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taddyangle

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Registered: 03/13/05
Posts: 2,036
Reply with quote  #1 
Hi Guys,

It has been some time since I posted, on top of that I have had relatively high occupancy (98% ave) for the last few years, but now I find myself with 2 vacancies at the same time.  

In any case, I find myself reviewing applications and seeing the same old tricks tenants try when they rent a property.

I wanted to see if you all had stories that you wanted to share, as these may help others that manage their own properties.

Just today I had one potential tenant use their buddy as their landlord reference.  Before I call a reference I check to see who owns the property, how many, look up the phone number on the internet, and find out as much info as I can before calling.  Generally if the questions are not answered as I would typically expect I will ask who is the owner of the property, and at that point they either freeze or make something up.  On top of that I may ask for the fax number so I can fax over the auth to release info, this to stumps them sometimes.  


The other big red flags:

When a potential tenant asks if I can work with them on the deposit. 
When they can't or choose not to document their income.
I require a verifiable rental reference, and it can't be Mom if your a 30 year old.







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rickencin

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Registered: 06/20/06
Posts: 746
Reply with quote  #2 
As you mentioned, make sure that the previous landlord isn't a relative or a friend.  If the landlord you are calling is their current landlord and they are terrible tenants, it is a huge conflict of interest.  The landlord isn't going to say bad things about them and have them hand around even longer.  Asking for the landlord two back may be a good idea.  It's funny how many applicants will try to bluff that they have a really good credit score until you make it clear you are going to run their credit.  I never even get 3 out of 4 applications back.  I try to be very clear that I decide who lives there and I want to know everyone who is moving in.  If I wanted to rent by the room, I would charge by the room.  Always assume double occupancy, as boyfriends and girlfriends come and go in a totally uncontrolled manner.   Much like Gresham's law: bad tenants drive out good tenants.  I also love the "I can do anything I want, as long as I pay the rent" line.
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Rick
larrywww

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Registered: 08/29/06
Posts: 1,664
Reply with quote  #3 
I have known landlords in particularly dicey areas who will take photos of all the tenants listed with dates of births and socials, etc, just because this is such a common ploy.  If you advertise you are going to do this up front (even if sometimes you don't follow through), it tends to discourage some of the really bad tenants.
javipa

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Registered: 09/20/06
Posts: 3,165
Reply with quote  #4 
This topic is coming up all over the place.  Must be summertime...

People are suggesting the most complicated, anal, cya-type of methods of qualifying tenants ever.

Taddy, no disrespect for your management approach is intended by the following.  However, I'm hearing similar things from others in regard tenant screening that I don't recommend or do anymore (did once, yes).

And here's why:  If anyone had a critical mass of units, they couldn't get this far in touch with their inner CSI agent, and do the level of background searches, phone calling, property data verification, and what-not they're wanting to do, and NOT wear themselves out with busy-work.


Here's our short- cut."  I'm not saying this whole thing will work everywhere, with everyone, or that novices should attempt this approach ...but here goes: 

1.  Use 'message to market' ad copy to attract the most likely prospects who will want what we have to offer including "Bad/No Credit".
2.  Provide 24/7 number to call with outgoing message describing the house, and announce the time/date of the cattle call showing.  We don't normally show by private appointment.
3.  We ask interested applicants to sit down with us, during the cattle call, to complete the application.  The serious applicants will make time.  The rest won't.  It's a qualifying moment.  Applications are only available at the cattle call.
4.  We ask the applicant, "If we were to run your credit today, what would we find?"  Then we follow up from there.  We pay no attention to pre-printed credit reports.  However, we don't run credit, if the tenant hasn't qualified for everything else first.  The credit report is used ONLY to confirm what we know already, not used for discovery.
5.  If the applicant has any combination of qualifying problems, we may ask for the following:
  • 4x's the rent in deposits ( $1800/mo ~ $7,200 in deposits [based on contract rent $3,600/mo with 50% discount for on-time payment] )
  • Optional co-signer
  • Optional 10% above retail rent, regardless of the advertised rate
  • Always two-year lease agreement
There's no consistent threshold for any of these requirements, except that the co-signer and deposit overcome most all qualifying problems, and the other two requirements just make it worth our time. 

Some people are really out of options, and we make money focusing on them.


In the end, we don't like settling for applicants that have great credit and strong residence histories.  They've got options, and are notorious bargain hunters.  Forget that.  We like dealing with the ones that are being turned down, and are happy to jump higher hurdles; pay more rent; pay for longer periods of time; and obligate someone else to make sure they keep their word. 

We call this the "Bend Over and You Qualify" method of property management.

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"Obstacles are those frightful things you see when you take your eyes off your goals." --- Henry Ford

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ptiemann

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Registered: 11/07/05
Posts: 1,150
Reply with quote  #5 
I got an application last week where the current address and landlord's name was mentioned, but no phone # or email. Was I supposed to send a letter? And where? A mailing address was missing as well. The tenant looked good otherwise, so I called twice and left 2 voice mails asking for the landlord's phone #.. no response.


Another red flag is when the applicant wants to move in 'tomorrow', i.e. is sofa-surfing as of now.
I understand that the rental market is tight, and people get asked to move because owners want to sell the property, but it's still a red flag to me.


Another applicant worked as a masseuse, I thought that could be profitable enough to pay rent. Then she volunteered that she charges $5 for a 15 minute massage. I don't know about San Diego, but around here, $5 for 15 minutes is very cheap regardless of the job. That's what the guys at Home Depot charge, or less. She asked me to try her massage. I told her she should raise her price. Later I found out [from other people who know her] that the salon where she works keeps 50%. I'm just glad that she volunteered the $5 price tag in the initial phone call.. saved me time.


Also, when tenants tell me that they just sold their house, I open my eyes a bit further. Half the time they just did a short sale or worse.. I expect this to decline in the future.

Javipa mentions '2-year lease'. I don't sign leases anymore if I can avoid it. And if anything, then less than 360 days. E.g. I would offer a 345 day lease. I think I read that there are some disclosures required if one offers a lease of more than a year. 'Estate for years' was the keyword.

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javipa

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Registered: 09/20/06
Posts: 3,165
Reply with quote  #6 
Quote:
Originally Posted by ptiemann

That's what the guys at Home Depot charge, or less.



__________________
"Obstacles are those frightful things you see when you take your eyes off your goals." --- Henry Ford

"149 Ways (Plus One) To Find Motivated Sellers and Get Them To Find You"
>>>Click To Download http://sub2marketdomination.com/how-to-find-motivated-sellers/
brycewheeler

Senior Member
Registered: 03/09/09
Posts: 442
Reply with quote  #7 
Many good tips here on reviewing Prospective Tenants.  Many of those who lost their homes have very good credit except for the one big blotch of losing their home.

I have found that prospects that have lost their home have been the very best Tenants I have ever had.   Unlike renters, they are used to putting the monthly cost of their house first priority in their budget, even if they were taken advantage of by others promising them quick profits from house prices that only go one way--clear up to the sky.

Over half of my Tenants have lost their home.  One tenant even rents the home he lost and another tenant who lost his home rents from me directly across the street.  

And most who have lost their home have been given travel money by their bank, a ready source of security deposits for me.  I had two cases where they were given $3,000 moving money, and guess what my security deposit was??? You guessed it----$3,000.  Of course their new quarters were completely remodeled so I had no misgivings in charging $3,000 Security Deposit.

Bryce
taddyangle

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Registered: 03/13/05
Posts: 2,036
Reply with quote  #8 

@Ptiemann
Agree, Big Red Flag when they need to move asap.

@Javipa
I have fired too many property managers so I find it easier to deal with it myself (but will admit as I get older, screening apps and coordinating repairs gets tiring).  Over the last 10 years I have had 2 nightmare tenants, and generally speaking I have learned that it makes no sense to stress over things I have no control and honestly the cost to evict or repair damage to these rentals is a non -issue when you look at the big picture.  

Bend over and you qualify - hilarious



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