Archive for the ‘Screening’ Category

Family Dinner Time, Your Phone Rings..Do You Take The Call?

Friday, July 23rd, 2010

After months of getting your investment property prepared, the first call comes right as you sit down with your family for dinner.  You are not sure who is calling, but from now on every unrecognized number may be a tenant…a source of revenue to offset the payment and expenses you have incurred.

You ask your family to excuse you as you slip off into another room.  Sure enough, it is somebody calling to find out about the three bedroom home for rent.  As your heart skips a beat, you describe all the personal touches, along with the not so personal touches.  All the fresh paint, and efficient windows, and the extra storage.  The caller sounds nice enough and now they ask if they can see the property!

“This is going to be easy” that little voice in your head tells you.  The caller says they are free after work tomorrow.  You say great, forgetting for the moment that tomorrow is Jimmy’s playoff soccer game.  Remember, you need to get this home rented.   After confirming the time, you hang up and realize that you do not have the caller’s number.  Maybe it is on caller ID…but no…they must have used a blocked number.  You return to dinner as the table is being cleared.

That night your wife reminds you about Jimmy’s soccer game tomorrow night.  Immediately, you realize the conflict and wonder how you can find these callers to reschedule.  That fails, so you hope your best buddy can show it to them tomorrow.  He has plans.  So, you are stuck.  Maybe a quick showing and race across town and still catch the second half.  

The thought hits you, maybe you really should have budgeted for help with this hobby.

The showing time arrives.  You bring two rental applications found on line..just in case.  Not sure how you will get the background checks or credit pulled but you  will figure that out once you have the applications completed. 

 At the agreed time…no prospective tenant.  Fifteen minutes late, they pull up in a 20 year old van falling apart and very dirty.  It is exhuming exhaust.  The prospects both grind out their cigarettes on the driveway as they get out.   Both possible tenants begin to unload children from the rear.  First one, then two, then three and finally four and five.  Lets see, 7 occupants in a 3 bedroom 1000 square foot home.   Your heart sinks a little.

You show off your pride and joy and learn that there are some mysterious circumstances about where these people currently live.  A reference to how nice it will be to actually live in a home instead of the van by one of the kids catches your attention.  At that moment, you decide to ask what they do for a living.   One is unemployed..the other just got a job after months of unemployment.  The job involves selling magazines and appears to not really be as an employee but as a contractor.

Of course, they love the house and request the applications.  You hand them out and ask them to fax or email them back as you really need to run.  They do not have fax or email and want to fill them out now.  You are screwed.  Jimmy scores the winning goal..you miss it.  You waste an hour with a family that you are not even sure how to screen to officially reject.

Why is it again that you are doing this yourself?

Mistakes you learn by and the next time you will be smarter.  No answering the phone during dinner…but what if?  More pre-screening on the phone…but what if they call during dinner and you are in a hurry?  At least get a phone number…that one you can do every time!  How many more summer evenings meeting tenants before you find one?  Then, won’t it be fun to increase the return on this hobby by being there to service the leaky faucets and the oven that does not work on Thanksgiving?  Oh, and collect late fees when rent is late.

Leasing and property management sure sounds like fun when you have a life and a career..doesn’t it?  Most people actually have to enjoy experiences like this to decide that they understand why management and leasing companies exist. 

Save yourself the headaches.

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Posted in Best Practices, Owners, Qualifications, Rent Preparation, Responsibilities, Screening, Selecting A Manager, Tenants, Uncategorized | No Comments »

Smoking Ain’t Allowed In School…

Tuesday, April 13th, 2010

I can’t help it.  This topic always makes me start thinking about the 70′s classic “Smoking In The Boys Room“.  For rental property owners, I think smoking is one of the most challenging issues.  I know many owners who have staunchly not allowed smokers to rent their properties but in today’s soft market are now reconsidering this policy. 

I see this as a three choice decision.

  • No Smokers
  • Smoking Only Allowed Outside
  • Smokers Allowed

My experience with “smoking only allowed outside” has not been great.  Smokers are famous for thinking they can actually walk around and smoke and nobody else notices.  Also, depending on the climate extremes, the nicotine habit is not something that allows a smoker to hold off when it is ten degrees below zero, raining like a monsoon, or just plain miserable outside.  So, an innocent exception becomes common place and the smoker thinks nobody can tell because they do not smell it.

The other negative is the risk of fire.  Reports of people smoking in bed, starting fires that destroy property and possibly lives, are common.  Smoking creates a new liability issue.  In researching this post I was surprized to learn that one in four people killed in home fires are not the smoker whose cigarette caused the fire!

Then the obvious.  The smell does not come out.  Once a property owner allows smokers, the only next tenant will be a smoker.  As a population, smokers are decreasing.  Have you made a choice in a soft market that actually will limit your potential tenants the next time around?

My best suggestion if you have a non-smoking property and feel that you are losing tenants by maintaining this position?   Go with option 2 permitting smoking outside the premises.  Then ask for a “smokers damage deposit.”  Simply, this deposit is for the extra cleaning that will be required if the smell of cigarette smoke is detected in the home.  I know, very subjective.  I would worry about subjectivity if smoking is detected inside.  An independent  “sniffer” could be the verification device.  The point is the deposit is enough that the smoker thinks long and hard about smoking inside when it is really nasty outside.  This might also keep the smoker in tune to make sure their friends do not smoke inside.  About $500 should be a nice sum and will provide reimbusement for a thorough cleaning and air ionization.

Start by making all properties non-smoking and then add this deposit only if you need to get a property occupied and feel allowing smokers will open up more possibilities.

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Posted in Liability, Screening | 1 Comment »

Get It Rented..Now!

Friday, March 19th, 2010

Anybody who has ever owned an investment property and looked at it empty has experienced the certain panic that ensues as another month of expenses are paid out of pocket.  The natural sense is to urgently accept the first tenant that comes along and can fog a mirror.  I understand that.  I also can’t express often enough, that when just any tenant is accepted often you’re trading one set of headaches for another.  Unfortunately, the bad tenant headaches are frequently more costly than letting the property sit vacant!

So, at Wilmoth our objective when leasing a vacant property is to properly screen prospective tenants so that we get your property leased to a properly qualified tenant.  There are actually five different points of contact that are a part of our screening process.  Some of these contacts result in objective information, some are more subjective.  It is through this process we ultimately can recommend whether or not to proceed with an applicant.  These points of contact include our first inquiry, the showing, the application, the approval, and the lease signing.  Yes..I said the approval and lease signing are a part of the screening process!  Up until the moment there is ink on a lease, certain types of behavior or incidents, or new information, would allow us to determine this is not the right tenant for your property.  So the screening process continues until the lease is executed.

During the inquiry we get basic information on the proposed tenant (PT).  If the PT has problems answering basic questions like why are they moving, or can they provide references, these are not good signs.  Good PT’s are anxious to answer questions thoroughly..they have nothing they wish to hide.

When we show the property we notice subjective things about the tenant.  Is their appearance well kept?  Their car? Do they have an attitude?  Are they critical of the property or process?  If it is a non-smoking property, do they smell of nicotine (smokers never realize they smell!).

The application process is where we hit both subjective and objective behaviors.  Do they willingly provide the application information promptly or is it like pulling teeth?  Of course, this is where we also gather objective information in order run credit, criminal, and background checks.  This objective information is provided within the privacy laws to the owner, along with our observations and any recomendation.

Letting a tenant know that their application is approved and asking them to schedule the lease signing is another screening hurdle.  Also, specifically identifying the amount of funds required and how it is to be delivered.  It is at the approval notice that we ask for the first month rent to hold the property.  These funds are to be presented in a cashiers check or cash within 48 hours of approval.

Finally, the execution of the lease is a surprizing final screening moment.  I have had tenants not show up, or show up several hours late,  for the appointment.  This is almost always a bad sign.  I have had tenants want to have a copy of the lease so their Uncle John, the Realtor, can review.  This does not have to mean you are going to have problems, but it is also almost always going to produce further questions or requests.  Completing this process in order to have an executed lease can provide indications of what type of tenant we are dealing with.  There are moments when it becomes clear that returning their deposit and getting the property back on the market is the best alternative.

So, prospective tenant screening is an ongoing process that we feel is very important to making sure we have a highly qualified tenant for your property.  The headaches avoided by methodically screening a PT are well worth the effort.

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Posted in Qualifications, Screening, Tenants | No Comments »