The Ins and Outs of Tenant Qualification



Last week, we went over 5 main components of a tenant rental cycle. Today, we will go into a little more depth regarding the first component, tenant qualification. We will also include some more links to our resources about this component of the rental cycle.

Tenant qualification begins with the first inbound phone call from a prospective renter. Although this is usually a quick call, much can be assessed during the call and asking the right questions in the right way can save you time and spare you grief.

On the first call from a prospective tenant, you are mainly attempting to quickly survey these three important factors:

1.    Rental History
2.    Income and Job Security
3.    Credit History

It is best to ask the prospect in a series of questions. How you ask each question is as important as what you are asking.

For rental history, you could ask “How is your rental history? “. However if you phrase it like this, you will probably get a lot of general responses like “ok” or “good”.

We have found it much more effective to ask the rental history question in a way like this: “When we call your previous landlords, will we find a record of any late payments in the last 3 years”? Asking the question like this makes the person be specific with you and it also shows the prospective tenants that we will be checking on them (in case they have any thoughts BS’ing us).

Once you get an answer for this question you can then evaluate the response. For a good explanation of what you should be considering, you can refer to this video http://bit.ly/1wwgboj.
The same questioning approach applies to the Income and Job Security question. You may be tempted to say something like “Do you have a job and do you make 2 ½ times the rent price“? You will find that if you ask the question this way you will get a bunch of “yep” or “uh-huh” responses.

The best way to phrase the Income and Job Security question is something like the following: “Can you tell me how long each person on the lease has been with the same employer and can you ballpark the combined gross amount that we will see on the W2’s of all of the tenants that will be on the lease?”

It may take a few seconds for the prospect to do the math, but this will help you get the most accurate information you can and also show the tenants that you will be checking on this as well. We go over what is acceptable regarding income at http://bit.ly/1oRMGxx.

If you have proceeded as suggested above and at this point in the conversation the person starts to object your line or the detail of our questioning, they probably are hiding something and would be wasting your time if we took things further.

If we get to the next step, the credit question is asked in a similar manner. If you ask a general question like “How’s your credit” you will get a lot of “good” or “ok” responses.

It is better to phrase the credit question like “When we run your credit report, will we see that you are paying on time on a car or credit card and that there are no late payments or outstanding debts?” You will find that phrasing the question like this will engage the prospect and they will be more likely to giving you the truth and the details of their situation.

The credit report is the most complex and subjective piece of the tenant qualifying triple, but we give you an analysis trick here http://bit.ly/1vJEGiP.

You will find that if you handle the tenant qualifying stage correctly and start on that first phone call in, you will get the best information you need to analyze the prospective tenant’s worth. If you follow our advice, you will save yourself a great deal of time and stave off potential problems by ensuring that you are showing and renting your property to the right people.   
Read more

Check out our New Podcast

Check out our new podcast. Our monthly podcast will have information about how to successfully manage rental properties.  The pod will cite actual real life examples of situations that landlords will encounter as well as solutions.

On our introductory show, will look in detail at how to screen your tenant for your Phoenix rental home.  We uncover a common oversight regarding tenant credit analysis and address possible security deposit options.  


Read more

Develop a Consistent System to Make Your Landlord Life Easier

At RPM West Valley, we manage hundreds of rental properties. We have a great staff and advanced software systems that help us do this. However, perhaps what has helped the most is that we have implemented consistent systems and procedures regarding most management aspects we tackle.
We have a defined and detailed process for items like leasing, tenant behavior and maintenance. Because we have done this, most management ambiguity is answered we are set up to function quickly and efficiently. As an owner, having a consistent system and process is something you can do whether you have 1 or 100 properties.
Developing a repeatable process will take some time to start off with. However, once you have the process in place, you will find that the whole management process will be quicker, easier and less variable.
Let’s outline some of the items in the cycle of the rental process to get you started with your system. We have included some links to some of our material and recommendations that should help.

1. Tenant Qualification- Being consistent and correct on this will give you a good start on having a successful tenant experience. http://bit.ly/ZD31Kd 

2. Move In – Making sure this is done correctly will save you a possible headache down the line. http://bit.ly/1rYqfBd
3. Maintenance- Have a consistent policy at all properties regarding as is items, items you will fix, items that the tenant will be held responsible for and emergency items. Make sure your vendors are skilled, responsive and comfortable with tenants. Institute a process with your vendors regarding tenant communication, response time and payment.

4. Move Out – Along the move-in a consistent process here will save you when it comes to security deposit disputes. http://bit.ly/1r267Pf
5. Turnover – Being consistent with this at all of your properties will not only save you time but also allow you to forecast expenses with more accuracy.  http://bit.ly/1Dthojv
Read more

Landlords Beware of an Eviction in Buckeye

As a Property Manager we have helped owners facilitate evictions for many years and thought we had seen it all; until that is we had to process an eviction for a home in Buckeye at the White Tank Justice Courts! BEWARE!!!

In all of the evictions we have processed over the years this is the first for us! We worked hand in hand with the property owner to complete an eviction with a problematic habitual late payer. All of the necessary steps were taken, the letter of law followed to evict the tenant out when September 2014 rent was not paid. The eviction proceedings were filed September 17th and the pretrial was set for September 23, 2014. The tenant appeared in court at the pretrial on September 23rd and was in dispute of the amount owed, not that the September 2014 rent was not paid. It is not uncommon, that if the tenant does not plead guilty a trial date will be set. In this case our trial date was set for September 30, at that time the tenant produced a copy an uncleared payment that she claimed was sent in to to pay down the past due balance, again admitting that she had not paid September rent. The judge granted the tenant a 7 day continuous for tenant to provide the additional payment was accepted and cashed. All parties returned to court on October 7th, at which time the tenant produced fraudulent proof that the payment was cashed. The judge gave the owner two options: take another 7 day continuous to dispute the payment was cashed OR accept a dramatically reduced judgment. We opted for the judgment as the continuous would have basically given the tenant the month of October in additional to September before a lock out could have been completed. It is unfortunate the judge did not see both sides of the case, be it the home owner paying the mortgage as they were drawn in by the tenants lies, sad, sob story and ultimate fraud. This again shows the importance of screening your tenants!!

Follow @rpmwvphoenix

Read more

Rentals Pet Policy

You have now completed all repairs on your home to get it rent ready and set the price. As you think about the funds you just spent getting your home into rent ready condition the thought of a potential pet in your home sends shivers down your spine. As a Phoenix Property Manager, we know the thought of allowing pets in your home can be scary however about 75% of all renters have at least one or more pet. Most of those pet owners are found to have cats or dogs with only a very small number having fish, reptiles or other types of pets. Most pet owners understand they are required to put down an additional pet deposit, the most common deposit is about a $250 / $350 in addition to the security deposit. Apartments may charge a pet rent however that is uncommon in a single family home. We do understand that it can be worrisome to allow pet in your home but if you’re not allowing pets, you’re turning away a large subset of renters. Limiting the number of pets, pet types and requiring a professional carpet cleaning receipt every so often are a good way to set your mind at ease when listing your property as pet friendly. WITH PET OWNERSHIP TRENDING UP, Having a pet friendly property is now, in addition to pricing and condition could put your property at a competitive advantage over those that are not pet friendly. Follow @rpmwvphoenix

Read more