True story: At a real estate event last week, one of the panelists (a real estate developer) said, “When I was in my thirties, everyone was getting married and having babies. Today, Millennials are getting pets!”
It’s true–and it’s not just Millennials who have pets: An estimated 65% of American households have at least one pet.
However, most landlords, property managers, and homeowners associations give pause to residents with pets. Some consider pets to be a liability–and in some cases, that may be true. However, there are also tremendous benefits to offering pet-friendly housing.
Here’s our rundown of things to consider if you’re wondering whether you should allow pets in your community.
Should You Allow Pets in Your Property?
Consideration #1: Allowing Pets Can Attract More Residents
Pet-friendly properties can help you to attract more prospective residents. Many of the new buildings coming online are designed with animal owners in mind. They offer dog wash stations, enclosed dog parks, and even doggy daycare. You don’t have to go to such extreme lengths at your property–just allowing pets will draw a larger pool of prospects.
Should You Allow Pets in Your Property?
Consideration #2: Allowing Pets Can Bring in Additional Revenue
Some animal lovers are willing to pay more to live in a pet-friendly property. There’s no doubt that animals cause additional wear and tear on units. You can account for that by charging animal owners a slight premium (e.g., $50 more per month). In markets where pet-friendly properties are hard to come by, many pet owners would gladly pay a premium to keep Fido by their side.
Should You Allow Pets in Your Property?
Consideration #3: Allowing Pets Can Help You to Retain Residents
People with pets might be inclined to stay longer. Because pet-friendly units are often hard to come by, people with pets might think twice before moving. Others may hold off on moving if they feel that doing so would disrupt their pet’s routine. Lower turnover = less time spent marketing units, more consistent cash flow, and an overall higher return on your investment.
Should You Allow Pets in Your Property?
Consideration #4: Allowing Pets Can Attract More Responsible Residents
Animal owners are often more stable tenants. Taking care of an animal is no easy task! It requires a person to be at least marginally responsible. If they’re responsible enough to take care of their pets, they’ll probably be responsible enough to care for your unit, pay rent on time, and give adequate notice if they decide to move.
Should You Allow Pets in Your Property?
Consideration #5: Some Insurance Policies Place Restrictions on Pets
Check with your insurance company before allowing pets. Some insurance policies specifically prohibit animals (or animals over a certain size) from living on the property. If you decide that you do want to allow pets, you’ll want to be sure to adjust your insurance policy accordingly. Some insurance policies charge more for (or ban) specific breeds of pets, so be sure to look at that, too. Otherwise, if one of the resident’s animals were to cause harm–to another resident, another pet, or the property–you could be on the hook for costly damages.
Should You Allow Pets in Your Property?
Consideration #6: Meet Pets Before You Allow Them to Move In
Consider “interviewing” the pet. This may sound crazy, but hear us out. Just as you screen residents, you should also screen pets. Start by asking a prospective resident about their pet. How long have they had the pet? Where did they get them? How old are they? Has the pet ever done damage to a person or property? Who will care for the pet? Do they have proper vaccinations and licenses? This will give you the baseline detail about the pet situation. Then, take it a step further by asking to meet the pet. You’ll generally be able to get a sense of the animal’s demeanor within the first few minutes; so “interviewing” the pet will help you to determine whether that animal will be a good fit for your property.
Should You Allow Pets in Your Property?
Consideration #7: Make Your Pet Policy Clear in Your Lease
Be sure that your pet policy is detailed in your lease. Whether you decide to allow pets or not, your lease agreement should make your restrictions and expectations clear. Specify whether pets are allowed, and if so, the type and number of pets allowed. If certain breeds are banned (e.g. those defined as “dangerous breeds”), say so. You might also include restrictions on the size or weight of pets allowed. Don’t forget to include language as to whether visitors are allowed to bring their pets, and if so, under which conditions.
The lease should go on to define the responsibilities of the pet owner. For instance, you might stipulate that all dogs are required to be on a leash when outside the unit. Maybe you ban animals from specific areas, like the pool or the clubhouse.
Finally, you’ll want to outline a procedure in the event that an animal becomes a nuisance. The last thing that you want is to lose other great tenants because of a dog that barks at all hours of the night! Include language in your lease that states your warning and/or penalty system in the unfortunate case that a pet becomes a problem to others.
Should You Allow Pets in Your Property?
Consideration #8: Use Security Deposits to Offset Property Damage
Security deposits can insulate you from damages caused to your property by pets. We generally encourage landlords, property managers, and HOAs to charge the maximum security deposit allowed by state law. This is especially true if you’re going to allow people to have pets. Some states allow landlords to charge an additional “pet deposit,” which, on average, ranges from 40 to 80 percent of the monthly rent. Part or all of that deposit may be refundable, depending on your local laws. These deposits can be held to cover any routine or accidental damages cause by someone’s four-legged friend.
Should You Allow Pets in Your Property?
Consideration #9: Should You Require Renter’s Insurance?
Your homeowner, landlord, or business insurance policy should cover you for damage caused by pets–but just in case, you can also require tenants to have renter’s insurance. Renter’s insurance won’t cover damage to the premises caused by pets. Instead, it protects the renter in the event that the animal bites or otherwise injures someone. If this were to happen, both you and the tenant would likely be named in a lawsuit, and renter’s insurance will ensure that the renter has at least some basic coverage for his or her defense.
Should You Allow Pets in Your Property?
Consideration #10: Pet-Friendly Units Can Take Longer to Refesh
Even the most well-behaved pets can cause substantial wear and tear to units. As a result, pet-friendly units can take longer to make rent-ready. For example, I purchased an apartment once where a police officer had lived with his K-9 dog. The dog was lovely, but it wasn’t until after he moved out that I started to notice all of the small wear and tear–which, in aggregate, took a lot of effort to repair. There were small scratches on the doors, a few bite marks on window sills, and I think it took two years before the last of the dog hair was completely out of the HVAC system! And I consider myself lucky: Animals can also bring smells that can be tough to get out. So if you’re planning to allow pets, just build in enough time to make units rent-ready before releasing down the line.
Landlords, property managers, and HOAs already have a lot to consider. Adding pets into the mix can seem like an unnecessary complication. In our experience, however, pets can be a wonderful addition to your property!
If you’re struggling to create or enforce a pet policy, consider hiring a property manager. An experienced property manager will be well-versed in how to handle furry friends of all shapes and sizes. When you’re ready to search for a property manager in your area, All Property Management will be here to help.
The post Should You Allow Pets in Your Property? 10 Considerations for Landlords, Property Managers & HOAs appeared first on APM.
Everything that follows can be summed up by this concept: Use the right tool for the job. What do you need to see from prospective tenants? What is important in your scene? What follows is a comprehensive review of the different services that exist so you can make an informed decision.
This explores the tools available from RentPrep as well as TransUnion.
We are writing this because we care about you, the landlord. The goal is that you walk away from this with more clarity as to what you need. The goal of this is to educate, not to sell.
There’s no doubt that TransUnion has managed to create a tenant screening product that has become popular in today’s market with SmartMove.
However its popularity has been largely based on the direct connection to the source. Because TransUnion specializes in credit scores, they are in a unique position to make those available to landlords.
For example, at the beginning, Disney only made movies.
Years later they (wisely) decided to get into merchandise which created a competitive advantage due to them owning the trademarks on the characters in their movies.
In the same way, Transunion is one of the three main credit bureaus and they decided to get into tenant screening with their SmartMove product.
They own the data so why not use that competitive advantage to create a service to connect directly with landlords.
That being said, there are pros and cons to every service and I’ll do my best to explain those with SmartMove. I’ll break down exactly how SmartMove works for tenant screening, what makes their product good, and what landlords could do without.
Why do we offer SmartMove?
At RentPrep we offer similar services, so you may be wondering why we offer SmartMove when we’re a direct competitor.
We keep all of our customer support in-house and we’ve spoken with thousands of landlords. We’ve found that every landlord is different in their needs.
For instance, we offer a “Credit Check” as an add-on for our Basic, Pro, and Platinum Packages. This is a pass/fail situation.
SmartMove offers a “Full Credit Report” for landlords which includes the exact credit score. This is beyond what we offer. The first question you need to ask is “Do I need the exact credit score for applicants or is knowing that it’s ‘good enough’ acceptable in my case?”
We’ve found there to be 3 camps as it pertains to credit scores and landlords:
- Some landlords are fine with a pass/fail measurement included with our credit check add-on.
- Other landlords insist on seeing the actual credit score.
- Many don’t believe in using credit scores at all and just want to see a background check that shows criminal, eviction, bankruptcy & liens history
If you’re a landlord who puts a high value on knowing the credit score and seeing the full credit report, SmartMove is the way to go.
While that may sound great, there are a few downfalls of solely using SmartMove for tenant screening.
I will share later on down the article why credit reports aren’t the be all end all of tenant screening.
For the easiest visual on why we offer SmartMove you can visit our Pricing & Packages page and hover over the elements on the left hand side to learn more.
(on mobile just click those elements on the left hand side to see what each means)
Why not go directly to SmartMove?
TL;DR (Too Long; Didn’t Read) – No FCRA support, bad customer service.
This is a good question. The easiest answer is “FCRA Support.”
The price and product is exactly the same if you use SmartMove through RentPrep or directly through TransUnion.
The issue TransUnion has, is that they’re a large company with 3,700 employees, and their customer support is order focused.
A quick Google search shows you a customer support number isn’t readily available.
You have to submit a support ticket and wait for someone to get back to you.
If you have questions about RentPrep we’re open 55 hours a week and available by phone, e-mail, or LiveChat (the box in the lower right).
All of our screeners are FCRA Certified so they’re educated on credit reporting. We’re with you through the entire process and readily available.
Seriously… just ask a question to our LiveChat box in the lower right and if the office is open an FCRA Certified Screener will answer. Otherwise you can leave a message and we will answer first thing in the morning.
What is TransUnion SmartMove and why does it exist?
TL;DR – Landlords cannot use a home office. This cuts the headache of having the space inspected.
My tenant screening company has been around since 2007, well before the major changes in the FCRA that changed how landlords accessed credit reports.
The FCRA created significant changes in the way a landlord could obtain a credit report.
In the old days, a landlord could go online and order a credit report with little more than agreeing to some terms and conditions.
That is until it became clear that the typical “non-professional landlord” was viewing and storing these reports in non-secure conditions. Since most landlords run their rental business from the confines of their home, they would naturally use their home computer to view credit reports.
If you were using your home computer, there’s a good chance it’s the same computer that’s used by your 15 year old son to play Call of Duty and chat with friends on Facebook. At least this is the picture that was painted by consumer advocacy groups pushing for tighter regulations to protect tenants from identity theft.
In today’s tenant screening world, the credentialing involved in accessing credit reports now includes a site inspection and verification of documents to prove the landlord has permissible purpose to view someone’s personal credit report.
The problem is that a major criteria for passing the site inspection is that landlords must be operating their “business” from a commercial location. In other words, no home offices. Which disqualifies about 95% of most landlords who are professionals in industries outside of real estate and run their rental business on the side, from a home office.
Let’s get the tenant involved
Since TransUnion is one of the 3 major credit bureaus, they have the ability to create workarounds for landlords with home offices. As an alternative to a costly site inspection and credentialing process, SmartMove takes care of the complete tenant identity verification and authentication process. This is how that process works:
– The tenant (applicant) can release their credit report directly to a landlord. This is done by releasing the credit report and verifying their identity by answering some questions unique to their credit history, such as: “Do you have an auto loan with Kia?” or “Which bank do you carry your mortgage with?”
– This allows the verification of the credit report without the need for a designated office space. Win-Win if you’re after a comprehensive credit report but don’t have a designated office space.
We here at RentPrep, call this process tenant involvement.
What I do like about SmartMove
Tl;DR – Reputation, fair pricing, tenants can pay.
1. Reputable company
The top of this short list is going to be the fact that SmartMove is a TransUnion product. I like this because TransUnion is the authority in credit reports for the real estate industry.
Having used all three bureaus’ credit reports (Experian, TransUnion, Equifax) I have to say that TransUnion uses a FICO score model much more “real estate friendly” because it doesn’t inflate the scores. This is only useful if you know about credit scores, and how to read a credit report.
2. No monthly fees
The next feature I like about SmartMove is the pay-as-you-go ordering capabilities. For most landlords there’s not going to be a need to run background checks 12 months out of the year, so monthly minimums make no sense.
3. Tenants can pay
Finally the last feature I like about SmartMove is the ability to let the tenant pay for the report. This is not a feature exclusive to SmartMove, but nonetheless it’s a convenience to a landlord that doesn’t want to handle application fees.
What I do not like about SmartMove
TL;DR – I don’t like that the applicants can take as long as they’d like to complete the application.
1. Tenant Involvement: Tenant screening on their time, not yours
When most people think of getting a background check they imagine requesting one by entering the applicant’s information and having the report returned when complete. Some are instant with no turn-around time, which I hate and will explain later.
But for SmartMove, the tenant is the gatekeeper and controls the turn-around time as well as the completion because of the identity authentication process they must pass.
The identity authentication process
For an applicant to verify and authenticate their identity they must receive an email and complete a questionnaire based on their credit history. It asks things like:
Your auto loan is through which lender?
- Empire Loans
- Ford Motor Credit
- GM Financing
Until they successfully complete this process, the landlord will not receive the credit report. Which creates an obvious problem with completion rates.
48% completion rate
UPDATE: The completion rate is now up closer to 70%
This means that 3 out of 10 reports ordered by landlords were not returned by rental applicants.
Some landlords see this as a tenant screening tool in itself. Making the point that if the applicant is not willing to jump through this hoop, they’re not motivated enough to meet the rental requirements.
Other landlords see this as a conversion killer when it comes to processing applications.
Knowing that most people will follow the path of least resistance, the tenant will simply apply to an apartment complex who can access credit reports without the tenant involvement or a landlord who doesn’t use a tenant screening product that requires tenant involvement.
Heck, sometimes they only apply at apartments that don’t screen their tenants (which unfortunately is a large number).
Email address is required
The only way for the applicant to complete the SmartMove request is to have an email address. There are obvious concerns for people who:
- Don’t have an email address
- Don’t have readily available access to a computer
In this day and age, it’s very common for everyone to have an email address and even a computer. But for those who don’t, does that mean they are a bad renter because they can’t complete the SmartMove request?
2. The information included in the SmartMove report
My major problem with SmartMove is actually not a problem inherent to only SmartMove, but a problem that plagues most tenant screening services. And that is the actual data that gets returned.
Instant criminal records are not as accurate
SmartMove obviously includes a TransUnion credit report, but it also contains a national criminal background report as well.
The problem with this is that database criminal reports are not as accurate.
For this very reason database criminal reports are not allowed for employment screening.
We use multiple databases (3 to be exact), because every day we find a criminal record that is recorded in one database and not the other.
The explanation for this is simple, the courts and sources of these records have no obligation to share their records with any particular database. That means we can find a criminal record for murder on one database and not a single record on another for the same person. We realized this gigantic problem several years ago and completely stopped offering instant criminal background checks.
Instead we aggregate every report through an FCRA Certified Screener who can search multiple databases and ensure the quality and accuracy of the report being returned.
Instant criminal records aren’t available in every state
In the United States there are laws that have to be followed. Even SmartMove, owned and operated by one of the 3 major credit bureaus cannot access this information.
Here’s a screenshot, from SmartMove’s criminal report page:
There are 5 states that SmartMove does not include in their nationwide criminal background search:
- South Dakota
It’s my opinion they haven’t added Colorado to their list (yet) because they’re the newest state to not allow instant data pulls from their databases.
If you own a rental property in either one of these states, be aware that you will not be getting any criminal results if your applicant is from either one of those states as well.
Eviction records are spotty
Being in this business for 10 years and serving 10s of 1,000’s of landlords and property managers, I can say very confidently that if you gave me only one search option for a tenant background check, I would choose an eviction report.
- People can have bad credit and still pay their rent every month.
- People can have past criminal records and still pay their rent every month.
- People with a prior eviction could still pay their rent every month.
Plus, an eviction report is the only report that’s specific to the rental industry.
Why on earth would you overlook this?
I’ve often said that once a person goes through an eviction, they’re more likely to go through another. They’ve lost the fear of the unknown and they know that there’s light on the other side of an eviction. They can get through it, after all they have before.
We see so many cases where an eviction is filed and appears on a judgment search, but not an eviction search. Crazy I know!
So again the only solution is to run these tenant screening reports using multiple databases, which an instant report plugged into one database, like SmartMove, cannot do.
A credit report is NOT a background check
Forget for a minute that we’re even talking about credit reports and background checks. Let’s pretend that I’m talking about football.
Imagine you’re a college scout given video on 20 players to find your next starting quarterback.
The video shows the following:
- Players catching the ball
- Players running the ball
- Players kicking the ball
What sense does it make to have a potential quarterback kick the ball, when I know they’ll be throwing it?
The same amount of sense that running a credit report to test someone’s rental history makes. None.
Just like I know that a quarterback doesn’t kick the ball, I also know that statistically renters have a lower credit rating than a homeowner. We’ve found around 649 to be the average renters score while the average homeowner is closer to 700.
And I know that just because the quarterback can’t kick the ball, doesn’t mean he’s bad at throwing the ball.
Much in the same that just because someone paid their dentist late, doesn’t mean they’ll pay their rent late.
People pay their bills in order of priority
Since most people pay their bills in order of priority, it’s more important to test their priorities.
If they have an eviction filed against them, it’s clear that at some point the rent was not a priority.
If they have a judgment filed against them for owing a landlord past due rent, again it’s clear that at some point the rent was not a priority.
So I ask the question, “What do you expect to find on a credit report?”
Assuming you know how to read it, what good does it do you that the applicant has paid their cell phone bill when they were evicted last year?
If you were looking at the full picture, you’d see an applicant who prioritizes their cell phone before their rent.
Is it really that hard to believe that people do this?
For some people an eviction seems like less of an ordeal than losing their phone. You can just move to the next place that doesn’t do a proper background check.
Sorry to say, but I’m betting on them paying their cell phone bill so they have something to play with while they’re crashing on a friends couch after you evict them.
3. TransUnion SmartMove Pricing
The cost for a SmartMove report without the full credit report is $25 and the pricing for SmartMove with the full credit report is $35. Both include an instant national criminal background report.
So the big question for landlords is “What is a good price for a credit report?”
Unfortunately, I don’t think $35 for a full credit report is a good deal.
Ask any property manager, or someone in the rental industry with commercial access to credit reports what they pay.
Your answer would range from $8 to $20.
It’s clear that landlords are paying for the platform, not the data.
I think a good price for a report that includes credit information, as well as accurate data on criminal and eviction records should cost around $30 total.
If you used SmartMove as a piece of the full tenant screening picture, you’re going to pay around $50. And that doesn’t even include any phone calls being made on your behalf!
It all depends on what you’re looking for with a screening service.
You’re not wrong for whatever you choose.
Many screening services you’ll find will “white label” the SmartMove product as their own.
If they offer full credit reports, without onsite inspections, they’re using either Transunion SmartMove or Experian Connect to gather that data.
I believe between those two services that SmartMove is the superior product.
We don’t believe in white labeling services. Transparency is one of our values as a company and we hope we’ve been as transparent as possible in this review of SmartMove.
To me, the best possible package we can offer is our Platinum Report.
We include all possible data and cross-reference multiple databases for accuracy. We then call your applicants current landlord, previous landlord, and current employer (up to three times) to verify rental and employment history for you.
If you’re interested in that package we offer a promo code of twenty percent off your entire order. Just enter “DEAL20” on the last checkout page when you place your order.
The post TransUnion SmartMove Review: An Industry Expert’s Review appeared first on RentPrep.
Clayton is a former TV host who left the business young so he could pursue real estate. He has a podcast called “Investing In Real Estate” and a great following of investors.
He talks about the freedom number that you need to figure out in order to understand how many rentals you’d need to support your lifestyle.
Listen in as he shares details about his formula and advice on investing in real estate in 2018.
Accounting is tricky enough as it is. Throw late payments into the mix, and accounting can become really challenging for landlords, property managers, and HOAs. If payments don’t come in on time, it makes it harder for you to pay your vendors–and yourself. You might need to put off repairs. You might inadvertently overdraft your bank account. Late payments can create a vicious cycle.
This year, make it a priority to start collecting payments on time. Depending on your role, that might be collecting rent payments from residents, or it might be collecting HOA dues. Whatever the case may be, now is the time to halt late payments once and for all.
“Easier said than done,” you might be thinking. Well, we never said it would be easy–but there are some strategies to make it easier.
Here’s how to reduce late rent payments and dues in 7 steps.
How to Reduce Late Rent Payments: Step #1
Change the Payment Due Date
If you rely on certain payments to pay your own bills–for instance, to pay the mortgage on your rental property–adjust the payment due date to at least a week before they’re due. This gives you more wiggle room in case payments come in a day or two late. Of course, be sure to give residents plenty of notice before you implement this policy so that they have time to adjust accordingly.
How to Reduce Late Rent Payments: Step #2
Create a Payment Reminder System
Implement a payment reminder system to ensure that residents are aware of upcoming payments. As a general rule of thumb, we like reminding people 3 days before a payment is due, the day that a payment is due, and then a day after the payment is due telling them that their payment is now late. There are all sorts of sophisticated web tools you can use to do this, but even a rudimentary email blast will do the trick.
How to Reduce Late Rent Payments: Step #3
Increase Communication with Late Payers
If you have a resident who is routinely late in submitting payments, reach out to that person directly. Try to figure out if there’s a special circumstance that prevents that person from paying on time. For instance, they might not receive the paycheck or child support payments that they use to pay their rent until after the rent is due. In circumstances like these, you may propose an agreement where that resident pays you on a slightly different timeline than others.
How to Reduce Late Rent Payments: Step #4
Start Collecting Late Fees
Many leases and HOA agreements stipulate that overdue payments will be subject to a late fee. However, some landlords, property managers, and HOAs are lenient when it comes to enforcing these fees. Start implementing your late fee policy and collecting fines. Late fees might come as a jolt to some–but can be exactly what’s needed to get people to pay you on time.
A few notes on implementing late fee policies:
- Be sure that you implement the late fee policy fairly and consistently.
- Allow for any “grace period” provided in the lease or HOA agreement.
- Payments sent by, but not received or cleared by the bank by the specified date, are typically considered late.
- Be sure to document all communication with residents regarding late fees.
How to Reduce Late Rent Payments: Step #5
Enable Electronic Payments
We’re a big fan of software that allows residents to make payments online, such as many property management software solutions. In this day and age, we’re all busy. Having to physically write a check, track down a stamp, and trek to the post office to mail a payment is a hassle. Some will certainly prefer to make payments that way; but if you want to collect payments on time, leveraging electronic payments will make it easier for you to do so.
How to Reduce Late Rent Payments: Step #6
Improve Your Resident Screening Process
There will always be one-off cases of residents paying late. However, if you find that multiple residents are making late payments more often than not, it could mean that your tenant screening process is in need of a few tweaks. Be sure that you’re calling landlord references, confirming proof of employment, setting guidelines for minimum income required to lease, etc. This should help to ensure that you’re choosing high-quality residents who can afford to make their payments each month.
How to Reduce Late Rent Payments: Step #7
Hire a Property Manager
If you’re struggling to collect rent payments and dues, or you simply don’t have the time or energy to track down late payments, consider hiring a property manager. Hiring an experienced property manager can help you to implement a stronger payment system to ensure consistent cash flow moving forward, and can provide valuable expertise on these kinds of situations in the future.
Don’t shrug off late payments. If you start allowing residents to make late payments, a few days late here or there could soon turn into weeks. It’s important that you treat the operation like a business, no matter how friendly you’ve personally become with your residents. Late payments can be seriously detrimental to your bottom line–so we hope that these tips help you to figure out how to reduce late rent payments and dues from hereon out.
Recently we came across a blog post on https://optionalpha.com/ talking about how to reinvest income in rental properties through a snowball philosophy.
When we reached out to the author he said we needed to interview him and his wife together. Turns out his wife runs the blog over at http://rentalrookie.com/ and they have a treasure trove of resources for investors.
Emily and Kirk have a great story and are well on their way to building their real estate empire. We interview them to learn how they got started and what speed bumps they’ve encountered along the way.
Original blog post: https://optionalpha.com/the-snowball-investing-strategy-for-rental-property-how-im-investing-outside-the-market-16467.html
When real estate investors purchase a rental property, it often comes with current tenants already in place. These are known as inherited tenants.
Sometimes the transition is smooth and the new landlord inherits organized files on the current tenants. However, there are time when new landlords get little to no information on the inherited tenants.
This video explains more about what new real estate investors and landlords can do with new property as well as new tenants in place:
Gather Information on the Inherited Tenants
If there is no information passed along on the current tenants in a newly purchased property, the landlord need to start gathering some. The first place to look is on the purchase contract for the rental property. This and similar purchasing documents should list the tenant’s name, the current rent and some other basic information.
To get more detailed information, the landlord will most likely have to visit the tenants at the rental unit. They can deliver a change of management notice to the tenant. This document informs the inherited tenant about new contact info, where to pay the rent and how to report maintenance issues.
Many landlords make a personal visit to meet the tenant. They take the opportunity to get more detailed paperwork filled in. Follow up questions about total occupants, pets and more can help landlords compare the current household to what is on the lease agreement.
Tips on Handling Inherited Tenants
Many landlords don’t bother with screening inherited tenants. Therefore, they often take the approach of dealing with bad tenants when the lease is up for renewal. If the tenants are doing well, then everyone is happy with the arrangement.
In extreme cases, some tenants push back against new rules and behave badly. As a result, landlords may have to start the eviction process for any tenants that don’t want to conform to the new owner’s updated requirements.
Ultimately, the goal of every landlord is to fill every unit with excellent tenants. Of course, the risk of inherited tenants is that the landlord didn’t choose them. On the other hand, they could inherit some excellent tenants that want to stay for a long time. Only time and communication can reveal which type the inherited tenants will be.
So, you’ve decided to pull the trigger: 2018 is the year that you’re going to hire a property manager. Congrats–you’ve made a wise decision!
It’s important to realize, though, that not all property management companies are created equally. Levels of experience can vary widely, as can the rates that property managers charge. Some may leverage new technology, while others may be operating the same way that they did decades ago.
Just as you’d do your due diligence on an investment property, you should do your due diligence on prospective property management companies–because after all, they’re who will be caring for your investment on a daily basis. Here are 25 basic questions to ask in a property manager interview–at a minimum!
25 Questions to Ask in a Property Manager Interview
- How long have you been in business? We recommend hiring a company that has been in business for at least five years. This allows a long enough track record to call references prior to hiring.
- How has your business model changed during that time? This will tell you how responsive the company is to industry changes and the evolution of technology.
- Which property management services do you currently offer? Not all property management companies offer the same services. Be sure that this company offers a full suite of services that meets your needs.
- How many rentals do you currently manage? This will help you to gauge the company’s size and expertise. Be sure that the company isn’t stretched too thin given the size of their staff.
- Do you manage any other rental properties in my area? You want to be sure that your property management company understands the nuances of your local rental market.
- Which areas does your company service? If you own or are considering investing in properties in multiple cities or towns, having a large coverage area could be beneficial.
- Which types of properties do you manage? A property manager who manages single family rentals will have a different approach than someone who manages commercial or retail properties. Be sure to find someone within your market niche.
- How do you set your rental rates? Any credible company should be able to run a market analysis that informs rental rates based on a number of variables, including your local market, the unit size, the amenities you offer, etc.
- Which strategies do you use to fill vacant units quickly, without sacrificing tenant quality? This provides insight into their leasing strategies when pressed with a deadline.
- Can you explain Fair Housing laws? A good property manager should be fluent in all local, state, and fair housing laws.
- Do your team members have specialized roles, or are they generalists? You’ll want to know whether one person is responsible for managing your rental, or whether the company takes an all-hands-on-deck approach to service delivery (one person who markets the units, another who’s responsible for repairs and maintenance, another who’s an accounting expert, etc.).
- Which types of insurance do you carry? Look for companies that carry at least a $1 million general liability policy, as well as an errors and omissions policy.
- What are your monthly management fees? Management fees generally run anywhere between 8-12% of total monthly revenues, but can vary depending on the services offered.
- Do you collect management fees when a unit is vacant? If so, run away. Property managers should be incentivized to lease units quickly–and forfeiting a portion of their fee in the meantime is generally the industry standard.
- Can I cancel my contract without penalty if I’m unhappy? Avoid companies that try to lock you into a contract. You should be able to switch management companies if the service is sub-par.
- Are there miscellaneous fees that I should expect to incur? Some companies charge extra for marketing units, evicting tenants, turning over units, etc.
- What’s your procedure for qualifying tenants? Learn whether the company uses background, employment, credit, and landlord reference checks as part of their screening procedures.
- What is the average vacancy rate among the properties you manage? Consider whether this vacancy rate is above or below the area average.
- How long do units typically stay vacant after turnover? Look for companies that will have units rent-ready and leased up again within 30 days, which should give them plenty of time to refresh the unit and perform any repairs.
- What’s your process for handling service requests? You’ll want to know what the process is for tenants to communicate service requests to the PM, as well as your role in the process. Will you be making final decisions about repairs and maintenance? Can you require authorization for any expenses above a certain amount? Look for a company with a well-thought-out process.
- How often will you provide me with updates about my property? You should be able to obtain information about your property as often as you’d like. More sophisticated PM companies will leverage technology (e.g. online dashboards) to provide you with real-time information about your portfolio.
- What is your preferred method of communication? If you are someone who insists on speaking over the phone, but this property manager insists on communicating by text or email, this could be a mismatch. Look for companies that are willing to communicate through various media–not just with you, but with residents and vendors, too.
- Do you have pre-existing relationships with local vendors? Find out who the property manager subcontracts with, and whether any discounts are available through those relationships.
- Will you be able to provide me with investment advice or help me to grow my portfolio? More advanced property management companies will be able to help you to identify market opportunities–whether through the purchase or sale of assets–and help you to position your assets in a way that maximizes your return on investment.
- Do you personally invest in real estate? If so, that’s a good sign–it indicates that the property manager has an investor’s mindset and will hopefully care for your property the way that they care for their own.
Depending on your specific circumstances, you’ll probably have other questions to ask potential property managers; but this list of 25 questions to ask in a property manager interview is a good starting point.
You likely already know this, but always be sure to meet with property managers in person before deciding to hire them. This will give you a better feel for the person. For instance, was he on time? Did he seem organized? Was he transparent in sharing information with you? It’s easy to hide behind a guise online or over the phone; in-person conversations reveal so much more.
Ready to start interviewing? Let All Property Management help you to find property managers located in your area.
Amanda Maher is a self-proclaimed policy wonk who dabbles in real estate law. Amanda holds a B.S. in Political Science and Sociology from Boston University, as well as a Masters in Urban and Regional Policy from Northeastern.
Sometimes landlords may get an inquiry from a company trying to locate rental properties for people displaced by a disaster. The companies want short-term rentals and are often willing to pay a higher rent per month. But are these companies and these offers legitimate?
This video explains more about renting for short-term disaster relief and whether it is something that landlords should consider:
What is a Short-Term Disaster Relief Rental?
Natural disasters happen all over the United States, from floods and wildfires to hurricanes and earthquakes. When someone’s housing has been significantly affected, they can’t live there any longer. Insurance companies take time to rebuild or reimburse. Therefore, many people are seeking short-term disaster relief rental contracts.
There are companies that work on behalf of the insurance companies and the people to find housing. Often, they reach out to landlords and property management companies to secure rentals. Because of the unique circumstances of the short-term rental, they often need specialized lease terms.
Often, these companies offer incentives to landlords to allow these unique rental situations. It may mean paying more rent per month or providing a bigger security deposit. Each company operates differently when seeking short-term disaster rentals.
Are Short-Term Disaster Relief Rentals a Good Idea?
Like most things, the answer to whether short-term disaster relief rentals are a good idea is that it depends. Short-term disaster relief rentals can be a good idea for some landlords some of the time. If the unit is empty and its a slow time of year for rentals, short-term can be wonderful. If the unit has a lot of demand and a short-term rental will leave it vacant again in the slow season, that could be a problem for landlords.
Every landlord will have to make the decision for themselves about whether or not they should open up to short-term disaster relief rentals. Because every situation is unique, landlords have to evaluate and decide based on their own particular circumstances.
The bottom line is that short-term disaster relief rentals are usually legitimate offers. They can be very beneficial to landlords and not as great at other times. The offer is definitely worth investigating, even inf it doesn’t ultimately work out.