CategoriesLong Term Rentals Real Estate Investing

Screening Criteria: The Best Line of Defense

Screening criteria is always important.  You should always be following your screening criteria every time you process an application or talk to a prospect. But nowadays I find myself pontificating more and more about screening criteria on investor forums. Why? Because in the midst of these eviction moratoriums and other restrictions, our screening criteria now is our most important line of defense.

One of the things that has fundamentally changed for us is how much weight and significance we place on our screening process.  In a way we have tightened our screening criteria. Now this isn’t to say it was loose and wild before, because it certainly wasn’t.  We’ve made small tweaks that have made the difference in what applications are accepted and what ones are not.

I’m not going to go into specifics in our screening criteria because what is permissible for us here in Wisconsin can be vastly different than what you can do in other states.  Even your county or city can have a say in what is legal for screening criteria.  This is more to get you thinking about your own screening criteria and pondering how you can make it more ironclad to get the tenant you want for you unit. 

I should stop and say that of course with a more stringent screening criteria you may face a slightly longer vacancy BUT would you rather have it sit an extra 3 weeks for a highly vetted tenant versus roll the dice and possibly get stuck with a tenant who can’t pay in a city where judges aren’t giving evictions of any form the light of day?

#1 Consider Adjusting Your Credit Score Parameters

Our screening criteria uses credit score as one of the main determining factors.  One of the ways you can help reinforce your first line of defense right now is shore up your credit score requirements.   Increase your minimum score requirement. What class of property you are renting out will play into how much you might want to adjust the bottom score.   Consider a tiered credit score system where a credit score in this range is X% of deposit more.  Tier systems usually have the denial score, 2 middle tiers with additional deposit, and the top tier which is standard accept.

#2 Collect First, Last, and Security Deposit

This is something I have personally never done yet it is a practice that is used a lot by large complexes or bigger rental owners sometimes.  You may have heard the term “first and last month’s rent” from a renter when they are inquiring about  move-in terms.  That is different.  (I also could go on a separate rant about why this turn of phrase is horrible.)  In this equation we are collecting the first month, the last month as well as the standard deposit.  (CAUTION: Check your state statutes on how you are permitted to record this.  Some states won’t allow you hold future rent payments so you may have to refer to it as a security deposit in your records and possibly your ad as well.)

Now if you think this is crazy because “the economy is rough and people don’t have savings”.  Numerous banks are pointing to a record high of savings in their bank accounts. Also, when the economy is rough that is when you want to protect your investment the most. 

#3 Get Those Employer References

I prefer employer references over rental verifications any day of the week.  A landlord or management company may have a vested interest in embellishing the facts to get rid of their not so great tenant. Employer references rarely have anything at stake in their report on an employee in a screening process. Throw in a question like “Is there any reason this person may not be employed by the company in ____ months?”  Place more weight on the employer’s reference than a stellar rental verification.  

#4 Stick Your Criteria Like Glue

Now is not the time to make exceptions to your screening criteria.  You set those parameters for a reason. They are meant to help you locate the ideal tenant for your property. Why during uncertain times would you suddenly view the document as guidelines?  During tough times is when you should look at your screening criteria as iron clad.  It’s what you created to bring you the tenant you wanted to rent to in the first place.  Don’t get desperate and lessen that criteria.  (Not to mention getting flexible with your criteria may cause Fair Housing issues.)

CategoriesLong Term Rentals

Keep These Questions To Yourself

When we are showing a vacancy, we are usually in one mode: get it rented.  We want the best qualified applicant as soon as possible. We want to find out as much about the person either prior to completing the application.  It saves us time right? The more we know sooner, the easier it is for us to weed out the bad candidates. So we ask questions to get some answers and satisfy our curiosity.  

Sometimes we are just making friendly conversation and we tend to forget that in the role we are as landlord, what we say to tenants and prospective tenants is scrutinized.  So what was meant to be a friendly conversation point about the person may turn into a complicated Fair Housing complaint down the road.   

Here’s a list of questions that will you should avoid asking potential renters.  Some seem innocuous but can be construed as seeking for discriminatory information.  

Where were you born?

This seems harmless but since its asking for information about a protected class (national origin) and it has no bearing on their possible performance as a tenant it’s on the no-no list. 

Tell me about your children.

Familial status is a protected class. Phishing for information about the children’s age, grade, etc is a potential Fair Housing lawsuit  Wait to find out information about the kids from the application. 

Do you need to know where the nearest [mosque, temple, church] is?

No. No. No.  You are inquiring about their religion, which again has no bearing on the application.  If they ask you where the nearest worship location is, that’s different because you are answering their question.  When you someone appears at a showing in unusual religious clothing, don’t make it a point of conversation

You have a nice accent. Where are you from?

This is also a question that inquires about national origin or ethnicity.  Your finding out someone is Welsh, Russian, etc which is something that should not have any bearing on their application.  This is a hard one for me to follow because I love accents.  

Do you have a disability?

….No. Just no   It’s rude. It’s common courtesy.  It’s a violation of Fair Housing.  

Do you have a service animal?

You can ask if they have pets but not specifically service animals.  Let the conversation flow naturally. Ask if they have pets, then if they do inquire about the breed, weight and other characteristics you want to know.  If the pet is something you don’t accept you can say so. That is when most people will tell you it’s a service animal. You are still getting the information about pets but you are letting them tell you its a service animal.

You can still find out a decent amount about your applicants without probing in areas you shouldn’t.  Be methodical with your questions and don’t forget as a landlord doing a showing you are held to a higher standard with your conversation. 
Here’s a list of common questions that are still ok to ask:

  • Do you have any pets
  • When are you looking to move?
  • How many vehicles do you have?
  • Why are you looking for a new place to live?
  • Do you smoke?
  • Does your current landlord know you are thinking of moving?
  • Do you have any questions for me about the process?

That last one is a GREAT question to ask.  It opens the door for them to tell you what might be concerning them about the application. If they are offering you the information without you phishing for it it becomes fair game.  

CategoriesLong Term Rentals

Setting the Tone For A Tenancy (Pt. 3)

As Written for the Wisconsin Apartments Association

by: Corina Eufinger

In this final look at “Setting The Tone For A Tenancy”, we look at move in day and the successive first 60 days of the tenancy.  This article will put all the puzzle pieces together on how the pre-tenancy phase sets the standards for the tenancy. We will look at situations that often arise when a tenant has been able to assert dominance in the relationship and how difficult it can be to get it back.

Chances are most of us have had a tenant call us before the 1st to see if they can move in early. Sometimes they are looking for just a day or two so that the 31st they can turn over their previous unit to the landlord with time to clean it (or so we hope is the case).  Other times they are looking to move in more like 4 or 5 days early. I have no problem appeasing these phone calls if 3 circumstances are met: 1) the unit is ready at the time of their call (no exceptions); 2) I haven’t already set their move in appointment with them (one of my personal pet peeves is rescheduled appointments for move-ins because the beginning/end of the month is always jam packed); 3) I can reasonably fit their request into the schedule. Also, no matter how many days they move in early, I always charge a daily rate. The only day I don’t charge for is when they take keys on the last day of the month.

I cannot stress this next point enough: NEVER LET A TENANT MOVE IN WITHOUT FULL SECURITY DEPOSIT AND FIRST MONTH’S RENT PAID (in a non-bounceable form).  Even if you followed all the other pointers that I’ve laid out in this series, if you throw this one  by the wayside you have lost control, and control over the most important part of the tenancy for a landlord. Money.

Under most circumstances a move-in goes fairly smooth. In theory there shouldn’t be a long list of repairs because everything is already done. But s*&$# happens. One of the ceiling fan bulbs decided to burn out as you turned it on, the batteries on the hardwired thermostat aren’t working even though you just replaced them, etc.  I have been there and most tenants are extremely accommodating when it’s small stuff like that. So there is no reason to rush a maintenance guy over or quick grab your batteries.  It can be handled the next day. Responding like it’s an emergency to a standard repair on move-in day says to the tenant you react quickly to all maintenance repairs, all the time.  

If you find yourself with a tenancy where the tenant has seemingly taken control of the relationship Is it possible to regain authority in this relationship?  You can, but it is a painful and annoying process. You will need to be firm and use that backbone you hopefully have.  The tenant will complain you aren’t accommodating them anymore and accuse you of treating them differently. In reality you are treating them….more normally.  You’re not available at the drop of a hat anymore, you don’t respond to maintenance as soon as they call (emergencies excepted).  Other than how annoying this process is given the “lip” you will likely get, what is worse is that by changing your over-accommodating behavior after move-in you have also proven the idea that once you are a customer no-one really cares.  

If you have to regain control financially, it gets a little more sticky and…expensive. When you issue a 5-day notice they are shocked you would do such a thing. You likely got a less than pleasant phone call from the tenant telling you that you are a horrible person and why does it suddenly matter because it didn’t before.  If they don’t pay up during that period, they are trying to call your bluff.  You cannot back down from this.  You must file the 5-day.  File, get a process server, etc.  If you don’t follow through at this crucial stage you will never be able to regain control.  Your eviction threats will be hollow and meaningless. Don’t get caught in a trap where you chicken out of filing because it’s only one month.  If you have lost monetary control of the situation, you have lost control over the most important aspect of how successful your rentals are.  It doesn’t matter how safe and clean your housing is if you aren’t getting paid for it.   

Do yourself a favor and maintain control. Follow your rules and make your needs the priority (but not the need to fill the unit ASAP).  Be polite, but firm and accommodating when it fits your schedule.  Don’t place yourself in a rush or bind to appease the applicant or future tenant.  If you follow these rules, your future self may just build a time machine to come back and thank you for keeping their landlord life a little simpler.  

CategoriesLong Term Rentals

Setting the Tone For A Tenancy Part 2

Setting The Tone For A Tenancy

We prefaced last week that our actions from the start of contact with a prospective tenant, it can set a tone for the tenancy. In this blog we are going to focus on the pre-tenancy activities and how they can affect how successful a residency is for landlord and tenant.

It’s Sales 101 to always be pleasant and happy when someone calls that wants to rent your place.  After the prospect has decided that they would like a showing, your instinct it likely to tell them you can show it now and grab your keys. After all, you don’t want to miss out on renting it right?   people’s instinct is to jump and grab your keys.

You have subtly sent a clue that your schedule and time isn’t too important to you.  You will jump when the right keys are turned (so to speak). This is not the precedent you want to set.  You want to make sure the tenant knows that your time is of value to you and that you schedule your time carefully. Doing so will reinforce to the tenant that you have other obligations. It also avoids setting the false expectations that you will always jump to assist them.

When scheduling the showing try to do it at least 24 hours in advance (unless you have another showing already scheduled that you can piggyback). If your time is limited don’t be afraid to set an open house strategy. You can tell the prospect you are showing the property at 9am & 10am on Saturday and they are welcome to join you then.  The premise being that if the prospect is motivated enough, they will be there.

When you are at the property for the showing, it is important to remember that your time is money.  If the person doesn’t call within 5 minutes of the showing start time to say they are lost or had an emergency, don’t wait around.  Remind yourself that you have a schedule and other tasks to handle.  It is your choice if you choose to call the tenant about the missed appointment while at the property or later.   If you call while there do not allow them to monopolize your time more.  Offer to reschedule but make sure the next appointment piggy backs off an existing one.  (Just in case they don’t show again.)

If a tenant isn’t courteous of your time before they move-in, they aren’t going to value your time after.  If they don’t value your time they don’t respect you.  If they don’t respect you, they aren’t going to be inclined to pay you on time per your rules.

There is a difference between being flexible and a doormat.  If you become a doormat for the pre-tenancy phase you will notice rent due dates are fluid, rules are nice when they work for them,and your words aren’t enforceable. Your communication and actions should establish the idea that you are the one who will control the relationship. If they seize control in the pre-tenancy days you will never get it back and you will always be their second fiddle until you “man” up and kick them out.

In the next blog we’ll take a look at what happens after the prospect has seen the property.  We’ll address the subtle things you might be doing during the application and leasing process that further establishes a tone of tenant dominance.

Corina Eufinger

Owner Brio Properties & CRC Investments

CategoriesLong Term Rentals

Setting The Tone For A Tenancy

Two years ago I had a procedure altering epiphany that drastically changed how I ran my properties and those I manage.  It all started when I met a fellow investor at a networking event. After getting to know him for a few months, our conversations became more in depth and…well….useful. They transitioned from weather, etc to nitty gritty real estate.

I was expressing how I was frustrated with some of the newer tenants being demanding and flighty at the same time. I went on to explain who Iit was getting hard to get rent on time, tenants would scheduled repairs but then changed their minds one hour before appointment, and they only followed the rules that were convenient for them.  Immediately he began asking questions.

He asked me if the showings for these particular tenants were scheduled in advance or if the showings were done on demand.  He then asked if we had a security deposit and holding fee procedure.  Was the tenant late to any appointments in the beginning? At first I thought it his questions were unrelated and he had forgot what we were talking about.  Then I realized that his inquiries weren’t unrelated but were all funneling to a major point he was building up to.

After many questions he smiled and said “I know what your problem is.”

He went on to explain that from the moment my staff initially spoke to the prospective tenant we had already begun seceding power and establishing the tone of the tenancy.  My mind was blown.

When we reacted and scheduled a showing for a few hours from the time of the call I was showing them that their time was more valuable than ours. I furthered the problem by asking the leasing agent to stay 10-15 minutes later and her agreeing to show it when they eventually waltzed in. I thought we was being understanding turns out I was being a sucker.

Then the investor said the life-altering sentence “You have been setting the tone for a tenant dominated relationship from your first action.” I spent the next hour of the event going through scenarios and scribbling out notes and procedures on a stack of cocktail napkins. Yes I was that cliched person.  But those many napkins have turned into an amazing procedure and now…this blog series.

The next two blogs will take an in-depth look at some of the ways the tone of tenancy is set in the first 60 days of the relationship. Common landlord mistakes and ways to change it so you are establishing control of the relationship from the beginning.

Corina Eufinger

CEO of Brio Properties

Owner CRC Investments

Owner Brio Properties & CRC Investments

Add to cart