Landord: Keeping Records

Now that you have tenants in your rental property,  the hard part begins.  In this post,  I will discuss the importance of keeping good records by documenting your interactions with your new tenant.

First,  you want to make a copy of (1) lease agreement (2) lease addendum,  if any and (3) any signed documents between you and the tenant. Do not accept cash. Make sure you give the copies to the tenant in a timely fashion.  Next,  store the original documents in a file folder and store them in a fire proof cabinet in a safe location. The last thing you want is for these documents to come up missing or damaged due to water or fire. 

Every so often,  you will get a call from the tenant requesting repairs or to make a complaint.  It might sound minimal,  but take the extra minute to document the call.  Write down the nature of the conversation,  time of the call,  and the plan of action.  You then want to add this to the tenant's s file.  If you have property management software such as Yardi, add it on there.  The documentation may come in handy if you ever need to go to court. 

In addition,  if you accept money orders from the tenant for rent payment,  make sure to make a copy and add to their file. Also,  add  copies of bounced checks,  semi annual unit inspections,  3 day notice to pay or quit,  lease violations,  written warnings and any other documentation you may deem important later down the line. (discuss the items in detail in a later post)

If you ever have to go to court for an eviction due to non payment of rent or behavioral issues dealing with violation of the lease,  you want to show the court that you did your part in notifying the tenant of late rent and a history of violation of the lease. 

In property management,  keeping good documentation and record keeping is key. When organizing your file,  I recommend you create the following tabs in the folder:

1. Lease Agreement and Lease Addendum
2. Unit Inspections
3. Payments/Security Deposit
4. Tenant Correspondence
5. Move In Documentation.  All the documentation you used in the initial application. 

Landlord: The Move In Process

So you bought a house/condominium/apartment complex and are ready to start renting it out to potential residents. Congratulations! Before you do, there are few things you should know in order to save you time and money.

Before taking applications or inquiries about your property, make sure everything within the property is in good working condition. For the basic necessities, a walk through of the place is a must and will give you an idea of the overall condition. Things to check for are, but not limited to; appliances, flooring, painting, electricity, plumbing, boilers, windows and working locks. You want to make sure that all these items are in good working condition before you move someone in. In some cases, you may want to consult with a professional company/vendor to inspect and to make any necessary repairs if needed.

After you and/or a professional company has deemed the property to be in good condition, it is very important that you come up with a selection criteria of things that you will look for when screening the applicant(s). For example, credit score, how much does the person have in collections, prior evictions, have they declared bankruptcy in the past, is their monthly income 2.5 times the rent you are charging, do they owe any other apartment complexes, utility bills in collections and for criminal history misdemeanors/felonies, etc.. It is very important that you do not have criteria that may be deemed discriminatory/offensive. It is highly recommended you check your local fair housing laws to make sure your selection criteria is in compliance.

 

It is very important to screen your applicants before you move them in. This will give you an overall idea of (1) prior rental history (2) have they met their prior financial obligations and (3) criminal history. Again, this will save you a lot of time and money in the future.

 

Next, set up an account with a credit/criminal background company.  I have used a company called National Credit Reporting in the past. It costs around $25 to run the applicant's credit and you can pass these costs on to the applicant. Once the account has been set up, schedule a meeting/interview with several applicants. Having multiple applicants will save you time in case one does not meet your selection criteria.

 

In the meeting, before you check their credit, I recommend you explain to them what your selection criteria is and the steps you will take in processing their application. I would also mention the size of the property, the rent, how long is the lease and how soon can they move in if they qualify. This will eliminate any confusion of the property you are renting.

 

Then, have the applicant turn in an application and sign a background authorization form in order to give you permission to check their credit/criminal background. You can obtain a basic rental application online and a background authorization form from the credit/criminal check company you set up an account with. If you can, it is more efficient that you be able to check the person(s) credit/criminal while you both are present. That way if the person(s) credit does not meet your criteria, you will both not spend any additional unnecessary time on the application. If you have to deny them, send them the denial letter in the mail and make sure you include the reason for their denial. If the credit/criminal does meet your criteria, I then would ask them to turn in three months worth of paystubs, any documentation of monthly income that is dated within the last 120 days (For example social security award, child support, general assistance, etc.), prior year taxes, copies of ID's, social security cards if applicable and have them sign a housing verification authorization form. I would recommend that you check their housing verification for the previous 5 years. You then want to let them know that you will be verifying their housing and that you will be getting back to them within a week or two. If you need additional information/time, you will call them.

 

Once you have run their credit/criminal background, gathered all the documentation and have received the housing verifications, you will have an overall picture of the applicant. You will know whether they met their prior financial obligations, any prior criminal history, amount of monthly income they are receiving and prior housing history.

 

By this time, you should know whether you have approved the applicant to live on your property or not. If you have, I would call them and inform them as soon as you have made that decision. If not, send them a denial letter in the mail.

 

If approved, I would recommend that you notify the applicant that you would need to collect a security deposit within the next 5 business days. This will let you know that (1) they are committed to moving and (2) save you money in case they may want to back out at the last minute. There is a security deposit agreement that you can have them sign that will notify them that they have 3-5 business days to change their mind. If they do not move in/or tell you they are no longer interested, within that amount of time, you will keep their security deposit. I would start by looking online for one.

 

I then would schedule a date for them to move in. I would allocate 1-2 hours for this process. During the move in, this is were you are to be clear what your expectations are of them (Free of excessive noise, pay rent on time, no damaging the property, etc.) and what they should expect from you (repairs, monthly rent, keep property safe of any health/safety hazards, etc.). Here you will have them sign the lease agreement and any lease addendums you may want to include. In addition, you will collect any rent for the month in which they are moving in. Prorate it if they move in on any other day that is not the 1st of the month. Once completed, advise them that you will give them a copy of all signed documents in the coming days. Make sure you do this.

 

Once all documents have been signed, go to the rental property and do a walk through together. Make sure you document anything that is (1) new in the property (2) not working properly/need of repair (3) damaged and (4) anything considered to be in good condition. When walking the property together, always start on your right side and walk the entire inside/outside of the property. Once the walk through has been completed, have the person sign the move in inspection and notify them how/when you plan on fixing the items that are not in working condition, if any.

 

Give them the keys and let them know that you will not re enter the property unless you have permission from them or you have posted a 24 hour notice to enter (will explain in more detail at a later post) 

 

1. Sign application
2. Sign background authorization form/application
3. Charge $$ to run credit/cash or money order only
4. Run credit
5. Tell the applicant you will get back to them in a week or two
6. If credit looks good, ask for paystubs/taxes and signatures to housing verification
7. Call prior landlords and ask about them. Most of the time they are going to ask you to send them a signed release form
8. Gather all the information and make a decision
9. If you decide to move them in, call them and tell them they are approved
10. Charge them a deposit of first months rent (or any amount close to it)
11. Add the prorated rent for the remainder of the month to their move in costs (example $1000 rent. They moved in on 7/12. July has 31 days. $1000/31=$32.25 per day. 20 days remaining in July so 20x$30.25=$605 + $1000 deposit = $1,605 in move in costs.
12. Sit down with them and sign the lease. Be very clear of your expectations for them as a tenant i.e. when the rent is due/where to send it, how to address complaints, repairs, etc. This will save you a money and time in the future. Make sure to let them know that if they move out you will need a 30 day notice after their lease it up. This will give you enough time to look for someone else.
13. Do a walk through of the apartment with them before you give them the keys. You can do a checklist or write a list of the things that may not be in optimal condition. Both of you sign the document and date it
14. Give them the keys