Guide to Choosing the Best Tenant Screening Service 2017 (Part 2)

In my last post, Guide to Choosing the Best Tenant Screening Service 2017         (Part 1) I wrote about  “what makes TenantMagic better than the rest of the tenant screening companies out there?”  That post looked at the importance of having comprehensive screenings to make a qualified decision when considering rental applicants.

In this post I want to look at the other end of the spectrum, screening reports that have volumes of data and analytics.

A business acquaintance of mine has a real estate agent service platform and recently contacted me regarding a competitor that offers a similar application and screening program. They approached him to explore potential partnering opportunities. My acquaintance asked me what I thought of the company.

Their web site had a good clean design and did a nice job of presenting their program. The 5-minute video on the home page spent a lot of time talking about using artificial intelligence for their reporting analytics.

I then looked at their sample reports and was overwhelmed by the number of analytics and charts. A lot of the data was nice to know but really did not add much to the overall decision making process. From my perspective, it would lead to analysis paralysis. Here is a good article that describes analysis paralysis in decision making. https://personalexcellence.co/blog/analysis-paralysis/

I base this observation on the calls I receive from both agents and landlords users of TenantMagic. We have made every effort to make our reports as easy to read and review as possible. Over the years we have made changes from the input we have received from our users. In spite of all of these efforts we do get users that need assistance. We do provide written instructions and have short explainer videos but some still need to be walked through the process the first time.

TenantMagic users want both comprehensive information and the ability to quickly evaluate it. We work very hard to maintain that balance to make sure agents and owners select TenantMagic when choosing the best tenant screening service. After all they are using our service to save time and overwhelming them with data is counterproductive.

When choosing the best tenant screening service, agents and landlords need to consider how well the tenant screening provider understands their information and time requirements. TenantMagic understands those requirements by listening to our users.

Guide to Choosing the Best Tenant Screening Services 2017 (Part 1)

Choosing the best tenant screening service
How to choose the best tenant screening service

One question we frequently get at TenantMagic is “what makes TenantMagic better than the rest of the tenant screening companies out there?” With so many different tenant screening companies, we understand that looking for the best screening service might be difficult.  For that reason, we decided to give you our guide on choosing the best tenant screening companies. Today’s post we will look at the importance of comprehensive screenings.

Comprehensive screenings

One important aspect of tenant screening is gathering all relevant information about the tenant. I have spoken to many landlords and agents that use a credit report to qualify a tenant and sometimes they accept a credit report provided by the applicant.

There are 2 reasons why this is bad.

  1. Credit reports give you part of the picture. Eviction reports and criminal reports ore very important to properly evaluate a potential tenant.
  2. As I have written in a previous post, fake credit reports can be purchased on-line. Here is a site that blatantly promotes them. https://fake-credit-score.pdffiller.com/

Many services offer combinations of credit reports, criminal reports, and eviction reports, and others offer credit and criminal reports, with eviction reports as an additional add-on cost. TenantMagic includes eviction reports in the screening report giving owners and agent comprehensive information to make a highly informed decision.

TenantMagic goes one step further after the owner or agent receives the reports.  There are instances when the criminal received from the courts require further explanation. TenantMagic will conduct additional research on criminal reports if further clarification is required.

Additionally, eviction courts do not use social security numbers. This can result in false positives with common names. The TenantMagic program resolves false positives by comparing addresses where the applicant was known to live as reported by the credit bureaus with the addresses where a person with that name was evicted. If there is a match, then we know it was the applicant that was evicted.

In future posts regarding Choosing the Best Tenant Screening Services, I will discuss customer service and ease of use for both the owner/agent and the applicant.

 

Successfully Dealing With a Late-paying Tenant Without an Eviction

No late rental payments
No late rental payments

I was speaking with a landlord recently about getting good tenants and what to do with  late-paying tenants while avoiding the eviction process. Jack has been in the business for close to 20 years and has a couple of dozen properties.

He explained his very effective method to deal with late paying tenants.

After conducting the background screening but before the lease is signed, Jack sits down with the applicant and clearly reviews the rules regarding rent payment.

They are-

1. Rent is due on the 1st

2. If the payment is not received by the 1st of the month there is a $50 late payment.

3. If the rent and late payment is not received by the 3rd of the month they  will a receive a 3-Day Notice.

4. There are no exceptions.

A 3-day notice advises tenants that they are being asked to leave or that an eviction action will be brought against them. They are also advised to seek legal assistance if they have any questions or concerns. (This landlord’s properties are in Ohio and laws do vary from state to state, so please check with your attorney or state’s landlord tenant laws) You can also check out https://www.rocketlawyer.com to see a sample and learn more.

Once the 3-day notice is delivered, he calls the tenant and tells them, “You are more than 3 days late with your rent and I want you out as I warned you about this before you signed the lease.”

Jack then makes the tenant the following offer, “If you are out by the week-end I will pay you $250. If you agree I will meet you at the property with your check. If the property is clean and in good shape, I will give you the check in exchange for the keys. If you do not agree, I will immediately start the eviction proceedings.”

Over the years, he had only one tenant that declined this offer.

He knows his ex-tenant is probably at a bar buying drinks with his new-found money bragging about getting over on his landlord. But Jack is the one that has come out ahead.

Jack has avoided paying the costs associated with filing the eviction. The property was left clean and in good condition, which would be very unlikely if the tenant was evicted. And he has the security deposit, which covers the cost of the payment and some of the lost rent.

Jack spends very little time chasing down the rent from late-paying tenants by being very clear about the rules before the lease is signed and strictly adhering to them.

TenantMagic provides comprehensive application and tenant screening at no cost to real estate agents, property managers and landlords. Applicants pay the fee

Jay Apple is co-founder of TenantMagic, LLC  www.tenantmagic.net

Please note that this post relates to an approach to dealing with late paying tenants and is not meant to be considered legal advice.

Are your rental applicants using fake pay stubs?

Are your applicants using fake pay stubs?
Fake pay stubs are easy to get

In a previous post, I discussed the ease of getting a fake credit report and why you should always run your own screening reports for rental applicants. Credit reports are not the only fake documents that are readily available online. Fake pay stubs are also easily available for under $10.00.

https://www.realcheckstubs.com and https://fakepaystubonline.com are just 2 of many services that can be used.

It only takes a few minutes to generate a fake pay stub and they can look very authentic. If the rent is $1200 per month and you require a 3-1 income to rent ratio, no problem. The applicant can simply generate pay stubs showing income of $3600 per month or more regardless of what they make.

Income is obviously one of the more important requirements when considering a tenant. Lack of sufficient income will typically result non-payment of rent and ultimately in an eviction.

Fortunately there are a number of steps you can take to verify an applicant’s pay stub information.

  • Take a close look at the deduction amounts. Calculate them to see if they make sense and are in-line with the state where they work. City and state tax rates are readily accessible on line.
  • Ask for bank statements that correspond with the dates of the paystubs to see that the money was actually deposited into their account.
  • Look at eviction and credit reports to see if there are any anomalies.

Some resources suggest contacting employers to verify the income. I do not recommend this, as many employers will not provide that information. Some larger corporations that do, will outsource the service to a third party which can charge up to $25. With the steps I outlined you should be able to get verified income without the significant time and effort required to contact the employer.

The best way to incorporate these steps into your application process is to use a online rental application and background screening program. An applicant completing a TenantMagic application give permission for the agent or owner to ask for information such as bank statements in addition to the credit, eviction and criminal information pulled from the bureaus.

TenantMagic www.tenantmagic.net comprehensive application and tenant screening at no cost to offers real estate agents, property managers and landlords. Applicants pay the fee.

Jay Apple is co-founder of TenantMagic, LLC  www.tenantmagic.net

Technology-relevant lead generation for property managers and landlords

Use technology-relevant lead generation
Millennials hate voice mail

Technology-relevant lead generation is so important to effectively market your properties, especially to millennials.

Many owners and property managers I speak with are always looking for a reliable source for rental applicants.

A significant number of these applicants will likely be millennials. According to a cnbc article  http://www.cnbc.com/2016/09/09/millennials-will-be-renting-for-a-lot-longer.html, over 60% of people in the 25 to 34 age group, are renting their residences.

In addition to listing on sites such as  Craigslist or Zillow, many owners or managers place a “For Rent” sign out with a phone number of the owner or property manager.

“For Rent” signs will typically attract potential applicants that have a greater interest,  as they are making the effort to check out the property and the neighborhood.

The problem with the “For Rent” signs is that the phone is the method of contact. This brings up a number of issues.

Potential applicants often look at properties during evenings and week-ends when rental offices are closed and owners are not always available. Many applicants, especially millennials,  are adverse to calling and even a larger number refuse to leave a message. If they do leave a message (which is unlikely)  and you call them back, don’t even think of leaving them a voice message.

Millennials hate voicemails. They don’t like leaving voicemails and will typically send a text message instead. They also often avoid listening to voicemails that have been left for them by others. Here is a great column giving a millennial’s perspective on voicemails.

http://www.baltimoresun.com/entertainment/bthesite/bs-b-0618-column-20150617-story.html

So, what is the best way to use “For Rent” signs? Use a text lead generation program for the signs. This is a good example of technology-relevant lead generation.

Full disclosure – TenantMagic has launched Rider Sign Leads www.ridersignleads.com. The program provides property managers and owners with a customizable code that can be placed on the “For Rent” sign riders, either in addition to or  replacing the phone number. When the prospective applicant texts the code to the number on the sign, they receive the rental details, owner/manager contact information and a link to the web listing of the property. The owner/manager receives the phone number of the prospect.

Technology is changing the way we shop, live and make decisions. It is imperative to make sure that your business can accommodate the tech tools that are being used by your target market.

Jay Apple is co-founder of TenantMagic, LLC  www.tenantmagic.net

A credit report alone is not sufficient for screening a tenant

rental property trashed by bad tenants
But they had a good credit score.

I last wrote that you should never accept a credit report provided by the applicant due to easy online availability of fake credit reports.

In this post, I would like to explain why even a valid credit report is inadequate by itself when screening a rental applicant.

Credit reports do not contain enough information to properly evaluate an applicant.

The applicant’s income, in addition to eviction and criminal history are very important when considering a potential applicant and none of these are found in a credit report.

Typically the required income to rent ratio is 3 to 1. If the rent is $1000 per month, then the income for all the renters need to be at least $3000 per month.

I am often asked about verifying income. We recommend that the agent or owner ask for 3 consecutive pay stubs. You should request the 3 most recent bank statements to verify  the income deposits if the applicant is self-employed.

This method is far easier and quicker than attempting to get salary or wage information from the employer. Many large employers will direct you to a third party that requires a fee for income verification.

An eviction report is extremely important.  A person who was evicted in the past, is likely to be evicted again. It is very time consuming and costly to evict a teannt. Repairs to the property also need to be taken into account. Most evicted tenants don’t exactly leave the property “broom clean move-out” condition.

Don’t think a criminal report is important? Think again. I was speaking at a real estate investors group about tenant screening best practices.  An elderly landlord told me a very scary story. The tenants in one of his properties stopped paying rent and would not respond to his phone calls. He went to the house to ask about the rent, was beaten severely by one of the occupants and ended up in the hospital for 2 weeks.

It was discovered after the tenant was arrested that he was a convicted felon.

A criminal background check would have identified his criminal history and saved the landlord from the pain and suffering of the beating.

Here are some more stories that will help convince you about the importance of tenant screening. http://buildrealty.net/blog/2014/12/21/6-insane-landlording-stories-that-prove-the-importance-of-tenant-screening/

No tenant screening process will be 100% effective. But a comprehensive background search can significantly reduce the number of problem tenants.

Jay Apple is co-founder of TenantMagic, LLC  www.tenantmagic.net

Why you shouldn’t use a credit report provided by a rental applicant

Fake credit report web site

Here is a big reason why you should never use a credit report provided by the rental applicant for an application.

It is quite easy to get fake one.  Simply by Google “Fake credit report” and fill out the on-line pdf. Here is a link to one of the sites so you can see for yourself. https://fake-credit-score.pdffiller.com/

Agents and landlords should always use a reputable online tenant screening program to avoid fakes.

You obviously want to know that the information in a completed rental application and screening report is accurate.  It is also critical to know that the person submitting it is who they claim to be.

A quality screening provider will verify the information provided by the applicant and their identification.  When an applicant enters their social security number into the system. The credit bureau will then check to see that the personal data of the applicant matches with what the bureau has on file (date of birth, current address, etc.) The process should then require the applicant to verify their ID. This is accomplished by answering questions that only the applicant would know the answer to such as amount of car payment, previous address or auto loan amount.

Additionally, a credit report is only one of the reports that should be considered by an agent or landlord You really need an eviction report, a criminal history report and a sex offender report to do a thorough review of an applicant.

There is no shortage of scammers out there. And once they are in a property, it is difficult and expensive to get them out.  Then there is often significant damage to the property once you do get them out.

Fortunately there are high-quality tenant screening service providers that you can use.  A good tenant screening service will help identify unqualified applicants before the lease is signed, saving you time and money.

Jay Apple is co-founder of TenantMagic  www.tenantmagic.net Continue reading Why you shouldn’t use a credit report provided by a rental applicant

How far and how fast will home ownership swing back?

I recently had lunch with a senior finance executive who is in his mid 30s,  married and has a young daughter. The conversation turned to home ownership and how it is viewed by people in his age group.

He rents and said that currently he and his wife (also a professional) have little desire to purchase a home. He went on to say that many people he knows that are in his age group feel the same way about home ownership.

This made me think about how fast and far the home ownership pendulum is going to swing back.

Since 2005 home ownership has steadily declined from 69% to 63.7% at the end of 2016.

As can be seen in the US Census Bureau graph below, the decline has been longer and steeper than in any other period going back to 1965.

A closer look will also show you that the drop off continued after the 2007-2009 recession.

Hone ownership rates 1965 - 2016

As we all know trends don’t continue forever. But we do need to look into what has changed that can affect any rebound. For more data check out the entire report at https://www.census.gov/housing/hvs/files/currenthvspress.pdf

During my conversation with my finance exec friend, he mentioned 2 reasons he and his wife did not want to buy a house. The first was he didn’t view it as a good financial decision. Housing prices are still recovering from the 2007 – 2008 housing crash. Secondly, his career could require him to move regularly and he didn’t want deal with buying and selling his property every couple of years.

Industry research on this topic has identified 2 other reasons that millennials are not buying homes like people their age did a generation ago.

College loan debt plays a very large factor. Graduates are saddled with this debt for a long period of time which makes it difficult to save for a down payment. This coupled with a less than robust job market adds to the headwinds in home ownership, especially among people in their 20s and 30s.

If history is any indicator, the trend in home ownership should reverse itself. However the trough is deep and even returning to rates of the 1980s can take some time.

Bottom line, real estate agents should be prepared to deal with home renters for the foreseeable future.

Jay Apple is co-founder of TenantMagic  www.tenantmagic.net

Are your customers satisfied or totally irritated with your customer service? – The need for speed.

Bad customer service

TenantMagic makes the rental application and background screening process quick and easy for agents/landlords, as well as applicants by using technology.  As we all know, things can go wrong with even the best designed programs. It is important that rental applications are processed quickly, as any delay can result in an applicant losing out on a desired property, so at TenantMagic we need to address any issue promptly.

This is where customer service comes in and where businesses can really make a name for themselves, for better or for worse.

I manage the customer service for TenantMagic and look to consumer companies that I interact with for ideas on what to do and what not to do. After all, our expectations in the business world are shaped by what we experience as consumers.

Recently I had issues with two different product/service providers that required me to contact their customer service departments and had two distinct experiences.

The first was Amazon.  The phone accessory I purchased using Amazon stopped working a few days after receiving it.  I was unable to find the contact information for the company, so I called the Amazon customer service number.

I told them what had happened and they immediately took care of it by crediting my account. I then purchased a similar item from another provider. Amazon came through, the product manufacturer did not. I will continue to use Amazon, but will think twice about going back to the company that supplied the product.

The second experience was with my cell phone carrier which I have been with for 17 years! I was able to easily contact them about my issue regarding a phone upgrade, but the promises that were made were not kept, requiring me to call back multiple times. I will spare you the details, but in the past 2 weeks I have spent easily close to 20 hours on the phone with their customer service reps and all my problem is still not resolved – and it is not that complicated.

When things go awry in a business transaction it is vital to handle the issues quickly.

The way I look at it is, that is comes down to time. First, don’t make it next to impossible for your customers to find company’s contact information. The when you do interact with a customer that has a problem, try to resolve it immediately if possible. Your customer’s time (and yours) is too valuable to waste. Delays lead to irritated customers.

At TenantMagic we make every attempt to have a person answer the phone for customer services calls and try to get any issue resolved as quickly as possible. There are times when we cannot address a customer’s problem to their satisfaction. When that happens, we explain the situation, tell them we are sorry but there is nothing more that we can do. We might lose that customer, but have not wasted their time by stringing them along with excuses and promises that cannot be kept. And, we are not wasting our time.

Paper rental applications? Do you know what century we’re in?

It never ceases to amaze me the number of agents, landlords and property managers that still use paper applications.

In my last 2 posts I covered how paper applications can complicate Fair Housing compliance and the create personal data security problems.

Today we will look at how time consuming paper applications are, how they make  your business look antiquated and can affect compliance with Fair Housing laws.

Paper applications, whether they are handed out or a downloadable pdf, require the agent/owner/ property manager to enter all that information into the background screening program. (If you are not screening your prospective tenants, then you are just asking for big trouble.)

Typically this can take up to 10 minutes or more per application, which  adds up when you have multiple vacancies.

Paper applications are usually accompanied by paper checks or credit card information application fees that need to be written out and then entered into a payment system, again requiring even more time with data entry.

Still not convinced? Do you still feel that all this paper and redundant data entry is really not that big of a deal?

Then consider the image that you are portraying to your prospective tenants. If you are using paper applications and collecting fees with paper checks you are giving people the impression that your business is not up to date. What are going to think about your property and its maintenance?

Fair Housing compliance is also an issue with paper applications. A blog post by OneRent http://blog.onerent.co/fair-housing-rental-application/  reports that “Many landlords notice that the paper rental applications that they receive, are rarely complete. In most of the cases, the tenant provides half-finished applications that make it difficult for property owners to scourge for and scrutinize additional information. Some tenants provide basic bio data at first and additional bank statements and credit reports later, leaving the property owners with no option but to hand over the house to a new tenant in the interim period.”

Due to the lack of complete information, landlords often discourage potential tenants from looking into their properties or steer such applicants towards another property. This constitutes a violation of the anti-discriminatory housing laws.

Using a reputable online application and screening company makes sense on so many different levels. The amount of time you save and the how you present yourself and business are just two reasons to switch.

Jay Apple is co-founder of TenantMagic www.tenantmagic.net, an online rental application and background screening provider that is free to real estate agents, property managers and landlords.