Tag Archives: Tenant Screening

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.

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.

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.

10 Steps Toward Low-Risk Landlording

Learn how to protect your rental property from common mishaps and risky situations.

Most rental property owners worry about protecting their investment. From physical damage to the property to insurance claims to lawsuits brought by tenants, there are myriad ways that you can lose money. Fortunately, minimizing risks in a rental business doesn’t require a ton of money or a staff of experts. All you need to do is learn where you’re vulnerable and then take commonsense steps to minimize that vulnerability.

Here are ten steps you can take to protect yourself against liability as a landlord. By acting now, you’ll enjoy a big payoff: reduced likelihood of lawsuits, harm to tenants and guests, damage to your property, and financial distress to your business.

Step #1: Get the Right Insurance for Your Property and Business

Don’t wait until a loss occurs before you determine whether you have the right insurance for your business and property. Review your current policy with your agent or broker, then discuss coverage options that fit your needs.

Step #2: Make Your Property Physically Sound

Keep your property safe so that people don’t get hurt. To do this, learn the basic legal requirements for repairing and maintaining your property, and then follow them.

Implied warranty of habitability. Virtually every landlord must comply with a legal rule known as the “implied warranty of habitability.” This means you must make sure your rentals are in a “fit” and “habitable” condition when tenants move in, and you must maintain this condition throughout the tenancy. Get familiar with your state and local health, building, and safety codes, and strive to keep your property compliant.

Take steps to prevent injuries and losses. In addition, take other reasonable steps to prevent injuries and other losses. For example, take all tenants’ repair requests seriously and fix problems promptly. Inspect your property yourself for hazards. If you can’t address a hazardous situation immediately, warn tenants and visitors about the danger. (For example, put traffic cones around a pothole, or post signs and safety tape near a spill on the floor.)

Step #3: Make Your Rental Property Accessible to Disabled Tenants

Make your property accessible to tenants with mobility impairments and other disabilities. Check whether structures on your property must follow the Fair Housing Act’s “design and construction” requirements. (Generally, multifamily buildings that were designed and constructed for first occupancy after March 13, 1991 must comply.)

Regardless of when your buildings were constructed, seriously consider all requests from a disabled prospect or tenant to modify your building in order to meet that person’s needs. Review each request on a case-by-case basis and grant it if it’s reasonable. For example, a prospect’s request to install grab bars in the bathroom or lower kitchen cabinets is probably a reasonable modification request.

Step #4: Remove Environmental Hazards from Your Property

Removing environmental hazards is often trickier than removing other physical hazards. Environmental hazards often can’t be seen, and they may not become apparent until they cause injury or property damage. For example, a landlord might not learn of lead paint dust on her property until a family gets their child’s blood test results showing elevated levels of lead. What’s more, in some cases environmental hazards remain invisible even once they’ve caused damage, as in the case of carbon monoxide or radon.

Do your best to address environmental hazards before they cause serious damage. Here are some ways to do so:

  • Require tenants to report all leaks and flooding to you promptly so that you can take quick action to prevent mold.
  • Maintain your heating systems and appliances, and install carbon monoxide detectors in order to prevent carbon monoxide build-up.
  • Comply with federal testing requirements when employees or contractors work on asbestos-containing building materials, such as sprayed-on ceilings. These tests will reveal to workers what’s in your building, and you can use this knowledge to protect your tenants, too.

Step #5: Prepare for and Handle Disasters and Emergencies

Take steps to safeguard your business and protect your property, tenants, and employees in an emergency. For example:

  • Back up your computer files and keep important documents (such as a mortgage, note, and management contract) in a secure and fire-proof off-site storage facility.
  • Report suspicious objects, activities, and mail to the police, and take bomb threats seriously.
  • Document the location of utility shut-off valves, a step that can save lives and minimize damage if a fire or other disaster occurs.
  • Create an emergency procedures manual with an evacuation plan that’s tailored to your property.

Step #6: Lower the Risk of Crime at Your Property

In recent years, courts have increasingly found landlords partially responsible for crimes on their properties because they didn’t provide adequate security.

To prevent problems and keep your property and tenants safe, comply with state and local laws concerning security measures on rental properties. Screen your applicants and employees carefully — don’t just look for experience and know-how when it comes to filling a position on your staff. Adopt a smart key policy so that keys don’t fall into the wrong hands, and make sure your intercom system doesn’t link tenants to their apartment numbers. Answer prospects’ questions about security candidly, and deliver on any promise you make to increase security.

Step #7: Avoid Fair Housing Complaints When Choosing Tenants

If a prospective tenant believes you violated her civil rights, she may take legal action against you. Even if you win, defending yourself takes time, money, and energy.

To avoid problems, learn the basics of fair housing laws. The key to compliance is treating everyone the same. Some ways to do this include:

  • putting your screening criteria into a written tenant selection plan and giving a copy to applicants
  • rejecting applicants for legitimate business reasons, such as poor credit or negative references from prior landlords, and letting applicants know your reasons for rejecting them, and
  • keeping an updated log of apartment availability, and granting prospects’ requests for reasonable accommodations. For example, if you have a “no pets” policy and a prospect needs a guide dog to accommodate his disability, let him keep the dog as an accommodation.

Step #8: Adopt Careful and Consistent Business Practices

Many landlords create risks just by the way they go about their business. Be a careful and consistent landlord by using a written lease or rental agreement with tenants and by enforcing lease clauses consistently. Create house rules for tenants to follow (for example, regarding pets or children’s health and safety) and enforce them. Don’t let a friendship with a tenant interfere with your professional relationship. Also, to prevent identity theft, don’t use tenants’ Social Security numbers any more than needed.

Step #9: Avoid Problems When Hiring Help

Hiring help brings the promise of efficiency, savings, peace of mind, and profitability to your business — but it also brings risk. To lower your risk, determine whether you must classify a helper as an employee or an independent contractor.

For employees, be sure to withhold the appropriate payroll taxes and create a zero-tolerance policy against sexual harassment.

When using contractors, make sure they have insurance and sign a written contract with you.

If you’re considering hiring a management company or need to hire a lawyer, ask questions until you’re satisfied you’re choosing the right one.

Step #10: Taxes: Stay on Good Terms with Uncle Sam

Take steps to avoid a tax audit and to maximize your deductions. For example,

  • Establish a recordkeeping system for your business so that you keep track of every document that will substantiate your claimed income and expenses.
  • Understand how your choice of business structure and tax year affect your taxes.
  • Find out what deductions you’re entitled to claim, and then claim them.
  • Finally, hire the right type of tax pro for your business, and review your past returns for evidence of trends or problems.
Information obtained from nolo.com

For more help regarding these issues please visit:

https://helpforlandlords.com/landlord-state-guide-assistance/

Tenant Screening is a Key to Low Vacancy Rates for Rentals

Nicole Lee, a leading property manager with the Ashford Realty Group / Masters Group, a Colorado Springs property management company specializing in investment properties, says finding quality tenants is a key to keeping low vacancy rates for her real estate investor clients.

Online PR News – 27-April-2010 – Colorado Springs, CO – Professional real estate property manager Nicole Lee of the Ashford Realty Group, a company specializing in Colorado Springs property management, says that finding quality tenants is one of the keys to keeping low vacancy rates for her real estate investor clients. She says that while many property managers shortcut the tenant screening process to save time, it invariably ends up costing both the manager and the owner more time and money down the road.

“We would much rather put the hard work into finding good tenants who are interested in taking good care of our properties up front than have to do two or three times the work in the long run by having to fill more vacancies.”

Lee says that there is a culture of cost-cutting among many management firms because most are only interested in the sales side of their business. That leaves the necessary task of screening tenants and keeping a property occupied underprioritized and understaffed.

“We take the long view with our business. We know that investors who place their properties with us do so to keep their investment property producing positive cash flow. That is impossible to do when you have a high vacancy rate due to insufficient tenant screening.”

She says her tenants have been known to go above and beyond the call of duty to leave a property in better condition than they found it.

David Tanaka, President of Rocksolidpower Solutions (http://rocksolidpowersolutions.com), says that the Ashford Group has saved him thousands of dollars on his four Colorado Springs investment properties, in part through excellent tenant screening.

“Ashford Realty Group is not only an expert in their field but they have an expert staff and vendors who can service our Colorado Springs rentals at the most efficient cost. I have been a property owner for over 20 years and I know how hard it is to find a fantastic property manager.”

While other Colorado Springs property management firms focus on simply adding more properties under management to their rolls, Lee says she works hard to cultivate good relationships with experienced investors who will become lifelong real estate clients.

“Building a relationship based on trust with our investors and renters alike is an essential part of our job description. We’ve found that produces rewarding business relationships in the long term.”

Provided by onlinePRnews

Please visit my tenant screening section for tenant screening providers.  As I’ve stated before, I am a Premium Member of the American Apartment Owners Association www.aaoa.com and they provide me with all my tenant screening needs.

The Importance of Credit History in a Tenant Screening

During a tenant screening, a landlord will often run a credit check on the prospective tenant. Here are a few things to consider about the importance of credit history in a tenant screening.

Credit Score

A credit score is calculated using a complex formula that was developed by the credit bureaus. One of the biggest factors in determining a credit score is whether an individual regularly pays his bills. If a credit score is high, you know that you are dealing with an individual who always pays his bills on time. Getting the rent payment is going to be one of the most important things to you as a landlord. By looking at the credit score, you will be able to predict if you are going to get your rent payment regularly.

Securing the Investment

As a landlord, you should look at the screening of tenants as part of your investment process. You want to take all of the proper precautions in order to secure the quality of the investment. By creating a good investment, you will have the option of selling your property with the tenant in place. If you have been thinking about unloading a property, quality tenants are a very attractive feature for potential buyers.

By Sequoia

For information on tenant screening please visit my tenant screening section.

The Tenant Blacklist ends

From GothamGazette.com

Council, Courts End the ‘Tenant Blacklist’

The term “blacklisting,” usually associated with 1950’s McCarthyism, has taken on a new meaning. The blacklisted in 21st century New York have been people applying for apartments whom property owners deem undesirable as tenants. In an effort to limit this practice, the New York City Council in March, building on previous court cases, enacted the Tenant Fair Chance Act.

While credit checks are well known, most New Yorkers do not realize that some companies buy landlord-tenant filings, harvest court histories and sell them to landlords. The endgame is for landlords to learn whether the apartment-seeker had an in-court dispute with a prior landlord.

Tenant screening agencies, as the companies are known, may supply information about credit, character, reputation and personal characteristics, but the new law’s emphasis is on “history of contact with any court… [and reports] used for the purpose of serving as a factor in establishing a consumer’s suitability for housing.”

The Legal Background

In the case of White v. First American Registry a class-action was brought in federal court in Manhattan against the nation’s largest tenant screening agency. In his ruling, Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York noted that landlords are all too willing to use such “consumer reports” as a blacklist, “refusing to rent to anyone whose name appears on it regardless of whether the existence of a litigation history in fact evidences characteristics that would make one an undesirable tenant.”

The judge went on to say the practice of seizing upon the availability of Housing Court filings helps “to create and market a product that can be, and probably is, used to victimize blameless individuals. Tenants and lawyers in that case won more than $2.9 million.

While everyone agrees landlords have a right to know who will be living in their buildings, and that they should do some checking, Kaplan agreed with tenants that the records obtained and sold by screening agencies are unreliable. As Supreme Court Judge Barbara Kapnick wrote in the later case of Dawn Weisent v. Subaqua, “regardless of whether or not a tenant prevails in the Housing Court, his or her name may appear on the ‘blacklist.'”

Limited Information

The Housing Court records that are bought and sold show merely that a proceeding was commenced, not what ultimately happened in the case, making the information incomplete or even inaccurate. The records the screening agencies receive from the court show a proceeding was brought — for example, Landlord v. Tenant — but give no other information. Because of the limited facts, the case might not even involve the tenant in question, but someone else with the same name, giving a false impression of a potential tenant’s history with a landlord.

The records also do not reveal, for example, that a tenant might have previously withheld rent due to dangerous housing conditions. Instead, they simply show that the tenant was a defendant in a lawsuit. The records also will not reflect that a Housing Court judge might have dismissed the landlord-tenant proceeding, finding that it was baseless, or deciding after trial in favor of the tenant. In other words, the mere fact that there was a proceeding in an apartment related dispute brought to court could be used against a person trying to rent an apartment — even if it is the wrong person.

The Council’s ‘Fair Chance’

The Tenant Fair Chance Act, which was introduced by Manhattan City Councilmember Daniel Garodnick and co-sponsored by 17 other members, goes into effect this summer. It intends to let potential tenants know if screening agencies are being used and what they have reported about them, especially if adverse information has led to denial of an apartment.

In introducing the bill, Garodnick said, “Tenant screening reports are one of the most powerful tools working against renters today, and yet they are almost completely unregulated.”

Under the new law, the tenant who is spurned is entitled to a copy of the report and the opportunity to make any corrections. The law states, “Every tenant or prospective tenant may dispute inaccurate or incorrect information contained in a tenant screening report directly with the consumer reporting agency.”

A violation of the Tenant Fair Chance Act law “shall be subject to a civil penalty of not less than $250 nor more than $700 for each violation.” Other penalties, including criminal prosecution, also are available.

Emily Jane Goodman is a New York State Supreme Court Justice
This is the full article, but you can view it again here.