Jeri: Hello investors. My name is Jeri Frank and I’m co-founder and CEO of AssetRover.
Today, I’m here with Judy Stevens from Skogman Realty and Judy Stevens has been in real estate
since 1978. She served for 6 years on the Iowa Real Estate Commission, has been an instructor
for the Iowa Association of Realtors and for Skogman Realty. You do independent teaching
of insurance classes, correct?
Judy: I do. I have been a landlord. My husband and I probably
have been landlords for about 48 years, but we just sold our last one this year.
Jeri: Congratulations.
Judy: All of them in Iowa, one in Arizona.
Jeri: All right. When we first spoke and we
were talking about topics that we might want to talk about, you actually brought up the
idea of talking about rental applications and I was curious what brought that to the
forefront of your mind as a topic.
Judy: If you could only have everybody fill out one piece of paper, it would be the rental app.
I think you can eliminate headaches on the rental app than you can with the lease
or your rules or regs or anything else, because it is always said that a bad renter will put you out of the business, but a good renter
will keep you in the business and keep the whole business fun. Now is that time to eliminate
that bad renter is on the rental app.
Jeri: All right, so let’s go through the
rental application. What should you include, what kind of information should you collect?
Judy: Okay. The very first thing you should do is to ask their name and you should have
this all in writing and there’s websites also, free websites that you can do your own application.
I also talked about the Linn County landlords. They have an excellent rental
app, but you have to join them and I strongly recommend that you do that, but if you’re
making up your own, the very first thing that you want to do is get their name and you’ll
also want to ask them if they have any aliases or have used another name during their time
that they have lived here in Linn County. You need to get this from every non-related
party that is going to live on the premises, so you do that. In fact, if you have two people
who are going to live together and they are not married, you want to get a rental app
from each one of them. After you do that, then you want to
make sure you get a birth date because that will sift out … For example, my name is
Judy Stevens. I have a lot of interesting people who also are named Judy Stevens. You
want to get the birth date and you don’t necessarily want to get the year because some
people are a little hesitant about doing that. The only time you really want to get the year
and you can explain this, if you see someone who’s quite young and you want to make sure
that they’re 18 years of age so that they can sign the lease. If they’re any younger
than that, that lease would be voidable, so you want to get that.
Jeri: In that case, does a parent sign the lease for them if they’re trying to …
Judy: Whatever your rules are, whatever your rules are. Usually, I would usually get a
co-signer, yes, and make sure that they would be held responsible. Then you want to ask
their present address, where are they living now, and this is why you need to ask this
of every person who is going to live in the premises, where are they living now? Are they
living together? Are they living apart? This is especially true when someone is first living
together, that can be a volatile situation. Anyway, then you also ask them their previous
addresses. You want to go back at least five, seven, eight years and get all their previous
addresses. Then you need to … This is something you can do yourself when you check out your
rental app, the next thing you need to do is you need to get on the assessor site for
Linn County or the city of Cedar Rapids and find out who actually owns that property because
some people say, “Well, I own that or my parents live there or whatever,” so you
need to check it out and make sure, first of all, that there’s really that address,
so that’s what you do. Judy: Next, you ask who their current employer
is and how much they make. You can set your boundaries as to how much you expect them
to have as income over and above what the rent is. People will tell you they’re very
used to being poor. Well, if you only have $50 a month leftover after the rent, you’re
not used to being that poor. You need to found out who their current employer is and how
much money they make. You need to look at this also and also you can ask them about
other sources of income because other sources of income are acceptable. For example, they
might have some children who are on social security. You may have an elderly person who
receives social security. You cannot discriminate on that. If they’re getting child support,
that’s a source of income, you can also ask them if it is current. You can be awarded
child support, but you may not be getting it.
Judy: Then you’ll also want to ask what type of vehicle they drive and how many vehicles
will be on this property because if you’ve got a single family dwelling especially and
you don’t have a lot of parking, you need to know who’s there. The other thing is
you’re renting apartment houses, you may have people working on their cars out in the
parking lot and that’s not acceptable. Then again, you also ask them who will occupy the
property because now is the time where they will put down dependents who are living there,
the children and so forth, and that’s fine, but the most important thing also is you need
to find out are they living here year round because what can happen and happens a lot
in our society is people will have custody of children over the summer which is fine,
but you may not have enough bedrooms for them, so that’s what you need to ask also.
Have you ever been convicted of or have you ever been asked to move? No, that wasn’t
right. Have you ever been evicted or have been asked to move? This one you definitely
want to check out because this would appear on Iowa Courts online. You always look for
evictions. The other thing that you want to put at the bottom of your rental app, you
definitely need to say, “Any falsification of this document will result in termination
of your lease.” On top of that, if they lie here and then you get on Iowa Courts online
and find out they’ve been evicted, we’re not renting to you. Have you ever broken a
rental agreement? If so, why? Have them explain. Have you ever been convicted of a felony or
a misdemeanor? Again, this is something you can check out on Iowa Courts online.
The other question you also want to ask and this was a little lengthy so I didn’t
write it down, you want to ask if they have ever committed a crime which would put them
on the sex offender list which is a felony and the other one is you want to ask them
if they are currently using or have ever been convicted of using a controlled substance.
Those are good questions especially since in Iowa, if you knowingly allow your tenant
to use drugs on the property, they can confiscate your property. Consequently, this then is
an indication that you have tried to screen so that would not happen. This looks good
in court for you.
Jeri: In the event they put something on their
rental application, they’ve lied, but you find out about it later …
Judy: After you rented to them? Jeri: Correct.
Judy: If you have it in there that you can terminate the lease, but you must put that
on your rental app.
Jeri: Okay.
Judy: At the bottom of your rental app also, along with the falsification of record, get
their permission to run a credit check, to do a criminal background check and to verify
anything on these rental apps and you get their permission to do that and that’s what you do.
Jeri: Have you ever had anyone who has declined that?
Judy: What?
Jeri: Having any of those … Judy: Oh yeah, absolutely. The best part about
a rental app is that people will say, “Okay, I need to fill this out right away because
I need a place to live,” and you say, “Okay, have at it. Fill it out.” Then they get
to certain questions and they say, “Well, you know what, I need to get back to you.
This is kind of lengthy.” You know what, you just lost … You’ll never see them
again, but you know what, that is exactly why you did this.
A vacant apartment or house is 10x better
than a bad tenant. Those are some of the things that I look for. Now when checking out this
rental app then here’s the things that you do. Number one, you check the address to make
sure that someone actually lives there and who it belongs to. When you ask for former
… I’m assuming that you also will ask for the former landlord’s name where they
lived before. You can call those landlords. Again, some landlords are a little hesitant
to give you a lot of information for the privacy acts, but the one question that you can ask
is, “Would you ever rent to them again,” and that will tell you a lot.
Jeri: Do you find that if that person is currently trying to leave their current residence, the
existing landlord is sometimes hesitant because maybe they do want that tenant to leave?
Judy: Yeah, and they may give you some bad information. That’s why you check the previous
ones. That’s why you ask for the previous ones. I learned a lot from a lady who was
a very, very good landlord in Waterloo and what was interesting is when she called for
references, the first thing she asked, the first question out of her mouth was, “How
are you related to this person?” She screened a lot of people that way because people would
just pop, “Oh, I’m her mother or I’m her sister or whatever.” “Oh, that’s
interesting.” The other thing then you start calculating that income. Sometimes if people
are working in restaurants, the restaurants are famous for keeping all that less than
40 hours. They will say, “Well, I make so much an hour, but I work there 40 hours.”
Well, I really question that, and so you need to calculate.
Judy: I know I had a tenant who was working all these jobs. She had just all kinds of
income. I called her and I said, “When do you sleep?” She says, “Well, I just got
that one job and I’m going to be quitting these other jobs,” but she put it all on
the rental app because she wanted this house I had. Well, you know what, I didn’t rent
it to her because she was dishonest right there. That’s the other thing that you check.
I absolutely always check Iowa Courts online. There are also organizations here in Cedar
Rapids who will do that for you and of course if you’re right in Cedar Rapids with our
new ordinances, you turn this all over to the police department and they do it for you
for $8. That is a bargain. Again, that’s part of the ordinance that we have in Cedar
Rapids that you have to do this. Now, it does not mean that you do not rent to them. You
can rent to them. If this guy’s a registered sex offender, you can rent to him, but they
want to know that you know who it is. They’re not telling you who to rent to
and who not to rent to.
Jeri: If you get through the entire process,
they filled out the paperwork but you have a bad feeling. What do you do?
Judy: Don’t rent to them. Here’s another thing I have done. I have rented to two people
in my career that were being evicted. They were being evicted. I knew the landlord and
I just decided, “You know, there’s something going on here.” I honestly went over and
visited the people and saw what the house looked like and everything and I rented to
both of them and I had very good tenants. Their references were excellent. I had one
gal whose employer called me and he said, “Just give her a chance. Please give her
a chance.” He says she’s talented and there’s a lot of things going on in her
life and she has to get out of this unit, so I went over and visited her. She’s sitting
there on boxes. She’s going to get evicted the next two days and she had children and
we rented to her and we had a good tenant. It happens. It doesn’t hurt either to … It
doesn’t hurt to visit them and see what their houses look like and what’s going on.
Jeri: Is there anything that we’ve missed
in this conversation or additional advice that you would give to someone who’s just
going in to the landlording business and figuring it out for the first time?
Judy: Get a rental app and use it. It’s not discriminatory. You have to just make
sure that you use it with everybody, ask all the same questions. The other one that I might
add that I’ve always used, I also ask who to contact in case of emergency. I have worked
with investors. I had an investor who told me that he found a woman passed in his apartment,
28 years old. He said he had no idea how to get a hold of family, anybody and since then
he always asked who to contact because he said there is some mother here in Iowa who
would rather have him call than have the highway patrol come find her. That’s a good one.
That’s also kind of been funny because that’s a good screening question because
I’ve had people say, “Well, if I put my mother down, when will you call her?” In
case of emergency. “Oh, well, like parties or something, will you call her?” No, so
that’s an indicator. That’s always been a good screener. The questions that have been
the best screeners for me is income, emergency and have you used a controlled substance.
Those are really good screeners because you can just see them when they get to those they’ll
decide they don’t want to fill out the app. You do not have to take the app immediately.
You say you’ve got to do your checking and again in all fairness and you want your unit
rented, so you do it as quickly as possible and then you get back to them. If you do turn
them down for credit, the laws now say that you’ve got to put it in writing and you
have got to let them see the entire record. Judy: Again, you have to remember also, I
rented a house in Phoenix, Arizona for 13 years and I was told by my manager down there
that, “If you’re looking for somebody with good credit after the big crash in Arizona,
you’re never going to find a tenant.” Everybody has their story. That’s what we
do or did. We don’t do it anymore.
Jeri: All right. Well, thank you very much. I appreciate it.
Judy: Well, thank you for asking me.