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duplexplus

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Posts: 15
Reply with quote  #1 
I am in the middle of checking out references on a prospective tenant.  She has a ft. and a pt. job. I checked her employer references and they came out good.  I have left several messages on the # she left for her former apt. It is the  property  management #.  They will not call me back.  She has been living with a relative for the past 6 months. She wrote on her application that she left that apt. because she had lost her job.  While filling out the credit card section of the application she stated she  didn't  have any credit/credit cards.  I asked her didn't you have a loan for your car you said you own outright.  She then proceeded to tell me she had gotten a settlement for illegal firing and paid cash for her car. That job is the same job she has listed as working there for 2 1/2 years. My husband is worried that she might be a sue happy person .  I worry a little about that too but it is possible that she was illegally let go since she won her case and still works there. I also think that she must be an honest person to come out and tell me that.  What should I do about the apt. reference?  Also, she makes $2520.00/mo. and the apt. is $750.00/mo. with heat and hot water included.  Can she afford it if she really only has her car insurance as a monthly bill?  Obviously, she will have an electric bill and possibly cable plus a phone bill.  I will be showing the apt. again this weekend .  If I find another qualified prospective tenant or two from this weekend's showing I will check their references too. Should I order a credit check from the credit bureaus on all of them or is that a lot of money? Any suggestions?  I really do like that first one I wrote about but like I said I haven't heard  back from her prior landlord plus should I worry that she may want to sue me in the future? Thanks fir your help
MikeTfromCA

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Posts: 125
Reply with quote  #2 

I'll start off by recommending you stay consistent and solid with your screening criteria (better yet write it down) and make sure that you don't discriminate against any protected classes and only discriminate against things you're legally allowed to (i.e. credit, or dirty vehicles, etc).  Failure to do that only opens the door for a discrimination lawsuit against you as well as possible legal action by HUD and/or other housing jurisdictions.  Not renting to someone because they recently prevailed in a lawsuit (which makes you feel that they'd be sue-happy) is an illegal form of discrimination. 

Next I recommend that you absolutely check each prospective tenant's credit in addition to their income quantities, and if possible have a look at how clean they keep their car (something they own).  Credit is critically important, and checking it is critical for success in this business.  Ask any landlord (myself admittedly included) about what happens when you rent to someone who's score is even just slightly below 600.  Credit checks typically won't cost you more than about $20 or $25 or so, which unless your states laws prohibit you from doing so, you could charge the prospective for as their application fee.  It's a small cost that makes a huge difference.  Think of it as: would you rather spend $25 on running credit checks which will lead you to a good tenant or hundreds or even over a thousand dollars in unit rehab costs and evictions process costs?  When you look at it that way, it's a small price to pay.

As far as income quantities go, from experience if they're making at least 3x (gross) a month what you're asking for rent then they'll in all likelihood be fine and based on what you described the first prospective was making she would be close enough in my book. 

Don't ever be afraid to inquire in the validity of any claims that a prospective is making if it's directly related to you trying to determine if they're qualified enough to rent from you.  For example you mentioned that she claimed to own her car, so one thing you could ask her to provide is proof of that.  Another common thing to check when verifying income quantities are pay stubs.  However, those may not be available in certain cases, and sometimes they are even forged by prospectives.  If you're having difficulty contacting their previous landlord or property manager, then you might want to try visiting the property or the company during business hours for a quick face to face meeting.  At the same time you could at least drive by their current residence to see how they maintain it.  If it looks trashed, then the decision about whether or not to rent to them should be a no-brainer.

Keep track of all of these expenses and driving miles you incur during this process of advertising, as they are tax-deductible items (business expenses).

Good Luck.

duplexplus

Registered:
Posts: 15
Reply with quote  #3 
 I  just wanted to follow up.  I showed my apt.  to a few more people  after this girl but they never returned their application .  I didn't want to show it to a lot of people plus I really like this girl.  It was more my husband that worried about her being sue happy.  I liked her personality.  I told this prospective tenant that the other people I showed it to weren't interested and if she was still interested I would run a credit check and if it came back good we would offer her the apt.  Well, now I feel like I got her hopes up because I told her I really liked her. Upon checking her credit which she had told us when we showed her the apt. she hadn't any credit it appears she has had several things go to collections and had a prior repossesion.  She had been honest on her application saying she had broken a lease and I questioned her asking if that was when she had been fired . If you remember from my prior post, she said she sued her employers. So I believe she was out of work and couldn't afford the apt. There is something on the report from her prior landlord for a "civil judgement". Is that different than an eviction because she had checked off "no" on the application for an eviction and also "no" that she hadn't been brought to court by another landlord. She said she lost her job in January and the landlord took her to court in January. Would it be that quick for a landord to take her to court the same month or is it probable that she was already behind in her rent before losing her job?  Also, I am curious why wouldn't a current credit report show her present jobs.  It showed a totally different employer yet I spoke to both of her present  employers.  Anyhow, I feel bad that  I may have gotten her hopes up.  The site I got the credit report off of has a denial  letter that I can print to send to her.  Do I send it by regular mail, certified mail?  Can I send it via e-mail?  Should I also call her?  I hate this part!  Rejecting someone!
MikeTfromCA

Registered:
Posts: 125
Reply with quote  #4 
No hard feelings, but if you want to succeed in this business then you better get used to rejecting applications that don't qualify. It's just the nature of the beast that is this business. I can't count how many times where the applicant came across great at the appointment, but was anything but when I pulled their credit.
Send them the declination letter (you're required to do so by law) by regular mail (is fine). Throw their application, etc. in your locking file cabinet and move on to the next appointment or application. FYI, if you're not getting as much interest as you'd like for your rental unit then the most common reason would be that you're asking too much for the rent. Be very competitive. Tenants like to feel like they're getting a good deal.
duplexplus

Registered:
Posts: 15
Reply with quote  #5 
Mike, I know I am a softy.  Too nice of a person!  I have to learn not to get too chummy and just be business like because as I said I felt like I really liked this girl and wanted to rent it to her.  I find it funny though that she told us she didn't have any credit yet she had a lot of things in colletions.  Is there a site that helps you better understand  the report?  The summary of accounts were: positive: 5, negative:3, collection: 4 and a 1 public record.  I didn't really see anything that looked positive. Credit summary   No.of accounts 1-Pays or paid 60-90 days past due 2- 90-120 past due , repossesion-1 ( think back in 2009) 4- Bad debt, charge off , skip  Also collection item example:. Assigned 11/12 Last Act.06/13 Name: Collection Comment: Comment : disputed by consumer.  Another example: Assigned 03/13 Last Act. 04/13 Name: Collection, Comment: Placed for collection account.  Would this mean that she last paid on 4/13 or  they sent it to collections after 4/13 because I thought most of it was old debt gone to the bureau but with those dates I guess it's not old.  She had told us all she had for bills was her car insurance. Lesson learned!  I will mail out her letter today but I have a feeling she might text or call me before she gets it.  What should I say or not say to her if she does call?  Thanks!
duplexplus

Registered:
Posts: 15
Reply with quote  #6 
Addendum:  I just printed the decline letter off the credit reporting site that I had order the report from  and it printed " under our standard lease terms".  Can I put a line through that and write " tenant at will" seeing as this is a month to month rental only and not a lease.  I would also initial next to the changes.  This letter is a check off form so I believe I should just check off on credit history part for "unsatisfactory payment history" and "collection activity".  I thought about also checking off on the application incomplete and false infotmation because she didn't fill out the credit section because she verbally told us she didn't have credit.  Since it was verbal I think I won't check it off because she may try to dispute that she said that .  Do most landlords bother with a credit report if it is only a month to month or temporary tenant ? This is the first time I ordered one.  
MikeTfromCA

Registered:
Posts: 125
Reply with quote  #7 

Rule #1 of being a LL: You're not their "friend" and don't be the nice guy/gal.  That doesn't mean you need to be a jerk, but you need to act in a professional manner and enforce your rules.  For example, whenever I have to enforce rules, etc. with any of my tenants I usually say something on the lines of: "Nothing personal but this is a business", or when they ask for permission to let one of my rules slide for a short period of time (e.g. I don't allow dogs, but they want to dog-sit for a friend for the weekend), I'll usually respond with something like: "I'm sorry, but I just can't allow it.  I wish I could because you're such a great tenant, but like I said it's a rule and it's not up for negotiation". 

As for your issue with your prospective tenant/applicant, it almost sounds like you're trying to find a means to justify accepting them.  You can't think like that.  Two reasons: 1) if you get into a habit of doing it, then eventually you're likely going to get sued by a prospective that you didn't favor as much as another (for whatever reason) even though on paper they were both equally qualified, especially if the one you rejected applied first.  Law requires that you rent your unit to the first qualified applicant.  Second reason is that in doing this you will get burned by renting to a bad tenant.  This has happened to me every single time I've rented to someone that was 'just under' my minimum qualifications, but I (foolishly) convinced myself that they were "close enough".  Half of those experiences ended in VERY costly evictions.

As for credit reports, the best way to review them is to first just look at the score. If it's below your cut off then you can stop right their - they're not qualified.  If their score is in your range or marginal (at your cut off or just slightly above) then I usually look at how many collections they have.  I don't care if they've been settled (paid off) or if their still in effect.  Bottom line with me is, if they're recent, then that's enough to convince me that they're a high risk.  They're not responsible enough at this point in their life to fulfill their obligations to pay me the rent on time.

It's been my experience that 99% of the time when a prospective tenant has bad credit, they know it and they're hoping that you're not going to check it.  One of the red flags to watch out for when you're showing a unit is when they're way too happy to see you and the unit (they're overly nice/thrilled).  This is a classic act that bad tenants/prospective will pull on LL's/property managers when they're at the appointment.  Their hope is that they will win you over by their good looks and charm in the hopes that you will either not run their credit/background checks or at the very least look past it.  Don't be fooled by them.  They're a high risk that you don't want/need.  Let them be someone else's problem.

If she calls (doubtful that she will, they usually don't), then just tell that you've decided not to rent to her because she didn't meet your qualifications - her credit came out bad.  Keep the conversation short and to a minimum.  If she get's into an emotional mode, then just try to end the conversation - quickly.  Explain that your minimum qualifications which she didn't meet are "non-negotiable" - period.  She'll move on (trust me).

MikeTfromCA

Registered:
Posts: 125
Reply with quote  #8 

Answers to your "Addendum" questions:

Can I put a line through that and write " tenant at will" seeing as this is a month to month rental only and not a lease.  I would also initial next to the changes.     -Yes, but if you choose to do this make sure that both you and the tenant initial any/all changes or hand-written items.  Don't leave the door open for the tenant possibly denying anything down the road should you ever have to defend your rental agreement in court, and of course make sure you keep the inked copy and provide the tenant with a photo copy of the agreement.


I thought about also checking off on the application incomplete and false information because she didn't fill out the credit section because she verbally told us she didn't have credit.  Since it was verbal I think I won't check it off because she may try to dispute that she said that .  -Verbal correspondence means nothing in a court (it constitutes "hearsay").  Always, Always, Always get everything in writing.


Do most landlords bother with a credit report if it is only a month to month or temporary tenant ? This is the first time I ordered one.   YES! the ones who are successful and haven't been burnt out by bad tenants-ALWAYS run credit!!! Even if you were to just rent a unit for the term of just one month, it's worth it to screen them just as if you were to going to rent to them on a 2 year lease.  Reason being, it's not worth it to get stuck with a bad tenant that won't pay you.  In the end, if a landlord ends up having to evict a tenant, it will cost the landlord a good chunk in terms of time/effort and money lost. When it comes to evictions there are no winners both the tenant and the landlord will lose every time.  If you ever have to go through an evictions process to get rid of a tenant then you'll see what I mean by this.

duplexplus

Registered:
Posts: 15
Reply with quote  #9 
Mike. I was talking about the  letter I printed off of the credit reporting agency to tell her why I am denying her.  I am sure it is a generic denial letter but  It stated the word lease but the apt. was being offered month to month.  So I want it to match the type of rental I was offering. So I can cross out and write month to month in place of lease  then initial and mail it to her?  She shouldn't have to sign anything I would think  being as it's a denial letter sent to her.


MikeTfromCA

Registered:
Posts: 125
Reply with quote  #10 
My apologies, I misunderstood what you were asking.  Yes, there's no problem in doing that.  Like you said, it's just a denial letter - just standard protocol.
12Jgoldt

Registered:
Posts: 30
Reply with quote  #11 

Yes, you should definitely run credit checks on all applicants. You have to realize that if tenants have a good credit history and pay their bills on time, chances are they will pay their rent on time as well.
If you worry about fees that renters need to pay for these checks, you can run credit reports with the help of rental application services. Some of them, like this one, for instance, https://rentberry.com/tenant-screening/credit-report
  do credit reports for free, in case if tenant applies for vacancy via such platforms.

 
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