Tenant Screening Background Tips

It is not at all difficult to go online and find an overwhelming number of different tenant screening companies claiming to provide property owners and landlords with a variety of different types of tenant background check reports. It makes no sense to throw your money out on ordering a tenant background check that is not comprehensive. Never order a tenant background check unless you are going to be receiving data that searches for data from every state throughout the USA, and be sure that it includes both civil and criminal court records because you need to be aware of all evictions and judgments as well as criminal history.

You cannot just analyze the criminal background of any individual and legitimately believe you have done a thorough tenant background check. This fact should be obvious, but most companies in the business of offering tenant background checks to landlords are not providing many of the key elements absolutely necessary for a property manager to make appropriate decisions about the financial health and dependability of his or her rental applicant. Very often, a rental applicant that has a history of needing to be forcefully evicted from a property will very often repeat this undesirable behavior in the future. It is not uncommon to find rental applicants who have made a living out of defrauding unsuspecting landlords that utilize very lax tenant screening standards, or quit often neglect ever running a tenant background check. There is no doubt that appearance can be very deceiving as we have heard many stories from unhappy landlords who relied upon their instincts to grant a least to a tenant and realize that they made a huge mistake.

Click here for tenant screening companies by state

The Importance of Residential Tenant Screening & Commercial Tenant Screening

Some think that tenant screening services are unnecessary. They believe that it is a waste of money when you can verify the information yourself by calling references. However, the fact is that with regard to an investment, everyone must make smart choices. The only way that one can make a smart decision is based upon accurate information. Unfortunately, people will lie in order to get what they want. It is these people that are willing to do anything that are the most dangerous to your investment. Employment screening services ensure that you are adding the right person to your team, and confirm based on their history that your employees and business are not at risk by this person. Tenant screenings confirm that the renter is credible and is consistent on paying their bills.

Life Without Background Checks

When it comes to not using tenant screening services, there are countless stories of homeowners that rented to someone that then skipped out on their monthly rent payment. One example is from the state of Georgia. The person renting the home skipped out of town while still owing two months of rent. Calls, emails and texts all were not returned by that person. All the homeowner could do was file with the court, and look into the potential of garnishing wages. The only problem is that he did not know where the renter was any longer. Tenant checks could have pulled up any history of this type of action, and prevented the homeowner from losing out on money.

Not using employment screening services can be even more damaging as it involves the reputation of a business being on the line. There are several stories where businesses that work with children had unknowingly hired a convicted child molester. The reputation of the business can be permanently scarred by one bad decision. Employment background checks can prevent businesses from making poor hiring decisions.

Types Of Screenings

There are multiple facets to employment screenings. The first checks for a criminal background. This is important to the safety of other employees, yourself and to your business. If an employee has previously been convicted of embezzlement then it would not be a good decision to hire that person for an accounting position. The employment background checks also evaluates the work history of the candidate to verify that the information provided on the resume actually matches the recorded work history of the individual.

Tenant screening services check the criminal background of the renter as well. This is extremely important if the person has a history of drug abuse. If illegal drugs are made or distributed on the property, the government has the right to confiscate that property. In turn, you could lose your investment because of a renter. On the other had it also checks the credit history of the renter to ensure that they do not have a record of skipping out on their bills.

Protect Yourself From Risk

Regardless of your situation, you will want to employ either tenant or employment screening services to ensure that you are protected. The best way to protect yourself from risk is to make sure that the employment or tenant screening services you use meet the Fair Credit Reporting Act standards set by the federal government. Protecting yourself and your business is important, start by getting background checks today.

Article Source: http://EzineArticles.com/?expert=Chris_A._Harmen

 

First Drop in TransUnion Credit Risk Index Since 2008; Signals Improved Consumer Credit Risk Conditions

TransUnion’s Credit Risk Index (CRI) declined during the first quarter of 2010after five successive quarterly increases, signaling thatconsumer credit risk conditions in the U.S. are beginning to improve.  The Credit Risk Index is a statistic developed to measure changes in average consumer credit risk within various geographies across the nation.

TransUnion’s Credit Risk Index decreased nationally 85 basis points to 128.82 from 129.67 during the firstquarter of 2010, the first decline of this measure sincethe third quarter of 2008 — the early stages of the current recession.

“Based upon the Credit Risk Index it appears that weare finally beginning to see improvement within theconsumer credit economy and possibly the beginningof an economic recovery,” said Chet Wiermanski, globalchief scientist at TransUnion.

TransUnion CreditRisk Index- Statistics

After reaching an all-time high at the national level theCredit Risk Index’s percent decrease of 0.65 percent wasrelatively small compared to previous times when thenational index declined. “It is not out of the ordinaryto see the credit risk index decline 1 or 2 percent on aquarterly basis, but the direction of the change is whatmatters at this point in time,” said Wiermanski.

On a year-over-year basis, the Credit Risk Index stood1.23 percent higher than it did at the end of the firstquarter of 2009; however, at the end of the first quarterin 2010, 43 states and the District of Columbia experienced declines in their credit risk indices signaling that a broad improvement in consumer credit conditions is finally taking root. Four NewEngland states (Connecticut, New Hampshire, Rhode Island and Vermont) along with Montana, Utah and Wisconsin experienced slight increases in the credit index.

On a state basis, the order of states with the highestCredit Risk Index did not change with Mississippi having the highest Credit Risk Index at 167.46, fol-lowed closely by Nevada (166.26) and Texas (163.09).Continuing from the previous quarters, the least riskystates are predominately concentrated in New Englandand the Upper Midwest areas of the country, withNorth Dakota coming in at 82.51, Minnesota at 91.14 and Vermont at 93.54. North Dakota, theDistrict of Columbia and South Dakota experiencedCredit Risk Index declines of 2 percent or more.

Analysis

“We are cautiously optimistic that the Credit RiskIndex will continue to experience small declines as consumers keep reducing their debt burden and remaincurrent on their existing credit obligations,” saidWiermanski. “After experiencing one of the mosttumultuous economic periods since the GreatDepression, it is possible that consumers may be reluctant to take on significant debt in the near future,which could possibly temper an economic recovery.”

The Credit Risk Index is defined as the weighted average probability of 90-day delinquency or worseamong consumers in a given region relative to the nation as a whole. The Credit Risk Index uses thefourth quarter of 1998 as a baseline for comparison.Therefore, it measures changes in consumer credit scoredistributions relative to the national distribution anddelinquency rates as a whole at the end of 1998.

TransUnion considered 1998 as a representative year of credit performance within the usual dynamic of the historical credit cycle.  A value of more than 100represents a higher level of relative risk.  For comparisonpurposes, the Credit Risk Index in recent years has generally ranged between 110 and 120, experiencing a one- or two-point shift between quarters.

TransUnion’sTrend Data DatabaseThe source of the underlying data used for this analysisis TransUnion’s Trend Data, a one-of-a-kind databaseconsisting of 27 million anonymous consumer recordsrandomly sampled every quarter from TransUnion’snational consumer credit database. Each record contains more than 200 credit variables that illustrateconsumer credit usage and performance. Since 1992,TransUnion has been aggregating this information atthe county, Metropolitan Statistical Area (MSA), state and national levels.

www.transunion.com/trenddata

About TransUnion

As a global leader in credit and information management,TransUnion creates advantages for millions of peoplearound the world by gathering, analyzing and deliveringinformation. For businesses, TransUnion helps improveefficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data andadvanced analytics and decisioning. For consumers,TransUnion provides the tools, resources and educationto help manage their credit health and achieve theirfinancial goals. Through these and other efforts,TransUnion is working to build stronger economiesworldwide. Founded in 1968 and headquartered inChicago, TransUnion employs associates in more than 25 countries on five continents.

Top 10 Tax Deductions for Landlords

Every year, millions of landlords pay more taxes on their rental income than they have to. Why? Because they fail to take advantage of all the tax deductions available for owners of rental property. Rental real estate provides more tax benefits than almost any other investment.

Often, these benefits make the difference between losing money and earning a profit on a rental property. Here are the top ten tax deductions for owners of small residential rental property.

1. Interest

Interest is often a landlord’s single biggest deductible expense. Common examples of interest that landlords can deduct include mortgage interest payments on loans used to acquire or improve rental property and interest on credit cards for goods or services used in a rental activity.

2. Depreciation

The actual cost of a house, apartment building, or other rental property is not fully deductible in the year in which you pay for it. Instead, landlords get back the cost of real estate through depreciation. This involves deducting a portion of the cost of the property over several years.

3. Repairs

The cost of repairs to rental property (provided the repairs are ordinary, necessary, and reasonable in amount) are fully deductible in the year in which they are incurred. Good examples of deductible repairs include repainting, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows.

4. Local Travel

Landlords are entitled to a tax deduction whenever they drive anywhere for their rental activity. For example, when you drive to your rental building to deal with a tenant complaint or go to the hardware store to purchase a part for a repair, you can deduct your travel expenses.

If you drive a car, SUV, van, pickup, or panel truck for your rental activity (as most landlords do), you have two options for deducting your vehicle expenses. You can:

  • deduct your actual expenses (gasoline, upkeep, repairs), or
  • use the standard mileage rate (55 cents per mile for 2009; 58.5 cents per mile for July 1, 2008 through December 31, 2008 and 50.5 cents per mile from January 1, 2008 through June 30, 2008). To qualify for the standard mileage rate, you must use the standard mileage method the first year you use a car for your business activity. Moreover, you can’t use the standard mileage rate if you have claimed accelerated depreciation deductions in prior years, or have taken a Section 179 deduction for the vehicle.

5. Long Distance Travel

If you travel overnight for your rental activity, you can deduct your airfare, hotel bills, meals, and other expenses. If you plan your trip carefully, you can even mix landlord business with pleasure and still take a deduction.

However, IRS auditors closely scrutinize deductions for overnight travel — and many taxpayers get caught claiming these deductions without proper records to back them up. To stay within the law (and avoid unwanted attention from the IRS), you need to properly document your long distance travel expenses.

6. Home Office

Provided they meet certain minimal requirements, landlords may deduct their home office expenses from their taxable income. This deduction applies not only to space devoted to office work, but also to a workshop or any other home workspace you use for your rental business. This is true whether you own your home or apartment or are a renter.

For the ins and outs on taking the home office deduction, see Home Business Tax Deductions: Keep What You Earnor Every Landlord’s Tax Deduction Guide, both by Stephen Fishman (Nolo).

7. Employees and Independent Contractors

Whenever you hire anyone to perform services for your rental activity, you can deduct their wages as a rental business expense. This is so whether the worker is an employee (for example, a resident manager) or an independent contractor (for example, a repair person).

8. Casualty and Theft Losses

If your rental property is damaged or destroyed from a sudden event like a fire or flood, you may be able to obtain a tax deduction for all or part of your loss. These types of losses are called casualty losses. You usually won’t be able to deduct the entire cost of property damaged or destroyed by a casualty. How much you may deduct depends on how much of your property was destroyed and whether the loss was covered by insurance.

9. Insurance

You can deduct the premiums you pay for almost any insurance for your rental activity. This includes fire, theft, and flood insurance for rental property, as well as landlord liability insurance. And if you have employees, you can deduct the cost of their health and workers’ compensation insurance.

10. Legal and Professional Services

Finally, you can deduct fees that you pay to attorneys, accountants, property management companies, real estate investment advisors, and other professionals. You can deduct these fees as operating expenses as long as the fees are paid for work related to your rental activity.

Did You Know?

Did you know that:

  • Landlords can greatly increase the depreciation deductions they receive the first few years they own rental property by using segmented depreciation.
  • Careful planning can permit you to deduct, in a single year, the cost of improvements to rental property that you would otherwise have to deduct over 27.5 years.
  • You can rent out a vacation home tax-free, in some cases.
  • Most small landlords can deduct up to $25,000 in rental property losses each year.
  • A special tax rule permits some landlords to deduct 100% of their rental property losses every year, no matter how much.
  • People who rent property to their family or friends can lose virtually all of their tax deductions.

If you didn’t know one or more of these facts, you could be paying far more tax than you need to. For more information, see Every Landlord’s Tax Deduction Guide by Stephen Fishman (Nolo).

by: Stephen Fishman , J.D.

Holding an Open House Saves Time & Money!

In my dreams I fill my vacant units with the best tenants on earth who pay their rent on time, keep the apartment clean, and never move out.  But unfortunately my dreams aren’t reality.

When I’m looking to fill a vacancy I prefer to show the unit like I would an open house.  I’ll pick a day, say Saturday, and set aside a period of time for propsective tenants to view the unit.  For example:  Open House, Saturday, 2-4pm!

I’ll tell as many prospective tenants to come on that same day and time too.  This helps create a sense of urgency and competition amongst the fellow renters visiting the property.  Plus it saves me time from having to meet prospective renters at different times and different days.

By creating a buzz, prospective renters feel the unit is special, limited, and could be rented in a blink of an eye.  This is their chance to grab it before anyone else does.  You never want to eat at an empty restaurant, do you?  Well you don’t want to live at an apartment that no one else is interested in either.

The prospective tenants that are interested will fill out an application right there and then.  Depending on which property I am at, I can also run their credit report on the spot (I check eviction, criminal and some other stuff too).  For screening providers I’ve used and others, click here.

No-Fuss Wallpaper Removal

Q: Do you know the best way to remove wallpaper that’s about 20 or 30 years old? I just bought a house that has old-time country wallpaper in the kitchen, and I really don’t like it. Besides, they didn’t do a very good job putting it up in the first place.

I’ve tried some over-the-counter spray that’s supposed to work, but it only succeeded in having me put a bunch of little holes in the wallpaper. My dad suggests I just cover it up with drywall, but then the wall would be sticking out beyond the kitchen cabinets and I would need to redo the trim.

I just want to remove it and put some paint in its place. The kitchen is not very big, and there’s not a lot of wallpaper to remove. Any suggestions?

A: Wallpaper of this vintage is probably vinyl on a paper backing. The vinyl prevents the spray you bought from penetrating the wallpaper to the glue. We assume the little holes in the wall are from your attempt to score the paper so the solution could penetrate.

Don’t abandon the job. You just need to tweak your method a bit. Follow these steps and you should have the offending paper off the walls lickety-split.

First, prepare the area. Shut off all circuit breakers that control the kitchen outlets and lights. Remove covers from outlets and switch plates, and keep them and their screws in a safe place. The job will require fairly significant amounts of water. You don’t want to fry your electrical system or yourself.

Put drop cloths over anything you want to protect. Old wallpaper and glue get everywhere. And once it dries on the floor, it’s a pain to get off. Tape plastic sheeting to the cabinets. Use cloth on the floors. The drops on the floor will move, so be careful.

Next, slide a metal putty knife under the edge of the wallpaper. Odds are some of the seams are loose. Take the edge of the paper and peel it back. The vinyl face should separate and expose the paper backing. Peel as much of the vinyl off as you can.

Fill a bucket with water as hot as you can stand. If you are using commercial stripping solution, mix it with the water according to package directions. You can also get good results with a 20 percent solution of vinegar in hot water or a 50-50 mix of fabric softener and water. Use a paint roller to get the hot-water stripping solution mix on the wall.

Apply the solution liberally. The idea is to saturate the paper and the glue holding it to the wall. Do an area only as big as you think you can strip in 15 minutes. Any longer and you risk the paper drying out.

The wallpaper darkens as it gets wet. Let the solution set for a few minutes to thoroughly saturate the paper. Now start peeling. We like to use a 4-inch drywall knife for this part of the job. It’s small enough to maneuver, yet large enough to take big pieces of paper off at a time. Have a big garbage can nearby to contain the paper.

Once all the paper is off, you’ll be left with little specks of wallpaper residue on the walls. A Scotch-Brite pad dipped in stripping solution will take care of the stragglers.

The solution mix will cool down or get contaminated with old wallpaper glue. When that happens, dump it out and make a new batch. Don’t dump it into a sink or tub, as this may make your drains go slower. Dump it down the toilet — don’t worry about clogging — or outside if you are using nontoxic substances.

For larger jobs, rent a wallpaper steamer. This is a metal plate connected to a tank by a rubber hose. The tank contains a heating element. When plugged in, water is heated to create steam that escapes through holes in the metal plate. The advantage is that the water never cools, making the job go more quickly.

With clean walls, a little spackling, priming and painting will make your kitchen look like new.

 Copyright 2009 Bill and Kevin Burnett

Using Facebook as a Tenant Screening Tool

This is a recent article from American Apartment Owners Association, of which I am a member.  This was posted on their blog today and I found the information to be especially helpful for landlords:

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Q: When I screen potential tenants, I talk to their current landlord and their employer, ask for references, and order a credit report.crystal ballSome of the landlords in town are also regularly looking on the Internet, to see if the applicant blogs, has a Facebook page, and so on.

One friend told me that when he looked at the Facebook page of an applicant he was about to rent to, he saw that the person is really into partying and drinking. My friend didn’t rent to him.

Should I be looking at Facebook pages, too? –David R.

A: Your question calls for two answers: a legal one and a practical one. From a legal point of view, should you be checking applicants’ Internet postings? And, from a practical point of view, is it a good idea?

The steps you’ve been taking when screening tenants are the tried-and-true methods that careful landlords have been using for years to weed out risky applicants: those whose past actions indicate that they may not pay the rent or may not be considerate residents and neighbors. Although these methods are commonly used, they are not legally required.

It’s possible that a court might rule that these tools are the “industry standard,” which might make them quasi-mandatory, but it’s unlikely. Running a residential rental business (unlike, say, car manufacturing) is engaged in by too many people, in too many varied ways, to conclude that it’s an “industry” with common metrics and procedures.

So because you’re not legally required to do even what you’re already doing, it’s very unlikely that a judge would consider checking for Internet postings to be a legally necessary step in the screening process. Consider, for example, the issue of screening for those who are legally required to register as convicted sex offenders.

No state requires landlords to go online and look for their applicants on these lists, and California specifically forbids them from doing so. If you’re not required to consult the Internet for information as serious as registration for one of these crimes, it’s not reasonable to think that you’d have any duty to search for evidence of partying.

This conclusion has to be adjusted, however, for one situation: If you’re hiring a resident manager, you are screening not only a tenant, but a future employee, who will have access to tenants’ personal information and even their homes. You have a duty to make sure that you do not place a dangerous tenant manager in that position — in other words, your duty to screen has changed significantly.

Careful landlords do investigative background checks for tenant managers, with the legally required advance notice to the applicant. These investigations may turn up relevant information, including the applicant’s postings on the Internet.

So much for your legal duty. What about the practical value of hopping online and checking out your applicants? It’s hard to resist, and indeed you may learn information about your applicants’ lifestyle and habits that would reasonably lead any landlord to say, “No thanks on this one.”

As long as you’re looking at Web postings that are available to the public, your applicants will have no legitimate beef if you reject them based on what you see and read. But be careful — you can safely reject any applicant only when your reasons for doing so, no matter where you found the information, are legally justified, and not based on that applicant’s membership in a protected class, such as race and religion.

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For the rest of this article, please visit:  American Apartment Owners Association.  This link will take you directly to the article.