Sunday, 27 April 2014

National Realty Investment Advisors Share Tips for Finding Tenants

Each day, more people are partaking in the profitable venture known as real estate, and National Realty Investment Advisors indicates that investors in the city of Philadelphia are no exception. Although based in northern New Jersey for easy access for its quad-state investors, National Realty is a prominent component of the City of Brotherly Love’s real estate market. 
 
This specialty single-family residential management firm seeks to help investors, developers, homeowners, and related parties with their real estate investment needs. In a time when many people cannot afford to buy under today’s strict credit regulations, the rental market has exploded. Managed real estate is a smart business decision because tenants pay off your mortgage and provide you cash flow – when a property is done right. However, as an owner and operator “hands-on” landlord it can be quite difficult to maintain a property. There are various aspects that some people tend to overlook before they dive into this endeavor themselves.
                                                                   

People who are just starting their careers as landlords need to be careful when it comes to selecting tenants. When managing a property, they need to realize they are handing over the keys to the unit to strangers. Sometimes, renters may not have the same concerns in mind as the landlord. National Realty Investment Advisors strongly urges landlords to take the time to carefully identify and screen their tenants before allowing them to sign any lease. A landlord’s number one priority should be to look out for their investment by selecting the right tenants. In order to pick the right residents, landlords are advised to follow some guidelines.

First and foremost, landlords must adhere to the Federal Fair Housing Act. Even though property owners want to find suitable tenants for their residence, it does not mean that they can bypass this regulation. Landlords in the United States have no right to discriminate against tenants based on race, color, nationality, religion, sex, family status, or disability. In addition to this, some states even have their own fair housing rules that make it illegal to “steer” potential tenants toward or away from properties. National Realty Investment Advisors stresses the importance of following these regulations, or else the landlord can end up with a huge legal debacle on their hands.

NRIA believes that good tenants have respectable credit. Landlords will want to find residents who are financially responsible and who will have no problem paying rent each month. There are several ways to verify if a tenant is dependable when it comes to their finances. Verifying their income is one method and is often the easiest way to track a person’s credibility. Provide a credit application to the tenant that releases the authorization to receive their confidential financial information. Make sure that application passes current legal muster. Have it reviewed by an attorney for proper disclosures. 

The landlord should also request a copy of the latest month’s pay stubs from the prospective tenant along with at least one month’s asset statements. Two months is preferable. Check to see if they have any non sufficient fund charges from bouncing checks or if the deposits match their paychecks. Check their cash balances. Check to see that the previous landlord’s rent check cleared and matches the information they provided about that rent and landlord. Landlords can also call the tenant’s employer directly and ask several verifying questions. It is wise to confirm the employment, their monthly earnings and the length of time that the tenant has been working. A general rule of thumb is that a tenant’s monthly income should be three times their monthly rent.

National Realty Investment Advisors recommends running an official credit check. Again, with the proper disclosure and permission forms filled out by the tenant, one may also have to charge the prospective renter a credit check application fee. Landlords will want to see if their potential residents have a history of paying their bills in a timely manner and if they have ever had prior evictions, civil judgments, or bankruptcies. Another factor to be on the lookout for is the debt-to-income ratio or “DTI”. Again, generally rent should be one third to 38 percent maximum of the monthly gross paycheck income.

National Realty Investment Advisors states that landlords would be wise to perform criminal background checks on their clients. A thorough check will include a Federal Court Record Search, a Statewide Criminal Record Search, a County Criminal Court Search, a Department of Corrections Offender Search, and a Sexual Offender Database Search. Criminal information is usually held on public record, and landlords should do the best to protect themselves. In order to conduct a record check, all that the landlord needs is a name and birth date. In some instances, tenants may try to falsify information or try to hide their criminal records, so landlords should ask for a photo ID as well. A point of caution worth noting is that some states prohibit discrimination due to certain criminal convictions. The landlord will have to find a justifiable reason for turning down a tenant in various circumstances. Check with local legal counsel on these matters.

The ideal tenant has a consistent lifestyle. Landlords should look at their tenant’s background and credit check application to see if they have a habit of frequently changing jobs or residences. If they display a habit of moving often, then the landlord will want to be prepared to handle an abandoned unit or an eviction. National Realty Investment states it is much easier to be prepared ahead of time than it is to wait until the tenant leaves and have to start from scratch to find a new resident. Better yet look for a new tenant with more stability.

National Realty Investment Advisors Lists Important Tenant Questions

Before leasing a unit to a tenant, National Realty Investment Advisors recommends that landlords ask the appropriate questions. One effective tactic is to talk to the tenant’s previous two landlords to find out some important information. Tenants may be hesitant about revealing information from their last places of residence, so a landlord might have to do a little investigating on their own. When meeting with a previous landlord, there are several questions that should be asked.
  • Did the tenant pay their rent on time?
  • Why did the tenant decide to move out of their current residence?
  • Was the tenant evicted due to non-payment of rent or because they broke residential rules?
  • Did the tenant give a 30-day notice prior to the move?
  • How clean was the apartment kept during their residence?
  • Did the tenant cause any extensive damage to the unit besides normal wear and tear?
  • Was the tenant respectful to their neighbors?
  • Did the tenant complain often?
“It can be slightly difficult to find out the history of some tenants such as first-time renters or college students. In order to protect your assets, you should have them get a co-signer for their lease,” recommends Art Scutaro, Senior Project Manager from National Realty Investment Advisors. 

No comments:

Post a Comment