Posted by & filed under Tenant Screening.

You likely understand the importance of screening potential tenants for a residence, but many landlords don’t realize they should also be screening commercial tenants. Although it may seem like (as business owners themselves) commercial tenants would be more responsible tenants than residential tenants, this isn’t always the case. Unfortunately, there is still risk involved with any tenancy and if you’re not diligent, you could end up with a commercial tenant who refuses to pay rent on time or simply doesn’t take good care of your property.

estate agent giving house keys to woman and sign agreement in office

By screening potential commercial tenants, you can better determine whether they’re a good fit for your commercial space. TSCI’s CommercialConnect offers comprehensive commercial tenant screening, including a company credit report, the signer’s credit report, and a national criminal background check. Keep in mind that the following is for informational purposes only and is not intended as legal or financial advice. Laws regarding tenant screening can vary depending on your location.

Steps to Take When Selecting Commercial Tenants

  1. Interview potential tenants

Although some tenancies can work out well without meeting the lessee in person, it’s always a good idea to meet and interview your potential tenants. This can be done in person or in a virtual meeting. Some topics to inquire about include:

  • Income
  • Employment
  • Criminal background
  • Previous evictions
  • Rental history

Although this is all information you’ll receive on a commercial tenant screening report, it’s essentially a pre-screening step that can help you determine whether the tenant meets your basic criteria before moving forward.

  1. The Application Process

If the interview goes well, the next step is to have the tenant fill out a commercial rental application. This will help you collect pertinent information about the prospective tenant. Typically, the rental application should include:

  • The legal business owner and company name
  • Date the business was established
  • Type of business
  • Rental history
  • Financial information

It’s also recommended to ask about the potential customers who will be visiting the space; if the business is already an established one, you may always want to ask to see financial statements to ensure the company is a viable one. If the company is a start-up, consider asking to see its business plan and names of their guarantors.

  1. Evaluate the Terms of the Lease

Even though things can change quickly in the business world, most commercial tenants will know whether they’re interested in a short-term or long-term lease. Although most landlords prefer long-term leases, there are many reasons why a potential tenant may request a month-to-month lease or a 1-year lease. Either way, determining the leasing terms upfront is an important step before deciding whether the tenant is a good fit.

  1. Check for Guarantors

Many businesses have financial backers who can serve as lease guarantors should the business owner be forced to default on their tenancy. If this is a new business, guarantors can be especially valuable. If the tenant has multiple guarantors, this shows they’ll have adequate financial support in case the market or economy changes or their business struggles to find ground. If the applicant doesn’t have guarantors, it’s even more important to pay close attention to the company’s business model, financial projections, and screening report to determine whether they’d be a risk.

  1. Conduct a Commercial Tenant Screening

If the prospective tenant has met all your criteria so far, the next step is to conduct a thorough tenant screening. Using TSCI’s CommercialConnect will reveal everything you need to know about the tenant, including the signers:

  • Financial summary
  • Credit score
  • Balances
  • Credit lines
  • Prior inquiries
  • Public records
  • Employment and address history

You’ll also receive in-depth and important information about the financial state of the business, including red flags like:

  • UCC (Uniform Commercial Code) Filings: These determine whether the lender has an interest or lien against an asset being used to secure financing—which can increase their overall credit risk and scoring.
  • Bankruptcy: Bankruptcies are a sign that a business no longer has the sufficient cash flow to pay its debts or operate its companies.
  • Collections: Creditors often turn to collection agencies after multiple failed attempts to collect the debts they’re owed.

  • Credit Limit Recommendations: This is the maximum amount of money a lender will allow the business to borrow while using credit cards or its line of credit.

  • Judgment Filing: Judgment filings are court decisions that have been entered into the public record. If a judgement is entered against a business, debt collectors have more tools at their disposal for collecting the debt, like garnishing income or bank accounts.

If allowed in your area, you may also want to conduct a national criminal check, which will show:

  • Felonies
  • Misdemeanors
  • Sex offender status
  • Other convictions at the state and federal levels
  • Evictions

Ideally, the tenant’s screening report will be free of red flags, with a good rental history, excellent credit score, and other signs of financial stability and responsibility.

  1. Make a Final Risk Assessment

If you have more than one prospective tenant, you should conduct a final risk assessment to determine which is the best candidate. You’ll want to weigh factors like references, credit scores, reliability, and results of the background check. Stay objective through the process and consider the interviews as well as the screening reports.

With commercial real estate in high demand, there are likely to be several tenants interested in renting your space. Make sure you’re taking the time you need to screen each applicant thoroughly. CommercialConnect is specifically designed for commercial landlords and screens both businesses and the lease signer for only $75.00. You also have the option of adding on a national criminal background check. Our screening reports are fast, easy to use, and available online 24/7. If you have any questions, feel free to call us at 1-800-523-2381 or fill out our online form.

Posted by & filed under Rental Housing.

Proof of income is often required by experienced landlords; although it may feel like an invasion of privacy, requesting proof of income is an essential step in the application process that can help you decide whether a potential tenant is a good fit for your property. Here’s a look at which documents are considered proof of income, why it’s so important, and how you can verify it. Please note that this is not intended as legal advice, but for information only. Laws may vary depending on your location.

What is Proof of Income?

Proof of income is any document that shows an individual’s earnings; this is generally for a specified period of time (such as earnings for the past year) however the timeframe can vary depending on the type of document used. Proof of income is used to provide proof that a prospective tenant makes the amount of money they claim they make. In the case of credit card companies, it can also be used to figure out whether an individual will be able to pay for large purchases, like a home, a car, or a personal loan. Depending on the situation, the type of documents used to provide proof of income can vary.

Proof of income is an important step in the tenant screening process because it can help you avoid high-risk tenants who won’t be able to pay their rent. In general, it’s best to select tenants who make at least three times the monthly rent rate per month; this ensures that they’re able to pay their rent comfortably, as well as other necessities. However, without proof of income, you have no way of knowing whether a potential tenant makes enough money to cover the monthly rent.

As a landlord, you have the right to request evidence of a rental applicant’s income; you can also legally deny applicants who don’t meet your rent-to-income criteria.

Which Documents Can Be Used for Proof of Income?

Documents that can be used as proof of income include:

  • Pays stubs
  • W2 or 1099 forms
  • Bank statements
  • Federal tax returns
  • Profit and loss statements
  • Employer letters that state the applicant’s job, salary, and date of employment
  • Social security income
  • Other documents, such as court alimony letters or retirement pension statements

You should be able to quickly review these documents to determine whether an applicant is being honest about their income and will be able to afford rent.

Regardless of the type of documentation you require, make sure it includes the following information:

  • The applicant’s full name
  • Identifying information, like their social security number
  • Their income amount for a specified time period
  • The date the document was issued
  • The employer’s name (if applicable)

How to Verify Proof of Income

If the prospective tenant is being honest about their income, they should have no problem providing the requested documents. Let them know that it’s a step in your screening process; you’ll also want to have them sign off on a background and credit check. Once you have their permission to conduct these screenings, you’ll need to verify the information they give you. This is vital because some tenants will lie about their income in order to qualify for a rental property.

There are several ways to verify that the applicant is truly receiving the income they claim. This can be done using any of the following methods:

  • Contact the employer they listed and confirm that they’re still employed
  • Cross-reference bank statements with pay stubs, keeping an eye out for any discrepancies
  • Verify that the documents the applicant submitted are current and real
  • Ask for a letter to verify social security income (if applicable)

Finding out whether a tenant is being honest about their income—as well as knowing how much an applicant makes—is an essential step in the tenant selection process. Without this information, you may have no idea if a tenant can actually afford to pay their rent in full and on time. If a tenant’s income is too low, you may be doing yourself (and them) a disservice by approving them. Being as thorough as possible before choosing a tenant is the best way to protect your business and your property.

Posted by & filed under Property Management.

Funny portrait of cute puppy dog border collie holding miniature toy model house on nose, isolated on white background. Real estate mortgage property sweet home dog shelter concept

Many landlords have strong feelings about tenants keeping pets in their rentals. Some landlords are against having pets on the property because of the potential for damage or liability issues; some may be willing to negotiate their pet policies on a case-by-case basis. Other landlords may be pet lovers themselves or recognize how allowing pets can improve occupancies and tenant retention. Animal lovers often have trouble finding pet-friendly places to rent—and when they find a place that allows pets, they’re far more likely to stay there longer.

There are obvious pros and cons to allowing pets on your properties; if you do allow pets, it’s important to reduce the risks associated with them by including a clear pet agreement section in your lease. Here’s a look at what you should consider when creating a pet agreement. Please keep in mind that this is not intended as legal advice, but for information purposes only. Laws may vary depending on your location.

What Are Pet Agreements?

A pet agreement is a section in the lease that clearly outlines your policies for keeping pets at your properties. If a tenant has more than one pet, you may want to consider including several different agreements. Regardless of how you choose to handle it, it’s important to go over the pet agreement during the lease signing to make sure you and the tenant are on the same page. Just like the lease itself, a pet agreement is a legal contract.

Here are some examples of what you should include:

  1. The types of pets tenants are allowed to have

The pet agreement should state which types of pets are allowed at your property and how many are allowed. Many landlords choose to only allow cats and dogs, while others allow more exotic pets, like birds, reptiles, and invertebrates.

If you allow dogs, you may also want to consider if there are particular breeds that you’d like to ban. For example, many landlords choose to ban dogs that have an aggressive reputation, like pit bulls and rottweilers. Although there’s controversy surrounding those breeds, you’re well within your right to prohibit them at your rental property. If you don’t want to limit the types of breeds you’ll accept, it’s best to discuss the matter with your insurer, as some companies won’t issue a liability policy if there are “dangerous” breeds on the property.

As an alternative to banning specific breeds, you can include weight limits. For example, you can choose to only accept dogs that weigh 25 lbs. or less.

  1. Outside pets prohibited

Make sure to include that the pet agreement is only for tenants’ pets—caring for other people’s pets is prohibited. While you may be fine with your tenant keeping pets on the property, you don’t want them to start boarding other people’s pets while they live there. You should also include rules for guests who bring their pets over to your tenant’s home.

  1. Approved pets only

Make it clear that the pet agreement covers approved pets only and that tenants must get approval for any additional pets they’d like to keep. You may also want to include a list of pets that don’t require approval, like goldfish. Here are some questions you should ask before approving any pet:

  • How long have they had the pet?
  • If the tenant is planning to get a pet, where are they getting it from?
  • Has the pet caused property damage, noise complaints, or any other problems in the past?
  • Who will take care of the pet when the tenant is away from the home?

You’ll also want to include that your approval is based on the condition that the tenant continues to comply with the rules and regulations in the pet agreement—and that you have the right to ask the tenant to remove their pet or terminate the tenancy if there are repeated or serious violations.

  1. Name tags, licensing, and vaccinations

Consider requiring all dogs and cats to wear a collar with a name tag and proof of licensing and current vaccinations. Before drafting this section in the agreement, be sure to read up on which vaccinations and licensing are required in your area. You should also request documented proof of vaccines and licensing to keep in the tenant’s file.

  1. Make it clear that tenants are responsible for their pets

Tenants should agree to be responsible for their pets at all times so they don’t cause damage or disruptions. They should clean up after their pets—indoors, outdoors, and in any common areas. Tenants should also agree not to leave their pets outdoors or unsupervised for extended periods and to keep any crated or caged pets contained in appropriate areas in the home. To reduce your liability risk, you may also want to consider requiring your tenants to get renter’s liability insurance if it’s allowed by state and local laws.

  1. Pet fees

Even well-behaved pets can cause additional wear and tear. To offset this, you may want to require a pet fee in addition to the security deposit. However, there are some downsides to this:

  • Pet fees may not be legal in your area; check your local laws before implementing them
  • It may not be practical to set aside a separate deposit—especially if the pet is well-behaved, but the tenant causes damage. A non-specific deposit is generally the best option.

If you do decide to charge a pet fee, keep it at a reasonable rate, like $200 a year. Make sure not to charge a pet fee for service or companion animals—they aren’t considered pets, but rather animals that aid a person’s disability.

Make it Easy to Make Changes

Over the years, your views on pets may change or you might encounter situations that you don’t have a specific rule for. Make your pet policy easy to edit by including a clause that says you have the right to amend the rules as long as you provide reasonable notice. If you’re planning to change the rules significantly, consider adding a grandfather clause for existing tenants who already have pets. Their current pets would be exempt from the new rules, but they would be expected to comply with the new rules with any new pets they adopt.

Pets bring considerable joy to the lives of their people; allowing them at your properties is a great way to improve the lives of your tenants and encourage them to live at your rentals long term. However, it’s your right to determine what types of pets you’ll allow and your expectations for pet owners. If you choose to accept pets at your properties, just make sure your tenant understands the rules in the pet agreement and accepts the conditions.

Posted by & filed under Rent.

The rental housing market is seeing a slowdown, as rent growth has dropped over the past several months. According to Jay Lybik, National Director of Multifamily Analytics, CoStar Group, “After four quarters of supply additions outpacing demand, the market is shifting with national asking rents declining over the last 90 days by 0.4%.”

During the first half of 2022, rent prices soared, hitting a national average of $2,495. Comparing the second quarter and third quarter of 2022, rent rates have now declined by $7—a significant difference from what was seen six months ago. Annually, rent rates remained at 5.8% through September.

Although rent prices continue to raise year-over-year, the pace of growth is slowing, particularly in cities that saw the largest increases in 2021, like Palm Beach, Phoenix, Tampa, and Las Vegas.

Vacancy Rates Are Rising

In addition to the rent rate slowdown, CoStar also found that the national vacancy rate rose 5.4% at the end of September, due in part to the large number of new units hitting the market. Unlike the market conditions a year ago, the supply of available rentals has significantly outpaced the demand.

As a result, many landlords have become desperate to find tenants to occupy their rentals. This has contributed to rents across the nation declining as more tenants choose to stay in their current housing, rather than search for a new place to live. “The uncertainty in the economy right now has put so many potential households holding off making that decision about going out and renting an apartment, and they’re just continuing to stay put in whatever their current situation is,” Lybik said.

Rental Rates and Inflation

Due to the large portion rent makes up of most household budgets, rental rates are an important measure of inflation. Housing makes up approximately 30% of the headline consumer price index and around 40% of the core index. According to the Labor Department, the consumer price index rose to the highest amount in almost 40 years—an annual rate of 8.3%. In addition, shelter costs rose 0.7%.

Higher borrowing costs and increases in labor and construction prices have also cut into landlords’ profits—as well as higher costs for utilities. However, with the increase in rent prices last year, many tenants are still paying higher monthly rent rates to stay in their current leases. Although rent prices have stabilized in some markets, some areas, like New York City, continue to have record highs. CoStar anticipates that rent growth will continue to slow through the end of the year and into 2023.

Posted by & filed under Property Improvement.

Important Steps You Can Take To Avoid Tenant Fraud

Fall is officially here, and cold winter weather won’t be far behind. Since winter temperatures can take a toll on buildings in many parts of the U.S., now is an ideal time to take care of maintenance at your rental properties. Performing basic maintenance now will ensure you’ll spend less time (and money) on roofing, plumbing, and other repairs in the spring.

To help you give your property a complete once-over, we’ve created a handy checklist on everything you should check before winter arrives.

Indoor Maintenance

Before starting interior maintenance, it’s always a good idea to review your insurance policy to ensure you have the coverage you need for unexpected repairs caused by seasonal storms.

  • Check the doors, windows, and locks
    Make sure all the doors, windows, and locks work properly, and lubricate any rough or sticking mechanisms. You should also inspect doors and windows for any cracks or drafts that could raise heating bills or make residents uncomfortable. Repair or replace any damaged caulking or weather-stripping.
  • Check the chimney and fireplace
    If your unit has a chimney and fireplace, have it inspected and cleaned by a professional chimney sweep.
  • Test the thermostat
    Make sure the thermostat is working properly by switching it from cooling to heat and setting the temperature a few degrees higher than it currently is in the room. If the heat doesn’t come on after a few moments, check the batteries and wiring. If this doesn’t solve the issue, contact a professional HVAC company.
  • Replace furnace air filters
    If you have a furnace in your unit, replace the air filters. Dirty filters will reduce the efficiency of your system and lead to higher energy bills, lower heat output, and increased wear and tear on the system. They can also affect indoor air quality, which can be a serious health concern for tenants who have respiratory conditions.
  • Have your HVAC serviced
    HVAC systems should be serviced twice a year to keep them well-maintained—once in the spring, and once in the fall. An HVAC specialist will perform a thorough system inspection and cleaning, and let you know if there are any worn or damaged parts.
  • Smoke alarms and carbon monoxide detectors
    All the smoke and carbon monoxide detectors should be tested; replace the batteries as needed.

After you’ve completed your indoor inspection and repairs, it’s time to move on to outdoor maintenance.

Outdoor Maintenance

  • Inspect the landscaping and trees
    Rainstorms and snow can cause tree branches to break, so it’s important to make sure any branches that could threaten your building or outdoor structures are trimmed back. Consider hiring a professional tree trimmer to evaluate large trees and remove dead, damaged, or diseased branches. Trim bushes and remove leaves that have collected near exterior drains.
  • Clean and inspect the gutters
    Gutters should be inspected for cracks or other types of damage and repaired as needed. While you’re inspecting them, clear out any leaves, twigs, or other debris that could lead to clogs.
  • Clean and inspect the roof
    Clean off any leaves or debris that may have collected on the roof; while you’re up there, make sure to check for signs of damage, like weak areas or missing shingles. Repair or replace damaged areas as needed.
  • Responsibility for snow removal
    If your property is located in an area that gets snow, your lease should contain a clause about who (you or the tenant) is responsible for removing it. If you’re responsible for snow removal and you don’t plan to remove it yourself, secure a contract with a professional removal service before the busy season hits.
  • Winterize your outdoor systems
    If you have an outdoor sprinkler system, irrigation, or faucets, it’s important to winterize them to prevent them from freezing and bursting. Drain all the exterior pipes and close off the valves.
  • Animal proofing
    Rats, squirrels, raccoons, and other animals search for warm places to stay in the winter. To prevent them from nesting in the attic or basement, install metal screening over any potential entry points.

Tenant Fall Maintenance

Some of these maintenance items can also be completed by tenants; if you have specific tasks you’d like them to be responsible for, make sure they’re clearly outlined in your lease. Some examples of maintenance you may want to have your tenants do include:

  • Testing smoke alarms and carbon monoxide detectors
  • Winterizing exterior pipes
  • Replacing HVAC filters
  • Outdoor upkeep

You may also want to remind tenants to keep the thermostat set to 55 degrees Fahrenheit when they go on vacation to prevent frozen pipes.

A Little Preparation Now Can Go a Long Way Come Springtime

Each season requires special maintenance to keep your rental property comfortable and safe—and your investment protected. By taking care of these tasks now, you can ensure a smoother winter season. You may also want to consider sending out a reminder to tenants on ways they can keep their costs down and stay warm throughout the winter. A simple winter newsletter is an easy way to stay in contact with your tenants and offer some helpful advice. Preparing now will pay off once spring arrives!

Posted by & filed under Rentals.

Whether you’re a homeowner or a landlord, it’s always wise to have an emergency fund to pull from when unexpected expenses come up. Most financial advisors recommend property owners save at least 3 – 6 months’ worth of expenses to cover maintenance, repairs, mortgage loss of income, and other financial concerns.

Green arrow up over wooden houses. Increasing cost of housing concept. High demand for real estate. Growth of mortgage rates. Sale apartments. Price increase. Maintenance cost. Raising property taxes

However, only around 39% of Americans have the additional funds on hand to cover a $1000 repair. It can be difficult to know where to begin when it comes to building an emergency fund, but here are some simple steps you can take to get started. Please note that this is not intended as legal advice, but for information only. Laws may vary depending on your location.

Tips for Creating an Emergency Rental Fund

  • Keep Separate Bank Accounts

Although it may seem easier to manage your rental finances as an extension of your personal finances, this could end up being risky—and in some cases, illegal. Most states actually require landlords to have a dedicated bank account to secure tenant security deposits. This helps keep everything separate so there’s no chance of mixing up your money with security deposit money. You may also want to consider creating a business entity for your real estate business. Here are a few things every landlord should have:

  • An operating account for rent deposits, taxes, mortgage payments, insurance, and other rental expenses.
  • A dedicated security deposit checking account for each rental property. When you receive a security deposit, deposit it in its individual account and leave it there until it’s time to return it to the tenant.
  • A single emergency fund account for all the properties you own. While this could be combined with your personal bank account, it’s often better to keep this fund in a separate account so you can easily keep track of what you’ve spent.
  • Building Your Emergency Fund

Just like a personal bank account, your emergency fund can be used for any unexpected repairs or vacancy loss mitigation. If you’re not sure how much to put into the fund, three to six months of expenses is a general rule of thumb. This can become more complicated the more properties you own; if you only have a few units, your rental income will be lower and major repairs will probably use up a higher percentage of your income.

  • Calculating an Emergency Fund

If you have 1 to 10 units, you can calculate your emergency fund by adding up the following expenses for all the rental properties you own:

  • Monthly mortgage payments
  • Taxes
  • Insurance premiums
  • Condo fees (if applicable)
  • Utility costs

After you’ve added up these expenses, multiply the total by three and divide that by half. This amount will be your minimum emergency fund.

The Importance of an Emergency Rental Fund

No matter how many properties you own, emergency funds are a vital way to ensure you can pay for any unexpected expenses that arise. This will give you peace of mind and help you stay afloat in times where you might have more vacancies or expenses than usual—as well as if your tenant fails to pay rent. Although managing several accounts may seem like a hassle, you’ll be glad you did when the time comes to use them.

Posted by & filed under Tenant Screening.

For many landlords, the goal is to avoid spending money unless doing so will increase their return on investment (ROI). However, there are times when spending money to convince a tenant to leave is preferable to the time, costs, and hassle of eviction.

Close up focus on keys, smiling woman Real Estate Agent selling apartment, offering to client, showing at camera, holding documents, contract, making purchasing deal, real estate agent, mortgage or rent

Cash for keys is an ideal option for landlords who would like to avoid the potential of dealing with a disgruntled tenant while getting the tenant to vacate the property as quickly as possible. It can also be an excellent option if you’d like responsible tenants (who couldn’t be evicted) to move so you can remodel the property, move into it, sell the property, or increase the rent substantially to reflect the current market rate. In a rent-controlled property, this is typically referred to as a “buyout agreement.”

Please note that this is not intended as legal advice, but for information purposes only. Cash for keys agreements are legal in all 50 states, however, laws may vary depending on your location.

Cash for Keys vs. Eviction

Cash for keys incentivizes tenants to move out by a certain date in exchange for a lump sum. Although it may seem counterintuitive to pay a tenant to leave, many real estate investors have found that it often costs less than the cost of an attorney, filing fees, and months of unpaid rent during the eviction process—especially when the eviction process can take anywhere from 5 weeks to three months on average. In addition, it allows you to avoid expensive problems from disgruntled tenants, like property damage.

There are several scenarios where choosing cash for keys may be the best option:

  • Your tenant failed to pay rent as agreed upon in the lease.
  • Lease violations or property damage.
  • Financial reasons, like wanting to raise the rent of a rent-controlled property to the market rate.
  • Your rental property has gone into foreclosure.

What Are the Benefits of Cash for Keys?

Between monetary costs, time, and aggravation, it’s easy to see why landlords dread eviction. Depending on how long the case runs, it can easily cancel out several months’ worth of rent payments on the property. And although it’s not mandatory to have an attorney, you will need one if the tenant doesn’t obey the court order.

Beyond that, it can take a long time for the tenant to leave—and every day they stay in the rental equals more lost income. When they leave, you’ll need to prepare the rental for the next tenant and advertise. If the tenant did significant damage to the unit, you’ll also need to worry about repair costs.

If you’ve determined that your tenant isn’t able to pay rent, cash for keys can motivate them to leave—especially if they’re already having financial trouble. Depending on how much you offer them, it may be enough to pay for their next security deposit and moving expenses. It’s not uncommon for tenants who are facing eviction to respond with property damage; this could cost more to repair than if you had bought the tenant out.

Cash for keys offers benefits for tenants, too. For example, even though they’re losing their home, they’re avoiding an eviction judgment on their record. If a tenant were to challenge the eviction judgment in court, they might be responsible for paying the landlord’s attorney and court fees—in addition to their own. The tenant would also receive a negative entry on their credit report, which could have long-term effects on their ability to find housing.

In short, cash for keys is often the most mutually beneficial option for getting a tenant to leave your property.

How to Notify the Tenant

If you choose to offer cash for keys, you’ll need to notify the tenant in writing that they are behind on rent and must pay in full or vacate the property. This should be sent via certified mail with a return receipt, so you have proof it was delivered.

After the tenant has received the notice, contact them to make your cash for keys offer. Make it clear that this is a positive resolution for them. Some details you’ll want to go over include:

  • The move-out date
  • The amount of money the tenant will receive
  • Whether the tenant is required to clean the unit
  • Which property should remain in the rental (such as appliances, furniture, or landscaping)

If the tenant agrees, both parties should sign a written contract. Make your payment by check to ensure there’s an official record of the transaction. If the tenant requests a cash payment, make sure the contract states the amount was paid in full and have both parties sign it.

If the renter doesn’t agree to the cash for keys offer, you can move forward with an eviction.

How to Avoid Cash for Keys and Eviction

Unfortunately, there are some circumstances where it’s necessary to have a tenant leave your property. Although evictions are stressful, expensive, and drawn-out, tenants who can’t pay rent will probably have trouble paying any amount the court orders them to pay. Cash for keys can be an ideal solution for everyone involved. To prevent issues that can lead to eviction or a tenant buyout, make sure to conduct comprehensive tenant screening with each applicant. Being vigilant before a tenant moves in is the best way to prevent problems in the future.

Posted by & filed under Tenant Screening.

One of the best things about tenant screening reports is that they give you plenty of objective information to base your rental decisions on. However, there’s still value to be had by paying close attention to the questions a potential tenant asks when you’re showing them your property.

Real estate prices have grown exponentially, Vector illustration design concept in flat style

Here are some questions applicants may ask that should make you feel triggered. Although some of them might be asked for completely valid reasons, it’s always best to play it safe. Ask your own questions and back up your decisions with thorough tenant screening.

Please note that this is not intended as legal advice but for information only. Laws may vary depending on your location.

1. How Quickly Can I Move In?

Depending on how long your rental has been vacant, you may see this question as a positive one. It shows the potential tenant has an interest in the rental and that you can look forward to getting rent payments sooner. However, before you make a decision about the applicant, ask them why they’d like to move in so quickly. It could be that they were displaced by a natural disaster or are separating from a romantic partner—or it could be that they’re in the process of being evicted (or other issues).

2. Do You Do a _______ check?

If prospective tenants are concerned about credit checks, background checks, or criminal or eviction checks, there’s probably a good reason why. It’s likely there’s information on those reports that would disqualify them somehow. This is an excellent time to pull out your rental criteria and discuss it with them.

3. How Late is Too Late for My Rent to Show Up?

This question is essentially asking how long they have to pay their rent before they start to get hit with late fees… which also suggests that they either have a history of paying rent late or that they believe they’ll have trouble paying rent on time.

4. How Much Money Do You Need Upfront?

This could be a completely innocent question; after all, moving can sometimes come with more expenses than anticipated, so it’s best to be prepared. You may need to ask more questions to determine whether this is the case.

5. Can I Pay the Deposit Later (Or in Installments)?

Like the late rent question, this suggests money is an issue. It could be that money is tight right now, or they may not have a cushion to cover extra expenses.

6. How Many People Can Live Here (Or Visit Me)?

Either of these questions suggests there will likely be a lot of people at the property if the applicant becomes a tenant. Make sure to go over your rules about maximum occupancy, as well as any rules about guest limits (including how long they can stay).

7. Are You a Professional Property Manager or the Landlord?

There’s a chance the prospective tenant is genuinely curious, or they could be trying to figure out what they can get away with. There’s often a perception that small landlords are more personable and less strict than property managers—which some tenants use to their advantage.

8. Do the Neighbors Complain About Noise?

If they’re asking questions about neighbors complaining about noise or other issues, there’s a good chance this has happened to them in the past. It may be that they didn’t get along with their old neighbors, their neighbors were fussy, or the prospective tenant could have been causing problems that made their neighbors rightfully complain. Either way, it can hint at potential conflicts in the future.

9. Do These Screens Come Off the Windows?

While this is a safety concern, it could also be a way for the tenant to skirt around your no-smoking policy. Keep in mind that tenants who go to those lengths rarely continue; eventually, they’re likely to get lazy and start smoking inside.

When in Doubt, Trust Your Instincts

These are just a few red flag questions that can point to rental issues down the line. Unfortunately, bad tenants can end up costing you a lot of money—and stress. If you receive any of these questions while showing your rental, make sure to follow up with some questions of your own. It’s also a great time to discuss your policies to make sure everyone is on the same page. Trust your instincts, and be sure to have an effective screening process in place to help you find the best tenants possible.

Tenant Screening Center offers convenient screening packages for landlords and property managers, including credit, background, criminal, and eviction history. Our reports are available online, and the cost is deferred to the tenant. We stay up-to-date on the latest regulations and have helped thousands of landlords across the country find reliable tenants. We’re also accredited by the Better Business Bureau and members of The Professional Background Screening Association. Sign up for free today or contact us at 800-253-2381.

Posted by & filed under Tenant Screening.

Real estate investment, Real estate value

As experienced landlords know, tenants can have a huge impact on your business. Responsible tenants will pay their rent on time, minimize wear and tear, and typically treat your property like it was their own. Bad tenants, on the other hand, can be costly in more ways than one. They may consistently pay their rent late, cause expensive property damage, cause trouble with other tenants, and generally be more trouble than they’re worth.

Needless to say, good tenants are extremely valuable in the rental housing industry; it truly pays to take the time and energy to find them. One bad tenant could cause problems for months until the lease ends or an eviction judgment is made, so it’s best to avoid them whenever you can. Read on to find out what makes a tenant a good, reliable candidate for your property.

Please note that this is not intended as legal advice, but for information purposes only. Laws may vary depending on your location.

Qualities of Good Tenants

  • A Detailed Application

A good tenant will make a point to make sure their application is completely filled out. They’ll provide detailed information on everything you ask for, including the names of references and their contact information. You should have no trouble being able to tell that they’re able to meet their rent payments and take good care of your property.

  • A Good Tenancy Record

The tenant should have good references from their previous landlord. You can also check to make sure they’re not listed on a tenancy database. These databases are used by landlords and property managers who have had problems with tenants, such as property damage or falling behind on their rent.

  • Creditworthy

A good credit score indicates the tenant pays their bills on time; it also shows you how much debt they have and what type of debt it is. Essentially, a good credit score shows that the tenant is financially responsible—which also means they’re likely to be responsible when it comes to paying rent.

  • Easy to Communicate With

It shouldn’t be a chore to communicate with your tenants. Good tenants will be respectful, friendly, and easy to communicate with. They should respond to your calls and messages within a reasonable amount of time and you should make a point to do the same.

  • Pays Rent—On Time

A good tenant never defaults on their rent; they make sure to pay it and pay it on time. To help make on-time payments easy, consider offering online rent payments. If a situation comes up where the rent will be late, or the property has become unaffordable, they’ll communicate this clearly and honestly.

  • Accommodating for Property Access

Tenants have a legal right to privacy, but there are still times when it’s necessary to visit the property for inspections, repairs, or general maintenance. A good tenant understands this and will have no problem allowing you to access the property with the right amount of notice.

  • Cares About the Property

A good tenant will care about the property and try to reduce the amount of wear and tear they add to it—and avoid causing property damage. They’ll care about where they live and it will show through their actions and tidiness.

  • Notifies You of Maintenance Issues ASAP

Part of caring about where you live involves keeping the property well-maintained. Good tenants will let you know as soon as a maintenance issue needs attention. Not only does this show respect for your property, but it also can end up saving you money—after all, a small leak can turn into an expensive problem very quickly!

  • Drama-Free

Some tenants live for drama; they play the victim and offer excuse after excuse for why they haven’t paid their rent, maintained the yard, etc. Fortunately, they often have a history of late payments and evictions, so they’re not hard to spot. Good tenants will take responsibility for their actions and won’t bother you with unnecessary details about their lives.

  • Follows the Lease or Rental Agreement

Good tenants generally want to live in a rental long-term, so they’ll make a point to follow the lease or rental agreement to the letter. They’ll adhere to rules about pets and smoking, pay their rent on time, and will avoid having parties or gatherings that disturb the other tenants and neighbors.

  • Renews Their Lease

Although sometimes necessary, turnover is expensive and time-consuming for landlords and property managers. An ideal tenant will have all of the qualities listed above, along with a desire to live at the same rental for many years.

Tenant Screening: An Essential Step for Finding Good Tenants

There are many steps to take to find a good tenant: preparing the rental, advertising, showing the rental, interviewing applicants, and selecting a tenant. One of the most essential steps you can take is to make sure to screen qualified applicants. Although a potential tenant may have many of the qualities listed here, tenant screening will give you invaluable insight into whether they’ll be a responsible renter. Sign up for free today to get started on making the most informed decisions for your property!

Posted by & filed under Eviction.

Eviction and mortgage debt, foreclosure or difficulty to payback bank mortgage loan concept, bankruptcy man and family fighting to hold back their house with big legal hand evict it by law. Property

Evictions aren’t pleasant—for landlords or tenants. However, knowing what to do after you evict a tenant can make the entire process easier and less stressful. Once you’ve regained possession of your property, it’s invaluable to have a defined course of action. Here are some steps to take to get your rental ready for the next tenant.

Please note this is not intended as legal advice, but for information only. Laws may vary depending on your location.

5 Steps to Get Your Rental Property Ready for the Next Tenant

  1. Change the locks

As soon as you have possession of your property, change the locks. Even if the tenant handed over the keys, there’s really no way to know whether they’ve made copies—or given a set of keys to someone else. It’s not worth risking squatting or property damage, so this should be your first step.

  1. Conduct a walkthrough inspection

Once you’ve secured your rental, it’s time to conduct an inspection. Bring a copy of your walkthrough list and move-in inspection so you can easily repair the condition of the property before the tenant moved in and after the eviction. If there’s any damage, make sure to document it with photos.

It’s not uncommon for tenants to cause property damage after they’ve lost the eviction case. However, there are ways you can recover the costs of the damages. Some areas you may want to pay particularly close attention to include:

  • Checking for mold, especially in the kitchen and bathroom(s)
  • Holes in the walls
  • The water heater and other appliances
  • Wear and tear on the carpet or flooring
  • Leaks in the kitchen and bathroom
  • Areas that need to be repainted
  1. File a small claims case

If the tenant caused a significant amount of damage to the property, you have the option of filing a small claims case to collect the damages.

  1. Start preparing the rental

Once you’ve assessed the damages, it’s time to get your rental ready for the next tenant. If you only have to worry about normal wear and tear, this shouldn’t be any different from when a typical tenant moves out—and you should already have a system in place. If the property was severely damaged or vandalized by the evicted tenant, you’ll have to work with a contractor to perform the necessary repairs. In some cases, you may want to consider remodeling.

  1. Reassess your rental process and make any necessary changes

After you’ve put your rental back on the market, take some time to think about the evicted tenant. Can you pinpoint anything you overlooked during the application or screening process? Is there anything you could do differently? Take a look at your lease, too. Are there any unclear clauses or different policies you’d like to implement? Are there any loopholes for tenants to take advantage of? Make sure to address any weak areas in your rental process before selecting a new tenant.

How to Prevent Evictions

Evictions can be expensive, time-consuming, and stressful. Although there are times when evicting a tenant is necessary, it’s best to try to avoid it altogether. It’s easier to reject a potential tenant during the application process than it is to remove an established tenant.

Fortunately, there are several steps you can take to protect yourself and your property:

  • Prioritize tenant screening. Interview tenants during the application process and be sure to run a credit and eviction check, as well as tenant verification. If the applicant doesn’t fill out the application all the way or balks at the idea of tenant screening reports, it’s a red flag.
  • Develop good relationships with your tenants. Think of your tenants like customers—because they essentially are. Having a good relationship with them will increase the chances that they’ll treat your property with respect. Make sure it’s easy for them to communicate with you and respond to questions, concerns, and maintenance or repair requests as quickly as possible.
  • Keep your property maintained. When your property is well-maintained, it sends a message to your tenants that you care about their living environment—which, in turn, increases the likelihood that they’ll be respectful of it. A well-maintained rental will also attract better tenants.

Protect Your Investment with Tenant Screening Services

Since 1985, Tenant Screening Center has provided thorough, accurate tenant screening services for landlords and property managers across the nation. Our reports can be found online, 24/7, and the cost is deferred to the applicant. Sign up today for free and get started on protecting your investment.

Even with the most stringent screening methods in place, you may still find yourself needing to evict a tenant. After all, circumstances can change. Following a set process, like the one outlined above, can help you get back on track as soon as possible.