by Debbie Vornholt | Jun 22, 2020 | Landlord
How To Find A Great Tenant For Your Rental
All landlords want great tenants. How do you find a great tenant for your vacant rental property though?
Searching for a great tenant can seem like an impossible task. I have found that you have to talk to a lot people to find one or two who will fit your description of what a great tenant is.
The first step is to list your rental requirements on your listing so that you discourage those who don’t qualify not to contact you. The second step is to conduct a thorough pre-screening of every interested party before you show the property. Why bother to allow people to see your vacant rental property if you on’t know if they would even qualify to rent from you? The third step is meet interested parties in person.
Pre Screening Potential Tenants
We are going to talk about Step Two of this process which is the pre-screening step.
Advantages of Pre-Screening:
- Find out more about anyone interested in your property
- Eliminate a lot of people because they don’t qualify
- Only show your property to people who meet your qualifications
Keep in mind that at this point, you will only have verbal answers to your questions. Hopefully, no one lies to you but you will find that out when someone actually submits an applications. That would be grounds for immediate denial.
What Questions Should You Ask?
For Fair Housing reasons, always ask the same questions of every person that calls. Going through this process will help you identify people who can potentially be a great tenant for you.
The longer you do this, the more rhythm you will have. If you notice that you are getting mostly through the list of questions and keep reaching one that is disqualifying, change the order of questions.
For example, if you do not allow pets, ask that question close to the beginning. There is no reason to ask a lot of other questions if this person has a pet.
It is amazing how much information someone will tell you when you ask open ended questions! Depending on how much information you want to know, you can add to these questions or change them however you want.
Some basic questions that I start with are listed below. Be sure to customize them or rearrange the order to suite you. If you don’t accept pets, move the pets question up closer to the top. I can’t tell you how many times I asked that towards the end and had to tell them I was sorry.
Examples of Pre Screening Questions:
- How many people will be living in the home?
- Where do you live now?
- How much is your rent?
- Why are you moving?
- If you’ve been at your current residence for less than two years, why do you move so frequently?
- What type of pets do you have?
- Where do you work?
- How long have you been in your current job?
- How much is your gross monthly income?
- Do you have any credit issues that we need to know about?
- If you have Section 8:
- How long have you been on section 8?
- Have you met with your caseworker yet?
- Do you have a voucher and how much is it for?
- How many bedrooms are you approved for?
- How soon do you want to move in?
Again, customize the questions to meet your needs. Your questions should always be open ended in order to encourage everyone to tell you more. Be prepared to ask more questions as needed and ask for more details.
This process is easy to implement and allows you to easily see who doesn’t meet your basic guidelines. A qualified list of pre-screened people will start you on the path to finding a great tenant!
by Debbie Vornholt | Jun 11, 2020 | Landlord
Tenant Not Paying Rent Due To Covid 19
As of the date of this post, courts are beginning to open back up in many areas. So, this answer will fit what is going on right now.
Times are tough right now for landlords and tenants. Everyone has a different idea on how to proceed. There is a lot of debate about what is “right”. To say the least, this is a very hot topic. Most tenants do not understand that landlords are not wealthy and there is a mortgage on the property that the tenant is living in. So, when the tenant can’t pay, the landlord can’t pay the mortgage. Many landlords are struggling just like tenants.
The bad news is that, unfortunately, there is not a lot you can do right now about non paying tenants. This is going to be disastrous for many landlords who depend on the rent to pay the bills. It can be very frustrating to watch the news and hear so many people insisting on rent forgiveness. It seems like a lot of people are painting the landlord as the bad guy. The bottom line is that no landlord decided to have rental property just so it could be rented for free. Owning rental property is a business. The income is counted on by most landlords just to be able to keep the property.
I am lucky. Most of my tenants are paying. The majority of my tenants who couldn’t pay contacted me and explained their situation. Most were waiting on their unemployment and/or their stimulus check. It is much easier mentally and emotionally to help these tenants out as they were proactive.
When reviewing the non paying accounts, I realized early on that many tenants who were not paying were the same ones who either paid very late every month or were tenants I had to send 7 day letters on to actually get paid.
Dealing With A Non Paying Tenant
Communication is key with non paying tenants. When this first started, I made sure that I spoke with every tenant not paying rent. If you have not done this yet, then I recommend you do it today! The good paying tenants were very embarrassed and there were a lot of tears. But, they are at least making an attempt to pay something.
As for the few tenants that are not paying at all, they literally have no money to pay their rent with. Some are not eligible for unemployment and used their stimulus money to pay utilities and buy groceries. Others, especially my commercial tenants, have tried to get business loans but have either been denied or have not received the money yet. I have both residential and commercial tenants so their ability to pay the rent depends on a number of things. The commercial tenants who have restaurants or other businesses are hurting the most. There is nothing I can do until evictions can be filed. I am staying in touch with them though.
I have one tenant who has indicated that he doesn’t intend to pay until I make him. I have reminded him that the rent will have to be paid eventually. I told him that if he doesn’t, once I can file an eviction, I will be filing on him. He told me to go for it.
Two of my tenants had heard on the news that they didn’t have to pay rent. They really thought that the moratorium on rent meant that they didn’t have to pay at all! Once I informed them that what they heard wasn’t reality and that they would owe all of the rent eventually or be evicted, they paid. One laughed and said he thought that was too good to be true!
For the tenants who are chronic problems, you either have to figure out how to get them back on track or evict them them once you can. That is something you will have to decide. Sometimes it is cheaper to work with these tenants than to evict them but if they are four to six months behind on the rent, there is really no way they will be able to get caught up.
Can I Evict For Issues Other Than Non Payment?
The answer is that yes, you can. If you have other issues that are related to tenant not paying rent, find out what the rules are in your area first. In my area, I can send them a Cease and Desist and then file an eviction if the situation has not been rectified. I am in the process of doing this with tenants in an apartment building. They have been disturbing all of the neighbors with their cussing and fighting at all hours of the day and night. I sent the Cease and Desist notice and they were shocked that they received it. After talking with them, I was able to get them to agree to move out. I got lucky. Stay tuned though because they aren’t out yet!
The biggest issue is that the courts are backed up. A real estate attorney attended our local Real Estate Investor group meeting (online) at the end of May and said that while the courts are opening back up, there is a 6 to 8 week back log of existing court cases. But, at least you can do something and put them on notice to straighten up or they will be evicted.
Also, make sure your lease has a “peaceful enjoyment” clause in it. This makes it easier to evict tenants who are loud and are disturbing the neighbors.
Action Steps
Keep in mind that most tenants are not bad people. Many have been blindsided by the furlough or loss of a job. Some are literally frozen in place and have no idea how to move forward. Sometimes you can help them by talking with them and being empathetic. That doesn’t mean you turn a blind eye to your business!
- Review all non paying tenant accounts and those with balances
- If you have not done so already, contact all of them
- Keep detailed notes about what each one said
- Set up payment plans when possible
- Follow up monthly to see what is going on
- When you know the date courts open back up, notify your tenants that eviction filings are resuming
- Schedule your 7 day letters to go out when appropriate
- File your evictions as soon as you are allowed to
Resources
Did you know that Covid 19 relief funds are available to tenants? If you haven’t already done so, find out what resources are available in your area. Compile a list of resources with phone numbers and either email or physically mail them to your tenants. When I talk to tenants on the phone, I give them the resources I have and instruct them to also go online and see what they could fine.
I found out about some programs when representatives from local organizations called me to verify information for a tenant. I then got the information I needed from that person to pass onto my other tenants. In my area, local churches offer rent and utility assistance year round. Many of my tenants were able to pay their rent with these resources.
Trust me when I tell you that it is well worth your time and effort! The last time I checked, I had received over $7,000 in rent!
Finally . . .
Hang in there. This won’t last forever. Work with the tenants you can and evict the ones who cannot get caught up. Keep in mind that unless the tenant has kept the property in great shape, you are going to have to make repairs at the very least. If the tenant has been there a long time, you may have to completely redo the unit. Can you afford to do that? I don’t know the answer to that, only you do. You need to weigh the cost of working with a tenant with the cost of evicting this person and having a vacant unit needing repairs.
by Debbie Vornholt | Jun 1, 2020 | Landlord
Calculate Debt To Income
When screening applicants, do you use calculate the Debt To Income ratio?
If you don’t, then you should!
I just had someone apply for a rental home. He currently owns a home and will be closing on it in a couple of weeks. He told me told he tried to buy a house but had been turned down due to an old bankruptcy. That didn’t make sense to me but I told him to fill out the request to see my vacant property and to answer the pre-screening questions that would be emailed to him. Once he did that, I told him I would get him in to see the home.
This happened Friday late in the day. I checked for his responses over the weekend but he didn’t request to see the property. I assumed he had moved on. Monday morning, I received a notice that I had received an application for my vacant property. When I looked at it, the application was from the person I spoke to on Friday.
Keep in mind, he did not follow directions and fill out the request to see the property and he didn’t answer the pre-screening questions. He also has not seen the property.
I reviewed his application and ran his credit. It is interesting to note that the credit screening report listed him as APPROVED. There were only two items in collections, one item past due and the rest of his debt was paid on time. His credit wasn’t terrible and his credit score was 601.
Calculate The Debt To Income Ratio
When I reviewed his application, I noticed right away that he had four bills listed that he owed. I ask every applicant to list what they owe monthly for bills.
- Car payment: $400
- Car Insurance: $133
- Cell Phones: $120
- Child Support: $425
- Monthly rent: $1,200
Total Monthly Debts, including the rent, are$2,278. This does not include gas, electric, water, fuel for his vehicle, food and entertainment.
His monthly gross income was listed as $3,900 and his net was $2,859.40
When you subtract the debts from the net income, you are left with $581.40 to pay all other bills for the month.
When I ran the numbers, his debt to income ratio was too high. This applicant could not afford this rental home and was denied.
I run across too many landlords who don’t follow all of the steps when screening applications. This guy seems very nice but he is desperate to move and isn’t using his own good judgement. If I let him move into this home, the chances are high that he would not be able to pay the rent.
If you want to find great tenants, follow a system and don’t make exceptions. Follow a process and follow every single step.
When you calculate the debt to income ratio, you get a better picture of what the applicant can afford.
