REPOST: Your five-step guide to screening tenants

Finding the perfect tenant who wouldn't ruin the property, would always pay on time, or wouldn't give landlords any difficulty is a rigorous process. This Toronto Sun article provides a five-step guide to screening possible tenants.

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The quality of your property management experience, including your net return, relies heavily upon the kind of tenants you have as residents. This is why it’s crucial to do a thorough screening when selecting tenants for your best chance at a right fit for your space. Here’s my 5-step guide to screening tenants.

1. Evaluating first contact: Rental candidates will contact you by phone or email for more information and to set up viewings.  This initial contact is a great opportunity to pre-screen would-be tenants. If you’re chatting by phone take notes throughout the process. Ask things like:

How long are they looking to rent? If you’re interested in a short-term lease, but they’re looking for something longer-term, identifying this mismatch now saves you both a wasted showing.

• When do they need to move in?
• How many occupants will be moving in and what’s their relationship to each other?
• Do they have pets?

2. The viewing: When you’re showing the unit to prospective tenants, treat this as an in-person interview. Before the showing review your notes from your initial contact. You’ll be covering many of the same questions in a different context and want to ensure the answers you get don’t diverge.  Some red flags to be aware of:

• Was the candidate late for the scheduled showing?  This tardiness might extend throughout your relationship if they become your tenant.
• What was their general attitude like? Did they find reason to complain about the property or seem easily put-off or putout? Were these annoyances used to negotiate a price reduction?

3. The rental application: Common information to request includes personal information (full legal name, a piece of identification, current address, phone and email address, and date of birth), residential history (contact information for landlords and previous home addresses), employment history (status of employment, supervisor contact details, income), financial obligations (outstanding debt or ongoing obligations such as alimony), personal references, and emergency contact information. Be sure to receive a potential tenant’s express consent to commence the due diligence process including for credit and criminal reference checks.

4. Due Diligence: As best you can, authenticate the reference information provided and assess the feedback you’re hearing from references.  Do a little investigative work by looking up phone numbers to ensure they correspond to the names and organizations you’ve been given. 

When calling a landlord start the conversation with “I’m calling about your rental unit”. If a friend has offered to stand in as a landlord reference, this question tends to be enough to catch them off guard. Typical questions for landlords include whether rent was paid on time every month and about damage to the unit above expected wear and tear.

For work references, ask employers about the length of the candidate’s employment and if this job is expected to continue. Run a credit check using a company that provides a credit score, even if the candidate has provided their own. This report helps you understand the candidate’s big financial picture including obligations and payment habits, allowing you to gauge whether rent will be paid on time.

5. Go with your gut: The property management business is a nuanced field and this is where experience pays off. In the absence of experience, go with your instincts on a candidate. You’re about to embark on a long-term relationship with a valuable asset at stake. Be confident in your decision, as a vacant unit is preferable to a troublesome tenant.

And once you’ve found your dream tenant, do nurture the relationship!

Follow this Applegate Property Management Facebook page for more tips on handling properties and tenants.

A primer on subleasing

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Subletting is a preferred option for individuals who want to rent out their apartment without losing on their current payments. This option has another person renting out a room (or the entire apartment) for a predetermined period. This is typical for backpackers or for people who spend months away from their current residence. Subleasing is also an option for those considering moving out of their country permanently. 


This renting option is generally simple, although there are a few consideration before deciding on subleasing:


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Not everyone can sublease: Where most people get in trouble with this type of option is not informing their landlord beforehand. Individuals who are currently renting out their own rented unit should first review their current contract. If the contract does not include a provision for subleasing, individuals should seek permission from their landlord. It is highly recommended that agreements are made in writing, with a copy given to the landlord and the other to the renter. 


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Subleasing is a business: Most of the time, people sublease their apartments to their friends or relatives. To be fair however, deposits should be made prior to the move and payments made regularly. Subleasing is still a business transaction and should be treated with the same amount of formality given to any financial deal. 


Ultimately, subleasing is another way for people to earn money while traveling or on the move. Business-minded individuals can use this option as an alternative means to generate income during their times of recreation. 


Subleasing is part of property management. Count on Applegate Property Management to help you create strategies to make this process easier. Subscribe to this blog for more discussions on property management.

REPOST: Tenant power: how to battle a bad landlord

 We've all seen bad landlords on TV shows and movies but only an unfortunate number have experienced bad landlords in real life. This article from The Guardian discusses some of the ways other people handle their not-so-nice landlords.

Protesters demonstrating before a Commons debate over the issuing of eviction notices to tenants who complain. | Image Source: theguardian.com

 
Dozens of private renters staged a demonstration outside parliament last Monday evening to put pressure on MPs to ban so-called “revenge evictions”. The demo came ahead of Friday’s House of Commons debate on proposals from Liberal Democrat MP Sarah Teather that are designed to stop landlords evicting tenants who complain about essential repairs or poor conditions.

There is growing evidence that an increasing number of renters are being forced to put up with properties that are damp, dangerous and badly in need of repair, but feel powerless to speak out, for fear that they will be thrown out and forced to find somewhere else to live, perhaps in another area.

Last week, Citizens Advice revealed that 20% more people sought help over eviction – despite being up-to-date with their rent – in the three months from July to September this year, compared with the same period last year. The charity also dealt with 14% more repairs and maintenance issues, and added that young people were more likely than older renters to have problems with private landlords.

There have been a number of cases in the news involving rogue landlords. Earlier this month it was reported that David Kohali was ordered to pay a total of £281,000 – thought to be a record penalty – for illegally renting out so-called “beds in sheds” in north London. And in August, another London landlord, Yaakov Marom, pleaded guilty to failing to comply with a council prohibition order to stop renting out a room that could only be accessed by crawling up a staircase on all fours.

By law, rented properties must be safe and fit to live in. The trouble is, many aren’t, due to a rogue minority of landlords ignoring their obligations. If you think your landlord is breaking the law or acting unfairly, what can you do?

A tenant’s first port of call should be the landlord or letting agent. Set out your concerns in writing and ask for them to be rectified within a reasonable amount of time. Check outTenant.Repair, a free service to help private renters in England fix maintenance problems themselves and report issues to their landlords.

If nothing happens, it may be time to think about calling in the local authority’s environmental health department. Under the Housing Act 2004, environmental health officers will use the “housing, health and safety rating system” (HHSRS) to check a property is safe. The HHSRS looks at 29 health and safety areas, and each hazard found is scored as either category 1 or 2 (category 1 is most serious). The most common hazards relate to damp and mould, excess cold, overcrowding, fire, lack of adequate heating, leaks, inadequate security, and risk of falling (for example on stairs).

The most basic action a council officer can take is to issue the landlord with a “hazard awareness notice” – but this doesn’t require any action to be taken. However, an “improvement notice” does. This will require the landlord to carry out repairs within a set period of time.

In serious cases, more severe courses of action open to the council include prohibition orders, which ban a property, or part of one, from being rented out, and demolition orders, which do as the name suggests. The council can also complete work itself and bill the landlord. In most cases the landlord is only at risk of prosecution if he or she ignores an improvement notice or other order – which is perhaps why some are happy to let unsafe properties. Even if a landlord fails to comply with a notice, the council will have to weigh up the chances of a prosecution. Once in court, any fine is set by the magistrate, with many appearing woefully inadequate.

“Under the Housing Act 2004 the maximum fine for a HHSRS notice is £5,000,” explains David Smith, housing solicitor at Anthony Gold Solicitors. “You might have seven hazards on one notice, but the maximum fine is still £5,000.”

In some cases local authorities go through expensive and time-consuming prosecutions, only for the magistrate to give the landlord no more than a slap on the wrist.

The Local Government Association, which represents local authorities, is highly critical of the process for prosecuting bad landlords. It cites one case where a landlord received a fine of £100, even though six tenants were left living in a property for a year without fire alarms or proper escape routes.

On top of any fine, landlords can also be hit with costs and a victim surcharge. However, costs awarded by the courts do not always meet the full costs incurred by the council. Alex Hilton, director of campaigning group Generation Rent, says this makes councils less willing to prosecute landlords.

“Because environmental health officers only recoup the notional costs of a prosecution when it is successful and not the cost of enforcement leading to the prosecution, councils see enforcement as a drain on resources,” he says. “This is because the fines go to the Treasury. In our Renters’ Manifesto we called for local authorities to keep the fines so that councils can see the value of investing in effective enforcement.”

Much bigger fines can be levied for other non-HHSRS offences. The Health and Safety Executive can prosecute landlords who break gas safety rules, and landlords can ultimately be jailed if their failure to maintain gas appliances leads to someone dying. Breaches of the Regulatory Reform (Fire Safety) Order 2005 can also incur big penalties.

When it comes to planning, the rules are slightly different, and the course of action the council will take depends on what planning regulation has been breached.

“For beds in sheds, a prohibition notice is likely to be issued straightaway, which would ban the shed from being used as a residential property – and this is usually followed up by a demolition order,” says the Association of Residential Letting Agents (Arla).

One group of landlords potentially subject to tougher rules and higher fines is that letting “houses in multiple occupation”. HMOs, let on a room-by-room basis, are lucrative for landlords, but it is a complex area of the private rented sector, and subject to a lot more rules than other property.

“Large” HMOs, rented to five or more people making up more than one “household” (ie a family or couple), and at least three storeys high, require a licence, while some councils will also licence “small” HMOs, too.

Most court cases which result in five-figure fines are for HMOs; landlords can be fined up to £20,000 just for not having a licence. If they have also committed “management offences” such as letting rooms that don’t meet the minimum size, they can be fined up to £5,000 per offence.

Some local authorities have introduced selective licensing, which means all landlords are required to hold a licence to rent out property. These schemes are normally introduced in areas with high levels of antisocial behaviour. The London borough of Newham introduced selective licensing covering all private rented properties in January 2013. Landlords letting property in the borough without a licence can be fined up to £20,000.

Learn more about the proper tenant-landlord relationship by following this Applegate Property Management Twitter account.

REPOST: How to spot bad tenants

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The private rented sector is becoming more and more competitive, meaning landlords could jump at any opportunity to fill their property. However, while most tenants are unlikely to cause any hassle, some will wreak havoc, meaning you need to be on the lookout for any bad apples.

According to a survey of 2,000 landlords - undertaken by AXA Insurance last year - 26 per cent of tenants fail to pay their rent on time, 15 per cent of participants had received complaints from neighbours because of excessive noise and ten per cent had experienced tenants disappearing in order to avoid paying rent arrears.

Ensuring that the right tenants move into your property can save you hassle down the line, such as the lengthy and costly eviction process. Some stick out like sore thumbs, so are easy to avoid, but others rely on deception and secrecy.

Here are some tips to help you avoid bad tenants.

Start with the advert

The first thing you should do is ensure the advert for your vacant property clearly states that prospective tenants will need to undergo background checks before they are handed the keys. Note that references will need to be verified and occupants will be expected to comply with specific rules, eg no smoking or no pets. This should help deter any untoward people from enquiring about your property.

Referencing checks

The research from AXA revealed that a staggering 38 per cent of landlords do not carry out checks on prospective clients, leaving themselves vulnerable to bad tenants. Referencing checks can provide a landlord with an idea of what to expect, such as if the potential occupier will pay their rent on time or if they could cause damage to the property. These checks will also reveal if the person has any criminal convictions or county court judgements against them for debt, which should give a landlord a clearer picture of the potential tenant.

Be wary of tenants who try and get around referencing checks, as this could be an attempt to keep their history hidden. It is likely that such a person would target landlords that have just entered the buy-to-let property market or private landlords that choose to work without the help of lettings agencies.

Wayne Mearns, from Belvoir Southend-on-Sea, told the Telegraph: "Tenants with untoward motives for securing a rental property will often target private landlords who find tenants themselves."

Guarantor

This may not be required in all cases, so use your initiative to decide if a guarantor will be needed or not. Tenants that work part-time or receive benefits or couples who apply for a joint tenancy may not be able to pay the rent if their situation changes, so in these instances it may be a good idea to give yourself added protection if issues regarding rent arise.

Deposit

Landlords should take a deposit, which generally equates to six weeks' rent. This provides the owner of the property with a degree of financial protection should any damage to the property occur or if the tenant absconds without paying their last month's rent. Deposits must legally be held in one of the government's three protection schemes until the tenant vacates the property.

Be on the lookout for any potential occupiers that ask you to forego the deposit, as it could be an indicator of a rotten apple.

Inventory

Taking an inventory will reduce the chances of a dispute happening when a tenant leaves a property. Write down what the house contains and make a note of any existing damage, taking photos as well. This means you have the evidence necessary to prove any missing items or new damage is the fault of the tenant.

The importance of tenant screening within the bounds of law

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Property management involves a full set of services from rental marketing to tenant screening. Most homeowners do not realize the importance of every step of the process when handling their real estate assets. This is understandable since there are other issues that must be taken into consideration as well, including taxes, maintenance, and accounting.

However, it cannot be stressed enough that choosing responsible (not to mention, reliable) tenants can make or break an entire property’s future state and profitability. Tenants are the individuals who live in and pay for the unit. Their actions directly impact how a property is managed and maintained.

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Given this, it is particularly important that close screening process be applied to the people who will be living in a specific property. The screening process comes with many hurdles since there are legal considerations. There have been a number of suits alleging tenant discrimination. Whether these cases have merit or not, it is often the property owner affected the most. The very label "discriminatory" affects how a potential buyer looks at the owner. It would not be a leap of the imagination to forecast a dramatic loss of sales should the case be known to the general public.

The property owner can take advantage of the hundreds of online sites available on how to properly screen tenants. Legitimate strategies take both local and federal state laws into account, which are especially applicable if the owner has properties scattered across the nation. When the property owner is unsure of any of requirements listed in his or her tenant agreement, he or she should consult with a trusted property management company.

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Trust inApplegate Property Management for all your property managing concerns. For more information on the company’s services, follow this Twitter account.

Avoiding common mistakes in property management

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Managing a property and a tenant relationship may be a fairly straightforward matter for some property owners. Some may take cues from their time as renters and copy a few methods that they liked while observing landlords and implement solutions to those they disliked. It doesn’t always turn out well as there are some areas where many landlords are prone to make errors.

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First among these is that many property owners tend to forget treating the management of the property as a business. As a result, some may see the necessary paperwork as a hassle and would prefer just verbal agreements with tenants. Without written documentation, it will be hard to resolve disputes so it is better to plan ahead and make sure that the stipulations for property use are properly recorded. Issuing receipts, meanwhile, is useful for tax records and making sure that all payments are up to date.

Another mistake that landlords tend to make is accessing the property without consent from the tenant. While they own the property, they must never forget that they agreed to rent it out to someone else. So, for the duration of the contract, landlords must remember to always respect the tenant’s privacy and that they have to gain permission to enter and inspect the property.

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Finally, landlords must make it a point to give out their contact information to their tenants. This is to make tenants feel secure in knowing that the property owner is available to deal with any problems with the property that may arise. It is understandable that some property owners may also be juggling managing their property with their work so it may be better for them to rely on a property management services provider.

For more information about property management, visit this Applegate Inc. Facebook page.

Including a pet agreement clause in a rental lease

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To answer the growing need of a pet-friendly home arrangement, many commercial and residential owners are now including pet agreement clauses in their rental lease. There are many provisions that are stated in the general contract, ranging from the type of pet to how long the tenant plans on staying in the area. Listed below are a few examples of the clauses most property management companies will address:

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The type of pet allowed: The pet agreement will state which type of pet breeds are allowed. Most landlords allow the standard type of pets, which include, dogs, cats, birds, fish, guinea pigs, rabbits, gerbils, small reptiles, and hamsters. The clause will also determine how many animals of each kind (if ever) the landlord will allow. Tenants should also clarify the specific type of dog or cat breed they intend to bring the area. Certain breeds, such as Rottweilers and pit bulls, are considered dangerous by some, and may not be allowed.

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Properly identified, licensed, and vaccinated pets: As a general precaution, landlords will state in their pet agreement clause that they will only allow pets that are kept under control at all times. This means that the pet is properly collared, has a licensed, and has vaccination papers. Some landlords may even require a tenant to carry a renter’s liability insurance (depending on the state and local laws). This insurance covers any damage caused by pet accidence that does not dog bite or similar injuries.

It is highly recommended that tenants talk to their potential landlord first before signing any contract. Also, it should be noted that for pet owners that they also take an extensive external audit of the surroundings and see whether the place and the other people living there will best suit their and their pet’s needs.

Applegate Property Management offers property management services in Wisconsin. Visit its official website to learn more about its services.