Although people with criminal records are not explicitly protected by the Fair Housing Act, a new policy established by the Department of Housing and Urban Development requires landlords to distinguish between arrests and convictions and consider their severity and nature before denying an applicant with a criminal record, rather than implementing what the HUD refers to as "blanket bans" in which any applicant with a criminal record is automatically denied residency.
Read more in an article published by the New York Times
What can be so hard about owning investment property? you buy a house, you stick a Fore Rent sign on the front lawn, get a tenant and charge more than what your expenses are and you are done. Right? Wrong!
Owning an investment property is a business (passive for the most part, but a business nonetheless) and it should be treated with the seriousness a business deserves. Some of the most common mistakes landlords make can cost you plenty.
Here they are, summarized, so you can be aware and try to avoid them:
1. Not screening properly. Every tenant seems like the perfect tenant when you have a vacant property that's costing you money, but make sure you vet each tenant properly to avoid future issues that can cost you thousands in unpaid rent, evictions and property damages. The best way in which you as a landlord can find out if the prospective tenant is as responsible as they claim to be and has been a good tenant in the past, is by conducting a thorough background check including criminal background searches, eviction record searches, verification of employment and previous landlord, etc.
2. Under-budgeting for vacancy costs. Do you have enough cash set aside to pay for your mortgage, taxes, utilities, insurance, etc while your property is vacant? check with a local Realtor to find out what the average vacancy rate is in your area to make sure you can carry the property until you find a tenant.
3. Underestimating maintenance costs. Maintaining a rental property comes with unexpected expenses, such as damages, repairs and normal wear and tear. Analyze the condition of the property for potential repairs, budget for maintenance items such as A/C cleaning or potential leaks and set money aside for painting and carpet cleaning when the tenant vacates.
4. Improper paperwork. I always say that when things go well, nobody needs a contract, but when things go wrong, that's when you need them. A lease agreement is a legally binding contract and as such, it should be prepared skillfully. There are fill in the blank versions, which have been prepared by attorneys, that are a great resource. Make sure that you fill them out thoroughly, specifying all the terms and have it checked by a professional (a Realtor and/or an Attorney).
5.Not being aware of the Fair Housing Act. Not knowing, or ignoring fair housing laws can cost you dearly by opening you up to potential discrimination lawsuits. Make sure you word your advertising and conduct tenant interviews free of bias. Visit the US Department of Housing and Urban Development website for information about protected classes.
6. Neglecting tenant's requests. Failing to maintain your property and address tenant's requests will not only make your tenant unhappy, but it means you are breaching the lease. What's more, a small failure that goes unaddressed, can turn into a bigger issue over time. Keep in contact with your tenant to make sure the property is being maintained in good condition and send repair personnel promptly when repairs are needed.
When you hand off the keys to your property, you want to make sure the person you have rented your investment to is reliable, trustworthy and financially stable. Gut feelings and sixth senses may be valid decision-making factors when choosing a flavor at the ice cream shop, but when making a financial decision that affects your bottom line, hard data is often more reliable.
Once that For Rent sign goes up on your front yard and calls start coming in from prospective tenants, make sure you have a reliable online tenant screening company you can depend on to provide you with criminal background checks, evictions records and other valuable information about an applicant. So what are some things you can expect from a tenant screening company?
1. Thorough research: Tenant screening companies have access to various national and local databases in order to obtain the most accurate and up-to-date information on an applicant. Most counties report to the National Database of Criminal Records on a regular basis, so you can obtain localized records on an applicant from one source. In addition, a tenant screening company is also able to provide state and county records.
2. Fast results: Tenant screening companies have access to records that can be released instantaneously. You no longer need to wait days to review a potential tenant’s credentials. Instant results mean you can make a decision about an applicant much quicker, thus cutting down your vacancy costs.
3. Easy to understand reports: There are tens if not hundreds of databases containing an applicant’s background information. Tenant screening companies will comb through the various databases including national databases for criminal records, FBI records, OFAC searches, national sex offender registries, eviction records and more, and place the results in an easy-to-understand report. All the information, in one place, for you.
Your rental property is one of your most valuable assets, treat it as such and make sure every potential tenant undergoes a thorough tenant screening so you can make an educated and informed decision about them.
American households have increasingly turned to the rental market for their housing needs. 31% of households rented their homes in 2004, compared to 35% in 2012 and 36% at the end of 2014.
Some factors to contribute to this increase, according to a study by the Joint Center for Housing studies of Harvard University, are:
- The enormous wave of foreclosures that displaced homeowners after 2008
- The recent economic turmoil raised the bar to qualify for homeownership
- High rates of sustained unemployment
- The market conditions during the last few years have made evident the risks of owning a home, such as the potential loss of wealth derived from falling home values and the potential personal and financial effects of foreclosure.
- Renters appreciate the ease of moving when renting versus owning
- Being free from responsibility for home maintenance is something valued by renters
According to the study, "the 2000s marked the strongest decade of growth in renter households over the past half-century". With these numbers in play, a great opportunity has been presented to investors of rental apartments. Make sure that as an investor, you protect yourself and your assets. Run a criminal background check of your prospective tenants whether you are in Florida or anywhere in the United States.
You bought a great investment property at a great price, cleaned it up a bit and put a For Rent sign in the front yard. It is such a great investment that calls start flowing in and in no time, you start getting offers from prospective tenants. Sweet right?
Before you get too excited and sign the first lease that comes in, make sure you do your due diligence and check prospective tenants' out, after all, a tenant from hell can turn that sweet investment into a bitter eviction process faster than you can say 'sold'.
Avoid potential issues and make sure your tenant has the qualities you look for in someone who will be moving into your property.
Make Verify Tenant your trusted source for background checks in Florida and the U.S.
The South Florida housing market seems to be gaining some stability. With a nearly 40% decrease in short sale closed sales for the period of November 2013 to November 2014, a Multi-Indicator Market Index of 72.2 in Dade, Broward and Palm Beach and low-end homeowners regaining equity, thus finding it easier to sell their homes, South Florida should start seeing some signs of recovery in 2015.
If you are one of the many who has been waiting for this moment to become a real estate investor, make sure you have all your ducks in a row and make Verify Tenant your preferred vendor for Tenant Screening services and background Checks in Florida.
Last year Lynda H had the opportunity to move to Spain for a year. Her son's childhood friend, Nick, seemed like the perfect tenant to rent her house while she was away. He was single, no pets, had a stable job and she had known him since he was a kid. Because she knew him well, she thought she could forego the formalities of a standard agreement. She did not run a credit or background check, she didn't require a security deposit and they signed a simple one-page agreement stating the terms of the lease.
As Linda got ready to travel, she handed the keys to her property to Nick and instructed him to deposit the rent in her bank account on the 1st of each month. During the next 12 months, Nick paid Linda only two months worth of rent, caused significant damage to her property and refused to move out until Linda was forced to take him to court.
A tenant from hell is not always easy to spot. Make sure you are diligent when handing the keys to your property. Run a thorough screening of the potential tenants including a credit report, a criminal background check, eviction records and check references for prior residency and employment.
U.S. Supreme Court will hear an appeal from Bank of America. The lender claims underwater Fla. owners shouldn't be able to "strip off" second-mortgage debt.