I keep reading about people who are in foreclosure because the value of the property went down. Further reading shows that many of these people are still fully employed. I don't get it. The mortgage payment is the same regardless of the value of the property. I believe some people are walking away from their obligations so they can get a better deal elsewhere. Is it the taxpayer's fault that they paid top dollar for the property?
The more we know about the 'story' of the folks who are moving in, the easier it is for landlords to determine which folks just hit a rough patch, and which people really are habitually poor at their finances. And, we have ways to draft leases that give the landlord some additional protections and give the tenant a little more incentive to pay on-time and in-full.
Experience in the leasing market gives agents and landlords the ability to think ahead to the 'what if's" and cover those bases in the terms of the lease. Everybody's story is a little different, and there are just a lot more people looking to lease right now, which means the landlords can be a little more picky with who they allow to reside in their properties.
Two quick thoughts:
Some people are habitual deadbeats. Others have a good history, and have gotten into some trouble--foreclosure, medical bills, etc. You absolutely want to screen out the deadbeats--people with a repeated history of credit or financial problems. If they'd previously had good credit but ran into a specific, identifiable problem, then you want to make sure that, whatever that problem was, that it's resolved now.
Many people suggest screening. That's good advice--do both a background check and a credit check. As for contacting past landlords, here's a tip: Don't stop at the most recent one. Especially if the prospective tenants, for whatever reason, are leaving a place early. Example: A family moving a few miles to be closer to an ailing relative. The family has a good income. The present landlord gives a glowing recommendation--good tenants, never a bother, always pay their rent on time. That's a red flag. Check with previous landlords. It's possible that the landlord with the glowing recommendation wants the tenants out as soon as possible and is willing to give the glowing recommendation to do so. Previous landlords may be more honest. (Don't ask me how I know this one!)
Hope that helps.
You might run THEIR credit report and check their past living history the best you can (or your agent/mgr).
1) the dog they never had or ex boyfriends dog - all of a sudden shows up.
2) or the non-working ex shows up - for a "couple" days
3) the kids that they forgot they had show up - for a"couple days"
4) the lost kitty finds a new home - or has to go to the shelter
5) tenant starts smoking
6) their car breaks down and winds up a test project in the driveway
7) their friends car breaks down and winds up a test project in the driveway
8) they decide to save money to buy a house by not paying you rent
9) they decide to get a divorce
These aren't only tenant issues. These are REAL issues that actual home buyers should look into when they are looking at homes - don't just drive past with an agent on a nice "quiet" time -like when the neighbors isn't around.
A credit report is a start - a tenant lifestyle report is needed - or a homeowner lifestyle report,
People are people. Not everyone likes their neighbor, their looks or jokes.
The landlord just needs to take a deep breath and not panic when the phone rings.
More importantly, the landlord should not be a landlord if they don't have the funds to cover repairs, vacancy and, for those agents out there, a commission.
The tenant will not always cover your costs. DO YOUR OWN CALCULATIONS.
Trust me. 25 years of landlording.
I used to be able to look at someone, tell them what the rent was and ask for the 1.5 month security deposit and hand them the lease.
That was then - either people understood they had to pay the rent or they looked back at me and said they will thiunk about it - which they would and never return.
Today, someone can look nice, drive a nice car and hand you over the security deposit and you think great - O can't wait to I get my next rent check so I can make my mortgage payment or pay the taxes.
One month, two months and that professional tenant just cost you 5 or 6 months rent.
rentlaw.mysmartmove.com for tenant screening - remember, it's onily an indicator of past performance ):
We are afraid that landlords like you will be unwilling to rent to us because of giving up our home, when you could not FIND better tenants than we would be, who take pride in keeping a clean home and landscaped yard. Please don't judge all those going through foreclosure until you hear their stories. We don't all deserve the stigma we've been given.
I thought some of the suggestions on this link were very helpful. http://www.thelpa.com/lpa/tips/5_step_screening.html
With RentLaw.com The National Landlord Tenant Guide, you can run a report from $20 or $25 depending on the info pulled.
RentLaw.com with rentlaw.mysmartmove.com is perfect for small landlords.
And remember- you never hos HOW perfect a tenant is. A report is only an indicator of their past payment history and what was contained in public databases.
The applicant pays the fee, the site does a credit, and criminal background check and grades the applicant. It is free to the landlord if they set it up for the applicant to pay the $45 fee. It is a great system, easy to use and very helpful. I guess we got lucky because we had so many applicants to choose from. The landlord can manage multiple properties through their account.
2nd option: Verify the address on the application by going out. Income Verifcation. Verify References, Pay History verification. Request Background checks. You have to be creative.. You want to be fair, understanding, smart, and of course within landlord/tenant guidelines from start to finish--- all at the same time.
Keep in mind that great tenants can also be a source for finding other great tenants.
Also, a well written, thorough, and strong lease agreement will help to encourage many undesirable candidates and/or tire kickers to self-select themselves out of that application pool. For example, if your lease specifies that you have cameras that are always recording, and that you periodically share them with the police, then some potential tenants involved in various "extra-curricular" activities will move somewhere else. Another example: if you state in your lease that you'll pursue all civil and criminal remedies afforded to you against anyone cooking/using meth, or possessing any meth cooking paraphernalia, then you'll encourage them to pursue other living accommodations. Many of characters "love" it whenever they see a clause for random and regularly scheduled (like once per quarter) inspections.
Finally, although this is another lease-related issue, this one deserves it's own special treatment. You need to incorporate 1 or more decent hassle-related clauses into your lease. Your tenants need to know that the more hassle that they give you, the more they'll pay. For example, if tenants know that they'll have to pay a $100 deductible for any plumbing related issues, then they're not going to try to flush stupid stuff down the toilet. If you pay the utilities, and you cap the amount that you'll pay, then amazingly enough you'll notice that your tenant's utility bills usually won't go over that cap. If you incorporate a $200/"driveway project"/month fee into the lease, then you'll notice that those driveway projects won't show up on your property. If your tenants know that they'll have to pay a per diem in addition to the rent whenever they overstay their lease, then they'll make more of an effort to move out on time.
I'm located in Northern New Jersey, just on the New Jersey of the GWB bridge. As a long-time, experienced realtor, I'm happy to asnwer any other questions related to rentals or any real estate items.
Wendy W. Dessanti/Weichert Realtors
201 310-2255/201 541-1449, ext 192
Unwavering Commitment to Service - in New Jersey
The best way to ensure your renters are good are
!Hire a Management Company! if this is not an option see below
1. High Credit Score, Ask For Cosigners on credit scores lower then 700
2. 3 References
3. Employment History at same job lasting longer then 6 months minimally (pay stubs, tax returns)
4. Contact Last Two landlords of residences the person(s) have stayed at
5. Offer long term leases only as these people tend to take better care of the property and pay their rent.
Keller Williams Realty
Just because some has a foreclosure on their report doesn't always mean they won't be a good tenant. Their credit report will tell a story if you take the time to read it closely.
I usually check for debt to income as a big factor, because if some if living on a very tight budget, you may eventually see problems with the rent being paid on time if paid at all.
The best way to go is to higher a real estate professional or a property management company to help you through this process.
Residential Real Estate Professional / Prestige Realty
Bianca Bennett / 602-570-7898
From my experiences, the best way is to screen for tenant employment and income, either is a good predictor of rent-paying tenant. If you feel that employment and income verification is too time-consuming, you can outsource it to specialized companies. TheWorkNumber is a decent option, but it only covers 1/3 of US work population and is expensive. Tenantify is a newcomer and proves to be reliable and affordable.
Tenant screening is a multifaceted process that should be seen as being fair to the tenant and yet still protects the landlord.
So In keeping with the Question...How can you find good tenants?
http://www.tenantverification.com advocates that landlords/property managers make tenant worthiness as much a part of their screening criteria as credit worthiness.
As noted in some of the comments here... there are valid reasons why some Individual(s) credit history has been negatively impacted. . e.g. lost a house during the housing crash But there are many more scenarios where Individuals have bad credit but are good tenants.
So how does a landlord determine tenant history? Call current and previous landlord to determine rent pay habits. Was rent paid on time? Was all rent paid upon lease expiration? Any damage to rental? Would you rent to him/her/them again?
Bad or high risk tenants use landlords/property managers as a revolving line of credit, they never pay rent, are hard to evict, do not suffer any consequences and carry on to the next landlord. So in addition to obtaining a consumer credit report, you had better make some phone calls.
This piece of due diligence along with a credit report should prevent or at least minimize of rental income loss. TIP: Compare personal information on credit report to personal information on rental application. Does it match? Are all addresses listed on rental app? Look at some photo ID such as a D.L.s as well and compare information on it to rental app. Does it match?
The e-guides noted below provide valuable tips & advice.
Get a FREE landlord e-guide and a FREE tenants e-guide to renting simply by emailing email@example.com and requesting same. No promo involved. There are links in the e-guide to above noted website, which is all the promo you will see/get.
A couple of good educational websites for landlords & tenants are http://www.tenantsinfo.com and http://www.landlordfraud.com
Hope this helps out. Don't forget Landlords need tenants and vice versa. Most tenants are good tenants, some need to be educated a bit with respect to responsibilities etc. www. tenantsinfo.com will do that.
The landlord experience can be a pleasant one if there is a process or a plan that protects the landlord and benefits the tenant and/or the tenant community. The blog/newsletter at http://www.tenantverification.com has new information every two weeks that landlords benefit from.
Since so many people are in foreclosure and short sale situations, partially because of the banks....it is important to look at other payment records.
Personally, if someone paid everything, except their mortgage in a timely manner, I would most likely give them a chance.
I would look at that record and their employment history and income, and if that looks good, they should be able to make the monthly payments. Many people are going to need a break, and a place to live...if they are working and the only negative is the mortgage...give them a break.
Things I would ask for:
1. Letter from employer stating the probability of continued employment.
2. Letter of recommendation from former landlords (if they had one)
3. Letters of reference from non family members
4. A letter from them, explaining how they got into this position
Best of luck !
My tenants like it too, because they can also see their report AND it only creates a soft inquiry on their credit. Other products have a minimal impact on their credit score.
Worth checking out!
I you lose one month in rent because you are looking for people, you lose that 10% you tried to save.
If you don't rent a tenant credit report and wind up with a dead beat tenant (you can still lose), you lose more than 10%.
If you don't know what you are doing - you lose more than 10% .
Ask around as well - many agents work for 1/2 month rent (if they do their own) or a flat 5% of the rent.
If you need to run a Tenant Credit Report with a recommendation, see rentlaw.mysmartmove.com
If you need to learn more about being a landlord or tenant, see this reference and gain knowledge.
Get an overall picture of the applicants and meet them if possible. Run a credit check on them and look at the big picture. A past foreclosure or a short sale does not mean they will not pay their rent. Perhaps they have they paid all their other bills on time. Do they have a recent bankruptcy? What was their situation that led to the hardship?Do they have any past rental history where you can call the previous landlord and verify they paid on time and took care of the place.What is their current employment? Is their income enough to pay the rent. They should make more than 40x the monthly rent in yearly income.
It is often an overall picture you create of the applicant with many pieces.A person that has paid on time and has excellent credit may be a lower risk but can still fall on hard times or not take care of a place properly. Take the time to gather as much information as you can on the applicant and make an informed decision. If necessary ask for an extra months rental deposit if allowed in your state.
You can verify previous address. Bad tenants often use a previous address - their mothers, their friends or false landlords to verify their stellar record.
Things happen and good tenants can become bad tenants.
Screen the tenants - small landlords should look at RentLaw.com Tenant Screening Services - rentlaw.mysmartmove.com
pay their bills (credit report)-if foreclosed okay -but did they pay other bills?
not too much other debt
you can't be sure they have a pet or will get one, but they can do damage
try for deposit, but you are competing with some others who don't require deposits- I don't know how it is possible-if you have no deposit you take a big risk-(maybe only big apt buildings do it sans deposit so for them it evens out)