Category Archives for Finding and screening tenants

How do You Ensure that You Find the Best Tenants?

Finding the diamond in the rough with tenant screening.

How do we ensure we are finding you the best tenants for the property?  That is a great question because bad tenants can cost you a lot of money. They can damage the property, not pay their rent, and force us to evict them. All of which cost a lot of money and lead to vacancies.

  1. Marketing. The first thing we do is market the property. By actively marketing the property, we can get a selection of applicants. This gives us the opportunity to choose the best tenants. Then  we screen all applicants.
  2. Screening. When someone is interested in renting a property, we have them fill out an application. We then screen out the ones you do not want living in your property. We have an extensive screening checklist. You can learn more about it by going to 7 Steps to Flawless Tenant Screening.
  3. Landlord verification. Although many landlords will debate the merits of landlord verifications, we believe they are an essential part of the screening process when available. Go to Problems with Landlord Verification in Screening and the Solution to learn more about the advantages and disadvantages of landlord verification, but more importantly, how we mitigate the disadvantages when screening tenants.
  4. Manual checks. Because we take the screening process very seriously, we manually check all local criminal and eviction records. Why is it so important to check criminal and eviction records manually?   Another great question. You can follow the link to read more extensively on the topic. In short, we learned through experience that national background check data bases are imperfect. While they are still a useful tool, they are not sufficient to stand on their own. We also check with the local courts for any recent filings or ones missed.

Tenant screening and marketing work in combination to ensure we have a selection of good tenants to choose from for each and every property we manage, We have several videos and blog posts available on the many things we do to market properties, but a good one to start with is My home is not leasing – some tips for better lease marketing.

Our experienced investment property management team can relieve you of the burden of managing your rental property while saving you some serious money! Call us today at (440) 220-7300 to see how we can help you!

 

Do You Have Hoarders Living in Your Property?

Have you seen the show Hoarders?

It depicts people with compulsive hoarding issues that cause them to collect things…lots of things. Hoarding leads to a home filled with trash and clutter. So much so that rooms get blocked off or it becomes unsafe to navigate the apartment.

Hoarders can also lead to damage to the structure of the building. There can be issues like water leaks that go undetected due to the hoard. Hoarding can also lead to damaged floors and walls. It can lead to bugs or mold, which cause additional damage.

The bottom line is you do not want a hoarder renting one of your properties. It leads to a very expensive move out when the apartment will need emptied, cleaned, and repaired before it can be rented again.

What can you do to prevent a hoarder from damaging your properties?

This one is difficult because you do not know when meeting the perspective tenant that they are hoarders. We work hard to help our landlords avoid having a hoarder take over a property. We do that in two ways.

  1. Careful screening. Screening for hoarding is not as easy as screening for other issues. It is not something that will show up on a credit or criminal background check. What we do is get the contact information for a couple of their previous landlords. While this is not a foolproof approach, it helps in avoiding the situation altogether
  2.  Three-month inspection. Three months gives a new tenant time to get settled in their new home. If there are hoarding issues, they will likely start to show by three months. Identifying the problem early gives us the opportunity to work with the tenant to set cleanliness expectations and to follow-up to ensure the mess is handled.

Again, there is no sure-fire way to avoid having a hoarder damage your property. However, through careful screening and follow-up inspections, you can mitigate the risk and hopefully reduce or eliminate any damage to your property. We freely do this for all the property owners. It is always our goal to provide them with the most stress-free and cost-effective experience possible.

Dealing with a hoarder is a situation where before and after video inspections may become highly critical to establish the extent of the damage caused to the property. Watch for our upcoming post on the value of video inspections.

Our experienced investment property management team can relieve you of the burden of managing your rental property while saving you some serious money! Call us today at (440) 220-7300 to see how we can help you!

The Top Five Reasons Lease Options Fail

The concept of the Lease Option is excellent in theory. A property owner leases a home to someone who cannot currently qualify for a mortgage loan. They do so with a specific and separately written agreement that tenant will acquire and purchase the home in a specific period of time. Normally the tenant gives a significant upfront deposit that is forfeited if he or she does not follow through with the purchase. If executed as agreed, both parties mutually benefit. The home owner / investor sells a house for a profit and gets an income stream immediately while waiting for the purchase to be complete instead of letting it languish on the market. The tenant does not have to rent while they recover from the economic event that left them unable to purchase and they get to lock in today’s price for a time period that may be several years.

Unfortunately in practice, lease options are often plagued with challenges.

Today I will share with you the top 5 reasons lease options fail and why working with professionals like a qualified credit repair organization and property management company can help all parties circumvent some of the pitfalls and increase the ratio of closed sales via lease options.

5. A bird in the hand is not necessarily better than 2 in the bush:
Many property owners become overeager to place someone in their property. With tax payments and overhead, it is understandable. It can be enticing to accept the potential tenant’s word that they can resolve their credit issues. Without a third party opinion, there is the belief that the problem can be resolved even if it is near impossible.

A property management company can work in tandem with a credit repair company to help choose the best candidate as well as bring in a lot of candidates through professional marketing so that home owners have more options. As a homeowner you will have a much better idea up front of how things will work out.

4. The hurry up and wait scenario:
I cannot count how many property managers have sent applicants to us for a pre-screen, and then never require them to enroll in our program. The owner may even say, they have to enroll, but I am giving them the keys on Monday. Monday comes and the tenant creates 1000 excuses as to why they have to wait to enroll. 90% of these applicants never enroll and usually fail at closing.

Whether it is credit repair, consumer credit counseling or bankruptcy, the rule should remain the same. If the applicant needs financial or credit assistance, you MUST have them enroll in that program prior to letting them take occupancy. Think of it as getting married to a gold digger without a prenuptial agreement. Just don’t take the chance.

3. No skin in the game:
Another misstep we often see is that the property owner says they want to pay for the credit repair for the tenant. As much as we like getting paid, we literally will not allow property owners or managers pay for the entire service.

Tenants that have their credit services fully paid for, almost never follow through. They have no cash commitment and already have the keys to the home. This is a recipe for disaster and almost always ends up in an unhappy relationship.

At Credit Repair Resources our lease option clients must pay their own initial enrollment fee. We are open to, and encourage, reimbursement for success in our program, but require our clients show the commitment to lasting success. Some owners create an incentive plan to encourage the tenant to become mortgage ready ahead of the deadline. If you work with Realty Trust Services, they charge a non refundable option deposit which really commits the tenant to the process. Depending on the negotiations money from this might be applied towards the cost of credit repair.

2. Unrealistic expectations:
Recovering from an economic event can be extremely challenging. Credit repair is one component of the process of regaining financial control. Life continues to happen and the best laid plans… well you know. Some property owners put tight time restrictions in place for their tenants. “You have 12 months to get yourself straightened out or you are out” is a common statement we have heard. The philosophy behind this is to motivate the tenant to take action.

The challenge with this ideology in regards to lease options is that many times the property owner is not being realistic of the resources and capabilities their tenants have. If you ask a tenant if they can save $3000.00 by this time next year, they most likely would say yes.

Even if this is realistic in the moment, the day they get their keys there are countless places they will allocate their funds before adding to the $3000.00 fund. Couple this with the cost of restoring their credit and you have a losing proposition.

Our suggestion: consult with your CRO partner to get a true picture of what it will take to turn their credit around based on the income and resources they have available. Create a timeline and plan that can be reached comfortably and you will be much happier in the end.

1. Communication and follow through:
That’s right, the single biggest reason we see lease options fail is the lack of follow through by the tenant and communication between the two parties about the progress. As much as the tenant wants to make good on their commitment, restoring credit takes time and consistent effort. In some cases it takes more than a year to fully recover from a major economic event. Staying focused can be difficult.

Although the property owner has a vested interest in their tenants’ success, they have their own life and responsibilities to attend to. Micromanaging their tenants should not be a priority.

A strong CRO partner will provide detailed updates on a scheduled basis. These updates should reflect the true status of the credit repair process, the execution of the tenant’s action plan and the affect it is having on their credit scores. This will provide transparency for all parties and hold the tenant accountable throughout the life of the agreement.

Lease options are an investment and every investment has its inherent risks. I hope the above information provides some insight on mitigating some of them.

Chad Kusner is President of Credit Repair Resources.

Chad Kusner is President of Credit Repair Resources.

Chad Kusner is President of Credit Repair Resources. He has more than a decade of mortgage lending experience and partnered with 20 year consumer litigator. Chad has spoken nationally on industry practices and serves as Executive Director for NACSO, the credit repair industry’s trade association. Credit Repair Resources was voted the Best Small Agency in America for 2012 by the largest ranking site on the internet and continues to prove itself as an industry leader. Feel free to contact Credit Repair Resources at CR760.com or (888)9-CRR760

Turning around an apartment complex

Does your property need a turn around? Give us a call. We put the same creativity we put into marketing, into helping our clients find solutions.

Does your property need a turn around? Give us a call. We put the same creativity we put into marketing, into helping our clients find solutions.

We wanted to share with you a success story. Today we filled the last of a series of vacancies for the 333 Washington, an 18 unit apartment building in Elyria. When we took over management in October 2012, this building had a 50% occupancy and of those units several were under eviction.

There were a lot of repairs to be made, as the current management was not meeting the needs of the tenants. Screening had not been done properly and it had gained a very bad reputation. Advertising dollars were spent poorly. 6 months later this property is 100 percent occupied with only 1 eviction in process (not a tenant we put in). It wasn’t easy to turn this complex around.

The owner had a limited repair budget which we had to work with. The building had a bed bug infestation that took several months to get a handle on. There were difficult tenants we had to get rid of. We had to really dial in the marketing and find out what worked for that property.

For us this is a turnaround story, we are very proud of and we think that we could bring YOU the same results.

About Realty Trust Services

Realty Trust Services is a licensed brokerage and property management company based out of Lorain County with a service area from Sandusky to Cleveland Heights to Medina. Their team includes: Agents, Christopher Obrycki, Andrew Morris, Shanon Jones- Plas, Kari Taylor, Matthew Klein, Julie Musial and our other unlicensed team members including Steven Taylor, Bill Taylor, Greg Zadorozny, Kris Mrazik, Joyce Thomson, Matthew Harkins and David Stevoff. For more information on Realty Trust Services and how they can help with your property call 440-220-7300.

How to vary your rental marketing and tenant screening for the area

The market has been ruthless to many landlords as well as opened up new oppurtunities to acquire properties and make more money in real estate investments than every before.

When looking to lease out a property and find the best tenant you need to keep in mind the following and vary your strategy according to the local market you are working in and the type of property you have.  It helps of course to have the help of a professional team with experience.  However if you want to go it on your own here are some guidelines and strategies that will hopefully help you manage this process.  Keep in mind we do have a marketing and tenant placement service for those who want to do the management themselves.

Certain areas will simply attract a different kind of tenant than other areas. It is important to understand various areas and the best marketing for each area as well as how to screen tenants.

For lower income areas (properties with rents $300 to $850) Craigslist along with aggressive handwritten signs (if necesary) might be the way to go for marketing. Also in many lower income areas you won’t find a tenant with good credit. You have to screen those tenants based on their eviction history, criminal history, landlord referrals and income. Make sure you check those references. We have a grading system for quickly grading low income renters. This is important because competition is brutal. If you can’t give an affirmative answer with in several hours your best in class low income tenant may have signed somewhere else already. In many lower income areas the competition is so fierce that you won’t be able to attract a tenant with out discounting the security deposit.

For higher end areas (properties with rents 900 to 2,500) the process is much different. Those properties need to be put into the MLS as well as numerous other websites including Craigslist (which is still very useful). Tenants may come through outside agents who represent them. The good news is generally there is a much higher quality pool of tenants to choose from. You may be able to require great credit and a full security deposit. However you have to sell good prospects as well as they have a choice. Rental prospects may in fact be interviewing and screening a landlord or management company just as much as the management company is screening them. They will make a choice based not just on rent and whether they like the property but also they want to know that a professional is managing the property and want assurance that the property is going to be maintained in a timely manner and their needs will be dealt with professionally (hint- We actively market to clients not just our properties but the assurance that we as a company have a system to take care of them).

————————-

With more than 45 years of investment property management experience our expert team can relieve you of the burden of managing your rental property while saving you some serious money! Call us today at (440) 220-7300 to see how we can help you!

";