Tenant Screening

Organize Your Tenant Records

Organizing Tenant Records

Organizing Your Tenant Records

When you are performing tenant screening on applicants for a rental home or apartment, you will have to deal with plenty of documents and paperwork. Because of the legal and tax implications of being a landlord, you will need to retain much of this paperwork for many years. Keeping your records from tenant screening organized can help you to find what you need without wasting your time. Keep these organizational tips in mind for organizing your tenant records.

Application Paperwork
Each applicant will submit a variety of paperwork to you as part of the process to become a tenant. You will collect documents even before the tenants move in, including applications, credit reports and references. You may wish to keep a specific file for applications that are rejected and have those separate from the tenants you accept. Maintaining the paperwork on rejected applicants can be done as a way to protect yourself against claims of discrimination. When you accept a tenant, you may wish to keep their application, credit report and references in an active folder with other information that you collect during the rental period.

Documents for Each Unit and Tenant
When you accept a tenant, it is in your best interest to maintain an active file on them. This file should include their references, credit report and original application. The signed lease should also go in the file. While they are living in your apartment or rental house, add any written or emailed correspondence, requests for entry and requests for repair. Move in and move out letters should be included in a tenant file. When a tenant stays long enough for a lease renewal, include the updated signed lease. If you choose to raise the rent, include that documentation as well. If you take photos of the unit before the move in process, place those in the file. Move out photos taken after the tenant has vacated the property should also be included, especially if you do not return the tenant’s security deposit due to damage.

Receipts and Tax Documents
As the owner of property that is a rental unit, you are able to make tax deductions on repairs that you perform. You should maintain a file for each property or unit for tax purposes. The unit-based file should include receipts related to any repair or replacement work that has been performed on the unit. This includes receipts for painting, new carpeting, cleaning and replacement of appliances. You will also need to keep receipts for professional services such as electrical work, heating and air conditioning maintenance and repairs and pest control. Keep all paperwork related to tax deductions for at least seven years in case of an audit.

Accepting Rental Applications

Rental Application

Accepting Rental Applications

Renting has become a very popular choice among people who are looking for a temporary residence. If you are a landlord or owner of a property that you wish to rent, there are several things to consider when choosing a tenant. This is where tenant screening becomes important. You want to ask for several things in the rental applications to ensure you are choosing the best tenant for your property. These applications can be presented to a potential tenant to be submitted electronically or in paper form. Here are some things to focus on when accepting these applications.

Criminal Background Check
First and fore most you want to ensure any potential tenant wont cause any harm to your property or other tenants around the neighborhood. This is why a criminal background check is important. It should be done on all tenants 18 years of age or older who will reside in the property. This will reveal any felonies or convictions a tenant may have had in the past or any current cases that are pending. Many landlords or property owners do not rent to tenants who have a criminal background.

Employment and Income
Ability to pay and is important when applying to rent a property. This is why employment history should be verified. Typically, a tenant should be employed with the same employer at least 6 months to one year to prove job stability. Current check stubs and /or bank statements can be used to verify this income and show consistent earnings.

Rental History
All prior addresses and landlords should be contacted. In this way, all on time payments, late payments or any prior problems a former landlord may have had with a tenant will be revealed. In gathering rental history, a landlord can get a good idea of a tenant’s ability to maintain a property, pay rent on time and adhere to property guidelines.

Credit History
Pulling a recent credit report is a part of tenant screening that allows the landlord or property owner to see any prior evictions or other delinquencies in payment history. The tenant can supply his or her social security number on the application and this credit information can be pulled by the property owner to get a snapshot of how responsible the tenant is with financial obligations.

In addition to gathering this information, a landlord should make sure all application fees, deposits, and other guidelines related to the property are clearly stated and understood by all tenants prior to accepting any applications. This will avoid any confusion or legal issues in the future and will ensure the most responsible tenant is chosen for the property.

Ending a Lease

Ending a Lease

Ending a Lease

Confusion is not uncommon for both tenants and property owners when it comes to issues associated with ending a rental lease. Leasing contracts cover rental periods between a specific starting and ending point, and typically require tenants to provide either verbal or written notice if they intend to vacate upon the conclusion of a lease. While the amount of notice required may vary from one rental lease to the next, notice of non-renewal is typically required to be furnished between 30 to 90 days in advance. Some leasing contracts are designed to allow tenants to remain on a month-to-month basis after the end of a lease while others require a new leasing agreement to be created.

After the Residency Has Been Vacated

The landlord or property manager will typically perform an inspection of the premises once the tenant has vacated in order to assess any damages and conduct repairs. Any remaining cleaning and security deposit is typically refunded once the tenant has vacated. The exact time-frame for refunding deposits may vary based on state leasing laws and different leasing terms, but most refunds are typically issued between 30 to 45 days after vacancy.

Early Termination, Subletting and Lease Amendments

Tenants who will not be able to stay through the end of their lease may be able to negotiate an early release from their rental agreement, provided their landlord or property manger is willing. Finding a new tenant to take over an existing lease may also be an option depending on rental policies and leasing terms. Other issues, such as enrolling in military service, are covered by law and allow tenants to move before the end of their lease without being required to pay additional fines or penalties.

Evicting a Tenant

A property manager or landlords may be required to evict a tenant, either due to non-payment or violating other terms of the lease agreement. The eviction process differs considerably from one state to the next, and both tenants and landlords would be wise to familiarize themselves with local leasing laws and the eviction process before taking any action. Most eviction processes typically require the property owner or landlord to issue written notice, provide tenants with a set amount of time to either address payment issues and/or vacate the residency. Many lease contracts detail specific circumstances that may result in eviction as well as any additional costs or fees that evicted tenants may be financial responsible for.

Which is better a lease or a rental agreement?

lease or a rental agreement

Lease or Rental Agreement?

Lease and rental agreements differ primarily in terms of time commitment. In a lease, a tenant is obligated to fixed obligations for a longer time period. Rental agreements are more flexible and operate on shorter time scales. Some tenants prefer that flexibility, as do landlords that look forward to increasing rent revenues relatively quickly. The flip side to more lucrative rental agreements is that competitors and market conditions can’t guarantee that a landlord will find suitable tenants every time a rental agreement expires. An overzealous landlord may end up pricing his properties out of the market, thereby being forced to deal with property costs without compensating rent revenues.

Leases are typically a longer-term version of rental agreements. Leases oblige a tenant for 12 months of fixed-amount payments and associated rights and responsibilities. From a landlord’s perspective, leases are better when the housing/rental market is harsh and it is beneficial to secure a tenant for a longer stretch at a time. Unless specified in the lease agreement, leases lock in payments for the 12 months, meaning landlords can’t raise rents or other costs for the duration of the lease. This eases pressure off tenants who may be wary of rapidly-increasing costs.

Since leases open up landlord property to one tenant for a longer time period, tenant screening is more important with leases. A quality tenant can translate into reliable, long-term income for the landlord. Conversely, poorly executed tenant screening can result in the landlord incurring costs and perhaps legal troubles far in excess of rental revenues.

Rental Agreements
Rental agreements are typically monthly contracts. When renewing rental agreements, terms such as rent amount may be changed. Landlords can lean towards offering rental agreements as opposed to lease agreements when market conditions allow increased rents without substantially alienating tenants. Tenant screening with regard to rental agreements does not have quite the urgency as it does with lease agreements. This is because unpleasant tenants are less likely to stay long-term.

Whichever option you choose remember to always put your agreement in writing.  As time passes you and your tenant will always have a document to reference in regards to rules, subletting, term of the lease and payment amounts.  As a landlord you will also need to check your local laws referencing Fair Housing, terminating an agreement, rent control, and security deposits.


FAQs Credit Report Inquiries

FAQs Credit Report Inquiries

FAQs about Credit Report Inquiries

What are credit report inquiries?

Credit inquiries are requests by a “legitimate business” to check your credit. You can see these inquiries on a credit report under the Inquiries Section. Generally you will see a few inquiries on your credit report if you are shopping for a new car, refinancing a home, or looking for a place to rent.

Where do credit report inquiries appear?

Typically inquiries are toward the end of a credit report in their own section .

What is the difference between a hard and soft inquiry?

According to myFICO soft inquiries are all credit inquiries where your credit is NOT being reviewed by a prospective lender. These include inquiries where you’re checking your own credit (such as checking your score in myFICO), credit checks made by businesses to offer you goods or services (such as promotional offers by credit card companies), or inquiries made by businesses with whom you already have a credit account.

Hard inquiries are inquiries where a potential lender is reviewing your credit because you’ve applied for credit with them. These include credit checks when you’ve applied for an auto loan, mortgage or credit card. Each of these types of credit checks count as a single inquiry.

What are some examples of soft inquiries?

  • Checking your own credit
  • A company/business you already have a credit card with
  • Promotional offers from credit card companies

What are some examples of hard inquiries?

  • Applying for an auto loan
  • Applying for a mortgage
  • Applying for a credit card
  • Applying to rent a property from a landlord or property manager

How do inquiries affect my score?

Soft inquiries do not affect your credit score.  Hard inquiries will take less than 5 points off your score.

Are there any exceptions or tips you can give me?

If you are shopping around for a home, car or rental property the smart thing to do is reduce your “shopping” period to 45 days or less.  Your FICO score will then consider all these inquiries as a single inquiry and only affect your score once.

What if I don’t recognize an inquiry or I feel it is an unauthorized inquiry?

Hard credit inquiries may only be completed with a person’s consent. If you suspect that there has been an unauthorized inquiry with your credit, first establish that the inquiry hasn’t come from a legitimate pre-screening, or through a promotional event. If the legitimacy of the inquiry is still in question, request more information about the inquiry, as well as proof of authorization to run the inquiry. After undertaking these steps, if the authenticity of the inquiry is still suspect, begin a dispute. The inquiring agency has 30 days to respond in writing under the Fair Credit Reporting Act, after which, the reporting bureau is obligated to follow up with the inquiring agency. If proof of authorization is still not provided, then the credit reporting agency is obligated to remove the inquiry from your credit report.

Don’t Buy a Cheap Credit Score

Don't Buy Cheap Credit Scores

Don’t Buy Cheap Credit Scores

As a landlord or property manager, you may be focused on keeping your expenses as low as possible, and you may understandably jump at the chance to save money on tenant screening services. A key aspect of tenant screening involves pulling a credit report so that you can review the FICO score and so that you can see the potential tenant’s actual expenses. By doing so, you are checking on the creditworthiness of the potential tenant as well as his or her ability to pay the rent and all other monthly obligations. However, when you buy a cheap score, you may actually not be looking at the FICO number at all.

Not All Credit Reports Are the Same
The unfortunate reality is that not all credit reports that landlords can purchase are the same. Some credit reporting companies are attempting to sell you the “educational score” rather than the actual FICO score. The educational score is derived off of different data than the FICO number is derirved from, and it is the FICO number that lenders and others will use when making a credit decision. With this in mind, you can see that you need to be looking at a FICO number rather than an educational number.

What Is a FICO Score?
FICO is an acronym for the Fair Isaac Corporation, the creators of the FICO score. There are three main credit bureaus, and these are Transunion, Equifax and Experian. Keep in mind that credit card companies, mortgage companies and others are not required to report information to all three bureaus, and some may only report information about a consumer to one or two bureaus. This partly explains why each of the three bureaus may have different scores for the same individual. In fact, the three bureaus rarely have the same information or the same score for an individual. If you are only getting one of the educational scores, you are not getting the full picture of the individual’s creditworthiness. Remember that a FICO number will always say FICO next to it while others may only indicate a credit score rating or a rating from one of the three bureaus.

Tenant screening is an important part of your job as a landlord or property manager, but you need accurate, up-to-date and comprehensive information in order to make the most informed decision possible about your potential tenants. Take time to verify that the credit reporting agency you are using to purchase your reports from will provide you with the actual FICO number and not an educational score.


What To Do if You Believe Your Tenants Are Subleasing

What To Do if You Believe Your Tenants Are Subleasing

What To Do if You Believe Your Tenants Are Subleasing

Find out whether your fears are merited. The easiest way to do this is simply to ask your tenants or someone who works in the building, like a doorman or maintenance worker. You can check websites like Airbnb by searching for apartments like your tenants’. Do not input price or date parameters. Look at the map of apartments to see if the apartment in question is listed.

Know the laws of your state and city. Subleasing and subleasing via Airbnb are treated differently under the law. Most states and municipalities have laws protecting tenants who choose to sublet. Some have carve-outs for short-term rentals like those through Airbnb. However, most of these carve-outs are related to duration and frequency of sublets. If you don’t know the details of your tenants’ activities it’s nearly impossible to determine if their actions would be protected. Knowing the laws of your area is crucial, because taking action in contravention of those laws could create serious legal problems later on.

Re-read your lease. If the lease agreement says tenants can sublet as they please, there is nothing you can do, unless short-term subletting is illegal in your area. In most areas, it is not illegal. Though a lease that is more restrictive than the law is unenforceable, a lease that is more lenient than the law will control.

Consider your remedies. Tenant eviction is an option, but should always be a last resort. It’s messy, expensive, and usually not allowed. Tenant eviction that is groundless or unmerited will lead to serious financial and legal ramifications. Generally, an ounce of prevention is worth a pound of cure. Tenant screening can weed out financially unstable candidates who are more likely to sublet. Tenant screening can also alert you to any legal actions previously taken against your prospective tenants, some of which could be for illegal subletting.

Despite your fears about tenants having short-term subletters, it’s also important to remember that subleasing means rent for you. It’s better to have tenants sublease occasionally and pay their rent than default on their rent and disappear with your money.

An Overview of the Fair Housing Laws

Fair Housing Laws

Fair Housing Laws

An important part of the Civil Rights Act of 1968, the Fair Housing Act was set worth to protect any person intending to buy or rent a home, apartment or other living space from discrimination on the part of the person selling or renting said space. This means that when a landlord or property seller is conducting a tenant screening, it is not legal for that person to discriminate against the potential tenant or buyer on the basis of their race, the color of their skin, the religion they practice, the country from which they originate, their age, handicaps, disabilities, gender or the status of their family. In the case of family status, this means that a renter or buyer who is a pregnant woman or who has children who have not yet reached age 18 may not be discriminated against. For the purpose of this act and other civil rights acts, these groups are referred to as protected categories.

In practice, the Fair Housing Act means a number of things for someone renting or selling a property. Nowhere in their advertisement or in any statement may they indicate that they have any level of discrimination against any type of protected category in regards to their function as a landlord or seller. They are not legally allowed to lie and say that no rentals are available if they are, in fact, available. Their tenant screening process must not include any discrimination against protected categories, and they may not legally refuse to rent to anyone based on any protected status. In addition, they may not require tenants to pay larger security deposits or face any terms or conditions that are not faced equally by all other renters to whom that individual acts as a landlord. Finally, they may not evict a person or family or terminate their lease due to their inclusion within a protected category.

The Fair Housing Act was created in response to discriminatory housing practices that many people faced in the United States prior to 1968, with individuals largely being discriminated against on the basis of race and religion. Today, the act continues to ensure that people in America have equal civil rights when it comes to buying or renting a living space.

Airbnb: How to prevent your tenants from subleasing


How to prevent your tenants from subleasing

When you rent out your property to a tenant, you expect that he or she will treat it with care. While you expect some level of wear and tear to occur, those costs are generally accounted for in the rent that you charge. What you don’t expect is for your tenants to sublease your property through services such as Airbnb. What can you do to prevent this from happening?

Explain Your Rental Policies Thoroughly

The last thing that you want is for a tenant to claim that he or she didn’t know or wasn’t aware that subleasing was wrong or illegal. You also don’t want your tenant to claim that there was nothing in the lease forbidding the practice. Therefore, you will want to walk whoever is renting your property through the lease agreement to ensure that he or she knows what is expected. This will make it clear that subletting the property without permission could lead to eviction.

Screen Your Applicants Thoroughly

Before you rent your property, you should conduct a tenant screening process that will weed out those who may have a checkered history when it comes to paying their rent. Tenant checks will also verify how many people are supposed to be living in the home or apartment. While you can’t tell your tenants not to have anyone over, you may be within your rights to start the eviction process if there are crowds of people not on the lease or otherwise authorized to occupy the rental.

Do Random Checks of the Property

While you can’t just walk in on your tenants, you can ask to stop by and check the property with 24 hours notice. If your apartment or home is being leased to another person without permission, this could catch your tenant off guard. Either this person will admit to subleasing your property or you will be able to gather direct evidence of subleasing when you conduct your visit.

Check for Listings on Airbnb

An easy way to find out if your property is being subleased is to look for listings on Airbnb and other sites. If you see that your property is being rented out without your permission, you can contact the tenant and put a stop to the activity. While this may not prevent your tenants from trying to sublease, it gives you a chance to stop such activity quickly.

Before renting your property, make sure to do tenant checks and a thorough tenant screening process. Credit checks, reference checks and asking for proof of employment will often help you find tenants who will treat your property well as opposed to those who will try to make money off of you.


Who fixes what? Landlord and Tenant Responsibilities

Who fixes what? Landlord Responsibilities

Who fixes what? Landlord or Tenant

One of the advantages of renting an apartment or house rather than owning your own property is that your landlord takes care of much of the maintenance. However, there are some things that tenants generally are responsible for, so it’s a good idea to read your lease and be clear on what the landlord responsibilities are and what your renter responsibilities are.

General maintenance and minor repairs
Tenants are responsible for keeping the rental unit in good shape and for using fixtures and appliances as they are intended. Tenants also are expected to take care of minor maintenance and repair items on their own, such as plunging clogged toilets or changing burned out light bulbs. However, issues that are beyond a tenant’s control, such as an appliance wearing out from normal use, are a landlord’s responsibility. A landlord typically would be liable for making small repairs, such as fixing a dripping faucet or a running toilet, but in many states, no law compels a landlord to make any repairs that do not endanger a renter’s health or safety

Major repairs
For any vital item in the rental that needs fixed or replaced, it is the landlord’s responsibility to do so in a timely manner. This includes appliances, lighting and electrical outlets that don’t work, plumbing issues and issues of safety, such as broken windows or door locks that don’t work. While it is the landlord’s responsibility to make sure the item is fixed, if the tenant is responsible for the damage, then the tenant can and likely will be billed for the repairs. A landlord can delegate repairs to a tenant, requiring the tenant to pay if it is among renter responsibilities or deducting the amount from rent if it is among landlord responsibilities.

Time Frame
If you have a serious issue that needs attention, the landlord generally needs to make the repair within 24 hours. For such repairs, you should notify the landlord directly either in person or by phone and in writing. For minor repairs, you should notify the landlord in writing and give a reasonable time for the repair to be made, at least a week. If the landlord does not make the repair, check to see if your city has a “repair and deduct” law that allows you to make the repair yourself and deduct it from your rent. Make sure to document everything in writing. If your landlord does not make timely repairs, report the issue to the local health department or city code department.