Posted by Teresa on January 27, 2012 under Eviction, Tenant Screening & Background Checks | 
Landlords, have you ever been the victim of a scam pulled off by a “professional tenant?” There are always a few lurking around in the shadows. We’ve heard a few stories lately about landlords who have suffered losses because they unknowingly fell victim to a pro.
Jeff is a new landlord who recently arranged with a couple to lease a rental unit he owns. They wrote a check for the first month’s rent and security deposit, which Jeff deposited into his account. A week later, they cancelled the lease because their employer was transferring them out of state. They asked for a refund. Jeff refunded the full amount, only to discover the original check was written on a non-existent account. It was counterfeit. The couple flew the coop and Jeff is out nearly $1300.
Banks don’t typically place holds on every check, so Jeff assumed it had cleared the bank with no problem.
One way to avoid this scam: Ask for the first month’s rent and security deposit in cash. That would have sent these two packing.
A better solution: Run a thorough tenant screening on every applicant. Check their credit history and criminal history. Call previous landlords and their current employer. Remember: scammers do their best work when no questions are asked.
Another story is about a famous scam where the tenant moves into an apartment and proceeds to trash the place. Or he just stops paying rent. He then waits for the eviction notice or sues the landlord for unsafe housing. He’s an expert at stretching out the judicial process though filing complaints, asking for judge recusals and causing postponements. In the meantime, landlords are racking up massive attorney’s fees, he’s living rent-free for months or years, and usually the court decides in his favor.
The only way to avoid this type of tenant scam is through tenant screening. One of the victims of this scammer admitted she didn’t check with any of his previous landlords before renting him an apartment.
Protect yourself, your business and your wallet by keeping your guard up, trusting no one you don’t know, and running a tenant background check on every prospective tenant.
Posted by Teresa on November 11, 2011 under Screening and Background Checks, Tenant Credit Checks, Tenant Screening & Background Checks |
Smart landlords always run tenant credit checks and prescreen tenants. They talk to applicants’ former landlords and check for criminal activity. But when the economy is so tough, many landlords find that screening tenants and making decisions on signing leases is based partly on data and partly on circumstance.
For example, Wendy has been a landlord for many years, and has “seen it all.” She says that tenant credit scores are as volatile now as she can remember. “Some people with six-figure incomes have been forced to short sell their homes, and have lower credit scores as a result,” she said recently. “I’ve had to look more closely at their credit card and car payment history, and not just their credit score.” For Wendy, renting to people who recently owned and lost a home is less risky than renting to those who are continually late with rent payments or have history of evictions.
Mike, on the other hand, looks at credit scores and collection reports closely; he considers student loans collection activity to be a deal-breaker, but thinks medically-related collections reports are acceptable. “People can’t help what happens to their health,” he said. “Medical costs are outrageous and so many people don’t have insurance. I try to work with people who have had medical concerns.”
For most landlords we know, any eviction or rent collections activity on a prospective tenant’s credit report is not okay—even in these tough times. Bob is a fairly new and cautious landlord, who has been seeing more rent issues on credit reports. He always checks work references and tries to talk to as many landlords as he can. “Landlords usually tell me the real deal on their tenants. At first, I thought they’d give only good references, just to be done with a poor tenant, but I’m finding that they don’t want me to inherit their problems.”
Bob shared that he also talks to tenant applicants about any issues he finds on their credit reports. “I ask them why they didn’t pay their student loans, or what happened with the late car payments. Some will make excuses. Some will blame others. And a few own their credit problems and explain how they’re making them right.”
While credit scores are an important indicator of whether or not a tenant will qualify for a lease, many landlords indicate say that it’s not the only factor they consider. “A good rental and work history means more to me than a number,” says Brian. “I’m careful, but I prescreen and talk to work and landlord references before I make my decisions.”
Posted by Teresa on October 31, 2011 under Fair Housing Act, Landlord Tips, Marketing for Landlords, Screening and Background Checks |
If you’re landlord who has just closed on your first rental property, you may be wondering if this is a good time of year to find good tenants. After all, Thanksgiving is a few weeks away, and that means the winter holidays can’t be far behind. We often hear new landlords ask, “Do people move this time of year?” or, “Will my rental property be sitting vacant until after the New Year?”
Of course, every situation is different, but the short answers to the above questions are “yes” and “not necessarily.” Tenants move at all times of the year, and depending on their circumstances, plenty of people move just before or after Thanksgiving, or the week of Christmas, or even on New Year’s Eve.
If you have a rental property ready for your first tenant, you should create a plan for marketing the property right away. Here are a few tips for filling a vacant rental property fast, no matter what time of year it is:
Remember you may not screen out any tenants on the basis of race, color, religion, marital or family status, gender, or disability. New landlords should become very familiar with the Fair Housing Act and all state and local rental ordinances.
Define your best-fit tenant: Who do you want living in your rental unit (staying within the FHA, of course)? Is it a high-end property with a higher rent, or is it middle- or low-income? Will you seek out Section 8 tenants? Is it perfect for students? What is the income requirement to rent your property? Who can afford it?
Post plenty of signs: Place “Now Leasing” or “For Rent” signs in the windows and on the lawn. If possible, put “For Rent” directional signs at intersections, pointing the way to your rental property. Your signs should include the number of bedrooms and bathrooms and your phone number, along with a website where prospective tenants can view photos.
Put up a few fliers: Post fliers where your best-fit tenant will see them. This could be a coffee shop in the neighborhood, a Laundromat, a grocery store, or a community center bulletin board. Include a thorough, well-written description of the unit, and provide tear-off tabs with your contact info. Highlight any features that will sell the tenant on living there. Is it bright and sunny? Are there details like a fireplace or hardwood floors? A patio? A view? Close to trails, the grocery store or library?
Advertise: CraigsList.org is probably the most popular rental advertising site, although you can also post on Rentals.com, ForRent.com and ApartmentFinder.com. The more you advertise, the more exposure you’ll get and the faster you can fill the unit. Write a good ad that appeals to your best-fit tenant.
Incentivize: When you get closer to the holidays, you may find it tougher to get prospective tenants to agree to move. You can always offer an incentive, such as half off the first month’s rent, waiving the application fee, or offering an appliance upgrade if they sign a one-year lease before Thanksgiving.
Pre-screen tenants: Don’t get so antsy about filling the rental unit that you skip the tenant screening process. Background checks and tenant credit checks are vital to starting the landlord-tenant relationship off well. Protect yourself, your property and any other tenants you may have by properly screening each prospective tenant.
Posted by Teresa on September 21, 2011 under Landlord Paperwork and Forms, Lease and Rental Agreements |
As a landlord, do you keep track of tenant lease renewal dates? It’s important to do so, for a few reasons.
If you’re on a one-year lease schedule, set reminders to contact tenants prior to the lease expiration to thank them for leasing your property and inform them it will soon be time to sign a new lease. If you will be raising the rent, now is the time to inform your tenant. You may wish to provide a perk such as an appliance upgrade or new carpet to entice them to renew at the higher rent.
At lease signing, have your tenant fill out an updated information form, so you can be sure to have current employment information, emergency contacts, current occupants and vehicle license numbers:
- You’ll want the employment information in case your tenant vacates the unit and owes you rent. If you’re forced to go to court to collect, you’ll want to know where you can garnish the tenant’s wages, if it comes to that.
- Personal and emergency contacts are important, not only in case of an actual emergency, but again, if the tenant breaks the lease and owes you rent, you’ll have a place to start looking for him or her.
- Vehicle license information is vital to keeping unauthorized or unknown vehicles off your property.
- Asking for current occupants are a great way to discover if there are unauthorized residents staying in your rental property. If there are “guests” over age 18, you’ll want to point out the lease clause that covers your guest policy (such as limiting guests to two consecutive weeks in any six month period) and require lease applications and tenant background checks from anyone living in your rental unit who is not on the lease. Of course, if the new tenant is permanent, you’ll need a to draw up a new lease that includes his or her name.
Remind tenants that they must provide written notice if they intend to move out at the end of the lease. Ask for an exact date they will be vacating. However, don’t promise the unit to a new tenant until you are absolutely sure that the old tenant is moving out.
Posted by Teresa on May 2, 2011 under Lease and Rental Agreements, Tenant Screening & Background Checks |
We’ve often advocated that screening tenants begins with placing your For Rent ad. It should continue with the phone conversation you have with prospective tenants when they call in response to your ad.
But what exactly should a landlord ask each prospective lease applicant to avoid the tire-kickers and those whose credit and rental history make them ineligible to lease the property? Here are a few suggestions for questions to ask before showing your vacant rental units:
- Where do you live now?
- Are you currently renting?
- Why are you moving?
- How many people will be living with you?
- What kind of reference will your current landlord give you?
- What kind of reference will your previous landlords give you?
- What kind of work do you do?
- What types of pets do you have?*
- How many people who will be living in this unit are smokers?*
- We run credit and criminal background checks on every lease applicant over the age of 18. Will there be any issues there?
- We require a lease application and a fee to cover the background and credit check for each tenant over 18. Is there any problem with that?
- When do you want to move in?
- Will you have the first month’s rent and security deposit ready if we sign a lease?
- Do you have any questions about the process or the rental unit?
- Do you have a problem with any of these requirements?
*Asking “how many” rather than “do you have pets?” or “does anyone smoke?” often elicits an honest answer. If you do not allow pets or smokers, you’ve just eliminated the applicant.
Depending on the answers you get, the interested party may decide you are not the landlord for him or her. And you may decide they are not the tenant for you. Either way, you’ve saved your valuable time by avoiding showing the rental unit and going through the lease application process.
Posted by Teresa on April 8, 2011 under Landlord Tips, Marketing for Landlords |
How a landlord advertises rental property is the first step in signing a lease with the best possible tenant. If you want a tenant who pays rent on time, takes care of your property and doesn’t cause any trouble, you can start that process when you place your ads.
What to Include in a For Rent Ad
First you have to decide the basics: how much rent you’ll charge, the length of the lease, how many people your rental unit can accommodate, whether pets will be allowed and the requirements tenants must meet to qualify for a lease.
Once you’ve determined these factors, you can write your ad. Include the following:
- Number of bedrooms and bathrooms.
- Location.
- Special features, like hardwood floors, washer and dryer, water view, or proximity to trails or parks.
- Size and type of pets allowed, if any.
- Website to view photos and find additional information.
- How to contact you. Include a mobile number.
- The rent, security deposit and any other requirements that will help you screen out less-than-desirable tenants. For example, let readers know up front that you will be ordering tenant credit checks and background checks on all applicants.
What not to include:
Any language that can be considered discriminatory. Don’t mention that your rental unit is best for singles, families, elderly, young people, or those of a certain religion. Even mentioning that it’s located near a church can be interpreted that you expect to rent to church-goers.
Once you’ve placed the ad, try not to allow calls to roll to voice mail. People are impatient these days and may not leave a message or call you back.
Posted by Teresa on April 6, 2011 under Lease and Rental Agreements |
The utilities section in a property lease is one of the most important. It stipulates who is responsible for the utility bills associated with the rental property. Failing to specify which utilities the tenant will be responsible for can cause headaches and financial loss to the landlord.
Determining who’s responsible for the unit’s utilities—and having a signed agreement—is important because it protects both the landlord and the tenant. Each utility company has different ways of handling rental properties. Once you know how things work in your area, decide which arrangement works best for your situation; there are many options, including:
- In single-family rental houses, tenant pays all utilities directly to the provider
- Landlord pays for utilities that can result in liens against property if unpaid
- Tenant pays for everything except sewer and water
- Landlord pays utilities and has tenants reimburse him
- Landlord pays only for utilities the building owner is responsible for
- Tenants pay for anything that is metered to their unit; utilities with shared meters (usually water and sewer) are paid by landlord and built into the rent
- Landlord pays for garbage and recycling pickup only
Once you determine which arrangement works best, draft your this section of the rental agreement stating that the tenant is responsible for all utilities except for those (specify them) the owner will be paying. Also include language that the tenant agrees to make the payments through the term of the lease and nonpayment will be considered a breach of the agreement. State that any past due utility bills may be paid by the owner and will be charged to the resident, along with applicable fees.
As part of your due diligence before you sign the lease, check with the utility companies to be sure the tenant qualifies for an account in his or her name. Outstanding bills may prevent this—if you sign a lease with a tenant who cannot get the utilities in their name, you’ve just wasted a lot of time working with a tenant who won’t be moving into your rental property.
Finally, most landlords we know have utilities revert to their name between tenants.
Posted by Teresa on March 31, 2011 under Landlord Tips |
So, you’ve landed a new tenant for that vacant rental you’ve been showing. He paid the deposit, and you’re in the tenant background check phase of your due diligence process. Now you can take down the flier you posted at the local coffee shop, stop showing the unit and cancel your ads, right?
Sure, if you’re betting that the deposit check won’t bounce, the tenant credit report will come back at an acceptable level and the tenant’s references will all check out. But smart landlords know that anything can happen between the lease application and the lease signing. Tenants change their minds every day. References don’t check out. And credit scores are more iffy than ever these days. Maybe showing the rental property to additional prospective tenants is the better way to go.
Every landlord should have a back-up plan, just in case the shiny new tenant doesn’t prove to be 100% reliable. Besides, unless and until you have a signed lease, you don’t really have a new tenant.
There are several advantages to continue marketing a pending rental property:
- You’ll have prospects for your additional rental properties.
- Murphy’s Law says that as soon as you stop marketing one rental property, another one will become vacant!
- You can refer your prospects to other landlords in your network.
- A waiting list can move a hesitant tenant from “just looking” to “where do I sign?”
- You might find a better-qualified tenant than the one you’re working with.
Some landlords would say that “never” is when they stop marketing their rental properties. As in any profession, being proactive is better than being reactive in the rental property business. No matter how good a prospective tenant looks, make sure you have a back-up plan. Keep marketing and showing your rental unit and gather names for a waiting list—just in case the deal falls through.
Posted by Teresa on March 11, 2011 under Tenant Credit Checks |
What should a landlord do when a potential tenant states they have had their credit report pulled recently and therefore, there’s no need to run another credit report for their lease application? Should they accept the applicant’s report and save the time and trouble?
In a word: no. Some tenants might be trying to save money and might not see the need for another credit report. Or, they may want you to know up front that their credit score is low; in this case you can make a decision to continue with your own report or reject their lease application.
And then there are those who fabricate their own credit reports, which happens every day to landlords and others who aren’t as cautious as they should be. Fake credit reports are widely available, so don’t make the mistake of accepting any credit report other than one from a trusted service provider.
Smart landlords don’t run their rental property business on guesswork. To really know who you’re renting to, always reinforce your policy that a credit and background check will be conducted on every tenant applicant.
If, after hearing you won’t accept their credit report, the potential tenant is no longer interested in your rental property, you might have dodged a bullet.
Of course, there are exceptions to every rule! In some states, landlords must accept a potential tenant’s credit report if it is no older than 30 days. Other states have legislation that a credit bureau must forward an existing credit report whenever the tenant applies for a lease within 30 days. These laws are designed to prevent tenants from incurring high fees from repeated applications.
Landlords have the right to protect their business interests by leasing to qualified tenants. Make sure yours are qualified by conducting a thorough credit and background check on each one–even if they have one in their pocket for you!
Posted by Teresa on January 11, 2011 under Landlord Tenant Lawsuits, Tenant Screening & Background Checks |
You’re probably familiar with the news story about a house in Escondido, CA, where the resident is accused of making bombs and plotting bank robberies. Because of danger to neighbors, the decision was made to burn the house completely to the ground.
Now the question is, “Who’s responsible for the compensating the property owners?” While the county made the decision to destroy the house in the interest of public safety, where did that leave the owners of the home, who rented it to the accused bomb maker? Should the owners’ insurance company reimburse them for the loss? Or is this a necessary expense of the taxpayers of San Diego County, who are already burdened with the expenses of removing the hazard and the resulting cleanup?
Obviously, the accused man, George Jakubec, bears the full responsibility for his actions. But it’s doubtful he’ll have the ability to repay the homeowner. Some say the landlords should be responsible for their loss and to the county for all expenses because of negligence—that they should have known of this tenant’s activities. Questions have arisen about whether proper tenant pre-screening and periodic inspections were conducted.
However, there is no proof that the landlords didn’t screen the tenant prior to signing a lease. Even if they had, the suspect’s crime record has not been released, so we don’t know whether or not he had a criminal record that would have prevented the landlord from renting the property to him.
Most landlords know that their tenants have the right to peaceful habitation, without harassment or unnecessary inspections. However, landlords who care about their properties schedule periodic maintenance to not only protect the property value, but to ensure that illegal or dangerous activity is not taking place.
In the Escondido case, the landlord’s attorney has filed a claim with San Diego County, asserting that no legal justification existed to burn the house. Further, the claim states the eminent domain procedures that would have compensated the property owners were not followed. We’ll keep watching for updates.
In the meantime, a word to the wise: keep conducting thorough tenant screening and background checks, and schedule periodic inspections of your rental properties. It’s so much better to be safe than sorry!
Landlords, have you ever been the victim of a scam pulled off by a “professional tenant?” There are always a few lurking around in the shadows. We’ve heard a few stories lately about landlords who have suffered losses because they unknowingly fell victim to a pro.
