NUTS & BOLTS
PART 1 OF 6
LANDLORD/ TENANT ISSUES
Securing QualityRenters FINDING QUALIFIED TENANTS DOESN’T HAPPEN BY CHANCE. HERE’S SOME EXPERT ADVICE FOR THIS IMPORTANT FIRST STEP IN THE PROCESS OF MANAGING YOUR INVESTMENT PROPERTIES.
by Kevin Ortner
A
sk any experienced landlords, and they’ll tell you that one of the secrets to success with rental properties is finding the right tenants. The right occupants are a landlord’s dream-come-true. They’ll pay the rent on time—every time—and look after your property and treat it right. They’ll abide by the terms of the lease and won’t bother the neighbors. But finding qualified tenants doesn’t happen by chance, and it’s not simply a case of going by gut feelings alone. Instead, sourcing the best occupants for your property is a deliberate and involved process, one that involves asking the correct ques- tions, using the right screening criteria and then verifying the information that applicants give you. It can also be complex, requiring you to make sure you’re operating in compliance with anti-discrimination laws and ensuring that you screen all of your applicants fairly and equally. But while tenant sourcing and screening can be time-con- suming, it’s more than worth the time and effort that’s required. The right tenant will provide you with a steady passive income and a great return on your investment. And the wrong tenant? Well, let’s just say that bad experiences with tenants are one of the main reasons that landlords leave the industry. While finding trustworthy renters is no simple feat, the good news is that it does get easier with experience. One of the best ways to create an effective and straightforward screening pro- cess is by taking the time to create solid screening procedures that outline your process—and to document everything in writing. It’s also important to ensure that your processes are in compliance with fair housing laws. This will help you to ensure that nothing’s forgotten, while also helping to keep you on the right side of the law. With this in mind, let’s take a look at a few things you can do to secure excellent renters for your rental property.
choose from is by casting a wide net when advertising. Start by creating an effective, straightforward ad for your property, including all of the basic information on your rental, as well as a couple of its very best features. Then, try to post your listing on as many websites as possible, like Realtor, Doorsteps, Oodle, Zillow and, of course, Craigslist. Advertising online will give you a better response rate and a much larger pool of applicants to sort through, allowing you to choose the best of the best. It also allows you to post photos, so make sure you do, and post lots of them! Today, tenants want to know what they are looking at before they look at it. Good tenants will pass on listings with no, limited or bad photos. Your listing is actually a form of tenant screening. By including plenty of information in your ad—price, location, number of bedrooms and bathrooms, hardwood floors versus carpet—you are encouraging only tenants who are suitable for the property to contact you. CREATEATENANT SCREENING PROCEDURE While creating a tenant screening procedure may seem ex- cessive, it’s not. For any landlord today, having a solid screen- ing procedure in writing not only allows you to ensure that you ask all of the questions to which you need answers, but it also allows you to prove that you’re committed to fair screening processes. This will help save you from potential discrimina- tion accusations and will prove to be invaluable should you ever find yourself before a judge. TIP ENSURE THAT YOUR SCREENING PROCEDURE COMPLIES WITH FAIR SCREENING STANDARDS It’s important to ensure that your screening procedures are in compliance with the law. Landlords cannot discriminate against any protected classes, and it’s important to avoid asking questions about an applicant’s race, color, gender, national ori- gin, family status, disabilities or religion. Many states also have laws that include other protected classes as well.
Additionally, recent guidelines issued by the U.S. Department of Housing and Urban Development (HUD) mean that landlords are advised not to implement screening policies that might disqualify potential tenants solely because of a criminal background.
someone’s name on the rental application that the individual will give them a good review—you’d be surprised. Instead, pick up the phone and call the previous landlord, as well as other references listed on the application. Be sure to contact the ap- plicant’s employer to verify the information that’s given. Make sure it’s not a friend or family member posing as the employer. Remember to abide by rental discrimination laws when performing your reference checks. The goal of a reference check is to uncover any discrepancies in a renter’s application; everything else is additional—and unnecessary—information when screening applicants. RUNABACKGROUND CHECK You should also run official background checks from a verified tenant screening company. The tenant background checks, also known as “consumer reports,” will check a number of things, including criminal records. They can include running the name on the sex offender database, as well as rental and eviction history and credit score. Keep in mind that it’s important to use an approved consumer reporting agency to obtain a background check on a potential tenant. Check the Consumer Finance Pro- tection Bureau for a list of approved CRAs for tenant screening. > Continued on :: PG 94 Kevin Ortner is president and CEO of Renters Warehouse. He first joined the company in 2009 as a franchisee for the Phoenix region, and after founder Brenton Hayden’s retirement, Ortner went on to take the reins of the company, helped see it through monumental growth and has helped double the company’s total number of franchisees in the country since 2013. In 2015, he was honored with both an American and International Stevie Business Award for his achievements as Executive of the Year.
CREATEARENTALAPPLICATION FORM The rental application form is one the most important doc- uments for a landlord to have. A solid application will ask for information including: • Name and contact information for applicant’s employer • Applicant’s income • Applicant’s current address • The names of everyone who will be occupying the unit • Name of applicant’s previous landlord, as well as friends and personal references • Applicant’s driver’s license number or other official govern- ment identification • Applicant’s next of kin and extended family members • Permission to run background and reference checks When someone contacts you about your rental, asking them to fill out a rental application form is a great way to collect the information that you need to screen potential applicants and run reference and background checks.
PERFORMREFERENCE CHECKS We can’t overstate the importance of thorough reference checks. Don’t just assume that because an applicant lists
CASTAWIDEVISUALNETWHENADVERTISING One of the best ways to gather a decent pool of applicants to
80 | think realty magazine january :: february 2017
thinkrealty . com / mag | 81
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