rental property leases:

  • Clearly state your expectations and the co-signers’ responsibilities in the lease. If the co-signer is liable for the rent when the tenant doesn’t pay, establish a method to collect the rent from the co-signer. Include time limits and eviction action in the case of non-payment of rent.
  • Know your co-signer. You must be comfortable that the co-signer is financially capable of abiding by the terms of the lease, including paying the rent in the event the tenant does not. Obtain permission from the co-signer to run a background screening credit check to be absolutely sure your co-signer meets your qualifications.
  • Obtain at least two ways to reach the co-signer. You need to be able to get in touch with them immediately upon non-payment of rent.
  • Meet with the co-signers, if possible. If you cannot meet in person, try to have a three-way call with the tenant and co-signer. Go over the terms of the lease with both parties.
  • Don’t allow the tenant to move in without a signed lease, first month’s rent, and security deposit. Do not allow a stick of furniture in your property until you have received the co-signer’s signature on the lease. Preferably, notarized!

It’s not necessarily a bad thing to require a co-signer on a lease—especially if you’re having trouble filling a rental vacancy. Just be thorough, keep good records, and check the co-signer’s credit history before approving the application.

How to Collect Rent on Time, Every Month

Posted by Teresa on May 21, 2010 under Landlord Tips, Rents and Deposits | icon: commentBe the First to Comment

iStock_000002872280XSmall1-208x300Every landlord we know would agree with this understatement: rent is important. Actually, it’s more than just important—rent is like a fertilizer that keeps your rental business growing and healthy. Rent is as necessary to your rental property business as rain is to plants.

If only collecting rent was as easy as collecting the rain when it falls from the sky. Rent collecting can be an easy task—or it can be a monthly struggle. It all depends on how you set up your leases, your management skills, expectations, and consequences.

Lease Language: Make sure your lease clearly states the amount of the rent, the day of the month rent is due, any grace period, late fees and when they are added, and number of days until eviction action is taken for non-payment.

Terms of Acceptance: Let multi-roommate units know that you do not accept multiple checks—you don’t want the hassle of chasing down several tenants for rent. Let your tenants figure out who owes whom how much, and collect one check from someone. Also, it’s best to avoid accepting partial payments. Evictions for non-payment are difficult to obtain if you’ve accepted a payment!

Manage the process: It’s up to you to determine how things are going to run in your rental property business. After all, nobody else is taking on the responsibility and liability of owning rental property. So manage your business like the boss that you are. Keep excellent records, establish procedures, and stick to them. Let your tenants know that you don’t waive late fees, and that you will file for eviction if they don’t pay within an agreed-upon time frame.

Expectations and consequences: If you’re managing your rental property well, your tenants know exactly what is expected for rent: they are to pay you on the day the rent is due, not later; they are to pay with one check; they are not to bounce checks; and they are to notify you if any of the previous terms are impossible, due to circumstances beyond their control.

It’s your job to clearly communicate your expectations to every tenant. Let them know up front the consequences for not meeting your expectations, too. Not every tenant has been asked to strictly keep to the terms of a lease. Let your tenants know that you expect them to, and they will be more likely to do so.

More and more landlords are turning to online rent collection. It’s a convenience for you and for your tenants. There are many services to choose from, so ask your friends in the business if they’ve had good experiences with online rent collection. It certainly eliminates the need to make runs to your post office box and the bank, as well as a tenant blaming the U.S. Postal Service for late rent checks!

Easy Tips for Managing a Property Manager

Posted by Teresa on May 18, 2010 under General | icon: commentBe the First to Comment

shaking-hands1There are just as many rental property owners who wouldn’t dream of personally managing their rentals as there are landlords who would never allow a property manager to do it. As your rental property business grows, you may find it becoming too much to handle by yourself.

If you’ve made the decision to turn over the day-to-day management of your rental business to a property manager, keep these tips in mind for managing the individual or company you hire.

1. Even though the property management contract is signed, you’re not off the hook. You’re in charge, so you can feel free to take charge, be in control of the relationship, and require a certain level of performance from your rental manager.

2. Supervise their activities as well as you can. This can be a little more difficult if you are an out-of-town rental property owner. Still, you’ll want to avoid nightmares like unauthorized repair bills, erroneous charges, and poor rent collection. Require photos of repairs for proof they are done properly and to your satisfaction.

3. Be realistic. Some repairs will cost more than you think they will. Property managers shouldn’t have to call you for permission to spend $10 on your behalf. And emergencies happen—so don’t risk creating a bad relationship by complaining about emergency repairs—especially if they will save you money in the long run.

4. Remember, rental property managers are in business to make a profit. If they are providing a valuable service, you should expect to pay for it. Just be sure to check over invoices carefully, ask for clarification if don’t understand something, and require explanations of anything you don’t recognize as necessary.

5. Keep your contract handy and make sure they are following its terms. If rents are due in your account by the 15th of the month, and they routinely miss it by a day, they are in breach of contract. If monthly tenant reports, vacancy reports, and marketing reports are required—but are not happening—don’t let the property manager get away with it, or they’ll continue to do so. Be sure that you are abiding by the contract, too—remember you agreed to it.

6. If the terms of the contract you signed aren’t working out as you had hoped, ask to re-negotiate. It can’t hurt to ask. And if the relationship is still unsatisfactory at the end of the contract term, find another property manager. At least you’ll have a better idea of what works and doesn’t work for you.

7. Show the property manager that you’re the boss. Someone has to be in charge, and it’s your property with your tenants—and your liability. So that someone in charge should be you! Don’t pay for repairs you don’t authorize. Require pre-approval for any expenditures over a certain amount, like $100. Don’t allow tenants to sign leases unless they meet your criteria for tenant background screening and credit checks.

Property managers can be 100% honest, wonderful communicators, and an integral part of your rental property business. But not all of them are. When you hire a company to manage your rental property, you still need to manage the manager!

Hiring a Maintenance Company? 5 Things Landlords Should Look For

Posted by Teresa on May 14, 2010 under General | icon: commentBe the First to Comment

tools2Whether hiring an outside contractor for regular maintenance, emergency repairs, or both, landlords need to know a few things first—especially if they’ve never hired a contractor before. It’s important to keep your rental properties in good working order and safe for your tenants—so having a great repair person can bring you peace for mind. Besides, they’re a good investment in your business.

1. Is the contractor a member of your local building and remodeling association? Call them and find out! These associations are great sources for information and referrals. And generally, their members are experienced professionals who see value in associating with other professional contractors.

2. Is the contractor licensed and insured? Most localities and states require contractors to hold proper licenses. Most also require liability insurance—and closely scrutinize contractors. Before hiring one, ask your repair professional or contractor to show you their license and insurance coverage documents. Just because they say they do doesn’t mean a thing—and you don’t want to find out after they walk off your job or damage your property that your contractor has neither a license nor insurance!

3. Find out how they collect deposits and progress billings. We’ve all heard the nightmare stories of homeowners and landlords who are swindled by unscrupulous contractors. Paying large deposits—or the entire estimate in full—before the work has started is a risk. Some landlords never seeing the contractor again—and it happens every day. If your contractor is licensed by the state and a member in good standing of your builder’s association, you stand a better chance that they are reputable.

4. Does the contractor have excellent references? A good estimate and friendly personality doesn’t mean you should sign a contract. Too many people don’t check references—so too many dishonest contractors get away with illegal activities. Ask for references and call them. And be suspicious if they are too good—you could be talking to a friend of the contractor!

5. Does the contractor have a criminal past? As a landlord, you are responsible for the safety of your tenants. Imagine the potential liability of allowing an ex-con, thief, or sex offender around your tenants and their neighbors. For complete security, consider running a background check on the contractor you choose—before you sign the contract!

Section 8 Housing: Basic Info for Landlords

Posted by Teresa on May 10, 2010 under Landlord and Tenant FAQs | icon: commentBe the First to Comment

LandlordTenant-300x199Section 8 is the widely-known term for the U.S. Government’s subsidized housing program, which allows low-income families and individuals to live in affordable and safe privately-owned rental housing. The program’s official name is “Housing Choice,” and it is the government’s major housing assistance program.

How Is Section 8 Housing Different from Public Housing?
Those who receive Housing Choice vouchers find their own apartment, townhouse, or rental home, and the U.S. Government pays a specific portion of their rent. Voucher recipients are not limited to public housing—they are free to choose any rental housing that meets their needs.

How Does Section 8 Rental Housing Work?
To be eligible for Section 8 vouchers, rental units must meet minimum health and safety standards. The local Public Housing Authority (PSA) will inspect the unit to determine whether it meets the standards, and if the rent is within the Fair Market Rent (FMA) for the geographic area and size of the rental unit.

Tenants Pay the Difference Between Benefit and Rent
The PSAA calculates the tenant’s benefit. The tenants may rent a unit exceeding their benefit; they simply pay the difference between the asking rent and the amount that is subsidized. For example, an $800 monthly rent might be eligible for $600 in Section 8 assistance. The tenants would then owe the $200 difference, payable in accordance to the lease’s agreed-upon terms and conditions.

How can I Become a Section 8 Landlord?
Landlords who wish to accept Section 8 vouchers must follow certain guidelines and procedures, and inform the local Housing Authority office of Housing and Urban Development (HUD) of their interest. Vouchers are managed at the local level, and are paid directly to the landlord.

Expectations for Both Landlords and Tenants
Once a Section 8 tenant signs a lease of at least one year, the PSA enters into a contract with the landlord, for the same duration as the lease. The tenants are expected to conform to the lease, pay their share of the rent on time, and keep the rental unit in good condition. Landlords are expected to keep the unit safe and sanitary, and maintain the standards that existed when the contract was signed, as long as he or she received housing assistance payments.

The PSA will monitor the family’s income, inspect the rental unit annually, and make sure the landlord meets his or her obligations. The PSA has the right to terminate rent payments if a landlord fails to do so.

Types of Housing Choice Vouchers:

Conversion Vouchers: These help families move to private housing from public housing that has been demolished or otherwise forced the family out.

Family Unification Vouchers: Help is provided for families to rent affordable housing in order to prevent separating children from parents.

Project Based Vouchers: These encourage rental property owners to rehab or build units in specifically to lease to low-income families.

Tenant Based Vouchers: Provided to low-income tenants to help them rent safe privately-owned housing.

HUD-VASH Vouchers: Rental assistance combined with VA case management services to help low-income homeless veterans.

Vouchers for People with Disabilities: Assists low income families with disabilities.

Welfare-to-Work Vouchers: To assist families transitioning form welfare to self-sufficiency.

Witness Relocation Vouchers: Relocation assistance for witnesses of violent crimes that occur around public, Indian, and other HUD-assisted housing.

What Landlords Need to Know About Tenant Background Checks and the Law

Posted by Teresa on May 7, 2010 under Tenant Credit Checks, Tenant Screening & Background Checks | icon: commentBe the First to Comment

tenant-credit-check3-300x216The Fair Credit Reporting Act (FCRA) established rules to protect privacy and guarantee report accuracy when businesses, banks, and rental property owners check consumers’ credit histories. Landlords are allowed to obtain tenant credit reports as long as they follow the FCRA’s provisions.

Specifically, when landlords obtain information about a potential tenant’s credit history, rental history, previous evictions or a variety of other pertinent personal information, and they use that information to determine what they require from the tenant, they must give the tenant an “adverse action notice.”

For example, a low credit score might mean the landlord requires a co-signer on a lease application. Or, a previous eviction may mean the tenant’s application is denied altogether. Even requiring a higher rent deposit is considered an “adverse action,” if it is based on information obtained in a consumer credit report. And really, if a landlord requires a higher deposit from Tenant B than from Tenant C, the only grounds he or she could base that decision on would be a tenant credit report—or else a discrimination claim under the Fair Housing Act could be in that landlord’s future.

When a landlord takes adverse action against a tenant applicant, the FCRA requires a notice to be supplied to the tenant. The notice must include:

  • the name, address and telephone number of the Consumer Reporting Agency (CRA) from which the report was obtained;
  • a statement that the CRA did not make and cannot specify the reasons for the adverse decision;
  • a notice of the tenant’s right to dispute the accuracy of the information the CRA supplied;
  • notice of the tenant’s right to a free credit report upon request from the CRA within 60 days.

The adverse action notice can be given verbally; however, a written notice is advised, since the landlord would then have proof of giving the notice to the tenant.

Even if the CRA is checking information that has nothing to do with the tenant’s credit, such as verifying tenant employment or income—an adverse action notice is required if that information is the basis of a denied application, higher security deposit, or other action required by the landlord.

There are serious legal ramifications for landlords who fail to supply notices required by the FCRA. Check with your attorney if your procedures are called into question, but in the meantime, educate yourself about your responsibilities under the law.

The Fair Credit Reporting Act is available online, so it’s easy to familiarize yourself with its provisions and updated requirements. And updates are done frequently, so it’s up to every rental property owner to stay informed on a regular basis.

Money-Saving Hints from Landlords

Posted by Teresa on May 3, 2010 under Landlord Tips, Tenant Screening & Background Checks | icon: commentBe the First to Comment

home-and-money2Landlords are happy to share information to help out their fellow rental property owners—especially when it comes to saving money, time, and trouble. Here is a round-up of some of our favorite easy-to-implement ideas.

Out with the carpeting. If you own an older rental building or home, there are probably hardwood floors lurking beneath that worn-out carpeting you’re getting ready to replace. Get rid of the carpet, and you’ll never have to buy another roll of carpet again. And you don’t have to refinish the floors, either—you can simply paint them. Look for special floor paint in a dark color, like brown or dark grey. Just roll it on and cover a multitude of sins. And no more carpet burns or stains! Keep in mind this type of paint takes longer to cure, and is subject to scratching for about 30 days. So don’t blame your new tenants if they scratch an uncured floor when they move in!

Replacing cabinets, counters, or hardware? Check recycled building materials stores first! Most larger cities have Re-Stores, run by non profits like Habitat for Humanity. These stores carry all kinds of building materials, from shingles to clawfoot tubs. Besides great prices, these stores keep a lot of trash out of the landfill. It’s all about recycling these days. They’ll even take your leftover renovation materials as a donation—which could mean tax savings for you (check with your professional tax advisor, please).

Invest in a digital camcorder. The come in handy for rental property inspections, move-in/move-out checklist making, and for those times you need to prove a point to a tenant—or even to a judge! For example, a landlord we know was faced with tenants who didn’t believe he got complaints about their dog barking when they were away. A simple recording of the apartment door (with their number) and the barking coming from behind it was enough to prove his case.

Trust your gut: If you have a bad feeling about a potential tenant, save yourself time and worry—don’t rent to them. Just make sure that you are basing your decision on legally-binding reasons, such as length of employment, income, and credit history—not appearance, disability, or any other reason protected by the Fair Housing Act. The best way to treat applicants fairly is to require background screening, credit check, and criminal history check on all tenant applicants.