Can I improve my process?

Question

I've been renting out my property for a few years now and haven't had any major issues, just wanted some feedback if there's anything I can do better to improve the entire process and a few questions.

1) Advertising
I've been using craigslist/postlets as well as putting up a big sign in the front yard.  I've tried putting signs in the surrounding area, but it really didn't seem to help as much as one big sign in the front yard and craigslist.   I'm not sure if I should consider rentals.com?

I've never had an issue renting the property yet, but I believe it's because it's the nicest place for the lowest price in the area.  So I'm just wondering if rentals.com or any other place would actually help show more tenants?

2)  Background check
When I show the property and a person says they want it right away, I have them fill out a one page application and collect 35 dollars.   Then I go home and use www.e-renter.com for the background check and make phone calls myself on everything that's on the application.  The background check can only show me if their everything checks out, if they have foreclosed or had any major issues.  As far as credit, I put in 520 and above, which it will come back a yes or no.  It doesn't show me their credit report, which I would like to see.  I would like to know if they can truly afford the rent.  Is there a better site or a better way or determining if a person can afford the property?  I feel their pay stub/w2 only indicates how much they bring in, which is useless if they are upside down or in extreme debt.  
That website can give you a credit report, only if you own a business, which they send somebody out to make sure you really do have a business to qualify for the option to get a full credit report along with score.   I'm not sure if there's any work around, besides having a friend who owns a business help me out.

Any advice on this would be appreciated.

Another question is what do you guys do with two adults, run a check on each person or only one person.  I've mostly had stay at home wifes and I've been running a background check on the husbands, but this last time the wife filled out all the paper work.   I'm not sure if a married couple would have similar credit scores?  Is it safe to just run it on one person?  I just tend to think that they don't want to pay twice the price for just a background check that is not reimbursable

After everything checks out, I meet up with them for the second time to collect more things for their background check such as
1) copy of ID for each person over 18 years of age
2) social security card copy of each person
3) last two pay stubs

Agreement
If everything checks out, then I meet them for the third time to sign the contract.  I've been requesting one months rent for deposit, then I've only been accepting automatic payments, so they fill out that document for the contract, so that money is pulled out on the 1st and they only have to come up with security deposit during signing and the first of the month is when the money will be pulled out of their checking.  I've been using https://www.erentpayment.com/ with their documents

One question I've had is how to avoid tenants that will not stop calling you for every single thing that's minor such as light bulbs or a water drip in the shower every 3 hours?
I've updated my contract that there's a deductible for each instance of 20 dollars, but I'm not sure that's smart? A friend told me it's what he does with his rentals, but I do have a little bit of a concern that they will let things go longer and then it will cost me more in the long run.  I just don't want to have a phone call over things that are so minor that I'm getting a phone call every 2 weeks, but don't want thing getting out of hand.

Tenant Leaving
I really haven't had an issue with tenants leaving at all.  I've had some try to not pay me the last month and tell me to use the security deposit, but with the automatic payments, they don't have this option.  They can't cancel the automatic payments and it also allows me to view the property and then push money back to them through the same system.

So far I can't complain about everything as it has been going really well, but I feel I could always be doing things better or smarter.  Any suggestions would be greatly appreciated.

J Scott · Answer

Here are the two pieces of information you need to make this determination:

1. Do they make enough money?

2. Do they prioritize rent over all other expenditures?

If the answer to both questions is "yes," they can afford the property.

In order to determine the answer to the first question, get a couple recent paystubs and verify employment information with their employer.  I generally like to see that they bring home at least 3 times the rent amount per month in collective income.

In order to determine the answer to the second question, check to see if they've had any evictions or foreclosures in the past and verify their payment history with at least the prior two landlords.  If they've always paid their rent on time in the past, they likely will continue to (conversely, if they've ever not paid their rent on time, it means they don't value a roof over their heads over other things, and deny them).

Personally, I don't care about credit score.  There are plenty of people who can't pay their *other* bills on time, but put a very high premium on making sure their rent is paid and they have a roof over their heads.  This is what's important to me (though a higher credit score is certainly a bonus).

Why do you have an issue with them coming out to do an inspection?  What they are looking for is that you have the processes and tools in place to ensure the privacy of the data -- this means making sure your computer is password protected, making sure you have a locking file cabinet, making sure you have a shredder, etc.  The inspection is not that rigorous, and certainly worth it if you really want the full credit reports.

For things like light bulbs, put in the rental agreement that the tenant is responsible for the first 10 dollars of repairs in any given month.  This means they pay for things like light bulbs, batteries for smoke detectors, etc.  Or, if you don't like that approach, just leave a bunch of light bulbs and batteries in a kitchen cabinet for when they move in.

As for things like dripping showers, this is something that you should want to fix. Ultimately, the house is your long-term investment, and making sure that it stay in good shape should be your goal. Plus, the tenant has a right to working fixtures, etc. Especially if they're responsible for the water bill.

Account Closed · Answer

[[[.... Do they make enough money?..... Do they prioritize rent over all other expenditures?....]]]]

I also want to know if they did any damage to prior rentals. It doesn't do you much good to have a tenant with enough income who pays the rent on time and does $15,000 in damage to your unit (yes, it is possible to do that much damage) .

Also, I do not want that "sufficient income" to come from the sale proceeds of a marijuana grow operation or a meth lab. So I run a criminal background and verify their source of income.

I also check to see if they have been involved in any lawsuits. I don't want one of those tenants who invent things to sue the landlord over. (Yes, they are out there and they are always charming people)

J Richardson · Answer

Thank you all so much for the help

@ J Scott

This was a lady who called me one day to tell me the show was dripping.  Then one day later called me and told me that it was her imagination and that it isn't dripping.  Then called me back two days later to tell me it was dripping again.  So I went out with my plumber who looked at it and said if it's dripping once every 3 hours or longer, that's condensation in the pipes and is not an issue.   She was with me when the plumber said this, then about a week later she called me again to show me that there was a drip.  I couldn't see any drip at all when I was there for 30 minutes.
I spoke to a few other plumbers who all told me unless it's one drip every second or every two seconds you will spend much more money fixing the drip then it would cost in water even after 10 years.

@ Realtyman
I was more referring to $60 dollars, not hundreds of dollars.  I meant rentals.com as I found a pie chart online somewhere on what places people search the most for rentals and 3rd place was craigslist and I can't remember what was second place, but 1st place was rentals.com.  So I was more questioning if I should spend that extra 60 dollars.  Even though I haven't had any issue with tenants, it would be nice to get more exposure as maybe I could get a better price or better tenants, but just a thought.

@ Cameron Novak
I have tenants in there now that are about to leave and have already signed new tenants.  4 years ago I had trouble renting the property, but I'm certain it was the price as for the past 4 years I haven't had an empty month since then.  So far no issues, but again I'm getting new tenants, so we'll see how that goes.

What is CL forum?

J Richardson · Answer

@ Jon Holdman
I actually think it's a great idea.  I rarely have no shows, very very rare, but I call before I drive out anywhere.  Normally I get to the house a few minutes before, open all the blinds so that more light comes through and it has a larger appearance, but I really think you have a point.  Maybe next time I can schedule them, not at the sametime, but 15 minutes from each other.

Funny about what happened with your faucet, but I had the exact same with a faucet and this was with a contract that landlord covers 100% and no 10 dollars per incident. 
The tenants finally told me that there was the facet was leaking and by then the bottom of the cabinet rotted out completely.
So I don't see either contract helping me in that situation, because it probably took me a few hours to rebuild a new bottom cabinet and rip out all the rotten out stuff.  I do about 90% of my own work at the place, but I have a plumber that is too inexpensive that it makes no sense for me to do certain plumbing myself.

I do see value in what your saying, because one tenant I had told me he hear noise in my walls, which I had a busted pipe a few years ago.  Maybe if there was a deductible that they would be less likely to call and the damage could have been horrible.  My plumber came in, cut the wall, replaced the pipe, patched it up and painted for 40 bucks.  But I can see what you mean about what if the tenant would never had called, but I guess it's one bad tenant that would call about 3-4 times a month with things that were just silly and normal.  Maybe 1 out of 4 was something needed repaired.  That's all I want to avoid the things I feel are not an issue.  
I'm talking about things I would not even fix at my own house, so I find it insane to do it for my tenants when they aren't issues, but a persons preference.

Jon Holdman · Answer

Yep, I tell them to show up at the same time.  Most folks spend all of five minutes looking at a property.  Maybe 10 if they're really interested.  Most folks also don't show up exactly at the time you tell them.  I try to be about 15 minutes early, and its pretty unusual to have two show up at exactly the same time.  If they do, whoever gets there second waits a few minutes.  Combine that with the fact that only about half the people who say they will come actually do and this really isn't a problem.  Its made the showing process much less painful.

Keep in mind that many people have no experience in repairs at all.  Most folks don't have any tools or the knowledge to do even basic repairs.  I deal with my properties myself.  I always go have a look first and see what's going on.  Many times, its a quick trip to Home Depot, $10 in parts and an hour later I'm headed home with the repair complete.  It does get frustrating to have to deal with little stuff, but it saves paying someone $100 to deal with something trivial.  The last repair was when a tenant called saying there was a drip under the sink.  The sink faucet had broken and the spray hose had worked loose.  I took it off and went to buy a new one.  I told the tenants they had to pay, which they agreed to. Turned out the faucet had a lifetime warranty, so the new one was free (and much more strongly designed.)  My total cost?  $0.  Just about 90 minutes of my time.  My savings?  Avoiding leak under the sink that would have destroyed the cabinet given time.  I'd much rather be called to deal with something minor than to find the cabinet rotted out when they move out later.

Whoever said rental properties were "passive" was full of bull.

J Richardson · Answer

@ Financexaminer
How would I know the law in Florida?  A few property managers have been doing it as far as I'm aware.
It's not about them paying for repairs, it's about paying for convenience or the argument that they believe something needs updated/fixed, when I disagree and I know spending the money is an absolute waste of money.  I know when the next tenant comes in, they will careless about the change.

I have recently had two people ask me who is responsible for repairs before I ever showed them the contract and I told them I would take care of anything the first 30 days, because I feel it's unfair for them to pay for any repair that was mostly likely there already before they moved in and that I charge 10-25 bucks after the first month for any repair.   I explain to them that I just want to avoid people calling me for silly things that they should be able to do themselves or that aren't even issues.

J Richardson · Answer

J S. -> lockbox sounds interesting, but a little bit nervous about strangers coming in my property without me ever seeing them or knowing who they are.  I've noticed I've gotten all kinds of people and would hate for the wrong one to show up.  
I can see it benefiting time though

Jon H.
I was a little confused with your post.  Do you actually show possible tenants at the sametime?  So if a few call, then you tell them all to show up at the sametime?

Jon Holdman · Answer

This is part of the gig.  I figure it takes about 10 showings to get a good tenant in place.  So, none of the showings are a waste of time, they're just one more check mark on that list to a good tenant.

I generally only show once a week.  I'll pick a time that's convenient for me and give everyone who calls and passes the phone screening that date and time.  I then tell me to call 30 minutes ahead of the appointment or I will not be there.  I usually end up with 3-4 people who say they will come and usually two who actually call and then show up.  Once in a while only one will show, sometimes more than two show up.  Since doing this, showings have become much more efficient.

The other step is to ask them to fill out the application and pay the application fee on the spot.  If they do that, they're serious.  If they take an application, they probably are not.  I have had a few bring an application back, but its rare.

They must pay the first months rent plus security deposit in cash or money order before they get the keys.  If they're holding the place before the sign the lease, I want the deposit at the time we agree to the hold, also cash or money order.  Check cash with a counterfeit pen. Checks, even cashiers checks, can be forged.

Angie Menegay · Answer

I think despite the disappointment, your biggest blessing here is that they have not moved in.  Imagine that security deposit was OK, they moved in, then something happened to their job a month later and they couldn't pay and you had to go through the eviction process, then had to fix up your house for showing again.

I'd taken personal checks for security deposit before but I went to their bank and cashed it immediately.

Good luck with your next tenant!
Angie

Bill Gulley · Answer

Hi, welcome to Landlording!

Income: I used income verifications and employment verifications, same as for a mortgage. I could run my own credit reports, but later, asked for the past two or three months bank statements and last months credt card statement. A verification of employment together with a criminal check on my own at the clerk of court was all I used and had very little problems.

As to charging a tenant for repairs, can be illegal so check with your state, it's a bad policy anyway since a judge will frown on such tactics...why? Because a tenant has a leasehold interest in a property and repairs and improvements are a cost of ownership. It can be done and is common in commercial, but not residential.

My leases have an administrative fee. At the time of making the lease it is agreed that the landlord will not be required to to make inspections at the request of the tenant, will not be required to return trash carts to the rear of the property, will not be required to mow the grass or pick up litter in the yard...etc. So, if such things become necessary, an adminstrative fee of XX dollars becomes due as rent and is payable on the following date rent is due and if not paid consititutes a late payment of rents.

This has been HUD approved in addition to Section 8, bankruptcy cases and court in my area, so it's an acceptable means to collect fees for activities that arise that were unforseen at the time of executing the lease. Basically saying, I'll rent it for less if I don't have to do all this other stuff! Good luck....

Can I improve my process?

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