TIPS & HINTS FOR OWNERS…
AND THINGS WE DO!
1. Application Fees:
The law limits application fees to no more than $42.06 per applicant. The law also states that you can only keep the portion of an application fee that covers your actual costs for credit reports, office/staff time to verify information and so on. And lastly, you have to give the applicant a receipt itemizing the way his or her application fee was used.
For example: When we receive an application, we run the credit reports first. If we can tell at that point that we will not approve the applicant, we decline them and refund their entire application fee except for the cost of the actual credit report and $10 office time to run it and analyze it. If we go through the full investigation process with an applicant, our actual costs always exceed the maximum allowable application fee of $42.06.
These new laws were created because of unscrupulous landlords that made application fees a profit center. They would charge application fees to 10 or more applicants where they only had one rental available. Then they would choose the one they investigated and keep everyone else's application fee.
2. Credit Checks:
A credit report tells you volumes about a person's character when it comes to keeping their financial commitments. It is a bad business decision to accept nice people with bad credit. If the credit report reflects too many problems, we decline the applicant. Be sure to check the following when you receive the credit report:
1. Do the social security number and driver's license numbers match on the credit report with the numbers on the application?
2. Do the addresses on the credit report match with the address for rental history on the application? This is a good way to catch a person that is hiding problems they had with a landlord.
3. Does the applicant carry debt balances that might impair their ability to pay the rent? If credit card balances exceed 4 months income, it is a good idea to make sure the rent amount is one-fourth (or less) of the applicants monthly income rather than one-third.
3. Other Options Blemishes:
When everything else about an applicant is positive, we sometimes approve them with one or more of the following credit blemishes if there is a reasonable explanation:
a) Medical collections
b) Paid collections
c) Credit problems that are 5 years old or more (where new, good credit has been established)
d) Defaulted student loans
Ø Note: People that have not paid their phone or power bills create an unacceptable risk and of course, the black kiss of death is a collection from a property manager / landlord.
4. Other screening services
You can also subscribe to services that will check any name against a database that will tell you if that person has ever been evicted in your state. Hurst Home Realty Property Management Services will run an eviction check, criminal search, rental history verification, employment verification in addition to a credit report on all prospective tenants. Currently we use Landlord Protection, which costs run $40.00 for a single person and $50.00 for a married couple (with the same last name). We feel that this full report gives us the most comprehensive insight to tenants and helps to protect you the Owner.
5. Megan’s Law:
Notice:The California Department of Justice, sheriff's departments, police departments: serving jurisdictions of 200,000 or more and many other local law enforcement authorities maintain for public access a data base of the locations of persons required to register pursuant to paragraph (1) of subdivision (a) of Section 290.4 of the Penal Code. The data base is updated on a quarterly basis and a source of information about the presence of these individuals in any neighborhood. The Department of Justice also maintains a Sex Offender Identification Line through which inquiries about individuals may be made. This is a "900" telephone service. Callers must have specific information about individuals they are checking. Information regarding neighborhoods is not available through the "900" telephone service.
NOTE: We include the Megan’s Law (Data Base) Disclosure for all prospective tenants and the tenants are required to sign it, if accepted.
Ø This notice must be in your Rental/Lease agreement
6. Checking Rental History:
This is one of the most important steps in the screening process. Some people with good credit are still miserable renters.
We ask these questions of every landlord reference. The answer to any one of these questions could be the key to avoiding a bad tenant:
a) May I have your name please?
b) Are you the Owner, Manager, or Leasing Agent?
(We ask these first two questions because we verify the owner using the county record. Every once in a while we catch someone posing as an owner that is really not. The applicant that sets up that trick is guaranteed to be a disaster.)
c) What date did the tenant move in? (Be sure the date matches the date on the application and the credit report.)
§ Are they still living in the property?
§ What is the monthly rent amount?
§ Has the tenant ever paid late?
§ Has the tenant ever given you a NSF (non-sufficient funds) check?
d) Have you ever had to serve the tenant a 3-Day Pay or Quit Notices?
e) Have you ever received any complaints (noise, etc.) about the tenant?
f) Does the tenant take good care of the yard?
g) Does the tenant have any pets?
h) If yes / Have the pet(s) created any problems or damage?
i) Has a 30-Day Notice to vacate been given?
(If the tenant is making plans to vacate without giving a notice he/she will do the same thing to you.)
j) If yes - Did the tenant give you notice or did you give the tenant notice?
(Sometimes everything sounds good until the owner tells you that he/she gave the tenant notice. If the owner gave notice, ask "why?" and listen closely)
k) Is rent current?
l) Would you rent to them again?
m) Is there anything else I should know about them?
The current landlord may want the tenant to move out and thus, give them a glowing reference. It is imperative that you call the prior landlord and ask them the same questions as you asked the current landlord (if less than three years).
7. Verifying Income:
One of the best ways to verify income is with a pay stub that shows the YTD (year to date). Be sure the Social Security number on the pay stub matches. Even when an applicant provides a pay stub with a YTD, call their place of employment to insure that they are past any probation period and that there job is secure. This is also a good time to get a feel for the character reference for the tenant.
If the tenant is self-employed, be sure to verify his/her income with 3 months of bank statements or tax returns for the past 2 years. Phone verifications from self-employed are very suspect because the owner, or someone that works for him/her, will be providing the information to you.
8. Visit Applicants Residence:
We, sometimes, depending on the applicant, drop-in on the applicant or do a drive-by, to see how they take care of their current home. Oftentimes either the yard looked terrible, the house was a mess, or cars were parked on the lawn. This helps in our final decision to rent or not to rent!
We look forward to working with you now and in the future. If you have any questions or concerns, please feel free to give us a call at 916-652-8048.