Your best defense from a bad tenant IS….

Do you know the ONE thing that can be your best defense from a bad tenant? While you can prescreen, call references, order a complete background check, and verify employment, unfortunately bad renters can still slip through the cracks. Then, what?

Having an ironclad lease is truly your best defense against a lousy renter. If there is any room for interpretation within your agreement, then your tenant will give you quite a battle, and the eviction could get expensive. However, having all the rules outlined clearly in black and white will give you a stronger leg to stand on if it comes time to evict.

Make sure the restrictions as they pertain to pets, smoking, subletting etc., are made very clear, as well as the consequences for violating the terms. Also, all of your dates, deposits, and fees must be spelled out so there is no questions what your expectations will be.

Hopefully you won’t have to enforce the negative aspects of your contract, but a good landlord can never be too prepared.

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Can your tenant REALLY afford the rent?

How do you determine if a tenant will be able to afford to rent your home? Generally, the rule of thumb in the industry is that rent costs should not exceed 30% of the tenant’s take home pay. In theory, this gives them enough money to afford the other costs of living expenses (food, clothing, gas, creditors, electricity, etc).

 

However, a recent survey by the Rasmussen Reports for Country Financial found that more than half of all Americans spend more money than they make for several months out of the year. Also, only half of all people surveyed say they actually have a monthly budget in place.

 

This takes us back to our original question – can your tenant REALLY afford the rent?

 

 

Biggerpockets.com recently recommended that landlords screen their tenants financial records like a lender would at a bank. That means in addition to verifying income, perhaps landlords should also have tenant’s provide information such as:

·         Bank balances & other assets

·         Monthly expenses (living)

·         Liabilities – including monthly payments and time left to pay off (credit card debts, auto loans, alimony, student loans, judgments etc.)

 

By gathering all of this information, you will have a much clearer picture of your tenants financial responsibility, and be able to determine if in fact they have enough means to pay their rent on time. If you find their debt-to-income ratio is just too high (i.e. monthly debt payments exceed 36% of monthly income) then perhaps it might be a good idea to pass on the applicant at this time.

 

For this and more information about interpreting credit reports, and screening tenants please contact ATS Inc. today!

 

Since 1988, ATS Inc has been a leading provider of tenant screening services  for Landlords, Property Owners, Property Managers and Real Estate Professionals.

Advertising Rental Property Online? Read this FIRST!

If you decide to advertise your rental property on free sites, such as Craigslist, or other real estate boards, there are a few things you should do to avoid headaches that come with online advertising.

First, protect yourself against spam. Do not provide your personal or professional email address in an online ad. Instead, have the messages come to you through web host, either by method of a personal inbox on the site or a forwarding system. You could also set up a designated email address for each property listing and have it send out an “auto-reply” with information about the rental, such as pet policies and tenant screening requirements. Also, attach an application. Only after you have established a dialogue with a legitimate tenant applicant who seems genuinely interested in your rental property, should you then exchange personal contact information.

Secondly, if the site doesn’t offer pictures (or even if does), ask the tenant applicant if they are familiar with the area of your rental property. Suggest they do a drive-by of the home to see if they are still interested in it before filling out an application. This will save you the time and trouble of conducting a background check and tenant screening if the person changes their mind after seeing the place.

Lastly, always make sure to include the rental price in your online listing. The first question on a prospective tenant’s mind is cost. If you don’t want to answer fifty to a hundred emails all asking the same question, make sure to include it in your property listing.

Visit ATS Inc's homepage to find out more about our tenant screening services!

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Questions to Ask When Pre-Screening Tenants

Before you hire professionals to conduct tenant screening services, you should always do a pre-screen of tenant applicants over the phone or in-person. The following are some questions you must ask during the initial screening to weed out any potential problem applicants:

1.     Make sure they can afford the rent. You need to make it clear how much the monthly rent and security deposit amount are to anyone interested in renting from you. Feel free to ask specifics about the applicant’s monthly income. As a landlord, you are within your rights to determine the minimum amount applicants must earn in order to qualify for residency consideration. A tenant who is confident in their ability to make monthly rent checks will not balk at income questions.

2.     Be clear about how what your tenant screening service provides. Any prospective tenant can lie about how much income they make and whether or not they have been convicted of a crime.  You need to make it clear during the pre-screening that all serious applicants must consent to a thorough background check that will include employment verification, past eviction searches and a credit report. You will find the applicants who haven’t been honest up front will most likely reconsider applying.

3.     Ask if they have any pets. If you are a landlord who allows pets in your rental, explain your guidelines from the beginning. Applicants should be told up-front how much extra the security deposit will be, and if you have any pet restrictions. Do you discriminate against certain dog breeds? Do you limit the number of animals per resident?

4.     Let them know how often you will be doing property inspections. Again, a tenant with nothing to hide will likely agree to whatever terms you set forth in the lease agreement. However, if the applicant had previous intentions of hiding a roommate or sneaking in pets without paying an extra deposit, they will probably be less inclined to go through with submitting a rental application.

Visit ATS Inc's homepage to find out more about our tenant screening services!

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Landlord Finds Child Porn on Tenant’s Computer

Earlier this month, an Oklahoma City man was arrested for downloading child pornography using the shared internet connection at his apartment complex. The situation was brought to the landlord’s attention when another tenant began experiencing problems on the shared wi-fi connection. When the landlord discovered child pornography was on the network, he notified authorities.

This case highlights some concerns that come with offering a shared internet network within a multi-housing unit. First, the only reason the suspect was identified was because he was the only tenant using a Windows computer. Authorities were able to establish that a Windows computer had been used in the crime. Had this not been the case, it would have been harder to identify which tenant was breaking the law. If all tenants had previously passed criminal background screenings, a landlord would be hard-pressed to determine which resident was currently breaking the law.

If you are a new landlord or property owner who offers free wi-fi service, it is important to establish some ground rules with your tenants.  Did you know some landlords have even been targeted in the past when their tenants illegally downloaded music on a shared server?  You need to make it clear in your lease agreement that tenants will be liable for any improper usage of the shared internet connection.  You might also want to establish a connection that requires username/passwords, to determine which residents are using the service and to deter their temptation to commit any cyber crimes.

Visit ATS Inc's homepage to find out more about our tenant screening services! 

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New Marijuana Laws Make New Landlord Headaches

The US Justice Department is not the only group trying to deal with new marijuana laws now in effect in Washington and Colorado. Landlords in both states are also scratching their heads as they try to understand how marijuana legalization affects their current and future lease agreements with tenants.

What new landlords and property owners need to remember is this: You can still ban smoking of any substance on your property, and you do not have to give exception to tenants with medical reasons. So, even though Colorado law says a person can grow, possess and smoke marijuana, a landlord can still make specifications in their lease agreements that prohibit a tenant from doing all three.

One thing a landlord cannot do is amend the smoking rules mid-lease. So, they have to wait until renewal to enforce any new marijuana-specific agreements with tenants. However, some landlords are dealing with tenants who ingest marijuana in liquid form or by vaporizing it.  Again, a landlord has the right to prohibit marijuana usage in any for, but one would be hard-pressed to police a tenant who chooses to take the drug in these ways.

The new legislation will take some getting used to for landlords and tenants, and there is no doubt the federal government and the two states still have a lot to sort out. However, landlords should rest assured knowing they do still have rights. Even though marijuana is against federal law, you the property owner will not be charged with any federal crimes as a result of tenants who possess the drug on their property. 

Visit ATS Inc's homepage to find out more about our tenant screening services! 

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