Welcome to the StarPoint Tenant Screening Blog. This blog is dedicated to sharing valuable and helpful info with property managers and individual landlords about tenant screening, state tenant laws, useful forms and more.
Finding a new tenant for a residential property you rent and manage is not always a simple task, especially if you want to ensure your property is taken care of throughout the duration of any new lease agreement that is signed. Knowing what to look for before selecting a tenant for one of your rentals is essential to help prevent problematic issues from arising in the future.
Whenever you are searching for a new tenant to rent your home or apartment unit to, it is imperative to verify the income they claim to make before providing them with a leasing agreement. If an individual is unable to provide proof of their income with a bank statement, 2 paychecks, it is difficult to determine whether or not they are capable of remaining financially responsible when their rent is due to you each month. A tenant credit report can be ordered on the prospective tenant not to verify income, but instead verify they make timely payments on debt and to check their monthly debt range to see if they will be financially able to pay their rent.
Reference Check Problems
If you are unable to speak with references that were provided to you by potential tenants, it is not always a great idea to continue considering the individuals a prospective resident. Reference checks help you to determine the type of character a prospective tenant has, which is why it is so important that you are able to speak with multiple friends and family members who are willing to vouch for anyone who is interested in becoming a potential tenant of yours.
When you are not able to reach a reference of a prospective tenant, ask the individual if they have alternative contact information available to provide. If an individual does not have alternative contact information, this may be a red flag and a surefire sign to avoid allowing him or her to move into your home or apartment unit.
Running a background check and checking the criminal history of any and all applicants who are interested in living in a rental that you own is a must to truly determine whether or not an individual is a potential problem tenant. If an applicant has a history of run-ins with the law or has a criminal past, it is highly advisable to find another prospective tenant, especially if the applicant themselves was not upfront about their past while submitting their information to run a background check. Include a section for potential applicants to inform you of their criminal past in your original application if you want to learn more about prospective residents before running a tenant credit report or tenant screening.
Repeated History of Evictions
If you are able to determine that a prospective tenant has a history of evictions, it is important to inquire to learn more if you are still considering allowing the individual to move into one of your properties. When an individual has a repeated history of evictions, it is best to steer clear to avoid the potential risk of losing out on rent money, causing you to invest more of your own finances in order to maintain your properties over time.
Taking the time to conduct a thorough tenant screening and tenant credit check on your potential future tenants is a way to ensure there are no issues when it comes to receiving your rent money on time throughout the duration of any leasing contract that is in place. When you know what to look for while eliminating potentially problematic tenants, avoid headaches, repair fees, and other eviction-related charges and instead, opt for a tenant that is trustworthy and reliable.
Contractors for landlords are perfect for large remodels, such as a kitchen or bathroom, but a handyman for rental property keeps the home running smoothly by tending to wear-and-tear repairs. Several online resources help make this process easier by collecting contact information and reviews from other property owners and landlords.
Angie’s List is one such service, and they do not allow anonymous reviews. All the reviews on their site are certified. The reviews are grades, A through F, so they are quick and easy to understand.
There are three membership levels. The Green Membership is free and includes the worker’s information and ratings. The Silver Membership cost $24.99 a year. Silver has more benefits, such as special discounts and a fair price guarantee, which allows you to receive a refund for the amount exceeding Angie’s List Fair Price (terms and conditions apply).
Angie’s List Gold Membership costs $99.00 annually. Along with all the benefits of the Green and Silver plans, Gold offers a service quality guarantee. This guarantees some workmanship up to $100,000 (terms and conditions apply). The Gold plan offers more perks too, like an emergency service phone line, which could come in handy with rental homes.
All members have access to coupons, which are located at the bottom of each contractors profile page. Some business do not have any, while others offer 5% or 10% off.
Thumbtack is a completely free service where you can search for a handyman for rental property and licensed contractors.
They use the traditional star rating system to review the workers, one through five, with five being the best, paired with verified client comments.
Thumbtack also offers a product they have coined The Guarantee, which protect up to $1 million against certain property damage caused by the Thumbtack professional under certain conditions. Work that is not finished and incorrect installations are not covered.
HomeAdvisor is free of charge. The site offers over 500 real estate related services, from foundation repair to roofing.
Property owners rate the service providers with the five-star system. Along with the star ratings, there is a description of the project completed with client testimonies. Additionally, the service provider comments on the project to give an overall view of what may have happened; good, bad, or neutral.
Contractors for landlords can be found on Yelp for free. Yelp is a directory of restaurants, events, and home services. Any discounts offered to consumers will come from the service provider, not Yelp, and there are no guarantees.
The review system is very popular and heavily used on Yelp. Yelp uses a computer to screen all reviews. The system looks at how often the reviewer writes a review. Are they active reviewer, or do they review once every ten months? The program is looking for opinions, good or bad, opinions deemed reliable, and that will be helpful to other people.
Yelp highlights these reviews, but all reviews can be seen at a link at the bottom of the businesses profile page. This process is entirely automated; no humans screen the screener. Yelp displays the traditional five-star ratings and post client comments.
All of these companies have free mobile apps, which makes it convenient to get updates. Angie’s List, Thumbtack, and HomeAdvisor offer tips on how to select a profession, what questions to ask, how to get a quote, and pricing guidelines; Yelp does not. Prices subject to change.
You have a lot to cheer about if you are a landlord. The recent passage of the Tax Cut and Jobs Act (TCJA) means you will have more money in the bank when you pay your 2018 Landlord taxes.
If you are a landlord, you will be able to take advantage of a 20 percent tax break under the law if you operate as what is known as a pass-through company. As a residential landlord and pass-through company owner, you are the sole proprietor and individually own the property you rent; or operate as a limited liability company or LLC or partnership. Landlords who operate as sole proprietors claim or pass through the profit they make on their rental properties on their individual tax returns.
The 20 percent break is in addition to all of your other allowable rental property tax deductions. If you qualify, this means that you will only be paying taxes on 80 percent of the rental profits you make on your 2018 Landlord taxes. The 20 percent break is set to expire on Jan. 1, 2026.
The deduction is gradually lowered if you are a married couple filing jointly with an annual income greater than $315,000 or if you are single with an annual income in excess of $157,500. The deduction completely vanishes for married couples with an income of $415,000 or more and for individuals who earn more than $207,500.
However, if you are married with an income of $415,000 or more or single with an income of $207,500 or more, you may still be eligible for the 20 percent deduction if half of your wages were paid by your rental business or if 25 percent of your wages were paid by your rental business in addition to your company’s paying at least 2.5 percent of the cost of the rental home.
The TCJA also allows landlords to deduct in a single year the cost of the personal property that is used to operate their rental business. This includes such items as furniture and appliances.
And, landlords may now claim 100 percent of the cost of personal property they purchase for their rental business from Sept. 27, 2017 through Dec. 31, 2022. The deduction also applies to used property that landlords may purchase for rental use.
Under the bill, landlords also remain exempt from having to pay self-employment taxes such as Social Security amd Medicare as long as they are not operating what is in effect a hotel or bread and breakfast type establshment for their renters.
The TCJA is a boon for landlords and should result in real estate investors having more money in their bank accounts, which they can use to purchase other properties and help spur economic growth.
As many of you know Equifax announced a cyber-security incident potentially impacting approximately 143 million U.S. consumers and some UK and Canadian residents. We at StarPoint Screening are aware of the situation and want to make our customers aware that we do not have a partnership with Equifax or use their services for consumer information.
From Mid-May through July of 2017 criminals exploited a U.S. website application vulnerability to gain access to certain files. The information accessed primarily includes names, Social Security numbers, birth dates, addresses and in some instances driver’s license numbers.
See if your personal information is potentially impacted.
Equifax has provided a link where you can enter your last name and the last six digits of your Social Security number and based on that information, you will receive a message indicating whether your personal information may have been impacted. If your information was impacted you will have the option to enroll in TrustedID Premier. The enrollment period ends on Tuesday, November 21, 2017.
Summer’s almost here, and that means it’s the peak of the rental season for homeowners and vacationers. Preparing your rental for the warm months ahead is a good idea for luring in prospective new tenants and making sure your property stays in optimal shape.
Before you begin preparing your property physically and restoring the inside and outside, you should think about how comprehensive your tenant screening process is. This process is the only chance you have to filter through tenant options and backgrounds to decide which tenants are the right choice for you.
Tenant screenings are important because the information it reveals can help you determine whether or not your new prospective tenant is trustworthy, able to pay their bills (and therefore, their rent), on time as well as previous addresses, rental references, and eviction information. It helps complete a clear picture of who they are overall as renters. It doesn’t tell the whole story, but it definitely tells a big part of it.
Inspect Your Air Conditioning Unit
Whether you have window units or a whole-house A/C duct system, it’s important to inspect them for proper operation before tenants start moving in. It helps your visitors stay happy and comfortable, even in the summer heat. For window units, check to be sure the exterior condenser has room to drain and breath by clearing any overgrown shrubs or plants that may be crowding the area. Also, replace and/or clean the filter for the unit. Make sure all interior ductwork is in proper order and that all vents are open and free of obstructions.
Check Battery-Operated Devices
Replace the batteries in your smoke detectors if they’re no longer working, and check your security system’s operation as well, if you have one. Some thermostats also run on batteries, so be sure those don’t need to be replaced either. Most thermostats will have a low battery indicator, so replace them if needed.
If you have a washer/dryer and offer laundry, be sure to clean out dryer vents outside the house. Many fires have started because of clogged dryer vents, so by taking this simple precaution, you can keep your tenants safe through the summer months.
Windows and Doors
Be sure doors and windows are sealed and optimized for A/C use. Open air gaps allows cold air to escape, increasing utility costs. By taking the extra time to seal gaps, you’ll keep your home energy-efficient.
If your summer rental hasn’t been opened or used for months, consider hiring a cleaning service to get it ready for new tenants. They can take care of things like mopping the floors, vacuuming carpets, dusting off ceiling fans, freshening up the furniture, and airing out the interior.
Sprucing up the yard can make a big difference with curb appeal and allows your summer tenants to enjoy your backyard in the nice weather. Do it yourself or hire landscapers to mow the lawn, clear brush and plant flowers if it’s feasible.
Owning investment real estate is a lucrative way to build wealth. Renting out to quality tenants means that you have another form of steady income. However, renting out to the wrong tenants can lead to frustrations and lost revenue. Learn about the tenant screening red flags to look out for as applicants inquire about your rental.
Part of your tenant background screening process must be running a credit check. Look for candidates with a high credit score. These applicants typically show a history of paying their debtors on time. Poor payment history, Bankruptcies, liens, judgements and other collections will all be present on the credit report. Allow this tenant screening strategy to guide your decision.
Verify if the applicants have a criminal history by purchasing a National Criminal Search with a vendor such as StarPoint Screening. As a landlord, you have a right to know if a person has a criminal background. Analyze the tenant background screening very carefully so that you don’t overlook any details. Serious charges, such as robbery or assault can appear as well as minor infractions, including traffic tickets. Multiple violations can mean that an applicant is prone to trouble regardless of the charges. Remember to always get the applicant’s signed authorization before running a criminal background check or credit report.
Any rental application should ask for an employment history and contacting those current and previous HR departments to complete a reference check is always a good idea. You want to be able to verify your applicant’s hire date, term date, salary, and position. Asking for a W2 or the last two paystubs is also a reliable way to verify salary and employment.
Completing a nationwide eviction search of you tenant is an inexpensive way to find out if any previous landlords, property managers or apartment complexes have had any issues with your applicant and had to take them to court. Eviction searches typically are under $10 and can save you thousands if you have to evict that tenant in the future.
StarPoint Tenant Screening, an accredited reseller for Trans Union and an information services company that delivers tenant credit reports and tenant background screening reports nationwide is proud to announce their redesigned Tenant Credit Report. StarPoint expects that the new report format will not only attract new landlords and property managers, but also offer their existing customers a streamlined, logical report format that eases the path to finding the perfect tenant.
“We designed the new report format to be more visually appealing and intuitive and expect the new format to make the tenant screening process a simpler and more informed experience.” Stated Kelly Gontarski, CEO.
Additional system features which benefit property managers include:
- Free online rental forms
- Printer friendly options for reports
- User Administration which allows the account admin to create multiple users accounts
- User Statuses which allows the account admin to change a user status (active, suspended, inactive)
- User Rights which allows the account admin to set other users as admins, give other users the ability/inability to view invoices and balance information, and make other users pay/not pay at time of order
- Viewing Rights which allows the account admin to allow other users to:View all reports ordered by this company, View only reports ordered by this location, View only reports ordered by this user
- Convenient billing options which include pay at time of order, monthly autopay, or monthly invoicing to be paid by check, ACH or credit card.
- Discounted volume pricing for property managers
Property managers need only to fulfill a few simple requirements from StarPoint and TransUnion to be compliant with the Fair Credit Reporting Act in order to be granted credit report access.
If you’re renting out a property, thorough tenant screening is a must. A bad tenant is not only a hassle to deal with, but can also cost you thousands of dollars.
Take a look at the true cost of eviction to see why you should always conduct tenant background screening.
If you need to evict a tenant, it won’t happen overnight. Eviction is a lengthy legal process, and it typically takes about 2 to 3 months from when you file the paperwork to when the eviction actually occurs. How much do you charge for rent on the unit? Multiply that by 2 or 3 and that’s about how much money you’ll already be out, and keep in mind that the process of evicting a tenant could take even longer.
Going to court isn’t free, and you can anticipate it costing about $100 to $300. If you need an attorney, and you will if you want to make this process go as quickly and efficiently as possible, those legal fees could be anywhere from $200 to $750.
Once the tenant is gone, you need to get the unit ready to rent again. That will likely run you between $500 and $2,000. Of course, if you had a bad tenant, there’s no telling how much damage they might have done. There’s no shortage of landlord horror stories about tenants who damaged walls, ruined appliances or let their pets destroy a unit. And don’t think that putting a “no pets” clause in the lease will always protect you, as plenty of tenants have chosen to ignore those kinds of restrictions.
There’s no telling how long the unit will be on the market after you put it up for rent again, but you should expect to lose about 1 month of revenue. You can also expect getting it rented to cost you about half a month’s rent, as you may need to provide concessions to a new tenant or advertise the unit. Even if you don’t do either and simply advertise your unit in free classified ads, you’ll still be losing money on the time you spend showing the unit to prospective tenants.
So, how much are you spending for all of that? Let’s say that you have a unit renting for $1,000 per month, you’re able to keep your costs to the low end of these estimates throughout the process and you find a new tenant within a month. You’ll be looking at:
$2,000 in lost rent while evicting the bad tenant
$1,000 in lost rent while finding a new tenant
$500 in make ready costs
$500 spent on finding a new tenant
$200 in attorney legal fees
$100 in court costs
That all comes out to a grand total of $4,300, which will take you over 4 months just to make back. And that’s if you’re able to minimize your costs. It’s obvious that each bad tenant comes at a huge price.
What is the Cost of Tenant Screening?
You can have a thorough credit check completed for as little as $10.95. That screening will provide information on the prospective tenant’s financial history, including their credit score and any bankruptcies, their payment history and verification on their ID.
It doesn’t cost much to screen a prospective tenant, especially compared to the cost of a bad tenant. Go through the screening process with any tenant you’re considering to give yourself peace of mind and minimize your risk.
Don’t let screening a tenant intimidate you. Follow the steps on this infographic and use StarPoint Screenings Free tenant screening forms to help you get the job done today! Tenant Screening can be one of the smartest steps you take in protecting your investment and making residual income.
Below you will find the top ten deductions for landlords that will decrease their tax liability. Before claiming any of these deductions, make sure to have receipts and files to back them up.
Interest can be one of the biggest tax deductions for a landlord. They can deduct interest from a mortgage loan or credit card interest from using the credit card for repairs on the property. Mortgage Interest (primary & secondary), HELOC Interest, Credit card interest on purchases or improvements on the property, and Mortgage Points to purchase or refinance the property all fall into this category.
You will not be able to do this in the year the property was bought but you can do it the following years when the property actually depreciates. The value of the structure and the value of the improvements can both be depreciated.
Repair costs are deductible in the year that they are done. The repairs have to be needed and the cost must be within reason. Repairs can also include any effort to maintain the current condition of the property. The type of repairs that fall into this category would be painting, plumbing, AC and Heat repairs, fixture repairs, fixing floors or the roof, and fixing windows. You can also deduct the Labor Costs for conducting these repairs.
4. Local Travel
You can deduct the mileage you incur from your rental activities such as going to the property, collect rent, dealing with a renters problems, and even going to the hardware store.
5. Long Distance Travel
Traveling a long distance for you rental duties can also be deducted. You deduct such things as airline fares, car rentals, taxis, uber, gas, 50 % of meals, hotel bills and more. You have to document your trip carefully as the IRS will look closely at this deduction.
6. Home Office
While meeting certain requirements, you home office and/or workspace used for your rental activities can be deducted. You can also depreciate certain equipment used in you rental business space including ink, paper, pens, rental software, legal documents, phone and internet, and the square footage of the home office. Be careful as that IRS says that one of the most commonly audited deductions is a home office.
7. Employees and Independent Contractors
Whether an employee or an independent contractor, you can claim their wages as a tax deduction as long as it is related to your rental business expenses.
8. Casualty and Theft Losses
If you property is damaged or destroyed by a flood or fire per se, you can deduct part but not all of the loss. This is dependent on whether you had insurance or not.
The premiums that you pay for almost any type of insurance related to you rental business can be deducted. You may also deduct your employees health and workers compensation insurance.
10. Legal and Professional Services
You can deduct legal and professional service fees. These fees are known as operating expenses and can be deducted as long as they are related to your rental business. These fees can include tax preparation and software, property management services or software, court filing fees and accounting advice.
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