Monthly Archives: July 2017

4 Tenant Screening Factors More Accurate Than Credit Scores

These days, landlords and property managers are often content to assess a potential tenant based only on the renter’s credit score and income. It’s a practice that has led to far too many bad deals for landlords, and it needs to stop.

A renter’s credit score will vary from one credit bureau to the next. An applicant could have a score of 720 from TransUnion and 668 from Experian. These companies have different ways of calculating credit scores, and neither is necessarily right. That’s why mortgage companies typically pull scores from all three major credit bureaus, and often settle on the middle score or the average of the three.

The point is that a renter’s credit score is just a score. After the 2008 housing crash, millions of Americans watched their credit scores plummet. Did that mean that they suddenly became unworthy of renting? No. Many had steady jobs, families to feed, and the ability to pay their bills. Their credit scores were not reliable indicators of their value as tenants.

Digging Deeper Than a Renter’s Credit Score

It’s possible to make a reasonable assessment of an applicant without relying solely on the renter’s credit score. If you read the full credit report (making note of one-time losses or ongoing abuse); ask the right qualifying questions; and collect the necessary supporting documents, you should have everything you need to make a confident decision about whether to accept a prospective tenant’s application–regardless of the renter’s credit score.

To make the most accurate assessment and find the right fit, keep these four qualities in mind:

Honesty

Look for people who are willing to share the good, the bad, and the ugly with you. If a renter is open and honest, you can work toward finding solutions and housing options that will fit their true needs–and yours.

Consistency

Look for renters who do what they say and say what they mean. This starts by considering some important questions.

Did the potential tenant show up on time to tour the property, or did you get a no-show and a lame excuse about traffic? Does the renter’s credit score reveal that they pay their debts on time, or do you see lots of late payments? Did they fill out the application when they said they would, or did you have to remind them multiple times to get it done? If you see hesitation, backpedaling, or unreasonable excuses, pause and really reconsider this person before moving forward.

If an applicant seems inconsistent after the first few interactions, would you rely on them to report repairs needed to your property? What about paying their rent on time? The best renters respect landlords, pay on time, and are consistent in their communication efforts if a setback does occur.

Verifiability

Make sure that you can verify what an applicant tells you. Are they moving from out of state for a new job opportunity? Great! Ask for an offer letter from their employer on the company’s letterhead. Call their new supervisor, and verify their start date and income. This information should match the letter.

Want to know how they’ll treat your rental? Ask for the phone numbers and email addresses of previous landlords, and cross-reference these with public information to ensure that you’re actually talking to a property owner–not a friend pretending to be a landlord.

No pets on the application? Ask if they “accidentally” forgot to list a pet. Feel free to take a look at any public social media accounts to see whether you discover photos of them playing with furry companions as they check in at the dog park.

You aren’t just a landlord at this point; you need to put on your detective hat and gather all of the necessary information to verify that what potential tenants are telling you is true.

If you can’t verify, then deny.

Patience

This is for you. There are more renters than inventory, so practice patience. Take your time interviewing, and don’t let anyone rush you into a deal.

People in a hurry to get answers are those who tend to “forget” to send you supporting documents, or who send items from years ago that are irrelevant today.

If you slow down and a potential renter starts demanding that you make a decision quickly or he’ll go elsewhere, let him go. There are plenty of well-prepared, even-keeled humans coming along. You don’t need to be bullied or rushed into anything. This is your investment property, and you have every right to protect your assets in the best way that you know how.

Just remember: People are more than their credit scores. A renter’s credit score is merely a snapshot of a moment in time. It can certainly be a great way to start your evaluation of an applicant, but it shouldn’t be the only factor you consider. Remember these four traits to find a tenant who will treat you and your property with respect.

Further Reading

10 Tried & True Tips for Advanced Tenant Screening

Tenant Credit Checks: What Landlords & Property Managers Need to Know

Kassandra Rose founded Rent My Way in 2014. Based in Seattle, Rent My Way serves as a rental relationship management tool for landlords, property managers, and renters that assists in matching inventory to client needs and manages their experiences with transparency for all parties. Beyond owning and operating Rent My Way, Rose also owns and operates RentLucky Property Management and serves as a broker for My Way Real Estate Services.

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Should I Let My Tenant Paint the Rental?

Maintaining a rental property is a lot of work. Landlords that own rental properties know that keeping them attractive is important.

One of the best ways to ensure that tenants are happy with the place is to paint the rental before they move in. Most landlords choose a white or cream color to keep the look neutral. But what happens when the tenant approaches the landlord and wants to paint?

Some renters want to add some color to their living space while others are simply tired of white or cream and want an accent wall in a beautiful color. However, there are several factors that landlords need to consider before asking themselves, “Should I let my tenant paint the rental?”

Should I Let My Tenant Paint the Rental: Pros

When a tenant wants to paint their rental, they usually want to bring some color and personality into the space. Usually tenants just want to liven up a children’s bedroom or put in an accent color wall in the main living room.

The advantage to allowing a tenant to paint is that they may have a greater feeling of ownership about the place and treat the rental as more of a home.

Some landlords feel that if an especially good tenant with a proven history of on-time payments and clean habits may deserve the perk of painting as an incentive to stick around and renew their lease for another year.

Still other landlords recognize that the choice to paint certain areas attracts quality tenants who find that feature highly desirable and may provide a palette of approved colors and paint brands that a tenant can select from.

Having the freedom to create a space of their own makes most tenants very happy. After all, a happy tenant is usually a happy landlord.

Should I Let My Tenant Paint the Rental: Cons

The downside of answering the question of “Should I let my tenant paint the rental?” is that painting may seem easy but to do a professional-looking job requires some care and experience that many tenants simply don’t have.

Problems like accidental paint spills, roller bumps on the ceiling and paint on outlet covers and trim can make things look even worse in a rental.

Allowing paint can also create more work for the landlord when the tenant moves out, because the new color must be primed first, then painted over to match the original neutral paint once again.

Many landlords simply don’t want their tenants doing any work or improvements on the rental property as a rule, painting included. It’s often easier to just say no to improvement requests across the board rather than head down that slippery slope.

RentPrep’s Take On “Should I Let My Tenant Paint the Rental?”

There’s really no right answer that applies to every rental situation when it comes to allowing a tenant to paint. Each tenant and each situation affects the decision and landlords must assess the pros and cons for their unique circumstance.

It might be a good idea to let a long-term tenant do some painting as an incentive to renew their lease. The landlord may determine they will have to repaint that unit anyhow once it is vacant again, so it would be no big deal to allow it.

On the other hand, many landlords realize the value of a quick turnover, and keeping the same paint in all the rooms of the rental makes it easy to put on a quick topcoat to get the rental looking as good as new.

The best compromise may be to allow tenants to paint, but have a lot of rules in place. Many landlords do give the tenants a choice of whether to paint or not but add a lot of stipulations into the lease agreement if they do.

Common paint clauses include the landlord approving the color and that the rental has to be returned to the original color upon vacating. Some landlords even insist on professionals doing the job at the tenant’s expense.

All in all, most landlords we associate with don’t allow tenants to paint the rentals, but there are always exceptions and if the landlord feels it is the right decision for the property and for that tenant, we support it fully.

What Are Other Landlords Saying About Tenants Painting a Rental?

The answer to the question, “Should I let my tenant paint the rental?” is up to every individual landlord and can vary based on their preference, quality of the rental, and location.

Here’s a screenshot of landlords discussing this question in our private Facebook group for Landlords.

 

You can see even more comments on that post by checking it out in the group.

should I let me tenant paint the rental

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#165 Short-Term Rentals With Al Williamson

Our guest Al Williamson is a former engineer and now full-time landlord who likes to experiment with his rentals.

He works on ways to increase the revenue of his rentals and find new streams of revenue.

Listen in as we discuss his short-term rental strategies and how he is able to make more income from his rentals.

Connect with Al Williamson

LeadingLandlord.com

 

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Top Apps for Tracking Rental Expenses

Have you ever thought about using apps for tracking rental expenses? Being a successful landlord means that you need to be really organized when it comes to paperwork.

That’s because tracking things like invoices, receipts, documents and pictures are important when turning over units.

Because of the nature of the business, landlords usually work with an accountant that needs all the invoices and receipts meticulously organized to be able to do their job properly at the end of the year. Missing even a few of these could be a real problem for landlords.

We often get asked about the best way to deal with the paperwork that comes with being a landlord and while there are many different methods, technology sure makes things easier.

Here is a rundown of some of the best apps for tracking rental expenses.

Apps for Tracking Rental Expenses: Necessary for Accounting

Successful landlords know that tracking rental expenses is really important for tax deductions every year. However, if you don’t have record of expenses, they can’t really be added to the operating expenses of the rental property business.

The key rental expenses that landlords need include records of rental income and documentation for expenses. For landlords that own more than one rental property, they need to keep the different expenses separate.

Keeping paper records is not really the most efficient way to track expenses. Instead, there are numerous apps that take the hassle out of tracking all the rental expenses and storing them until needed.

Apps for Tracking Rental Expenses: Camera Scanners

There’s no doubt that camera scanners on smart phones is the best way to record receipts and invoices for rental expenses. Not only is it convenient, but they can then be digitally stored instead of physically stored.

These are among the highest rated Android and iOS apps for tracking rental expenses and managing receipts:

Many of these top apps that track business receipts have a free trial period or a low monthly or annual fee.

All you need to do is snap a picture of the receipt or invoice and it is stored for future use. No more storing piles of unorganized paper–landlords can track expenses much easier now.

How to Find the Right Apps for Tracking Rental Expenses

Because there are so many different apps for tracking rental expenses, landlords need to decide exactly what their needs are and choose the right one for them.

For example, do they have just one property or several? What kind of smart phone do they have? Do they need the app to export data to an accounting program like QuickBooks? Do they just need a scanner or something more sophisticated? Answers to these questions can help landlords find the perfect apps for tracking rental expenses.

If you have questions we’re here to chat as well.

What Apps for Tracking Rental Expenses Do Everyday Landlords Use?

Of course, every landlord is going to have their own preference but sometimes it’s nice to see what others find useful. Also, getting a recommendation for a particular app may make it easier to decide for yourself.

Here’s a screenshot of landlords discussing this question in our private Facebook group for Landlords.

 

 

apps for tracking rental expenses

You can see even more comments on that post by checking it out in the group.

The post Top Apps for Tracking Rental Expenses appeared first on RentPrep.

Average Renters Credit Score Is On The Rise

According to our records the average renters credit score is 649.

However, this number will be changing in the coming months and here’s why.

We recently discussed why an average renters credit score is expected to go up 10-20 points due to changes in the three major credit bureaus.

The “National Consumer Assistance Plan” is a project put together by the three credit bureaus of Transunion, Equifax, and Experian. The main purpose is to make credit reports more accurate and easier for consumers to correct any errors they come across on their report.

On July 1st, 2017 credit reports won’t be able to report the same amount of judgements and liens. Here’s a brief synopsis of some of the highlights.

Average Renters Credit Score Improving: Changes To Medical Debts

Medical debts will now wait for a 180 waiting period before being reported. This rule’s been created to allow time for insurance payments to be paid.

This new change will also remove from credit reports and previous medical debts that have been or are being paid by insurance.

Just one collections account can cause a 50-100 drop in a credit score.

We also know that 1 in 5 working-age Americans struggles with paying medical debts.

Many times it can be issues associated with going back and forth with insurance. Adding this 180 day grace period is just one reason the average renters credit score will be improving.

Average Renters Credit Score Improving: Non-contractual debts

The NCAP is also working to eliminate the reporting of debts that did not originate from an agreement or contract by the consumer to pay, such as traffic tickets or fines.

Most debts occur from contractual agreements that are not met:

  • Rent Payments
  • Mortgage
  • Car Payments

These will still be reported but any debt involving traffic violations will not be reported. This should eliminate a small percentage of debts across the board.

RentPrep’s Take On Renters Credit Score

Typically speaking, a homeowners average credit score is around 723. Since a renters credit score is lower, it’s not hard to imagine that they are more likely to have medical debts or debts involving fines.

These changes are more likely to effect a renters average credit score since they may have more dings on their credit.

If you need to run a background report on a prospective tenant and are looking for their credit score, we recommend using our SmartMove product.

If you have questions we’re here to chat as well.

What Should My Minimum Credit Score For A Tenant Applicant Be?

This is up to the landlord and can vary based on your preference, quality of the rental, and location.

Here’s a screenshot of landlords discussing this question in our private Facebook group for Landlords.

You can see even more comments on that post by checking it out in the group.

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Ask an Expert: What to Do If You Suspect Drug Dealing on Your Property

I own a small, 10-unit apartment building. I suspect that at least one of my tenants is involved in dealing drugs. I don’t want them and their buddies dragging down my property’s reputability and endangering my investment. What are my options?

–Adrian in Orlando, FL

Dear Adrian,

Unfortunately, your situation is not at all uncommon. As we speak, Florida and a number of other states are dealing with a serious heroin epidemic. Furthermore, heroin cut with fentanyl has exponentially increased the rate of lethal overdoses. Nobody wants anyone to die; and certainly, no landlord wants anyone to die on their property.

However, the problem isn’t limited to overdoses: A drug-dealing or drug-manufacturing operation attracts criminals to your rental property. These criminals will tend to strike as opportunities present themselves–and as a result, they may prey on families living in your community.

The situation is even more imperative if someone is manufacturing crystal methamphetamine. At best, the chemicals involved in the production of meth in your rental property could force you to renovate the entire building–and at worst, they could cause a toxic explosion.

Drug Use in Rental Properties: How to Respond

So what should your course of action be? The answer lies within your lease agreement. Almost all attorney-generated leases include a clause allowing you to evict if the tenant is engaging in criminal conduct and/or illicit drug activity. In addition, if the lease is well-written, you likely have a clause that allows you to evict if the tenant’s guests are engaging in those activities.

Many states allow landlords to pursue an expedited eviction process, without any opportunity to cure, if the tenant has engaged in illegal activities or nuisance behaviors–the precise definition of which varies by state.

For example, Florida eviction laws allow landlords to terminate a lease agreement with 7 days’ notice under these conditions. According to Florida Statute Section 83.56(2), your eviction notice should say, “You are advised that your lease is terminated effective immediately. You shall have 7 days from the delivery of this letter to vacate the premises. This action is taken because (cite the noncompliance).” 7 days from when your tenant receives your notice, you can go to court and file for the eviction.

You are not required to give the tenant an opportunity to cure if the tenant has been engaging in serious, irredeemable lease violations. Florida law does not specify drug activity as qualifying for this treatment, but it doesn’t exclude it, either. If you can demonstrate to the judge that a tenant or their guests are engaging in drug dealing on your property, you won’t have a problem getting the eviction order signed.

The difficulty comes about if the tenant shows up in court to contest the eviction. They could, for example, claim that you are mistaken–that they aren’t engaged in illegal drug activity or nuisance behaviors at all.

In that case, you would need to be able to show a preponderance of evidence that proves that the tenant has been engaging in nuisance behavior and is in violation of the lease. So be prepared to show up with evidence that backs up your case, including:

  • An arrest or conviction for drug activity
  • Witnesses who can testify as to the tenant’s illegal drug activity
  • Photo evidence of drug paraphernalia in and around the apartment
  • Photo evidence of large amounts of trash and chemical containers, such as those involved in meth production

While you may not be able to prove drug activity directly, you may be able to prove that the tenant is engaged in nuisance behavior if you can demonstrate a large amount of late-night traffic to and from the residence.

Meanwhile, keep an eye on the Orlando police blotter. Here’s a website that allows you to receive updates about incidents involving a police response at any address.

That being said, be careful, and be sure of your case. In Florida, if you try to evict and fail because you didn’t have proof, you could wind up paying the tenant’s legal fees as well as your own. Experienced eviction attorneys will generally tell you straight up when they think you won’t win your case. Landlord attorneys hate to lose; it’s bad for their reputations.

If the tenant contests your eviction, you may not be able to evict unless you get the police to confiscate the illegal substance, and they get a positive field test. If all that you have is some tenants complaining that they smell marijuana coming from the neighbor’s unit, you probably don’t have much of a case.

How to Prevent Drug Use in Rental Properties

Meanwhile, there are some things that you can do to prevent future problems:

  • Get police to perform regular courtesy checks and patrols on your property.
  • Invest in cameras-both obvious and hidden-and good lighting. Criminals don’t like to engage in crimes in well-lit areas covered by security cameras; it’s bad for business.
  • Take the time to run a proper background check on every rental applicant.
  • Contact prior landlords and other references. They may have been kicked out of previous housing for drug use or criminal activity. However, if they moved out before the previous landlord actually filed an eviction suit, it won’t show up on their background checks. Call their previous landlords and verify.

The post Ask an Expert: What to Do If You Suspect Drug Dealing on Your Property appeared first on APM.

#164 Tenant Wants To Break Lease Before Moving In

It happens… sometimes you have that great tenant lined up to move into the rental and the lease is signed… and they call and want to break it.

What do you do in this situation?

On paper they’re signed up for the length of the lease but as a landlord what steps should you take?

Listen in as Steve and Eric debate and discuss a call they received about this topic.

You can connect with Steve and Eric in the RentPrep For Landlords on Facebook.

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Tenant Screening Arlington

Arlington is a thriving Texas city with plenty to offer its residents when it comes to jobs, recreation and culture. Any landlords with property in Arlington are in a good position to keep units filled with great tenants. The best way to find these tenants is by following the Arlington tenant screening process. Since the steps to tenant screening are so thorough and compliant with the law, landlords will definitely want to abide by them to ensure they find the best applicants.

In this post, Arlington landlords can learn about:

  • Arlington tenant screening laws
  • Free landlord resources
  • Overview of application screening process
  • Find the best tenant screening services

Tenant Screening Arlington Laws

The reason that laws and regulations are put into place in Arlington concerning tenant screening is to ensure that the entire application process is both fair and legal. Arlington landlords could face some serious legal trouble if they fail to comply with the proper procedure.

These are a few of the Arlington tenant screening laws:

  • The city puts no limits on the amount landlords in Arlington can charge for application fees.
  • Like many other cities, Arlington supports non-refundable application fees.
  • Security deposits and application fees are separate financial transactions in the city.

The Arlington tenant screening process is the best way to figure out which applicants will be the best tenants. Landlords that want to run a successful real estate business should pay attention to every law that affects them.

Avoid This Common Screening Mistake

Once the landlord has the application, they may think they are on their way to doing a background check on the applicant. However, this is where most Arlington landlords make one of the most common screening mistakes. Landlords can’t run a background check without the written consent of the applicant. In other words, an applicant must provide a signature in order for landlords to run a background check on them. If the landlord doesn’t have this in the current application, they should amend it or find a new application form.

This RentPrep form is a good example:

arlington-tenant-screening-services

 

See how the top red arrow shows the non-refundable application fee notice, while the bottom arrow reveals the signature line so the landlord can run a background check.

Resources for Tenant Screening in Arlington

RentPrep has gathered a helpful list of links for you to use in your real estate business. There’s no better way to find top tenants than to use the information here.

*Many Arlington landlords implement a no blank space policy when reviewing applications. This means that if an applicant has not answered a question on the application, or left a blank space, the application is denied for lack of information.

Arlington Tenant Screening Process

A tenant screening criteria list is a smart and consistent way for landlords to sort through applications to see whether or not they meet their requirements. All it takes is for the landlord to create a list of characteristics they most want to see in a new tenant. If an application meets the minimum standards, it goes to the next level.

Here’s an example of an Arlington tenant screening list:

  • No bankruptcies
  • Proof of renters insurance
  • No evictions
  • Two small dogs under 10 lbs each or one dog under 20 lbs allowed
  • Income to rent ratio at least 2:1
  • No smoking
  • Credit score of at least 580
  • No violent criminal history

There are certain classes of people protected by federal and state laws. Some landlords don’t realize that cities can also enact housing anti-discrimination laws that may be more strict. Landlords in Arlington definitely need to know about protected classes for their city. Arlington fair housing laws are discussed here and they can visit the hud.gov website for federal standards.

Arlington tenant screening laws include:

  • No limit to what landlords may charge in application fees.
  • A tenant screening list lets landlords deny applications that don’t measure up.
  • Arlington landlords cannot discriminate against protected classes.

It’s easy to avoid bad applicants when Arlington landlords follow the city’s tenant screening laws.

Check Out Your Texas Screening Guide

In many cases cities have their own screening rules and regulations while the state has another set of rules that govern the screening process.

Click here to go to our post on the “Texas Tenant Screening Process.”

Find the Best Tenant Screening Services

Too many landlords make the mistake of trying to do a background check themselves. However, that’s never going to be as good as a background check done by a professional tenant screening service. There are several excellent tenant screening services out there that charge a reasonable fee.

A good background report should include

  • Past evictions
  • Any bankruptcies
  • Judgments or liens
  • Previous addresses

Landlords should never offer to signing a lease without seeing the results of a professional background check report.

At RentPrep, we have experience with over 21,000 landlords over the past 10 years. Check out our tenant screening packages to see the services we offer.

Our FCRA certified screeners will put your mind at ease by providing the best tenant screening report available.

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