Web Beat #102
TENANT SCREENING 101: MORE THAN JUST AN APPLICATION AND CREDIT REPORT
Even if you have a detailed application your prospective tenants have to fill out, there’s going to be a lot you don’t know about them. That’s why you also want to run a credit report. That can help you make a decision, but you still won’t have the whole picture. While credit reports are generally fairly accurate, the application may not be. People lie. It’s a sad fact of life, but you don’t want it to turn into a nightmare for you and your apartment complex.
Rather than just take applicants at their word, you’ll want to do some digging. Those references they put down? Call them. The places they said they work? Call those, as well. Make sure your applicants are giving you information you can verify as being accurate. That’s part of the reason to have a detailed rental application. You get enough information to start the digging process, and to see if the people who have applied to rent an apartment from you are being honest with the information they’re providing. If you find that they’re lying, you may not want to rent to them, even if they have good credit.
Another way to screen prospective tenants is to do a Google search on their names, or to look for them on social media sites. This is much easier to do if they have a less common name, but if you’ve seen them in person you may be able to match up a picture or other identifying information. That’s often a good way to see if they were being honest when they said they didn’t smoke, didn’t have pets, or wouldn’t be having too many people live there. Searching the internet can often also provide information about prior arrests, which can be important when making a decision about an applicant.
It’s a shame in many ways that landlords have to resort to these kinds of searches, and that some prospective tenants can’t be trusted, but it’s much better to be safe rather than sorry. Just make sure you’re being fair to all tenants, in that they all have to fill out the same application, and they all undergo the same screening process. If you don’t handle every applicant the same, and the applicant can prove that, you could be in legal trouble for discriminating against an applicant.
To avoid that, and to be clear about how you make your decision on who to rent your apartments to, make sure each person who applies to rent from you gets information about what will be asked of them and what you will do with that information. The more up-front you are about your methods, the more you can automatically weed out people who know they can’t qualify. Many of these people won’t even apply, which means those who do will have a higher chance of being the kinds of tenants you want to rent to and would like to have in your apartments.
The American Apartment Owners Association provides thorough tenant screening services to members and non-members. To order a report, visit our tenant screening page. Our background checks start with basic credit and can include a credit score, criminal and eviction history, full address history, social security fraud check, bad check writing verification (Telecheck), and more.
IS YOUR PROPERTY COMPETITIVE IN THE MARKET?
Remember, an apartment building is a business. An individual rental unit is part of what contributes to the success of that business.
Making a unit rent ready may be the single most expensive expenditure an owner or manger does on a regular basis. Put too little money into the unit and the business may suffer due to being unable to compete in the market. Put too much money into the unit and the business may suffer because of a lack of cash flow or poor return on investment.
The trick is finding the happy medium of being competitive in the market while not over capitalizing in the process of making a unit rent ready. In other words, keep your eye on the bottom line. A rental units’ purpose is to generate income for the business. This does not mean you use only the cheapest materials or the lowest bidder. Know your market and be honest about the grade of building you have. Is the property an “A”, “B”, “C” or a “D” building?
The goal is not only to be competitive regardless of the property grade, but to beat the competition as well.
Use the best material appropriate for the grade of building. Strive to make a C-minus into a C-plus, a B-minus into a B-plus and so on. Use dependable, quality contractors and suppliers. A call back to repair sub-standard work typically costs twice as much as the cost of quality work done right the first time. Sub-standard work also leads to unhappy residents and vacancies, both of which will affect the bottom line negatively.
Good quality work standards coupled with quality materials appropriate for the property will lead to higher quality residents, improved income and a sustainable business model regardless of the grade of building you own or manage.
Choosing a quality contractor is like choosing a doctor. If you went to the doctor, you would ask his advice on how to treat whatever ails you and confer with him on the best approach to achieve improved health. You would be wise to learn from the doctor’s years of experience. Choosing the right contractor is just as important to your financial health. A professional contractor will temper you if needed, make recommendations and not be afraid to tell you “there is a better way”. The best contractor is like an experienced partner with your best interests in mind.
In order to keep a project running smooth, on time and on budget; always keep the points below in mind.
1: Proper Planning
2: Clear Objective
4: Vendor Control
A break down in any of the above can result in lost time and money. Improper scheduling or control can cause delays or extra work that can affect the total cost.