Bill Gray – The Landlord Doctor

Insider Advice on Collecting Tenant Debt and Screening Tenants

Posts Tagged ‘Credit Report’

Accurate Tenant Screening may Become Much Easier!

Posted by Bill Gray on July 20, 2010

A credit report is basically a report card of how a particular person pays their bills. Why are monthly rent payments not reflected as a trade line on the credit report? I as well as many [tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5Dothers, have felt for years that rent payments should be included on the credit report, just as mortgage payments are. If a tenant pays the rent on time every month, they should be awarded credit for paying their obligations. On the other hand, a tenant who does not pay their rent, or pays late, should be dinged on their credit, as they are if they pay a credit card late or skip the payment.

This month Experian announced that it has acquired RentBureau of Atlanta, Georgia.  This acquisition may finally make it possible for rent payments to be accurately reflected on the credit report. RentBureau is the nation’s largest consumer-reporting agency specific to the multi-family industry. RentBureau provides landlords and property managers a way to report rent payment history.  Click here for the press release

I have not learned the details of what Experian’s plans are with this acquisition, but I assume the result will be that landlords will finally have the ability to report rent payments directly to Experian, just as a mortgage company reports payments.

This could be a huge leap forward for both landlords and tenants. By reviewing a prospect’s trade line reflecting rent payments, a landlord will immediately know if the prospect has paid his/her rent on time. Conversely, tenants will finally receive credit for timely rent payments.  Using this information to screen tenants could greatly decrease the possibility of a tenant skipping or being evicted because the rent was not paid.

I am curious how my reader feel about this new development in screening tenants. Please take two minutes and complete the quick survey. Include your email address and I will send you my free E-Book “How to Detect Social Security Number Fraud.”

Click here to complete the short survey

Bill Gray

Bill@thelandlorddoctor.com

www.thelandlorddoctor.com

Tenant Debt & Screening Forum www.theinformedlandlord.com

Copyright 2010 – Click here to reprint/re-post

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Posted in Credit Bureau Reporting, Credit Report, Evicted, Landlord, Property Management, Tenant Screening | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , | Leave a Comment »

Non-Refundable Pet Deposits Can Actually Cost You Money

Posted by Bill Gray on January 31, 2010

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DThe way in which you explain, or don’t explain pet deposits can cost you profit.  If landlords could spend just one day as a professional collector attempting to collect tenant debt, one of the top objections they would hear from previous tenants is about pets and pet deposits.

“The urine spots on the carpet are covered by my pet deposit” is one example of a tenant either intentionally or unintentionally misunderstanding the pet deposit.  Many pet deposits are non-refundable.  If this is not fully explained at lease signing, most likely the tenant will believe that the pet deposit is no different than the standard deposit he placed on the rental unit.

Most tenants understand that when they pay a rental deposit any damage they cause to the unit will be deducted at move out from their deposit.  If the non-refundable pet deposit is not fully explained, the tenant considers it the same as the rental deposit.

So when Fido has several accidents and soils the carpet, the tenant often will guesstimate that his pet deposit will cover the cost of cleaning it.  In reality the cleaning cost is deducted from his refundable deposit.  Imagine the difficulty a professional collector has on the telephone trying to explain the difference between a non-refundable pet deposit and refundable rental deposit.

This is not to say that a certain percentage of previous tenants have a convenient memory when it comes to the terms of the lease.  But I do believe that a good share of landlords do not take the time to fully explain the terms.  An initialed and signed pet addendum will go a long way in settling disputes after move out.

Use a clear, understandable pet addendum and explain it clearly before the new tenant initials and signs it.  Doing so will save you profit by reducing tenant debt when the tenant moves out.

Email me your tenant screening and tenant debt questions.

Bill Gray

www.thelandlorddoctor.com

Forum www.theinformedlandlord.com

Copyright 2010 Click here to reprint/re-post

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Posted in Landlord, Landlord Tenant, Landlord Tenant Law, Property Management, Tenant Debt Collections | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 8 Comments »

Rising Tenant Debt Challenges in a Down Economy

Posted by Bill Gray on January 6, 2010

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DOur country’s current economy has had a severe impact on the real estate and housing market.  The nightly news covers the blight of communities impacted by a high number of foreclosures and the emotional stories of people who are facing such a crisis.  Unemployment, lack of medical insurance, and the credit crunch caused by sub-prime mortgages add to the crisis, making the current real estate market grim.  As a result, the downturn of the economy has also significantly affected landlords and property managers, presenting them with an unprecedented number of challenges.

As ‘The Landlord Doctor,’ I’ve reviewed over 70,000 cases of tenant debt, encompassing more than $200 million dollars.  Every day, I witness the negative impact of our economy on landlords and property managers across the country who seek my advice and instruction in reducing or collecting tenant debt.  As I sit on boards of professional associations and talk to the people who attend my conferences, I’m astounded by the increased spark of questions and concerns raised by landlords because of the economy.

As more people are displaced from their homes, those questions and concerns will continue to rise.  The need for extensive tenant screeningcollect tenant debt will increase as people become victims of the economy, and the need to will be a pressing issue for landlords.  There has already been a tremendous increase in landlords seeking my assistance in these areas, which is why I thought I’d share two common questions which have been posed in the past few months.

“My tenant is three months behind on rent. He’s always been a good tenant, but has lost his job. What should I do?”

First, like you, I sympathize with your tenant’s situation. However, three months is a long time to receive free housing. Remember, while you’re trying to be a nice guy, being a landlord is still a business. My experience shows that once a tenant is allowed to become two months in arrears on their rent, the odds are slim that they will become and stay current. In fact, these tenants usually owe much more than two months rent when they leave. When you first become aware of a change in their financial situation, make it clear that while you empathize with their dilemma, you cannot afford to allow the rent to go unpaid.  Be straightforward from the onset, notifying the tenant that carrying a balance due on rent is not an option. Additionally, a good attorney will advise that past case law has indicated that routinely allowing tenants to pay late sets a precedence which could force you to continue accepting late rent payments. Even worse, allowing one tenant to pay late, while refusing other tenants the same latitude, may cause a Fair Housing lawsuit, as all tenants must be treated equally.

“My tenant skipped out on their lease and damaged my rental. How can I collect what they owe?'”

This situation can be more complex. While it’s certainly something no landlord wants to  encounter, it happens.  Though this situation is more common during tough times, efficient property managers have learned to minimize it by applying good business practices from the time the prospect walks through the door, until he or she moves out of your rental. If it happens, I recommend that you take pictures and document all damages.  Follow your state law regarding proper notification to the tenant about the application of their deposit. Insofar as collecting the debt, you have three options:  1) sue the debtor in small claims court; 2) hire a collection agency (only an agency that specializes in tenant debt), or report the debt to all three credit bureaus and attempt to collect it yourself.

While I know that each of those situations has its own unique set of circumstances, a common theme prevails—an increasing number of landlords and property managers are experiencing a rise in cases of tenant debt.  These new challenges should make us more aware of the need for prevention, education and remedies in screening and the collection of tenant debt.

Use this difficult time to hone your skills as a property manager and your focus on the details. Improve your business practices by making small changes and improvements.  As a result, you’ll decrease incidences of tenant debt and increase your profits.  These are critical areas landlords must address to survive in any economy.

Email me your tenant screening and tenant debt questions.

Bill Gray

www.thelandlorddoctor.com

Bill@thelandlorddoctor.com

Copyright 2010 Click here to reprint/re-post

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Posted in Landlord, Landlord Tenant, Landlord Tenant Law, Property Management, Tenant Debt Collections | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a Comment »

USA Today – The Landlord Doctor

Posted by Bill Gray on January 4, 2010

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DDecember 30th USA Today published an article titled “Apartment renters win as vacancy rate climbs”, when he wrote the article author Paul Davidson asked me what effect concessions are having on the tenant delinquency rate.  My quote is included in his article.  The bottom line is that concessions may help rent empty units, but tenant debt continues to rise.

Link to Article: “Apartment renters win as vacancy rate climbs”

Bill Gray

Bill@thelandlorddoctor.com

www.thelandlorddoctor.com

Tenant Debt & Screening Forum www.theinformedlandlord.com

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Posted in Evicted, Landlord, Landlord Tenant, Property Management, Tenant Debt Collections, Tenant Screening | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment »

Tough Economy Makes Tenant Debt Tough, but Not Impossible, to Collect

Posted by Bill Gray on December 28, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DThe downturn in the economy has caused many landlords to lower their credit requirements for new tenants.  Of course, lowering credit requirements increases financial risk. Renting to a tenant with little or poor credit increases the likelihood that the tenant will at some point leave owing the landlord money.

This change in rental criteria is understandable, considering the need to keep all units rented.  But know that when you lower your standards and in turn incur debt, this debt will be tougher to collect than if you had rented to a tenant with good or great credit.  If you use a collection agency to collect the debt, you should also lower your expectations about how much you feel they should collect.

Collection agencies are reporting that they are receiving many more files than two years ago.  The average amount of debt in these files has also increased.  Relaxed rental standards, coupled with the high unemployment rate, have put collection agencies in a tough spot.

The American Collectors Association reports that the collection industry debt recovery rate is down 30-40% over last year.  Angi Pusateri, National Sales Manager for RentDebt Automated Collections, confirmed that her company is experiencing a similar decline in debt recovery.  However, RentDebt Automated is weathering the storm well and has added employees in the last year at their offices, which are located in Nashville, Tennessee and Dallas, Texas.

Jeff Cronrod, the President of Rent Recovery Service, a national collection agency specializing in the collection of tenant debt, estimates that nearly 40% of the debtors his company is trying to collect from are unemployed.  “It is not that these debtors do not care about the debt or their credit. They simply have no means to pay the bill,” Cronrod explained.

Saul Wertzer, President of Rent Recover Solutions in Atlanta, Georgia (not to be confused with Cronrod’s Rent Recovery Service), told me that his company has also seen an increase, not only in the number of collection files, but also an increase in the average amount of each file.  I have heard this from every company I have spoken with, in every corner of the country.  Wertzer went on to say that it is important for landlords and property managers to think long-term about debt they are owed by previous tenants.  Over time a good percentage of tenant debt is collectible.

If your collection agency has served you well in the past, stick with them, even though recent recoveries may have dropped.  Trust me, every agency is experiencing a tough time collecting debt.  Don’t jump ship and hire another agency, because eventually the economy will improve and many of these tenants who owe previous landlords will get back on their feet.  When they do, they will work to clean up their credit and pay their debt. But don’t wait until then to do something about it.  Now is the time to make sure the debt you are owed is reported to all three major credit bureaus. Whether your collection agency reports the debt or you report it via an automated service, make sure every dollar you are owed is reported.

Doing so will greatly increase the odds that you will get paid the debt your previous tenant owes you.

Email me your tenant screening and tenant debt questions.

Bill Gray

www.thelandlorddoctor.com

www.theinformedlandlord.com

Copyright 2009 Click here to reprint/re-post

Tenant Debt & Screening Forum www.theinformedlandlord.com

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Posted in Collection Agencies, Credit Bureau Reporting, Landlord, Landlord Tenant, Landlord Tenant Law, Property Management, Tenant Debt Collections | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment »

New Landlord Forum – Tenant Debt and Tenant Screening

Posted by Bill Gray on November 25, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DThanks for reading my blog.  I try hard to respond to every email I receive, but I receive more and more every week.  It is getting hard to keep up.  I started a forum that will address tenant debt and tenant screening issues to help answer the commonly asked questions.  Please help me get the forum off the ground by registering and posting your questions.

The forum url is: www.theinformedlandlord.com

Thanks,

Bill Gray

Bill@thelandlorddoctor.com

www.thelandlordoctor.com

Copyright 2009

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Posted in Credit Bureau Reporting, Evicted, Landlord, Landlord Tenant, Landlord Tenant Law, Property Management, Tenant Debt Collections | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments »

Do not Make These Mistakes When Screening New Tenants from Abroad!

Posted by Bill Gray on November 22, 2009

[tweetmeme http://www.URL.com] Screening possible new tenants who have recently come from another country can be challenging.  Even those who may have been in the U.S. for some time may be a challenge — if you are not judicious enough to very carefully read what they have submitted on their application.

1. Dates: When most Americans write a date, they normally put it in month/day/year order.  In other countries, however, often the month and day are inverted so that dates are printed day/month/year.  The American military also uses a dating system that shows day/month/year.

Also be aware that the numbers themselves may look different than the way you are accustomed to seeing them.  Many other countries put a hook on the bottom of a ‘9’ or a line through the middle of a ‘7.

Since several types of screening reports are matched to birth dates, you can understand that entering the wrong date could hinder your ability to receive complete data about your applicant.  I prefer a rental application that clearly asks for the day, month and year.

2. Hyphenated names and spelling: Other than possibly nicknames, most of us print or write out our name the same way every time.  Not so in some other countries.  Often the name is

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Homeowners Could Quickly Become Renters, While Mortgage Companies Become Landlords

Posted by Bill Gray on November 18, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DChris Thorman from www.softwareadvice.com/property-management/ recently posted an interesting article about a program that could possibly turn thousands of homeowners into renters.  The twist is homeowners could be renting their own home from their mortgage company.  Here is a link to Chris’ article: http://www.softwareadvice.com/articles/property-management/breaking-down-fannie-maes-deed-for-lease-program-1111609/

This article interests me in two ways.

1.  I own a home in Florida that I can not give away. I would be VERY happy to rent it from my mortgage company.

2.  If this program takes off it could be a windfall for property managers of single family homes.

Since I work exclusively with landlords regarding tenant debt and tenant screening, the idea of renting my home from my mortgage company raises some interesting questions.  Will I be screened and if so, by what criteria?  Could my mortgage company evict me if I am late on my rent?

As this program unfolds please email me anything you learn.  I am also very interested to hear from property managers as how you intend to capitalize on this opportunity to increase the number of rentals you manage.

Bill Gray

www.thelandlorddoctor.com

Bill@thelandlorddoctor.com

Copyright 2009

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Landlords Who do Not Screen are Shooting Themselves in the Foot

Posted by Bill Gray on September 23, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DemailOf the 20 to 30 emails I receive per day from landlords with tenants who owe them money, 5 or 6 are from landlords who did not screen their tenants before they rented to them and are now upset that the tenant burned them.  I shake my head when I read these requests for help.

For whatever reason, the landlord rented to someone who “looked okay” and then got upset when the tenant burned them.  Would these landlords buy a used car sight unseen?  Or show up at a dog shelter and say, “give me any dog, I don’t need to see it or know anything about it.”?  Of course they wouldn’t.  As absurd as this sounds, it is basically how they run their rental business.

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Posted in Collection Agencies, Credit Report, Evicted, Tenant Debt Collections, Tenant Screening | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments »

SUING AN EX-TENANT FOR PAST DUE RENT: What Factors To Consider

Posted by Bill Gray on September 14, 2009

[tweetmeme source=”your_twitter_name” only_single=false http://www.URL.com%5DTristan R. Pettit, Attorney at Law, Milwaukee WI –       Tristan’s Landlord – Tenant Law Blog www.petriestocking.com/blog/

Your tenant has already vacated your rental unit – so there is no need to file an eviction action — but they left owing you money.  Is it worth your time and effort to sue them in order to obtain a money judgment?  This is probably the third most frequently asked question that I receive when talking to landlords (the first two most asked questions in case you are curious are (1) which notice do I use when? and (2) how do I evict my tenant?).

There is not a simple answer to this question.  It depends . . . on many things.  Many variables need to be taken into consideration before deciding to spend the time and effort to sue an ex-tenant.  Let’s consider what some of those variables are.

1.     How much money does the tenant owe you?

Is the amount that is owed to you worth the time, energy, and cost to attempt to collect it?  You will need to purchase a small claims summons which will cost you approximately $100.  You will need to personally serve the ex-tenant with the assistance of the Sheriff or a private process server — typical cost between $35-$100.  If you are representing yourself you will spend time away from work and therefore lose some wages.  If you opt to hire a lawyer to represent you, you need to consider how much you will have to pay the lawyer.

There is no magic dollar amount that makes suing a tenant worth it or not worth it.  The “breaking point” as I like to call it, will be different for different people. Read the rest of this entry »

Posted in Credit Bureau Reporting, Evicted, Landlord Tenant, Landlord Tenant Law, Tenant Debt Collections | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 3 Comments »