In today’s session, I will cover the top questions we ask during a landlord reference.
What is a Landlord Reference?
A landlord reference is when we call a previous or current landlord to verify a tenant’s qualifications.
As a property management company, we want to call two landlords. Why? Because the first current landlord, if you have a horrible tenant applicant, is going to say anything to get their tenant out of there.
“Yes, they’re fantastic,” or “Yes, they pay their rent.” With those answers, you will take them in, and then you will assume the problems that these people want to get rid of.
If we go back to two landlords, what ends up happening is that the previous landlord doesn’t have to deal with them anymore so they will tell you the truth. We always like to see a history of that.
Sometimes, it is not possible if they have lived there for a long time or are newer renters. But what we do, no matter what, is we check our references.
Questions to Ask Your Tenant’s Former Landlords
We ask previous or current landlords the following questions to check and ensure they have a good landlord reference.
Have the tenants paid their rent on time?
You don’t want to have a tenant that is late when it comes to paying their rent.
Have they paid all their rent, not just on time, but in general?
It is critical that you know when a tenant has gone above and beyond to pay their rent on time.
How have they been as residents? Has there been any neighbor complaints?
You want to ensure that the residents you are moving into your building aren’t causing issues for other people.
Do they take care of the property?
Are they treating it like a house, or are they trashing it? There is no point in maintaining curb appeal if your property is left in a mess by a difficult tenant.
Would you rent to them again?
And I think this is a huge one. And again, you want to hear from pauses. Everybody might say, “yeah, we’d rent to them again.”
That hesitation might mean something, so you should ask them, “Okay, what is it that you wouldn’t rent to them again? What about them would you change?”
Have they fulfilled every lease obligation or broken any rules and regulations?
And again, if there is any hesitation, you might want to dig further into it. And if not, great.
So if they get green flags and the right answers for all of these questions that we currently ask their current or previous landlord, then that’s definitely an OK to keep proceeding with the applications and approve them.
But if any of these are red flags, if you don’t get good answers, or if there is hesitation, issues, or problems that come up, you should consider their application and debate if you want to approve them moving into your house.
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Having pets in your rental units adds liability and costs. But there are still ways to manage your property and remain pet-friendly while minimizing your liabilities. Here’s how.
Should Pets Be Allowed in Rental Properties?
The typical answer is yes, but with restrictions and at a cost.
Pets are everybody’s best friend. But does everybody take care of their pets, and does the pet take care of the property?
We typically increase the rent by a certain amount every single month. In different states, they might allow you to take additional pet security. In Massachusetts, however, that is not allowed.
So, what we do is increase the rent for you to be able to make more income as a landlord. In addition, we add on inspections through the property to ensure that the pets are “taking care of the place” and that nothing is being damaged in your unit.
How to Make Your Property Pet-Friendly
My property management company has a pet lovers guarantee and screening application process for tenants with pets.
Aside from the walkthrough inspections, make sure that you have restricted breeds. That means your property insurance should say you are not allowed to have certain breeds on the property, such as Dobermans or Pitbulls.
You should also limit the pet’s size and weight. It is usually limited to 25 pounds, typically restricting bigger breeds.
When the tenants go through the pet application process, you can also charge them for monthly damage protection.
Doing these will make you stand out because most landlords won’t allow pets in their units. We respect that, but there are still ways to make any unit pet-friendly while protecting it from any possible damage.
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A zero vacancy rate is not impossible. Today, we talk about how we maintain zero vacancies and how you can adapt these strategies to your own rental business.
Zero Vacancies are Possible
In my home state of Massachusetts, specifically in Boston, we have low to zero vacancy rates. So, my property management company can turn over a unit the next day.
To make things better, we can even turn the unit over on the same day that a previous tenant moves out. That means someone might move out at midnight, and I got to get a new tenant moving in at 6:00 a.m.
You are probably wondering how much work I can do in this time frame because certain tenants have some expectations, such as the walls and floors to be painted. In other states, I hear that they leave properties vacant for a month so they have time to do repairs and renovations.
But in Boston, we don’t have the benefit of having too much time between an outgoing and an incoming tenant.
So what do I do, how do I do it, and what should you do?
3 Ways to Maintain Zero Vacancies
Here are the strategies that have served us best in maintaining zero vacancy rates.
1. Conduct annual inspections
With annual inspections, we see what we can do to keep up the property during the year. Our team conducts a thorough walkthrough to ensure no issues can hinder a turnover. That way, we don’t have to worry about anything when it is time to turn over the unit.
Annual inspections also allow us to maintain the same high standards during off-peak seasons and address potential issues before they get out of hand.
2. Opt to end leases early
Every two to three years, we paint the entire place. But, of course, tenants are living in the unit. They might have things up against the walls, so doing a paint job might not always be possible.
So what we do is have leases end a couple of days early, especially for big units or major houses with three to six bedrooms. For example, leases typically end on August 31, but we would have them end on August 29.
That setup will give us two days to paint the unit. It’s not a lot of time to paint or do some floors. So we also line up our vendors to try to knock that out.
3. Negotiate delayed move-ins
If ending the lease early doesn’t work out, we will try to see if we can work with the incoming residents to do a delayed move-in.
By delaying their move-in date, we might be able to work with them to get their floors done or do it room by room. It’s a lot of work, but at the end of the day, it’s important.
Bigger bedrooms and apartments will get beat up. And you don’t want these properties looking bad throughout the year because it will lower their value. The tenants aren’t gonna take care of it, and, long story short, no one’s going to want to rent it in the future.
So you have to do everything you can to keep up the value of your property. And remember, typically, as with any other business, the money you spend on it is a write-off. So it’s actually very beneficial for you to spend the money to improve your property and keep that value up.
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Whether or not managing properties is new to you, you might have heard about leases (fixed term) and tenancy at will (month-to-month).
Learn the differences between these two forms of rental agreements, so you always know what’s best for your tenants and investment property.
Lease vs. Tenant-at-will
A lease is an agreement outlining the conditions of tenancy between a landlord and a tenant. stipulating the terms of tenancy.
This type of agreement usually lasts for a specific period. A typical lease is one-year with 12 monthly payments.
Tenancies at will are month-to-month agreements with no set length of time, as long as the tenant pays the rent.
The tenant can stay for 30 days and only has to give 30 days’ notice to leave. That notice to leave the property can also come from the landlord.
If the lease expires and the tenant does not leave but continues to pay the rent, it would automatically become a tenancy at will.
This is not an ideal situation for most landlords since there is no security of consistent income from the rent payments. But it happens.
The Pros and Cons of Leases and Tenancy at Will
It is typical and safe to do lease agreements. Leases mean a consistent amount of money coming in for a more extended period.
However, a tenancy at will has its merits in certain circumstances, such as:
1. When the property is newly acquired
If you acquire a new property and don’t know what the current tenants are like, it might be good to keep them at tenant at will for a while.
That way, it will be easier to issue a 30-day notice should you find them not the kind of tenant you want.
2. When you want to increase rent
Technically, increase your rent every single month if you give that notice. It’s very unlikely you get to do it with no complaints, but you do have the flexibility to increase rent without having to wait for several months.
3. When you want to renovate or sell
You might want a renovation or need to sell the property asap. With this, a tenant at will comes in handy because you can get a tenant out easier and faster rather than having them for a longer time if they are on a lease.
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Getting the right tenant is a crucial part of renting your property. Here’s how to pre-screen the best tenant possible through their landlord and work verifications.
Are Landlord and Work Verifications Necessary?
I get this question a lot. But as I always say, it never fails to stick to the 5Ps: Prior Planning Prevents Poor Performance.
There is no way to determine right off the bat if your tenants are a good fit. But landlords, with the help of property managers, can always plan ahead and strategize.
One way to do that is through landlord and work verifications. Like credit scores, they are early indicators of good tenancy history and financial status.
What to Ask During Landlord Verification
I include landlord verification during the screening process where the tenant-applicant will be required to provide some information about their former landlords.
If they refuse or hesitate, you can probably guess that they didn’t have a good relationship with their previous landlord.
But if the applicant complies and you are able to reach their former landlord, here are a few questions you can ask about their former tenant:
Did the tenant pay their rent on time?
Did the tenant keep their unit in good condition?
How were they as tenants? What did you like most about them?
What type of situation, if any, did occur that they did not like?
Were there any neighbors that they didn’t get along with?
Why do you think are they moving?
Keep in mind that landlords can be incredibly busy, so you would want to set an appointment with them in advance. Be specific about the time and date, and emphasize how you would appreciate their feedback.
Furthermore, you may want to contact at least two of the applicant’s former landlords. This way, you can guarantee consistency and avoid any false information.
What to Ask During Work Verification
If your tenant-applicant provides their pay stubs, you can also use them. Pay stubs, also called payslips or paycheck stubs, indicate how much they are paid so you would know if they can pay the rent.
But looking beyond their ability to pay their bills, we want to get a grasp of their personality.
As such, here are some questions you can ask their employer or superior during work verification:
Does the tenant show up on time?
Are they disrespectful towards clients, superiors, or colleagues?
Do they get along with others?
Their attitude towards work is a reflection of their overall character, and that would let you know if they are the kind of tenant that you want to deal with.
Remember, you are not just looking for someone who has a paycheck and can pay the rent. These people will be living in your property and you will deal with them for a certain period of time.
It is important to screen tenant-applicants well and utilize the information you get from their landlord and work verifications.
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In all my years of managing over 800+ properties, I have seen and dealt with countless tenant applications.
If you or anyone else you know is looking for guidance on screening tenants, such as conducting landlord and work verifications, join the Landlord Tutor community and sign up here.
With every new tenant, landlords charge certain fees related to the move-in. State laws may vary, but here’s what you need to know about tenant move-in fees.
What Are Tenant Move-In Fees?
When a tenant signs a new lease, landlords often charge a certain fee. These fees typically cover all expenses related to processing and accommodating new renters, including touch-ups and small adjustments like switching directories and reprogramming security systems.
While some tenants resent paying these fees and consider them an unfair expense, the fees are perfectly legal as long as they are reasonable and disclosed upfront.
Security Deposit vs. Tenant Move-In Fees
Tenant move-in fees should not be confused with the security deposit.
A security deposit is an amount that a tenant pays to a landlord at the start of a tenancy and that the landlord holds in trust.
It is also used to cover the expense of repairing any excessive damage the tenant, other residents, or their visitors made to the rental property during the tenancy.
The security deposit also only forms part of the move-in fees.
State Laws on Move-in Fees
As a landlord, you should be aware of what tenant move-in fees you can charge and how to collect them so there are no legal issues down the line.
In Massachusetts, there are three categories under which you can collect move-in fees:
first month’s rent – the rent for the first month of their tenancy
last month’s rent – the rent for the last month of their lease term
security deposit – an amount held in trust that must be equivalent to no more than one month’s rent
You can also charge a key deposit fee which would include the purchase and installation costs for a new lock and key.
Charges for lease creation, pet fees, and application costs are all prohibited. You also cannot collect nor accept rent payments in advance, even if the tenants offer. Doing so would put you at risk of liability.
Knowing the state regulations will let you decide how much you can collect in advance and how you must manage those funds. Remember to always check your local state laws for any changes to the regulations.
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I have been in the business of buying and managing investment properties for over 20 years. To know more about tenant move-in fees and other things you ought to know about being a capable and profitable landlord, join the Landlord Tutor community and sign up here.
