How do apartment complex managers determine whether the lease applicants who’ve just walked through the door are a good credit risk or represent accounts that will eventually need to be turned over to a collections company? It’s always a gamble, but we’ve got a few tips you’ll want to move in on.
Reference Checks Aren’t Just for Jobs
References have become synonymous with job applications. But the idea of checking up on someone isn’t just for a potential workplace. You can, and should, check references on your lease applicants wherever possible. Request a contact name and number at the current or last-known address. You’ll want to ask things like:
- Did the applicant consistently pay rent on time?
- Did any of his payments bounce?
- Were there complaints lodged against the person, such as noise or smoke?
- Did the person break any apartment policies, such as pets on-site, grilling, or modifications to the unit?
You may not always be able to get a reference for every person, but won’t you be glad if it turns something up?
Pour Over Policies
It’s really easy to shuffle a bunch of papers toward your applicants and hope they’ll read them. But what happens when they “forget” to pay, citing they thought you allowed certain grace periods? It’s much harder to get someone evicted from an apartment than to turn him down from moving in at all. If you have a no pet policy, for example, taking two minutes to point that out in writing prevents you from having to replace carpets, paint over wall scratches, deodorize the apartment, and put up with unhappy neighbors who have to hear the Great Dane barking from within paper-thin walls. Your staff can’t be in every apartment, every day as a watch guard. You should hit every important point with your applicants before they move in. Consider it CYA.
States’ requirements on pre-move-in deposits differ, as may your individual properties. You may have to collect two months’ down payment on one apartment, whereas across town, they’re only asking for one. Where possible, require a higher amount of money as deposit. Put it in an interest-bearing account, which benefits both you and the renter. He gets his money back, plus extra, when he moves out on good terms. You have something you can dip into should he make a run for it or cause extensive damage. It may not cover everything, especially if you’re trying to collect on someone who hasn’t reconciled rent for multiple months, but it’s something.
You could employ someone whose only job is to friend and follow all your residents on social media, but you’re not insane. But one way you may be able to help anticipate possible payment problems is to keep an eye on social review sites such as Yelp. Get your complex listed on there, if you’re not already, and set up alerts for when you receive reviews. It’s fairly easy to figure out who’s posting, especially if you recognize the person from the issue he’s writing about. If it’s major enough for the person to be complaining online, it may be a hot alert that he’s looking to move out – without giving notice or paying up a balance.
Move in on our free Best Credit Policies white paper – no security deposit required! Yes, pets are allowed, too.