Renting During a Recession Means Making Concessions

Every landlord hopes for a dream tenant to walk through the door, someone who’s friendly and clean with excellent credit, solid employment, good references and no criminal record. While these tenants do exist, it’s getting harder to find renters with spotless credit reports and an unblemished employment history. These last few years of layoffs and pay cuts have wreaked havoc on families across the country, and plenty of upstanding citizens, many who’ve owned their own home before, are facing hard times.

Landlords can’t become bleeding hearts, opening their doors to every victim of the recession. It’s still important to do a thorough tenant screening on applicants and think long and hard about the risks associated with allowing someone to sign a lease. But if the potential tenants you’ve been screening have lower credit scores than what you’re used to accepting, consider a few things:

1. Don’t make a foreclosure a deal breaker. The number of people who have a mortgage in foreclosure or mortgage payments significantly past due is rising. While those people couldn’t hang onto their homes, they more than likely are good prospects for renting because they’re used to caring for and maintaining a home, and they’re determined to improve their financial situation, which means they’ll pay their rent on time.
2. Reduce the security deposit but make it nonrefundable. Reducing the security deposit gives a break to those who will probably be good tenants but don’t have a lot of cash lying around to drop all at once. And making the security deposit non-refundable helps alleviate some of your risk in renting to someone with a lower credit rating.

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Up in Smoke: When a Tenant Smokes, the Damage Can Be Devastating

If you asked, some landlords would say they wish there was one more detail a tenant screening service could tell them about a prospective tenant — whether or not the person smokes.

Many landlords don’t like to accept tenants who smoke because of the damage that cigarette smoke does to walls, carpeting and furniture (let alone the potential for burn marks on the floors and complaints by nonsmoking neighbors who live close by and prefer to breathe smoke-free air.) But many applicants are good at hiding the fact that they are smokers.

If you ask an applicant whether he smokes and he says “only outside” or “only occasionally,” consider that answer to be “yes.” Someone might usually smoke outside, but during those long cold winter months, you can’t be sure your tenant isn’t staying curled up in his living room for a smoke instead of shivering on his porch.

When you advertise your property, be sure to include that you’re looking for nonsmoking tenants only; that should help weed out many regular smokers. And even if the tenant you find says he or she doesn’t smoke, include the rule in the rental agreement that there will be no smoking on the premises, and make sure they initial it. You might even want to stipulate that if smoke damage is found on the premises, the needed cleaning and repairs will come out of the tenant’s security deposit. 

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Make the Move-Out Process Smooth for Tenants — And You

Most tenants have good intentions when they give their landlord a move-out date. After all, they want as much of their security deposit as possible. But often tenants, especially ones who’ve lived in the same rental property for multiple years, grossly underestimate the amount of time, money and effort it takes to effectively move all of one’s belongings from one place to another. When time gets tight and energy runs low, the first thing to go is the tenant’s attention to the rental unit he’s leaving behind. Unwanted items are left piled in empty rooms, the kitchen and bathrooms are not cleaned properly, sometimes even the refrigerator isn’t totally emptied.

This leaves the landlord with a mess and a hassle – and if you’ve already got new tenants slated to move in right away, you could be left scrambling for a professional cleaning service to come at a moment’s notice and undo the damage done by the previous tenant.

The good news is there’s a simple way to help avoid all that. When a tenant gives his 30-day notice that he’ll be leaving the property, an effective landlord should be proactive and immediately give the tenant three things:

1. A copy of his signed rental agreement with any requirements for move-out and the return of the security deposit highlighted, as a memory refresher.
2. A copy of the move-in sheet that should have been filled out and signed by both tenant and landlord upon the tenant’s arrival. This should list, room by room, any damage or issues that were present when the tenant moved in. That will give the tenant a good guide when he’s getting ready to leave about what, if any, repairs he needs to make in order to leave the rental unit in the same shape he found it.
3. A move-out guide that gives a basic cleaning checklist for a tenant. Some tenants won’t remember to clean the oven or defrost and clean the freezer unless it’s written on a handy to-do list. 

Arm your tenant with all the information he needs to make a smooth exit and ensure he receives all, or at least most, of his security deposit.

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