Questions To Ask Potential Renters (Podcast #336)

Podcast Host, Andrew Schultz, goes over essential questions to ask potential tenants and the top red flags to look for when screening renters.

Andrew also discusses a new ruling in Portland, Oregon that states landlords must now pay their tenants’ relocation costs if those tenants can’t afford the rent increases they’re imposing.

Last, but not least, how often should you be checking in on tenants if at all? Find out in our latest podcast.

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Show Transcription:

Andrew Schultz: (00:00)
Hey everyone. Welcome back to another episode of the Rent Prep for Landlords podcast. This is episode three 36 and I’m your host, Andrew Schultz. On today’s episode, we’re going to be talking about landlords paying for tenant relocation costs in Portland, Oregon. How often should you check on your tenants and what should you ask tenants during the screening process? 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 Shultz.

Andrew Schultz: (00:28)
Before we jump into today’s episode, don’t forget to check out the Rent Prep for Landlords Facebook group. Over at facebook.com/groups/rentprep. The Facebook group is a great free resource that you can use to speak with other housing providers around the country. Ask questions that you need answers to and get answers from people who have probably already been through the situation that you’re experiencing right now. There’s a ton of great knowledge over in that group. Don’t forget to check that out today. Over at facebook.com/groups/rentprep, we’re coming up on almost 12,000 members over there, and we’d be glad to have you on board. We’re going to start today’s episode with some breaking news coming out of the Portland, Oregon market, where landlords must now pay the relocation costs of tenants who can’t afford rent increases. This article published October 26, 2020, and by the Motley fool, we’re going to pull some information from this article here with regards to this new regulation in Portland, Oregon.

Andrew Schultz: (01:20)
So in Portland, Oregon, a new ruling state landlords must now pay their tenants’ relocation costs. If those tenants can not afford the rent increase that they’re imposing, this rule will apply to rent increases issued March 31st, 2021, and puts landlords on the hook for between 2,940 $500 to allow tenants to move. Furthermore, this rule could be extended past March 2021, depending on how the circumstances shake out this new Portland ruling may be designed to help protect tenants, but some landlord short aren’t happy about it. Portland landlords were required to give tenants a minimum of 90 days. Notice if they plan to increase their rent from their tenants can provide written notice that they require assistance and landlords could then be liable to pick up the tab for their relocation costs. Of course, the goal here is not to hurt landlords, but to help ensure tenants don’t fall victim to homelessness in the absence of a statewide eviction moratorium.

Andrew Schultz: (02:10)
But clearly, the new rule hurts landlords a lot, especially mom and pop landlords without the resources larger property management companies have. If landlords could be held liable for covering tenants, relocation costs in Portland, the same thing could technically happen anywhere, but this rule only applies to landlords imposing rent increases. It doesn’t apply to landlords whose tenants opt not to renew their leases due to financial constraints. Therefore, even if similar rulings are imposed in other cities, landlords can avoid the burden of paying a tenant to relocate simply by keeping rent prices stable. As the country continues to grapple with its ongoing recession. Of course, some landlords may seek to increase rents, to compensate for lost revenue. Over the past seven months. Many tenants seem to have had no choice, but to withhold rent during the coronavirus pandemic and smaller landlords may be growing increasingly antsy, increasing rents, therefore may not be an act of cruelty so much as an act of desperation.

Andrew Schultz: (03:01)
Unfortunately, this recent Portland ruling is just one example of how landlord-tenant laws have a tendency to unfairly favor tenants. In fact, many landlords have been pleading for aid ever since the initial route of eviction bands was put in place at the start of the pandemic every time.

Andrew Schultz: (03:18)
Hi, am I see something like this? I realize how much of a lack of understanding there is about the real estate industry because it almost always leads to some sort of government overreach, such as this leases are a contract, a legal binding contract between two parties with set terms and conditions. This type of regulation basically seeks to inject the government or doesn’t seek to it. Does it injects government interference into every residential rental contract in the city of Portland, Oregon, and stuff like this has to stop most housing providers that I know of usually shoot for a rent increase of between three and 5% a year? And that essentially just keeps them a level. It’s not as though that three to 5% is going directly back to the housing provider and going directly into their pocket as a profit. It’s more or less going to keep up with the fact that the property taxes went up.

Andrew Schultz: (04:12)
Keep up with the fact that, you know, the cost to maintain the property, went up, keep up with the fact that their insurance costs just went up. Things of that nature. It’s not like this as direct profit going from, you know, tenants hand directly in the landlord’s pocket. That’s not how this works. These rent increases are basically to keep the property afloat at the same level that it’s at. And I don’t know about the Portland Oregon market so much as I know about the Buffalo New York market, but I can tell you that the cost of everything here has gone up since coronavirus started contract labor has gone up to get things fixed. The cost of building materials has skyrocketed. I know property taxes are going to be going up as a result of this because our state was already in a deficit before we even got into the pandemic.

Andrew Schultz: (04:54)
So I know that this is where we’re headed the best way that I can say to deal with a situation like this is to join your state and national organizations that help advocate for housing providers. That’s where we need to be. There are a lot more tenants than there are housing providers and the tenants have a much louder voice than the housing providers have. If we’re going to stop having things like this, come down the pipeline from government officials that don’t understand how our industry works, but decide that they want to regulate it. Anyway, we need to start standing up for ourselves. We need to start advocating for ourselves and it has to happen at the state and the national level. I’m not saying that there are no good grassroots campaigns out there that there are no good local groups that are putting together the good fight for the housing provider.

Andrew Schultz: (05:37)
But realistically speaking, in order to affect these changes, you’re going to be looking at a state and federal level. And that’s where you need to be focusing your energy. You do have cities like Portland, for instance, where something at the local level would definitely be helpful. But I almost wonder if it’s at the point now in Portland, where they don’t even care about what the housing provider is going through. They’ve basically just written the housing provider off almost. That’s not who their target demographic is if you will. So that’s not who they are trying to represent, and that’s not fair to the housing provider. Housing providers deserve representation, just the same as tenants do in these situations. And it’s time for housing providers to stop being taken advantage of in situations like this, where we’re just as impacted in a lot of instances as what our tenants are,

Voice Over: (06:26)
Forum quorum, where we scour the internet for ridiculous posts from landlords and tenants,

Andrew Schultz: (06:35)
Today’s forum quorum comes to us courtesy of the landlording subreddit. And it’s a pretty straightforward one. How often do you guys check the fire alarm or visit your tenants and how many times a year is too many? My property manager told me that our tenants complained about him visiting four times a year or once every three months. So I think that that’s very reasonable four times a year. Doesn’t seem unreasonable to me depending on the property. Um, I can tell you that the way our company is set up as a management company, we actually do two inspections per year. And then we have a third, I won’t call it an inspection because we’re in there servicing the furnace and making sure that the filters and things like that are changed, but we do check smoke and CO2 alarms at the same time. So I guess I would constitute that as another check as well.

Andrew Schultz: (07:18)
Um, so I would say that we go in on average about three times a year into every unit. And I don’t think that that’s an unrealistic number of times to go into, to look around what are we looking for when we go in? So what we do is actually I’ll back up a little bit and I’ll mention that we always make sure that tenants are aware of when we’re coming. We always make sure that they’re aware that we will be taking photos of every room. And we also make sure that they are aware of what it is that we’re inspecting. So we let them know up front, you know, we’re going to be looking in closets. We don’t take photos in closets unless there’s damage. Uh, we do look under sinks. We do take pictures under sinks. Um, we look for smoke detectors. We look for CO2 detectors.

Andrew Schultz: (07:58)
We look to make sure they’re operational. We’re looking for overloaded outlets, um, power strips that are Daisy chained onto another power strip or a, an electric space heater or something like that. That would overload an outlet. That’s the kind of stuff that we’re looking for. And beyond that, we’re looking for general maintenance, you know, the cracked window or the door that’s not sealing tight or something like that. We’re basically looking to make sure that the unit is being maintained in a good fashion. If there are any issues we want to catch them before they become major issues. And we do let the tenants know upfront that yes, we will be stamping a couple of photos of each room just for our records so that we have that information for the future. And most tenants generally don’t have too much of a concern about that. We always send that out as a letter.

Andrew Schultz: (08:41)
We give them an, uh, date and time, uh, when we’re going to be out to do the inspection, we tell them they can be home if they wish, but they don’t necessarily have to be. And most tenants do choose to have someone home. We did put a pause on this briefly during the early onset of the, but we are back to doing in-person inspections in all of our units at this point. And, uh, I think that it’s pretty important to make sure that you are checking at least a couple of times a year on every unit that you manage, every unit that you own, just to make sure that things are going their way, that they should be going. The number of landlords and housing providers out there that don’t do any sort of during tenancy checks on their tenants. You know, as long as that rent checks coming in every month, we’re just going to let it roll.

Andrew Schultz: (09:22)
They’re taking a big risk. Uh, you have no idea what’s going on inside the building. You have no idea if the tenants taking care of the property, you know, they might have a simple sink leak that because you don’t do an inspection turns into a kitchen remodel because the cabinets are all destroyed or something like that. So I don’t think it’s unrealistic to go in and take a look at an apartment once a quarter. I think that that’s pretty reasonable. I think anything more than that would probably start to get a little bit burdensome. You know, if you were looking to go once a month, I think that would probably be burdensome. Um, but I think once a quarter is probably okay, we’re averaging about once every once, every four months, depending on our schedule between inspections and furnace checks and things like that. So that’s how we handle it here at our office.

Andrew Schultz: (10:04)
I would definitely recommend getting some kind of a checklist in place to make sure that you’re reviewing things, checking over the same things every time, making sure you’re not missing things. And we do the same thing. We checklist everything and make sure that we’re looking at the same stuff every single time. Uh, because we know that those are the items where we’re finding the most wear and tear the most issues. And we want to make sure that we’re checking those on a regular basis to ensure that those are staying in good repair. Ultimately, I think it boils down to just making sure that your tenants understand that you’re looking to keep the property in good repair and maybe asking them if there’s any maintenance issues that they know of before you come in for the inspection. And then that way they don’t feel as though you’re spying on them, for lack of a better term, which is probably what their concern is.

Andrew Schultz: (10:43)
They just don’t want somebody in their house rummaging through stuff or whatever the case may be, which obviously that’s not the case. That’s not what you’re trying to do here. You’re just trying to keep the property in good repair and getting to a point where your tenant understands that I think will go a long way in helping you to get the compliance that you’re looking for when it comes to doing these inspections. But definitely, definitely, definitely make sure that you are doing your inspections at least twice a year, if not more frequently. But I think that twice a year has to be the absolute bare minimum number of times that you’re going in to check out those apartments,

Voice Over: (11:13)
Water cooler wisdom, expert advice from real estate pros.

Andrew Schultz: (11:21)
When it comes to screening tenants, there are a lot of things that you can do. And there are a lot of things that you can’t do. Hopefully, we get to this person before they make a gigantic error that costs them a lot more than what they’re anticipating. This one comes to us via the landlording subreddit as well. And it reads as follows. Hi, we’re new to renting property and we’ll be renting part of our legal two-family home to tenants in Brooklyn, our real estate agent scheduled a meeting for us to get to know each other. What should we ask or discuss or try to get out of them in order to find out what kind of people they are? I know we can’t tell everything one meeting, but are there any red flags or signs that we can read before we even get into what you can?

Andrew Schultz: (11:58)
And can’t ask in a situation like this, I want to cover what a Mrs. Murphy exemption is to the fair housing act. So the Mrs. Murphy exemption provides that if a dwelling has four or fewer rental units, which this one does, and the owner lives in one of those units, which is the case here, that home is exempt from the fair housing act. Uh, one thing that’s worth noting is that HUD does not exempt you from the civil rights act of 19, excuse me, 1866, which would make it illegal for you to discriminate based on race, regardless of if you’re exempt from the rest of the fair housing act. That being said, you lose your Mrs. Murphy exemption. The second that you hire a real estate agent or a real estate broker, to help you locate a tenant real estate agents and real estate brokers are bound by the fair housing act at all times in all aspects of their job.

Andrew Schultz: (12:46)
So you’re not going to get a real estate agent or a real estate broker. That’s going to help you violate fair housing law. I’m not saying that that’s what this housing providers attempting to do, but the way that question was worded, I just get a very uneasy feeling about it. So my recommendation would be let your real estate broker let your real estate agent, let your property manager run the process and find you a good quality tenant that meets their qualifications. Use legitimate criteria. Use objective criteria, use written objective criteria when you were selecting your tenant. And don’t be subjective about things like this. Um, be very, very cautious about the questions that you ask to avoid fair housing violations. And realistically speaking, you’ve hired a real estate broker at let them take this burden off of your plate altogether. So that’s my initial thoughts on all that, um, all that being said, there are a lot of questions that you can, and a lot of questions that you can not ask of a potential tenant when you’re screening them.

Andrew Schultz: (13:46)
I’m going to direct you over to the Rent Prep website, rentprep.com. And from there, go ahead on the front page, there’s a little dropdown for tenant screening. You’ll click tenant screening one Oh one. And in there is a series of about 20 questions that have already been looked at and reviewed questions that you can ask your potential tenant without getting yourself into trouble. So go ahead and check out that free resource over atrentprep.com. That’s going to help you to find the information that you’re looking for without putting yourself in a position where you are basically exposing yourself to a potential fair housing violation. Uh, realistically speaking, though, if it was me and I’d hired a real estate broker to find me a tenant, I would probably not take that meeting. Um, I would not take the meeting with the tenant. I would let the real estate broker do what it is that they’re being paid to do.

Andrew Schultz: (14:34)
And I’ll tell you upfront that when we have clients, especially our property management clients, they don’t get the final say in whether or not a tenants approved or not approved any longer. It’s a change that we made a couple years back after we had a client that put us in a situation where we could have potentially had a fair violation, not because of something we did, but because of something that the client did. And at that point, we realized we’re the experts here. We’re the ones who know what we’re doing. The clients came to us because we’re the experts. They hired us for our expertise. We’re going to do what we need to do. And we’re going to make sure that the tenant is quality. And we’re going to make sure that the client is protected. And the best way to do that is to not put the client in a position where they can violate fair housing law, essentially.

Andrew Schultz: (15:18)
So that’s how I would handle it. That’s how we’ve been handling it for the last couple of years now, where the client basically gets, you know, an email, letting them know we’ve found a new tenant for your place. Here is the, you know, the information about their income, their credit reports, their criminal background check, things of that nature, all objective measurables. That’s what we’re looking at is the objective data that can, we can measure using criteria and put a score on it. And that’s how we kind of handle our tenant placements here over at owned Buffalo. That pretty much wraps it up for this week’s episode of the red prep for landlords podcast. Thank you all so much for listening. I really do appreciate it. If you’re looking to get in contact with me, I can be reached over at ownedbuffalo.com. There are links to all of my social media, as well as a contact form there where you can drop a question or comment right into my inbox that I review those every single day.

Andrew Schultz: (16:05)
Your question may even be picked up on an upcoming episode of the podcast. So be sure to check that out. And if you’re looking for top tier tenant screening services, don’t forget to head on over to rentprep.com. There’s a variety of packages available over there to help you meet your tenant screening needs. They do have product packages for small landlords, large landlords, and everyone in between. Don’t forget to check that out over at rentprep.com. We’ll be back next Thursday 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 next week.