Posted by Teresa on August 27, 2010 under Landlord Tips, Tenant Screening & Background Checks | 
Landlords are faced with making tough decisions every day. If you’re like the investment property owners we talk to, you regularly ask yourself questions like these:
- Where should my next rental property purchase be?
- What can I be doing to lower my vacancy rate?
- When can I quit my day job?
- Should I hire a property management company?
When it comes to question #4, we have some tips for you to consider when making that decision. Read on for ideas on how to choose a property management company.
First, take your time and do your research. Whether you own one or a dozen rental properties, the decision to outsource management is one of the most important ones you’ll make as a rental property owner. It can make or break your bank account—and even your business. Look at things like:
- How do they handle tenant disputes?
- What is their maintenance agreement like? Do they charge for labor and materials? Is there a surcharge on materials?
- How do they conduct tenant screening?
- What is their reputation in the community?
- Do they offer online rent payment?
- When do you receive rent payments?
- What is their fee?
Understand that hiring a property management company means letting go of the day-to-day management of your rental business. The PM company will show the property, advertise vacancies, screen tenants, handle the paperwork and all the maintenance. If you are not ready to give up control, then hiring a management company won’t do you or the company any good.
Smart landlords know that you must manage the management company. It’s like having employees—and business owners must manage their employees. The property management company is representing you, so make sure you are 100% happy with how they are treating your property and your tenants.
Hiring the right property management company can lead to increase profitability through lower vacancy rates, better tenant satisfaction and lower turnover. You might even get some of your free time back! Do your homework and carefully consider all the implications before you sign any contracts.
Posted by Teresa on August 17, 2010 under Landlord Tips, Tenant Screening & Background Checks |
- An incomplete tenant background check may not provide information on a lease applicant’s employment and income.
- Verifying the employer listed by a lease applicant will indicate his or her honesty—or lack of it. If you call the number provided and the telephone is not answered professionally (or at all) you might have reason to suspect the potential tenant is not being truthful. Certainly, exceptions apply—especially for small businesses.
- Long-term employment is an indicator of stability. However, recent economic difficulties have put many talented and dedicated employees out of work. Landlords may need to be flexible on their standards until the economy recovers. Requiring all tenants to have held their jobs for two years, for example, could mean a record number of vacant rental units for you.
- It can help you determine whether a potential tenant’s income source is lawful or illegal. Sure, it’s nice to have tenants who have plenty of cash to pay their rent. But if they’re not legally employed or cannot provide proof of income, like pay stubs, you could be asking for big trouble.
- Verifying employment can give you peace of mind. Renting to qualified tenants with jobs is the number one concern of most landlords. Confirming your lease applicants’ employment can keep your cash flow healthy and reduce turnover in your rental properties.
The best time to thoroughly check out a tenant’s employment situation is before the lease is signed. Following this tenant screening procedure on every applicant will ensure that you are not discriminating against any protected groups and that you will be leasing to only qualified tenants.
Posted by Teresa on July 27, 2010 under Landlord Tips, Tenant Screening & Background Checks |
According to MPF Research, the apartment rental market is showing signs of improvement, as the vacancy rate declined from 8.2% to 6.6% in the first half of 2010.
That’s good news for landlords. Perhaps you’re already seeing an increase in the number of prospective tenants viewing your rental properties. If you’d like to fill your vacancies fast, this might be a good time to review our tips for selling a good prospect on your rental unit. Don’t let a good tenant go just because you failed to close the deal and get a signed lease!
Remember, there is more to renting an apartment than the unit itself. People want to feel good about where they live. Highlight the following:
- Good communication with owners or management: let the prospect know how well you handle interaction with tenants. Examples of great communication include 24/7 emergency availability in case of emergency, a stellar call response policy, and active listening—which starts the minute you meet the prospect.
- Demonstrated level of professionalism: when you’re on time, your documents are in order, the unit is clean and ready, the grounds are professionally maintained, and you have the statistics to back up why your property is the best, who wouldn’t feel good about living there?
- Location: make it your mission to know every business and attraction within a 5-mile radius. Letting the prospective tenant know there is a dry cleaner, grocery store, library, park, and coffee shop close by could seal the deal.
- Amenities: even if you don’t have a first-class gym or on-site laundry, list the amenities you do offer. Things like water-saving fixtures, low-VOC paint, professional landscaping and free parking are good news to many good tenants.
When the prospective tenant shows signs of interest, be proactive and close the deal. People sometimes have a hard time making a final decision, so it’s up to you to help them:
- Have a lease application ready. Never show a unit to a prospect without one.
- Get a commitment: ask them to complete the lease application.
- Let them know you only want the best tenants, so there will be an application fee to cover paperwork and required tenant screening.
- Your goal should be to collect a signed application, first month’s rent, and security deposit at the same time. Let the prospective tenant know if they do not qualify, the rent and deposit will be returned.
- Remind the prospect that you are showing the rental unit to additional prospects and you cannot hold it without a deposit.
You don’t have to be pushy. If you have a good prospective tenant who needs a great apartment, it’s just a matter of putting the two together. As the rental property owner, it’s your job to make this win/win situation happen!
Posted by Teresa on June 18, 2010 under Tenant Screening & Background Checks |
The U.S. Supreme Court issued a ruling June 1 that could affect landlords whose tenant background checks are limited to the state they reside in.
Essentially, the Court ruled that a convicted sex offender did not have to register in the state he currently lives in because his conviction pre-dated the Sex Offender Registration and Notification Act (SORNA), passed in 2006.
Background to the Decision
The case involved an Alabama man, Thomas Carr, who was arrested for a sex crime in 2003. Upon his release from prison in June 2004, he registered in Alabama as a sex offender. He moved to Indiana 5 months later, in December 2004, where he did not register with proper authorities. Two years later, he was arrested for violating the Sex Offender Registration and Notification Act (SORNA).
Carr’s lawyer argued that his client was not subject to the law because he moved to Indiana well before SORNA was passed by Congress and before the attorney general established a regulation retroactively applying the law to interstate travel by sex offenders.
Supreme Court Overrules Circuit Court Decision
A federal judge ruled that retroactive enforcement of the law did not violate the Constitution. Carr pled guilty and was sentenced to 30 months in prison. On appeal, the Seventh U.S. Circuit Court of Appeals upheld his conviction. The Supreme Court reversed the Circuit Court’s decision, taking a narrower view of SORNA than the Obama administration’s.
According to the Court decision, the law as written by Congress did not authorize retroactive enforcement. Why not? Because Congress used the word “travels,” instead of “traveled,” when referring to offenders who move state to state.
What Does This Mean for Landlords?
If you typically screen tenant criminal backgrounds only the state you live, they could be hiding a criminal past—including for sex crimes. Running a criminal background check on Carr in Indiana, for example, would show no record.
Landlords, Be Safe with Thorough Tenant Screening
Whether landlords agree with the Supreme Court’s decision or not, the prudent solution is to make sure your tenant background screening is as thorough as possible. Peace of mind is priceless!
Posted by Teresa on June 8, 2010 under Eviction, Tenant Screening & Background Checks |
Elaine is a responsible, no-nonsense landlord. Her leases are clear and thorough, and her tenants generally live by her rules. Every now and then, however, Elaine signs a lease with a tenant who unexpectedly starts causing trouble—despite her checking the tenant’s rental history, criminal background, and credit.
This time it’s a young woman who is simply too loud. She plays her TV at top volume, listens to bass-busting music late at night, and has way too many parties with her also-loud friends.
Elaine has reminded the young tenant about her rules on disturbing the peace. She’s asked her to discontinue the behavior. And now, other tenants are complaining. Elaine is ready to issue a Three-Day Notice to Quit. Is that her best option?
According to our sources, no. This non-conditional notice is generally used when whatever is happening to breach the lease cannot be corrected. Examples include illegal behavior like selling drugs, irreparable damage to the property, or subleasing the property without permission. The notice tells the tenant that if they are not out in three days, eviction proceedings will begin.
In this case, Elaine’s tenant could still correct her problem—just by quitting the loud parties and turning down her stereo equipment. Therefore, a Three-Day Notice to Perform Covenant or Quit is the better recourse. It must specifically state the behavior that breaches the lease so the tenant can correct it.
Then if the problem continues over the three-day period, Elaine can start eviction proceedings. But what if the tenant quiets down for three days, and turns up the volume again? Hopefully, the threat of eviction is enough to inspire behavior modification in this tenant. If not, another Three-Day Notice to Perform Covenant can be issued. After a few of these, it might be time for the Three Day Notice to Quit!
Legal disclaimer:
The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining legal advice applicable to your situation. Always consult your legal advisor for your particular situation.
Posted by Teresa on June 2, 2010 under Landlord Paperwork and Forms, Landlord and Tenant FAQs, Tenant Screening & Background Checks |
Leases begin and end; tenants come and go. Often, life interferes with details like legal documents (leases) and a tenant comes to you with an announcement: “I’m moving, but don’t worry—I found someone to take over my lease!”
For some landlords, this is when the worrying begins. For others, it’s not a big deal—having a new tenant without advertising and showing the rental unit is the best part about subleasing.
Subleasing is when a tenant assigns his or her lease to a third party; in effect, they are renting the unit from you, while renting it out to someone else.
To protect yourself, you should be aware of the following when considering whether or not to allow a sublease situation in your rental property:
1. Make sure the original tenant knows that a sublease itself does not release them from the original lease. If the sublease renter defaults on the terms, the original lessee is still responsible.
2. If you as landlord choose to release the tenant from the lease, then the sublease renter becomes responsible for rent and other obligations of the lease, and you become responsible for responding to the sublease renter’s needs under the lease.
3. In many cases, landlords do not release the original tenant from the lease, so the original tenant collects the rent from the sublease renter, and pays the landlord per the terms of the lease. The original tenant is also responsible for any damages to the property caused by the sublease renter.
4. You are still in control—not only can you approve or deny the applicant who wishes to sublease, but you can refuse to participate at all in a sublease situation. You then handle the tenant’s breaking of the lease agreement the way you normally do, whether it’s collecting the balance of the lease period’s rent, keeping the security deposit, or agreeing to let them out of the lease providing you find a new tenant.
5. Keep in mind that tenants don’t always inform landlords of their plans. Sometimes they move out and let their sublease renter move in—and you’re none the wiser. You are under no obligation to accept the situation, and after checking with your legal advisor, may be able to start eviction proceedings against the sublease tenant and the original tenant, too.
If your tenant asks about subleasing your rental property, check with your legal advisor first. To ensure you’re protecting your best interests, as well as your other tenants’, insist on full application procedures and tenant screening on the sublease renter.
Legal disclaimer:
The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining legal advice applicable to your situation.
Pre-screen all tenants as part of your standard application process. Background and credit checks will help ensure you rent to qualified tenants. For more landlord resources, including forms and information on tenant screening, turn to E-Renter.com.
Posted by Teresa on May 29, 2010 under Landlord Tips, Tenant Screening & Background Checks |
You’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!
Posted by Teresa on May 25, 2010 under Landlord Tips, Tenant Screening & Background Checks |
Every 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.
Posted by Teresa on May 7, 2010 under Tenant Credit Checks, Tenant Screening & Background Checks |
The 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.
Posted by Teresa on May 3, 2010 under Landlord Tips, Tenant Screening & Background Checks |
Landlords 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.
Landlords are faced with making tough decisions every day. If you’re like the investment property owners we talk to, you regularly ask yourself questions like these:
