by Stephen Michael White

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July 21, 2021

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Andrew Schultz: (00:00)
Hey everyone. Welcome back to another episode of the Rent Prep for Landlords podcast. This is episode number 355, and I’m your host, Andrew Schultz. On today’s episode, we’re going to be talking about renters, applying for a property without seeing it, how to minimize your rentals. Time spent vacant and handling tenants who make incremental payments. We’ll get to all that right after this.

Voice Over: (00:23)
Welcome to the Rent Prep for Landlords podcast. Now your host, Andrew Schultz.

Andrew Schultz: (00:28)
Before we jump into today’s episode, don’t forget to check out the Rent Prep for Landlords Facebook group. It’s a great free resource for you to network with housing providers from around the country. And if you have a question or a situation that you’ve never dealt with before with over 12,300 members, chances are someone in their group has been there before and can lend a helping hand if you haven’t checked it out yet, do it today. Over at facebook.com/groups/rentprep. Don’t forget to mention the podcast when answering the questions. So we know how you found us

Voice Over: (01:01)
Forum quorum, where we scour the internet for ridiculous posts from landlords and tenants.

Andrew Schultz: (01:08)
This week’s forum quorum comes to us via the landlord subreddit. This one is all about rental applications, and we’re going to go ahead and jump right in here. My husband and I are new landlords. And I’m sorry for what might be a dumb question. We scheduled a showing for one day and got an overwhelming response with a lot of inquiries. The showing times were booked within a day of listing the house on Zillow. We’re now getting requests saying that they’d like to submit an application without seeing it since they missed the showing. However, we’d prefer to select a tenant that came to the showing, which we might based on the outcomes of that day. And we want to reject any additional rental applications, but can we, I know that California is very tenant-friendly, so I want to make sure we do things right. Can we reject applications that do not care to see the property?

Andrew Schultz: (01:49)
Can we reject applications while we’re in the process of confirming one candidate? So this is actually an interesting one because we see questions all the time about what to do when you have multiple applicants for a home or something along those lines. And it seems like everybody has a little bit different take on it. Going back to the root question, I don’t know of any law stating that you can’t make it a requirement that an applicant has to see the property before they rent it to the best of my knowledge. There’s no fair housing violation there that I can see and not coming to see an apartment is not a protected class. So if you have say five applications from day one, when you started showings, I would start processing all of those applications, our office processes applications on a first approved basis. So if we get five people and number two gets all of their paperwork and incomplete and all the verifications are completed.

Andrew Schultz: (02:37)
First, they’re going to be offered the apartment before the person who put their application in, in the number one slot, if their applications not already verified and completed all the way through, but essentially some states do not allow for that. And it has to be first come first served. So you’re going to want to check your state laws and see exactly what is permissible in your area. Thing that we do here in our office is we will actually continue to show the home, not just until we have an approved application, but we continue to show it all the way until we have a signed lease. And a security deposit has been received. We’ve had people that are approved that never signed their lease or never pay their security deposit. And it always results in lost time. So we just keep marketing and showing the apartment until we have our tenant lined up.

Andrew Schultz: (03:21)
One thing I will mention is to keep your selection standards consistent across all of your applications. Don’t suddenly accept an application from somebody who hasn’t seen the property when you’ve only been accepting applications from people who have seen it unless you plan on opening your pool up to all of the unseen applications. Essentially what I’m saying here is if you have a criteria of, you must see the apartment in order to qualify, and then you drop that criteria for one application, you need to be consistent and drop that criteria for any other applications that are out there as well. Consistency is key, especially in housing, and especially, especially when it comes to tenant screening, it’s becoming more and more regulated as to what we can and can’t look at when we’re selecting tenants. So we need to make sure that the things that we are looking at we’re doing the best possible job of getting the best possible data for when we go to make our decision.

Andrew Schultz: (04:10)
If you do wind up in a situation where you have multiple applications, don’t forget that you have to send some sort of an adverse action letter out to anyone that you ran a credit background checked on so that they have the ability to go and then see their credit and background. Within 30 days, I believe it’s 30 days, it’s either 30 or 60 days of having that pull done. When you issue that adverse action letter, they can actually go back to the agency where you pulled the report from, and that agency will provide them with a free copy. So if you did have an application and you did pull a credit or a background, you do have to send that adverse action letter, make sure you’re doing that because it might be a situation where they’re relying on that adverse action letter in order to pull a copy of their history and see what’s going on.

Andrew Schultz: (04:49)
If that might’ve been the reason that they were denied the home or whatever the case may be. So make sure that you’re following the regulations surrounding that as well. If you’re looking for a copy of a good rental application, you can find a PDF over on the Rent Prep website of a good rental application. It includes a lot of different things that you may not otherwise think about when you’re building a rental application. And I believe it already has the proper disclosure on it for pulling credit and background checks as well. So head on over to rentprep.com, you can find some information on that rental application, as well as how to set up a set of a tenant selection criteria and how to create a written policy on your selection criteria, things of that nature. So lots of good information over there on the website, feel free to head over there and check that out. But the best advice I can give here is make sure that you were consistent with everything that you’re doing when it comes to leasing and housing and things like that because it’s going to make your life so much easier in the long run, especially when you know that those criteria are not in violation of any of the fair housing laws or anything along those lines.

Voice Over: (05:51)
Water cooler wisdom, expert advice from real estate pros.

Andrew Schultz: (05:59)
We’ve got two really good water cooler wisdoms for you this week. The first one comes to us via the Rent Prep for Landlords Facebook group. And this one is all about showing an apartment while it’s still occupied. Let’s go ahead and jump right in here. The current renters are leaving and we are eager to find a new renter. However, the current renters still have lots of stuff in the house and they are in the middle of moving. We showed the house to several people. However, it’s difficult to see through the current mess. If we wait until the current renter moves out to show the home, then we will have a big gap between renters, any suggestions to minimize the gap between renters. And again, this one comes to us via the Rent Prep Landlords Facebook group. So as I said at the onset, showing an occupied apartment can always be a bit of a challenge.

Andrew Schultz: (06:41)
It really just depends on the type of tenants that you have living in the apartment that are in the process of moving out. What’s not clear to me from the question is what exactly is the mess? Is this just simple packing mess or is this dirty mess that makes it a little bit more difficult for you to kind of see through the dirtiness and get a real feel for the space? So there’s a few different things that you can do from a marketing perspective. The first thing I would do would be when I list the home for rent use photos of the home from when it was vacant and then move-in ready condition and by moving ready condition, I mean, everything should be, you know, cleaned and ready to go. You want the best possible photo set that you can possibly get.

Andrew Schultz: (07:19)
Your cell phone is fine for taking these photos. If you don’t have a nice camera or something along those lines, cell phone is perfectly fine. The way the cell phone cameras are nowadays, you can totally shoot your, your marketing photos on your cell phone. It’s totally fine for about 95% of instances unless you’re listing a super high-end luxury or something like that. The one thing I would recommend is just make sure that you clean off your camera lens before you start shooting photos. The other things that I would mention would be a walkthrough video. Again, if you’re there shooting walkthrough photos, it’s very easy to do a walkthrough video at the same time. You don’t have to narrate it. If you don’t want to, you can just walk through and point at things and that’s perfectly acceptable. You know, if you upload it to your computer or upload it to YouTube, you can drop a music bed over it.

Andrew Schultz: (08:00)
And then nobody has to hear your footsteps, or you don’t have to worry about narrating it or whatever the case. Everybody knows how to point a camera and take a video. At this point, you can create a walkthrough video. It’s super, super simple, something a little bit more advanced. And if you don’t have one of these cameras, you either have to purchase one and they’re not super expensive, but it doesn’t make sense. If you only have like one or two doors, you might be able to find a service local to you that can come out and shoot. This would be a 360 virtual tour. We’re starting to see these a lot more in the rental realm. It was a thing that started off in the residential sales space and over time it’s really started to grow into the rental space as well. As a matter of fact, I would say that the pandemic did a lot to help push forward.

Andrew Schultz: (08:43)
The 360 virtual tours. I know that most of our buildings have 360 virtual tours shot on them as well. It is an option that we offer to our clients when we’re setting them up with their management, or if we’re setting them up with a leasing contract, the case may be 360 virtual tours are a really cool option. And even tying back to our last question for somebody that hasn’t been able to see the apartment a 360 virtual tour is going to give them a much better feel of what the space actually is versus a walkthrough video, or versus just some photos or something like that. So something like that to keep in mind. So you do have a few different marketing options there that you can tackle to help you find a new tenant before the existing tenants are completely out of the space.

Andrew Schultz: (09:23)
Another thing that I’ll mention is have dimensions for all the rooms available. That’s actually a pretty important thing. A lot of people forget about that. And then you’ll constantly get people saying, oh, what’s the square footage. Or, you know, do you know what the size of the rooms are or whatever, if you have the room dimensions, I mean, you only have to take them once and then you can save them in a folder. So you have them for the next time. It’s super, super easy to drop those onto your rental listing and make that information available to people who are interested in the property. Now, as far as actually showing the property itself goes, I find that the best way to handle showing an occupied property is to prearrange showing times with a tenant and ask them to try to be accommodating with regards, to having stuff all over the place.

Andrew Schultz: (10:03)
You know, if they have a giant stack of boxes, maybe they can move the giant stack of boxes into one, you know, one area so that it’s not all the way throughout the house, something along those lines, just to make it a little bit easier to walk through, but keep in mind that they are still living there. And they’re in the middle of a very stressful life event too. So you might get some accommodations. You may not, it really depends on the tenant, but I think that this is a situation where being open and communicating is probably going to get you much further than just demanding or showing up or something along those lines. So the other thing I would mention is if you can do it open house style, if you can have several people come to one showing to reduce the number of overall visits, that’s going to help everybody as well.

Andrew Schultz: (10:44)
Number one, it’s a lot less inconvenience for both you and for the outgoing tenant. Honestly, that’s probably the most important reason that I would look at is it’s a much more convenient situation when you only have to go to a property one or two times. And the tenant only has to be inconvenienced by having people tromped through their house one or two times, it makes it a little bit easier for everybody in those instances. So that would be, my recommendation would be try to open house at, or schedule several people for the same timeframe so that you’re not making a ton of trips back and forth and not inconveniencing the tenant every other day or something like that. In some instances, if you have a particularly dirty apartment, you may just be better off waiting to show it until the tenants have departed. And you’ve had a chance to make it rent ready for the next tenant.

Andrew Schultz: (11:26)
There’s a certain amount of mess that can be overlooked, but if the place is really gross, my recommendation would be it’s best to just wait. It’s not super super clear from the question, if it’s, you know, dirty mess or if it’s moving mess, I’m thinking it’s probably just moving mess and you might be able to talk to these tenants, communicate with them, come up with a solution that works for everybody. But if it is truly just a dirty apartment, you may be better off waiting because everybody who’s coming into that place is going to remember that it was dirty. So that’s something to keep in mind if it’s a situation like that, I would hold off and wait until after that kinda does out, get the unit turned over as soon as you can and get it back on the market. Our next water cooler wisdom comes to us via the Rent Prep for Landlords Facebook group.

Andrew Schultz: (12:07)
Again, this one seems pretty fruit straightforward, but it’s got a little bit of a convoluted answer to it. If a tenant pays 50% of the rent before rent is due and then pays the other 50% of rent after the rent is due, is it considered late and does a late fee apply? Here we go, everybody. I don’t think I’ve said it yet. This episode, you got to check your state and local laws on this one. So this is definitely one where you have to check your state laws on late fees. And you may even have local laws at this point as well. Furthermore, some states have late fee restrictions in place right now due to the pandemic. So you’re definitely going to want to understand what the legislative landscape is on late fees before you just start charging them without doing any research.

Andrew Schultz: (12:49)
There are also some states that limit the amount that you can charge as well as the date that you can charge it. For instance, here in the state of New York, as of June 2019, when H TPA passed its now late fees are now limited to the lesser of 5% of the rent amount or a maximum of $50. And it can’t be applied until five days after the due date. So you have to know your laws before you start charging late fees, or you could find yourself either miss charging or charging too much, putting yourself in hot water. It’s not worth it. Just do the little bit of research. So you understand what the rules are in your state or in your municipality when it comes to late fees. Getting back to the root question here in my eyes, if a payment is split like this with the second half coming in after the due date, it is late and it would be subject to a late fee.

Andrew Schultz: (13:36)
So what we do is we offer all of our tenants one late fee waiver in a rolling 12 month period, because we understand that sometimes things happen. You could legitimately just forget to make your rent payment, the check, forgot to get tossed in the mailbox, or whatever things happen. We understand that. So what we do is we offer all of our tenants one late fee waiver on a rolling 12-month basis, basically one per year. And then we understand that sometimes things happen and it makes sense, and we’re, we’re happy to oblige one time, one time without the late fee, after that, we charge the late fees whenever we’re allowed. It wouldn’t surprise me down the road. If we wind up seeing some legislation that eliminates late fees altogether in the housing industry, at some point in the very near future, I don’t know of any areas yet that have outright banned late fees, but I would not be surprised to find that in some states legislation, sometime in the very near future, it just seems to me that we’re becoming a more and more regulated industry.

Andrew Schultz: (14:31)
And I have a feeling that as more and more regulation has placed on us, we’re going to start losing more and more of the traditional practices that have been around for decades and really centuries at this point. So that’s my thoughts on late fees. If it was me, if this was a split payment and the second payment came in after the payment was, yes, that would be a late payment. And yes, it would be subject to a late fee. But again, this is one of those situations where you really need to check in with your state laws to understand, especially right now, because there are so many additional regulations in place. You really need to understand if you’re allowed to charge late fees or what those fees are that you are allowed to charge. If you’re in a spot where you can charge them, do the research on this one, don’t put yourself in a bad position.

Andrew Schultz: (15:15)
The other thing I’ll mention is that you have to make sure that your late fee policy is in your lease. You can’t just randomly decide, okay, the late fee is now, you know, $55 or whatever the case may be simply because someone was late. You have to make sure that that is all specified in your lease at the onset of the tenancy. So that everybody’s aware of what the charges are in the event that, you know, a tenant sends you a late rent check or something along those lines while we’re talking about late rent checks or even online payments it’s worth mentioning that there’s a difference between a non-sufficient funds fee and a late rent fee. And both of those would apply in the event that somebody bounces a check or puts in an online payment that subsequently bounces. Those are two very, very different charges for two very, very different reasons, which is why we tell tenants, Hey, don’t bounce rent checks because you’re going to get whacked with two fees.

Andrew Schultz: (16:05)
So definitely something to keep in mind, if you do accept checks, or if you do accept online payments, if there’s a bounced payment or a non-sufficient funds payment, we have those specified as two completely separate fees in our lease. And we do charge both of those fees. If somebody bounces a check and is late because of the bounds of the rent check. So that’s something to keep in mind as well. Ultimately, I think that your fee structure is your business, but Hey, we get charged every time, a check bounces in our bank account. And we look to recoup that cost from the person that bounced the check, essentially. So that’s how we’ve been running at our shop here for years and years. Hopefully, you guys have a good late fee policy in your lease. And if not, that’s definitely something that you’re going to want to beef up before you place your next tenant.

Andrew Schultz: (16:46)
Are you getting the most accurate tenant screenings possible in our latest guide, we’ll go over the parts of getting an FCRA compliant background check, check it out today, over at rentprep.com slash blog. So that pretty much wraps things up for this episode of the Rent Prep for Landlords podcast. Thank you all so much for listening. We truly do appreciate it. Our goal with the podcast is to help as many people as possible make educated decisions when it comes to real estate, and you can help us to reach our goal. If you heard anything in this week’s episode or any other episode that will help someone, you know, please do us a favor and share it with them. If you’re looking to get in contact with me, I can be reached over at whatsdrewupto.com from there, you’ll find links to everything going on with me over at Own Buffalo, as well as other projects that we’re working on.

Andrew Schultz: (17:31)
In addition to the Rent Prep for Landlords podcast, I also hosted a weekly show called a property manager. You’ll find a link to my YouTube page over at whatsdrewupto.com. And from there you can access the growing catalog of 75 plus episodes. Take a look and don’t forget to subscribe. If you’re looking for top-tier tenant screening services, head on over to rentprep.com, there are multiple products to choose from including a tenant-paid option. If you’re over 50 doors, ask about enterprise-level programs and pricing. I’ve been an enterprise user of Rent Prep for years now, and it’s definitely changed the way that we screen our tenants. Check it out today over at rentprep.com. Again, thank you all so much for listening. We’ll be back in two weeks with an all-new episode you won’t want to miss until then. I’m Andrew Schultz with ownbuffalo.com for rentprep.com. And we’ll talk to you soon.

How To Reduce Rental Vacancy (Podcast #355)

Can you do us a solid?

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Show Transcription: