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Like most of the country, California has seen significant economic impact due to COVID-19. The executive orders from Governor Newsom have required many businesses to close or reduce their operations. Many citizens are still out of work; as of July 2020, the state unemployment rate was 13.3% – down from 16.4% in April. In addition, the orders on moratoriums and foreclosures have affected the normal rights and actions for leases and rental arrangements. These orders are set to expire on September 2, unless the state government can come to some form of agreement. With so much uncertainty in the air for California, and other states as well, landlords and tenants are left with many questions.

Here are a few ways you can navigate these uncertain times, as well as some solutions that have been adopted in other areas around the country.

Landlord considerations

Rent Concessions During Covid-19

Stay in communication with your tenants and continue talking to them about their situation. You should encourage them to apply for aid, when applicable, such as insurance claims, Small Business Administration Emergency Disaster Fund Loans, or the Paycheck Protection Program. You may also want to direct tenants to local assistance programs run by cities or regional foundations.

If tenants ask for rent concession, evaluate each tenant independently. Here are some factors you should keep in consideration:

  • – Is this tenant likely to rent from you long term?

  • – Does the tenant’s credit, current financial situation, and prior years’ financials demonstrate an impact due to COVID-19?

  • – Does the tenant have a history of consistently paying their rent on time?

  • – How much time is there left on the lease?

  • – Can the existing lease terms be modified in exchange for a rent concession? Some examples of modifications include the addition of a relocation clause, the elimination of a right-of-first-refusal, right-of-first-offer, expense caps, or similar provisions.

  • – Would a personal guaranty increase the tenant’s creditworthiness?

  • – What are your cash flow needs?

You should also review your insurance policies, as well as your contractual obligations to lenders and other tenants. Although many insurance policies contain exclusions for situations like pandemics, it’s worthwhile to look into whether your insurer is providing some form of emergency coverage. In terms of loans, many agreements require minimum levels of rent or occupancy or require you to provide a 12-month trailing statement on your rent numbers. To get a loan, you’ll generally need to show that you have a minimal level of cash reserve and cash flow. However, many lenders would prefer to work with you to prevent defaults, so it’s definitely worth communicating with them.

Another thing you should consider is consulting your attorney and accountant. They can evaluate abatement and deferral requests to ensure they’re structured in a way that maximizes the benefits for you and your tenants. Some leases have co-tenancy requirements or require anchor tenants, so you should also think about whether your existing tenants will be impacted if your property no longer meets those lease stipulations. Lastly, what are the long-term market implications for your property? Here are a few things to factor in:

  • – The cash flow of the property

  • – Occupancy rates

  • – Loans or leverages you have on the property

  • – How much is the lender willing to work with you? Are they willing to offer a deferral or waiver, payment restructuring, or interest-only payments?

  • – Do you have rental interruption or other insurance that doesn’t include a pandemic or epidemic exclusion?

If your tenant owns a business, you may also want to consider factors like their financial health, their credit history, and if they have a guarantor. How much cash does the tenant’s business have on hand? How robust were sales before the pandemic? If their business was already struggling or just breaking even prior to COVID-19, you may be in a position to support them through this time.

These are all questions that you’ll need to consider for each individual and property. If you choose not to provide some form of rent relief, you should also account for the potential vacancy loss and the costs associated with finding a replacement tenant. Keep in mind that the economic downturn could mean fewer renters searching for new housing – and longer vacancy times for your properties.

Some current solutions for landlords

Here are some solutions that have been successful for other landlords and their tenants:

  1. Apply the security deposit to rent.
  2. Collect maintenance charges on common areas, but defer the base price of rent.
  3. Reduce, defer, or abate rent for an agreed-upon period of time, with no repayment. This can be in exchange for more favorable lease terms, such as:
    • Extending the term of the lease
    • Terminating options
    • Rights of refusal/first offer
    • Eliminating exclusive or restrictive use provisions
  4. Reduce or defer rent payments for a set period of time, with payments spread out over the remaining term. If there is less than a year left to the lease and the rent amount is high, draw up a promissory note and have it secured by a personal guaranty until after the term ends.
  5. Reduce or defer payments for a set period of time, but add on the term to the end of the lease.
  6. Reduce the rent payment to a percentage rent based on the gross income of the tenant.
  7. Suspend late fees and/or interest.
  8. Suspend defaults for continuous operation, co-tenancy, and operating hours.
  9. Offer rent deferral or abatement for the length of the shutdown; resume rent once the pandemic ends. To avoid problems that could arise with this, add in an end date or cap to the rent deferral or abatement in case the shutdown is extended.
  10. Consider prohibiting “double-dipping.” This means if a tenant is receiving relief from another source, they aren’t eligible to receive relief from you as well. This allows you to provide relief to tenants who may be in greater need.
  11. Consider adding confidentiality requirements to any lease modifications you make. This allows you to adjust the terms for each tenant based on their individual circumstances while prohibiting tenants from comparing the terms of their leases.

Tenant Considerations

If you’re thinking about asking for a rent concession, be prepared to provide documentation that proves you need it. This could include bank statements, balance sheets, prior financial statements, evidence of loss of work or business, or other supporting documents. You may also need to show that you’ve applied for financial assistance through disaster relief programs or that you’ve explored insurance coverage.

It’s important to understand that landlords have many fixed costs they’re required to pay, regardless of whether they have money coming in. This includes things like debts services, property taxes, and insurance. Some costs, like security for the property, could even cost more during the pandemic. Check the section for landlords above and evaluate whether a rent concession would be beneficial to you and your landlord.

What happens if you’re not able to reach an agreement? In some states, eviction moratoriums still stand. As of August 25, these include:

  • Arizona – extended until October 31, 2020
  • California – set to expire September 2, 2020
  • Connecticut – extended until October 1, 2020
  • District of Columbia – evictions are banned until the state of emergency is officially declared over
  • Florida – set to expire September 1, 2020
  • Hawaii – set to expire September 30, 2020
  • Illinois – set to expire September 19, 2020
  • Kansas – set to expire September 15, 2020
  • Maryland – evictions are banned until the state of emergency is officially declared over, however, the Maryland Court of Appeals’ hold on eviction proceedings ended July 25
  • Massachusetts – set to expire October 17, 2020
  • Minnesota – set to expire September 11, 2020
  • Montana – evictions are banned temporarily during the pandemic but tenants must meet specific criteria to avoid being evicted
  • Nevada – has been phased out since July 31, but is set to expire August 31
  • New Jersey – set to expire October 15, 2020
  • New Mexico – evictions are banned temporarily during the pandemic but tenants must provide the court with evidence of their inability to pay rent during their eviction petition
  • New York – set to expire October 1, 2020
  • Oregon – set to expire September 30, 2020
  • Pennsylvania – set to expire August 31, 2020
  • Virginia – set to expire September 7, 2020
  • Washington – set to expire October 15, 2020
  • Seattle, Washington – set to expire December 31, 2020

There’s still uncertainty surrounding what will happen after these moratoriums expire, but for the moment, landlords cannot pursue evictions. Although you can’t be evicted, the rent is still due, payable, and will accrue. Once the eviction ban is lifted, your landlord may pursue every legal option to remedy the situation, including eviction. However, with cooperation and understanding, most landlords and tenants should be able to find a mutually beneficial solution.

Posted by & filed under Property Management.

As states have begun to lift stay at home orders, online searches for terms like “apartments for rent” have started to increase. With many renters now on the hunt for new housing, there are a few things you should start doing to prepare.

Tips For Adjusting Your Operations As States Lift Covid 19 orders

First, it’s strongly recommended that you read through the Centers for Disease Control’s (CDC) guidelines for shared and congregate housing. This goes over how you can safely resume normal operations, like showing vacant units to new applicants. You should also make sure you’re following all recommendations release by your local health and city officials.

Once you’ve reviewed all your policies and operations to make sure they’re in line with the latest recommendations, you can begin to focus on your marketing, leasing, management, and revenue processes.

Marketing

Don’t wait to run paid ads!

  • Now that many states have removed some of their COVID-19 restrictions, renters are starting to resume their hunt for housing. This makes your digital advertisements more important than ever. Although renters may be moving in slower volumes right now, the start of the school year is a historically slow time for most markets. There’s no way to know what autumn will hold in terms of the pandemic, either, so it’s best to start your marketing now in case things slow down even more.

Adjust your ad spend

  • As the demand for housing increases, you may also have more turn-over with your existing tenants. A good way to drive more traffic to your website (and showcase your vacancies) is by increasing your ad spend.

Re-evaluate the ways you market

  • While you’re taking a look at your paid ads, take note of which channels are successful, and which ones aren’t. You may need to reallocate your marketing dollars to channels that are actually converting into leads.

Emphasize visual content

  • Many people are still trying to reduce their in-person meetings and gatherings, so give your potential tenants a way to see your community without actually going there. This can be done using virtual tours, photos, floor-plans, and videos. Pushing your visual content is a great way to advertise your community and aid renters in their search.

Leasing

Offer virtual tours

  • Although states are starting to reopen, the CDC guidelines still recommend limiting any unnecessary exposure in enclosed spaces. So even though you may be tempted to start offering in-person tours, many renters may be uncomfortable with the idea. Virtual tours are the next best option. You can offer tours through video conferencing apps like Zoom or Skype, or use online tools to create virtual tours using online tools. Get some tips on how to offer virtual tours and best practices for them here.

Increase your hold time

  • Do you currently have a lot of vacancies, or expect to have some in the near future? If so, you may want to increase the amount of time you’ll hold a vacant unit for prospective tenants. You can compare your RVO to your Target RVO to help you determine how much time you should hold your units.

Here’s a quick guide to determine your maximum vacancy hold period:

RVO vs. Target RVOMaximum hold period
RVO ≥ Target RVO4 weeks
RVO ≥ Target RVO -1%5 weeks
RVO ≥ Target RVO -2%6 weeks
RVO ≥ Target RVO -3%7 weeks
RVO ≥ Target RVO -4%8 weeks
RVO ≤ Target RVO -4%9+ weeks

Management

Sanitize!

  • You’ve likely already changed up your cleaning routines and hours of operation for your community’s common areas, but if you haven’t, now is the time. Make sure you have enough supplies on hand to keep everything properly sanitized. You may also want to set up hand washing stations, areas with hand sanitizer, and similar precautions.
  • Another thing you may want to keep in mind is that your current tenants may not be happy about paying for amenities they can’t use or feel safe using. If you decide to open common areas like your gym or pool, ensure that you’re doing everything you can to keep them as clean as possible.

Speed up your tenant turnovers

  • Now that so many people are beginning to search for housing, it’s important to clean and prepare your vacant units for new tenants as quickly as possible. A good timeframe for this would be within seven days. Spend extra time making sure your vacant units are immaculate so new tenants can see the community they’re moving to is clean, safe, and well-maintained.

Increase your resident retention

  • Although the country has started to reopen, many people are still wary about returning to their normal routines. Pay close attention to any residents who may have a lease due soon. Is there anything you can offer them to entice them to stay?
  • You may need to get a bit creative with your renewals, like finding ways to make their unit more comfortable. You could offer free carpet cleanings or let them paint their walls. Smart amenities, like Nest thermostats, are the perfect blend of comfort and convenience, plus they can cut energy costs. Think about offering amenities that will benefit your current tenants as well as attract future ones.

Offer unique amenities

  • An important aspect of marketing for any industry is to set yourself apart from the competition. As a landlord or property manager, one way to do this is to offer amenities renters can’t find anywhere else. For example, you could offer electronic fitness items, like Peloton bikes or Tonal lifting machines. Try sending out a survey to your tenants with some different amenities you’d be willing to offer to see what would be most attractive. The more unique amenities you offer, the more likely you’ll keep your existing tenants and attract new ones.

Revenue

Price discounts

One way to attract more residents to your community is to offer discounts on rent. This is a good tactic for when your RVO is below your Target RVO. Here’s a guide to help you figure out which types of discounts would be feasible:

RVO vs. Target RVODiscount
RVO ≥ Target RVONone
RVO ≥ Target RVO -1%1-2% off monthly rent or 1/2 off first month’s rent
RVO ≥ Target RVO -2%3-4% off monthly rent or 1/2 off first month’s rent
RVO ≥ Target RVO -3%5-6% off monthly rent or 3/4 off first month’s rent
RVO ≥ Target RVO -4%7-8% off monthly rent or first month rent-free
RVO ≤ Target RVO -4%9%+ off monthly rent or 1+ months rent-free

You can also apply discounts to specific rentals that have remained vacant throughout the pandemic. For example:

Unit Vacancy DurationDiscount
30 daysNone
>30 days1-2% off monthly rent or 1/2 off first month’s rent
>45 days3-4% off monthly rent or 1/2 off first month’s rent
>60 days5-6% off monthly rent or 3/4 off first month’s rent
>75 days7-8% off monthly rent or first month rent-free
>90 days9%+ off monthly rent or 1+ months rent-free

Lower your lease renewal rates

  • One way to keep your lease renewals and occupancies high is to keep your renewal rates at or below the market rates. If you’ve chosen to lower your rates for new residents, you may also want to consider lowering the rent price on renewals to help retain those tenants.
  • COVID-19 has changed regulations, operations, and processes for the rental housing industry. The goals you once had for your community have most likely have changed as well. Communities that are willing and able to adapt quickly are most likely to see the greatest success as the country reopens and begins to embrace the new normal.

Posted by & filed under Rental Housing.

For many Americans, roommates are a necessity. High costs of living coupled with low wages and debt have made it difficult for people to meet all their financial responsibilities in many areas of the country. Unfortunately, this trend shows no sign of slowing; if anything, it’s likely to increase with the economic fallout from job loss due to COVID-19 – and the anticipated wave of evictions expected to follow. As a landlord or property manager, this means you may see an increase in tenant questions or requests regarding roommates. As a renter, you may be considering a roommate yourself.

Regardless of whether you’re a renter or a rental housing professional, the goal is ultimately the same when it comes to roommates: find someone who is reliable, responsible, and who will treat the property with care. Just as no landlord wants to deal with a troublesome tenant, no renter wants to deal with a troublesome roommate. This guide is designed to help both renters and rental housing professionals navigate the roommate situation with results that are mutually beneficial to both parties.

Renters: How to find a good roommate

Roomates A Guide For Rental Housing Professionals and Renters

The best way to prevent problems with your roommate is to find the right one from the beginning. Even though it might sound fun to live with your best friend, they may not be a responsible, reliable roommate – and that could cause trouble with your friendship. Here are a few ways you can make sure you’re finding the right fit:

  1. Ask your friends and family
    Living with a friend may be risky, but you may not feel comfortable living with a complete stranger, either. One way to solve this issue is to ask people you know and trust if they know anyone who’s looking for a roommate. Once you begin asking around, you may find you have a large pool of potential roommates to choose from. Although you won’t know them personally, you’ll be able to trust the recommendations of your friends and family members.
  1. Conduct multiple interviews
    It’s always recommended that you do multiple interviews before offering someone a room. Talk to different candidates, and then have a second meeting with the ones that seem the most trustworthy. It’s best to meet the candidates you’re considering in person, so you can get to know them a bit better and develop a rapport – or spot red flags.
  1. Ask the right questions
    When interviewing candidates, you’ll want to get to know them a bit to make sure you’ll be compatible roommates. Knowing about their likes, dislikes, and lifestyle can tell you a lot! However, you should also ask the following questions to get a fuller picture of the type of roommate they would be:
  • What do you do for a living? If they’ve had a consistent job, they’re likely fairly reliable. If they dodge the question, have switched jobs a lot, or don’t seem like they have one, this could be a red flag. If they’re a student it’s not necessarily a red flag, but it’s important to make sure they have some form of income to pay for the rent and bills.

  • Tell me about your recent living situation. Why are you looking for a new place to live? Find out whether they had roommates before and whether they got along with them. Maybe they’re searching for new housing now because their lease is up, or they could have conflicts with another roommate. Pay attention to their answers – and your intuition – to decide whether they’re giving you honest answers.
  1. Be upfront about costs
    Part of finding a good roommate depends on whether they’ll be able to pay for rent and bills consistently – so be upfront with costs so candidates know what they’re signing up for. Create an estimate of what they can expect to pay monthly and let them know what your expectations are in terms of splitting bills or food costs.
  1. Ask for references
    Landlords and property managers ask for references, and so should you. Ask if you can talk with their previous landlord or roommate. If the person seems reluctant or unwilling to give you a reference to contact, this is a red flag that there could have been problems with their last living situation.
  1. Get everything in writing
    No matter how trustworthy your future roommate seems, it’s important to make sure they’re on the lease agreement. That way, they are legally responsible if they can’t pay rent, cause damage to the property, or violate other terms of the lease.

Landlords and Property Managers: Renting to roommates

Renting to co-tenants can be confusing territory. How do you handle leases, security deposits, rent collection, and screening? Here are some tips for best practices when managing co-tenants:

  1. Make roommates jointly liable on the lease
    One of your first questions may be whether or not to allow subletting. To protect yourself and your property, subletting isn’t recommended. This is because subletters don’t actually sign the lease, so they aren’t legally jointly liable for rent or upholding the stipulations of the lease agreement.

    For this reason, you should have all tenants’ names on the lease and have each party sign it. Make sure your lease states that tenants are “jointly and severally liable.” This essentially treats all the tenants like one person, so if one of your tenants violates the lease, the other roommates share equal responsibility. Although it may not seem fair from the standpoint of the tenants, it’s a standard provision that gives everyone greater incentive to follow the terms of the lease.
  1. Screen co-tenants
    All tenants should be screened with a credit check and background check before taking up residence at your property, regardless of whether they’re the original tenant or co-tenant. RentalConnect may be a good option for you, as it allows you to defer the cost of the screenings onto the tenant.
  1. Don’t divide security deposits
    Security deposits should only be returned when all the occupants have moved out and you have the chance to fully inspect the property for damage. Co-tenants should work out between themselves how they’d like to handle the security deposit if one of them moves out. One suggestion you could offer is to have the new tenant pay the original tenant their share of the security deposit. If the co-tenant moves out before the original tenant, the original tenant can return the security deposit to them. If the original tenant decides to move, they can keep the co-tenant’s share, and you can return the full security deposit to the co-tenant after they move.
  1. One check for the full amount of rent
    In being consistent with treating all tenants like one person, you should request that the rent be paid in full with a single check. This makes it less likely that you’ll be drawn into any financial issues between the tenants and it will limit your involvement with individual tenants. If one of the tenants is having difficulty coming up with rent money, it’s something they will have to work out with their roommate.
  1. Suggest a co-tenancy agreement
    A co-tenancy agreement is only between co-tenants, but it sets clear expectations on each tenant’s responsibility. They typically include things like who will be responsible for writing the rent check, how much rent will be, how bills will be divided, household responsibilities, noise, overnight guests, and move-out obligations.
  1. Ask for a tenant representative
    Ask your tenants to designate one person to be your point of contact. The tenant representative will be responsible for communicating with you on all issues related to the property. This eliminates separate conversations with individual tenants, which will save you time and simplifies things like scheduling maintenance and repairs.

Keep in mind that state and local laws differ; it’s always recommended you check the rules in your area before making any changes to your lease. Hopefully, this guide has made how to handle roommate situations clearer from both a renter and rental housing professional perspective!

Posted by & filed under Rentals.

Virtual tours have grown in popularity over the years; thanks to the development of smartphone capability and apps, property managers and landlords can show off their rental properties to many prospective tenants at the same time. Renters also benefit, as they can search for housing and view the properties they’re interested in without ever leaving their homes.

Streamline Your Rental Tours With The Best Virtual Tour Apps

As a rental housing professional, virtual tours can boost your business – especially now, with COVID-19 concerns. Listings with virtual home tours consistently garner more interest and views than listings without them, in part because they give applicants more time to get a feel for the property. If you’ve been considering offering virtual tours but weren’t sure where to start, here’s a look at some great apps that can get you up and running.

Realync

Realync is a cloud-based app that allows for real-time, immersive interactions between you and prospective tenants. You can respond to their questions and showcase all the features of your properties through real-time tours or pre-recorded videos. All videos can be saved on the cloud for future use. Another great feature is the ability to host a live virtual open house that you can invite prospective renters to attend from anywhere in the world. The app also has fairly extensive (but easy-to-understand) analytics that allow you to determine what’s working for you and what isn’t, as well as the ability to capture contact data from open houses.

Rently

Rently aims to make property tours easier for you and prospective renters with self-touring technology. The company provides a lockbox device for each vacant property, which costs $30/month for unlimited leads and users. This device connects to the renters’ smartphone app, granting them access to the property without the need for you or your staff to be there. Prospective renters can register for a self-tour online; once they’re approved, they will receive a one-time entry code giving them access to the vacant unit. This app can be used for both single-family homes and multifamily communities.

Abodo

Abodo is a web-based multiple-listing site that allows renters to search for housing in more than 300 cities nationwide. The app makes it easy for renters to browse, filter, and tour properties that interest them. Listings are free for property managers, and you can easily reach out and communicate with interested parties. Although Abodo is open to everyone, its target market tends to be college students looking for affordable housing.

Tour24

Tour24 is another web-based platform that allows you to offer self-guided tours whenever it’s most convenient for you. You can­­ choose when renters are allowed to tour the property, as well as when to switch tours off. Renters schedule a tour through the app, which conducts identity verification before the appointment is approved. Like Rently, Tour24 uses the prospective tenant’s smartphone as the key to the property. Once the renter is at the property, their phone essentially becomes the onsite tour guide, generating pop-ups that highlight points of interest around the home.

AnyoneHome

AnyoneHome isn’t a virtual tour app but it does allow you to offer a fully immersive contact center through a well-developed CRM platform. Renters can schedule tours online, conducted either through an onsite manager or a self-guided tour. The app aims to optimize your leasing process with 24/7 availability, plus it integrates with a variety of helpful apps and self-guided tour hardware, including Tour24.

Video Conferencing Tools

In addition to the above apps, you can also use video conferencing tools to conduct virtual tours. Some of the most popular and easy-to-use ones include Zoom, GoogleMeet, and Facetime.

Additional Considerations

As you look into these apps, you may want to make a priority list to help you decide which ones would be most beneficial to you. Think about the following factors:

  • What’s your budget?

  • How many renters would you like to be able to give virtual tours at once?

  • Are you thinking about producing a single video tour that you can share with interested parties? Or would you prefer to offer personalized tours?

  • Do you need the ability to schedule virtual tours? You may also want to read through our blog on tips and best practices for virtual tours to get more ideas on how you’d like to conduct them.

Posted by & filed under Property Management.

How to Prepare For A Potential Wave Of Evictions

Earlier this year, states rushed to put a halt to evictions in response to COVID-19. As some states have now begun the process of reopening, the multifamily housing industry may be at a crossroads with evictions. Eviction moratoriums are set to be lifted in several states, with courts scheduled to begin hearing eviction cases later in the month. However, some areas are considering extending eviction moratoriums due to the increase in COVID cases.

Regardless of when courts reopen, the nation will likely see a flood of evictions in the future. If this happens, there will be an influx of rental applicants, so it’s essential to think about how this could affect your rental policies.

In only a matter of months, the rental housing industry has had to make some quick adaptations, including social distancing, eviction court closures, and missed rental payments. If you haven’t revised your written rental criteria since the pandemic started, now is the time. The landscape of the industry is rapidly changing, and your policy should be able to keep up.

In the past, it’s been best to avoid blanket standards on your rental policies to avoid liabilities. These are overly broad statements like, “no evictions” or “no felonies.” Stating “no evictions” has normally been problematic, as it doesn’t factor in differences between state, federal, and county-level laws. In many cases, it can be perceived as anti-renter behavior. This policy is especially important to avoid now, with potentially large numbers of COVID-19 related evictions on the horizon. Here are some reasons why:

It doesn’t look good from a legal perspective

Even if you’ve always had “no evictions” as part of your rental policy, you could be running into legal trouble for denying an applicant based on a COVID-19 eviction. Not to mention, it could damage your property’s reputation. It’s also likely that some states will implement legislation aimed at restricting the use of COVID eviction records for housing.

COVID-19 evictions won’t show you accurate risk

Many applicants who lost their jobs during the pandemic haven’t been able to pay rent. If they end up getting evicted, that doesn’t make them a bad or risky renter. They’re more a victim of circumstances beyond their control. A single eviction caused by missed payments during COVID-19 isn’t an accurate depiction of their rental history, especially if they have a previously perfect record. As long as they meet your income requirements, it’s not likely you’ll need to worry about them being a repeat offender. Using eviction data responsibly

Knowing how to navigate eviction data can be tricky, but here are several things you can start to incorporate into your leasing process right now:     

  • If you have a blanket statement like “no evictions,” replace it with a specific date-based restriction, such as “no monetary evictions within the past 3 years (with the exception of COVID-19-related evictions).”
  • Keep an eye on changes to data restrictions and laws. Over the past few years, many state and local governments have begun restricting the use of eviction and criminal data for housing decisions. You should make sure you’re familiar with the latest laws when reviewing background checks to avoid liability.
  • Apply your rental policies equally, every time, to avoid potential claims of discrimination. Arrange consistent training for your staff on your most current rental criteria, as well as how they should uphold it. This could include legal updates and restrictions, policy changes, and other important items.

There’s no way to know for sure when the pandemic will end or how it will continue to reshape the industry, but it’s important to be empathetic right now – and not only to applicants and tenants. Take care to also show empathy for others in the industry, such as staff and peers. These are difficult times; caring for one another is essential. We’ll continue to assist you with your tenant screening needs and keep you posted with the latest industry updates.

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Could Security Deposit Bans Be On The Horizon

As a landlord, security deposits are one of the most vital tools you have. While these deposits can only be used in specific instances, they ensure you don’t lose out on money if the tenancy doesn’t go as planned. Unfortunately, security deposits are the latest rental policy to come under fire. The affordable housing crisis, in combination with the pandemic, has many calling for security deposits to be banned entirely.  

How Did This Proposal Start?

As housing prices have risen over the decades, there have been multiple calls to eliminate financial barriers in order to make housing more affordable. In 1990, Los Angeles City Councilman Zev Yaroslavsky stated “…perhaps the next solution will be to simply prohibit security deposits of any type… I think this will have a more deleterious effect on the landlord, but it might have a more positive effect on the creation of affordable housing.” At the time he made this statement, L.A. had just passed an ordinance requiring owners of rent-controlled apartments to pay tenants 5% interest on security deposits.

Currently, more than half the states have placed limits on the amount of money a landlord can collect for a security deposit, which is typically one to two months’ worth of rent. Many states also require landlords to return security deposits within 14 days after the tenant has moved out. Within the past year, we’ve seen progressive cities pass laws that limit security deposits even further.

Security Deposit Law Changes in 2020

In January 2020, the Cincinnati City Council amended Chapter 871 of the Cincinnati Municipal Code to require landlords with more than 25 units to provide alternatives to a security deposit. In lieu of a security deposit, tenants can opt for the following:

  • Rental security insurance
  • A reduced security deposit that’s half the total of one month’s rent
  • A security deposit split into three payments over the course of six monthly installments

There are no clear penalties in place for landlords who refuse to offer security deposit alternatives; however, a tenant could potentially sue them if no alternatives are offered prior to the lease signing.

Cincinnati’s new legislation has prompted lawmakers across the country to consider making amendments to their security deposit regulations as well. The pandemic has only accelerated the issues surrounding the affordable housing crisis, with millions of unemployed renters being unable to afford to pay a security deposit.

One of the most notable bills on the table is California’s AB3260. This bill proposes all California landlords give tenants an alternative way to pay the full security deposit. This can be done through security deposit insurance or monthly installments. New York City is considering similar options.

How Can Landlords Prepare?

The pandemic has greatly increased the momentum for security deposit alternatives, so it’s likely other cities and states will propose similar bills.

As more areas adopt new laws or amend their current ones, you should be aware of what you can do to mitigate your risk with security deposits. Accepting security deposits in payments isn’t ideal because most tenant defaults take place within the first six months of the tenancy. If a tenant stops paying rent early on, there is little to nothing to fall back on. If you accept half of the first month’s rent, this likely won’t be sufficient to cover your losses.

An alternative to security deposits is working with a third-party that offers a lease guarantee. This is a separate contract that the third party guarantor agrees to meet the obligations of the tenant to the landlord. So if a tenant fails to pay rent, the landlord can recover the debt from the guarantor, generally before they seek damages from the tenant. Depending on the stipulations, the guarantor may also be financially responsible for damages to the property caused by the tenant.  As of now, there are few areas that have taken steps to change security deposit laws, but it’s important to know that we may see further efforts to amend or eliminate security deposits in the future – especially as the pandemic continues. Now is a good time to start thinking about your security deposit policies and what would be an acceptable alternative to you should laws change in your area.

Posted by & filed under Housing.

With things changing rapidly in the rental housing industry, you may have missed the recent statement put out by HUD. The notice, titled HUD Statement on Fair Housing and COVID-19, has several key takeaways that are important to note.

Fair Housing Laws Still Stand

The first important takeaway is that fair housing requirements, as well as the government’s enforcement of them, will continue throughout the pandemic. The notice states “We need to guard against irrational blame that fuels discrimination and harassment against people who, because of racial and ethnic profiling, are perceived to be associated with this disease.” Federal, state, and local fair housing laws still prohibit targeting a protected class due to their association with COVID-19.

For example, let’s say a housing provider incorrectly believes that Asian applicants are more likely to have the virus. If they were to deny an Asian applicant based on this belief, it’s a clear violation of fair housing laws. Another example would be if residents harass another resident because they believe the resident has an association of some kind with COVID-19. Fair housing laws continue to dictate that the housing provider is required to make the harassment stop.

Fair Housing Considerations During Covid 19

The pandemic has caused a wave of fear in the nation and as HUD’s statement reminds us, fear can often translate into discrimination. It’s essential to take every step possible to prevent discriminatory behavior by both staff and tenants.

Communicating with Tenants

In addition to keeping fair housing laws in mind, it’s also important for you to be communicating with your tenants on a regular basis. This can be done through online portals, emails, or even through notices posted on their door. With social distancing in place, you’ll want to avoid in-person conversations. It’s important to remind your tenants that you’re doing everything possible to keep them safe and secure during these unprecedented times.

One way you can do this is to explain what you’re doing differently to meet these challenges. Likewise, make sure to communicate with your staff members. Remind them of your policies about communicating with tenants, performing work orders, and doing cleaning or maintenance around the building. This will ensure that you’re taking all appropriate steps to keep everyone updated throughout the pandemic.

Common Areas

Common areas aren’t necessarily a fair housing issue, but you may be wondering how to handle closing them as a COVID-19 precaution. Ultimately, the decision to close where people gather is decided by the governor of each state. Once the governor issues that decision, it’s up to each property management company to implement the guidelines however they see fit and within their authority. Not many leases cover this type of situation, so there may be some things you’ll need to work out. For example, if you close down a common area, tenants may want to withhold some of their rent.

In some communities, residents have already intentionally cut back their rent payments because they don’t feel some of the amenities they’re paying for are being provided. Again, this isn’t a fair housing issue; it’s more of a landlord/tenant issue. This is unknown territory, but it’s unlikely that tenants actually have a right to cut their own rent based on a swimming pool or other common areas being shut down.  Unfortunately, ignoring the rules on rent and avoiding common areas aren’t likely lease violations.

Partial Rent Payments

Another question you may have is whether accepting partial rent payments is a fair housing violation. Unfortunately, we’re in a situation where landlords and property managers should consider taking partial and late payments from tenants who have been impacted by the pandemic. It’s also important to understand that many people are struggling financially and that these hardships could last a while.

Fair housing could be an issue if you’re not being consistent with making concessions 100% of the time, even if you’re not making decisions based on a protected class. Tenants may not see it that way. If you allow late payments for one tenant, but not another, some tenants may feel this is discriminatory. So in this case, it’s best to make this decision at a business-wide level, rather than on an individual basis.   

Tenants with COVID-19

If you find out that one of your tenants has the virus, it’s not a good idea to disclose this to your residents. The best precaution is to assume some residents have an infectious disease. It’s likely that some of them do and you’re not aware of it.

Do your tenants have a right to know that another resident in the community has tested positive for COVID or is being quarantined? For the sake of safety, it’s OK to post a notice telling tenants to be aware someone has symptoms or may have the virus. However, don’t single anyone out. You’re under no legal obligation to inform tenants about who has the virus, not to mention it’s a breach of confidentiality that could cause residents to target the sick tenant in some way. Whether to inform your tenants about someone on the property having COVID isn’t officially a fair housing issue, but it could become one in the future.In conclusion, take every step to stay informed on the latest fair housing developments. Pay close attention to your policies during this time to make sure they aren’t bordering discriminatory practices. Frequent staff training and policy reviews will keep your property management flexible while ensuring you’re addressing potential issues that could come up in the future.

Posted by & filed under Tenant Screening.

With inmate releases, pandemic-related job loss, and a potential wave of evictions on the horizon, we’ll likely see larger numbers of people choosing to cohabitate. What does this mean for you as a property manager or landlord? There’s a good chance one of your tenants may ask you to consider allowing them to have a roommate. While you may have been willing to accept a friendly referral in the past, times have changed. In an ever-evolving environment and economy, it’s better to be safe than sorry.

Treat roommates like you would any tenant

If you allow subletting, there are a couple of things you should require. First, the subtenant should be added to the lease. If your original tenant moves out, and the roommate stays at the property, having their name on the lease will ensure that they are still legally liable for their share of the rent. Remember, the lease must be signed by all parties to make it enforceable.

Additionally, occupants who haven’t signed the lease likely haven’t read it. If they don’t know the rules, it’s harder to follow them. The best way to make sure they understand the stipulation of the lease is to go over with them in person. This will allow you to clarify anything they’re unclear on.  

Secondly, you should treat the subtenant like any applicant and conduct a roommate background check. Regardless of their association with your tenant, it’s essential to know whether the subletter is responsible and reliable. Although it’s unlikely, the roommate may be trying to hide a bad rental history by moving in with someone else.

Protect Your Property With Roommate Screening

You may also want to review your guest policy. Not all roommates start off that way; some of them may be long-term guests who decide to officially move in. Your lease should have a standard for when a long-term guest is required to undergo a roommate screening and sign the lease agreement, otherwise, they could slip under the radar.  

Protect your investment

Whether you’re dealing with regular tenants or a roommate situation, having a thorough, consistent screening process is one of the best ways for you to protect your property. Screening helps you minimize your risk of late or non-payment of rent, evictions, and property damage.

While conducting background and credit checks can be time-consuming to do on your own, our tenant screening services make it easy and convenient. Our RentalConnect service allows you to select the level of reports you need while deferring the cost to the applicant. There are no on-site visits or membership fees, and it’s available online 24/7. Get the information you need to make an informed decision. For more information, don’t hesitate to contact us at 1-800-523-2381, or send us a message through our online form.

Posted by & filed under Tenant Screening.

Over the past couple of months, COVID-19 has caused the U.S. job market to take a significant dive, erasing nearly all the gains that were made since the 2008 recession. The 2008 housing crash shook the economy for years. Tenant fraud increased as many applicants attempted to hide their poor credit scores, evictions, and low income. With the economic troubles caused by the pandemic, it appears that tenant fraud is again on the rise.

Important Steps You Can Take To Avoid Tenant Fraud

Given how long it took the economy to recover after the 2008 recession, it’s likely many people throughout the country will struggle with financial stability for some time. To avoid being taken in by fraudulent applications, it’s important to take a look at your current screening strategies and adjust them with tenant fraud in mind.

Reassessing traditional screening factors

Traditionally, past behavior has always been the best determiner of an applicant’s potential performance as a tenant. With COVID-19, we now have to consider factors that may be out of an applicant’s control, like nonpayment of rent, lower income levels, and lower credit.

For example, a survey of 1,160 landlords found that approximately 59% of them had at least one tenant request a partial or complete rent reduction in May. Many people have lost their jobs since the pandemic started in March, and financial aid, unemployment benefits, and the federal stimulus have only provided temporary relief. It’s still uncertain whether the relief efforts were enough to help consumers and the economy return to its pre-pandemic condition.

This makes selecting tenants more difficult than it was before COVID-19. How can you know that a tenant isn’t trying to take advantage of the situation, or that an applicant is being truthful? Here are a few things you should consider while conducting tenant screenings.

Referrals

With social distancing still in place throughout the country, many companies have made the move to work remotely. This may make it more difficult to get ahold of employers or property management companies through their main phone line.

So, what’s to stop an applicant from giving you the cell number of a friend instead? There are a few steps you can take. If you’re interested in talking to an employer, verify your applicant and their reference on LinkedIn. Then go to the company’s website and find a corporate email address to send your verification request to.

For verifications from landlords or property managers, search public records to find the owner of the previous address. Does it match the name the applicant gave you? When you have them on the phone, say, “I’m interested in learning more about your rental.” If they don’t know what you’re talking about, they likely aren’t the landlord or property manager.

Or, you can save time with our tenant verification screening report.

Documentation

Some applicants may attempt to provide fraudulent documents that make it appear they have more income than they do. The best step to take in this case is to request multiple forms of documentation. Consider changing your policy to include the following:

  • Driver’s license or another form of government-issued ID

  • Paystubs; however, these can be faked. Here’s what to look for on a real paystub:
    • The name, occupation, and DOB should match the information the applicant gave you.
    • There shouldn’t be any spelling mistakes.
    • All digits and decimal points should line up consistently throughout the document.
    • The paystub should look like it was generated through accounting software.
    • The letter “O” should look different than “0”.
    • If there are estimations or roundups on the paystub, they should be minimal. If they’re rounded to the nearest zero, that’s a red flag.
    • The paystub should be legible and easy to understand, no matter how small the company is.


  • Bank statement from the last 30-90 days
    • You should be able to match the deposit amount to the paystub details.
    • The amount they’ve paid for rent should match.
    • Check that they have a sufficient amount of money in their checking and savings balance in case their financial situation changes.
    • Their W-2 should match their information, pay, and employment information.

  • Background Checks
    Your criminal background check policy should stay the same, but be sure to:

    Double-check that spelling, DOB, and their SSN matches any documentation that the applicant gave you.

    Make sure that you’re following HUD guidelines and your local laws when running criminal background checks. You should take into consideration the type of crime they were convicted for, how long ago it occurred, and whether the applicant poses a threat to your other tenants. Don’t create policies that completely ban those with a criminal history.
  • Eviction
    Most areas of the country have implemented an eviction ban during COVID-19, however, you should still check to make sure there were no pre-pandemic evictions.

  • Credit Reports
    Credit scores are important, but make sure to check the following on your credit check:

  • Monthly debt payments
    What is the applicant’s total monthly debt? How does that compare to their total monthly income? Will they be able to afford their debt payments in addition to the rent? Those with lower monthly debt have a larger safety net in case their income becomes impacted by the pandemic.

  • Collections
    Check to see if they have any recent collections for utility bills, apartment complexes, or payday advances. If so, did they occur before the pandemic? Applicants who were having financial issues before the pandemic are a higher risk for defaulting on their rent.

  • Loan payoff dates
    When is the applicant expected to pay off their car loan or student loan? Those who are closer to their loan pay off date are more likely to have additional income freed up in the future.

  • Loan deferments or forbearances
    Look for any deferments or forbearances and check when loan payments will become due again. According to the CARES Act, creditors are required to report accounts that have had payment accommodations applied to credit bureaus. An accommodation could be any type of relief, including agreements to make partial payments, forbearances, or to modify the loan. These accommodations are only applicable for agreements made between January 31, 2020 through July 25, 2020, or 120 days from the date the national state of emergency is over.

Essentially, you should continue screening your tenants but make sure to pay close attention to the details – and stay vigilant about the potential of attempted fraud. It’s likely you may encounter increasing numbers of applicants over the next year who have employment gaps, missed payments, or lower credit scores due to COVID-19. Having accurate information will allow you to make the most informed decision possible.

Posted by & filed under Property Management.

As the social restrictions for COVID-19 have begun to die down and everything is starting to reopen, renters are likely to start looking for housing again. One of the questions many property managers are likely to hear from applicants is, “How did you handle COVID-19 with your tenants?”

Tips For Checking In On Your Tenants Wellbeing During Covid 19

There are many ways to be a good property manager, but being considerate during a widespread pandemic is likely to be at the top of many renters’ lists. With that in mind, one considerate action you can take is to check in with your current tenants to see how they’re doing. This not only improves relations and your reputation with your existing tenants, but it also gives you an honest, built-in answer to applicants: “I checked in with them to make sure everyone was OK.”

Considerations for checking in

We’re living in difficult times and many people are struggling. Some of them may have lost their jobs or taken a pay cut, and are struggling financially. Others may be struggling mentally with isolation, anxiety, or depression. If your residents aren’t getting paid, they’re not able to save for basic needs. If they get sick, they may also have to worry about medicine or medical care.

It’s important to remember that many of your tenants are likely to be feeling stressed, preoccupied, and overwhelmed. A knock on the door from their property manager may worry them even more, so giving them a call may be the best approach, especially given COVID-19 precautions.

Your tenants may worry that you’re only calling about money, so be mindful that they may be uncomfortable initially. Public relations with rental property owners and property managers have been strained in many areas since the pandemic started. Contact your tenants when you’re in a calm, collected state of mind – not when you’re in a bad mood.

Be gentle and kind

After you’ve greeted them, move forward with the reason why you’ve called. For example, you could say something like, “I wanted to check-in and see how you’re doing. Things are stressful right now. Are you staying healthy? Is there anything you need?” Let your tenants speak freely, and be a good listener. Don’t be afraid of silence, because they may just be thinking about what they want to say.

While you’re talking with your tenants, remember that there are many ways you can help them. Everyone appreciates small acts of kindness. This could be something as simple as a care package or sending a congratulations card to a family with a recent graduate. Little things that show you care can go a long way. You can offer advice as well to show you’re listening, but make sure to be considerate. Often people aren’t looking for advice so much as a friendly ear.

Checking in on your tenants can be complicated with all the stress and uncertainty everyone is facing. However, it’s worthwhile to make the effort. Showing you care during these times will mean a lot to your tenants – and they’re not likely to forget it when the pandemic is over.