All Forum Posts by: Penny Clark

@Nyoka Fernandez, you should not be put in the position of negotiating with your tenant.  You were right to trust your instincts to be wary of using the $250 pet deposit. Rent increases should be part of doing business and not a bartering tool. The $25 rent increase (which is small) is necessary to cover any rising costs and help you recoup repair expenses and fund capital improvements.  Upon any tenant's lease renewal or before a lease reverts to a month to month, comps should be done followed by a small increase in rent after proper notice.  

That said, I do think if you are going to allow pets, a fenced yard as well as gated driveways, exterior lighting, etc. are selling features to tenants because they view them as a security benefit. 

I would invest in the fence and do the rent increase anyway.  Which do you think your tenant on a fixed income will do- absorb a $25 rent increase or spend $1500 or more (first month rent, security deposit, moving expenses, etc) to find a new residence who accepts pets too?  

@Aaron Schwab, liability + maintenance = HUGE headache.  We are selling our current residence as opposed to renting it because it has a pool. Not having a pool isn't a deal breaker for most tenants and if you do rent a property with a pool, you have to either rely on the tenant to do basic maintenance (dip out leaves, empty skimmer, brush down steps, fill it occasionally) or hire a pool company to do service - and that ain't cheap. Consider either filling in the pool or passing investment over for a property without a pool. 

@Christof Gardet, I would see if a permit is required for use of the porta-potties and call the City. However, it's possible this was a one time event. Since you're fairly local, visit the property at different times to see what block/neighborhood is like. You can also question the neighbors about it. If it's a problem house, they may share information. On the other hand, if it isn't a problem for them, it may not be a problem for the people you rent it to.

@Brie Schmidt, I would ask if the tenant(s) was discouraged from making rent payments in a form other than cash. There is no reason why PM should accept cash when you can do online payments, money orders, personal checks. This is risky business because there is no paper trail for the landlord or the tenant. 

For the repair question, be more specific, such as Please provide an approximate time when requested repairs were completed (within 2 days, 1 week, 1 month, never). I the question "Were you told anything by PM that you later found out to be untrue is too general. Be more specific, such as "Were you told that cash was the only acceptable form of paying rent?" or What were the reasons given when a repair you requested was delayed or not addressed?

I agree that you can't always rely on a tenant's word to be true - they will sometimes take advantage, exaggerate or omit facts if it suits them. Let them know you will be reviewing all documentation provided and encourage them to give you anything they received from the PM as well.

Wait the extra year to get total of two years tax returns. Most bank underwriting are going to want this for self employed businesses or corporations. You'll also need to have reserves ( about 6 months worth) of PITI for the subject property as well as the one you already own and pay off any credit card debt you have to reduce debt to income ratio. This has been our experience and we've done conventional financing for all our rentals. My husband owns and operates a pest control company and I am commission based Property Manager. I agree with Chris it is helpful to work with an investor friendly loan officer but it's the underwriter of the loan that determines if it's a go or a no.

Good luck to you!

Your property manager should give you a synopsis of applicant's income, rental and credit history so you know they've selected an applicant that matches your rental criteria. Sometimes PMs don't consult the owner because they want to fill the unit quickly or they think an owner will select an applicant based on factors that are outside of financial or rental history. I think PMs should let the owner have the final say but can give them parameters to start with for selecting good tenants. For example, income for applicants should be 2.5-3 times that of the rent.

@Derek Caffe, stand your ground on this one because you are right. Any vacant property should be marketed until you have the signed lease and security deposit in hand. Applicants are not first come, first serve, but first come, first qualified - that means you are able to verify ALL needed information (credit, income, rental history). In these situations, you gotta remember the acronym SEP or "somebody else's problem." It is your job to verify.  It is not your job or responsibility to chase down your applicant's information. For example:

- applicant doesn't have his previous landlord's contact information - somebody else's problem

- applicant couldn't make appointment to showing because car broke down - somebody else's problem

-boyfriend applicant has supplied his information but his girlfriend who will also be named on the lease has not - somebody else's problem

- applicant can't find most recent pay stubs because they just moved from out of state-somebody else's problem

Give strong consideration to those applicants who can get you what you need quickly because often they are the ones who make the best tenants.

@Account Closed, you have my sympathies, and I thought California was too tenant friendly! Since this is the place you chose to invest, then learn the laws of the province, and it sounds like you are doing that already. Is there a way for a landlord to not renew the lease or agreement? Hopefully you won't have to wait it out until the lease comes up for renewal. It may just be a matter of not accepting rent and going through the eviction process. 

Late rents happen for a couple of reasons: 1) Landlord accepts rent after the due date without issuing a  three day notice prior to receiving it 2) Tenant tells landlord in advance it will be late and landlord consents and does not enforce fee and/or issue a three day notice. Before long, the late pay becomes the norm, not only for the tenant but also a pattern for the courts to see if it goes to eviction. Renting to late payers can happen to any landlord if it is not said with great emphasis and enforced every time that RENT IS DUE ON THE FIRST. THE LATE FEE KICKS IN ON THE 3RD or the 5TH IF NOT RECEIVED BY 5pm.  Any rent paid after the due date is late. If this is not stressed to the tenant from the beginning, they get the impression that the period between the due date and the time the late fee kicks in is a grace period.  This is why many tenants think it is acceptable to wait until the 5th to pay rent.  Landlords enforce this view by accepting rent after the late fee and not issuing notice prior to accepting payment.

As far as not being able to contact your tenant, that is a problem. Before allowing any tenant possession to your property, make sure you have accurate information from their application - cell phones, emails, work addresses and phone numbers, emergency contacts - and take the time to update them when they change. This becomes very important when you have to contact the tenant and serve notices.

When I am screening applicants for my rentals or my clients' rentals, I pay attention to how responsive they are in getting me the verification needed to qualify as well as returning my calls and emails. I also look for timeliness for keeping appointments for showings. If they're late or forget to fill in information on their application or worse, expect you to track it down for them, move on to the next one. In my experience an applicant's conduct during the screening process does not change when becoming a tenant. 

Good luck to you and share with the community what the outcome was with the tenant.

@Nate Julian, I would research the market rents, then raise the rents after giving proper notice. You will have to let any existing leases  expire before you can raise the rent, or send them a letter a week or two before it expires inviting them to sign a new lease at the new rate. If they decide to walk, tell them a written 30 day notice, for example, ( check with your state ) is required.  For the month to month raises, you can do it slowly with a small increase if the tenant is worth keeping (pays on time, no 3 day violations, etc) and gradually get it up to market rent. Some tenants may even be cooperative and willing to pay a higher rent and tolerate some remodeling while in place.  If you want them out and/or remodeling is too extensive, then give them a termination notice of ending the agreement. Remember, you are da boss!

@Joseph Cornwell, First, Congrats on the purchase of your property! All the screening services mentioned by those above are a good start to help you view an applicant's financial story on paper - do they pay on time? Can they afford your rent with their existing debt are a few things these reports reveal. However, do not rely specifically on these services to do rental history screening or income verification; although some, like Cozy, will screen for eviction records, these often only come up if a money judgement was filed. Develop a system for getting previous and current landlord contact information from the applicant when they apply. For example, have your applicant provide a signed consent for you to check rental history. Most private landlords and property management companies won't release that information without the applicant's permission. You can easily get that signed consent when you meet applicants at the showing. This also serves as a screening device to filter out the deadbeats who do not want to be checked.

Next, verify income however you can - bank statements, wage stubs, tax records (self employed or independent contractors), award letters, etc, and try not to blush when you ask for these documents. As a business landlord, it is imperative you verify income. Never take stated income at its word or trade rent discounts for repairs done by the tenant. 

Most serious tenants know they are going to be screened and must pay a fee for it. For those applicants who don't make the cut, take the sting out by offering to give them a copy of the credit report you ran so they get something for their money. 

Good luck and do share your experience with the community!