Reviewing a rental Application

Last week, we went over how to have a productive showing and what information regarding the prospective tenant is essential to get on the application. Today, we will point out how to review the application and three most important details in making a decision on qualifying the tenant.

Earlier in the year, we went over the high 5 of tenant screening http://bit.ly/1mUOJhB. This is a quick over view of tenant qualifications and summarizes 5 of the important factors in this process. Today we will drill down a bit further. Here are three of the most important elements we think are critical in tenant qualification along with some links to detailed videos we have produced on these topics.

1. Housing History - It is extremely valuable to get positive feedback from another property management company or a company that rents apartments. A good reference from a private party may have no relevance. This is because many people will use their friends or family members to fake a good reference. http://bit.ly/1wwgboj

2. Credit Screening for evictions - This is an important step to take. At RPM West Valley, we pay an additional fee to our reporting agency to get this information. For further details regarding credit analysis you can review this http://bit.ly/1vJEGiP .Also, check out this little trick in analyzing the credit report we go over on our podcast http://bit.ly/1vJEGiP

3. Income Verification - http://bit.ly/1oRMGxx This is a good resource that goes over what to look for in regards to income. Once this that is important is job history. In our experience, the most reliable tenants are the ones that have a good length of time on their job. Make sure you get two full years of employment and be leery of job hoppers. Follow @rpmwvphoenix

Good Ideas for Property Showings

Last week, we detailed some elements of first component of the tenant rental cycle, tenant qualification. This week we will continue with this component. Today's blog will focus on how to show your property correctly and detail what the right information is to get from the tenant at the showing for qualifying purposes.

After the initial call, if the tenants pre-qualify and they are still interested in the property,it is now time to schedule a showing.

Before you do this, it is important that you disclose any significant, obvious and relevant information regarding the property that may be different from normal. This is because unusual circumstances could deter some prospects from renting your property. However, it is smart to disclose potential issues up front to save your time.

A common example of smart disclosure would be letting a prospect know if the rental property does not include a refrigerator. This could be a deal breaker to a prospective tenant. However, if you disclose this up front, at least you know it’s a no go before you waste time driving out to the property and waiting there while the people look at it.

If you have more than one group interested in seeing your property (or anticipate enough interest that you will be showing to a multiple groups), we have found that it is much better to schedule group showings. Group showings will not only save you time but it will also show the prospects that this is a hot property and if they snooze, they may lose out on it.

It is also a great idea to e-mail an application over to the prospect(s) for them to fill out prior to the showing and let them know if they need to have cash or a money order for the application fee (if applicable) and appropriate income documents. There is no point in waiting at the showing for people to slowly fill out the application or for them to go to the bank to get the application fee.

Make sure that the person you schedule the showing with has your phone number in case they need to cancel. Also inform them that you will be calling one hour to confirm the showing and it is important that they confirm. Let them know that and if they do not answer your call or give you a call back of your message within 10 minutes that you will not be showing up. Arrive at the property 10-15 minutes prior to the showing.

Once you arrive at the property, make sure the temperature is acceptable. In the summer in Phoenix, there is nothing worse than driving in 110 degree heat to see a property where the a/c is not running or set to an uncomfortable setting. As a rule, keep the property 85 degrees while vacant and kick the a/c down a bit for the showing. If you want to keep the temperature at the property higher while vacant, you’ll have to arrive much earlier to get it to an acceptable show temperature.

It is a good idea to open the blinds and turn on the lights. If they property has any kind of an off smell, open the windows (if weather permits) and spray some air neutralizer. We have found that being pleasant without being over-bearing is the right approach. It is important that the prospect feels comfortable and knows they can ask you questions.

If the prospects don’t like the property or appear disinterested, you are not out of line to ask them what they don’t like about the property or why they don’t want to move forward. They may not want to apply simply because of personal preference but they may point out something that could be valuable to get the property rented to another party.

If the prospect likes the property, they can now give you the application, employment documents and application fee. It is important that the application is completely filled out and signed by all prospective tenants over 18. Make sure you have the following information on the application:

1- Applicant Information- Name, cell #, e-mail, SS#, Driver’s License#
2- Employment History- Current employer and previous employer if first employment is less than 2 years.
3- Residential History- Last two years landlords, rent amount and phone numbers.
4- Bank Account #
5- Ask on app whether they have ever been evicted or didn’t pay rent
6- Ask on app if ever asked to move out by landlord or broken a lease.
7- Signature to obtain credit report and rental history.

The other documents that you will need are last two period pay stubs if they are W-2 employees and bank statement (2 months) and tax returns (2 years) for self-employed people. It is up to you if you will accept a check for the application fee. We won’t. We only take cash or money orders.

An application fee is a good idea as it helps you recoup the cost of running the app. It also helps ensure the people are serious about being a potential renter. Once you get the required information it is important to communicate when you will get back to the tenant with an answer and what the next step will be if they qualify.

The Ins and Outs of Tenant Qualification

Last week, we went over 5 main components of a tenant rental cycle. Today, we will go into a little more depth regarding the first component, tenant qualification. We will also include some more links to our resources about this component of the rental cycle.

Tenant qualification begins with the first inbound phone call from a prospective renter. Although this is usually a quick call, much can be assessed during the call and asking the right questions in the right way can save you time and spare you grief.

On the first call from a prospective tenant, you are mainly attempting to quickly survey these three important factors:

1.    Rental History

2.    Income and Job Security

3.    Credit History

It is best to ask the prospect in a series of questions. How you ask each question is as important as what you are asking.

For rental history, you could ask “How is your rental history? “. However if you phrase it like this, you will probably get a lot of general responses like “ok” or “good”.

We have found it much more effective to ask the rental history question in a way like this: “When we call your previous landlords, will we find a record of any late payments in the last 3 years”? Asking the question like this makes the person be specific with you and it also shows the prospective tenants that we will be checking on them (in case they have any thoughts BS’ing us).

Once you get an answer for this question you can then evaluate the response. For a good explanation of what you should be considering, you can refer to this video http://bit.ly/1wwgboj.

The same questioning approach applies to the Income and Job Security question. You may be tempted to say something like “Do you have a job and do you make 2 ½ times the rent price“? You will find that if you ask the question this way you will get a bunch of “yep” or “uh-huh” responses.

The best way to phrase the Income and Job Security question is something like the following: “Can you tell me how long each person on the lease has been with the same employer and can you ballpark the combined gross amount that we will see on the W2’s of all of the tenants that will be on the lease?”

It may take a few seconds for the prospect to do the math, but this will help you get the most accurate information you can and also show the tenants that you will be checking on this as well. We go over what is acceptable regarding income at http://bit.ly/1oRMGxx.

If you have proceeded as suggested above and at this point in the conversation the person starts to object your line or the detail of our questioning, they probably are hiding something and would be wasting your time if we took things further.

If we get to the next step, the credit question is asked in a similar manner. If you ask a general question like “How’s your credit” you will get a lot of “good” or “ok” responses.

It is better to phrase the credit question like “When we run your credit report, will we see that you are paying on time on a car or credit card and that there are no late payments or outstanding debts?” You will find that phrasing the question like this will engage the prospect and they will be more likely to giving you the truth and the details of their situation.

The credit report is the most complex and subjective piece of the tenant qualifying triple, but we give you an analysis trick here http://bit.ly/1vJEGiP.

You will find that if you handle the tenant qualifying stage correctly and start on that first phone call in, you will get the best information you need to analyze the prospective tenant’s worth. If you follow our advice, you will save yourself a great deal of time and stave off potential problems by ensuring that you are showing and renting your property to the right people.   

Check out our New Podcast

Check out our new podcast. Our monthly podcast will have information about how to successfully manage rental properties.  The pod will cite actual real life examples of situations that landlords will encounter as well as solutions.

On our introductory show, will look in detail at how to screen your tenant for your Phoenix rental home.  We uncover a common oversight regarding tenant credit analysis and address possible security deposit options.  

Develop a Consistent System to Make Your Landlord Life Easier

At RPM West Valley, we manage hundreds of rental properties. We have a great staff and advanced software systems that help us do this. However, perhaps what has helped the most is that we have implemented consistent systems and procedures regarding most management aspects we tackle.

We have a defined and detailed process for items like leasing, tenant behavior and maintenance. Because we have done this, most management ambiguity is answered we are set up to function quickly and efficiently. As an owner, having a consistent system and process is something you can do whether you have 1 or 100 properties.

Developing a repeatable process will take some time to start off with. However, once you have the process in place, you will find that the whole management process will be quicker, easier and less variable.

Let’s outline some of the items in the cycle of the rental process to get you started with your system. We have included some links to some of our material and recommendations that should help.

1. Tenant Qualification- Being consistent and correct on this will give you a good start on having a successful tenant experience. http://bit.ly/ZD31Kd 

2. Move In – Making sure this is done correctly will save you a possible headache down the line. http://bit.ly/1rYqfBd

3. Maintenance- Have a consistent policy at all properties regarding as is items, items you will fix, items that the tenant will be held responsible for and emergency items. Make sure your vendors are skilled, responsive and comfortable with tenants. Institute a process with your vendors regarding tenant communication, response time and payment.

4. Move Out – Along the move-in a consistent process here will save you when it comes to security deposit disputes. http://bit.ly/1r267Pf

5. Turnover – Being consistent with this at all of your properties will not only save you time but also allow you to forecast expenses with more accuracy.  http://bit.ly/1Dthojv

Landlords Beware of an Eviction in Buckeye

As a Property Manager we have helped owners facilitate evictions for many years and thought we had seen it all; until that is we had to process an eviction for a home in Buckeye at the White Tank Justice Courts! BEWARE!!!

In all of the evictions we have processed over the years this is the first for us! We worked hand in hand with the property owner to complete an eviction with a problematic habitual late payer. All of the necessary steps were taken, the letter of law followed to evict the tenant out when September 2014 rent was not paid. The eviction proceedings were filed September 17th and the pretrial was set for September 23, 2014. The tenant appeared in court at the pretrial on September 23rd and was in dispute of the amount owed, not that the September 2014 rent was not paid. It is not uncommon, that if the tenant does not plead guilty a trial date will be set. In this case our trial date was set for September 30, at that time the tenant produced a copy an uncleared payment that she claimed was sent in to to pay down the past due balance, again admitting that she had not paid September rent. The judge granted the tenant a 7 day continuous for tenant to provide the additional payment was accepted and cashed. All parties returned to court on October 7th, at which time the tenant produced fraudulent proof that the payment was cashed. The judge gave the owner two options: take another 7 day continuous to dispute the payment was cashed OR accept a dramatically reduced judgment. We opted for the judgment as the continuous would have basically given the tenant the month of October in additional to September before a lock out could have been completed. It is unfortunate the judge did not see both sides of the case, be it the home owner paying the mortgage as they were drawn in by the tenants lies, sad, sob story and ultimate fraud. This again shows the importance of screening your tenants!!

Follow @rpmwvphoenix

Rentals Pet Policy

You have now completed all repairs on your home to get it rent ready and set the price. As you think about the funds you just spent getting your home into rent ready condition the thought of a potential pet in your home sends shivers down your spine. As a Phoenix Property Manager, we know the thought of allowing pets in your home can be scary however about 75% of all renters have at least one or more pet. Most of those pet owners are found to have cats or dogs with only a very small number having fish, reptiles or other types of pets. Most pet owners understand they are required to put down an additional pet deposit, the most common deposit is about a $250 / $350 in addition to the security deposit. Apartments may charge a pet rent however that is uncommon in a single family home. We do understand that it can be worrisome to allow pet in your home but if you’re not allowing pets, you’re turning away a large subset of renters. Limiting the number of pets, pet types and requiring a professional carpet cleaning receipt every so often are a good way to set your mind at ease when listing your property as pet friendly. WITH PET OWNERSHIP TRENDING UP, Having a pet friendly property is now, in addition to pricing and condition could put your property at a competitive advantage over those that are not pet friendly. Follow @rpmwvphoenix