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4 Ways to Spot a Problem Tenant

When renting a property to someone, unfortunately, you have to be a little judgmental. As a part of your job, you have to be attentive to people’s characteristics and background/history in order to determine if they are the best candidate to rent your property to. Most of the time, a majority of the people you may come across to rent to are decent and good candidates that will end up not being of any trouble at all. While this may be the case, however, this doesn’t mean that you won’t encounter a prospective tenant that could be a problem at some point in your career.

Dealing with someone who shows interest in your property but also displays signs that they could prove to be problematic in the future is not easy by any means. Despite this, if you pay close enough attention, you’ll be able to spot the signs early enough which will ultimately make the process easier. If you are a landlord/property manager nervous about detecting the signs of potential problem tenant, check out my five warning signs below!

Before we delve into how to spot the signs, first, it’s important to recognize what the laws are regarding you, the tenant and your jobs. Lindsey Schober of Zillow makes an important note, stating, “Each state and municipality has unique laws and ordinances. Make sure you have a clear understanding of your landlord rights and responsibilities, tenant rights, and the basic workings of specific notices and eviction procedures. Work with an attorney to set up your policies and procedures.” Once you have a decent understanding of your rights as a landlord as well as the rights of any of your tenants, you will not only feel more confident about the selection process, but you will also feel better about handling a tenant in the case they pose a significant problem.

Now that you have an understanding of your rights and responsibilities, you can easily spot these five problem signs of a potential tenant:

1. Payment History/Credit: One of the determining factors when renting a property to someone is having a decent or good credit score. Though it may be unfair at times, many property managers and landlords use credit scores as a means of determining whether or not a tenant can be reliable in their payments and responsible while living in your property. A warning sign of a bad tenant can be a hesitancy to conduct a credit score or a credit score that shows a history of late payments. According to the staff at Upad, if you think you may have a problem, “Speak to the tenant and ask them if there’s a problem and remind them that the rent should always be paid by the due date. However, if you get a couple of late payments in a row, you should ask them directly if they’re having difficulty with the rent and discuss how you can sort this out.”

2. Friend/Family Member: You may be asking yourself, “what could be so wrong about having a friend or family member as a tenant?” Having a friend or family member as a tenant isn’t an instant horror, however, it can be dangerous. Have you ever heard of the phrase, “don’t mix family and business”? Well, there is a reason why that phrase exists. Unfortunately, in some cases when this happens, it becomes hard to uphold your status as the landlord and makes it harder for you to keep your relationship separate. In the long run, try to avoid this so you ultimately don’t ruin a relationship!

3. Criminal History: Background checks are wonderful things; they tell you anything you could want to know about a possible tenant to help narrow down your selection process. If a prospective tenant has a criminal history that makes you uncomfortable, in a majority of states, you can deny them based on their past criminal offenses. However, in states like California, you cannot discriminate against those who have been convicted of nonviolent crimes, according to Erin Eberlin of the Balance.

4. False Contacts: In almost all cases, most landlords/property managers ask for at least one or a few references to help in evaluating a tenant. Most people do not have a problem with this, however, those who can potentially be problem tenants may provide false contacts like friends or family members to pose as references to make themselves look better. To combat this, Chris of LandlordTalking notes, “One of the best ways to avoid this scam is to ask for multiple landlord references, including the current landlord. Come up with some preliminary questions to ask the contact during the interview. What will seem like small talk may actually tip you off to a fraudulent reference.”

While the process of evaluating a tenant may be difficult and exhausting, to notice the signs of a potentially bad tenant will only prove to help you in the long run. As always, good luck!

Position Realty
Office: 480-213-5251

Five Steps To Avoid Illegally Evicting Your Tenants

One of the biggest risks related to owning investment properties is dealing with an eviction. If a tenant doesn’t pay rent, the simple answer is to evict him.

To a seasoned investor, however, it’s never that simple. Actually evicting a tenant is an extremely complicated and expensive process, and one that should always be avoided.

An eviction is an official legal proceeding, complete with a formal process that needs to be followed exactly in order to have your tenant move out and relinquish the property back to you. Failure to follow your state’s laws on a legal eviction can result in delaying the eviction date, losing a court hearing or owing the tenant money.

Rental property owners will benefit from understanding the legal eviction process in order to protect themselves from breaking the law should they ever go through the process. I also hope to instill the idea that addressing an issue with a bad tenant takes a lot more energy than simply evicting him. I want all investors to understand the importance of finding good tenants and sticking to the lease terms, so you can minimize the risk of dealing with an eviction.

Let’s first take a look at the difference between an illegal and a legal eviction.

An illegal eviction involves:

• Changing the locks.

• Putting your renter’s belongings on the curb or in the garbage.

• Threatening the tenant with an eviction or increased fines.

• Turning off utilities or other services.

A legal eviction includes:

• A court order.

• Official notices.

• Appropriate communication.

• Adherence to state laws.

• Patience.

What Is An Eviction?

An eviction is a lawsuit, sometimes known as an unlawful detainer lawsuit, that a property owner files against a tenant in order to regain possession of a property. Once an eviction lawsuit is filed with the court and a judge rules in favor of the eviction, the property owner can work with law enforcement to remove the tenant by an agreed-upon date per the eviction ruling.

In order for a property owner to win an eviction ruling, the property owner must prove that the tenant violated a lease term, that he gave proper notices to the tenant to fix the violation and that the proper eviction process was followed.

Reasons To Evict A Tenant

A tenant can lawfully be evicted for:

• Failure to pay rent.

• A lease violation (like illegal use, subleasing, unauthorized pet, etc.).

• Damaging the property.

• Threatening the safety of other tenants, neighbors, the property or community.

• Breaking other local housing laws, as outlined in the lease agreement.

A property owner cannot evict a tenant because of personality clashes, minor disagreements or annoying behaviors. If you establish a reasonable need to evict a tenant, you should act immediately and follow your state’s guidelines for a legal eviction.

The Eviction Process

Here is a general overview of the standard eviction process:

1. Establish a legal need to evict a tenant:

Tenant violates a lease term, like failing to pay rent.

2. Notify the tenant:

Landlord provides an official notice to Cure or Quit to the tenant. A Cure Or Quit Notice notifies the tenant of the violation and tells the tenant to either fix the violation within a certain amount of time (cure) or move (quit). This notice should be taped to the door and mailed via certified, first-class mail. You will need to prove in court that you did your best to notify the tenant of the potential eviction proceedings.

In some cases, a property owner or manager can file an eviction with the courts without giving the tenant time to remedy the problem. Such is the case if the property or other people are in immediate danger.

3. File with the court:

If the tenant does not fix the violation outlined in the notice and does not voluntarily move out, the landlord can proceed with filing an eviction lawsuit.

After filing an unlawful detainer lawsuit with the local courthouse, you will receive a date for your eviction hearing and the court will notify the tenant of the summons. Depending on which state you live in and how busy your local courthouse is, this hearing can be anywhere from one week to a few months from your filing date. If it takes a few months for your eviction date, you have to let your tenant continue to live at the property until a judge rules otherwise. Often, a tenant will not pay rent during this time. If this is the case, let’s hope you have a good lost rent policy with your landlord insurance provider.

4. Court hearing:

At the court hearing, you will need to provide proof of the reason for eviction, and that you gave the tenant an official notice to cure or quit. It is also a good idea to bring copies of the lease, rent payment records and records of all communication you have had with the tenant.

If the judge rules in your favor, you will be able to move forward with an eviction by contacting your local law enforcement to escort the tenant out on an agreed-upon date, if needed.

5. Regaining possession of the property:

On the date determined by your eviction hearing, you will officially regain possession of the property. You are allowed to change the locks and proceed with managing any abandoned tenant property per your state’s laws at this time.

As you can see, moving forward with a legal eviction involves a lot of time spent dealing with your local courts. You have to be patient with the court’s timelines and rulings. You also must keep all your communication with your tenant professional during this time, which can be challenging if you are frustrated with your tenant’s behavior.

Evictions are risky because of the unknown timeline from the filing date to the date a tenant will actually be required to leave the property per the court order. The time and money associated with moving forward with an eviction demonstrate the need for approving only the most qualified tenants for your property, minimizing the risk of eviction.

Position Realty
Office: 480-213-5251

Is It Time To Hire A Property Manager For Your Rental

It’s a question that arises sooner or later for most landlords: “Should I manage my own rentals, or outsource the work?”

Keeping on top of rental maintenance is vitally important for any landlord. But for most, it’s not exactly something they enjoy. After all, being on call 24/7 for any repairs and maintenance issues that arise can get tiring after a while, even for the most resilient landlord. Then there’s the issue of time. While in the beginning, doing cleaning, painting and small plumbing jobs might be fine, once you’ve got a few rentals under your belt you’ll quickly find that management can escalate into a full-time job. No wonder 62% of landlords in one recent survey claimed that maintenance was their biggest pain point.

If you find yourself struggling to fit it all in, hiring a property manager is something that may have crossed your mind. But is outsourcing your property management always the best solution? When does it make sense to go it alone, and when should you think about bringing someone else on board?

If you’re on the fence, here are a few questions that can help you determine whether a property manager is the best option for you.

Do I have time to manage my property?

If you’ve reached a stage where you dread answering the phone because you don’t want to deal with yet another tenant maintenance request, it may be time to outsource.

In my line of work, I see it all the time: landlords running themselves ragged, trying to do it all. They have a few properties, but instead of creating passive income streams for themselves, they’ve simply acquired another job — a full-time one at that.

Don’t let your dream of owning rental properties become stifled because you can’t afford to put any more hours in at your properties. Instead, consider outsourcing to a reputable rental management professional who will be able to oversee the properties in your stead.

Do I want to expand my rental property portfolio?

If your goal is to own five, 10 or more rental properties, outsourcing is the fastest way to get there. This is especially true if you’re finding that maintenance and repairs are starting to keep you from high-level tasks like finding and assessing new investment opportunities and properly overseeing your property portfolio.

Will I invest in markets outside of my local area?

While many landlords start out with properties in their own hometown, if you’d like to grow your portfolio, you may wish to take advantage of up-and-coming markets or opportunities that are better than what’s available in your own backyard. However, being a long-distance landlord can bring its own set of unique challenges, even for experienced landlords.

If you’re thinking of investing in an out-of-town property, hiring a professional property manager who will be your eyes and ears on the ground can free you up from the stress that’s often associated with long-distance landlording.

Will a property manager help me be more profitable?

Finally, is hiring a property manager a financially smart decision? If you have one or two local properties, it might make more sense to oversee them yourself. But often, professional landlords find that hiring a property manager to oversee their rentals enables them to invest in more properties than they’d be able to otherwise, helping to maximize returns.

Finding A Reputable Property Manager

Much of your rental property’s success is contingent on how well it’s managed. For landlords who are thinking of outsourcing management or maintenance, finding a reputable and qualified professional is crucial.

Be sure to do your research upfront. Read online reviews. Ask for referrals. And, much like conducting an interview, ask your prospective property managers qualifying questions to ensure you end up with a great match. Here are a few questions you should ask:

1. How much experience do you have?

First, you’ll want to ensure that you find a professional who’s experienced and knowledgeable — one with a proven track record of success. Consider asking how many rental units they are currently responsible for. A low number could indicate that they’re new to the game, or perhaps struggling.

2. How do you structure your fees?

Concerns about cost is one of the main factors that keeps people from outsourcing. And naturally, this should be one of the first questions that you ask. Generally, monthly fees are either fixed or a percentage of the rental yield, often 8-12% of the monthly revenue. Optional packages and additional services could impact the cost, though, so make sure you’re aware of their fees before you commit.

3. Are there any fees when the property is vacant?

If you find a company that charges you while the property sits vacant, be careful. Property managers should have an incentive to keep your rental occupied, and if they’re being paid regardless, then that incentive goes away.

4. How do you screen tenants?

Any property manager worth their salt will not only screen tenants thoroughly, but also have airtight policies and procedures in place to ensure that they do so in a way that’s in compliance with the Fair Housing Act.

5. What’s your average vacancy rate?

Reducing vacancy times is key to maximizing your returns. A reputable property manager should know their average vacancy rates, and will be more than happy to inform you of them. Anything within the two- to three-week window is outstanding.

At the end of the day, the decision to outsource comes down to your personal preferences and investment goals. While first-time landlords can certainly benefit from the cost savings of doing their own work, for experienced landlords, offloading the day-to-day tasks to a professional is something that often makes sense. Many landlords find that it’s a pivotal turning point in their investment career — the decision that’s responsible for allowing them to reclaim their time and focus on growing their investments.

Position Realty
Office: 480-213-5251

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