AAOA Blog

TENANT BACKGROUND CHECKS: Checking Personal References

Obtaining references on a tenant application is important for a variety of reasons. Collecting references is a worthless exercise unless you check them out. 

Contact the Current, Previous Landlord

The most important reference is the current landlord, followed by the previous landlord.  Be sure to ask about:

• The general impression of this tenant
• The tenant’s  payment habits
• Whether they obey rules  
• Do they respect the property

You will be surprised what you can learn in just one phone call.

Friends and family

Other references include friends and relatives.  These references are critical:

• In the event of an emergency
• To locate the tenant once they’ve moved out
• Key to any collector doing skip tracing on a tenant that left owing money

Cross check that the phone numbers of references are from the same geographic area that the  prospective tenant claims to be from.

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

Premium and PremiumPlus members receive discounts on Tenant Background Checks.

For more information on Tenant Background Checks, see our interview with Fidelity Information Corporation CEO Jeff Cronrod,TENANT BACKGROUND CHECKS:  LITTLE KNOWN WAYS TO AVOID COSTLY MISTAKES. 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 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”.

Have tips to share?  Please post your comment.

To subscribe to our blog, click here.

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HOW TO CREATE A SOLID LEASE AGREEMENT:  Part Four of Four

By Wayne Gathright

Part One, Make Your Lease a Tenant Satisfaction Agreement

Part Two, The Basic Lease Agreement

Part Three, Build Tenant Incentive Clauses into Your Lease Agreement

Important Clauses To Add To Your Lease Agreement 

While the basic lease provisions are important, most of the time, a basic lease agreement is not enough.

In addition to incentive clauses, there are many other important clauses that landlords often tend to neglect, yet these can be invaluable if there is ever a dispute. 

Here are some examples of clauses that can be added to your lease agreement:

Parking.  Spell out how many vehicles (cars, boats, motorcycles, etc.) you will allow to be parked at the residence? Where?

Residential Use.  Can the tenants run a business? What kind?

Garage Sales/Auctions. Will you permit these? How often?

Notification of Change of Status.  Require that the tenant update you on changes, for instance, employment.

Subletting.  Is it allowed? How many new residents? Notification

Co-signers.  Should you add another responsible party as a guarantor?

Partial Payment of Rent.  What will happen if you receive only part payment?

Returned Check Fee.  How are you going to handle returned checks?

Bankruptcy.  What if your tenant files for bankruptcy?

Lease Violations.  What are your rights? What are the tenant’s rights?

Tenant’s Absence. What if the tenant disappears?  Can you get into the rental?

Furniture Lien.  Can the tenant’s possessions be takes?

Increase in late fees.  Can you charge additional late fees if the tenant is often late?

Judgment collection. Who pays?

Utility bills. What if the tenant defaults?

Emergency repairs.  What if you have to cut off the water for repairs?

Problem neighbors. How do you handle complaints?

Disasters.  What if you can’t fulfill your landlord obligations because of a disaster?

Illegal activity.  Make sure you can take action against drug use, explosives, firearms, etc.

Quiet Enjoyment.  You should insure that the tenant cannot intrude on other people’s rights.

Smoking.  Make sure your rules are clear.

Pets. How many pets? What additional deposit? What about additional cleaning costs?

Yard Upkeep. Make sure your property looks neat and is safe.

Health and Safety Codes. Be sure your tenant doesn’t violate these.

I hope these ideas make you think about how important your tenant lease can be.  With the right rental agreement design, you can create a lease that will protect your property, promote timely rent receipt, motivate your tenants, and protect your legal rights as a landlords.

Wayne Gathright is president of WG Software, Inc., developers of the Tenant File Property Management Software.  He has over 30 years experience in consulting and software development for real estate.  Mr. Gathright also markets a product for easy creation of leases called The Lease Designer, that allows the user to select from several prewritten leases, choose from over 200 prewritten rental clauses, and add house rules templates to the lease. A user can write their own leases and clauses, modify the existing templates, or import leases from other programs.

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.

To subscribe to our blog, click here.   

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HOW TO CREATE A SOLID LEASE AGREEMENT: Part Three of Four

By Wayne Gathright

Part One, Make Your Lease a Tenant Satisfaction Agreement

Part Two, The Basic Lease Agreement

BUILD TENANT INCENTIVE CLAUSES INTO YOUR LEASE AGREEMENT

Apart from the basic provisions, you can build incentives into your lease agreement to reward a good tenant. In return, you can turn your tenant lease into a valuable marketing tool for your business, while at the same time providing extra satisfaction for your tenants.

Here are a few ideas:

• Award special benefits to your tenants the longer they stay.  At each tenant lease anniversary, provide a financial or other type of award, provided they are on time with all of their rent payments.
• Provide incentives for your tenants to recommend you to other prospective tenants.
• Provide an incentive for your tenants to eventually own the house they currently rent, provided they remain in good standing as a tenant.
•  Encourage your tenants to make upgrades to your property if they have the skills.  You can provide materials and they can provide valuable labor.

Check back tomorrow for Part Four, Added Clauses.

Wayne Gathright is president of WG Software, Inc., developers of the Tenant File Property Management Software.  He has over 30 years experience in consulting and software development for real estate.  Mr. Gathright also markets a product for easy creation of leases called The Lease Designer, that allows the user to select from several prewritten leases, choose from over 200 prewritten rental clauses, and add house rules templates to the lease. A user can write their own leases and clauses, modify the existing templates, or import leases from other programs.

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.

To subscribe to our blog, click here.   

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HOW TO CREATE A SOLID LEASE AGREEMENT:  Part Two of Four

By Wayne Gathright

Part One, How to Create a Solid Lease Agreement

DRAFTING THE BASIC LEASE AGREEMENT

1.  Parties.  Include the full names of ALL prospective tenants – these will be the only ones held accountable if there is a dispute. 

• Be sure to include both names of a married or unmarried couple. 
• Remember, if one tenant skips, you should be able to hold any other party on the lease responsible for the rent. 
• Also, if any one tenant violates the terms of the lease, you should be able to terminate the lease.

2.  Rent provisions. Spell out more than just the rent amount. Include:

• The day rent is due
• How it should be paid – by mail, in person, online, direct deposit.
• List acceptable forms of payment – personal checks only, money orders, credit cards.
• Any charges if a check should bounce.
• When rent is considered late, and any late fees that the tenant is responsible for. 

Be sure to include whether you are going to apply any late fees prior to applying money received towards the actual rent.

3. Occupancy Restrictions  Make sure you specify who can live at the residence.  This would normally be only the parties named on the the lease and any of their minor children.  This gives you the right to evict any other people who might move in later, such as relatives or friends, plus it protects you if the tenant tries to sublet the rental without your permission.

4.  Security deposit.  Be specific.  Many legal hassles develop out of this part of the lease, so make sure you spell out:

• The amount of the security deposit,
• Conditions for the return of the deposit,
• Acceptable deductions, and
• When it will be returned.

Be sure to include how the deposit can be used by either party, such as deductions for cleaning costs, additional costs for pets, damage costs and other fees.  Make sure to spell out that the deposit cannot be applied to rent payments.

5.  Term.  Specify the lease term.  If the lease runs for one year, outline whether it reverts to a month-to-month after that, and the number of days notice you will need to renew the lease, if it is renewable.  If the lease self-renews, be sure to specify the number of days notice that either you or the tenant must give in order to move out.

6.  Repairs and Maintenance.  Clearly outline the obligation of both the tenant and yourself regarding repairs and maintenance of the unit.

• Your tenant will probably want to make alterations such as painting, running wires, hanging pictures, installing alarm systems, so make sure your permission is required first. 
• You should require that the tenant keep the property clean and let you know if anything needs your attention right away. 
• Make sure that you define who owns an improvement- usually a fixture improvement to the wall or ceilings becomes the property of the owner unless the property is restored to its original condition.

7. Rights to Enter the Premises.  To be sure that you do not get charged with illegal entry or privacy violations, be sure that you spell out the rights you may have to enter the premises.  Normally, the landlord cannot enter without the tenant’s permission, but you should have the right to:

• inspect the property
• show prospective buyers
• make repairs
• provide maintenance

with proper tenant notification and during acceptable hours, unless in case of emergency.  You might want to include the right to show the property to prospective tenants after notice of termination is given, again with proper notice to the current tenants.

8. Attorneys Fees.  In case of a dispute, you must outline in the lease which party pays attorneys fees and costs. Many standard leases make the tenant responsible for paying to enforce the lease provisions, but your state laws may not permit that, but rather requiring that the losing party in the lawsuit pay the fees.

Check back tomorrow for Part Three, Incentive Clauses.

Wayne Gathright is president of WG Software, Inc., developers of the Tenant File Property Management Software.  He has over 30 years experience in consulting and software development for real estate.  Mr. Gathright also markets a product for easy creation of leases called The Lease Designer, that allows the user to select from several prewritten leases, choose from over 200 prewritten rental clauses, and add house rules templates to the lease. A user can write their own leases and clauses, modify the existing templates, or import leases from other programs.

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.

To subscribe to our blog, click here.   

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HOW TO CREATE A SOLID LEASE AGREEMENT: Part One of Four

by Wayne Gathright, developer of Tenant File Property Management Software and The Lease Designer Program

Make Your Lease a “Tenant Satisfaction Agreement”

Every landlord struggles to write a lease that is airtight and covers every situation that might arise.  “Landlords should strive to make it more — to make it a ‘tenant satisfaction agreement’, says real estate software consultant and developer Wayne Gathright.  “The smart property manager crafts a lease that includes incentives and concepts that can turn average residents into productive, marketing, money-making partners.”

These ’satisfaction clauses’ can be added to the basic lease to create a good relationship right from the start. 

In this four part series, you will learn tips for creating your own lease.  Here are some important considerations before we get started:

• Even if you create your own lease, you should still take it to a local real estate attorney for a final review before using it. 


• You might want to start with a standard prewritten lease, and then modify or add to it as needed. 


• Make sure you understand your local and state laws.


• Keep your writing plain and simple.

Part Two: The Basic Lease

Part Three: Tenant Incentive Clauses

Part Four: Nuts and Bolts Provisions

Wayne Gathright is president of WG Software, Inc., developers of the Tenant File Property Management Software.  He has over 30 years experience in consulting and software development for real estate.  Mr. Gathright also markets a product for easy creation of leases called The Lease Designer, that allows the user to select from several prewritten leases, choose from over 200 prewritten rental clauses, and add house rules templates to the lease. A user can write their own leases and clauses, modify the existing templates, or import leases from other programs.

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.

To subscribe to our blog, click here.   

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OLD TENANT DEBT: Are you leaving money in your file drawer?

Our collection guru Bill Gray has some advice for you:  If you have old, uncollected rent files, you may be sitting on a wad of cash.

“A lot of landlords just give up when the tenant skips and they can’t find a new address — they think that if they didn’t collect the unpaid rent right away, it’s a lost cause.”

“But that’s not the case.  Old tenant debt can be an untapped source of cash.”

Even if the tenant didn’t have the ability to pay when he skipped on the rent, it might be worth pursuing him now that some time has gone by. He may have reestablished himself – he might have a new job, a bank account, and assets he doesn’t want to lose. “Often, delinquent tenants think they’ve beat the wrap after a year or so goes by,” Bill explains.  “They’re surprised to learn the problem hasn’t just gone away.  You can use that to your advantage to collect the old debt.”

The exact amount of time you have to collect a debt depends on the law of the state where the rental property is. “You might be surprised to learn the statute of limitations for debt in your state — it may be longer than you realize,” Bill explains. ”Many states have landlord-friendly rules for collecting unpaid rent – some give you as long as ten years to collect.”

It’s easy to find out if your old debt is still collectible. “It doesn’t take much time, just ten minutes or so to copy your file and send it out.”

Find out how far back you can collect in your state by emailing AAOA at collections@joinaaoa.org  Please type “collections” in the subject line.

Read Bill Gray’s feature blogs, Seven Vital Tips to Help Collect Tenant Debt.  

Check back next week to find out how you may collect your own debt and save a bundle on collection fees. 

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.

To subscribe to our blog, click here. 

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DID YOUR PREVIOUS TENANT LEAVE THE UNIT SMELLING LIKE SMOKE?

There is a  cheap and easy way to restore it.

Vickie Nagy, a real estate broker from Danville, CA found herself faced with trying to lease a property for a client that smelled strongly of cigarette smoke. 

“It was unrentable,” she explains. “I called the client and suggested we contract with professional cleaning companies to get quotes to remove the odor.” 

But the landlord’s chosen solution was to go online and look for a cheaper solution.

“And you know what? It worked!”

Here’s what to do:

• Purchase a large package of Styrofoam bowls (”32 cost us $1″), and 


• a half gallon of white vinegar.

Place the bowls about 1/4 full and set them every few feet.  

If the odor still lingers after a couple days, freshen the vinegar in each bowl.

“By the weekend, the home was in showing condition and we actually leased it within a very short time,” Vickie reports.

Some items in the house — fabrics in particular —  like draperies and carpets likely will still have to cleaned.

Thanks to Vickie for sharing her tip.  If you are looking for a realtor in the Danville CA, San Ramon CA, or Walnut Creek CA areas, you can contact Vickie at http://www.BestTriValleyHomes.com.

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.

To subscribe to our blog, click here.  

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Screening the tenant before you rent is only half the battle. Circumstances can change, and your ideal tenant can become a potential rent collection problem. Maintaining a current and complete tenant file is a simple way to protect your valuable investment. 

Remember, the sooner you are aware of a potential problem, the sooner you can gain control and minimize your losses.

Here are some tips for Tenant File Maintenance:

Track Changes in Payment Method.

• If a personal check is used, photocopy it each month.
• Note changes in names on each check. Relationship changes are the single largest cause for failure to pay rent.
• If you do need to take legal action, your diligence would not be wasted. The bank information will be crucial in helping to recover your money judgment.

Track Changes in Employment

• Require your tenant to update you when their employment status changes.  Note the new employer’s name and address.

Credit Report Updates

• A basic credit report should be run every 12-24 months on each tenant. This is an inexpensive way to see if he has been paying bills on time, going into more debt, and may even indicated if he has been shopping for another apartment or even a mortgage for a home.

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

For more information on Tenant Background Checks, see our interview with Fidelity Information Corporation CEO Jeff Cronrod,TENANT BACKGROUND CHECKS:  LITTLE KNOWN WAYS TO AVOID COSTLY MISTAKES. 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 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”.

Have tips to share?  Please post your comment.

To subscribe to our blog, click here. 

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COME SUMMER, LAWN MAINTENANCE CREWS MAY BE HARD TO FIND

Current Hiring Rules May Force a 30-50% Reduction in Landscape Workforce this Year, Drive up Costs

Landscaping businesses, a $40 billion industry, are reeling from changes in the guest worker program that is designed to allow these small and seasonal businesses to hire legal immigrant workers.

Under this hiring program, known as H-2B, qualified employers may hire properly documented guest workers so long as U.S. workers are not available for landscape jobs like cutting grass, planting trees and shrubs, and general maintenance. 

Controls on the number of visas were put into place to protect wages and working conditions:

• Visas were capped at 66,000.  Unfortunately, that number fell far short of the demand for these workers. 
• Congress then voted to allow an exemption for returning workers. But, that exemption has now expired, leaving companies in a quandary as to how to meet the high demand for services coming into the height of the season. 

According to Tom Delaney, the government affairs director for PLANET, the Professional Landcare Network, a national trade association which represents 100,000 lawn and landscaping professionals, unless something changes now, many landscaping businesses will not survive the summer. 

“This worker shortage is sure to have an impact on a large number of property owners as companies are forced to cut back on the number of projects they can handle.”  The lack of competition may adversely impact the costs of landscaping and maintenance.

To learn more, go to www.landcarenetwork.org and look for the H-2B toolkit.

Weigh in on this issue.  Leave your comment below.

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.

Check out our article on energy-efficient landscaping:  HOW LANDSCAPING SAVES YOU MONEY

To subscribe to our blog, click here.  

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HOW TO PROFIT FROM FORECLOSURES IN ANY MARKET

an interview with Alexis McGee, President: Foreclosures.com

“Coming up with the money is never the problem when investing in foreclosures.  There are more money partners than there are deals,” advises Alexis McGee, who coaches first-time foreclosure buyers.

“Investing a wad of cash is not the only way to make money in this market.  Research and sign the right deal, then find a money partner for a contract assignment.  You get out with a respectable assignment fee, and they take over from there, prepping the property and putting it back on the market. If you’re diligent, you can turn a couple of those assignment deals a month, and in little time become a money partner yourself.”

Although Alexis worked for many years as a commercial broker, today she is pursuing residential foreclose properties. ”It’s an easy market,” she explains.  “Some people are afraid of foreclosures because they think of the ’80’s, where you had such high inventory and no buyers.  But today’s market doesn’t follow that trend.  The economic factors- growth, jobs, financing- are still solid today.  There’s a good inventory, and buyers.

It’s also important to understand that you are helping people – that’s the only approach that is sustainable. Your deals allow the distressed owner to salvage a good chunk of his equity before it gets devoured by legal fees.   

There are particular formulas to follow to be successful:

• Stick with entry level properties, (but there’s a little more to it)
• Know how to run the numbers and research so you pay the right price for the house
• This type of work requires its own skillset, which you can learn. 

Alexis can feed you leads from the foreclosure notices, and teach you everything from which types of properties to consider to what to say on the phone when you call a prospective owner.  A good way to explore this opportunity is to:

• Check out www.foreclosures.com and access free articles on foreclosure investing
• Explore the free deal lead index to find properties in your area
• Register for a free seven day trial of the lead database
• Take the home study course.  Additional coaching available.

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.

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 free as our gift for joining.  Visit www.joinaaoa.org for more information. 

See our related feature Secret of Evaluating and Selecting Undervalued Properties.

To subscribe to our blog, click here. 

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