The following are some great questions from our students. Hope you find these helpful!
- Should I charge a $25 app. fee when buyers want to apply to rent a property?
Yes, if they want to fill out your application, they pay the app fee. That pays for your time or your employees time to verify what they put on the app. Also, you will pay to check their credit or do a criminal background check and that cost should be covered by what they give you for their application fee.
- What criteria do you normally use to select who you will rent to?
Employment history, income and the amount of money they have to put down.
- Should I send out the rental/lease contract now in addition to the rental application to everyone that applies in advance so they can review it and know what they are signing onto in advance of the open house?
No, you’ll overwhelm them with details they don’t care about yet. Wait until they’ve had a chance to see the house and fall in love with it. Don’t put walls in their way this early on.
- I worry about someone willing to sign the rental/lease contract without reading it first.
Most people never read it anyway. Go around asking homeowners if they’ve ever read the documents they signed at their closing. All they care about is whether or not they want the house and if they can afford it. We’re the ones who get hung up in the details.We do, by the way, take the details seriously. We have our buyers prepare for a 60 minute “closing ceremony” when they plan to move into one of our properties. At that time, (hopefully they’ve left the kids at home), we read over the contract with them line by line and have them initial the main items as well as the bottom of every page.Most tenant buyers get antsy and just want to sign and leave. I make sure to go over the details of rent, any available rental discounts or charges such as late fees and bounced check fees, pet fees (even if they don’t have one – they do – and even if they really don’t, they’ll get one in the future and owe you for it then), repair responsibilities and move out information. Get them to sign all those lines indicating it has been explained and understood.
- What is normally charged for pet fees?
We charge a $250 non-refundable pet deposit per pet. Yes, even adorable Fluffy will cause damage. In addition, we charge $15 – $25 per month pet rent per pet. Tenants love Fluffy and know she is worth it. These numbers are negotiable as needed, for example $25 per month pet rent for 2 cats rather than $15 each. In these cases, I always let them know that they are getting a discount, because they are.
- What kind of background/credit check do you recommend?
National Tenant Network is a great source for that and you can look NTN up online. There are many sources online depending upon what you want to check and fees do vary.
- What criteria do you go by in deciding who to rent to?
They must have a decent job/jobs that will cover the rent. I am more concerned with employment history and income than anything else. If they have a good job, make good money and can pay a good down payment with their first month’s rent, I love them. They must be employed (no, we do not count unemployment as income) and we will call their employer and previous landlord.
What questions, tips or suggestions can you add?
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This is great! I hope to have property to rent in the future and this will give me a start on how to ask the correct questions and get the “right” tenant. Thanks Karen, you do a great job.
Aug 31st, 2010 / 2:50 pm
I agree – employment history and income are the most important qualifiers for acceptance. I typically will NOT rent to someone unless they can prove 3X the rent in ‘take-home’ pay. I don’t want to put people in a position of them having to scrape buy to make rent payments – sooner or later they will choose to be late.
If they have 3X rent in take-home pay, they can typically afford the property – unless they are straddled with debt!
Sep 1st, 2010 / 2:02 pm
We do the same thing – 3x the rent. Tenants really argued when the banks were giving loans to people who made less than 3x. We all know how that’s ended for the banks…
Sep 1st, 2010 / 2:14 pm
How do you go about collecting late fees if the tenant does not automatically include it with their payment? Do you cash the check that they did send? Thanks.
Oct 22nd, 2010 / 7:08 pm
Joe: Great question and an ever present problem, right?
99.9% of the time, yes, I’m going to cash the check. Main thing is you want your payments covered and the late fee is really (1) to encourage them not to be late and (2) to pay for your time and aggravation!
But, the late fee is real and they have to take it seriously. So, I send a reminder and a notice that they still have money owing and that they will not be current until the late fee is paid, meaning that they will owe late fees every month until their account balance is brought back down to $0. I typically “forgive” one time.
How far you let them get behind is up to you. You want to keep your property filled and get your bills paid, but tenant aggravation has its limits!
Oct 23rd, 2010 / 10:11 am