Do’s and Don’ts Tenant Screening

This one goes out to all of the new landlords, or those feeling hurried with the hustle and bustle of the end-of-the-year:

Do:

Call the tenant’s references listed on the rental application.

Don’t:

Email or text the tenant’s references. You need to speak to a REAL person.

DO: Pick up the phone & speak with references

Do:

Run a credit check.

Don’t:

Ask the tenant applicant for a credit score and take their word for it.

Do:

Verify employment. Check a website, make a phone call and get proof the applicant is employed where they claim to be.

Don’t:

Take “self-employed” as an answer. Request W-2’s to prove there is an actual income!

Do:

Verify identity with license or government issued form of ID.

Don’t:

Ask them about their religion, sexual preferences, or native origin. It’s none of your business and has no weight on your decision to enter into a lease according to the Fair Housing Laws of the United States.

For this and more information about tenant screening, please visit our website at http://www.atshome.com


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Save social media for marketing

Businesses of all kinds are using social media, mostly as a marketing and public relations tool. Facebook pages, Twitter feeds, LinkedIn profiles and Pinterest accounts are quickly becoming must-haves in many industries. Interacting with consumers, gaining followers, promoting products and services … it all can be done online for free through social media sites.

But some businesses are finding another use for social media: Background checks. It’s a tempting practice, the ease with which you can look up a potential employee or tenant on Facebook to see what kind of person you’re about to hire – or accept as a tenant. But is it a good idea?

We think it’s a risky endeavor for a few reasons. First of all, there are privacy concerns associated with using people’s personal information and photos to make a judgment about their potential as a tenant. In fact, Fair Housing laws are in place to keep such discrimination at bay.

Second, it’s too easy to make a mistake. There are tons of folks out there with the same name, and you can’t be absolutely sure you’ve got the right Jane Doe’s Facebook page or Twitter feed. And even if you’re sure it’s the right person, the inferences you make about what you see could very well be false. For instance, just because Jane has a lot of photos of herself with two big dogs doesn’t mean they’re her dogs and will potentially be moving into your rental property with her.

It’s best to stick to the tried and true tenant screening methods of having the tenant applicant undergo a credit check, background check and employment verification. Leave the social media to your marketing plan

Visit ATS Inc's homepage for more information about our Tenant Screening Services 

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Unmarried couples should be treated equally and fairly on the lease

In this day and age, a lot of unmarried couples live together. While this is perfectly acceptable and should never be a form of discrimination based on your religious beliefs, landlords need to be careful to treat both adults equally and fairly when it comes to the tenant screening process.

Assuming both are adults over age 18, always have both parties fill out a rental application form, and run a credit check and background check on both of them. You never know what will turn up. Depending on how long they’ve been together, there’s even a chance one person’s past isn’t known by the other person. That’s not to say it’s up to you to disclose anything negative you find, although they are entitled to know why they are being denied if you do decide to reject their application based on something that turned up during tenant screening.

Also, get both parties to sign the lease. Even if one says he/she will be carrying the burden of the monthly rental payment, there’s no guarantee they will stay together. If one moves out, the other needs to be on the lease and therefore legally bound to uphold the tenets of the lease agreement.

No matter what they call each other, to you two unmarried tenants are merely roommates, and should be treated accordingly

Visit ATS Inc's homepage for more information about our Tenant Screening Services 

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Top 3 Tips for Finding Good Tenants

Are you a new landlord who isn’t sure how to select a “good” tenant? It’s not rocket science, but there is no set-in-stone formula that works for every prospective tenant and every property, every time. Here are a few tips for newbies out there:

1. Don’t wait until the perfect tenant comes to you; seek him out. Take an honest look at your rental property and surrounding area and decide what the ideal tenant looks like. Is this a three-bedroom house in a quaint neighborhood? Is it a one-bedroom flat in an up-and-coming section of the city? Think about the demographic who will most likely find your place appealing, and advertise where they are. The community bulletin board in the artsy coffee shop just down the block from your flat is probably the perfect place to hang a “For Rent” sign.
2. Credit, credit, credit. Running a credit report on a prospective tenant will tell you a lot more than how much debt they have. You’re not looking at the score, or the debt, as much as you’re looking for the overall history, to get a sense of whether the person is fiscally responsible. Car repossessions, credit card charge-offs, and previous evictions will show up on a credit check, so pay attention.
3. Double-check the dollars. Employment verification is key. Anyone can pluck a figure out of the air and tell you it’s their take-home pay. Verify the prospective tenant’s employment status, not just with a phone call but by requesting the most recent pay stub. A good rule of thumb is to decide the rent can’t be more than 30 or 35 percent of someone’s income. The last thing you want is a tenant who cares for the place but can’t pay the bills. 

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Don’t Reject on a Rumor. Make Lease Rules Clear and Trust the Tenant

Consider this scenario: A 21-year-old recent college graduate applies to become a tenant of your property. You run a background check, employment check, and credit check and everything comes out clean. But while calling personal references and her previous landlord, you discover that the young woman supposedly has a boyfriend who basically lives with her. Furthermore, there are offhanded remarks made about said boyfriend being an illegal drug user or, worse yet, a dealer.

What do you do? You certainly don’t want to open yourself, and your property, up to potential trouble with the law. And you don’t want anyone living in your property who is not on the lease. But you can’t discriminate against a tenant based on rumors and hearsay.

If you liked the applicant, she gave you a good first impression, and everything in her application and background check turns out solid, then go with your gut to sign her to a lease. But before you do, have a candid talk with the applicant that expresses your rules against people living in the home that are not on the lease, and that breaking such rules will result in eviction. Be stern from the start and allow her to decide whether something is worth risking her financial stability and housing future. Chances are, she’ll either withdraw her application and look elsewhere for a place with a more lenient landlord, or she’ll agree to your terms and hold up her end of the bargain.

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Many Americans Don’t Understand Credit Scores

According to a recent survey by the Consumer Federation of America and VantageScore Solutions, many Americans don’t really understand what goes into creating their credit score or how it may be used.

Among the findings, the majority of those surveyed didn’t know that a landlord or property manager could use a rental applicant’s credit score as a factor in deciding whether or not to approve them for a lease. About 67 percent of respondents incorrectly assumed age is a determining factor in the credit score, though nearly half knew the basic purpose of a credit score is to assess the risk for lenders of whether a borrower will or won’t repay a loan.

More than 1,000 Americans were surveyed by phone, averaging a D in total knowledge about credit scores, according to the survey results. VantageScore is a joint venture of three credit bureaus -- Equifax, Experian and TransUnion -- and calculates credit scores on a scale from 501 to 990.

Many may be ignorant about a credit score’s purpose or use, but that doesn’t mean a landlord shouldn’t use it. On the contrary, a thorough tenant screening and credit check are tops on the list of ways a landlord will know whether a tenant is lease-worthy.

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How to Find Tenant Buyers

If you are thinking of selling your investment property, a good way to go might be to find an interested, qualified tenant to sign a lease option purchase.

Of course finding the right tenant for such an agreement is the hard part. Tenant buyers are people who consider buying a home with a lease option as the best bet for them to own real estate.

There are many reasons tenants rent property instead of buy, but one of the biggest is the inability to obtain financing for a mortgage. Finding them isn’t as hard as it might seem, you just have to make your intentions known.

First, take a closer look at the current tenants. Are they financially secure? Do they have stable employment, pay rent on time, and take care of the property? If so, it might be a good idea to present a lease option purchase to them. They may not know that you would like to sell the house, and giving them first crack at it could be the perfect solution for both of you. (You’ll want to go ahead and run a current credit check on them if they are interested.)

Another way to go is to list your property as a rent-to-own or lease purchase option on websites and in a classified ad. Potential tenant buyers will come out of the woodwork, particularly if the property is in great shape and ready for new tenants who dream of one day owning their own home.

Credit reports can tell a lot about a potential tenant, but they do not show whether someone has a previous eviction notice. Fill in the blanks on a prospective tenant’s background by using a tenant screening service to see important details about their rental history.

Rental Payment History May Be Added to Credit Rating

Tenants who are late paying rent have never been concerned about the impact that a late rent payment might have on their credit rating. But that may be changing, as Experian RentBureau, one of the big three credit bureaus, recently began collecting data about consumer rental payments and including that data in its credit reports. This year Experian is only reporting positive rental payment information, but starting in 2012, the company also will report negative information such as late rent payments.

Some experts say including data about rent payments in credit reports could benefit consumers because it will help banks and other lenders pick up on potential consumers who are credit-worthy even if they don’t yet have traditional forms of credit, like credit cards or mortgages. It could be useful for a good tenant who’s never been late on rent to have that kind of positive credit history show up on a credit check when they’re looking to buy their first house or want to establish credit.

RentBureau is a national network of 45 property companies that collect data about rental payments and automatically report that payment history to RentBureau every 24 hours. Experian acquired RentBureau in 2010.

Did you know previous eviction notices don’t show up on credit reports? Don’t be duped into thinking a credit check is all you need to be assured you don’t have a problem tenant. Get a professional tenant screening!

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Why Landlord Insurance Is a Good Idea

If you’re thinking about becoming a property manager, you should definitely look into landlord insurance policies. Landlord insurance is an important way to protect your investments and gives you peace of mind when taking on such an endeavor.

The two biggest benefits such a policy offers are:

• Coverage in the event that the property is damaged or otherwise uninhabitable, thereby mitigating your losses in rental income.

• Coverage of legal fees in the event a tenant sues you for injuries sustained or other problems related to the property you own.

A few things to you’ll need to consider when deciding on the right policy:

1. What kind of property is it? There are different insurance requirements for different types of property.

2. Where can you get the best rates? Research, research, research to find the best rates on the type of insurance you need. Check with any financial institutions and insurance companies with which you’re already affiliated, to see what they offer. Also check with other landlords in your area as well as any local property management associations. Compare premiums and services, and don’t be afraid to bargain to get the best bang for your buck.

3. What types of things do you want coverage on? The amount of insurance you need will depend at least in part on the kind of property it is, where it’s located, and how well maintained it is. Most landlord policies will protect you against theft, fire, vandalism and damage from weather events.

Did you know previous eviction notices don’t show up on credit reports? Don’t be duped into thinking a credit check is all you need to be assured you don’t have a problem tenant. Get a professional tenant screening!