A Property Manager's Safety Guide

A hot topic right now is the story of Amanda Knox -- the 21 year old Seattle native who went to Italy to study abroad for a year. The twist is that she's been sitting in an Italian courtroom for the past five months, accused of slaying her British roommate, Meredith Kercher, in November 2007 in Perugia. Read the full story here: Amanda Knox Has "Nothing to Hide"

This kind of story brings up a lot of emotion and one hopes the truth will come out and justice will be served. Whatever the truth may be, it causes some to question the quarters these girls were residing in. Were these residents' screened? How safe were they really? What if it was a visitor who committed this horrendous crime or a lurking stranger around their residence? If you have a loved one living away from you whether in a foreign country or in an apartment down the street, resident safety should be a priority.

And if you are a property manager, potential renters want to know that you're serious about protecting them. For me, when something is written down and handed to me -- facts about what is being done concretely -- that goes a long way. So property managers, give your staff and residents a guide to your safety plan. Here are some quick tips for such a guide:

1. Awareness

• Have residents meet their neighbors. So what can you do as property managers? Promote community events so neighbors are aware of one another -- build relationships -- and hopefully look out for each other.
• Set up a community website. This would enable current community events to have a venue to be listed and could also double as a community watch program.
• Staff and residents should keep a close watch for strange activities and even suspicious people, packages and cars.

2. Duties of the Investor/Property Manager and Staff

• Have a resident screening policy in place. If not, these tenants may pose a high risk to your property investment. This same policy should adhere when authorized tenants bring in roommates. Policies need to be clear and upfront when new people are added to an apartment etc. such as additional charges and the same screening process.
• Keep good communication with your tenant.
• Staff should have an ID card on constant display.
• Ban door-to-door solicitors.
• Install alarm systems.
• Good lighting, angled mirrors, and clear views are a necessity. Parking areas, hallways, stairways, laundry rooms, entrances and any other common areas should be well-lit. Be vigilant when light bulbs burn out to replace immediately. Trim shrubs and trees to maintain clear views.
• Locks and peepholes should be updated. Never keep old locks when new residents move in and install deadbolts and peepholes. Sliding glass doors and windows also need locks including dowels to prevent from opening from the outside. Even place crime prevention stickers on doors and windows as an extra safety measure.
• If illegal activities are being conducted by tenants, report it immediately otherwise you may be liable and also the quicker it's reported, the sooner it can return to a safe residence, attracting good quality tenants. If not reported, it can also affect the value of your property.
• Have a noise code of honor in place. If noise violations occur -- such as loud music too late, barking dogs all hours of the night -- have penalties and warnings as part of the contract. Bad sentiments will run through the community which is not what you want if trying to protect your investment.

3. Expectations of its Residents

• Don't put spare keys in obvious places, such as under the doormat or in the mailbox.
• Don't put your full name on your mailbox and even in directories.
• When on vacation, use timers on lights and televisions to maintain the appearance that someone is currently at home.
• If you're aware of any illegal activities of other tenants, report it immediately. This will maintain a safe living environment.

These tips will not only allow the manager to feel he's done all in his power to protect his residents but it's also a demonstration that this apartment/condo does indeed take the safety of its potential renters seriously.

Resident Screening: A Saving Time & Money Tool

A disgruntled tenant can cost a landlord a big chunk of change. This can be the case in both the private and public sector, and if we're talking public housing -- it could cost the taxpayer too. Take an example from Australia where some public housing residents have cost the Victorian taxpayers millions of dollars in repairs because they've decided to trash their homes. For example, a 39-year-old single mother left piles of garbage to clean up, racking the taxpayer's bill up to $20,908. Or take the case of a single 60-year-old woman; her cost -- $20,641 in damages. Whether we're involved with private rentals or public housing, it's crucial that some kind of resident screening comes into play or we could be knee-deep in our tenants' trash; trash that we end up cleaning up while throwing away money. Let's go over resident screening criteria that will protect us in the long run. These will be business rules -- a good policy -- that we must stick with, no emotion necessary. No emotion? Maybe that sounds harsh, but rules are necessary and a seemingly nice person on the outset may have a criminal record the length of your arm lurking in the under layers of a three piece suit and magnetic smile.

• Interview. Discuss where they currently live, have lived and also have them fill out a tenant application form where they'd fill in these details. During this time, you'd inform the potential tenants that you'd be conducting a background and credit check. You can perform these steps or have an intermediary company perform a resident screening. Have a written document with both the signatures of the tenant and landlord, agreeing on the specific points to be checked. The applicant does have the right to privacy so your business plan may be to deny any applicants who aren't willing to have a background check performed.
• ID. Get at least two valid IDs. This way you can have confidence that this person is really who they say they are.
• Good Credit. To define good credit, you must also define bad credit. Do your potential tenants have timely payments for their credit cards or other debts? What is there credit score? Compare it to the average FICO score in your area, giving you a guideline. How many late payments are acceptable before it's an irresponsible red flag? No one wants a tenant who can't pay their bills or loans. This is the kind of information you'll want to gather and have certain rules already decided upon.
• Prior Evictions. Make a decision from the get-go if you'll accept those people who've already been evicted. Maybe once you don't worry, but two prior evictions is a deal breaker. Get references from prior landlords because if there was a specific problem, chances are you'll see it again.
• No History. So we don't want a criminal history, but what about no credit history? What age is reasonable to not have a credit history? What about new alien residents or those with no social security number? Maybe a guarantor or sponsor would be the solution, and if so, should they reside in the same state? These are all decisions we must make before we even start renting out.
• Income. Call the potential resident's employer and also get copies of recent pay stubs. Get a confirmation of his present employment, giving you knowledge if he's capable of paying rent. Find out all sources of income, whether through employment, trust funds etc.
• Bankruptcies. Is this a deal breaker? Or what if it occurred years ago? If a tenant does file bankruptcy during his tenancy with you, he/she could be staying at your property without paying the bill.
• Background Check of Cases Filed Against Applicant. Are there any complaints against this applicant? Is there a history of violence or serious violations? You want your other tenants to be safe also.

These steps are vital in protecting you, your other tenants and your pocket book. You can spend the time doing the needed research or you can have an intermediate company who specializes in this type of resident screening do the checking. Both ways pay off in the end. The choice is yours, but make sure you do make that choice and not leave it up to fate. Otherwise your tenant with the smooth chatter and polished shoes could be leaving you and his trash behind.

Selecting a Tenant or Resident Background Screening Service Provider

There are many things that a community manager or leasing manager needs to bear in mind when filling a vacancy.  There is no shortage of service providers out there that are willing to service the background screening needs.  With so many providers to choose from, how does one make a selection among the providers that provides the most value?

Understanding something of the nature of the background screening marketplace is very helpful.  In the past decade, the market has seen relatively low barriers to entry.  The credit report data is concentrated in the hands of only three National Credit Reporting Agencies (NCRA's), namely Experian, Equifax and TransUnion.  Each of the NCRA's has a reseller policy to permit service providers to resell the credit reports to the end users of the data.  Criminal background data providers have a similar business model to the NCRA's where the majority of the data is not sold directly but instead, as in the case of credit reports, through resellers.

The availability of credit report data and criminal history data to new entrants to the background screening market has had the effect of significantly reducing the barriers to entry.  Consequently, there are numerous background screening providers each vying for your business. 

The Under-capitalized Start-up Provider
Many of the new entrants are small under-capitalized ventures.  Under-capitalized start-ups have a significant challenge in that they must be profitable almost immediately.  These ventures often have just enough funds to buy web hosting services, secure a reseller agreement, and have a very modest advertising budget.  They typically specialize in either the credit report data or in the criminal history data.

Why do they specialize in only one when the market prefers a provider that offers both? Simply because they don't have sufficient capital (financial, IT resources, etc.) to attempt both at the same time.  They often choose one path (credit) or the other (criminal) and hope to build up sufficient customer base to be able to add the other as business grows (if it grows).  Some of the new entrants have been just sufficiently successful to be able secure a reseller agreement with both types of data services.

These new entrants typically provide only the most basic of services and compete almost exclusively on the basis of price.  They are keenly aware of their own cost structure and what they need to bring in the door to remain in business.  They see that the marketplace is full with other similar new entrants and attempt to undercut the competitors prices in order to expand their client base at the expense of their similarly situated competitors.

Their client base is generally much like themselves.  The customer to whom these start-ups appeal most is often other small businesses (a home-owner with one or more rental properties).  The home-owner who has a day job and has a rental property on the side is very focused on costs and may not always perceive the benefits offered by the other larger and mature service providers.

The Mature Background Screening Service Provider
The mature provider has long ago executed reseller agreements with credit and criminal data providers.  While these two components form the core of any background screening service offering, the secure and stable providers do a better job of understanding not only the needs of the small business operation, but also of the middle market and the national operations.

The long term provider's service offering goes well beyond a simple regurgitation of the credit report data and the criminal history data they resell.  There is typically some analysis of the credit report (FICO score, bankruptcies, late payments, partial payments, discharges, other derogatories) as well as some analysis of the criminal history (automatic filtering of false positives, address and SSN matching, photographs of most-wanted, sex offenders, and terrorists).

There is generally something that combines the findings of the credit report and the criminal history to form the basis of a recommendation (accept, deny, accept with provisions).  There are additional services that also are components of the service offering (automatic address histories,  SSN validation and SSN death master file checks, record of previous evictions or other derogatories from previous communities).

The mature provider, while remaining cost competitive, does not compete primarily on the basis of price but rather on the basis of features.  The breadth and depth of the service offering are at least as important as the cost.  Integration of the screening function within the communities' property management system is also imporrtant.  Apartment communities spend substantial sums of money creating a great living environment (in-apartment laundry facilities, weight rooms, swimming pools, clean and up-to-date grounds, on-site/on-call maintenance, and a host of other ammenities).  These communities also have substantial advertising budgets and are frequently upgrading (as opposed to simply maintaining) the communities features.  For these communities, after having invested in their communities as they have, filling vacancies with resident who would detract and diminish from the enjoyment experienced by the existing residents is not an option.  Screening, validating, and rigorously vetting applicants is standard practice for these mid and upper level communities.

When evaluating background service providers for your company or community, look closely, examine carefully, probe for hidden dangers, and watch your step. Be wary of the SomeGuyAndaWebServer.com providers that have crept into the market. Knowing that they are out there and for what and where to look in order to avoid them can make the difference

Charging Applicants a Fee for Background Screening

Some years ago, when background screening was not yet mainstream; many apartment community managers and leasing agents clearly understood the incremental cost of running a background check but did not always understand as clearly the benefit derived. These days, background screening has not only become commonplace but is now an industry best practice.


The debate over whether or not to perform background screens on applicants has been settled. The question of who pays for the screen and what are the circumstances still has many different answers:

• Applicant pays cost of screen - this is the preferred and most egalitarian method where each applicant bears the direct cost of their own (and no other) background screening. There are a few variations on this theme where the costs can be subsidized by the community or the community might choose to add a modest mark-up (no gouging please) to the direct cost.


• Successful applicant pays cost of screen - this is not preferred. Local governments (state/county/city) can sometimes intervene and impose restraints on charging fees to applicants for background screens. When this happens, communities typically shift the cost of the background screens into a "move-in" fee which is non-refundable. All this really means is if it takes an average of 5 applicants to fill a vacancy, the successful or winning applicant will bear the burden of the 4 applicants that were not successful.


• All successful applicants pay cost of screen - this is also not preferred. In this scenario, rents are increased for all residents to offset the background screening costs. Residents, depending on their duration can end up paying for hundreds of background screens.

There have been mulitple reports of "bad actors" looking for an apartment. They will "work" the area making upwards of 10 applications per day in search of a community with lax process/discipline. Communities with weak process or discipline have gotten burned by the bad actors that have cost them significant hard costs to repair/collect and are similarly expensive in the soft costs of time and aggravation to get them out.

Screen every applicant; every time. Police see the direct impact neighborhoods and communities suffer when communities and landlords are don't follow through. Police encourage decision makers to deny applications of active criminals, those with a history of drug abuse or violent crime. Leasing to individuals who lack the means to meet their own needs is likewise unwise.

NAA Green Conference & Expo

It's held in Phoenix, AZ (April 28-29) at the Phoenix Convention Center in downtown. A principal speaker is James Brew, Principal Architect of the Rocky Mountain Institute's Built Environment Team. He'll be speaking on the subject of sustainable design.

Going green is increasingly important these days with many prospective tenants committed to occupying only green communities.

Come learn how to save some green while going green at the Green Conference & Expo in Phoenix.

Rents on Luxury Homes Reducing

With the purchase market for homes is all but locked up due to credit having dried up, the rental market has also suffered. In particular the luxury homes have since significant price reductions in the monthly rent in order to keep them occupied.

In a recent Wall Street Journal article, the difficult times for the owners of luxury homes for rent is illustrated. Rents have been reduce as much as 25% or more as housing values fall and buyers of the homes are forced to sit on the sidelines. Listings of the luxury homes are also up as many of them are available. Real estate agent Lawrence Story of New Canaan, Connecticut reports that the number of listings in his area for homes for rent in the $9,000-$20,000 per month range have doubled from last year.

Although we are now just beginning to see some loosening in the credit market, it will be quite some time before the purchase and rental markets return to anything that resembles normal conditions.

Q1 2009: Less Pessimism in the Apartment Market

The National Multi-Housing Council has published the latest installment of its quarterly Survey of Apartment Market Conditions. The results for the current quarter, while not exactly oozing with optimism, is nevertheless less pessimistic than the previous quarter.



The market outlook calls for continued slack (moving down the index from 24 to 11 with a value of 50 being neutral). However, there are some signs that are less negative. They are the Sales Volume, Equity Financing, and Debt Financing which all three posted improvements compared to the previous quarter.

Source: National Multi-Housing Council