Getting the Best Tenantsby Al Susoeff
I often get into discussions with other landlords both here in town and online in other parts of the country and they ask me how it is that I do not have the same problems that they have with their renters. I tell them that the short answer is, “I’m a mean and nasty bastard and live by the rules of ‘management by intimidation’ theory”, but the truth is, I really just do not have many problems with tenants. I think my posture from the very beginning sets the stage for my attracting the renters who will not be a problem. That being said, let’s start at the beginning. Prescreening
It starts with my ad in the paper. The ad is always a three line with includes the address, the bedrooms, the baths, whether or not it has air conditioning, and whether or not I will except section 8, and of course the phone number. A bit of a side note here, I always except section 8 and all my houses have air conditioning; living in the south, this is one way I attract a better renter. Only about 30% of the homes I see in the paper have Central Heat and Air. Next the number does NOT ring to me. It doesn’t even ring to a human being. It rings to a voicemail service that I pay monthly for and change the messages as house come in and out of inventory. The message gives more detailed information about the house and instructs the listener to go by the home and pick up an application or download it on the web and fax it to our office along with one month’s worth of pay stubs, and a copy of their driver’s license or state id. They DO NOT get to talk to me until they send an application. They DO NOT get to view the inside of the home until they send me an application. I think by doing this, I have sent a message that “my time is much more valuable than yours, and you will respect it, or you won’t get the house”. Maybe not, but it seems to work. Sometimes people leave me a message. The message is turned into an mp3 and sent to my email. The email includes their number based on caller ID, so I have total control as to whether or not I call them back. Oh, and here’s the beauty part; it costs me something like $8.49 per month. Sometimes I call them, sometimes I don’t.
So, my personal guidelines are like this: 1. If they fail to leave a message…no call back; they are a time waster. 2. If they say something really stupid like your ad says 3 bedrooms and your recording says 3 bedrooms but I needs me a 2 bedroom…no call back; they are too freakin stupid to rent from me. 3. If they fail to leave their name…no call back, if they are that rude and uncultured I don’t want to spend the next year babysitting perfectly useless adults. 4. If they say something like “this is MS. Watkins”…no call back; they want to be the “in charge dominant” person in the relationship, and I do not want to have to deal with begging them for the rent every month. However, if they call and ask for directions, I immediately call them back. This is a “closing statement” scenario. They are not just mildly interested; they are on the way to check out the property. If they call needing help with the website, or have specific questions about filling out the application I call them back immediately as well; again, when a client makes a statement like that, it usually means they are ready to go right now; and it usually means they are going to have at least a modicum of respect.
Screening and Interviews
My process for screening is very simple. They have to meet three criteria; money, work and former housing. They must make a gross weekly salary equal to a month’s rent. Period. If they make less than that, they are not qualified for that house. By the way, that does not necessarily mean I throw out their application. If they are close and the rest of the application looks good, I may call them and try to put them in a different and cheaper house, or ask if I may keep their application for the next 6 months in case another house that they can afford comes up. By the way, that’s a gold nugget I just gave you guys; I cannot tell you how many tenants I have placed in houses other than the one they applied for, and many times do it months later. I call their employer. Typically I have to send a fax with the application requesting the reference, but in a litigation crazed society like ours I can hardly blame them. Employers are very limited and very scared when it comes to the information they give out about employees. For this reason I ask only a few questions and with a single exception, all require a “fact” type answer. The questions go something like this: 1. “How many times has the employee been late in the last 6 months.” If they are habitually late for work, I am willing to bet they will be habitually late with the rent. 2. “How many times have they been disciplined or commended in the past six months”. This will give me and idea of what sort of attitude I will be dealing with. 3. Finally, I ask them, “If you had to do a lay off and cut the employee, would they be among those who were eligible for rehire”. This is not a “fact” type answer, but it does give the employer the ability to kill or praise the employee without risking a lawsuit. Most employers laugh when I ask this and I have gotten so really interesting, if not hilarious answers.
If they pass all of that criteria, then I allow them to look at the inside. I call them and give them the code to the lock box, instructing them how to open it, and making sure they understand that they need to lock it. I usually say something like, “listen, ‘prospective tenant’, I am super swamped right now, but you seem to be pretty trustworthy and your application checked out ok…how about if I just give you the code to the lock box and let you go look at it on your own…you just have to PROMISE me you will lock it back up when you are done…call me when you are done and let me know what you think”. When they call back, I schedule an interview. I have them understand when I talk to them that they are coming to sign the lease, and I make sure they are ready to do so. I tell them they must have a cashier’s check for the deposit which is always equal to one month’s rent, and the first month’s rent, which I typically prorate in 1 week increments and any other fees I charge, (like the pet fee or the waterbed fee). They are not allowed to pay cash, personal check or money order the first time. I want a cashier’s check because I want to know they can put their hands on the money and that they are serious about leasing the property. My lease is a monster. If all the addendums are used it is 17 pages and contains more than 8500 words. If you are part of my mentoring group you have already seen it, but suffice to say it is pretty much bullet proof for the state in which I live. I go over the entire lease pretty quickly, but I spend extra time in two areas; the money and the “crime and drug free addendum”. I explain to the tenant that I expect the money in my PO box on the first and there is NO GRACE PERIOD. If it is not there on the morning of the first, they are late and accrue a late fee that day. The laws are really slanted toward the landlord in this state so I further explain that after 5 days I will start both civil and criminal eviction proceedings. They will gain a warrant for their arrest and have to appear in court if they fail to pay. Next I explain my “crime and drug free” addendum to them. This addendum basically states that if the cops show up for ANY REASON I may kick them out at my option. I will not tolerate drugs, I will not tolerate crime, and I will not tolerate adults acting like babies and I look them square in the eye and tell them that to their face. If I wanted to deal with children I would buy a day care not rental property. Between how I feel about the rent and the “crime and drug free addendum, I usually scare off about half of the prospective tenants that have made it this far; I suspect it is the half that I would have problems with. Finally, there are fees as well as deposits. I allow animals in almost all my properties, but each animal costs $150.00; and that is a fee not a deposit. They DO NOT get it back. I explain that animals no matter how good, tear up a house, whether they are inside or outside, whether they are dogs or cats. Why $150 you may ask? Well, I don’t want to appear prejudiced against animals, but by the same token I do not want a tenant who thinks he is “Ace Ventura – Pet Detective”. I have a fee for a waterbed of $75.00. Waterbeds smash carpet, and if one breaks on you, then you have a major problem, particularly in a two story house with the master suite upstairs; how do you think I know that? There is a deposit for a satellite dish. Dish installation puts holes in the roof which must be patched when a tenant leaves. No Patch? No return of deposit. Once They Are In
I don’t know what in human nature causes this, but almost every single tenant I have ever had “tries me out”. They push me to see how far they can go. Usually this happens in the third or fourth month. The first comes and no rent check. I do not call them. I post a notice on their door and I do it in a very particular format. The notice is for all practical purposes a standard “pay or quit” notice; but how I deal with it is not standard. I do not bang on the door and demand rent. I walk up to the door and tape it top and bottom to the door so that anybody who comes on the property will get to see that they are late on the rent. Then I step back and take a picture of the notice with my phone. I know from feedback that tenants find this technique embarrassing, rude and mean. I have had one woman call me the Anti-Christ. I simply explain to them that they can avoid such notices by paying on time, and if the rent, (and now the fees as well) are not in the PO Box the next morning the same will happen until the 6th day when I post the notice that says, “Notice to Vacate” and then file the complaint with the local prosecuting attorney. To date I have only had to ever start the eviction proceedings on one tenant, although many have taken it to the five day limit. I guess this sort of posture from me makes them really stop and think critically, like an adult should, because a few have come up with really creative ways to get me paid. I have had several give me half now and half a week later. Others have suggested other payment plans. One actually offered me security in the form of a wedding ring. I don’t mind working with people who are willing to work with me, but I never tolerate the ones who just want me to “fix it” for them. That being said there is a big difference between a tenant seeing what they can get away with and one who has a legitimate problem. The first thing to remember here is that their problem is NOT your problem. Sorry to sound cold, but if you decide to be a philanthropist; you probably will become a door mat for many of your tenants. This has to be taken on a case by case basis, and I cannot tell you exactly how to do it. I have a tenant who has been with me for many years. She is never late. Ever. I get a call from her on November 28th or 29th. She has a problem. Apparently she has been in the hospital for nearly two weeks and as a result had no rent money or any other money for that matter. She tells me this, but also says she has a plan if I would be willing to work with her. She will pay me all the late fees as well as the rent, but wants to pay in two installments, one about a week late and the other about two weeks late. Not only did I let her slide and do the payment plan she suggested, but I waived the fees and wished her a Merry Christmas as well. Why? Her history and her posture. Like I said in more than three years she was never late. She called me before the rent was due to work it out; she didn’t hide from me and make me come looking for her. She had a plan to present to me as a way to make it right quickly. Somebody like that deserves the benefit of doubt. Would I take that chance on most of my tenants? No way; but like I said, on a case by case basis it is doable. The other thing I do is get any repairs done immediately. Immediately that is, if they do not owe me money. I once had a tenant who called me because his heater would not kick on, when he turned it on for the first time that fall. He had failed to pay the late fees to the tune of $75.00, and argued with me that they were unfair. I explained to him (on the phone…NOT in writing) that when he was ready to bring his account up to date, I would be happy to schedule the heating and air guys. He paid me later that day. Apparently, after talking with his wife, he decided that working heat and a happy wife was better than winning an argument with me. Situations like that notwithstanding, I schedule repairs immediately. Much of the time, I do not do repairs, but I have found if I “show up” either before a repair is done or while it is being done, I get appreciative tenants. Appreciative tenants are more likely to pay on time. This gives me an opportunity to go look at the house and see if they are taking care of it. If they aren’t I let them know; nicely, but firmly, what I expect done. Usually it is something simple like not mowing the grass, and usually it takes just a friendly reminder which is followed by a sheepish apology. Sometimes though I have to remind them that if they do not get a little carpet stain remover on the spots before they become permanent they could lost their deposit. Nobody wants to lose their deposit; especially with the rates I charge. The Three Big C’s
I guess to sum it all up it, what it amounts to is how you as a landlord are going to handle the three “Big C’s”; communication, consistency and control. You need to communicate from the very beginning that you are “in charge”, your time is valuable, and you will always be the one in control. When they try to take control; which they will, you maintain control through firm but nice communication. This is consistency. Regardless of what they do or say you are consistent in the way you deal with them. You stay consistent in what you expect. You do not waffle or waver or buy into their stories. If they are willing to accept that you are in control and will communicate back to you as they have need, you can even be creative in how you get things done with them. Think of it like raising kids. I think we would all agree that many parents have lost control or never had control of their children. Why? Because they never communicated what they expected; or if they did communicate it, the proved they were not serious when the kids pushed the limits of the box. They were inconsistent. Think of tenants as big kids. Most of them really are after all. When they become adults, they will not need you anymore and they will move out into a house of their own instead of living in your house.
Al Susoeff, Jr. is a Real Estate Investor, Trainer, Coach, Author and Civil Engineer from Central Arkansas. You can read more of his articles at www.ASusoeff.com