All Forum Posts by: Jacob Morgan

Thanks for all the quick and thorough replies. I see there's a wide range of thinking out there on this issue.

I'll add that I'm being especially cautious right now because I am in the middle of cleaning up an apartment that is a total mess from a tenant that recently left after I non-renewed them for a variety of issues, none of which were indicated by the prior landlord of five years who gave a positive review (which is making me double down on the prior landlord contact, though that is proving very elusive to find).

I have watered the requirements down a bit to basically require 2 of 3 main points: 1 - income 3x the rent (and provable), 2 - current and prior landlord contacts with positive reviews, and 3 - funds available now for lease signing and/or strong credit background. I'm having trouble getting even 2 of 3 satisfied.

For those that suggested taking #2 from the group, that is no longer an option since they went with another property that must have been easier to secure. They had a story to explain the eviction filing (not judgment), but it only raised more red flags, so I'm not too sorry to have lost them.

My preferred option here is #4 - I have met them a couple times and they appear to be a stable small family unit and have been working in their positions here for over a year. The main issues are the inability to verify 2/3 of the applicants' income, inability to contact prior landlords (no email for the spanish language landlord of only 4 months which suggests a boarding house situation, common in NYC), and no credit history to pull and verify (no SSNs for 2/3 of them). These issues make me feel like my American-born applicants with spotty credit are at a disadvantage since they are unable to hide their financial mistakes. 

@Colleen F. Those are my thoughts too. While I'm usually drawn to higher earning, professional applicants, I have found they don't stay long since they are usually looking to move to a better place or to buy a home, or to take a job transfer elsewhere. One lease term is usually about all I get from them. The turnover is a burden for a small landlord who handles these changes on a DIY basis.

I have a remodeled, multifamily building in an smaller, old railroad town which has been down on its luck for a while, but seems to be slowly improving. As such, the core neighborhoods are pretty scrappy looking and most middle class applicants I show the apartment to are often put off by the area. 

With this, I have a tougher time selecting the best fit tenant for my apartment openings. I try to employ strict screening criteria for applicants, including verified income 3x over rent, two positive landlord references, satisfactory credit situation (score above ~600 with no negative patterns established), no smokers, and no large dogs. For past openings, I've managed to find a suitable tenant within a month, but this time around, it's dragging on and my options seem to be narrowing. I'm realizing my criteria are probably too strict, or that the one size fits all approach doesn't work well for all of the square pegs I'm finding that need to be jammed into round holes. 

For those of you who have similar properties, what are your criteria for evaluating reliable tenants? Which of the above qualifications would you jettison? And which of the following applicant options would you have taken?

1) Parents & young son with adequate income, but credit scores in the mid 500s with several accounts in collections, currently living with a friend, also living paycheck to paycheck and needing to wait two weeks to sign the lease (to have funds available). Landlord references available. Declined on credit situation.

2) Professional couple together making six figures with new baby. Credit in 700s, savings available, but an eviction filing record found by Smartmove. Prior landlords hard to reach, including obtaining a statement about the eviction filing. Delay resulted in applicants selecting another property.

3) Young couple with adequate income, but only current landlord reachable (prior one lost house in foreclosure and left town). One of the two has credit around 500 and is very protective of sharing information (documents come heavily redacted). Living paycheck to paycheck. Declined on credit situation.

4) Latin american migrant family, supposedly with asylum grantee status. All are employed at a local manufacturer, one is on staff and with documented income, but the others working through a staffing agency which deposits pay to a debit card and produces no pay statements and will not answer specifics about pay (cannot verify income). Currently living with a co-worker, but only prior landlord reference is to a Spanish speaking household in NYC which I can't communicate with. Absolutely no way to verify anything else, especially from the home country. They provided current visas, so they appear to be legal, but that's about it.

5) Two guys going through divorces, one of which has a disability and is being assisted by a nonprofit paying the first month of rent and deposit for them. Both have adequate documented income, but one of them has credit in the upper 400s with several recent collections and a vehicle repossession. Neither has a rental history either since they were living with spouses that owned their own homes for many years. Declined on credit and lack of landlord references.

Does this crop of applicants seem typical to you guys? If you have any suggestions for me, I'm all ears!

I have done both open houses and individual showings. I definitely prefer the open house format since it is more efficient on my time, and because it creates a sense of urgency in potential applicants to fill out the application and turn it quickly (sometimes on the spot). But this doesn't always work as there are many qualified people that won't be able to make it due to work schedules and traveling to come visit from farther places. 

Usually, my process is to respond to their initial inquiries which come in from Zillow or Craiglist with a standard set of screening questions, about a dozen, which are qualifiers that allow me to rule out those with not enough income, smokers, or types of pets. These also let them explain their needs and situation so I may know what to expect. If they meet these qualifications, I'll invite them to come to see the apartment. Usually I'll do individual showings, but I can direct them to two or three open house blocks during a week, often when I'm there reconditioning the unit for the next tenant. 

For individual showings, it's a good practice to always confirm the appointment on the day of. I have read some people here suggesting 24 hrs, but I think that people tend to forget from one day to another. I would say to confirm with them on that day, probably 2-4 hours before the appointment. Many people simply do forget and they are not using calendars and organizers to remind them. Your call or text will be that reminder. 

While performing the final step of my screening process, I use the Smartmove service to access the credit, criminal, and eviction reports. I usually find this service very useful for the credit reports, but I'm never sure how much to rely on the completeness or relevancy of the data provided for the criminal or eviction portions. 

A new issue showed up with a tenant screen that I just performed. I had an eviction record that came back for a tenant living in New York City. The record shows that a suit was filed for a certain amount around a year ago. Since this was a large red flag, and since the applicant had not mentioned an eviction on the application, I asked the applicant to explain it. The response was that there was a problem with lost/stolen money orders not being received by the landlord and some arrangement worked out with the landlord to wait for the money order company to replace and refund them. It appears that the landlord filed a suit in the county housing court over the issue five months later, but the tenant claims to have not been notified of this filing. 

To get the other side of this story, and for the usual landlord questioning screen I've tried contacting the landlord - a large corporate property management company (common in NYC) - which turns out to have a non-working telephone number (which is clearly shown on their website), and they are a total dead end for trying to get information.

Now I would have moved on after my first attempt to call this previous landlord and found the non-working number and impossibility to confirm tenancy info with them had it not been for the fact that this applicant appears stellar in all other ways - high income, high credit score/clean report, good current landlord review, etc., and is far above all my other applicants for this property at this time. The applicant passes the gut feeling check, but there's this record to deal with.

I searched the state civil courts website by name and case number (listed in the Smartmove report) to find the same record, but am unable to locate it. I'm starting to think that the record that Smartmove picked up is a preliminary case filing record. The status showing is "New Suit." There is no indication that there was a judgment entered. 

A fair bit has been written about "tenant blacklists" that have essentially been created by preemptive filings for eviction by landlords in NYC and other cities which have severely hampered tenants' prospects for finding housing over relatively minor issues occurring during their tenancies. Could this be one of those situations?

And as a final head scratcher, this record did not factor into Smartmove's accept or decline recommendations. Is Smartmove telling me that it knows this record may not be relevant since it is recommending accepting the applicant even though it turned up an eviction record?

I just tried the applications service and was not happy with the results. It's a canned solution that doesn't give the landlord any control over the process, and has some gaping holes for information that is usually needed to screen a tenant. 

First, the social security number is optional on the application, so if they don't provide it you may not get a background check, just a notice that says "background check unavailable." Somehow, they are able to generate a credit report without one, and that is rather strange to me. 

On the application, you get pretty basic responses to their work history and living location history. There aren't many opportunities to collect the more explanatory information that is sometimes need to explain frequent job changes or moves. You also cannot modify the application questions. What you get is really basic. It's also very hard to save or print the application. I think they think you will always return to the website to view it, which presents other problems. 

One glaring omission to this application is the required statement that every application should have - the statement authorizing the landlord to contact employers and past landlords and for those organizations to release information to you. Most corporate employers and property management companies absolutely require a faxed or emailed copy of this statement with the applicant's signature. You do not get the release authorization nor the signature with the Zillow Application. 

Now for the credit report. Zillow uses Experian to provide the credit summaries. I say summary because you won't get a full credit file. You will get a version of the credit score with a suggestion about how bad it is, and then a summary of the rest of their credit history. For many, this may be fine, but I encounter lots of people with mixed credit histories and would rather not go on just that score, but read through the report and decide for myself how much of a risk they are based on what sorts of issues they have had. Regardless, the reports that are provided on Transunion's Smartmove (and Credit Karma for that matter) are far more detailed and useful. 

Also, background check report seems to be optional thru Zillow. Need I list anything more?

I have been using Zillow Rental Manager for a couple years to advertise my properties. It works really well, and I get lots of responses from prospective renters. I plan to continue using that feature of their services. 

I just tried using their application and screening function for one applicant. I figured it would streamline my process of dealing with PDF/paper applications and then processing them through TransUnion's Smartmove service for the credit and background checks. My results were disappointing with this. First off, my renter didn't have a background check included in the screening report. That is a big deal to not include that, especially if the renter has paid the full $29 screening fee that theoretically includes both. Next, the application they provide is limited - you can't pick and choose questions, and the renter seems to get to decide what information to include on it (esp. social security number), and it doesn't have an easy download or print option. All you can do is save the output as a .htm file, and with most of the information buried in expandable menus, it's more suited for web view than for printing or saving. I sent Zillow support a message about the background check issue. They told me that since the renter had not provided their social security number (optional, since some people don't have them), it wasn't able to generate it. That seems odd though since they were able to generate the credit report. 

With those issues, I wouldn't consider using them for any other property management related activities. I don't think they have everything all worked out yet. Maybe in the future, but there's only so much you should automate of these tasks. You really need to be more involved than most people want to be. 

I went through the process of examining the 1031 process and rules last year and found that they were generally too inflexible for my needs at the time. First off - they are very particular and tricky regarding personal vs business property. It's supposed to be like for like - if you sell a rental, it should be converted into another rental. Depending on how much business you actually get in renting that house out on AirBNB, it may be an issue to sell that to a tax auditor should you ever need to.

The second issue that I had was that there are rules about equity positions between former and exchanged properties. I believe there should always be an equal or greater equity position in the new property to the gain that is being deferred. (I'm not a tax guy, just trying to present an issue that came up and was explained by a 1031 specialist). This in my case severely limited by ability to leverage the new property to fund further purchases. Your $350k line of credit sounds like it could be in that questionable territory.

I just purchased the forms and finished reading through the full lease document in the New York package and found two passages that are explicitly described as "void" by the NY State Attorney General in the state's Tenants Rights Guide. 

The first one is section 19, Indemnification; Insurance (A) - basically releasing the landlord from any liability for landlord-created problems. The second is in section 24, Miscellaneous (J) - waiving of right to jury trial for landlord and tenant. 

I would prefer to remove these sections because they are explicitly legally void and unenforceable, and because they communicate a lack of good faith to tenants I am expecting to sign this already onerous document.

The Tenants Rights Guide may be referenced here: https://ag.ny.gov/sites/default/files/tenants_rights.pdf. The passage I'm referencing is on Page 4.