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Old 02-03-2010, 08:55 PM
 
Location: Los Angeles
4,773 posts, read 6,934,160 times
Reputation: 6383

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I have been in property management here in Los Angeles for nearly 25 years, and have learned many lessons over the years.
What I would recomend is, along with any rental application, inform the perspective tenant they must submit a current credit report with a current credit score.
This one step will illiminate most of the low life you wouldn't want to rent too anyway.
If they are paying for a credit report, they are not going to waste money if they know they have doubtful credit.
Set a minimum credit score you will accept.
For my properties, I accept nothing below 720 for a score.
Seven twenty is good, not great, but acceptable.
Tell them everything they put on the application will be checked and varified,and failure to varify will mean the application will be rejected.
Under most circumstances this will asure that yoiu get responsible perspective people applying.
I only rent on a month to month basis.
That way, if I need to make a change in the tenants, I can do so with a written 30 day notice, and if ther tenants want to leave, they can give me a thirty day notice.
I wouldn't want to be tied to a year agreement.
Bob.
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Old 02-04-2010, 07:50 PM
 
368 posts, read 1,355,898 times
Reputation: 247
This great, everybody, thank you!

When we asked the wife for a small fee to check their credit she said that both her and the husband have very bad credit, and if we check it we will not want to rent the house to them. But they insisted they want the house any way. Hmmm... I think they can't get anybody to rent a place to them, that's why they are so desperate to get us to sign a 12 mo lease.

Can't thank you enough! Good luck everybody!
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Old 02-04-2010, 09:36 PM
 
Location: Lake Conroe, Tx
637 posts, read 2,869,938 times
Reputation: 410
I also owned a property management co with 120 properties and could write a book on the many pit-falls most folks make on trying to go it alone when leasing their property(s). I will instead add to this the following highlights in red. Also where I am in Tx it's very business/landlord friendly, not so much in Calif so good luck...

Quote:
Originally Posted by CALGUY View Post
I have been in property management here in Los Angeles for nearly 25 years, and have learned many lessons over the years.

What I would recomend is, along with any rental application, inform the perspective tenant they must submit a current credit report with a current credit score. Why would you accept a credit report from a prospective applicant? There's way too much you can do to "doctor" a credit report these days; better to pull your own, that way you know what you are getting. Also (very important) require them to provide a valid DL, that way you know your pulling info on who you think you are. In addition to getting a credit report you should also get a statewide eviction check and criminal background check. What happens if you end up renting to a felon, or worse yet a sex offender and something happens to one of their neighbors? Chances are you will get a law-suit.

This one step will illiminate most of the low life you wouldn't want to rent too anyway. True enough but see above for extra protections

If they are paying for a credit report, they are not going to waste money if they know they have doubtful credit. Always require cash, money order or cashiers checks for application fees. If they pay the app fees with a personal check and they do not get approved for some reason I'll give you 3 guesses as to what happens to your app fee check and the first two don't count.
Set a minimum credit score you will accept. Yes have rental applicant criteria set out and give it to prospective applicants up front, that way you are treating everyone fair and cannot get a suit for discriminating.

For my properties, I accept nothing below 720 for a score. Good luck with that in the renatal market these days, especially in Palmdale/Lancaster. If they had a 720 they would probably not be looking to rent, rather they would snatch up one of the many foreclosures in the area instead. That being said not all renters have train wreck credit, but more often than not you will be looking at scores a lot lower than the 700's. Better to make a higher security deposit for someone who has "decent" credit and is otherwise in good standing than send everyone down the road.

Seven twenty is good, not great, but acceptable. Don't kid yourself, 720's from a renter is great...

Tell them everything they put on the application will be checked and varified,and failure to varify will mean the application will be rejected. I agree if they commit perjury on any of the application questions send them down the road, you don't need liars, cheaters or thieives.

I only rent on a month to month basis. ?? why would you do that? You have too many vacancy issues, re-leasing costs', marketing, application process all over again, wear and tear on the property, no long term security etc, I could go on but it's way too much work renting short term.

That way, if I need to make a change in the tenants, I can do so with a written 30 day notice, and if ther tenants want to leave, they can give me a thirty day notice. If the tenants breach the lease you simply evict. Why would you want to give a good tenant the chance to bail out on the lease and have to go through the above referrenced items all over again in finding another good tenant. It's like playing craps, sooner or later you crap out. Better to find a good tenant and keep them in the house as long as possible.

I wouldn't want to be tied to a year agreement. ??
Bob.
Also; the application process is just the beginning, there is the writing of the lease; (one that's actually got teeth to it and is written properly so as to have protections and be able to be enforced if needed).

Also ask yourself this before beginning. Do I have the mechanisms to know what to do when the tenant does not pay, has unauthorized tenants, pets, cars etc... or otherwise breaches the lease. Do I have the marketing skills to ascertain a qualified tenant? Do I have access to the proper documents I will need, do I know ho to fill them out, the list goes on but hopefully the OP gets the point.

Again, I wish them luck if they choose to go this alone.
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Old 02-04-2010, 11:56 PM
 
Location: Los Angeles
4,773 posts, read 6,934,160 times
Reputation: 6383
Your response to my post is well taken for most landlords but, my system that I have used for the better part of twenty some odd years has worked amazingly well.
The adverage tenancy for my units is 8 years,and some have been with me over fourteen years, and all on a month to month tenancy.
My rental agreements are tailored to my property, and not the standard forms one can find at staples.
It is a tough regiment getting into one of my units, but couple that with no rent increases EVER, that really keeps the tenants living here.
I have been very successful over the years in this business, and wouldn't change a thing.
Bob.
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Old 02-05-2010, 04:54 AM
 
Location: los angeles/florida
485 posts, read 1,495,921 times
Reputation: 261
Quote:
Originally Posted by CALGUY View Post
I have been in property management here in Los Angeles for nearly 25 years, and have learned many lessons over the years.
What I would recomend is, along with any rental application, inform the perspective tenant they must submit a current credit report with a current credit score.
This one step will illiminate most of the low life you wouldn't want to rent too anyway.
If they are paying for a credit report, they are not going to waste money if they know they have doubtful credit.
Set a minimum credit score you will accept.
For my properties, I accept nothing below 720 for a score.
Seven twenty is good, not great, but acceptable.
Tell them everything they put on the application will be checked and varified,and failure to varify will mean the application will be rejected.
Under most circumstances this will asure that yoiu get responsible perspective people applying.
I only rent on a month to month basis.
That way, if I need to make a change in the tenants, I can do so with a written 30 day notice, and if ther tenants want to leave, they can give me a thirty day notice.
I wouldn't want to be tied to a year agreement.
Bob.

WOAH....so just because someone has had some financial hardships and now has bad credit or a low credit score they are a "low life?" I understand that you are looking at this from the perspective of a landlord, but that is just harsh. I know many people with bad credit who are wonderful, respectable people...I also know well-off people with good credit who are scum. Good credit doesn't always = a good person, just as bad credit doesn't always indicate a "low life." People are more than a credit score.
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Old 02-05-2010, 09:53 AM
 
1,308 posts, read 3,599,513 times
Reputation: 1097
You can also use a real estate agent. A good agent will run a credit check.
A big thing is that using an agent can minimize possible discrimination lawsuits. You cant be accused of discrimination if you haven't seen the prospective tenants.
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Old 02-05-2010, 10:23 AM
 
Location: Living on the Coast in Oxnard CA
15,372 posts, read 25,591,738 times
Reputation: 19649
Renting a property is a business operation. You seem like you have a lot to learn about the business of property management. I would do as others and hook up with an agency, or management professional that can help you out. Better to learn from someone that knows the business then to get yourself over your head in hot water.
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Old 02-05-2010, 05:57 PM
 
Location: Lake Conroe, Tx
637 posts, read 2,869,938 times
Reputation: 410
Quote:
Originally Posted by gypsystar View Post
WOAH....so just because someone has had some financial hardships and now has bad credit or a low credit score they are a "low life?" I understand that you are looking at this from the perspective of a landlord, but that is just harsh. I know many people with bad credit who are wonderful, respectable people...I also know well-off people with good credit who are scum. Good credit doesn't always = a good person, just as bad credit doesn't always indicate a "low life." People are more than a credit score.


When you own/run a property management company its not your money and property at stake, its the homeowners. The homeowners hire the management comapany to provide a valuable service, if the management company does not do their due diligence when screening prospective tenants they would be in dereliction of duty to the people that hired them in the first place.

Also, and though I'm sure you will disagree; a credit score is a lot more than a picture of ones financial profile, it is more often than not a direct judge of their character, not in all cases but in most for sure.

We use a scoring system that when ones goes below a certain Fico score we start to increase the security deposit to as much as a double deposit if it goes to a certain point; if the score goes below our threshold of approval we will not rent to them. We always have all the rental criteria posted up front so no one waste's their time or $ on app fees without knowing what the criteria is.

We don't gamble with our homeowners $ therefore pass no apologies with our criteria... What I have found over time is this; out of a 120 properties that we manage we will usually have about 8 to 12 stragglers every month, usually the same suspects. When I go into the files those are usually the ones that were increased deposit people. (go figure)

Say what you want but the system works as advertised.
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Old 02-05-2010, 07:04 PM
 
Location: Los Angeles
4,773 posts, read 6,934,160 times
Reputation: 6383
Quote:
Originally Posted by Lake Conroe resident View Post

When you own/run a property management company its not your money and property at stake, its the homeowners. The homeowners hire the management comapany to provide a valuable service, if the management company does not do their due diligence when screening prospective tenants they would be in dereliction of duty to the people that hired them in the first place.

Also, and though I'm sure you will disagree; a credit score is a lot more than a picture of ones financial profile, it is more often than not a direct judge of their character, not in all cases but in most for sure.

We use a scoring system that when ones goes below a certain Fico score we start to increase the security deposit to as much as a double deposit if it goes to a certain point; if the score goes below our threshold of approval we will not rent to them. We always have all the rental criteria posted up front so no one waste's their time or $ on app fees without knowing what the criteria is.

We don't gamble with our homeowners $ therefore pass no apologies with our criteria... What I have found over time is this; out of a 120 properties that we manage we will usually have about 8 to 12 stragglers every month, usually the same suspects. When I go into the files those are usually the ones that were increased deposit people. (go figure)

Say what you want but the system works as advertised.
I concur 100%
It is a business, and I call them as I see them.
It is more often than niot, the people with poor credit are habitually bad credit risk.
"Good people" who for whatever reason find themselves with poor credit, obviously didn't live up too their financial obligaations, and that puts them in a whole different catagory from those who maintain a good credit rating.
In business, it is all about figures, not personal feelings.
Bob.
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Old 02-06-2010, 09:40 AM
 
368 posts, read 1,355,898 times
Reputation: 247
Quote:
Originally Posted by SOON2BNSURPRISE View Post
Renting a property is a business operation. You seem like you have a lot to learn about the business of property management. I would do as others and hook up with an agency, or management professional that can help you out. Better to learn from someone that knows the business then to get yourself over your head in hot water.
Yes, you are correct, I do have a lot to learn in this area.

Hiring an agency would be much better, I agree. However, here's the situation. The mortgage on this house, taxes and insurance are about $1,900/mo. We listed the house for $1500, and got phone calls but did not get much luck. It may be, as someone said, that there are so many houses for rent right now. Lowered the price to $1400 two weeks later, so now we got a lot more phone calls, but still no tenants. The only ones that were interested in moving forward were the couple where she works part time and he is self employed, however, they did not want us to check their credit saying that if we do, we will not want to rent the house to them. We followed their advice and decided not to rent it them (lol). How long does it usually take to find a tenant? Again, this is a special market, with lots of houses for rent and a lot of renters with bad credit, especially in Palmdale. Anyone has any advice? Should we spend some money painting the interior of the house, changing the floors, etc? The house was built in the 80's and is in pretty decent shape, nice and clean, but does not have that "new" feel that a fresh coat of paint of new flooring would give... Spending money now would be hard, especially if the tenants will not take good care of it. So, if we hire an agency that will lower our margin even further. Thank you all for your help!
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