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Landlord Newsletter # 7 Careful Tenant Screening

The LPA Newsletter, May 2004

Dear Fellow Landlord,
I hope you enjoy this month's newsletter.

In this issue of The LPA Newsletter:

  • We are continuing our new series of Landlord Protection SPECIAL REPORTs,
    "What do I do when....?" In this issue, it's "What do I do when the Tenant Wants to leave?"
  • More Tenant Excuses you may find amusing.
  • Our monthly LANDLORD TIP was provided by me. It's called "Careful Tenant Screening."

    Please e-mail us if you have any questions or would like to add or share any material / information. Have a great month of May and a Happy Mothers Day.
    Remember, "It's better to have No tenant than to have a Bad tenant!"
    John Nuzzolese



    What do I do when...

    The tenant wants to leave?

    When a tenant wants to terminate a tenancy, it is done in one of two ways. Either:

  • in accordance with the lease agreement, or
  • in violation of the lease agreement.

    If your tenant wishes to vacate tenancy properly, it usually means giving you, the landlord written Notice to Vacate in a time frame outlined by your lease agreement. Normally this allows the landlord enough time to prepare and find a new tenant for re-rental.

    The usual steps a lease abiding tenant would take to terminate tenancy are:

    1. Notify the landlord in writing within the proper number of days notice according to the lease. (Most leases require 30 days written notice before the last day of the last full month of occupancy, but many landlords require 60 or more days - In the absence of a written agreement, most states require a minimum of 30 days written notice.)
      Keep in mind that a tenant can only give a valid 30, 60 day or whatever notice during a Month to Month tenancy, unless that notice is coordinated with the expiration date of the lease.
      The LPA recommends having your tenants use the Tenant's Notice to Vacate Form found in our Free Forms area of this website. I give my tenants a copy of this form along with their copy of the lease agreement so they'll be able to give proper notice to vacate as agreed.
    2. After notice is given to vacate, you can make arrangements with the tenants to show the rental to new prospective tenants.
    3. About 2-3 weeks before the tenant's proposed moveout, it is a good idea to send the tenant a Moveout Reminder Letter which instructs the tenant how they are expected to return your rental property to you and where to return the keys in order to get a security refund.
    4. The Moveout Cleanup & Debris Letter is another reminder letter I like to send. Over the years I have found a definite difference in the way people will leave a rental property when I use this form. Use it. It can only help.
    5. Inspecting the Rental for Damages: As much as the tenants may want to do a "walk through" with you to confirm that they will get the deposit back, DON'T until after they have moved out. And then do it without the tenants present. There are many reasons I say this.
      • Most damages are found after the tenant leaves
      • In fairness to the landlord, you can not make a full careful list of security deductions with the tenant watching. It takes time to do a good inspection
      • Avoid a confrontation that may cause more damage from a disgruntled tenant at moveout. Let them go out smoothly. Then you are in better control over their refund.

    As far as inspecting the property and calculating a refund with your Settlement Charges Guide, Property Condition Report checklist and Security Settlement Statement and handling tenants after they leave, check out our next What Do I Do When... the tenant has moved?

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    Excuse of the Day for 5/3 /04:

    "I'm short this month. How about you take the rent out of my security deposit?"

    You're only 5'2", so you're short every month in more ways than one. - Annie, USA

    Excuse of the Day for 5/1 /04:

    "I made a bet with my friend that you'll reduce the rent if I stop paying. I want it reduced $100. less for the next year."

    Just when I thought I wouldn't have an eviction this year. - Jack K.

    Excuse of the Day for 4/30 /04:

    "I'm sorry I don't have the rent, but you are looking so cute lately."

    That won't work. I'm married! - Jonathan

    Excuse of the Day for 4/27/04:

    "My bank account was just frozen. Don't worry, I should have this all straightened out within a few weeks."

    I should have sued you last month when you didn't pay. - Submitted by Ryan

    Excuse of the Day for 4/17/04:

    "Go ahead and evict me. Everybody knows you wouldn't dare risk losing me."

    She thinks because she's only 3 months behind on the rent and mows the lawn every 5 weeks that I'm afraid to kick her out. Well I'm looking forward to it! - Steve S., BVR Mgmt


    May 2004


    Careful Tenant Screening

    by John Nuzzolese

    From the time of first contact with the prospective tenant to the time you sign a lease with him or her, you are still in the tenant screening process. Keeping in mind The LPA article, How to Screen and Qualify Tenants in 5 Easy Steps, it is very important to decide beforehand that you WILL NOT accept anyone who does not meet ALL of your screening requirements.

    Often, landlords overlook certain "red flags" that indicate the prospect is NOT qualified to rent from you. It could be a sign of the tenant's financial stability, personal habits, respect or attitude toward the landlord. The important thing I'm saying here is, do your homework.

    What are your screening requirements? It's important not to forget some of the key ingredients when screening a tenant.

    1. Rental Application
      A fully completed and signed LPA Rental Application.
    2. Identification.
      Be sure you get a copy of the applicant's drivers license or other valid picture ID. Is it possible that a deadbeat would use someone else's identity and credit to get accepted as your tenant? You bet. It happened to me!
    3. A Non-Refundable Deposit.
      A serious applicant will have no problem leaving a substantial non-refundable earnest money deposit with you to secure the rental. If you reject the applicant, it is refunded, but they lose the deposit money if they change their mind or don't rent from you for some reason.
    4. A Non-Refundable Screening Fee
      It came to my attention that a local management company was charging an "Application Fee" or "Screening Fee" when ever anyone applied for one of their rentals. What a great idea! Since then I've been doing that too, and I learned there is a double benefit to it:
      • No more paying for credit reports!
        In the past, I paid for credit reports on rental applicants out of my own pocket. When screening a large number of applicants for a number of popular rentals it would get quite expensive, especially if there were a lot of rejections.
      • Bad tenants disqualify themselves faster!
        They may be willing to submit an application and waste your time and money checking them out if it doesn't cost them anything. They'll take a chance. "Maybe the landlord's to cheap to do a credit report", they may think. But when a small screening fee is required, suddenly they fall out of love with your rental. A screening fee rarely stops a good tenant from renting a quality rental.
    5. Verification of the references on the Rental Application.
      Be sure to take the time to make calls to verify the information on the application is true. When verifying the landlord reference, I recommend the Landlord Reference Qualifier.

      Occasionally, negotiations over price, security deposit and other matters may become heated with a prospect. It was always my first impulse to "can" the deal if I don't like the tenant's attitude. You may feel like killing it at that point, but don't...yet. Step back for a moment and think about whether the tenant has a valid point or position. Is his attitude a result of a wounded ego? I found that many deals can be worked out with certain tenants that seem to have an attitude or seem argumentative. Sometimes, they turn out to be the best tenants. They just need to know they are not being taken advantage of and they'll begin to respect you. So, it's up to you to be a diplomat and a psychologist to see if it's worth making a deal with the prospect.

      Remember, "95% of tenant problems can be eliminated in the screening process."



      "If I had eight hours to chop down a tree, I'd spend six sharpening my axe."
      - Abraham Lincoln

      "It shall be done." - William Peck in "The Go Getter"

      "One of the secrets of life is to make stepping stones out of stumbling blocks."
      - Jack Penn

      "True success is overcoming the fear of being unsuccessful."
      - Paul Sweeney

      "There never was a great soul that did not have some divine inspiration."
      - Marcus T. Cicero

      "How much did your last tenant problem cost you?"
      - John Nuzzolese


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