Monthly Archives: September 2013


Property Managment Gem: Use Background Checks

evictionsThis seems obvious. But we are surprised to see how many problem properties we are hired to solve that could have been avoided with some level of effort. Completing a credit and background check of your applicant can help you detect a potentially troublesome tenant early on and weed them out. However, interpreting a credit report can be tricky – at what point does an applicant become a risk? Credit score cutoffs aren’t always so black and white, especially once you’ve looked at the details of their credit and debt situation. Studies show that more than 750,000 US renters in class A and B properties, here are some trends that you should keep in mind when looking at credit and background check results.

Beware, credit score isn’t the only measure of tenant quality
Don’t forget income verification! Sure, the credit score will tell you where an applicant is in the spectrum of creditworthiness, but it’s not always the deciding factor when it comes to approving a prospective resident. Looking at the rental applicant credit score distribution, 85% of the rental applicant population has scores in the 501 to 799 range, putting them in the three lowest credit score ranges. These renters were also likely to be younger and have a lower credit score.

Understandably, young renters entering the market may be loaded with student loans and credit card debt, but that doesn’t mean they’re unable to pay rent – they just don’t have much of a credit history. Alternatively, you may also see older renters who have gone through foreclosure and are now becoming renters, another factor that will impact credit but doesn’t necessarily indicate inability to pay rent. Keep in mind that many applicants are in an in-between stage: recently graduated, newly employed, or recently unemployed. This doesn’t necessarily translate to a higher risk tenant, especially if you look for the following details in their credit and background check.

Evictions are a deal breaker
Instead of relying on credit score alone, look for the applicant’s previous rental record. Talking to prior landlords looking for evidence of late payments will tell you much more when it comes to how risky a renter is. Eviction is most likely the result of multiple late or missed rent payments – a red flag that you want to avoid.

How many missed payments are too much?
In essence, you rely on a monthly payment from your tenant. You are just another bill. So if they have trouble paying their bills, you will not be an exception. A renter might have been late on one payment because they were out of town or in the hospital; certainly not a cause of great concern. However, when a renter is late repeatedly, it increases the likelihood that they’ll be late again. Surveys show that renters who have had two or more debts in their rent payment history are six times more likely to have it happen again. Also, while renters with two or fewer late payments have about an 8% rate of default, applicants with three or more late/non- payments have a default rate of 17%. When looking at an applicant’s rental record, note how many times they’ve been late or neglected to pay rent. If it has occurred more than two times, the renter presents a significantly higher risk.

Let us do the dirty work and get your Chico Rental Property leased with quality tenants. Ask us how we do it.

What Repair Costs Can be Deducted from a Security Deposit?

security deposit damaged blindsCalifornia law allows landlords to deduct portions of the security deposit to cover the cost of damages caused by a tenant. However, landlords cannot deduct to repair normal wear and tear, or the normal depreciation of a property. It’s hard to determine what is considered damage versus normal wear and tear, but wise landlords soon learn the difference to avoid tenant disputes while receiving fair compensation for actual damages.

In short, your reputation and time aren’t worth the frustration or money it costs you to edge into the “gray area” of tenants deposits. Take out the minimum you can, and let tenants leave happy. Trust us, you’ll make more end in the end. Small minded owners, itemize to the penny, and tenants spread bad press about you. Next time you need a tenant, you better hope they don’t do their research on your companies policies.

What is Wear and Tear?
All rental properties are going to suffer some deterioration, even with the best of tenants. Wear and tear is the inevitable decline of a property’s overall condition due to time and usage.

Here are 10 examples of normal wear and tear:

  • Scuff marks or worn patches on linoleum
  • Wear patterns on carpet
  • Carpet seams unglued or unravel
  • Warping of doors and windows
  • Wall dents from door handles
  • Broken strings on blinds or curtains to t
  • Cracked light switch plates
  • Cracks in walls or ceiling from settling
  • Sun-faded or heat blistered blinds or doors
  • Wobbly toilet

These and similar conditions should never be deducted from the tenant’s security deposit because they represent common wear and tear issues. Instead, landlords should plan on covering these costs involved in refurbishing the rental unit for the next tenant.

What is Damage?
Damage to a rental property occurs as a result of unreasonable use, abuse or accidents. This can also include intentional alterations that the tenant made without approval. Even if the damage wasn’t made by the tenant, but rather one of their guests, the tenant is still responsible for the cost of repairs.

Here are 10 examples of damage:

  • Holes or tears in linoleum
  • Burns or oil stains on carpet
  • Pet urine stains on walls and carpet
  • Holes in walls not from doorknobs
  • Torn or missing curtains
  • Broken window or missing screens
  • Watermarks from overflowed sink or bathtub
  • Cuts or burns on countertops
  • Unauthorized painting
  • Broken toilet seat, tank or handle

While the specifics differ state to state, in general, a landlord must include a list of deductions along with any refunded portion of the security deposit. If the landlord has done a thorough move-in and move-out inspection with the tenant, there should be few surprises on either side.

Security Deposit Disputes
Unfortunately, disputes often arise when a tenant defines a deduction as wear and tear while a landlord considered it damage. A tenant may have a strong case if he or she can show that a landlord took a deduction for damages on something that is actually normal wear and tear.

As long as the landlord can give reasons for a reasonable interpretation of the differences between basic and normal wear and tear versus accidental or intentional damages, and outline the damages to the tenant during the move-out inspection, disputes can be minimized.

Other examples of normal wear and tear include:

  • Dirty carpets. Carpets that are dirty are not subject to withholding a portion of a security deposit. Dirty carpets are considered normal. However, removing urine stains from a pet is not considered normal and the costs can be covered by the security deposit.
  • Faded drapes. Fading is a normal occurrence. Rips in drapes, however, are not considered normal and thus any repairs or replacements can be covered by a security deposit.
  • Water-stained tiles on a bathroom floor are normal wear and tear whereas broken tiles are not.

Let us handle the management of your Chico property and we do deposit refunds in accordance with all the laws and best practices.


Property Management Gem: Show tenants you care

happy tenantsLearn about your tenants and show them you care. Ask questions about any improvements or events they’d like to see, and conduct surveys. Don’t forget to make it fun. Start a conversation by throwing fun posts into your mix: post local Chico pictures, create an Chico or property event, share local news or local deals. Tenants want a property management company and landlord that makes their lives easier.

Embrace Technology
Putting everything online these days doesn’t cost much and will save time in the long run.
On top of making your tenants’ lives easier, phasing out your office technology of yesteryear puts you ahead of the curve and makes your business run more efficiently.

Encourage renters to write reviews
82% of renters look at reviews, certifications, or awards your property management or Chico multifamily property have received when making a decision on where to live. When renters are looking for their next apartment, they want to know what kind of experience they’ll have living there. Having responsive customer service and an approachable property management team help renters write positive recommendations. This, in turn, encourages prospective renters to rent from you and help apartment hunters find you.

Your Reputation Matters!
Websites for user reviews are accessible, and renters use them when they’re deciding on a place to live. Chico is a pretty small town. Give your image a boost by using the internet to start conversation around your name. Be active in the online rental community by starting a blog, being active on multiple social media sites and review sites like Yelp. Invite renters to leave comments on your social media accounts, and monitor them regularly. This gives previous renters a forum where they can give you their input, and allow you the chance to respond positively.

Maintain a positive image.
It’s worth your time to keep your tenants happy, because the stronger your reputation is, the harder it is to take down. When renters have a great experience renting from you and are happy with the management team, they won’t hesitate to recommend you to their friends and family.