What to look for in a tenant background check

Paying a tenant screening service to provide you with thorough tenant screening reports doesn’t make a bit of difference if you don’t take the time to read through them, carefully discerning the most important information to help with your decision of whether or not to rent to that particular applicant.  

Here are a few landlord tips for what to look for when poring over the tenant background check and application:

• Take careful note of any collections flags. Applicants with collections actions against them are much more prone to skipping payments or requiring eviction proceedings sometime down the road – and you don’t want that to be your road.
• Calculate the income to rent ratio. Tenants who make less than two times the rent amount are more likely to pay late, skip rent or stop paying all together. Also, if possible factor in the average amount for utilities at your rental property (something you already should know) as well as any loan amounts or credit card balances listed on the tenant credit check. Adding up all those expenses against the applicant’s income will give you a pretty clear picture of whether or not they are likely to be able to meet their financial obligations to you. Conversely, tenants who make more than three times the rent amount are much less likely to have payment issues.
• Be very wary of tenants who don’t have a bank account and only want to deal in cash. This can often be a sign of a problem, either with the person’s credit history or with their criminal record.

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The pros and cons of a furnished rental

If you’re a property owner considering renting out your property, or a new landlord wondering how to make the most money from your rental unit, have you thought about keeping it furnished? Most landlords think an unfurnished apartment is the easiest way to go, but in certain markets it could be beneficial to your bottom line if you offer your rental as a fully furnished place to live. You could be looking at a higher-end tenant; a professional in an urban area in particular might find a furnished place appealing. You could also charge a higher rent – in some areas finding a furnished place is rare and, as such, in demand.

Landlords who are worried about their furnishings being damaged should take heart:  Security deposits don’t usually include the value of the furnishings, but in case anything is damaged or needs to be replaced, your insurance policy should cover it. (Check with your agent to be sure.)

A few things to keep in mind before scouring Craigslist and auctions for some nice but inexpensive furnishings are the downsides to renting out a furnished apartment. For one thing, you’ll need to keep a careful inventory of everything you’re providing tenants, from large furniture to kitchen utensils.  And that means a higher chance of having to deal with maintenance and cleaning issues, as you’ll likely be faced with the occasional need to clean, repair or replace furnishings that become damaged or go missing.

Also, people who are looking for furnished apartments are not usually long-term lease signers. They’re often starting a new job in a new place, starting over in their personal lives, or in a temporary living situation due to an emergency. So you have to be OK with that kind of turnover.  Just remember that tenant screening is just as important with a short-term tenant as it is with a long-term tenant; perhaps even more so. 

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Spread Some Holiday Cheer to Your Tenants

Are you a landlord who gets into the holiday spirit? We smiled at recent online news reports about a landlord in Los Angeles who sent out a letter to all his tenants at the end of November saying he was spreading a little holiday cheer by discounting December’s rental payment.

With little fanfare, the landlord told his tenants, “Please deduct $70 from your regular rent for the month of December and perhaps use those monies to purchase a gift for someone special in your life. Thank you very much for your continued residence with us. It means a great deal.” 

According to the letter, the discounted December rent has become a bit of tradition for this landlord, who mentioned he had done it “for many years.” Regardless of the amount of a monetary discount, all landlords can learn from this demonstration of kindness and goodwill. You don’t have to discount rent in order to express your appreciation for your tenants and strengthen the landlord-tenant relationship. Perhaps a gift card or poinsettia plant, even a plate of Christmas cookies or a simple holiday card expressing your thanks can go a long way in a tenant’s eyes. A nice gesture in December will help you start off January on the right foot with your tenants. We’re willing to bet it will make you feel just as good. ’Tis the season!    

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Property Owners: ‘Tis the Season for Fire Safety Reminders

It’s that time of year, when the chill in the air and the approaching holiday can mean increased fire hazards in and around the home. All property owners, landlords and property management companies should be vigilant about reminding tenants of these hazards. Landlords and tenants need to know how to protect themselves, their possessions and their property.

Holiday Decorations: Use non-combustible, flame-resistant materials. Never use lighted candles on a tree, evergreens or other flammable materials.

Lights: Check for loose connections, broken or cracked sockets or frayed wires. Use UL approved lighting. Fasten lights to the tree and prevent bulbs from coming in contact with the needles or branches. Unplug all exterior and interior holiday lights and decorations before you go to bed.

Trees: Be sure a natural tree is fresh and less likely to become a fire hazard by cutting 2 inches off the trunk and placing it in a sturdy water stand; water the tree daily. Keep the tree away from fireplaces, wall furnaces and other heat sources. When opting for an artificial tree, make sure it is labeled “fire resistant.”

Portable space heaters: Keep space heaters at least 3 feet away from anything combustible. Turn on space heaters only when you are in the room. Don’t leave a space heater on overnight or near children and pets.

Cooking: Turkey fryers should be used outdoors and away from buildings and flammable materials.

Fire Escape Plan: Be sure your tenants have and know an escape route. Check to make sure there is a working fire extinguisher in the kitchen, laundry room, and garage. Remind them to never burn greens, papers, or other decorations in the fireplace. Test all smoke alarms, and replace their batteries every six months.

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Investors: Stick with up-and-coming neighborhoods

Property investors have a lot to consider when deciding which rental property in which to invest.  When weighing your options and trying to select the right neighborhood and the right property, you have to beware of those unethical investors who are trying to sell properties based on false rent rates, or showing higher cash flow than what will really happen.  When buyers fall into those traps, they find themselves in a mess of too much cash going out and not enough coming in.

Property investors, be wary of investing in property in areas that are going downhill. To the untrained eye, a depressed area with a few promising shops or buildings can be sold as “up and coming,” and while some are, others are on the other end of that slope, making the downward slide into being a forgotten neighborhood without the amenities of other areas in town. It will be a hard sell to get high quality tenants to live there, even if you set the rent below what you originally hoped you could get and do a thorough tenant check on everyone.

Your focus should be to buy and sell in neighborhoods where you have the odds of collecting rent in your favor. You might only make a profit of $150 to $200 a property, but if you actually get the rent every month you’re one step closer to a successful business. In a neighborhood where demand is low, you might luck out with a tenant or two who will pay on time, but chances are if they’re a qualified tenant, they won’t stick around for long, and the vacancy and likely repairs needed to a home in such an area will leave you in a negative situation.

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Landlord Tips: Curb Appeal Goes Beyond Cleaning Up

Curb appeal is something every landlord pays attention to when it comes time to land a new tenant. Attracting tenants to a rental property is done a few ways, one of which is by a carefully worded classified ad. But once the ad piques their interest and they obtain the address, a drive-by is the next step – and they have to like what they see when they drive by.

For many property owners and property management companies, prepping for the tenant drive-bys is limited to decluttering the front porch and trimming a hedge. But if property owners spend a little time and resources into making some small changes that upgrades their property’s curb appeal, they could be looking at a much shorter down time between tenants, and possibly even a bit more in what tenants are willing to pay for rent. If you’re interested in doing more than sweeping the front sidewalk, try these landlord tips:

1.     Play up the era. If your property is from a certain era, play up those features on the outside. Install outdoor lighting authentic to the period, add shutters or other small structural changes that add interest and charm.

2.     Use plants. Adding shrubs, flowers and even small trees in just the right spots can really make the place look inviting. You can also use foliage as additional buffers between close rental units, to add privacy.

Fences make good neighbors. People like privacy, so adding fences, whether a few decorative posts out front or a more substantial fence to enclose the property, will increase curb appeal – particularly for those with pets and children

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Use the same tenant screening process every single time

You’re a good judge of character, right? Every landlord thinks they have a natural gut instinct for picking out the honest, responsible tenant in a sea of possibly unqualified applicants.  There are signs to look for, of course. For example, a tenant applicant’s personal appearance – not to mention their punctuality – when they meet you to tour the rental property can tell you a lot about how they handle responsibility and how they care for their personal property. Also their tenant application can provide clues, based on the job and education they list, not to mention whether it is filled out in its entirety or turned in unfinished.

Many landlords still rely on their gut to tell them whether or not a particular tenant applicant is worthy of signing a rental property agreement and becoming their tenant.  If you are one of these landlords, have you ever faltered from that instinct? Have you ever considered accepting a tenant applicant on first impression alone, but then gone ahead with a tenant credit check or other form of formal tenant verification just to settle your lingering doubts? If so, you could be opening yourself up to claims of discrimination by a tenant or tenant applicant who feels they were treated in a way that was different and discriminatory.

Look, even if you are a great judge of character, property management is a business, and in business it’s best to rely on cold hard facts – every single time. Set yourself up with tenant screening protocols for every single tenant applicant you are seriously considering, and don’t waver from those protocols. That way you can be sure you’re being fair to all, AND you’re almost guaranteeing a better tenant than if you’d just “gone with your gut.” Visit ATS Inc's homepage for more info on how we can help you! 

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