Dear all,
I just bought my first rental property a week ago and will close end of this month. But I am trying to post ads whereever I can now and hopefully i can get a qualified tenant before closing. But, I am soo nervous now and not so clear what to do on many things and need your help desperatley. Here are my questions
1: Application fee, the question might sound silly, sorry, just want to make sure everything i will do will be right. Should I ask them to mail me a personal check or money order? should I wait till i get the money to do the background check?
2: since we will close the house not until end of March, meaning we are still not the owner yet, do we have the right to sign a leasing contract with the tenant before closing for the house we don't own yet? or, we have to wait till we close it, that way, we might lose the potential
tenant.
3: is it right that we can't cash the deposit check?
Big thx for your help!
Nicole
1 Cash as they fill out the application. No money I'm not bothering with them
2 Find out from the sellers if you can have access to show the property and if you sign a lease make it subject to succesful closing.
3 You take a check for the deposit money? Sorry cash, money order or bank check.
I take checks for security deposit. Everything has to clear PRIOR to them taking possession of the house, however. That means I take security deposit and first/last month's rent and any other fees up front, cash them, and then give it 4 days to clear. Any bounces and they're gone. If they can't pay to get in the place, i can't trust them to pay rent.
Once everything clears, they get the rental deposit receipts and the keys.
RE: taking a check for the rental application. I take them. I do the background check, etc. and will even meet to sign a lease, and take security, first/last, etc. However, if that check bounces, they're out and the lease is null and void b/c they violated the rental applciation policy, which requires payment of the fee. That makes my lease null and void too. And they're gone with no second chances. Again, if they bounce a check on a rental app, they're no good. And NEVER GIVE THE KEYS until everything's been deposited and you've had 4 days after that for the payments to clear.
The best way to defend yourself against problems with this is to have a written tenant screening policy and provide it to every applicant. It lets them know if any check bounces during the process that they're automatically disqualified. If people think you'll check and won't give them keys until everything's cleared, they don't waste their own time.
Most people don't have a written policy and as a result, tenants think they can wiggle their way into a property before you'll catch the problem.
If you want a very solid free Tenant Screening Policy, PM me or email me. My company had one developed a while ago and it's great. No reason not to share.
-Jeff
Once everything clears, they get the rental deposit receipts and the keys.
RE: taking a check for the rental application. I take them. I do the background check, etc. and will even meet to sign a lease, and take security, first/last, etc. However, if that check bounces, they're out and the lease is null and void b/c they violated the rental applciation policy, which requires payment of the fee. That makes my lease null and void too. And they're gone with no second chances. Again, if they bounce a check on a rental app, they're no good. And NEVER GIVE THE KEYS until everything's been deposited and you've had 4 days after that for the payments to clear.
The best way to defend yourself against problems with this is to have a written tenant screening policy and provide it to every applicant. It lets them know if any check bounces during the process that they're automatically disqualified. If people think you'll check and won't give them keys until everything's cleared, they don't waste their own time.
Most people don't have a written policy and as a result, tenants think they can wiggle their way into a property before you'll catch the problem.
If you want a very solid free Tenant Screening Policy, PM me or email me. My company had one developed a while ago and it's great. No reason not to share.
-Jeff
i need you to PM me an email address or otherwise let me know how you want to get it.
To each his own, but if I were to spend days waiting for checks to clear before moving in a new tenant, I would have a lot of unhappy owners. In addition, on at least two past occasions, "cleared" checks were later rescinded by the bank.
I require a minimal application fee of $10 per adult occupant to be submitted with the completed application in cash or a money order before I will process the application. Once approved, I require the full security deposit within 1 business day, in cash or MO. The unit remains "available" until the deposit is paid (in other words, I continue to show and accept backup applications, although I do not process them until the first applicants deadline passes. I also refund application fees if they are not processed). Once the deposit is paid, they have 7 - 10 days to pay the pro-rated rent and schedule the move-in inspection. They do not move in until all money is paid, in cash or certified/money order.
Your market may vary, but the reality is that nearly three fourths of applicants want possession immediately, so waiting for checks to clear is not a reasonable option for them, and it's dangerous for you. Cash is cash, but a tenant that "promises" to make good is STILL a tenant, and now you are subject to all applicable Landlord/Tenant laws, including the typically lengthy and costly eviction process. Believe me, there are "professional" deadbeats that know how the system works, and will move in for nothing, play you, and end up with six months of free living. Getting good funds up front will not save you from every deadbeat, but its a great start.
In regards to tenant screening, it is important to have a written policy, but it should not be overly detailed. And again, the reality is that people have issues. In order to select a tenant, it is generally more important to look for REPEATED issues, rather than saying their credit score must be above 700, or whatever... You need to study the whole application, see if all the pieces fit together and make sense. Do their previous addresses in the credit report match with what they show on the application? Dates? If not, Why? What about their prior landlord-is it a verifiable company or an individual? Does that individual actually OWN the property? Or is it their sister-in-law? How about the employer? Did you call the phone number provided by applicant, or did you call the company's listed phone number to reach a manager? And just what DO you do if the Social Security number is reported as "deceased"?
It would be illegal to sign a lease for a property you do not own unless you clearly stated on the contract that you do not own it and might never be able to deliver the unit to the tenant. If I was a tenant and I saw such a warning I would not be holding my breath while you held my money.
To even screen tenants for a unit that you do not have could be an issue if you do not have multiple units that they could be offered and which they want. If you intentional hide the fact that you might never close (it does happen) and that you are taking their money but not accurately representing yourself as a landlord you are in trouble.
Best to be sure you have closed and then take money for screening and other such things. Advertise and other similar steps but be very careful about what you say and promise if you can not control the variables.
John Corey
Luckynicole,
I would get CASH for everything prior to signing the lease or giving them keys. I've had bad checks come back as long as 12 days after they were written.
Good Luck,
Mike