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    Previously I wrote about pre-screening prospective tenants and screening for tenants.  I just wanted to share a story regarding one prospective tenant that applied for my single family home.

    There were no clear cut things wrong with everything from the start.  A young cope came to view the place.  They are just starting life together.  they have 2 kids, a 2 year old and a 3 month old.  He is 21 and she is 23.  He has legal custody of his sister.  Very polite and interested in the property.

    This is where conversation can come in to play.  During talks with them I asked when they were looking to move.  They had said they gave their 60 day notice at the beginning of May.  My first red flag went off as this meant they had about 5 weeks to find a place and move in.  Seemed a bit irresponsible to me.    I pulled credit scores and both were in the low 500's.  The scoring criteria I have doesn't even give any credit for a score that low.  Their most recent charge of was about 6 months ago.

    Now looking at the application, he is now a maintenance worker but was previously a landscaper.  This is the Northeast section of the country and landscaping is seasonal.  A landscaper will not be making money in the late fall/winter months.  This is when the problems happened on their credit so I could have overlooked teh charge-offs.    I pulled eviction records and there was nothing.  At least that was good.  My thinking was that maybe they put rent the first expense that was paid and the others were all second.    My second bell did go off though because he has only been employed at this company for about 5 months..

    I then moved to the landlord checks.  I called both the current and previous landlords.  I got a hold of the previous landlord and they received glowing reports.  She would rent to them again, no noticed ever served, clean tenants.  Great, they seem like good people.  Another plus for them.   

    I usually wait to pull the criminal records until I have all other things done but I wanted to get the ball rolling quickly so with just these references done I submitted the search.  These usually take a few days to get back.  While waiting for the criminal records to come back, the current landlord returned my call.   

    Before i give you the details on what she said, Here is some information on where they currently live.  It is a complex of approximately 300 units.  The complex is part of a larger series of complexes owned by a company based out of New York City. 

    Now I begin my usual list of questions and get to the "Have any 3 or 30 day notices been posted for lease violations or non-payment of rent".  The answer was a chuckle and a "I was waiting for you to get to that".  Anyway, it turns out that this couple has been taken to court 3 times in the past 9 months for eviction.  Each time they were bailed out prior to the final court appearance by a family member.  All other things seemed good but this is a big one.  It throws my "rent is first" idea out the window.  I've got to give these people a call tomorrow to let them know their application has been rejected.     

    I have always placed more of an emphasis on the previous landlord than the current one.  This time it was  the current landlord that gave me the information that I needed.  Oh, I almost forgot to tell you, my final question is always "Is there anything else that you would like to let me know about them.  anything you think I should know".  I was surprised to hear they had a cat.  My place is no pets and they listed no pets on their application.

    Oh, and one more item, always verify that the landlord they list is the true owner of the property.  Here is Philly, this is easily done online via the board of Revision and Taxes.

web log for us – those that follow through with a full proper screening.

    I recently read this article that gives details on a company, Champagne & Associates, that operated in Dorchester.  From the few examples it seems to be a case of fraud on the part of Champagne & Associates operator's, Roberta Robinson and Rachel Noyes, but is it clear cut?

    There has to be a level of personal responsibility here.  Every individual in this world needs to watch out for number one.  That number one is you, the individual.  If you don't watch out for yourself, no one will watch out for you.  Another golden rule to live by.  If it seems too good to be true it usually is.

    In this article it talks of how Champagne & Associates allegedly falsified records, sent mostly blank mortgage applications to clients, got clients to buy 2 or 3 properties so they had rental income, etc.  The list of these items goes on and on.  If all these allegations are true, is Champagne and Associates fully culpable?

    I am of the mindset that some responsibility must fall on the purchasers of these properties.  Although hindsight is 20/20 there were signs here as large as billboards letting the individuals know something was wrong.  First, thing, being asked to sign "almost blank" mortgage applications.  It's common knowledge that you don't sign anything unless it is all filled in, read, reread and fully understood.  

    Another instance has someone knowingly going into a mortgage with a payment of $7194 a month.  This person knows she made $1800 a month.  Basic math tells you that you can't aford these loans.  A third example here cites that a woamn saw at closing that her monthly payment would be $3300 a month when she agreed to $2300 a month.  Her thoughts here were: "I see the real mortgages and it's apparent to me I got robbed," Hayes says, "but I'm thinking I'm going to make this work."  This was a time when she should have walked away from the deal.  Emotion and blinders kept her going.     

    Other applications cite second jobs that didn't exist, inflated or non-existant bank accounts, etc.  All this would have been visible at the closing if anyone took the time to read their paperwork before signing it.

web log for us – those that take the time to reand and understand everything before we jump into it 

    While getting the house ready to rent out there was one job I have been dreading for a long time. the brick and flagstone steps out front were cracked in a few spots and starting to lean forward. They were still structurally sound (no movement) but would be falling apart in a year or two with the winters and rain we have here in Philadelphia.

    Thus began the project of removing the top two flagstone steps, pulling off what bricks could be pulled out, and chiseling out the ones that were cracked in half.

    The process wasn't too bad. I had mt brother-in-law to help. Neither of us have done something on this scale before but he has at least done some brick work. We chiseled off the mortar from the bricks we could reuse and the flagstone. We then went through the process of rebuilding the second step. We added new bricks, spaced them out, mortared and leveled them in place. Unfortunately we couldn't find bricks that were a match to the one's we removed.

     Murphy's Law kicked in and it started to sprinkle a bit just as we finished all the bricks. We still had the flagstone top to put on and decided to go for it. I was mixing mortar like a madman as he dumped it and smoothed it out on the steps. We got the flagstone set and leveled out just as it started to move from a sprinkle to a drizzle. We quickly tarped it off and cleaned up.

Success!

    The top step only needs to have the flagstone mortared in place and then there are some spots where we need to point and fill in some small cracks that have started to form. That is slated to be done this weekend. Once everything is set and dried I will post some pictures of everything.

web log for us – those that have the gusto to dive in and get the job done right.

    Previously I gave some details on properly screening for tenants. I've been fielding the calls for those who are interested in the property and I figured that I should give my tips on the pre-screening process for potential tenants. This process deals mainly with the calls that come in for the property.

    The first thing I do is change my voicemail message to give details about the property in case a call comes in that I can't answer. I leave information like:

• Number of bedrooms/bathrooms
• Monthly rent and what's included (for me that's just the first $30.00 of water)
• Date rental is available
• Requirement of a Criminal, Credit and Eviction checks.
• Requirement of verifiable income that is 3 times the rent.
• Fee for application which will be applied to first month's rent if candidate is accepted.

    When I speak to the prospective tenants I usually start by asking them a few questions about themselves. I usually go for:

• Where do they currently live?
• Why are they moving?
• What rent do they pay now?
• What pets do they have?
• What do they do for a living?
• How many adults will be living in the property?

    This conversation will allow me to get a good feel for the people. I will also let them ask any questions of me that they may have. If everything sounds good on the telephone I will scchedule an appointment to show the place and meet the people. I remind them of the application fee and that it will be due in cash or money order when they turn in the application. If the appointment is for more than 2 days away, I call the day of the appointment to confirm the time.  The confirmation call helps reduce a lot of the no-shows.

web log for us – those that screen the heck out of our tenants so we minimize the problems later on

    REX & Company, a small San Francisco investment company is offering a new product to pay homeowners cash now in exchange for a right to part of the proceeds when the home is eventually sold.  They have the backing of a subsidiary of American International Group Inc. (AIG).

    The product is being marketed as an alternative to debt based methods of extracting cash from a home, such as equity loans or reverse mortgages.

    For example, a home currently valued at $750,000 might obtain $100,000 in cash by giving REX a 50% share of the change in the home's value.  If the home sold for $850,000, REX would receive $150,000.  The original $100,000 invested plus half of the increase in value.  If the home went down in value and sold for $650,000 you would still owe the initial $100,000 but REX would absorb half the cost of the loss in value so REX's share would really be only $50,000.   

    REX plans to reach consumers through mortgage brokers, real-estate agents and financial planners.  Brokers and other intermediaries could charge fees as high as 2% of the cash obtained by the homeowner.  People who sell the home in less than five years face an early exit fee ranging from 5% to 25% of REX's initial payment.

    The product is currently available in nine states – California, New Jersey, Virginia, Florida, Illinois, Washington, Colorado, New York and North Carolina but the company expects to offer it nationwide within a few years.

web log for us – those that are smart investors and like to use other people's money to help increase our net worth.