All Forum Posts by: Richard F.

Generally speaking, the more bodies (big, little, or furry) in a unit, the more damage you will have. The definition of "normal wear and tear" seems to expand exponentially...Noise increases (which may affect the neighbors) and the amount of trash generated (that might not make it to the dumpster) increases as well.

Of course, if you are renting to the roomates in a college area, none of this may be a concern, but it WILL likely be a source of additional expenses for you long term.

If you are new to the rental business, absolutely. Just attend some showings as if you were interested in renting...I'm not saying you need to apply, and I would not suggest you waste a lot of other peoples time, but you can do a quick walk through, ask a few pointed questions, and get a feel for what is being offered in the area, and the price.

Rentals, in broad terms, do not compare to your family home. You need to understand what is actually being offered for rent, and if that is comparable to what you have/intend to purchase.

The Vacancy rate is only useful for the market niche in which you are investing. It relates to amount of inventory in the area, the quality of the specific units, and the general economic climate for that type of property and in that locale. Certainly, some areas are more depressed than others, but if you offer a quality, well priced unit, you minimize the downtime. Of course the actual physical repairs done between tenants also has a direct bearing, but that should be mostly in your control.

5% has been a long term average for me, but some properties will sit longer no matter what. Others I have people waiting to get into. If you use a 5-10% figure for working up a pro-forma, in most cases that should be reasonable, but there are never any guarantees.

Here, our hotel units are at record low occupancy of 69%, while commercial space is less than 4% vacant. In December I had 1 vacant unit out of about 300, today I have 16, including one house just sitting for 3 months just waiting for the contractor to become available (major renovation).

TWO St. Bernards? STRIKE ONE
(Could also cause friction with the neighbors) OTOH, if this is "out in the country" and poses no concerns, take lots of pictures!

MOSTLY OK? with several 30 day lates? If those are after the BK, STRIKE TWO

POLITE? sorry, no points. I have had plenty of deadbeats try to shmooze their way in.

Before you count on the pet deposit solving potential problems, first of all, is it even legal in your locale? Check your landlord tenant code, and confirm. You don't want them to move in, then turn around and make a complaint against you. You also need to ensure it is legal for you to "automatically" keep the deposits.

As to "automatic" monthly payments, the cash has to be in the account, or you still get no check. You will hear, of course, "the bank must have screwed up the account".

You can Google "Statement of Credit Denial" and find some letters that you can model. The rather generic statements with a checkoff box are, IMHO, sufficiently vague to keep you out of trouble while still meeting the requirements. FCRA (Fair Credit Reporting Act) states (to paraphrase) that if credit is denied based on a credit report, you must identify and provide adequate contact information for that source in order to allow a consumer to dispute any erroneous information.

Occasionally, when you verbally inform an applicant they are denied, they will want to "correct" or add to the information and push forward with the application, so once I decide to deny, I always check off ALL objections that apply. This will prevent a long see-saw exchange and much wasted time (assuming you truly do not want that applicant).

Of overriding importance, is the need to first of all have a written policy outlining your requirements; secondly, to fairly and reasonably apply the same policy to all applicants; and thirdly to maintain the records of past applicants so you can prove you do so in the event of a Fair Housing complaint. And yes, I keep the entire application package, complete with my notations (and my assistant's) and a copy of application fee checks or receipts. We shred them after three years. Approved applicant packages become part of their tenant file, which are maintained until seven years after they vacate for IRS recordkeeping requirements.

Your written policy does not need to be overly complicated, but should take into account some of the points in my previous posts. For example, I do not use the FICO score as a criteria. I DO specify a minimum income level, and what is acceptable documentation of that income. Sadly, you have to be very careful about restrictions such as "no drug convictions". This can be twisted into a Fair Housing issue. Also, you don't want to shoot yourself in the foot by being too restrictive--you'll either miss out on a good tenant, or end up making an "exception" that can also turn into a Fair Housing issue with the next applicant.

You are very welcome...

I am not familiar with the reports from the site you mention, I have always obtained reports directly from the big three (Equifax, Experian, Transunion) or, occasionally, one of their authorized resellers. With these, as a business customer, you do have options as to different types of reports, and the information included in them. They vary greatly from what you receive as a consumer. Of course, there are strict guidelines for obtaining and using these reports, as well.

The reports I access are instantaneous, online, and are less than $10 single, and less than $15 for joint (married) reports.

Just a followup...

In regards to open accounts on the credit report, you also want to be comfortable that the applicant is able to pay those monthly payments as well as the rent, and will not be "juggling" their money.

I also did not mention what is for me, the last step in the application process: criminal background check. Assuming your credit, employment, and residency standards are sufficient, and dependent on your market, if all of the above is good, you will rarely find an applicant has a record. You should check, however, as many areas have easy online access. You may or may not have access to a sex offenders registry also. Frankly, these areas present other issues, and it is a decision you must make on what to do and how to handle the information obtained.

A full credit report from the big three will show you prior residences and residency dates (approximate) to confirm they lived in NY. It will also show "public records" which will include tax liens, judgments, and collection items within the US. It frequently shows some cryptic employment info, other names used, birthdates, and info on the social security number, such as status and where it was issued. All of this info can be used to corroborate the information the applicant has given you. Any "omitted" information MAY be cause for concern, or at least warrant additional questions.

Regarding employment verification, unless you look up the company in the phone book, and call the published number to locate a Human Resources person or a Manager (without asking for the person named as supervisor on the application), you run the risk of getting purely false information. It they have no public phone listing, you need to check public records to see if the business is registered in your locale, or can otherwise be confirmed as legitimate, and then call an officer or contact person of record.

Essentially the same goes for landlord references...if they rent from a company, get the reference "through the front door", not just calling whatever number the applicant provides. If the landlord is a private individual, at least check the county records for the actual ownership and try to confirm the tenant information. Depending on your market, you might be amazed at how many people "rent" from friends and relatives.

As to "what matters", IMHO, the credit report is great, and my primary tool. It does take some study however. The actual FICO score is not terribly relevant to me--what I look for is patterns of irresponsibility. Life Happens to people. You don't have a choice with medical bills. You don't have a choice, sometimes, when a bankruptcy takes place. You need to look at what I consider "consumer" issues.

Some examples I see all the time: Two or three cell phone companies with collection items; Victoria's Sec***, Pi**a Hut, K Ma**, even the local library showing up as collection items. ANY of these types of collection items, I won't rent to you. Medical bills, I ignore. Foreclosure/bankruptcy I MIGHT ignore, if A) it was at least two years ago; B) there is not a rash of abusive consumer items that precipitated the foreclosure; C) There are no NEW late accounts or collections since the discharge (and ideally, there is some new positive account information); and D) everything else, especially landlord reference and steady employment checks out "stellar". One red flag to consider is if several credit cards accounts show "reported stolen". This MAY be an indicator of someone just having trouble paying all their bills. You just have to study the whole picture.

Hopefully, this will at least give you a fighting chance of obtaining a tenant that will actually pay. Most of the time.

Good Luck!

PS- don't forget to give a proper WRITTEN denial letter to those you turn down, per the FCRA; and you also need to securely archive the application documents for three years to protect yourself on several fronts, including Fair Housing.

Well, I beg to differ... If you sign a Buyer's Agency agreement, YOU will be agreeing to, and responsible for, paying that person's commission, BASED ON THE TERMS SPELLED OUT. In other words, if the deal falls through, you could still be liable to the buyer's agent, depending on the circumstances. Read your contract carefully, and ask question before signing.

The SELLER's agent MAY (and usually does) "cooperate" and reduce their fee accordingly, but it is NOT automatic. Review the good faith estimate of closing costs to see "who" is paying "what".

As always, check your local laws.

Then, READ the lease (you DO have a written lease right?) it should address what happens when the initial term ends. If you actually have a fixed term lease, it ends on the date specified, and the document (or local law) should spell out whether any further notification is required.

If it states that it automatically reverts to a month-to-month or a renewal period equal to the original, then again local law will dictate what you need to do.

In either event, once you have given the proper notice, or in the case of a fixed term lease where no further notice is required, local law should also spell out what it will cost your "Holdover" tenant if they are not out on the date specified. In my experience, this is TWICE the stated periodic rent.

As ********** said, usually you will give a written notice prior to the expiration anyway, and you should be in communication with them scheduling a move-out inspection. I even do a pre-move-out inspection just to get an idea of what work will be needed, and to review the move-out requirements such as needing receipt for Professional carpet cleaning, all trash removed from the PROPERTY (not left at curb) and I ensure they are aware of the Holdover rate and that there will be a charge for my time if I show up at the move-out and they are not ready.

It is a good idea to review all leases for their end date, and schedule an inspection of the property about 60 days ahead of that so you can determine IF you want to renew them, and at what rate. Once you determine this, send them a renewal (or termination) letter 50 days ahead (assuming this meets local requirements), requesting them to sign and return to you no later than 30 days prior to the end date. If they are inherited tenants, this is your golden opportunity to have them complete a new application, and sign your preferred lease documents.

Yes, Malaekahana and Kahana Bay are favorite camping spots, and a stop at ANY of the roadside shrimp trucks plus a shave ice in Haleiwa on the way back completes the "vacation". Of course now the "Superferry" has arrived, making travel to outer islands with a packed car an intriguing option.