By David Pickron
I have always had a lead foot. It is hard to admit, but with my hard-charging personality, I just want to get where I am going… fast.
As a young man, to prevent countless tickets, I purchased a radar detector that allowed me to sense a police officer before he or she could see me. Police departments realized they were being outsmarted by this technology and needed to make a change, so they started using a different band that most consumer radar detectors did not have at the time.
The private market reacted as it always does, and soon you could buy a radar detector that included the new bands used by law enforcement. This produced a battle between radar-detector companies and police, with one making a move, only to be met with a counter move by the other.
Evictions tug of war
We find ourselves in a similar tug-of-war when it comes to evictions, where the CDC has now made a move to stop all evictions nationwide until Dec. 31 in an attempt to limit COVID-19 spread through homeless shelters or crowded family shelters.
As successful landlords, we are being forced to react to what I personally believe is an overreach. After spending the last few days fuming about this decision and asking myself if I still live in a free country, I have gone through four of the five steps of grief (denial, anger, bargaining, and depression), and now am working my way to the 5th step: acceptance.
Acceptance, that is, of the fact that this is happening, but by no means rolling over when it comes to managing properties. It is time to make a move and consider strategies to protect your investments.
Every property is different and certain strategies might not work for your property. This is not legal counsel and I always recommend when you make a change to any process you run it by your local attorney to make sure it is legal in your state. Please consider these as potential ways to better position yourself in relation to your rental properties.
The following are strategies that many of my clients and I have discussed concerning our policies and criteria to be successful landlords:
Strategy 1: Inspect your rental properties monthly
We are not targeting, merely being cautious, as we might have to get our homes or apartments ready to sell in these uncertain times.
- Does the carpet need to be replaced?
- Are the filters to the cooling and heating system in good shape, helping to preserve the HVAC unit?
- Does the landscaping need maintenance?
- There is no better time to get your properties in condition to sell.
The CDC order only limits evictions for non-payment of rent. If there are violations of the lease like unauthorized residents, criminal behavior, pets, smoking, damage to the property or other violations, you can give a proper notice to cure in most states and then move to eviction.
Monthly visits help you stay on top of any of these types of violations.
If you choose to implement this strategy, make sure you are inspecting every property you own in a similar manner, and not just singling out a few.
Strategy 2: Raise your criteria
With the inability to evict tenants for nonpayment of rent, finding the right tenants in the first place becomes paramount.
Raising the credit-score requirements will help find people who have shown responsibility in the past, giving you a good idea of how they will perform in the future. It should be noted here that evictions, judgments, and liens are no longer noted in credit bureaus, so those actions will not lower the score like they would have in the past. You need to make sure your screening companies are using other sources to obtain that data.
Timelines for considering past evictions might also need to be changed. Many of our clients indicate that any evictions or rental collections in the past two years would result in a “no-qualify” decision for their properties. Consider the type of rental you have and consider adjusting appropriately here.
Strategy 3: Create a relationship with a collection company
Collection companies and attorneys are currently the only organizations that can place a collection account on the credit bureaus.
There is nothing that prohibits you from turning over past rent owed to a collection company for collection, even if the tenant still lives in your property. If you choose this route, please remember your tenant has control of your property and could cause unnecessary damages.
In the current situation, my fear is that a tenant who owes eight months’ rent may just skip out of the property. At that point you have to start from the beginning of the collections process. This means finding out where they moved, getting them served, and waiting months to get a judgment.
Why not start the process now and turn it over to a professional who knows how to collect? You will probably have to give up 40 percent of the money owed if it is collected, but that is better than nothing. It will also indicate to your tenant how serious you are about collecting future rent.
Strategy 4: Call past two landlords and employers on every new applicant
Landlords over the years have gotten away from making calls to employers and past landlords, mostly because they are time-consuming and often ineffective.
Some companies charge $50 for verifications and others won’t give you any information at all, per their attorneys’ direction.
I can promise you that right now landlords are talking, but just make sure you go at least two landlords back, as the current landlord may say anything to get a bad tenant out. I would also ask only factual, “yes” or “no” questions.
- Has your current tenant paid rent on time in the last six months?
- Do your tenants currently owe you any money?
Regardless of whether you implement any or all of these strategies, as a successful landlord you need to pay particular attention to your eviction process. It would be beneficial to create an eviction flow chart to help you fully understand your policies and how they are affected during each step of the process. See the sample eviction process flowchart below.
As landlords we have to be flexible and sometime creative, as our survival depends on it.
When a roadblock appears, we thoroughly analyze it and develop a way to speed around it. Just make sure to have the right tools when you do to avoid the “speed traps” that may be out there.