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.
Posted by Teresa on April 2, 2010 under Landlord Paperwork and Forms, Landlord Tenant Lawsuits, Tenant Screening & Background Checks |
Our last post contained a warning to landlords that what you say can come back to haunt you. In other every day activities, like accepting or rejecting new tenants, landlords must also take care to know and follow all applicable laws—because it protects you and your business from liability.
Take discrimination. The Fair Housing Act is very clear on what constitutes discrimination: denying housing to an applicant based on race, gender, family status, country of origin, religion, age, sexual orientation, or disability. Still, depending on how a rejection is handled, there is always a chance that a discrimination claim could be filed by a rejected tenant.
How can landlords avoid such claims? First, make absolutely sure that you have a rock-solid reason for the rejection—and back it up with paperwork. Second, communicate the reason to the applicant. Don’t just say, “I found a better tenant,” or “I rejected your application.” The tenant could make up his own reasons for the rejection, including his race or religion.
Establish your minimum standards for approving tenant applications, and apply them to every single applicant. Treating everyone equally is a cornerstone of good landlord practices. Accept the first qualified applicant for a rental unit, after applying your standards to each interested party.
Full disclosure to all applicants up front is a good idea. Your lease application should convey your standards, as in the following examples:
- That each adult who will live in the rental unit must fill out an application and be approved.
- That a minimum income level is required to rent the unit.
- Employment history will be checked, and a minimum of six months at the applicant’s employer is required.
- That previous rental history will be taken into consideration, including timely rent payments, keeping property in good condition, and fulfillment of previous leases.
- That a tenant credit check and criminal background screening will be conducted on all applicants.
If you have additional requirements, add them to the list. And of course, your application should state that you do not deny the right to rent or lease property based on race, gender, family status, country of origin, religion, age, sexual orientation, or disability.
With this information up front, applicants will know what basis they can be rejected on. When you do reject a tenant applicant, be sure to explain your reasons in writing, and supply a copy of the credit report, as required by law.
Posted by Teresa on March 5, 2010 under Landlord and Tenant FAQs, Tenant Screening & Background Checks |
Verifying a tenant’s employment history and income is a vital step to approving his or her application. The unfortunate economic situation makes it even more important; while many good people have lost their jobs through no fault of their own, your tenants still need to pass your litmus tests, including meeting minimum income requirements.
Here are five reasons to verify employment and income on potential tenants:
1. Because landlords and property managers must know that each tenant who signs a lease agreement can live up to its terms—including paying the security deposit and upfront fees, plus the rent in full each month. Whether the tenant will pay on time each month is certainly not guaranteed—but you need to know whether they even have the capability before you sign a lease.
2. Because even if the tenant has the upfront fees ready to hand over, you’ll want to know if their employment history is solid. Holding a job is no guarantee that a tenant will pay rent on time, but it helps!
3. Because verifying the source of a tenant’s income is a great way to prevent those engaging in illegal activities from becoming your problem. In other words, if a tenant has plenty of cash but no job, be suspicious. Same for obvious high spending with a low income. It is not discriminatory to ask a tenant to prove how much money they make. Remember: pay stubs are your friends.
4. Because tenants sometimes go to great lengths to pull a fast one on a landlord. Just because they say they’re working for Jones Construction Company doesn’t mean they do. Ask for proof. Call the supervisor—and make sure that when you do, you’re actually speaking to the supervisor, not a friend pretending to be one.
5. Because knowing that your new tenant is stable and can afford the rent is one less worry for you. And landlords and property managers need to reduce worries as much as possible!
Posted by Teresa on February 23, 2010 under Landlord Tips, Tenant Screening & Background Checks |
Mark O. is a landlord who just purchased a single family rental house on foreclosure. The neighbors have informed Mark that although the home has only 3 bedrooms and 1 bathroom, there are several cars parked at the house all the time, and seemingly a dozen adults living there.
Mark is concerned about the wear and tear on his property, with good reason. Here’s how he plans to handle this situation:
First, Mark is going to require a new lease agreement for the property. The lease will contain a clause about the number of people allowed to reside in the rental unit. His limit will be two adults per bedroom, or six adults total.
Next, Mark plans to require that each adult over the age of 18 who is living in the house complete his tenant application. Mark’s standard practice is to conduct background screening and credit checks on each potential tenant. Any potential tenant who does not meet Mark’s minimum requirements for income and credit worthiness will not be allowed to sign the lease—and will have to move out.
Mark knows that the Fair Housing Act prohibits discrimination against tenants based on family status (married, unmarried) or number of children. Therefore, he has no intention of not renting his new rental property to any adults with children who pass his application process. Mark is also familiar with his local zoning law on rental units, which says that no more than three unrelated persons may share a single dwelling unit.
Limiting your rental properties to properly screened tenants who have passed your application process is the best way to protect your investment and your liability. If non-tenant adults have moved in with your tenants, you are under no obligation to allow them to stay.
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 January 25, 2010 under Fair Housing Act, Landlord Tenant Lawsuits, Tenant Screening & Background Checks |
Question 1 is about pet policies. Let’s say a landlord has five rental units. The tenants in four of them are neat and clean. The fifth tenants are not. They leave trash around their unit, and during inspections the landlord wonders if they ever clean the place. If a “neat and clean” tenant wants to adopt a dog, and a tenant number five also want to adopt a dog, is it discriminatory to approve Mr. Clean’s request and turn down the other tenant?
Pet policies have nothing to do with the Fair Housing Act. The only tenants who are protected regarding pets are those who fall under the protection of the Americans with Disabilities Act (ADA). A service animal must be allowed, regardless of your pet policies. All other pets are completely at your discretion.
Question 2 is regarding appearance. A landlord has two applicants for the same apartment. The first arrives in a clean, well-maintained late-model car. She is nicely dressed, and wears expensive-looking jewelry. The second arrives on a bicycle, wearing baggy jeans, a baseball hat turned backwards, and a torn t-shirt. Is it discriminatory to decline the second prospective tenant’s application without going any further?
Yes. Landlords may not discriminate on the basis of appearance. Smart landlords are “blind” to it, using solid tenant background screening as the decision maker. In this case, the first applicant could be way overextended on her credit, have a bankruptcy in her credit history, and owe her previous landlord a few months’ rent. The second could have bicycled straight from work, where he is well-respected, earns a good salary, and has solid credit. Appearances can be deceiving.
Question 3 is regarding advertising. Landlord Jane wants to pre-screen tenants by describing her expectations in the “for rent” ads she places in the paper. Her ad reads as follows: “1BR 1BA apartment, clean building, safe neighborhood near church. No pets, no kids, no smokers, no drinkers, no bums. Background and credit checks. Ref req’d.” Is Jane’s ad discriminatory?
Could be. Describing the rental unit as “near church” could be interpreted to mean she desires tenants of that church’s denomination. “No kids” can be problematic. You cannot discriminate against people with children, although a one-bedroom apartment could be considered too small for more than one person. Parents or a parent and infant in most states are allowed to rent a one-bedroom apartment. Check your local and state laws. Landlords can enforce a “no smoking” rule, and rules regarding alcohol consumption in common areas, but not a general “no drinking” or “no bums” rule. Jane’s definition of a “bum” is most probably discriminatory.
Remember, landlords must be very familiar with the Fair Housing Act, which bars discrimination against persons based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians), pregnant women, and people securing custody of children under the age of 18), and handicap (disability). Treating all of your tenants fairly and consistently is a smart way to avoid charges of discrimination.
Question 1 is about pet policies. Let’s say a landlord has five rental units. The tenants in four of them are neat and clean. The fifth tenants are not. They leave trash around their unit, and during inspections the landlord wonders if they ever clean the place. If both a “neat and clean” tenant and tenant number five want to adopt a dog, is it discriminatory to approve Mr. Clean’s request and turn down the other tenant?
Discrimination is defined by the Fair Housing Act (FHA). Pet policies have nothing to do with the FHA. The only tenants who are protected regarding pets are those who fall under the protection of the Americans with Disabilities Act (ADA). A service animal must be allowed, regardless of your pet policies. All other pets are completely at your discretion.
Question 2 is regarding appearance. A landlord has two applicants for the same apartment. The first arrives in a clean, well-maintained late-model car. She is nicely dressed, and wears expensive-looking jewelry. The second arrives on a bicycle, wearing baggy jeans, a baseball hat turned backwards, and a torn t-shirt. Is it discriminatory to decline the second prospective tenant’s application without going any further?
Yes. Landlords may not discriminate on the basis of appearance. Smart landlords are blind to appearance, using solid tenant background screening as the decision maker. In this case, the first applicant could be way overextended on her credit, have a bankruptcy in her credit history, and owe her previous landlord a few months’ rent. The second could have bicycled straight from work, where he is well-respected, earns a good salary, and has solid credit. Appearances can be deceiving.
Question 3 is regarding advertising. Landlord Jane wants to pre-screen tenants by describing her expectations in the “for rent” ads she places in the paper. Her ad reads as follows: “1BR 1BA apartment, clean building, safe neighborhood near church. No pets, no kids, no smokers, no drinkers, no bums. Background and credit checks. Ref req’d.” Is Jane’s ad discriminatory?
Could be. Describing the rental unit as “near church” could be interpreted to mean she desires tenants of that church’s denomination. “No kids” can be problematic. You cannot discriminate against people with children, although a one-bedroom apartment could be considered too small for more than one person. Parents or a parent and infant in most states are allowed to share a one-bedroom dwelling. Check your local and state laws. Landlords can prohibit smoking in rental units and alcohol consumption in common areas, but not a general “no drinking” or “no bums” rule. Jane’s definition of a “bum” is most probably discriminatory.
Remember, landlords must be very familiar with the Fair Housing Act, which bars discrimination against persons based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians), pregnant women, and people securing custody of children under the age of 18), and handicap (disability). Treating all of your tenants fairly and consistently is a smart way to avoid charges of discrimination.
Posted by Teresa on January 15, 2010 under Eviction, Tenant Screening & Background Checks |
On this site, we’ve covered the importance of clear rental agreements and leases a dozen times or more. And we’ve stated that the relationship between landlord and tenant is strictly a business one. Never does that distinction become more important than when it’s time to evict a tenant.
Even landlords who choose tenants very wisely, who run all the right credit checks and background screening checks, and who have good, professional relationships with their tenants will face the inevitable eviction soon or later. And, if that landlord is a compassionate person, he or she might not feel good about doing it.
This economy has made it tough for everyone. Tenants are losing jobs and landlords are having a hard time filling rental vacancies—there’s no doubt the business has changed drastically over the past year. But even in this economy, landlords must look at eviction as a business decision—hard as that can be.
Is it okay to evict a tenant in this terrible job and rental market? The answer is “yes.” If you’re in doubt, pull out the rental or lease agreement. Read it over. Check off the terms and conditions that your tenant has failed to honor. Remind yourself that when your tenant signed that lease agreement, he or she agreed to abide by each of those terms and conditions. And they agreed that if they broke the agreement, you had the right to take action, including eviction.
You took a chance that the tenant would uphold their end of the bargain, just as you performed all the duties you agreed to. In approving this tenant, you conducted your due diligence, mitigated your risk through tenant screening, and verified employment and credit worthiness. Though it was based in smart business practices, you still took a chance.
When it turns out that the tenant and you both made a mistake in entering into the agreement, then choosing to evict is okay. When it turns out that, despite the best efforts on both sides, the terms of the rental agreement cannot be upheld by the tenant, then choosing to evict is okay. Making the best business decision you can when a tenant breaks the rental agreement is okay.
This is just one reason a strong rental or lease agreement is the foundation of every landlord/tenant relationship.
On this site, we’ve covered the importance of clear rental agreements and leases a dozen times or more. And we’ve stated that the relationship between landlord and tenant is strictly a business one. Never does that distinction become more important than when it’s time to evict a tenant.
Even landlords who choose tenants very wisely, who run all the right credit checks and background screening checks, and who have good, professional relationships with their tenants will face the inevitable eviction soon or later. And, if that landlord is a compassionate person, he or she might not feel good about doing it.
This economy has made it tough for everyone. Tenants are losing jobs and landlords are having a hard time filling rental vacancies—there’s no doubt the business has changed drastically over the past year. But even in this economy, landlords must look at eviction as a business decision—hard as that can be.
Is it okay to evict a tenant in this terrible job and rental market? The answer is “yes.” If you’re in doubt, pull out the rental or lease agreement. Read it over. Check off the terms and conditions that your tenant has failed to honor. Remind yourself that when your tenant signed that lease agreement, he or she agreed to abide by each of those terms and conditions. And they agreed that if they broke the agreement, you had the right to take action, including eviction.
You took a chance that the tenant would uphold their end of the bargain, just as you performed all the duties you agreed to. In approving this tenant, you conducted your due diligence, mitigated your risk through tenant screening, and verified employment and tenant credit history. Though it was based in smart business practices, you still took a chance.
When it turns out that the tenant and you both made a mistake in entering into the agreement, then choosing to evict is okay. When it turns out that, despite the best efforts on both sides, the terms of the rental agreement cannot be upheld by the tenant, then choosing to evict is okay. Making the best business decision you can when a tenant breaks the rental agreement is okay.
This is just one reason a strong rental or lease agreement is the foundation of every landlord/tenant relationship.
Posted by Teresa on December 8, 2009 under Screening and Background Checks, Tenant Credit Checks, Tenant Screening & Background Checks |
Tenant screening involves conducting background checks on potential tenants. Typical checks include tenant credit check, criminal background check, and tenant rental history. Landlords and rental property managers also have the option to check previous addresses, identity and name validation, address validation, evictions, liens, bankruptcies, and sex offender status.
Here are some dos and don’ts to consider when making the decision to screen tenants:
- Do keep the screening process consistent: screen every applicant, every time.
- Don’t make yourself vulnerable to discrimination suits by screening applicants based on appearance or other subjective attributes.
- Don’t skip the tenant screening for an applicant who speaks well or dresses nicely, or the tenant applicant who drives a nice car—again, these are subjective observations that do not mean they will pay rent on time.
- Do protect your other tenants and the neighbors surrounding your rental property by including criminal history in your background check process.
- Do choose your screening service carefully. Are they a Better Business Bureau Accredited Business and Fair Credit Reporting Act (FCRA)-Compliant Consumer Reporting Agency? Is the staff FCRA Certified and Bonded?
- Do ensure that your screening service employs high security measures, such as fingerprint scanners, controlled access, monitored facilities, and proper disposal techniques.
- Don’t use a screening service without nationwide coverage and access to all three credit bureaus.
- Do keep all information learned from a tenant credit report in strictest confidence.
- Don’t neglect to provide a tenant applicant with a copy of the report, and to advise them in writing if you reject them for credit reasons.
