How to Choose The Right Tenant For Your Rentals

How to Choose The Right Tenant For Your Rentals

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A person writing a check list for finding the right tenant.
Many landlords in Salt Lake City struggle to find the right tenants for their properties, but there are a lucky few who have multiple qualified applicants. While most property owners would agree this is a good thing, many of them don’t want to fall foul of the Fair Housing Act (FHA), which stipulates that one can’t give preference to a particular tenant because of race, religion, or other qualities. 

It can be tricky. When you have multiple qualified applicants, which one should you choose? And how do you stay compliant with the FHA (and other renters’ rights) in Utah?

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Choosing the right tenant from multiple qualified applicants

You might find yourself in a situation where you have multiple applicants for your rental property, and you don’t know which one to choose because:

  • More than one applicant has a good, stable income and can afford to live in your property.
  • More than one applicant can afford the security deposit
  • More than one applicant has a good credit score with no recent adverse credit history. 
  • More than one applicant has passed your identification checks and has the correct documentation (as required by law).

Create a qualification criteria

A person writing a check list for finding the right tenant.
So you have multiple applicants interested in your property? Congratulations! Now create a list of criteria and apply it equally to all your potential tenants. Your list of criteria might include:

  • A minimum credit score.
  • A minimum income requirement.
  • Proof of previously paid rent, a positive reference from a previous landlord, or both. 

Whatever you decide to include in your list of criteria, it’s important to apply your standards to all applicants. Equally important, you should keep your list in a safe place in case someone alleges you didn’t comply with the FHA. Penalties for FHA non-compliance are extremely expensive, ranging from a maximum of $16,000 for a first-time violation to a maximum of $65,000 for two or more violations within 7 years. 

“Under the FHA, the Department of Justice may bring lawsuits where there is reason to believe that a person or entity is engaged in a ‘pattern or practice’ of discrimination or where a denial of rights to a group of persons raises an issue of general public importance,” says the Department of Justice.

Delve a little deeper

A Landlord using a laptop to promote their rental properties.
If tenants are still equally qualified, delve a little deeper into their references and payment histories. It can be difficult to gauge references from previous landlords, but there are some definite red flags to look out for. When compiling references, discover the following information:

  • Whether prospective tenants received noise complaints from neighbors. 
  • Whether prospective tenants paid rent late (and how many payments were late). 
  • Whether prospective tenants maintained good relationships with landlords. 
  • Whether prospective tenants caused any property damage. 

You might also want to assess a prospective tenant’s background outside of their previous rental commitments. This might include searching for the prospective tenant on social media or Google. As this information is available to the public, you won’t have to ask the applicant for permission. 

It’s important to note that not every applicant will have a spotless record, so you will need to exercise your best judgment. Ultimately, you need to make sure someone pays rent on time and respects your property.

How to choose between tenants who all qualify for your rental property

Once you apply your list of criteria to all prospective tenants, one or more renters might not meet your pre-determined minimum qualifications. This now lowers the number of tenants you have to choose from. However, you could still have multiple candidates who exceed your qualifications. Again, you will need to steer clear of FHA non-compliance. 

There are several things you can do in this situation. Here are just some of the best deciders when choosing between tenant applicants: 

  • You might want to select the tenant that exceeds your requirements the most. This might be the person with the highest credit score, highest income, or best reference from a previous landlord. 
  • You might want to choose the first qualified tenant interested in your property. 
  • You might want to choose the qualified tenant who can move into your property the quickest. 
  • You might want to choose the first qualified tenant who contacted you about your property. Many landlords use the “first come, first served” basis when deciding between multiple qualified tenants. 

Whichever method you choose, you need to stay consistent. It’s a good idea to keep a written account of your reasoning for choosing a qualified tenant in case someone makes a complaint with the relevant housing authority in Utah. Finding the right tenant is tough, but you will want to document the process properly.

Tell all applicants about your qualification criteria and decisions

A blank piece of paper to make a list for choosing the right tenant.
Honesty is the best policy here, and you can stay on the right side of the law by informing all applicants about your qualification criteria. Send written notices to the applicants you didn’t select, and explain your reasons not choosing them. As long as you didn’t base the decision on the applicant’s race, religion, or another quality, you will comply with FHA legislation. 

If you didn’t choose a qualified applicant because of information contained in their credit report, you will need to inform the applicant about this as per the Fair Credit Reporting Act.

Final Word

The Fair Housing Act can be a complicated beast, and making a simple mistake could cost you thousands of dollars in non-compliance penalties. This is why it’s such a good idea to enlist the services of a qualified, reliable Utah property management company that takes care of all the legalities associated with tenant screening. As a result, you can find the best-qualified tenants without breaking the law.

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How COVID-19 Has Influenced Multi-Family Housing Trends in 2020

How COVID-19 Has Influenced Multi-Family Housing Trends in 2020

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The top multifamily housing trends in 2020 may surprise you. With the economy going the way it is, mortgage rates heading toward a record low, and millennials ready to buy, there is sure to be a change.

It’s no surprise that the COVID-19 pandemic has greatly influenced emerging trends in the housing market. Overall, we can say the virus has had a serious impact on the market as a whole. Many state governments are implementing laws meant to help tenants remain at home. The multifamily housing market has encountered many significant challenges due to the pandemic. Nevertheless, multifamily properties that are filled or vacant during this time can still be benefited by property managers to help seek tenant placement, perform everyday maintenance, and ensure tenant satisfaction. Here are some of the top multifamily housing trends in 2020.

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Reduced Demand

Until 2020, the multi-family housing market was experiencing a very large increase in demand. This was particularly from millennials who were beginning to settle down. But the outbreak of the COVID-19 has elicited mixed reactions from various actors in the housing market. Many multi-family firms have experienced challenges in getting construction supplies as more and more countries close their borders.

This decrease has made it hard to construct the estimated 328,000 houses needed to meet the housing demand. But this demand will decrease as more people file for unemployment. Lower incomes mean less demand as people will devote much of the resources to meeting essential needs. The multifamily outlook 2020 will be negatively affected by the coronavirus.

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Growing Investor Interest in Smaller Markets

Multifamily market analysis shows that the present challenges have increased investor interests in smaller markets. Particularly those not as severely affected by the pandemic. The reduced demand in major markets has forced investors to explore the available options in smaller markets. 

Housing markets in states without many rent regulations are also gaining more investor interest. This is because one of the multifamily housing trends is rising rents. But many states have instituted rent control regulations to protect tenants. For this reason, many investors are moving into markets that have fewer regulations. Such markets have a better multifamily outlook in 2020.

More Rent Control Legislation

The growing demand in the multi-family housing market has in the past led to rising housing prices. But this is set to change in 2020 as many states legislate rent control regulations. The regulations have also gained more traction due to the coronavirus pandemic. 

States such as Washington, Illinois, and New York all have rent control legislation that will come into force this year. Rent control regulations in New York caused a 9.2% drop in multi-family investment. This was from a multifamily market analysis. Los Angeles also experienced a 9.8% drop in investment year-over-year.

Multi-Family Will Continue to Perform Better in the Suburbs

The market performance of multi-family housing will continue to do better in the suburbs. This is because more and more families are relocating to the suburbs. Thus, investors will continue to build more houses in these areas, where they can attract more tenants and achieve better rental growth. Suburban areas especially those in smaller markets not severely affected by the coronavirus and will also continue to experience growth.

Entering Age of Digitalization

The role of technology will continue to feature more prominently in the multi-family housing market. Landlords are making their multi-family homes smart by installing Wi-Fi and even video conferencing equipment. This has become a necessity as many workers have to work from home due to the stay-at-home orders. 

Realtors are also adopting technology such as virtual reality. For instance, realtors are now using automated apartment tours through cell phones. One of the emerging multifamily housing trends is self-guided tours. These tours are convenient and help tenants have a better view of the house without interference from the realtor.

Multifamily Housing Trends Outlook

The multifamily housing trends in 2020 are being affected by the ongoing coronavirus pandemic. But the housing market is holding steady. There are still high occupancy levels and growing demand for multifamily houses in smaller markets. This demand is also shifting to states which have less rent control regulations. It is uncertain when things will return to normal. But the multifamily market analysis shows that the housing market is doing quite well giving the circumstances of the economy.

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How to Deal with Difficult Tenants

How to Deal with Difficult Tenants

A professional landlord dealing with bad tenants.

A professional landlord dealing with bad tenants.
Being a landlord sure has its ups and downs. You have seemingly the best, easiest tenants most days. You’re feeling like you’ve made a great investment and you’re living the life. Until you’re not. One day it all hits the fan. You need to prepare yourself for how to deal with difficult tenants. It will happen. If you have kept a great relationship with them, it can be an easy fix. Just make sure your relationship and expectations are clear right from the start.

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Be Clear From the Start

When you first met your tenants, were your expectations clear? Did you do a background check, credit check, and formal interview? This can definitely work in your favor moving forward. An interview is key to starting a healthy landlord/tenant relationship. You can easily get a good or bad vibe from an interview and determine whether it’s someone that is a good fit for the living environment you are offering. Although unforeseen circumstances can always arise, such as noisy neighbors and disagreements, it’s best to put it all out there in the beginning. Make sure they know what is expected of them and that you will do all you can (within reason) to keep them happy in their rental. 

Also, make sure that they understand that this is a professional relationship. Even if you’ve known this person for ages, it does not give them the right to take advantage of your generosity. You are their landlord and they are your tenant. You can be friendly of course, but keep it professional.

Know Your Rights

Keep updated on the rights you have as a landlord in the state you are in. Some states make it very difficult to evict a bad tenant. Even when the tenant is harassing the landlord, or they are being hard to deal with. As long as they are continuing to pay and stop their annoying actions, they may be hard to actually get out. So, know your rights and their rights and stay up to date on them. If you have a tenant that has turned on you and is abusing their rights, legal action can be taken. You deserve to have a respectable tenant who pays their rent on time and takes care of their side of the deal.

Keep Your Cool

When you get a complaint from a tenant, take it seriously. Knowing how to deal with a bad tenant is key. Meet up with them and show compassion. Show that you are on their side, and that you want the problem resolved just as much as they do. Keeping your landlord/tenant relationship good is very important. Once it is clear who is to blame (them, you, another tenant, or a neighbor), be ready to take action.

  • Always be professional. Keep calm at all times and keep your tone friendly. The less personal it gets, the better for everyone.
  • Offer to take care of it immediately. Do your best to make a plan quickly. Just as much as you want this problem to go away, so does everyone involved.
  • Understand the problem. Make sure you take the time to get all the facts. Are you just listening to your tenant complain about a neighbor? Get the neighbor’s side and compare their stories. Decide who is truly to blame and how it should be handled.
  • Show your concern. If this is a normal occurrence from the same tenant regularly, show the concern that they are after and promise to address it.

Apologize. Just apologize. Even if it’s not your fault. Be the bigger man. Some bad tenants are just looking for something to complain about. If you take care of it quickly and apologize for the situation, they will have much more respect for you than if you lose your temper and place blame back on them.

Build Your Landlord/Tenant Relationship

If your tenant knows that they can come to you with a problem and you will fix it quickly and maturely, your tenant will be happy and so will you. This is a big part of knowing how to deal with difficult tenants. Or rather, hopefully stopping them from becoming difficult tenants to begin with. 

You need to be clear, however, that you are here for them and that they too need to hold up their end of the deal. Keep a log of complaints and problems. If it mostly comes back to a certain tenant, you need to have a real conversation with them. Maybe they are not a great fit for your building and you could come to an agreement that would serve you both.

If the problem is with a tenant not paying rent on time, remind them that you have been holding up on your end. You address their needs and take care of everything you promise to. Don’t give them a reason to slack or not pay their rent. Keep the relationship professional and easy. Many people rent because they don’t want to have to take care of certain things (lawn, building maintenance, etc.). Keeping up with your work is just as important, as you can show them that it’s worth it to live in your dwelling.

Hire A Property Manager

If you love the idea of having rental income, yet don’t necessarily know how to deal with bad tenants, hire someone who does! A property manager can be a great resource. They can take care of the things that you don’t have the desire to take care of, yet you still reap the benefits of having an investment property. Simply removing yourself from the situation can feel like a huge weight is lifted off of your shoulders. With our tenant screening and application process, we aim to avoid difficult tenants before problems even arise. Being real estate investors ourselves, we specialize in property management services ranging from single to multi-family homes. Contact a team member and start renting your home without the hassle!

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Tips for Marketing Your Vacancies on the Web

Tips for Marketing Your Vacancies on the Web

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Tips for Marketing Your Vacancies on the Web

 

Remember when finding a new tenant meant throwing up a sign in the yard and placing an ad in the weekend paper? Times were simpler then. With sites like KSL and Craigslist attracting tons of local traffic and allowing free classified ads, the web has become your go to spot for finding quality tenants for your Utah rental property. But how can you make your rental stand out in the crowd? Following these simple steps will give your property a strong web presence and help find your next tenant faster.

 

Create visibility – Telling you to publish your vacancy to as many websites as possible may sound obvious, but do you know why? The more links available to your rental, the more likely it is to show up on your prospective tenants search results and ultimately on their radar.

 

Let your photos do the talking  – Almost anyone can write a glowing description that will make even a toolshed sound luxurious, but searchers want to see it. In fact, you should add as many pictures as the site will let you. Make sure they highlight your property’s best features and watch your lighting, because dark photos can make your top floor condo look like a basement apartment.

 

Add video – Sometimes photos just don’t tell the whole story. A virtual tour can really help people visualize the space and picture themselves living in it. Another huge advantage to using video is it will limit your showings to only truly interest parties since everyone will have already had a chance to “walk through” your property.

 

Update your information regularly – One of the biggest advantages web marketing has over print is that it’s editable. If you change your price or forget to mention a particular benefit, you can easily make the change at no additional cost.

 

Make it convenient for tenants to contact you – Not everyone does their searching during daylight hours when it’s appropriate to call, so always make sure your prospective tenants can contact you by email to ask questions. In fact, if you hire a property management company, they typically offer software that will allow tenants to schedule showings or send an application right from their computer.

 

If you aren’t already marketing your vacancies on the web, I suggest you start now. Your competitors are already showing their properties off online. The web can be very competitive, but following these simple tips will help you build a web presence and decrease your vacancy rates.

 

 

 

 

What Options Do I Have if My Tenant Needs to Break Their Lease?

What Options Do I Have if My Tenant Needs to Break Their Lease?

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What Options Do I Have if My Tenant Needs to Break Their Lease?

 

Some of the best property management advice you’ll ever receive is simply to plan on bad things happening. No matter how lucky you are, something will inevitably go wrong and cause you to need a backup plan.  It’s how you prepare for these contingencies that will ensure the long-term profitability of your Utah rental property.

 

One of these inevitabilities is when your “perfect tenant” needs to move out early. Unfortunately, this situation is not uncommon, and you need to protect your investment. Here is a list of options available to you:

 

1) Include a lease buy-out clause – One easy solution is to include a lease buy-out clause in your rental agreement. This clause is essentially a dollar amount you set to allow the tenant to exit their current lease with no further obligations. This figure is typically set between one and three months rent. This strategy is a bit risky though, since you are basically wagering that it will not take you very long to re-rent the property. If you end up with a prolonged vacancy however, your buy-out amount may not cover your losses in rental income.

 

2) Allow them to find a replacement tenant – This is where you allow them to find someone else to move in and take over the lease. This can be a good option, but be careful. You must provide them with your rental criteria and inform them anyone they find will be measured against it. Also, be sure to receive a signed lease and deposit from the replacement tenant before allowing your existing renter out of their lease. The upside here is your renter will do much of the work, but make sure they know you are in control.

 

3) Charge your tenant the cost of re-renting – In this option, you can simply charge your tenant the costs you incur while trying to re-rent. These include unpaid rent, marketing expenses, cleaning and labor costs, as well as any damages. However, you must actively try to re-rent your property because you are legally obligated to minimize these expenses to your former tenant.

 

Whichever option you choose is up to you, and there is no “correct” answer. Each option will have its pros and cons, but what’s important is that you have a plan. Planning ahead and remaining flexible will always help you adjust to whatever challenges may be thrown at you.

Rental Advertising Tips for your Utah Rental

Rental Advertising Tips for your Utah Rental

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Rental Advertising Tips for your Utah Rental

 

Nothing puts a landlord on edge quite like a vacant unit. With no one to pay rent and expenses piling up, most want nothing more than a phone call from a qualified prospect to put their mind at ease. Sometimes renting your property is as simple as combining well written ad copy and strong sales skills. Use these tips when marketing your vacant properties.

 

Start with the basics – Good copywriting is certainly an acquired skill, but you’d be surprised how often even basic information is missing from Utah rental property listings. Always include the rental amount, property address, and property specifics like bed/bath and square footage.

 

Highlight features and benefits – Even the least desirable unit has some benefits and it’s your job to discover and highlight these. Top floor units typically have views, ground floor units are easily accessible without stairs, and homes on a busy street are closer to bus lines and freeway entrances. Every property has something that makes it unique and attractive.

 

Provide lots of information – The more details you provide, the more a prospect knows if your unit is the right fit for them. Items you should provide include detailed photos, lease terms and deposits, application process details, etc. Being this specific may limit your total number of showings, but you’ll find that the prospects who do contact you are much more qualified.

 

Sell to your audience – When showing your vacancies, try to point out features that will be important to each individual prospect. If you are showing the home to parents with young children, point out safety features like a fenced in yard. If your prospect is a student, highlight how close the unit is to public transportation that goes by the university. By tailoring your presentation to each individual tenant, you will be much more likely to fill your vacant unit.

 

Having unoccupied rental units can be very stressful for landlords, but there are some simple things you can do to help fill them quickly. Follow these tips next time you post your vacancy and watch how quickly it gets filled.

 

Is it time to hire a property management company?

Is it time to hire a property management company?

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Being a landlord can be very stressful and it requires a lot of time and energy from an owner. Many owners ask: “when is the right time to hire a property management company to manage my investment?” The answer to this question will vary from owner to owner, but below are some of the signs that it is time to hire a property manager:

How to Know When to Hire a Property Management Company

  • You are being bombarded with maintenance requests – Receiving maintenance requests are unavoidable. Things are going to break with your investment property and they will need to be fixed. If these maintenance requests are coming in faster than you can get them resolved, it may be time to consider hiring a property management company. A good property manager will have a list of qualified vendors that can usually solve any issue in a timely manner.
  • You move to a different location than your investment property – As stated earlier, in order to manage your investment property, you have to be able to be in close proximity to your property. Any time there is a showing, you need to collect rent, or there is a maintenance issue, you need to be able to get to the property quickly. If you move to a different city or state, it may be time to hire a property management company.
  • You cannot handle all of the showings – One of the most important aspects of renting your property is finding a qualified tenant to place in your investment. Without doing so, you cannot make any money on your investment. For this reason, you have to be available to show your property to prospective tenants. If you cannot find the time to do this, it may be time to consider hiring a property management company.
  • You do not know what to do once your tenant stops paying rent – No one wants to rent their property to a tenant that does not pay rent on time or does not take care of your investment. In the unfortunate event that your tenant stops paying rent, do you know the procedure for eviction? If you answered “no”, then it may be time to consider hiring a property management company. A good property management company will be well versed and should have a procedure in place in the event a tenant needs to be evicted.

If you do not think that you are able to continue managing your investment, please consider hiring FRE Property Management. We are the premier property management company in Utah and will provide you with the peace of mind knowing that your investment will be taken care of. Contact us today at 801-673-5692.