#1 BEST SCREENING TOOL! – “HOUSEKEEPING CHECK”

Managing tenants effectively builds our wealth and begins with screening tenants properly when they submit an application. Most landlords use applications for a fee. My objective here is to give you a smorgasbord of screening tips allowing you to select items of your choice to work into your system.

Application: first of all, make sure your application is proper and legal and does not violate any fair housing laws or local laws. On the back, include a section with a few lines allowing the applicant a place to write comments. Also include a small section of text briefly detailing your qualifying standards and permission for the landlord to check all sources in evaluating their application for tenancy. Also include a phrase stating an “false or incomplete application” is a reason to be disqualified or not approved. Their signature line is below this small bit of text.

The first section on the application asks for their full real name, date of birth, social security number, and phone numbers to contact the applicant. Ask for several

phone numbers – home, work, cell, pager, etc. After attending a class by an enforcement officer of the Equal Housing Commission, I learned to my surprise it is permissible to ask for “date of birth” for identification purposes; although you can not ask the applicant their age -baffling, but true.

Rental History:

The next section deals with rental history for the last five years, including addresses, owner / manager contact information, and dates of residency along with reason(s) for moving.

Income:

This next section demonstrates the applicant’s ability to afford and pay the rent. Information about their employer, wages, and other source(s) of income are entered here.

Incidental but powerful information section falls below the income section. It includes “What kind of animals do you have?” Do NOT ask “Do you have pets?”. This phrase almost automatically implies the landlord does not accept animals and your applicant will almost always answer this question with a “No”. The first question implies it is okay to have animals.

“What is the name of your attorney?” Having this question on your application is powerful. Many leave it blank (which is great). Those who fill it in quickly might ring a bell with you. It might be one of those attorneys on TV advertising “Help me find somebody to sue.”

“How many evictions have been filed on You?” It seems like the applicant has trouble reading the question properly. Even when confronted with false information on the application, the Applicant who answered this question ZERO or None will respond “I have never been evicted!”.

Fortunately, that is not the question. Read the question again, if you need to. Again, this question puts another bullet in your gun to protect you. Load up on some ammo. Household composition is the next section. You can not use the word “family” or “children”. Think of those words as lighting fuses to cause you trouble. If you are doing it, STOP IT NOW. Substitute the phrase “How many people are in your household?” If they answer and respond about children and spouses, you are in good shape. They volunteered and offered the information. You did not ask it. Yes, it does seem a play on words; however, the fair housing shoppers (investigators) looking for landlords who violate the federal laws can call and record your phone conversation. Be aware.

EMERGENCY CONTACTS:

this section includes the phrase “including nonpayment of rent”. This is an emergency. I also include this phrase right above the emergency contact information section in our rental agreement. This is powerful and allows you to contact these folks if they get behind on their rent. Yes, your tenant might throw a fit the first time you contact them, but you remind them they instructed you to do

so on both their application and rental agreement. After perhaps some embarrassment, I have found this to be a powerful tenant training tool. They will make sure rent is paid on time to prevent their emergency contacts from being

notified. I recall one tenant in particular where the mother would go off and attack and slap her son over his irresponsible actions. We need more moms like her.

TURNING IN THE APPLICATION:

this is a very critical part of the process. Remember, you handed them an application and instructed them in a calm voice to fill out the application completely. If you have an office, make a copy of their valid photo ID. If you are doing this at the house, use a digital camera and photograph the applicant and their valid photo ID. Many people are victims of identity theft and you do not want to

get a trash bag posing as a responsible person. When the application is handed back to you, quickly review the top section to make sure you can read their name, date of birth, social security number, and the phone numbers to contact them.

SKIP EVERYTHING ELSE & FLIP IT OVER, MAKE SURE THEY SIGNED IT.

Before parting ways with the applicant, we have encouraged a new aggressive approach to prevent the loss good applicants. In the past, we heard the phrase “beware of the applicant waiving cash, odds are, the cash they are waving under your nose belongs to their current landlord.” All landlords have worked up applications, called the applicant to let them know they are approved only to discover they have already rented another home. OUCH!

Back to ground zero. Now, when an application is turned in, we encourage them to put a DEPOSIT TO HOLD on the unit. It must be close or exceed the normal security deposit. The language on this form states the applicant puts up X dollars

to hold this property pending the approval of their application. If they are approved, these funds will be used to start their tenancy. If they are not approved, the funds will be returned to them within 30 days. If they wish to receive their money sooner, we charge an $85.00 processing fee.

If the applicant is approved and refuses to rent the unit, they will forfeit the entire deposit to hold. The objective here is to prevent a good tenant from continuing their search for a rental unit while at the same time providing stiff consequences to the dirt bag trying to get one over on us by wasting our time.

24 HOURS notice to perform when approved.

How many good tenants have you lost because an applicant was approved, you made arrangements to do the rental agreement on Friday and your approved applicant becomes a no show along with the inability to contact them by phone? Puzzled and frustrated, do you give them a couple of days? Do you rent to your next qualified applicant only to have the original approved applicant reappear

and challenge your process. You can prevent this headache with a simple 24 hours to perform rule. Remember the small print on the back side of your application

stating that once approved, the landlord will use the phone numbers listed on the application to contact the applicant and inform them they are approved?

This Starts the 24 hour Rule. Period.

If no answer or voice mail, you may keep calling, but I sure would start working on my next application. Shoot straight with the new applicant. Tell them this other person is in front of them and they have till 3pm today to perform or your newest applicant can be in the driver seat.

Do not worry about seeing blank spaces in the application – THIS IS GOOD AND POWERFUL FOR YOU! Before you start to “process” or work up their application, immediately make a copy of their application. Mark the original application “ORIGINAL” and do not mark on it anywhere. Stamp or mark “COPY” on your work copy. Do nothing to the original and safeguard it as it may turn into evidence to support your decision later. Staple it below your work copy.

Work thru your application process using the work copy. You can write and fill in the blanks on the fields of information they failed to fill.

I get more worried about the 100% completely filled out application vs. an incomplete application. You can telephone the applicant and fill in the blanks on your WORK COPY, and not their original. (Remember, an incomplete application is a reason to not be approved.) There are two types of applicants who leave

blanks on their apps. The dirt bag professional tenant who is trying to get over on you, and the plain good old “a little short upstairs” person who doesn’t know any better. I will go out of my way to help qualify a good old stupid person. If you help the dirt bag professional tenant fill in all the blanks on their original application, you are just making it more difficult for yourself to disqualify them; in fact, you are helping them to qualify.

NEVER DISQUALIFY an Applicant:

Always present a challenge or hurdle to the applicant that prevents you, the application processor, from moving forward. Put the ball in their court. The applicant needs to take action to correct the hurdle. You project an attitude of helping them by explaining to them how they can work through this obstacle. Many tall orders requiring work on a dirt bag applicant will cause them to tuck their tail and run away allowing you the liability free position of not having “disqualified a person for housing”. Avoid disqualifying an applicant over the phone or in person. My old program to protect the privacy of the applicant,

required the applicant to send a self addressed stamped envelope to receive a written explanation of the cause for not being approved. Today, we avoid disqualifying applicants.

For example, let’s say a dirt bag applicant has no chance – ZERO of renting a unit from you for reasons 1,2,3. We’ll telephone them explaining we need their help

in working up their application. “While working up your application, we discovered district court case number blah, blah, blah, where Mountain View Apts filed an eviction on you on such and such date.”

Your applicant may respond “That is not me”.

We will acknowledge we understand; however, the court records show this item against them and offer to give them the case number again to HELP THEM. Inform them as soon as they get it straightened out at the courthouse, bring the court paper to us and we can proceed with their application.

Ask them when they can get this done. Always present a challenging hurdle for them to straighten out in order to proceed with their application.

Present the challenge as their problem THEY need to correct and You are HELPING them.

Another example could be a bad landlord reference. Do not go into details, but explain there is a problem with their rental history and they need a letter explaining

their tenancy from each of the three landlords listed.

Another frequent flyer tactic is trying to hide previous addresses. It is surprising to see an applicant fill out an application listing their addresses for the last five years. Also amusing is noting the top of the application states

“ONLY CLEAN AND RESPONSIBLE PEOPLE WHO PAY RENT ON TIME MAY APPLY, with a valid Photo ID.”

AFTER submitting their application, the Applicant is asked to produce a photo ID and amazingly another address is listed on their ID. Do NOT confront the applicant

at this time. This is another bullet to put in your gun. On occasion, it seems some professional tenants just seem to self-destruct. If they have given you a bunch of BS on their previous addresses, you may ask them again, based on the information from their original app… So you lived at 123 Main St. for the last 3 years? If they

reply Yes, and you already have discovered another address during the same time period, then you can ask them about the newly discovered address. At this time, they will start back peddling and see you are for real and serious about working up their application. They will move on and search for a dumb landlord. You may choose to slow walk the conversation on the telephone making a big deal of the first issue asking for their help to get them qualified, then expose the 2nd hurdle, the 3rd, and so on. Most of these folks then just evaporate.

Phantom Owner / Manager:

Have you received applications where you suspect their current landlord is a relative or friend at work? If your gut feels this, here is a good method to expose the dirt bag. Call them and ask “How much is the rent for the available unit?” If you don’t expose yourself on Caller ID, this question will put the phantom off guard and they will usually reply “ I do not rent houses or apartments!”… Ah,

hah, now the cat is out of the bag! This would be an excellent candidate for False Information on an application.

BEST Screening tool for Landlords: Housekeeping Check

After working up their application on paper and on the phone – get out of the office! Ride by and see where they live. If it is ugly, tall grass, cars in the yard, no need to stop. If it looks okay from the street, then stop and knock on the door.

You MUST verify they actually live in this pretty home. I explain my company sent me over and it is one of the final steps in the application process.

This almost final step is “Our way of verifying you live here and to see how you take care of your home.” If you feel safe enough to eat a bologna sandwich then it

looks like you might have found a good tenant. Many times I have stopped by and knocked on the door only to discover the applicant does not live there but is a relative or friend who asked for a favor.

PREVIOUS LANDLORD is the most powerful reference, NOT the current landlord. Do not burden them with 26 or 32 questions. Tell them you have 4 easy questions. Remember, this tenant is gone! You are taking up their time.

Ask These 4 Simple Questions:

1.) Did they pay their rent on time?

2.) Did you receive any complaints?

3.) Did they damage your property?

4.) WOULD YOU RENT TO THEM AGAIN?

CURRENT LANDLORD – be careful here. Think about it for a moment. Have you ever had a bad tenant and you received a phone call from maybe their new landlord? What did you really tell them? Did you say they were average or okay, or they were great and you hate to lose them.

CREDIT REPORTS: it seems 90%+ of all applicants have no credit or bad credit. How can we find good tenants? What remains is the ugliest of the ugly. How can we make lemonade out of lemons. There is no need to stand by and

hope for A1 credit. You will have extended vacancies. You must make adjustments. If you do not have your own Trans Union or Experian Account,

here is a much needed and fantastic cheap resource for you to retrieve criminal backgrounds and Trans Union Credit Reports

www.CheapCreditReportsNOW.com allows you to retrieve criminal history and a Trans Union credit report for Only $20. There is no monthly fee, no subscription and there is no application fee for the landlord. It’s slick as snot and cheap too.

Expect bad and poor credit. How can they get qualified. The answer is compensating factors.

Here are some solutions.

1.) Use the phrase, “Bad Credit will not prevent you from renting a home.” (double deposit, pay rent in advance, co-signor)

2.) BUY DOWN their rent to qualify for their income. For example, a house rents for $800 month. For $2,500 today, your applicant can buy down their rent to $600 for 12 months.

3) Encourage an Option to Buy: get educated on it first in your state and jurisdiction. Many landlords using options improperly are jackpotting themselves.

4.) Ask for a FULL YEAR RENT paid in advance. Just like an aggressive investor, train yourself to ask this question… it costs you nothing, and some applicants have resources to pull this off. We sometimes focus on income to insure their ability to pay rent. I missed the boat and lost a good tenant to one of my business friends because he asked this question. In other words, we passed on this applicant because they did not have the income and my competition asked this question and the applicant paid a full year of rent in advance when they signed their lease. Who needs a job or income if they can do this? It costs us nothing to ask the question, we just may feel uncomfortable or feel it is useless. Again, it costs you nothing to ask the question.

PREVENTING TENANT TURNOVERS is your #1 method of preventing vacancies. Do something special and create loyalty from your tenants. Financial incentives and benefits to your tenants that cost you zero are home runs.

Keeping good tenants in units sure would eliminate all of the hoops and

hurdles discussed earlier.

If they live out of town, you can actually drive down there street in any town almost anywhere using Google Maps “Street View.”

 

Mike Butler

 

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