Warning Signs to Look For in a Tenant Screening Report

Most property managers and landlords understand why it is critical to run a tenant screening report, determining a potential tenant’s credit is only part of the process though, as a credit report only shows the likelihood of a tenant paying their rent on time, it does not really give a clear picture of whether the prospect will be a good tenant. Running a full package with credit and background check is a must if you want to get the full picture of the potential tenant. All Landlords/managers have their parameters of what type of tenant they are looking for, below are a few warning signs to be aware of before you execute a lease.

1. Payment History

Late payments are a HUGE red flag – be sure to see if they have a track record of late payments or if there was a short amount of time they had an issue and if there was only a short time of late payments be sure to find out why.

2. Financial Stability

You should look out to see if they have a history of on-time payments, as well as if they have applied for a large amount of credit lately. Also, be aware of the amount of debt they currently have and how much of their total credit has been tapped.

Not all debt is the same so be sure to evaluate the type of debt depending on the source you received the information from.

3. Bankruptcy

A Landlord/Manager obviously does not like to see a bankruptcy but if it has been discharged you may be ok with looking at their more recent credit history and how they have performed in rebuilding their credit.

4. Judgements

If you find a judgement from a previous Landlord/Manager it may be wise to discuss with them as well as the potential tenant about what happened before you make your decision.

5. Criminal Convictions

While a past criminal record should not necessarily limit anyone from housing be sure to see detailed information about the previous incident(s). You as a landlord/manager have a responsibility to the rest of your tenants as well as your property. Always confirm the report includes the at least a national database as well as a sex offender database.

6. Previous Rental History

Try to verify an applicant’s previous rental history by calling their last two landlords and checking a rental history database. Be wary of a current landlord reference, as some landlords may paint a prettier picture to get rid of a problematic tenant. Lastly, when calling the landlord, ask them details of their rent, when they moved in, how much they are paying etc… all the details should match what is on the application, or you may not be talking to the real landlord.

Conclusion

There will always be some risk in choosing a tenant to live in your property, but by having the applicant’s credit, criminal and eviction history you will be able to make a much more informed decision since you will be able to evaluate the risk a lot better. There is always the option to negotiate the lease amount or security deposits according to their credit information, larger deposit or higher rents may be something to consider as you negotiate.

Evictions Due to the Holidays

Many property owners/managers are struggling with the fact that during the holidays many tenants held back on paying their rent so they have extra money to buy gifts for their family, which in turn makes for a tough decision for the owner/manager. When an owner/manager is faced with a situation like this they have a few options, start an eviction (which nobody wants) or work out a payment plan with the tenant, most opt to work it out with the tenant and let them catch up but some do go ahead with an eviction as they feel the tenant will just do it again next year or others may follow in their footsteps.

I wanted to put together a list of options that may help alleviate any of these problems for the 2017 holidays.

• Have them add a little extra to each month’s rent so when the holidays roll around they are ahead of the game.

• Work out a plan where the holiday month is added to the end of their lease.

• Work out a payment plan over two or three months after the holidays, but be sure to add interest (reasonable).

We all know that evictions are a time consuming and costly expense, so a proactive approach may make 2017 even more joyous.

How Property Managers and Multi-Family Employees Can Help Uncover Human Trafficking

Human trafficking is the act of recruiting, harboring or receiving a person through a use of force, coercion or other means and transporting for the purpose of exploiting them (United Nations Office on Drugs and Crime).

Most people in the United States are not aware of how prevalent Human Trafficking is in the United States. Those that are aware of the problem believe that trafficking is predominantly for the sex trade, but in fact it is more for forced labor and that includes individuals that are working as maids in high income communities. If we know what to look out for, we may be able to help some of these individuals get free from the invisible chains that bind them.

The following are some telltale signs to look out for:

• Too many people living in one apartment unit

• Abnormal amount of traffic to and from an apartment unit

• Locks on doors and windows to keep people in, instead of out

• Closely supervised tenants (restricted in movement)

• People who are always with others who must speak for them, but do not appear to know each other very well

• People who do not have access to their own personal documents

• People who are not allowed to drive themselves anywhere

• People who are picked up every day in large vehicles and who return at the same time every night

• People who show signs of abuse, malnourishment or fearfulness

It is estimated that approximately 700,000 to 2 million people are trafficked around the globe every year (Safe Horizon). There is such a range in the statistics because trafficking can be difficult to spot, and is an extremely covert and underground activity. If a person is in possession of drugs, the drugs themselves imply illegal activity, and are easier to find, confiscate, and convict.

Possession of a human being is a much harder area to prosecute. It is easier to move people from state to state, or country to country, which is why human trafficking has been named the fastest growing criminal industry (UN Refugee Agency). It is less risky to traffic a person than it is to traffic drugs, at which point human traffickers may then force their victims to commit crimes for them. Train your team to know what to look for (note: not during the application process). In the cases of labor trafficking, teach them to ask about where someone is from, their accents, their families, their jobs and sparking conversation can be a good starting off point. Please be advised that many victims of trafficking often do not consider themselves victims, or are terrified for the safety of themselves or their families, so you may not get a true answer from them, if directly asked. Victims of trafficking are constantly being monitored by their traffickers, so if it appears as though someone else feels the need to stop the conversation you are having with a potential victim, it could be an indication that something is not right. I hope these few tips can shed some light as to some what you want to watch out for, I also recommend that you speak to your local Police department about further tips that they may feel are helpful. If you have any concerns or believe that human trafficking is occurring, you can reach out to the National Trafficking Resource Center at 1-888-3737-888.

What Investors can Do to Bring Value to their Rental Communities

As investors, many of us buy properties with grandiose dreams of big returns and how this property will be a great addition to our portfolio.

A broker calls us and says he has a deal. We run the comps, complete the due diligence inspections, apply for a loan and make sure the area is not in decline.

We prepare for the transition and begin the on-boarding of the property just prior to closing so we don’t miss a beat in the process. We look at the rent roll to see where we are with each resident and decide whether to increase the rental rates.

The one thing that many investors never tend to consider is what else we can bring to the community that we are now a part of. How can we enhance the experience and quality of life of the residents living in one of our communities? Here are a few things to consider:

• Anonymous suggestion box

• Bike-friendly storage areas

• Barbecues in the open common areas

• After school programs for your residents’ children

• Create activities for the elderly to be involved with

• Have a small business office with internet access for people to come work in

• Have a meeting space for the residents to use

• Have an event space for the residents and your community to use

• Gyms can be good if they are maintained properly

• Offer classes for some of the residents like knitting, computer, cooking

• Child care (part time)

• Create a dog run for their dogs (this also minimizes waste on the property)

• Create a dog/pet wash room

• Community events such as local fair, petting zoos (many local retailers would chip in and help pay if they can have a booth or give items to your residents)

• Hold a community meeting so everyone feels like they have a voice in their community

Some of these may be a bit difficult to immediately implement in your community, but if you can take the time and make an effort, you will find that when you get a vacancy, it will rent faster.

Most likely, it will be from a referral from a resident who wants someone they know to enjoy the experience of living in your community, which will therefore, cut down your marketing expenses and improve your ROI.

As an example, Teruko Springs, a 73-unit multifamily property in Dallas, Texas, has implemented a free after school tutoring/mentoring program for its residents’ school-aged children.

The center has computers with educational software and provides a tutor four days a week. The center is also utilized by the adults in the community to conduct online job searches and complete online educational courses.

During the school year, the center provides after school snacks for the community’s students, and during the summer months breakfast and lunch are served through a local church group.

According to the manager Sheryl Garza, the results of having this facility and these programs for the community have been lower turnover, and when they do get a vacancy, they fill it quickly thanks to referrals from their resident. There’s less on-property crime, and residents who socialize more with one another are both more involved and concerned with their neighbors and their neighborhood.

Garza is a firm believer in having this offering in her community and believes that it not only helps her property maintain quality residents but also helps to improve the entire community due to the fact her residents take pride in the community they live in.

After seeing the positive effects of how these efforts have enhanced the properties they have been implemented, I am convinced that working in a few of the above options will create a higher ROI on your investment and make the assets easier to manage.

By offering amenities that show you as the landlord care about the residents, your residents will in turn be happier and less likely to leave. This can save a property substantial amounts in expenses by minimizing unit turns, and it also increases the overall income by not having to fill a vacancy.

The most basic of these options may not seem like much to you and me, but to your residents, it shows that you are making an effort to make their quality of life better.

What investors can do to bring value to their rental communities

The Americans with Disabilities Act for Landlords And Property Managers

The Americans with Disabilities Act, commonly known as “ADA” is a federal civil-rights law protecting the rights of people with disabilities. The ADA places guidelines for access to:

• Employment

• State and local government programs, services and buildings

• Access to places of public accommodation such as businesses, transportation, and non-profit service providers

• Telecommunications

• George Bush signs the Americans with Disabilities Act of 1990; standing left to right Reverend Harold Wilkie, Sandra Parrino of the National Council on Disability; seated left to right, Evan Kemp, Chairman of the Equal Employment and Opportunity Commission, George Bush, Justin Dart, Chairman of the ‘s Committee on the Employment of People with Disabilities. Washington DC, USA, 26 July 1990. (Photo by Fotosearch/Getty Images).

The scope of the law is fairly broad and addresses many of the obstacles affecting the participation of people with disabilities within society. Many of the ADA’s civil rights protections parallel the Civil Rights Act of 1964, and the protections it established for racial, religious minorities and women.

Occasionally, management companies may be faced with a lawsuit for non-compliance with ADA laws. These compliance problems are usually preventable as many times they result from violations which stem from the lack of proper guidelines, policies, procedures, and/or practices regarding accessibility. Implementing current policies can go a long way toward avoiding the expense associated with ADA lawsuits.

As owners, landlords, managers, and tenants can be jointly and severally liable in the event of non-compliance. Making it important to ensure you have safe practices in place to address any ADA issue. Although a landlord may not shift liability for ADA compliance to their tenants, a properly drafted lease may call for the tenant to remediate. Remember though, tenants cannot be held liable for violations in areas which are not under their exclusive control, such as common areas.

Investors who purchase real estate need to take a serious look at their property during the inspection period. Acquiring an asset which does not comply can be a large expense when bringing it to code. It also puts you in a position for a potential lawsuit.

If you find the property you are acquiring does not meet current ADA standards, be sure to get a bid from a licensed contractor who is adept at addressing ADA issues to bring the property to code. Also, hold additional funds in escrow or ask for a reduction in the sales price to adjust. Alternatively, an investor may want to hire a professional ADA consultant to determine if the building (due to the age of construction, use, and possibly the cost to remediate) is exempt for ADA compliance.

Property Management companies typically are not held liable for the ADA compliance (unless they purposely act in violation of the law), as they are acting as agents for the landlord. As a property owner, you want to be sure you have a property management company you know will not put you at risk. I always recommend taking regular meetings with your property management company to go over all aspects of your investments, and confirm all inspections are handled. It also goes without saying, get it in writing!

Real estate agents need to be aware of the rules governing the ADA, but it’s not common for them to offer any advice. Typically it goes beyond the scope of their job and may create liability for them. However, they should be able to refer you to a reputable, professional ADA compliance consultant to advise on compliance.

For further information go to https://www.ada.gov/

The Americans with Disabilities Act for Landlords And Property Managers