Need a Good Short-Term Tenant?

Posted by Teresa on October 12, 2012 under Landlord Tips, Lease and Rental Agreements | icon: commentBe the First to Comment

tenant screening, tenant background checkIf you own a property and aren’t interested in renting it out for the long term, there are plenty of potential shorter-term tenants that could be a good fit for your needs.

Consider the following:

  • Older people who are retiring and want to rent in an area for a few months before deciding where to live.
  • Professionals who fell victim to the housing bubble and lost their houses. Many of these people took a hit to their credit, and need to rent until they can get their finances back in order.
  • Career-changers who have moved to an area for a new job and wish to buy, but need short-term housing while they look for a house.
  • People who are downsizing or upsizing and have recently sold a house, but haven’t found a new one that works.
  • People in transition—whether it’s because of a divorce, illness, death of a spouse or something else. They may not be in a position to make a long-term commitment, but a three- or six-month lease works.
  • Adult children of elderly parents who need to live nearby to care for them on a temporary basis.

Certainly, most landlords prefer to have long-term tenants to keep wear and tear down and decrease the hassles of finding new tenants. But if you have a rental property that’s empty, that you may be selling, or that you might move into yourself, there are good tenants out there who need a short-term lease.

With the right kind of homework and some advertising, you can find short-term tenants. Take a look at Craigslist’s “housing wanted” section. And post your listing in the “sublets and temporary” section, with a prominent “short-term welcome” in the heading. Try posting flyers in nearby coffee shops, co-ops and grocery stores.

Be sure to conduct tenant screening on all applicants. Even though the lease is only for the short term, you still need to be sure that your tenant is who they say they are, have adequate credit and income to cover rent and no criminal activity in their backgrounds that could pose a threat.

What to do About Tenants Who Sublet Without Authorization

Posted by Teresa on September 7, 2012 under Eviction, Landlord Paperwork and Forms, Lease and Rental Agreements, Tenant Screening & Background Checks | icon: commentBe the First to Comment

tenant screening, tenant credit check, background check landlords have faced one of these situations:

  • You’re doing a routine maintenance inspection and discover an occupant in the rental whom you’ve never seen before. You ask who he is and he replies, “Oh, I live here.”
  • You sign a lease with one tenant. A few months in, she mentions that the rent will be late because her roommate hasn’t paid her share yet. Roommate?
  • You live upstairs, your tenant lives downstairs. You notice he hasn’t been around lately, but someone else is clearly staying in the apartment. You ask questions and find out your tenant is away for three months, but he sublet the place to a friend.
  • Tenants who live next to one of your rental units call and complain about the three cars that are taking up all the available parking. You reply that only two people live in the unit, but they assure you that three people have been seen regularly coming in and out.

What’s going on? Most likely, your tenant has brought in a roommate or sublet part or all of your rental property to an additional person. If your lease agreement states that no subletting is allowed without your authorization, then the tenant is in violation of the terms of the lease.

The problem with subletting, or adding roommates without your knowledge, is that you have no idea who they are, where the work, if they’ve ever been evicted or convicted of a crime, or if their credit history meets your requirements. Without a chance to perform due diligence, including tenant screening and credit checks—the same tenant screening you do on all prospective tenants—you are at risk of liability for the actions of an unknown person. Plus, your property and business are at risk.

Why would tenants deliberately violate the terms of a lease?

  • Maybe they don’t thoroughly read the lease, or forgot what the lease said.
  • They may think you won’t catch them in the act, as long as they pay their rent on time.
  • Perhaps they think the lease terms don’t actually apply to them.
  • Or they simply cannot afford their apartment or house without a roommate.

In any of these cases, you likely have cause to send a cure or quit notice. Of course, check your local and state laws concerning eviction notices. You may want to send a reminder to all your tenants that subletting or adding roommates without your authorization is strictly prohibited. If they want roommates, they must undergo the same application and tenant screening process as everyone else. Explain that this is for the safety of all residents. Keep in mind that treating one group of people differently than others could put you at risk of discrimination charges, so make sure the same rules apply to all of your tenants. Finally, notify tenants that violations are grounds for eviction.

If you do agree to a sublease situation, be sure to put everything in writing. A sublease agreement should be signed by all parties and place in your tenant’s file.

Turning Down Non-Qualifying Tenants

Posted by Teresa on August 31, 2012 under Lease and Rental Agreements, Rents and Deposits, Tenant Credit Checks | icon: commentBe the First to Comment

tenant screening, tenant credit checkHow do you say “no” to tenants who don’t meet your lease qualifications? Some landlords have a hard time doing so, especially when the applicants are persistent. Here are a few examples:

  1. Don denied an applicant based on weak credit. The applicant offered a bigger security deposit. Now Don is thinking of approving his application.
  2. Karen is a landlord in a similar situation. Her non-qualifying applicants offered to pay an entire year’s rent up front. Karen decided to accept the deal and signed the lease.
  3. Another landlord reports that a non-qualified couple is pleading with her to rent to them, saying they have not found another rental that meets their needs. The woman has good credit; the man has terrible credit. The landlord is thinking of putting only the woman’s name on the lease, with a substantial cash security deposit.

What is wrong with each of these decisions?

  • In the first example, Don is allowing a larger security deposit to cloud his judgment. First, he lives in Massachusetts, where landlords are limited to charging no more than one month’s rent for a security deposit. Next, he is bending his own rules, which is a slippery slope. If a tenant knows he’ll cave on one aspect of the tenancy, they may be likely to push other rules, as well. Is the rent really due on the 1st? Wouldn’t it be okay to move some extra family members into the rental unit? Finally, treating every applicant equally is important to avoid charges of discrimination. Let’s say the next applicant also had bad credit and Don refused to sign a lease with them. They might charge that Don showed preferential treatment to the first tenant and that they are being discriminated against, due to their race, religion, family status, gender, age, etc.
  • In Karen’s case, one might think that paying a year’s rent up front would erase any worries about the tenant’s financial situation. However, most strong tenants don’t offer prepaid rent—especially a year’s worth—because they can’t afford it. Karen should ask herself why an applicant with bad credit has that much cash laying around. Have they been scamming other landlords and living rent-free? Have they been evicted? Or are they involved in an illegal cash enterprise? The offer of a year’s worth of rent up front should be a red flag.
  • In the third example, this landlord is asking for trouble. All adult residents should be put on the lease and held liable for the terms of the lease. What guarantee does the landlord have that the female will always be responsible for the rent? What if the couple breaks up and she moves out? The landlord will have a resident living in the rental unit without a lease.

Experienced landlords know that sticking to your standards and leasing only to solid tenants who meet your criteria are important steps in building a successful rental business. If denied applicants don’t hear your “no,” just say it again. And louder. And then, hold out for well-qualified tenants. Tenant screening on every applicant, with minimum qualifying credit scores, is a landlord’s best practice.

Tenant Screening Tips From Real Landlords

Posted by Teresa on August 24, 2012 under Landlord Tips, Lease and Rental Agreements, Tenant Screening & Background Checks | icon: commentBe the First to Comment

tenantscreeningblog.comMost experienced landlords will tell you that tenant screening is the most important aspect of renting property. Failing to screen prospective tenants causes more problems than just about anything else. After all, each tenant is a potential liability to a landlord.

Thoroughly checking up on tenants’ identification, credit history, criminal background, work history and previous rental situations can give you a clear picture of the tenant you are about to trust to live with your property and among your other tenants.

Here are some basic tenant screening tips from real landlords:

  1. Don’t skip the tenant screening process, no matter how nice or trustworthy a prospective tenant seems.
  2. Treating each applicant equally will help you stay within the law. This is another good reason to screen every tenant.
  3. Look at credit history, criminal history, evictions, judgments, bankruptcies and sex offender status.
  4. Fake IDs are easy to buy or make, so check the applicant’s Social Security Number and identity to be sure they are who they say they are.
  5. If the applicant is local, drive by their current address to see how they live. Is there a beater car parked in the yard? Garbage strewn about? Or is it neat and clean? How it looks is a good indicator of how they will treat your property.
  6. Don’t judge a prospective tenant by his or her clothing, car or jewelry. A hard working, honest tenant could be dressed in dirty work clothes, while a flashy car and fancy watch could indicate someone who has plenty of money, or is simply living above his or her means.
  7. Beware of tenants who want to move in fast and have plenty of cash to cover rent and the security deposit. Take your time and conduct your screening process.
  8. Talk to previous landlords. If a tenant specifically asks you not to contact the current landlord, find out why, and talk to former landlords. Conduct the rest of your screening process and if the tenant is approved, let him or her know, and then contact the current landlord.
  9. Don’t base your entire approval on the landlord’s reference. Some will be anxious to get rid of a bad tenant (and give a good reference). Others will be honest.
  10. Take notice if the prospective tenant is late for appointments without apology or is unhappy about paying an application or screening fee.
  11. Ask why they’re moving.

Using these tips, along with a professional tenant screening service, can help insure that you lease only to qualified tenants. Good luck!

Is Renting to College Students Worth the Trouble?

Posted by Teresa on August 21, 2012 under Landlord Tips, Lease and Rental Agreements | icon: commentRead the First Comment

tenant screening, tenant credit checkAcross the country, college students are gearing up for a new school year. That means securing housing, and for many of these kids, campus housing is not an option. Whether their school is short on housing, their parents are looking for ways to save from ever-rising room and board fees or they simply prefer to live off campus, they’ll choose renting a house or an apartment.

For landlords, student tenants can be lucrative. Many college towns have limited housing available, so vacancy is rarely a problem, and getting market rent—or above—is not unusual. In addition, mom and dad are often paying the rent, so that’s not a problem, either.

On the other hand, student tenants don’t always work out. Some are on their own for the first time and don’t yet realize the impact their actions have on others. Others don’t have mom and dad to back them up, so paying rent on time could be a problem. Students can be noisy, messy, and disrespectful of you, your property and the neighbors. They may not understand the terms of the lease or think that certain rules actually apply to them.

In other words, student tenants are just like the rest of the population. Some are good, some are not so good. So is it worth the hassle to rent to students? Many landlords say “yes!” Renting to students can be a sound business decision when approached from a business standpoint, with firm management, enforcement of the terms of the lease, as well as your rules and regulations.

Ten Tips For Renting to Students

  1. Never rent without a lease. Go into more detail than you think you need, and review it with your prospective tenants.
  2. When setting rents and security deposits, take into consideration the potential for higher repair and maintenance costs.
  3. Get each student tenant’s parent to co-sign the lease, making them responsible for late rent, damages, etc.
  4. Reinforce to student tenants that unauthorized guests or roommates are not allowed. Each occupant must be on the lease.
  5. Screen each potential tenant. Even though the students may be young, they could have criminal histories or be a poor credit risk. Tenant screening is a must.
  6. Determine whether your lease will run for 12 months or for the school year, which could be fewer then 12.
  7. Be sure the lease states that all tenants are responsible for the entire rent. If one student moves out, his or her share is still due and payable by the remaining tenants.
  8. Offer online rent payment for the convenience of your tenants and fewer hassles for you.
  9. Contact the parents or co-signers at the first sign of trouble, whether it’s property damage, noise problems or late rent.
  10. Enforce your rules. When students know what to expect from you, as well as the consequences of their actions, they are more likely to behave.

Who’s Responsible for Water Damage: Tenants or Landlords?

Posted by Teresa on August 16, 2012 under Lease and Rental Agreements | icon: commentBe the First to Comment

tenant screeningSituation: Water pipe starts leaking in wall behind washer and dryer.
Who’s Responsible? Most likely, the landlord. It’s possible that an inside-the-wall leak won’t be noticed until water starts leaking out onto the floor, which could be hours or even days later. Landlords will generally be responsible for a leak like this, but if the tenants fail to inform the landlord immediately (ideally, in accordance with the terms of the lease), the tenant could be liable for a portion of the damages.

Situation: Tenant goes away on vacation and their house sitter leaves the tub faucet on until it overflows. Nobody notices for several hours, and there is damage to the floor, subfloor and ceiling of the unit below.
Who’s Responsible? The tenant is ultimately responsible for negligence damages to the rental property, regardless of whether or not he or she was there when it occurred. The tenant can then try to collect any loss from the house sitter. Hopefully, they have renter’s insurance. In any case, this is definitely not the landlord’s responsibility.

Situation: Toilet overflows.
Who’s Responsible? This might be another case that depends on the circumstances. If the pipes are damaged or root-clogged, it’s not the tenant’s fault. However, if the tenant clogs the toilet up and doesn’t attempt to clear the clog, it’s not the landlord’s fault.

How to Minimize the Chances of Water Damage

  1. Show tenants the location of the water main shut-off valve. Teach them how to turn off the main water supply. Have tenants initial a clause in the lease that they have been shown where the main is, how to turn it off, and that they are responsible for water damages if they fail to do so (unless nobody is home when the leak starts).
  2. Insist that all tenants carry a renter’s insurance policy. Many landlords require it, since without such protection, tenants can’t always afford to pay for repairs on the damages they cause to rental properties. If someone is injured on the property, such as from a tenant’s dog or from falling in the rental unit, the tenant’s policy will usually cover the damages, saving the landlord from having to submit a claim.
  3. Supply a toilet plunger in each bathroom. They’re not expensive, and can prevent many headaches. Include a clause in the lease that the tenant must agree to plunge any clogs they cause or they will be responsible for subsequent damages.
  4. Include in your lease that tenants must contact you immediately when they discover any water leaks. Give them an emergency contact number and make sure you are available at that number. Emphasize that tenants should not email this information—you must be notified immediately.
  5. Consider installing drip pans in under-sink cabinets, in case pipes ever leak.

Water leaks and overflows are no fun. Every landlord knows leaks can cause major damages, such as rotted subflooring and drywall, warped wood flooring, mold and mildew. Preventing water damages whenever possible is in every landlord’s best interest.

No matter how competitive your rents are, you need to protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.

Why Some Would-Be Landlords Should Think Twice

Posted by Teresa on July 20, 2012 under Landlord Tips, Lease and Rental Agreements | icon: commentBe the First to Comment

tenantscreeningblog
Conditions for entering the rental housing market are great right now. Home prices are low, and interest rates are too. Demand for rentals is up, vacancies are low, and are expected to stay that way for the foreseeable future. That means investors could make buying a home and renting it out actually work.

But there are downsides to being a landlord, which any experienced one could explain in great detail. Here are just a few:

  • You’ll dread the sound of your phone ringing or buzzing. Too many times, it will be a call or text from a tenant, to inform you of a problem. Overflowing toilets, stopped up sinks, broken appliances or frozen pipes tend to happen when you least want them to—like in the middle of the night, on Christmas Day, or when you’re on vacation.
  • Your lease will be ignored. Sure, you’ll spend time and money creating an iron-clad lease to protect yourself and your property. Only trouble is, tenants don’t always read leases—nor do they understand what things like “no pets” really means. And if they do understand what they’re reading, they may think it can’t possibly apply to them. “Fluffy” is just a tiny kitten, so surely you won’t mind if a tenant brings her home, right?
  • Tenants will put others in danger. From allowing boyfriends, girlfriends, unemployed kids, ex-spouses or complete strangers to move in without your permission (or knowledge), to using your property as home base for a drug business, some tenants will try to get away with behavior that could put other tenants in danger. They could also leave you liable for their actions—criminal, dangerous or otherwise.
  • You may not get the rent on time. Okay, you probably won’t get the rent on time, all the time. Tenants will pay late, or just stop paying completely. In the meantime, you still have a mortgage and other expenses to pay. Landlords need several months’ worth of reserves set aside in the budget.
  • There’s a lot of upkeep. Any property requires care. Rental properties get more wear and tear, so they generally need even more maintenance and repairs. Landlords are required to keep their properties in habitable, safe condition for tenants, and professional plumbers and electricians are expensive to hire.
  • It’s difficult to get rid of problem tenants. Eviction is not fun, and it’s expensive. In many places, it’s also a very difficult process. To make it worse, some tenants are experts at avoiding eviction, by exploiting laws designed to protect them.

If you’re smart, tough and know how to run a business, landlording could be a good fit for you. Just be picky about the property you buy, and pickier about the tenants you allow to live there. Thoroughly screen all tenants. Run credit checks and criminal background checks with a reputable company. Then, make sure you enforce your rules fairly and consistently.

To Accept Pets or Not? 4 Reasons For and Against

Posted by Teresa on July 10, 2012 under Landlord Tips, Lease and Rental Agreements | icon: commentRead the First Comment

Tenant Screening BlogWhile there are some exceptions (such as service animals for tenants with disabilities), landlords are free to decide whether or not they will allow pets in their rental properties. Some welcome tenants with dogs, cats, birds, snakes and spiders. Others allow just dogs and cats. Still others refuse to allow any animals at all (even goldfish!).

4 Reasons Landlords Deny Pets

  1. Additional wear and tear: From scratches on wood floors, to torn screens and blinds, to holes in the walls, animals can stretch the definition of “reasonable wear and tear.” This term generally applies to wear and tear by people, not animals.
  2. Fur, dander and insects: Many people are allergic to pets. In multi-unit dwellings, pets may cause additional duct cleaning. And they could infest a rental unit with fleas.
  3. Damage: Dog and cat urine and droppings can ruin carpets, walls, floors and window coverings. Woodwork, doors and baseboards are often chewed or scratched up. And outside, animals can tear up plants, dig holes or trample grass.
  4. Potential liability: Landlords are often found liable in the courts for tenants’ dog bites. Even when they’re not found guilty, court costs can be significant when defending against such a claim.

4 Reasons Landlords Allow Pets

  1. To attract good tenants. Pet-owning tenants are often very responsible and willing to pay extra pet deposits. They typically are happy to find a place to rent where their pets are welcome. They can be ideal tenants.
  2. They love animals. Many landlords love animals and know how much enjoyment and companionship they bring. They dont want to deny that pleasure to their tenants.
  3. They see a market that needs to be serviced. More Americans own pets than ever before. They’re spending more money on them, as well. In fact, approximately 60% of all households own at least one pet, compared to about 35% of U.S. households that have children.
  4. They realize that many tenants will have pets regardless of policies. Even if pets are not allowed in your rental property, some tenants will have pets anyway. So many landlords have changed their policies in order to have some control over the situation, set pet deposit rates, and establish some rules.
No matter how competitive your rents are, you need to protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.

AirBnB Case Pits Landlord Against Tenant

Posted by Teresa on June 8, 2012 under Lease and Rental Agreements, Legal | icon: commentBe the First to Comment

tenant screening, tenant prescreeningA Brooklyn landlord obtained a restraining order against a tenant who has been renting out his apartment by the night through Airbnb, the site that connects travelers with homeowners or tenants who have rooms, homes or apartments to rent.

By turning his apartment into a full-time hotel room, the tenant made nearly $20,000 in nine months. He regularly grossed $1,000 per month over the cost of his rent by inviting unscreened, unapproved guests from all over the world to stay in his apartment.

Not any more. The landlord was well within his rights to use the court system to stop the tenant from endangering his business through running his own business out of the apartment, which is not only an illegitimate use of the rental property, but could lead to all sorts of problems.

Landlord’s insurance would not likely cover incidents that can occur when hundreds of strangers inhabit a property in a given year—while the chance of accidents, thefts, property damage and fire increase. There is simply much greater risk to the insurance company and the landlord when a property is used as a hotel.

Rentals are typically not allowed to be commercial enterprises, such as clothing boutiques, restaurants, bakeries or doggie day cares, so why would a tenant believe it’s okay to make money and put the landlord at risk by running a hotel?

The funny twist to the story is that the landlord has started renting empty units himself on Airbnb.

Landlords, remember to be specific in your leases about which activities are and are not allowed in your rentals. If you do not allow roommates without your approval, or subletting without your approval, you should add that you do not allow tenants to have paying guests by the night, by the week, or at all without your approval. Check with your attorney for proper language to protect your interests.

Prohibiting Smoking vs. Prohibiting Smokers

Posted by Teresa on June 1, 2012 under Lease and Rental Agreements, Legal | icon: commentBe the First to Comment

tenant screening, background checkMore rental property owners are prohibiting smoking in their buildings. The reasons to do so are many: avoiding the smell and stains that permeate your property, lowering the risk of fire, and protecting the health of children and non-smoking tenants. Plus, a number of municipalities are passing no-smoking laws for multi-family or public housing buildings.

However, smoking is not illegal. While you may have decided to prohibit smoking inside your rental units, can you deny the lease applications of smokers? And what can you do if you find out after the fact that someone was smoking in your smoke-free property?

First of all, smokers are not a protected class. The Fair Housing Act does prohibit housing discrimination against people based on religion, sex, disability, race, color, national origin, and family status. But it doesn’t deny landlords the right to choose tenants based on their smoking status.

To prevent smokers from taking advantage of lease loopholes, such as smoking outside their units, you might consider strengthening your lease language to prohibit smoking anywhere on the property. Since you are the owner and it is private property, you have the right to prohibit smoking wherever you’d like.

Being a hands-on landlord can help you avoid the problem of hidden smokers. When walking through your property, you may notice cigarette butts, or smell smoke. Asking tenants if they’ve noticed any smoking will indicate that you care about their health and enforcing the terms of your lease. If you do find out someone has broken the lease by smoking, you could have grounds for eviction (check with a landlord/tenant attorney for advice).

While frequent inspections can flush out smokers, many landlords don’t see the inside of their units until a tenant has moved out. If you discover signs of smoking, such as odor, cigarette burns or a layer of tar on walls and ceilings, you are likely entitled to withhold clean up costs from the tenant’s security deposit. Track all expenses (cleaners, primer, paint, new flooring) and keep receipts. Of course, it’s best to conduct a move-out inspection with the tenant so he or she can acknowledge all damages.

Protect your rental property and assets through tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.