Tenant Screening Process

Screening renters is a process that needs to be undertaken with thorough care.  It’s much more than just accepting who responds to your listings first. A bad tenant can make a good property investment go sour really fast. A great tenant will, ideally, not demand as much negative attention so you can focus on other things. There are a few basic steps to follow to better ensure you will get the right tenant.

The Ad Listing (And What to Put In It)

In order to avoid any potential conflict through the screening process, it is important that you are up front with what exactly you are looking for in the ad. Mention any tenant requirements you may have. This could be: no pets, no smoking, max occupancy, etc. Including rent and fees is also advisable. This will do a couple things. It will likely deter people who do not fit your requirements, saving you time from doing a walkthrough for someone who will inevitably not make the cut.

Having this in writing can also provide protection in the event that a rejected tenant claims you have breached the Fair Housing Act, which states that it is unlawful to reject a tenant based off of race, religion, gender, sexuality, nationality, etc. Adhering your screening to your list of expectations, if a prospective tenant does not show that they will be able to follow through with what you’re asking then it is completely lawful to reject them as a potential candidate. Being able to point them back to your original ad will hopefully reduce or negate conflict.

Background Check and Rental History

Analyzing a tenant’s background can be tricky. If a promising candidate comes along and you discover they have a criminal record, this can be off-putting.  As a landlord, you have every right to turn down an applicant because of their criminal history, but if the tenant seems to be a good fit in all other respects, you may want to take the nature of the crimes into consideration when determining whether renting to him or her is worth the risk.

On your application, include a spot for contact information of previous landlords if applicable. Checking with these sources is immensely valuable. It is illegal for landlords to slander former tenants, but talking with former landlords can help address any concerns you may have with a potential renter. If the applicant has a poor history with past rentals, it could be unwise to continue with them.

Employment and Credit History

Knowing if the tenant will be able to afford rent is crucial to determining if they will help move your investment forward. This can also be tricky though. While someone’s credit score can give you a partial idea of their fiscal responsibility, it can be misleading when looked at by itself. A low credit score can be attributed to many things: perhaps trying to buy a house just out of their price range or bad things like credit card debt.

It is best to look at their credit history with a context of their employment situation. If he or she has been working at their current job for more than six months and is making enough money to easily pay their rent and utilities, there may not be an issue. You can inquire about the details of their poor credit report if it seems overly concerning.

Deciding

In an ideal situation, you will have multiple candidates to choose from. The more options you have, the better your chances of finding the right match. Remember that you do not have to settle. If you have several people interested, but none of them meet your requirements, , don’t feel pressured to accept them for the sake of convenience. It’s better to spend more time listing your property and screening more applicants than to devote time to someone who potentially will devalue your property or cause unneeded stress with paying rent or other issues.

Hold out for someone who you think will be responsible. Someone whose history proves that they are equipped to handle paying rent each month, has a clean criminal record, and who comes with great references. As mentioned in the beginning of the article, a good tenant makes a good investment.

About the Author

Dusty Henry is an Editor at All Property Management, a company that matches rental property owners with property management companies in their areas. Search their extensive database at www.allpropertymanagement.com, and then get free quotes from property management companies near you.

Buying a Condo? You’ll still need Insurance- Via Military.com

Buying a Condo? You’ll Still Need Insurance
-Military.com

A new trend has taken over the real estate market — owning condominiums. More consumers want to buy condominiums instead of traditional homes. Condos became popular because they are a lower-cost alternative to traditional homes (depending on the area), according to published reports.

New condo sales prompted the insurance industry to offer insurance just for condominium owners. However, there are several different offerings and it might be difficult to know which one is best for you. State Farm Insurance recommends the following options:

The Condominium/ Association Master Policy
Because it can be more efficient or economical, your association may insure all the building and common elements under a single package policy, commonly called an association master policy. The three typical ways to provide coverage, all through an association policy:

1. Insures the building (walls, roof, floors, elevators) but leaves you responsible for insuring appliances, carpeting, cabinets, wall coverings, and other items in your unit.
2. Insures both the basic building and the items within your unit other than personal property.
3. Insures both basic building and includes unit owner fixtures and improvements.

Building Coverage

When an association master policy insures some of the buildings, a condominium unit owners policy provides coverage for:

1. Items not covered by the association master policy that may be your insurance responsibility.
2. The value of building additions or alterations made by you, at your expense.
3. Value added. For example, if you replaced the carpet in your condo with a higher-end or better quality carpet, this coverage would make up the difference in case of loss.
4. Damage to your unit not compensated because of the master policy deductible.

If this sounds a bit complicated, it is. Building coverage is one of the more complex parts of insuring an association. You should discuss your needs fully with insurance agent.

Your Personal Property Coverage

Because you have a large investment in your personal property, you need enough coverage to compensate you if you suffer a covered loss. One study found that many condominium/ association unit owners are underinsured in terms of their personal property. Whatever type of association you live in, a good way to be certain you have adequate coverage is to complete an inventory of your possessions and their purchase date and price. Some insurers have inventory forms available to assist you. Put your inventory listing in a safe place outside your home. Photographs or video will supplement your inventory. To speed up your claim settlement if you have a covered loss, save receipts for major purchases. Check to make sure your policy has an inflation-guard feature — one that automatically increases coverage for belongings.

Other Special Needs

If you operate an office or small business in your home, you may need special coverage. Check with your agent if you have a home business. This will help make sure that you have the right kind of coverage.

Putting it all together

Condominium association living has grown in popularity, and the insurance industry has responded by providing a broad selection of coverages and policies. Remember, that conditions in condominium association bylaws and other governing regulations may vary widely. Be certain that your policy covers any potential gaps in the condominium association master policy.

Discuss these needs with your insurance agent — someone you most likely already trust for you car, life and health insurance needs.

Don’t delay. The best protection against financial loss is well-planned coverage of your home and your possessions.

New Law Regarding Carbon Monoxide Detectors

California Senate Bill 183 was signed into law to regulate the installation of Carbon Monoxide detectors. The law is a two-part law that requires an update to the Transfer Disclosure Statements used in a real estate transaction, and puts into law the Carbon Monoxide Poisoning Prevention Act of 2010.

The first part of the new law requires that as of July 1, 2011, Transfer Disclosure Statements (TD forms) include a line item regarding the presence or absence of a Carbon Monoxide detector in the same manner as Smoke Detectors, for all residential units that are sold. This applies to just about all types of occupancies from single family owner-occupied and rentals, to multi-family housing. If the property is being sold, it must now include a CO Detector if the dwelling has gas appliances, fireplaces, and/or attached garages as described below.

The second part of the law enacts the Carbon Monoxide Poisoning Prevention Act of 2010 which requires that all residential properties, not just those being sold, be equipped with a Carbon Monoxide detector when the property has a fossil fuel burning heater or appliance, fireplace, and/or an attached garage. All single-family homes in structures with 1-4 units (owner or tenant occupied) must be equipped with a detector on or before July 1, 2011.

All other multi-family residential units must be equipped with a detector on or before January 1, 2013, not just those being sold.

For rentals, the Carbon Monoxide detector must be operable at the time the tenant takes possession. A tenant is responsible for notifying the owner or owner’s agent if the tenant becomes aware of an inoperable or deficient carbon monoxide detector within his or her unit. The owner or owner’s agent must correct any reported deficiencies in the carbon monoxide detector and will not be in violation of this section for a deficient or inoperable carbon monoxide detector when he or she has not received notice of the deficiency or inoperability.

The bottom line is that ALL SINGLE FAMILY residential dwelling units as of July 1, 2011 must have a CO detector, even those that are not being sold. All other dewlling units (multi-family, dormatories, hotels, motels, etc) must have CO detectors installed by January 1, 2013.

City expands probe into corruption allegations at building agency

By David Zahniser and Abby Sewell, Los Angeles Times
May 7, 2011
Los Angeles officials have significantly expanded their internal investigation into corruption allegations at the city’s building department, driven by fears of a much wider pattern of wrongdoing.

In the month since two inspectors were arrested on suspicion of accepting bribes, the Department of Building and Safety has received three subpoenas from a federal grand jury, including one seeking personnel records for at least 11 current and former employees.

Two department employees have been placed on leave over the last week, pending an investigation, officials confirm. Department managers would not say whether that move was connected to the probe. In addition, the city’s lawyers revealed that the department is the target of a lawsuit filed by a USC fraternity that claims it faced retaliation after refusing to pay bribes.

“Our investigation has expanded citywide,” said William Carter, chief deputy for City Atty. Carmen Trutanich. “We’re looking at all aspects of the inspection program.”

Carter said city officials originally thought the matter was limited to the two men arrested last month: inspectors Raoul Germain, 60, of Altadena and Hugo Gonzalez, 49, of Eagle Rock. Germain pleaded guilty on Thursday to accepting $6,000 in bribes between November and January.

Both men were put on leave in February after the department received an anonymous tip and were fired this week, city officials said.

Between August and January, Germain and Gonzalez were secretly recorded during an FBI sting operation that involved an undercover agent who posed as a contractor working in South Los Angeles.

A confidential informant told the FBI that bribes are a “systemic” problem at the department, and described giving not just cash but free labor, materials, and in one case, a vacation, according to court affidavits. Meanwhile, Gonzalez offered his own suggestion that other employees were involved, the affidavit said.

In one recorded exchange, Gonzalez told the undercover agent that he normally demanded $2,000 to sign off on a building permit. But because the construction project under discussion was on 97th Street, and outside of his territory, Gonzalez said he would need $2,500 so he could pay a “tribute” to the building inspector responsible for that address.

“We have been working like that for a long time,” the affidavit quotes Gonzalez as saying.

Gonzalez has pleaded not guilty but is considering changing that plea to guilty, said Jack Alex, his attorney. Gonzalez remains in custody and is considered by the presiding judge to be a flight risk because he owns a home and land in Mexico, Alex said.

Germain’s attorney, Steven M. Cron, said he did not expect that his client would help with the investigation of other suspects. Since the arrests, two Building and Safety officials — general manager Robert “Bud” Ovrom and department spokesman David Lara — have been called to testify before the grand jury. Federal prosecutors instructed Ovrom to turn over records on any disciplinary action or internal investigation involving Gonzalez, Germain and at least eight other current or former department employees

In his monthly newsletter to the public, Ovrom apologized to residents, the City Council and Mayor Antonio Villaraigosa for what he described as “alleged outrageous violations of the public trust.” And in an interview, Ovrom said his internal investigation has gone beyond South Los Angeles, where Germain and Gonzalez worked.

“I have been asked if [corruption] is systemic in the organization. I don’t believe it is,” he said. “But I do believe it is more than two employees. We definitely have more people under investigation.” The city employs roughly 315 inspectors.

Neither Carter nor Ovrom would provide the names of individuals mentioned in the subpoena, other than Germain and Gonzalez. They also would not identify the two employees placed on leave. Prosecutors with the U.S. attorney’s office declined to comment on the scale of their investigation.

The ongoing probe leaves open the possibility of lawsuits over the inspections handled by Germain and Gonzalez, who are accused of signing off on electrical work, foundations and fire systems — sometimes without showing up at the job sites. If more inspectors are implicated, more structures become vulnerable to challenge.

One lawsuit has already been filed by the Alpha Nu Assn. of Theta Xi, a USC fraternity on 28th Street. In documents filed in March, the group alleged that inspector Martin Hurtado held up approvals “any way he could” after his request for a “bribe” was rebuffed.

According to the suit, the Greek organization failed its plumbing inspection 20 times, each time with the same inspector.

“He requested unnecessary blueprints. He required the plumber to redo work that had been done correctly the first time. He would instruct the plumber to perform…tasks, then instruct the plumber to return the premises to the state they were before the task,” the lawsuit states.

Hurtado could not be reached for comment. He has not been identified in affidavits or mentioned as a target of any federal investigation. Lara said his agency had not reached any conclusions about the lawsuit.

“We’re rolling that into the ongoing investigation,” he said.

david.zahniser@latimes.com

abigail.sewell@latimes.com
Copyright © 2011, Los Angeles Times

Renters Insurance!

All of our leases require that tenants get a “Renters Insurance Policy”.  I found this worthy of sharing…..

From www.themoneyalert.com;

Renter’s insurance assures you that you’re protected against the damage or loss of personal property
when you rent an apartment or house. Your landlord may have insurance that protects the physical
building in which you reside, but this insurance will not cover your personal property. In fact, it’s not at all
uncommon for landlords to require the purchase of renters insurance prior to renting or leasing. This is
prudent for both the renter and the landlord, protecting both from the possibility of lawsuit by alleviating
each other’s respective liability.

In determining whether or not you need renters insurance, the questions you need to ask yourself are:
How much would it cost to replace my belongings if they were damaged or stolen? And can I afford to
replace them? Depending on your answer, renters insurance may be an easy choice, providing you with
the protection you need. Either way, it’s reassuring to have the peace of mind that comes from being
protected.

Things to consider before purchasing rental insurance:

How Much Coverage? – The amount of renters insurance you choose will have the biggest impact
on price of coverage. It is important to insure against all of your property. Remember, you’re not just
insuring against theft. In the case of a fire, for example, you could lose everything.

Deductible – The amount of the deductible premium that you’re willing to pay will have a major
impact on the premium costs. The higher the deductible, the lower the cost of home renters
insurance.

Actual Cash Value (ACV) – Type of coverage that will pay for what the item was actually worth at
the time of loss.  This basic coverage payout is determined by the cost to replace, minus
depreciation.

Replacement Cost – Type of coverage that will provide for the actual
replacement value of the item with no deduction for depreciation. Although
replacement cost coverage comes at an additional premium, it’s usually
worth the relatively small increase in cost.

Here are a few ways to save on renters insurance. Many insurers will offer
discounts, if you have some of the following:

• Monitored fire or burglar alarms
  
• Fire extinguishers
  
• Sprinkler systems
  
• Dead bolts on all exterior doors
  
• Auto insurance with that provider
  

If you own a dog, however, it may add to your premium. Due to liability issues,
some insurers won’t even offer insurance if certain dog breeds are owned. This
discrimination is exclusive to certain larger working dog breeds. It’s unfortunate
because many of these breeds are good-natured and provide a great deterrent
to theft. Yet, in the eye of the insurer, they’re a risk. The insurance companies
that do offer coverage for these breeds, will often do so at a premium.

Flood and Earthquake protection is not commonly included on rental insurance
policies. If you live in an area where these natural disasters are more common,
you may want to purchase an additional rider.

Liability coverage is most often a standard feature with renters insurance. This
can prove invaluable in case of an accident, such as a slip or fall by a guest. It
provides protection against legal claims that you may be obligated to pay, such
as injury, sickness and death. It is, however, limited to the amount of liability
coverage provided by your policy.

In order to avoid any disputes with your insurance company, it’s recommended that you take an inventory
of your personal items before purchasing rental insurance. This can be done by video taping or
photographing each room of your house. It is important to keep all receipts for any major purchases, as
well. The above should be kept offsite, in a fireproof safe or safety deposit box.

Fortunately, renters insurance is relatively inexpensive. If you’re looking for cheap renters insurance, it is
not uncommon to see policies with premiums that are less than $20 a month. And, thanks to the

Flood Insurance and Do I need it?

Flood insurance is a type of insurance that isn’t usually included in rental or home owners insurance. Many times when you rent or buy it is not included in basic insurance.

Most insurance companies offer flood insurance as an additional cost or protection. Some companies offer it to you without an additional cost, but you have to request to have the coverage added on.

Many people don’t understand why they need insurance think they don’t need it. The truth is everyone should have flood insurance regardless if they are renting, leasing or buying. At any time a down pour of rain or a storm could occur and cause damage to all of your furnishings inside your home. Even if you live near the mountains and don’t get much rain fall if a heat wave comes through it can melt the snow on the mountain and flood your home. There have also been many cases when a hurricane decides to turn and hit inland further than expected. You might think you are safe but at anytime the weather can change and you can get flooded.

Basic flood insurance covers up to $20,000 dollars in damage. You can upgrade to a higher amount for an extra cost. If you feel you have more than that in property in the home than it is a good idea to upgrade to a higher amount.

Relying just on federal aid won’t be enough neither. They are limited on what each family will get. They are also limited on the number of families or homes they can cover. They will only cover a certain amount, or just the ones that are out of a home completely.

Flood insurance is actually more affordable than many people think. The price will vary on your location, and age of your home. Different insurance companies will give you different quotes. Go with the one that offers the most with the best deal. Many times your home owners insurance company will give you a discount if you add on the flood insurance. In this case it is better to be safe than sorry, because once you get flooded it might be too late to add it on.

Please check with your insurance agent for specifics that relate to your situation.  All “figures” mentioned above are illustrations.

No more extensions of tax credit for first-time home buyers

The provision that puts up to $8,000 in buyers’ pockets won’t be renewed a third time, industry leaders and lawmakers say.

By Lew Sichelman December 27, 2009

 

Reporting from Washington – Home buyers hoping to take advantage of a new or extended tax credit should not procrastinate: This third bite at the apple will be the last.

Proponents of the $8,000 credit for first-time buyers and the $6,500 credit for move-up buyers made it clear during the debate on Capitol Hill that the benefits would not be renewed when they expire. And a lobbyist for the National Assn. of Realtors confirmed that at the group’s annual convention last month.

Lawmakers “made us promise practically in blood that we would not come back” for another extension, Linda Goold, the Realtor group’s director of tax policy, told her members.

During the debate, Sen. Johnny Isakson (R-Ga.), a former real estate broker and a longtime proponent of the tax credit, promised his colleagues, “This is the last extension.”

And Senate Finance Committee Chairman Max Baucus (D-Mont.) said, “It is important that this tax credit does not become a permanent fixture of the tax code.”

As it stands now, buyers who meet the income eligibility requirements have until midnight April 30, 2010, to ink a deal and must close by midnight June 30 to qualify.

Congress enacted the original $7,500 first-time buyer credit as part of the Housing and Economic Recovery Act of 2008. But because the credit had to be paid back it was more like a no-interest loan than a true credit and there were relatively few takers.

So in the American Recovery and Reinvestment Act of 2009, lawmakers upped the ante to a maximum of $8,000 for new buyers who closed before Dec. 1. They also said the new credit need not be paid back unless the taxpayer moves out within the three-year period following the purchase.

This second attempt at stimulating sales worked so well that the housing lobby implored Congress to help keep the momentum going. So lawmakers extended the deadline for first-timers and added a “long-term resident” tax credit for repeat buyers who owned their current home for at least five consecutive years out of the last eight.

Incidentally, the credit is not a flat $8,000 for new buyers and $6,500 for repeat buyers. It is 10% of the purchase price up to those ceilings. There is no credit if the price of the house is above $800,000.

Los Angeles property managers are experiencing some powerful economic trends affecting rental prices and vacancy rates

VIA All Property Management- August 2009

Los Angeles property managers are experiencing some powerful economic trends affecting rental prices and vacancy rates.

LA has one of the lowest vacancy rates in the country, hovering around 4%. They are experiencing high foreclosure rates. According to RealtyTrac, LA has one foreclosure for every 113 households. In addition, they have a challenging real estate market. Home prices have continued to decline over the last year. KB Homes, one of the largest homebuilders in the US, expects California prices to fall another 10-15% in the next 18 months.

How do these factors affect property management and the rental market?

• Low Vacancy Rate- The supply is tight, prices increase
• Homes Foreclose- homeowner forced into rental, reduces supply, prices increase
• Housing Slump- would-be buyers rent until market is less turbulent, reduces supply, prices increase

Economics 101 tells us these things combined would cause rental prices to go through the roof. Los Angeles property managers can charge $2000 a month for an average two- bedroom rental property. How high can prices go?

There is one outcome of these economic factors favoring tenants. Los Angeles property managers are finding that property owners are placing more condominiums and homes in the rental market. Rather than having properties sit empty because they are not selling, investment property owners are hoping to collect rent to cover their costs. Will this addition to the rental property inventory keep rents stable over the next couple of years? Only time will tell.

Los Angeles REAP and General Managers Hearing

Lately I’ve seen a rash of REAP hearings and General Managers hearings……….is it for money?  Is the city of LA just trying to raise extra funds to cover the shortfall?  I think REAP has it’s Pro’s and Con’s but the Con’s sure seem to be outweighing the Pro’s lately!

 

Are you familiar with REAP?  Is your property being threatened by the city to go into REAP?  Let us help you…..email me.  thomas@powerpropertymanagement.com

Luck or Success?

We’ve successfully re rented 2 separate units in 2 separate cities within 3-15 days of the previous tenant moving out!!  This includes rehab!  Some might call it success while we like to call it “HAVING OUR SYSTEMS IN PLACE!!!” Getting Lot’s of turnover?  Call us to see how we can help!