E-Renter News

Deciding which tenant is the right fit for your vacant rental property doesn’t have to be a difficult task. Your specific requirements will depend on your situation and the local rent market. But not matter how landlords’ requirements differ, the one thing all can agree on is that a thorough tenant screening check is a must for every tenant applicant. It’s just too risky to approve a tenant to sign your lease and live in your rental property unless you have thoroughly screened their criminal background and credit history.

Here’s what to expect from a basic tenant screening report:

Social Security Number and Address Confirmation: Using the Social Security Number provided, the applicant’s name and provided date of birth are compared with the records for that SSN. Alias names associated with that SSN will also be reported. Then, an address history is run, for insight into which court jurisdictions need to be researched for criminal records. With the SSN, alias names, and address report, all the information to run a criminal record check is on hand.

Evictions Reports: Standard credit reports do not include past evictions. Eviction reports provide details on any applicant court appearances, case numbers, dates, and the defendant’s name and address.

Bankruptcies, Liens & Judgments: Information about tax liens, small claims and civil action judgments as well as nationwide bankruptcy filings is provided, including court descriptions, case numbers, dates, amounts, and name and address.

Criminal Background: National court databases are checked, based on the tenant applicant’s name and date of birth. Data provided usually includes offense, date, courthouse, sentence, case number, and aliases. Not all states or all counties provide criminal database information.

Sex Offender Status: All 50 states require sex offender registration. From these registries, the report will include name, date of birth, SSN, physical descriptions, address, and offense type, date, and disposition. This information varies by state.

OFAC/Patriot Act Report: This report includes information from several government agencies to alert to an individual who appears on any terrorist watch lists or who is listed as an international narcotics trafficker.

Whether your new tenant applicant is a landlord’s dream or has a poor credit rating, lied about previous addresses, or hides a criminal past—you’ll want to know before you sign a lease! Tenant screening is your best choice if you want peace of mind about a new tenant.

1. Reducing Crime: Landlords keep neighborhoods safer when they install exterior lighting, keep shrubs and trees trimmed neatly, and provide their tenants excellent locks. By keeping a close eye on their properties and encouraging tenants to do the same, landlords help discourage criminals from gathering in and around their properties. Keeping rental property clean, neat, and in good condition keeps criminals away, too.
2. Providing Jobs: By patronizing local stores and service providers like attorneys, property management companies, landscaping and cleaning companies and contractors, landlords help keep local economies stronger.
3. Assisting Other Landlords: Experienced landlords are often mentors for newer landlords, helping keep another successful business in place.
4. Being Professional Business Owners: By demonstrating good business practices, landlords can be examples for the community. Good landlords make every rental property owner look better; conversely, bad landlords make them all look worse.
5. Improving Quality of Life: By taking good care of their rental property, landlords contribute to an improved quality of life for their tenants and the neighborhood, too. Pride of ownership shows—and it’s contagious!
6. Contributing to Tenants’ and Children’s Well-Being: Safe and attractive housing helps both tenants and their children feel good about where they live. This leads to improvements in other areas of life, like school attendance, grades, lower crime, and even self-esteem.
7. Providing Safe Housing: By law and by doing the right thing, landlords must make the housing they lease safe and maintained. Nobody deserves to live in housing that contains fire hazards or safety problems.
8. Providing Affordable Housing Alternatives: Millions of Americans are having economic difficulties. Landlords help people live well for less money than it takes to own a home.
9. Providing Accessible Housing: For elderly, disabled and other special-needs people, landlords are often the reason they are able to live on their own rather than in group housing. Providing rental housing that is safe and accessible is so important to millions of people.
10. Keeping Families Together: Affordable housing often makes the difference between families staying together and splitting up, or even living on the street. And, landlords who allow pets do a great service by keeping them with their families, rather than in shelters.

A new ruling will lock would-be homeowners out of new mortgages--and keep them in rental housing--for years to come. This week, mortgage giant Fannie Mae enacted a new measure, making homeowners who intentionally default on their mortgages ineligible for a new Fannie Mae-backed loan for 7 years after they abandon their property.

This ruling could keep tens of thousands of former homeowners in the rental market for the next decade. Since Freddie Mae is the nation's largest mortgage backer, would-be homebuyers who default now could face great difficulty obtaining financing in the future.

Fannie Mae’s executive vice president, Terence Edwards, said that the new lockout policy “is meant to deter the disturbing trend toward strategic defaulting,” which is “bad for borrowers and bad for communities.” Fannie Mae intends the penalty to discourage borrowers from walking away from their homes and mortgages. Those who stay in their homes and cooperate with mortgage companies could be considered for loan modifications, short sales, or other alternatives to foreclosure.

Borrowers who default and walk away while they have the capacity to pay their mortgages, or who do not complete a workout alternative in good faith, are affected by the ruling. Those with “extenuating circumstances” may be eligible for new loans in two to three years.

Fannie Mae will also be pursuing legal means to recoup mortgage debt from borrowers who strategically default on their loans.

Fannie Mae and sister company Freddie Mac Federal were taken over by the U.S. government in September of 2008 as a result of huge losses and plunging investor confidence.

Freddie Mac currently bans walk-away mortgage holders from receiving new Freddie-Mac backed loans for five years.

Martin is a landlord who’s in way over his head. It happened so quickly, he didn’t see it coming—and now he’s committed to meeting with three of his tenants to try and sort out an escalating game of finger pointing.

Here’s the background: When Betsy, a new tenant, moved into the downstairs unit of his building, she immediately began complaining. First, it was the dishwasher; then, the refrigerator. After appeasing her and replacing both appliances, Martin found himself fielding phone calls at all hours to report her latest grievance: the tenant upstairs, Charlie.

According to Betsy, Charlie is too loud. “He stomps on the floor and plays his music at the highest possible volume.” Martin had a talk with Charlie, who insisted he never wore his shoes in the house and that his music is at a perfectly reasonable volume.

Martin reported this back to Betsy, who insisted he “do something” about Charlie. What Martin did was to ask a third tenant, Abby, about the other two. Abby is a long-term tenant who causes no problems to Martin. Abby said that Charlie's music might be a little loud from time to time, but that Betsy is overreacting.

Betsy’s next move was to call the police when Charlie had friends over for dinner. “His dishwasher is too loud, too,” she said. Martin didn’t know how next to proceed, so he asked all three tenants to meet with him in order to “straighten the whole mess out.”

Why is this a bad idea?

1. It demonstrates to tenants that if they complain enough, they will get what they want—attention. It could be that Betsy is just a complainer and likes to push people around and get her way.
2. The meeting could spiral out of control. Martin is not a trained mediator, and has no experience in de-escalation tactics. He is not well-equipped to handle a three-way complaint session.
3. It’s not Martin’s role to play peacemaker. He is the landlord and his responsibility is limited to making sure tenants uphold the lease agreement.

Most everyone who’s ever lived in multi-family housing knows that you can hear your neighbors, and vice versa. But that’s not the landlord’s problem. If you have tenants like Betsy and Charlie, resist the urge to help them get along; they need to work out their own issues.

The BP Deepwater Horizon oil spill in the Gulf of Mexico continues to affect businesses and residents in Louisiana, Mississippi, Alabama, and Florida. Unceasing media attention is keeping vacationers from the white-sand beaches and vacation towns dotted along the coast.

Would-be visitors to gulf coast beaches are cancelling reservations at vacation homes—and rental home owners are losing income. Despite the fact that most beaches have been minimally affected by the spilled oil, bookings for some rentals is down 30%, 40%, even 60% from last year.

While lobbyists discuss economic and tax relief packages for local business owners, and vacation rental owners are identified as “a specific group” that would be protected and allowed to file claims with BP, beach front communities and vacation rental owners are working hard to convince visitors to follow though on their vacations.

Here are some tips to keep visitors coming when a crisis of any type hits near your vacation rental:

• Share information. For example, Gulf Coast rental home owners are promoting the Fishing & Seafood hotline, which offers information for guests who might be hesitant about eating Gulf seafood or fishing in the Gulf.
• Communicate beyond typical levels: Reassure guests who’ve already booked that you’ll do whatever it takes to take care of them. Listen carefully to concerns and address each one. Be very patient with guests who are worried about their vacation, and give them plenty of time to make up their minds about keeping their reservations.
• Be transparent: It’s no good to pretend there is no problem. But if it’s something most folks can deal with, then telling the truth up front won’t hurt the situation. Gulf coast vacation home owners have been posting photos of the beach on their websites to prove there are no tarballs washing up.
• Let others vouch for you. Encourage recent guests to post their photos and write reviews of their visit. Recent updates will help booked guests feel comfortable.
• Don’t discount your prices, but be prepared to offer concessions. What do you or your guests have to lose if you offer a free night with 5 paid nights? Or a refund if the beach closes after your guests arrive? You could even throw in a dinner certificate to a local restaurant to entice guests to honor their reservation—whatever it takes, it will pay off in the end.

Natural disasters affect ecosystems as well as individual businesses’ financial situations. If negative media attention is hurting your vacation rental business, it’s up to you to increase your marketing efforts, communicate thoroughly and honestly, and keep your guests happy. Your hard work will keep your income from declining.

As most landlords know, citizens are protected under the Fair Housing Act (FHA) from housing discrimination (including rental housing) based on race, color, national origina, sex, family status, religion, or disability.

But if a senior apartment complex could no longer choose to not rent to families with young children, it would not be serving the needs of senior citizens. So in 1988, when Congress amended the FHA to include family status and disability, the intent to protect seniors’ housing remained.

Rental properties that meet the FHA definition of “housing for older persons” is exempt from the family status requirements, providing:

• HUD determines the dwelling is specifically designed for and occupied by elderly persons under a Federal, State or local government program, or
• It is occupied solely by persons who are age 62 or older, or
• It houses at least one person aged 55 or older in at least 80% of the occupied units and adheres to a policy that demonstrates intent to house persons who are 55 or older.

If your rental property satisfies the definition above, you can legally exclude families with children. You must, of course, follow the remaining guidelines of the Fair Housing Act.

A landlord’s nightmare could be happening to you right now, if you have vacant rental properties. Imagine checking on a vacant apartment, condo, or single family home you own and finding people living there. And when you try to kick them out, they announce they are the new owners.

Of course, they can’t do that, right? All you have to do is call the police, right? Well, yes and no. Squatting in vacant properties is becoming a huge problem—and police can’t always take care of it for you.

In Seattle, a woman, man and her children moved into a $3.2 million foreclosed mansion. Neighbors thought they had purchased the home, but it turned out they just moved in and changed the locks. No purchase, no lease, no rent or mortgage payments. Still, she claimed she “owned” the house.

In Florida, a landlord discovered someone had moved into his vacant rental home, changed the locks, and had utilities accounts set up. The squatter claimed he had rights to the home because it was abandoned.

Whether by phony companies set up to challenge mortgages or claims of adverse possession, thousands of squatters are getting away with their crimes across the country.

Adverse possession is a leftover from medieval England, when ownership of abandoned cottages or farmland was given to people who promised to live there and pay the taxes. In Florida, over 200 adverse possession cases are pending in Broward and Palm Beach counties alone.

Other scammers claim title to a piece of property, then challenge the existing mortgage in hopes that banks will be unable to fight—and will go away. The Seattle squatter used this tactic: after the real estate agent representing the property called the police, she produced a form claiming she owned the house. The actual owner, a mortgage company, has started eviction procedures, but that can take months.

Police tend to avoid squatter cases because they are civil matters, and usually involve numerous documents asserting ownership. A few days later, however, the woman in the Seattle mansion was arrested for criminal trespass; same for the man in the Florida case.

The lesson here is to keep close watch on your vacant rental properties. If you live a distance from them, hire a property manager or even a security company to keep an eye on them for you.

If you discover squatters, do not threaten them with physical harm. Keep your cool. Take a witness with you. And call the police.

In Chicago, new downtown apartment buildings are filling up fast. These luxury accommodations, with amenities like spas and state-of-the-art workout facilities—plus the personal trainers to go with them, are drawing affluent tenants and are expected to be 90% occupied within 12 to 15 months.

In San Diego, apartment vacancy rates are finally turning around, and rents should rise again with the next 12 months.

Why the good signs of recovery in these two markets?

• Home buyers came out of the woodwork during the federal government’s first time homebuyer’s tax credit program. But that ended in April, so one incentive to buy rather than rent is gone.
• Home prices have not started rising again in many markets, so potential home buyers may be scared that their home or condo will lose value if they buy now. In Chicago, condo and town house median prices have dropped almost 10% since January.
• Borrowing requirements have tightened up to the point where some potential home buyers aren’t qualifying.
• Renters who prefer flexibility are biding their time, and turning to rental housing until the home market stabilizes again. They’ve seen their friends become stuck in condos they can’t sell, while they have the freedom to move where they want and upgrade when they want.
• People who may have spent the last six months or year looking for work are relocating to land jobs—so they’re more likely to rent until they put down roots in their new communities.
• Tighter supplies will lead to fewer vacancies, just when the job market will begin its recovery. In San Diego, the military and biotech industries are strong, which is leading to more demand.

Experts expect free rent, lower security deposits, and incentive give-aways like big-screen TVs to start going away—all good news for rental housing investors!

Most landlords know the basics of the Fair Housing Act, concerning tenants with physical or mental disabilities. In short, landlords may not discriminate against these tenants, and must accommodate reasonable requests for modifications due to their medical condition.

These requests must not pose an undue financial burden on the landlords and if requested, the tenant must be able to verify that the accommodation is deemed necessary by a medical professional.

Here are two more unusual examples we’ve heard of recently, where landlords originally refused their tenants’ requests.

1. Marcie’s tenant has a bad back; his doctor recommended he sleep on a waterbed. However, Marcie doesn’t allow waterbeds in her apartment building. She’s concerned about weight and leaking. She denied the tenant's request to override her waterbed rule.

2. George’s tenant has a rare skin condition; her dermatologist has prescribed a hot-water treatment. Unfortunately, the existing hot water heater does not do a sufficient job and the tenant can’t get enough hot water. She requested that George install an additional hot-water device. George refused, saying he was not required to make an accommodation in this case.

Who’s correct in these instances? In both cases, the tenants are. Each has a right to the requested accommodations. In Marcie’s case, she must allow the tenant to install a waterbed unless it poses an undue financial burden on her business. She may request a note from the tenant’s physician, and could be eligible to increase his security deposit—she should check her state’s guidelines.

In George’s case, the tenant is entitled to her extra water heater—but she must pay for the modification to the unit and to return the unit to its original condition.

We heard from a landlord whose long-term tenant plans on traveling all summer. He wants to hire a house sitter to care for his dog. How should the landlord handle this situation?

While it might seem easier for everyone involved to just let the house sitter move in, it’s not the most prudent plan. Experienced landlords know that when it comes to tenants and rental property, anything can happen!

The short answer is the house sitter should be made a sub letter on the lease, if that’s allowed in your rental property, or should be treated like any tenant applicant, with an application and lease under his or her name. This includes any tenant background screening you normally perform, as well.

Here’s why:

• The tenant might never come back. This is a bit of an extreme scenario, but landlords know anything can happen. In this case, the landlord has a new tenant—with a dog—who has not been properly qualified and has not signed a lease. The landlord might not even have the house sitter’s name, place of work, or any contact information. who is responsible for the rent when the tenant has left and the house sitter is under no obligation to pay? And, what happens when the rent payment never arrives? It’s a nightmare situation that should be avoided.
• The tenant may decide to allow the house sitter to stay after he comes back. As the previous case, you then have a tenant you know nothing about.
• While the tenant is gone, you have a person who is under no obligation to follow your rules living in your property. Who is responsible for any damages due to the house sitter’s neglect or behavior? What about the friends of the house sitter that are coming and going on your property?
• As landlord, you—not your tenants—have the right to decide who lives in your rental property. But you must be sure that your lease states this clearly. If not, add it as an additional clause under “guests.”

It’s a good idea to have lease applications, leases, background checks, and full contact information on everyone who lives in your rental property for long periods of time. And for most landlords, “long” means longer than two weeks. Guests staying longer than that have usually moved in.