Property Management Blog - Tips, Articles and Advice from RentingYourHome.com

Did you know that 80% of rental single family homes are owned by individual landlords who do not use a property management service? It’s a huge market. Around 10 million homes in America.

Did you know that over 90% of those landlord owners used a real estate agent?

Did you know that less than 1% of those agents provide any ongoing service to those landlords?

For the amount of money — and value — that a good real estate agent brings to the table when a landlord is buying or selling, it’s mind-boggling that after closing, agents immediately walk away and look for the next client.

More…

I like reading a wide spectrum of news sources, some of which are heavily slanted in their coverage. I like to think that it's good. Helps keep the mind open to new ideas and different perspectives.

In this month's issue of The American, a right-leaning publication that covers politics, ethics, and the economy, they ran an interesting poll…What are the most prestigious occupations?

More…

Generally, you should advertise wherever potential renters in your area are likely to see the ads. For example, if you live in a college town, put up flyers ($) at the college bookstore, Laundromats, and coffee shops. There are also numerous free online advertising sites like www.Craigslist.com, www.Oodle.com, and many others. Additionally, you may choose to pay for advertising in the local newspaper ($$$$) or online pay sites like www.Apartments.com ($$$). Finally, consider offering referrals (if allowed) to friends, family, and your current tenants.

The three issues you'll want to consider are:

1. How much time do I want to spend advertising?
2. How much money do I want to spend?
3. How much "Flake Factor" am I willing to tolerate?

More…

The best way to deny an applicant is to be short, sweet, and to the point. If the decision was based in part or in whole on their credit score, then you are required to provide them with the recourse to obtain a free copy of their credit report. Prepare a standard letter or find someone who can provide one to you. You are only required to information them:

1. Their rental application has been denied,
2. A notice that the decision was in part, or in whole, made based on their credit score,
3. As such, they are entitled to a free credit report, and
4. The contact information for the credit agency used.

This protects your legal liability, establishes clear and appropriate records, and effectively resolves your problem.

You should never get into a protracted conversation with someone about why they were denied. Nothing good will come from having a detailed discussion about why you think they are not good enough. Denied tenants can be defensive, aggressive, and difficult. If you do have a discussion with the denied tenant, and they feel your decision was based upon discrimination, they'll get ready help from the local tenant advocacy groups. Your only defense in court will be documentation proving that the decision was made on non-discriminatory grounds, and the only reliable proof of that is your letter stating the decision was made in part, or in whole, because of their credit! And your decision is ALWAYS based at least partly on credit…

After all, I wouldn't rent to an obviously dangerous crack cocaine dealer even if they had a 700 credit score…my threshold for dangerous criminals is an absolute perfect 800 credit score and no lower! So, it's always in part, or in whole, about their credit score.

Many landlords keep sloppy records or don't get the tenant's signed authorization to run credit checks. The rules are getting more strict about when you can run credit, who is authorized to run credit, and how that information can be used:

When You Can — You may only run reports on potential tenants that you are currently screening for a valid vacancy in a rental property that you own, manage, or are the agent for. You are also required to get that potential tenant's written authorization to run a credit report.

When You Cannot — It is illegal to run credit reports on yourself, family members, friends, or for any fraudulent purpose. Your account with the credit-checking agency will be immediately terminated in accordance with the Fair Credit Report Act (FCRA) guidelines if you do so. Failure to comply with the FCRA can result in very serious state or federal enforcement actions, as well as private lawsuits. In addition, any person who knowingly and willfully obtains a consumer report under false pretenses may face criminal prosecution.

Once you have the credit report, you are not allowed to provide that report to the tenant. In practice, most landlords let the tenant see the report but I think that's a bad practice. The report is yours - you bought it - and you're using for a business purpose. Do that business and make a rental decision. Let the tenant know the outcome of the decision and leave it at that.

Finally, once you've approved or denied that tenant's application, since 2006, you're required to destroy that credit report immediately. But, don't forget to retain the rental application and record of running a credit check to protect against Fair Housing claims. You gotta love regulation!

For more information, see the:

• Fair Credit Reporting Act (FCRA) http://www.ftc.gov/os/statutes/fcradoc.pdf;
• Federal Trade Commission website http://www.ftc.gov/os/statutes/fcrajump.shtm

Review of WalkScore.com | RentingYourHome.com from RentingYourHome on Vimeo.

According to Redfin's corporate blog yesterday, they announced the layoff of 20% of their employees. These aren't agents, mind you, but the back end office support for marketing, sales, and delivery of their flat fee brokerage products.

What does this mean for us landlords?

Well, it means that the largest flat-fee brokerage in the country is hurting alongside all the others. It means that the pared-down service they provide will be pared even "downer" in the coming months. Personally, I'm really hoping they pull through because the agent industry is so long overdue in revamping its compensation structure. Here's a few shocking stats about the real estate agent market over the past two years:

1. Home prices have dropped 24 percent on average
2. Agent commissions have dropped 17 percent on average (from a 6 percent commission on sale down to 4.96 percent)
3. Brokerages everywhere are cash poor, losing agents, and in big trouble.

The good news is that times are tough and them's good times to buy rental property. Bad news for the agents, but it's an opportunity for investors. If you've been thinking about expanding your rental portfolio, now might be a great time to start gearing up. Money is still pretty easy to get on smaller residential properties, agents are crying for business, and homes are cheap. I think it's time to start portfolio-building…what do you think?

As a general rule, you should ask questions that establish the ability and likelihood of that prospect to pay rent on time, every time, and not cause damage to the rental.

Stay clear of questions that focus on marital status, age, sex, religion, race, or any other protected class, as they may violate Fair Housing Law. The best practice is to establish a written list of questions that you ask of every single applicant so that everyone is treated fairly and you gather the information necessary to compare apples to apples.

Good topics to ask about include:

Many landlords don't know that Federal Fair Housing law applies to them. What may seem to you as an innocent ad posted up on Craigslist can turn into a real disaster if you accidentally discriminate against a "protected class". Fortunately, the rules of the road are fairly simple and once you know them, you shouldn't have any problems.

When advertising a rental property anywhere (including online, street signs, newspapers…), the general rule of thumb is to talk only of the attributes, amenities, and perks of the property itself in an advertisement and do not discuss the potential tenants, their preferences, the local demographics, or anything else that may indicate a preference for or against any protected class. Case law regarding advertisements is ever evolving and different courts may interpret the same advertisement in different ways. The following list is not at all exhaustive but may prove illustrative and provide guidance about things you should not say:

1. Race- "Come enjoy our Hispanic neighborhood!" Or," Local area has Indian foods, culture centers, and clubs that are very welcoming."
2. Color- "Black neighborhood." Or, "Predominantly white, middle class, suburban town."
3. Religion- "Only 3 blocks from a synagogue." Or, "Muslim culture center around the corner."
4. Sex- "Condominium is mostly professional women who commute."
5. National origin- "Highly immigrant neighborhood." Or, "Owners are Nigerian and would like to help other Nigerians get into a good home."
6. Handicapped- "Sorry, no handicapped access available."
7. Familial status- "Sorry, no children please." Or, "Community of singles with a fun atmosphere."

If an advertisement uses pictures of people, those pictures must basically represent the current

More…

Are the days of rotten real estate agent post cards finally gone?

According to that same California Association of Realtors study this year, only 1 percent of buyers/renters who search real estate online (which is nearly 80 percent of all buyers/renters) said they found their real estate agent through that agent's marketing materials. The rest found them primarily on the Internet. Wow!

That's a LOT of agent marketing dollars down the drain, not that it's a big surprise. For years, agents have been sending us fridge magnets with hazy head shots, fuzzy pens, doodle pads, and all kinds of crap that has nothing to do with real estate. I've often wondered what conclusion I'm supposed to draw from an 8.5×11 calendar with the agent's giant face pasted on it. Why would this make me want to give you $10,000?

No offense to this guy, but if I never see his face on a postcard again, that'll be just fine by me.

Anyhow, I read that statistic and had a good, hearty laugh. That industry is changing dramatically.