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Tenant Screening Tips for the Individual Landlord (Credit Checks and more)

Posted by Ryan Howard on Fri, Mar 20, 2015  |  Share       

Independent property owners, including those that are looking to rent out their own home, are right to have concerns. They want to make sure the mortgage can still be paid and on time. They want to know that their beloved home will be left in capable hands with a trusted tenant. Here are a few helpful tenant screening tips for the individual landlord.

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Topics: Tenant Credit Checks, Tenant Screening, Landlords

When Should Property Owners Conduct a Tenant Screening Check

Posted by Ryan Howard on Tue, Jan 21, 2014  |  Share       

 

Property owners have to make background checks on their tenants in order to be successful. In multi-family units, neighbors are close enough to see each other daily. Tenant screenings are not only important to protect the business from non-paying renters but also to maintain the safety and security of the other tenants from potential criminals. When in the rental application process should you conduct the tenant screening? The short answer to this question is as soon as possible to get the prospective tenant moved in quickly and avoid the holding costs on an empty unit. It isn’t always so easy, however.

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Topics: bad tenants, Resident Screening, Tenant Credit Checks, Taking Chances on People, Tenant Screening, Landlords

Your Tenant Screening Criteria Missed a Bad Tenant, Now What?

Posted by Ryan Howard on Mon, Dec 17, 2012  |  Share       

You are a property manager / landlord who thought you did a good job screening your tenants. But now, it is apparent that your screening process was inadequate and you have bad tenants. The most common problem is that tenants fail to pay rent, but that is not the only problem landlords encounter. Perhaps you have discovered that more people are living there than are allowed by the rental agreement.

You may have a policy against pets, but learn the tenants keep a pet ferret in the house. Then you find out the ferret is not housebroken. Maybe the neighbors are complaining about the horse in the back yard or the loud music that is played every night after midnight. Whatever the problem, you now know you have bad tenants. The big question is what to do next. 

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Topics: bad tenants, Tenant Screening, Landlords, Rent Collection

Rent Collection | How to Establish a Good Recovery Rate

Posted by Ryan Howard on Tue, Sep 18, 2012  |  Share       

Renting to the wrong tenant may lead to property damage, court costs, lost rent, and defamation of your reputation. There are precautionary measures you can take to protect your asset, but inevitably over time you’ll encounter a skip, eviction or otherwise unpaid tenant balance. 

So what should you expect to collect?

Whether you have an internal AR team that handles post-move out balances, or you charge the accounts off to a collection agency, there are a few things you should consider when setting a performance benchmark.So what’s a good recovery number?The [real] answer: it depends. Knowing what number represents a good recovery rate is important for any business forced to tackle the problem of managing bad debt. To understand dependencies that drive a recovery number, let’s look at some account level attributes that might influence or skew bad debt recovery rates:

  • Underwriting: who you lend or lease to will certainly influence [higher/lower] delinquency rates, bad debt rates, and recovery rates.  Individuals with lagging attributes like weak credit scores and/or unsubstantiated job records will be more apt to cross over into bad debt and be less likely to pay.  Conversely, individuals with strong credit scores and strong employment records who cross over into bad debt will have a higher propensity to pay.
  • Origination: different underwriting standards may cause acquired portfolios to produce results that differ from results generated through standard homegrown accounts – this is especially challenging when acquired accounts get embedded into standard homegrown accounts.
  • Account types and/or geography: accounts stemming from different sources may produce different recovery results.  In the world of Property Management, consider how bad debt stemming from normal damages will typically perform differently than accounts stemming from accelerated rent charges.  You might also note different recovery rates in one state vs. another.
  • Account balance/Average balance: small balance recovery rates will typically look different than large balance recovery rates.   Additionally, an account balance that doesn’t fit the norm can skew numbers (like a single large balance account embedded inside a batch of small balance accounts). 
  • Volume of accounts and flow: A batch of 5 bad debt accounts will act and perform differently than a batch of 1,000 bad debt accounts – small batches typically produce hit or miss results with exaggerated highs and lows.  

To develop a method for defining your recovery number (with dependencies baked in), consider the following strategies:

  • Stratify your business: find logical breaks in your business and develop methods for tagging and tracking accounts with different class distinctions (‘A’ properties vs. ‘C’ properties, acquired portfolios vs. legacy portfolios, and so forth).  The name of the game is to develop apples to apples comparisons.
  • Track your results over time: a simple method to track bad debt recovery rates is to break your bad debt population down into measurable batches within class (monthly write-offs by property as an example) and track monthly rates of return (dollars collected divided by batch, tracked month by month).
  • Benchmark results: taking an average of like/tracked results at marked periods is a simple way to establish return rates (the number).  As an example, taking the last 12 cumulative returns for batches matured 12 months is a great way to establish your 12 months recovery rate.  You can also use the benchmark to test current results against prior returns (lagging/meeting/exceeding).

Make sure that when you compare your numbers to those of your industry peers you consider any and all dependencies (compare apples to apples). 

Rent Collection Services

Here are a few tips on how to prevent a tenant from going to collections.

Due Diligence: It probably goes without saying, but make sure your leasing staff follows every step in your rental application and leasing process. Completed applications will be the source of locating the resident in the event of a future default or skip. Be sure to capture mobile phone numbers, employer phone numbers and emergency contact information. After obtaining written permission, verify the applicant’s information through a tenant screening / resident screening company. This can include rental payment histories (like RentForecast™), landlord credit checks, criminal backgrounds, and income verification. If there will be more than one adult on the premises, you may want to consider a background check on all parties in the unit.

The Lease: If you work for a property management company, most likely you have a process in place that systemically ensures a fully executed lease for every tenant. Retaining this document for the event of default is paramount. The lease should include the due date for rent collections, late fees, trash disposal, yard maintenance, traffic guidelines(people coming in and out of property), occupants, notification of guests and visitors for long periods of time, garage, repairs, etc.

The Rent: To help with resident satisfaction, convenience, and proper bookkeeping, offer electronic methods for rent collections. Direct deposit and online payments are the simplest ways to guarantee no mix ups on the day, time, or amount of rent that was paid. If your tenant is not computer savvy, offer the option of payment through money orders, or pre-filled bank slips.

Follow-Up: Communicate with your tenants. E-mail, call, and send letters to demonstrate consistency, build a rapport and capture their most current contact information.

If you would like additional information on VeriFirst's tenant screening services, or our sister company BYL Collection Services, Contact Us or click below:

Tenant Screening Services Rent Collection Services

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Topics: Landlords, Rent Collection

5 Simple Steps to Attracting Good Tenants

Posted by Ryan Howard on Mon, Jul 16, 2012  |  Share       

Good tenants pay on time, they treat your property with respect and are responsible for their actions around the community. On the other hand, a bad tenant can drive down the property, fail to pay rent on time (if at all) and cause damage to the facility. All of this can lead to you losing money on your valuable investment. After signing a lease agreement, removing them from the facility often becomes difficult and takes time, costing you time and money. Finding and attracting quality tenants is one of the most valuable assets to you and your investment. But how do you go about doing that exactly? Here are a few steps you should consider:

1. Respectful

The problem many landlords have is they treat tenants as someone who is just there to give them money, once a month, and that's it. They treat them without respect and aren't around for repairs, should something come up. This is the quick and easy path towards running down the property. You don't have to be best friends with your tenants, but treating them with respect and kindness. Tenants are more likely to treat the location with a returning respect when they feel you appreciate them. 

2. Appearance

When looking at how to find a good tenant, the very first exposure any individual looking for a new residence has is the appearance. This includes keeping the exterior of the home or apartment building, maintaining the parking lot, replacing carpet when old tenants move out and ensuring everything is clean and neat. If the property is not professional kept up and inviting to the eye, high-end, good tenants are less likely to sign a lease.

3. Advertise

Deciding how to find a good tenant often requires you to advertise. Having a simple "For Rent" sign only attracts those who walk past the apartment or home. Instead, you need to advertise on local want ads and websites. Of course, this alone isn't going to help you in how to find a good tenant. You also need to boast what makes the property unique. Good tenants want something that is unique, with special features. If there is a water view, modern design, historical building, or any other feature that makes the location stand out, include this information in a prominent manor on then listing, such as in the title and the first line of the blurb.

4. Verify and Background Check

Check previous leasing locations the tenants lived in. These locations are give you a window into how the potential tenants live, including if they paid rent on time, if they treated the property well and if they ever had complains. This helps you weed out the potentially disastrous tenants from exceptional ones. You can do this yourself, or streamline the process through a background screening company. Select screening companies now offer rental history data, alongside of traditional credit checks and criminal record searches.

5. Current Residents

Good tenants want to live next to good neighbors, and without good neighbors you'll never bring in top notch renters. Of course, you can't just toss out current residents, but this makes it very important to hire the right tenant the first time. One bad neighbor can make it almost impossible to bring in much appreciated tenants, no matter how fantastic the building looks or where it is located. If you have a current bad tenant, at the end of their lease, don't put it up for an extension.


All of these steps take just a little work, but can reap you benefits for years to come.  

 

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Topics: Tenant Screening, Landlords

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