Important Decisions Demand Accurate Information

Be Cautious about That First Meeting

Meeting with a prospective tenant is exciting, but it can also be very overwhelming. Not only do you have to review their referrals, credit history and past rental history, but you have to interview them to ensure they are a good fit for your property. Even a seemingly perfect tenant can turn into a nightmare situation, which is why it is important to exercise an amount of caution when meeting a prospective tenant for the first time.

Pets

A tenant may say they do not have a pet, but in reality they could have a cat, bird or other small animal they plan on sneaking into the new apartment. You can verify their no-pet status by contacting past landlords and inquiring about the condition of the property when the tenant left as well as if there were any complaints in regards to smells or noises that came from in-house pets.

How They Speak of their Current Landlord

Tenant and landlord suits are a common occurrence in civil court. Often tenants feel violated or are unhappy with their property and take it out on their landlord. Therefore, when you meet with a prospective tenant ask them why they are moving and their thoughts about a current landlord. If they have had multiple rentals in the past, ask them why they left and again, their feelings toward their landlords. Tenants who are overly negative can be difficult and you might just find yourself facing a lawsuit over a simple issue from a testy tenant if you go ahead and rent to them.

As a landlord, you have a little leeway when it comes to picking and choosing your tenants. Therefore, do your due diligence and exercise a little caution during that initial meeting and make sure the tenant you choose is the right fit for you and your property.

The housing market impacts homeowners, but how does it impact you and your rental properties? Unfortunately, there is not a clean cut answer simply because the impact on your properties depends on how the housing market is doing.

Sellers’ Market: When Housing Prices are Up

When housing prices are up, sellers have the advantage. They can get the most money for their property – if it sells. During this time, there are many people who want houses, but most of them do not have the credit or ability to buy a house at its prime rate. Therefore, these parties turn to rentals. This means you will have more individuals interested in your property and thus less worry about your properties sitting vacant. This also means that you will be able to increase the market rent on your property to get a higher rate, which is a good return for you.

Buyer’s Market: When Housing Prices are Down

When the market turns in the opposite direction and housing prices go down, more buyers enter the market and take advantage of the low prices. That means you will have less interested tenants and, in some cases, tenants putting in their notices in order to move out and into a purchased home. Unfortunately, if you have to rent any vacant properties during this time, your market rent will be considerably lower than it is during a Seller’s Market phase.

The housing market may not impact you in the same way it does those buying/selling, but it impacts your tenant availability, rental rates and overall profits. Therefore, just like any homeowner, you need to be conscious of how the market is doing and prepare for how it will affect you.

Advertising Your Properties: The “Why and How” that Every Tenant Should Consider

There are numerous outlets for property owners when it comes to advertising their available rentals. The best methods for advertising will depend on multiple factors such as the type of property, location and how fast the landlord needs to rent it. Regardless of the method, a landlord will benefit greatly from advertising.

Why Advertise?

The biggest advantage to advertising a rental property is that it will be occupied by tenants sooner than a property not advertised. Since most landlords cannot afford to have their properties remain vacant, advertising and subsequently having renters move in quickly is the most efficient way to get a return on their property investment.

Best Methods for Advertising

Landlords have a few options when it comes to advertising their rental property. While some landlords may use multiple advertising outlets for one property, others may use only one form of advertising to get their property information out there and noticed.  Following are some of the best methods for advertising available property for rent:

“For Rent” Signage – The most common type of advertising used by both large and small landlords is the “For Rent” sign. Since this can be placed on the property itself, it is free advertising that lets anyone walking or driving by know that the property is available. For properties in high traffic areas, this is all a landlord will typically need for their property to get noticed. Properties that are indoors (such as condominiums) or that are located in cul-de-sacs will not benefit from this method as much due to lower foot and automobile traffic.

Newspaper Advertising – Newspaper advertisements are affordable and still remain one of the more common and popular places potential tenants look when seeking a new property. Landlords should look for newspapers that offer online and offline listings to maximize their property’s renting potential.

Professional Services – The least common method is through professional rental and advertising services. These are typically hosted online and the landlord must pay to list their property on the site. Landlords are also responsible for providing the information on the property, photographs and pricing. The service will only list the property itself.

It is more and more common to encounter a bankruptcy filing when screening new applicants for your vacancy. It’s important to know and understand the different types of bankruptcy filings and how they can affect your decision.  Bankruptcy essentially wipes out the debts amassed by an individual or business by offering creditors partial payment through the transfer of assets. There are three types of bankruptcy filings.

Chapter 7 – A widely used form of bankruptcy among business and real estate owners, Chapter 7 deals with the liquidation of assets. For example, if a business files for chapter 7, they must cease operations, sell off their assets (e.g. inventory, land, etc) to pay for part of the debt, and go out of business. If an individual files for Chapter 7, they must also liquidate assets they own such as real estate, automobiles, or recreational merchandise (boats, ATVs, etc).  It is common for landlords to come across chapter 7 filings because individuals who had to sell their home will be looking for a place to rent.

Chapter 11- Usually only seen in the corporate world, Chapter 11 gives a business the opportunity to restructure their debts and reorganize their assets. The business can then start anew as long as it honors the obligations set forth as part of the new structure.

Chapter 13- Another form common among prospective tenants is Chapter 13. This is when an individual must reorganize their finances under direct supervision of the court. The debtor must submit for approval a plan to repay all debts to creditors within three to five years. This can be problematic for landlords because up to %100 of the individual’s income can be used to repay the debts. However, an individual is likely to declare Chapter 13 over Chapter 7 in order to maintain control of their assets such as real estate. Since Chapter 13 offers a court approved time frame to pay back all debts, liquidation of assets is not mandated.

A bankruptcy will affect an individual’s credit report. All debts charged off in the bankruptcy will no longer negatively affect the credit score of the individual. In fact, they will now have an opportunity to build a higher credit score. When reviewing a tenant credit check containing a bankruptcy, it is helpful to look at other pertinent information. For example, how is their financial behavior post bankruptcy? Have they established a better payment record? Are they amassing another number of debts? Knowing as much as you can about bankruptcy and its different forms will help you to be an effective landlord and make well-informed decisions. Remember to call us at 512 285 6078 for any questions regarding your report. Thanks for reading.

Sincerely,

Barret McCormick

Director of Operations

Accurate Credit Bureau