REAL ESTATE INVESTMENT SECRETS, PART FOUR OF TWELVE

TENANT BACKGROUND CHECKS:  LITTLE KNOWN WAYS TO AVOID COSTLY MISTAKES

an interview with Jeff Cronrod, CEO, Fidelity Information Corporation

Jeff Cronrod isn’t just the CEO of one of the largest national tenant screening firms; he’s been a landlord for more than thirty years.  “My company also owns a collection agency, so I see what happens when things go wrong, and I’ve seen it all,” Jeff remarks.  “The sad thing is you see the same mistakes over and over.

“You should use the same care in checking your tenants’ background as you would if you were lending money,” Jeff continues.  “That’s really what you are doing.  You are loaning out one of your most valuable assets.”

Tenant background checks are now largely automated, a great development from thirty years ago when you would have to do research in the courthouses to get criminal history.  The ease of obtaining this information makes it impractical to try to screen a tenant entirely yourself.  Besides, credit information is only available from the credit bureaus.  But Jeff warns of the pitfalls of relying on these databases alone:

“People often don’t know what the reports mean. The trend today is for computers to make the decision, based on the data, of whether a prospect is approved or declined.  There are many benefits to that system, but make sure you read the explanations that accompany the documentation you order and determine if there are items you should follow up on:”  

• 
  
  There may be a little lag time in eviction reports if the applicant is currently facing eviction, but nothing is filed yet with the courts.  Demand a current rental receipt.


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  Verify employment, salary, and bank information, as these are subject to change. 


• 
  
  Talk to previous landlords, and check out the personal references.


• 
  
  Make sure you do background checks on all of the adults who are going to be living in your rental, and check out co-signers, too.

You still need to get a fully-completed application, then cross-check the information on that with the reports that you receive.  You may find inconsistencies that require more due diligence. 

“Our collection agency sees tons of cases where people have used fake social security numbers - often their children’s,” Jeff warns. ”This is particularly hard for the smaller landlords. It can cost thousands of dollars to evict, and the property is tied up in the meantime.” 

Even once you have rented, your due diligence must continue. Jeff suggests that you:

• 
  
  Copy each rental check to catch a tenant who changes banks.


• 
  
  Update your application about once a year - verify employment, banking, even credit information

WHAT TOOLS ARE AVAILABLE FOR A TENANT BACKGROUND CHECK?

The national screening firms will offer access to:

• 
  
  Credit Reports


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  Eviction Reports by state


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  Criminal Reports by county, state, national or federal levels. (There’s a difference between national and federal - Jeff recommends getting at least the state level report.)


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  Sex Offender lists


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  Terrorist lists

Some companies, including Fidelity, offer additional verification of employment, bank accounts and prior landlord references.

“Ultimately, you will have to decide how to interpret the information you receive. Don’t rely on credit alone. Make sure you develop a clear sense of the prospect’s character. Bringing in a sex offender or a domestic abuser, for instance, causes disruption among the other tenants, and can touch off an exodus of your good renters.”

When choosing a screening firm, be wary of services that offer you free or low cost, immediate access to reports.  “The industry is highly regulated due to concerns for consumer privacy,” Jeff explains.  A landlord first has to be underwritten by a reputable screening firm to have instant access to an applicant’s background information. Companies that don’t underwrite you may not be giving you accurate, up-to-date information.  ”You don’t have to scrimp on the fees. On average, it will cost about $20-$30 for a accurate screen. Most often you are allowed to charge the tenant for the screening fee.  And don’t be afraid to ask the screening firm for references - just like you would from your tenants.

Fidelity Information corporation offers screening services to American Apartment Owners Association members. For information on how to apply and available discounts, go to www.joinaaoa.org.

This exclusive interview is included on the American Apartment Owners Association’s CD series, Real Estate Investment Secrets, twelve exclusive interviews with industry experts that will supercharge your ability to locate the best investment properties and manage or sell them for maximum profit. 

To read Part One of Real Estate Investment Secrets, “How to Buy, Reposition and Resell Income Properties for Maximum Profit”, by Daron Campbell, Managing Partner, RE/MAX Commercial Real Estate, click here.

To read Part Two of Real Estate Investment Secrets, “Finding the Right Real Estate Broker”, by David Potarf, Director, National Multi Housing Group, Marcus and Millichap, click here.

To Read Part Three of Real Estate Investment Secrets, “Secrets of Evaluating and Selecting Undervalued Properties”, by Ron Brock, Sr., President and CEO, Pierce Eislen

Real Estate Investment Secrets is available exclusively through the American Apartment Owners Association. To purchase a copy, visit www.joinaaoa.org.  Join as a PremiumPlus member, receive all the benefits of membership, and this CD series is our gift to you.

For tips on how your tenant background check can affect your chances for recovery of unpaid rent, check out our series on the blog “Seven Vital Tips to Help You Collect Your Tenant Debt”.

Check back for next week’s feature, ”Everything You Need to Know Before Hiring a Property Management Company“, with Rodney Trepess, CEO, All Property Management.

American Apartment Owners Association offers discounts on products and services related to your commercial housing investment, including tenant debt collection, tenant background checks, insurance and financing.  Find out more at www.joinaaoa.org.

Sign up to receive our posts.

Posted by Kim Ezzell on 11.30.2007. 8 Comments »

Filed under: AAOA Forum, Credit Screening

Seven Vital Tips to Help Collect Tenant Debt - Part Six of of Seven

Seven Vital Tips To Help You Collect Your Tenant Debt - Part Six of our Seven Part Series

by Bill Gray, Fidelity Information Corporation

Take advice from someone who knows the tenant debt collection business:

Your debt recovery may depend on what you do before the tenant moves in!

Get the right information from your prospect before they move in, and you will always increase your chances for debt recovery on the back end.

TIP NUMBER SIX

Background Check Co-Signers.  One way to rent to someone with questionable credit or rental history is to require a co-signer. But avoid the common mistake of accepting a co-signer without checking their credit and rental history. It is crucial to collection to have the co-signer complete a rental application and sign an iron-clad agreement.  In fact, it is extremely important for every adult moving into the apartment to complete an application and sign the lease.  This gives you far more leverage and ability to collect any future debts.

Miss the other tips in our series?

Click here for TIP ONE  

Click here for TIP TWO

Click here for TIP THREE

Click here for TIP FOUR

Click here for TIP FIVE

Come back soon for Tip #7 - we will be adding a new tip every week.

If you would like to be notified of new tips, please subscribe to our blog by clicking the box in the upper right side of the site.

In need of debt collection? Call 303–449–4533 or send an email to collection@joinaaoa.org.  Write the word “COLLECTION” in the subject line. 

Premium and Premium Plus members receive discounts on debt collection. Sign up now, or upgrade your membership to enjoy the savings. 

Premium Plus members receive a copy of Real Estate Investment Secrets, twelve interviews with industry leaders, including “How to Collect Debts When Your Tenant Leaves Owing You Money” by Jeff Cronrod, CEO of Fidelity Information Corporation.  To find out how to purchase Real Estate Investment Secrets,visit www.joinaaoa.org.

Posted by Kim Ezzell on 11.30.2007. 4 Comments »

Filed under: AAOA Forum, Collections

AFFORDABLE PROPERTY MANAGEMENT SOFTWARE

AFFORDABLE PROPERTY MANAGEMENT SOFTWARE: NOW EVERY LANDLORD CAN HAVE THE RIGHT TOOLS

WG Software, Inc., has been providing its Tenant File Property Management Software for over 12 years to more than 15,000 property managers.  President Wayne Gathright credits the success of Tenant File to his company’s direct focus on the needs of property managers, supplying both the personal support and the features they want. 

Why Develop a Property Management Software?

Tenant File software grew from the need for an affordable, easy to use management software.  “Actually,” Wayne says, “it grew out of the frustration of a particular property manager, one of Tenant File’s co-developers, who owned and managed multiple properties, but was unimpressed with the current software.” At the time, there were only about three property management software programs available, and only one of those was affordable.

The Trouble with Property Management Software

Most property management software was hard to use, and expensive. Heavy marketing efforts were passed on to the customers.  In addition, these companies required the customers to purchase costly updates, even if they were happy with their existing system.  This  problem brought management software out of reach for the owner with a few properties. How could you justify the cost?

Affordable Property Management Software

By focusing on an easy-to-use and efficient system, eliminating high-pressure sales and expensive trade show marketing, Tenant File became a property management software that makes sense for every manager, regardless of the number of units.  “We streamlined our sales department because we can sell through referrals, Internet sites and industry reviews.  We spend our money on talented programmers that make sure everything runs smoothly, and on a our well-trained customer support group, although most users understand the software right away from the documentation and built-in help file.” 

Direct deposit and on-line rent payment will soon be available on Tenant File. 

For more information regarding Tenant File, visit http://www.tenantfile.com/.  Check back for more information on the features of Tenant File Property Management Software.

American Apartment Owners Association offers discounts on products and services related to your commercial housing investment, including tenant debt collection, tenant background checks, insurance and financing.  Find out more at www.joinaaoa.org.

CD series, Real Estate Investment Secrets, twelve exclusive interviews with industry experts that will supercharge your ability to locate the best investment properties and manage or sell them for maximum profit. 

Posted by Kim Ezzell on 11.30.2007. CLICK to Leave a Comment »

Filed under: AAOA Forum, Forms

Real Estate Investment Secrets, Part Three of Twelve

SECRETS OF EVALUATING AND SELECTING UNDERVALUED PROPERTIES

an interview with Ron Brock, Sr., President and CEO: Pierce Eislen

As many savvy investors know, Pierce Eislen offers real estate market research needed to evaluate investment properties. 

Subscribers receive current and complete information on specific properties with 50+ units, and current market conditions for the area with a few clicks of the mouse. 

While their services are available of any area, Pierce Eislen directs its attention to the West, the Southwest, and it currently expanding into the Southeast, specifically Dallas/Ft. Worth. 

Ron’s first rule of thumb: “Each market is either improving or declining. A market may be improving slowly or declining rapidly, but it is never static.” 

An investor needs to identify their objectives, and find the corresponding market. 

• A slow growth market may allow the best potential for stable rents.  This is the place to look if your objective is cash flow. 
• High-growth markets like Phoenix, where the population is burgeoning, allow for higher appreciation.  But be careful, Ron warns. “It could go the other way just as quickly.”

Within the markets identified as consistent with an investor’s objectives, Ron finds a submarket with potential properties.

• “Look to where the properties have higher potential than currently realized.  A great example is a cluster of apartments where the rents don’t reflect the new improvements in the area.  The rents haven’t yet been adjusted upwards.”

While Ron finds some potential properties from broker listings,  over half of the properties sold are off-market. 

• “Most investors will find the property they want, then approach the owner for the sale.  You’ll still pay market value, and probably still need to work with a broker, but it avoids ”a beauty contest” over a new listing, and may mean the difference between getting the property and losing it in a bidding war.”  

Want to read more of Ron’s secrets? This exclusive interview is included on the American Apartment Owners Association’s CD series, Real Estate Investment Secrets, twelve exclusive interviews with industry experts that will supercharge your ability to locate the best investment properties and manage or sell them for maximum profit. 

Real Estate Investment Secrets is available for purchase from American Apartment Owners Association. Join as a Premium Plus member, and receive all of the benefits of our association including Real Estate Investment Secrets as our gift for joining.  Visit www.joinaaoa.org for more information. 

Check back for next week’s feature, “Tenant Screening: Little Known Secrets to Avoid Big Mistakes,”  with Jeff Cronrod, CEO of Fidelity Information Corporation.

Missed Part One, “How to Buy, Reposition and Resell Income Properties for Maximum Profit” with Daron Campbell, Managing Partner, RE/MAX Commercial Real Estate?  Click here.

Missed Part Two, “Finding the Right Real Estate Broker” with David Potarf, National Multi Housing Group: Marcus and Millichap? Click here.

American Apartment Owners Association offers discounts on products and services related to your commercial housing investment, including tenant debt collection, tenant background checks, insurance and financing.  Find out more at www.joinaaoa.org.

Sign up to receive our posts by submitting your email in the box provided in the upper right corner. 

Interested in commercial financing.  See our blog feature Two Reasons to Invest in Commercial Properties with Jeff Mack.            

Posted by Kim Ezzell on 11.27.2007. 4 Comments »

Filed under: AAOA Forum

Seven Vital Tips to Collect Tenant Debt - Part Five of Seven

Seven Vital Tips To Help You Collect Your Tenant Debt - Part Five of our Seven Part Series

by Bill Gray, Fidelity Information Corporation

Take advice from someone who knows the tenant debt collection business:

Your debt recovery may depend on what you do before the tenant moves in!

Get the right information from your prospect before they move in, and you will always increase your debt recovery on the back end.

TIP NUMBER FIVE

Avoid the “Company Name” Scam.  If your prospect says “I would like to put the apartment in my company’s name,” your mind should hear “RED ALERT! “ It is a common scam for people with bad credit or rental history to try to rent under a company name to prevent you from running their credit. 

• It is often far more difficult to collect a debt from a company than it is from an individual. 
• Even if the ‘company’ exists, you must go through proper channels to bind it to the lease.  
• If you do write a corporate lease,  ALWAYS acquire the proper documentation to show the company is in good standing, and the person signing the lease is authorized to do so. 

Miss the other tips in our series?

Click here for TIP ONE  

Click here for TIP TWO

Click here for TIP THREE

Click here for TIP FOUR

Come back soon for Tip #6 - we will be adding a new tip every week.

If you would like to be notified of new tips, please subscribe to our blog by clicking the box in the upper right side of the site.

In need of debt collection? Call 303–449–4533 or send an email to collection@joinaaoa.org.  Write the word “COLLECTION” in the subject line. 

Premium and Premium Plus members receive discounts on debt collection. Sign up now, or upgrade your membership to enjoy the savings. 

Premium Plus members receive a copy of Real Estate Investment Secrets, twelve interviews with industry leaders, including “How to Collect Debts When Your Tenant Leaves Owing You Money” by Jeff Cronrod, CEO of Fidelity Information Corporation.  To find out how to purchase Real Estate Investment Secrets,visit www.joinaaoa.org.

Posted by Kim Ezzell on 11.13.2007. CLICK to Leave a Comment »

Filed under: AAOA Forum, Collections

Real Estate Investment Secrets, Part Two of Twelve

Finding the Right Real Estate Broker

Posted by Kim Ezzell on 11.13.2007. 1 Comment »

Filed under: AAOA Forum, Property Sales

TENANT BACKGROUND CHECKS: WHAT EVERY LANDLORD NEEDS TO KNOW

TENANT BACKGROUND CHECKS: WHAT EVERY LANDLORD NEEDS TO KNOW 

Tenant background checks are critical every time you rent,  not only to avoid unpaid rent, but to avoid renting to a sex offender or other at-risk tenant.  While a credit check in important, it is not enough. 

These are the reports available for your tenant background check:

• Credit Report.  This paints a picture of the prospect’s ability, and willingness, to pay.
• Previous Address History. This report melds the SSN with previous addresses, and includes date ranges.  This information provides locations for criminal and eviction reports, and can flag SSN violations.
• Statewide or National Criminal History. Used to avoid bringing an at-risk tenant onto your premises.
• Sex Offender List
• Terrorist List
• Eviction History.  This is a statewide report. Cross-check against the Previous Address History.

In addition to these reports, it is critical that you demand a completed application from every prospect, and interview them face-to-face. If something seems “fishy” with this new prospect, it probably is.  Don’t discount your instincts! 

Did you know that your chances of collecting tenant debt may depend on what information you collect before the tenant ever moves in.  Read our series,Seven Vital Tips to Help Collect Tenant Debt featuring collection expert Bill Gray of Fidelity Information Corporation.

American Apartment Owners Associations members can receive discounts on tenant background checks.  Check out www.joinaaoa.org to find out how to maximize your savings!

Do you have any tenant screening questions? Click below and add your comments. 

Posted by Kim Ezzell on 11.13.2007. CLICK to Leave a Comment »

Filed under: AAOA Forum, Credit Screening

Seven Vital Tips to Collect Tenant Debt - Part Four of Seven

Seven Vital Tips To Help You Collect Your Tenant Debt - Part Four of our Seven Part Series

by Bill Gray, Fidelity Information Corporation

Take advice from someone who knows the tenant debt collection business:

Your debt recovery may depend on what you do before the tenant moves in!

Get the right information from your prospect before they move in, and you will always increase your debt recovery on the back end.

TIP NUMBER FOUR

Check Their Driver’s License.  Make a photocopy of the prospects’ driver’s license and Social Security card.  It is not uncommon for a bad ex-tenant to avoid a bad reference by claiming identity theft and saying he or she “never lived there”.  Copies of these documents will be crucial in identifying the debtor and collecting your money. 

Miss the other tips in our series?

Click here for TIP ONE  

Click here for TIP TWO

Click here for TIP THREE

Come back soon for Tip #5 - we will be adding a new tip every week.

If you would like to be notified of new tips, please subscribe to our blog by clicking the box in the upper right side of the site.

In need of debt collection? Call 303–449–4533 or send an email to collection@joinaaoa.org.  Write the word “COLLECTION” in the subject line. 

Premium and Premium Plus members receive discounts on debt collection. Sign up now, or upgrade your membership to enjoy the savings. 

Premium Plus members receive a copy of Real Estate Investment Secrets, twelve interviews with industry leaders, including “How to Collect Debts When Your Tenant Leaves Owing You Money” by Jeff Cronrod, CEO of Fidelity Information Corporation.  To find out how to purchase Real Estate Investment Secrets,visit www.joinaaoa.org.

Posted by Kim Ezzell on 11.05.2007. 1 Comment »

Filed under: AAOA Forum, Collections

Here’s How Landscaping Saves You Money

HERE’S HOW LANDSCAPING SAVES YOU MONEY

It’s generally accepted that, unless you go hog-wild with your design plans, landscaping gives more value than it costs.  For one thing, a carefully planned design keeps on giving year after year with little added investment.  And keeping up the appearance of a property leads to low vacancy rates.  But did you know:  

Landscaping can help reduce energy consumption, lowering costs for both you and your tenants? 

Paved areas, (the alternative to landscaping), can generate an immense amount of heat, which in turn increases cooling costs in the summer. 

• Ground covers keep the common areas cooler, and are more pleasing to the eye.
• Trees provide shade, and also serve as a windbreak that stops heat loss in the winter. 

Posted by Kim Ezzell on 11.05.2007. 3 Comments »

Filed under: Going Green

REAL ESTATE INVESTMENT SECRETS, Part One of Twelve

HOW TO BUY, REPOSITION AND RESELL INCOME PROPERTIES FOR MAXIMUM PROFIT

an interview with Daron Campbell, Managing Partner: RE/MAX Commercial Real Estate

The top-selling commercial agent in California, legend Daron Campbell has sold over $1 Billion in real estate, and oversees over 70 agents.  In addition, Daron has built up his own personal investment portfolio, and currently owns nineteen apartment buildings. 

How did he do it?

This UCLA graduate studied economics, then spent some time with Marcus and Millichap, focusing his attention specifically on the commercial market.  “In L.A., there are always more renters than there are apartments.  It was clear that the commercial market would always be growing.”

Daron quickly caught on to what he describes as “inefficiencies” in the commercial market.  While one building owner charges $700 a month for a typical one bedroom apartment, the owner across the street is commanding $850 for a similar unit. “There are great discrepancies in the perceptions of building owners as to the actual potential of the property.” 

But what an owner determines to charge for rent will affect all the factors for valuation: gross rent multiples, costs per unit, costs per square foot, and even the capitalization rate calculation.  A property commanding low rents, even with a tired appearance, can often be repositioned for a profit in as little as 18-20 months. 

Hear more about Daron’s strategies, including:

• how to apply them to your market
• how to build your commercial investment portfolio even if you need to start small
• how to contact Daron Campbell directly

This exclusive interview is included on the American Apartment Owners Association’s CD series, Real Estate Investment Secrets, twelve exclusive interviews with industry experts that will supercharge your ability to locate the best investment properties and manage or sell them for maximum profit. 

Real Estate Investment Secrets is available for purchase from American Apartment Owners Association. Join as a Premium Plus member, and receive all of the benefits of our association including Real Estate Investment Secrets as our gift for joining.  Visit www.joinaaoa.org for more information. 

Check back for next week’s feature, “Finding the Right Real Estate Broker”, an interview with David Potarf, Director, National Multi-Housing Group: Marcus and Millichap.

American Apartment Owners Association offers discounts on products and services related to your commercial housing investment, including tenant debt collection, tenant background checks, insurance and financing.  Find out more at www.joinaaoa.org.

Sign up to receive our posts by submitting your email in the box provided in the upper right corner. 

Posted by Kim Ezzell on 11.05.2007. 2 Comments »

Filed under: AAOA Forum, Property Sales