Manage in the Past and Forget the Present

Property management advice from David PickronManage in the Past and Forget the Present

Property management advice from expert David Pickron suggests looking to the past to find the renters who will pay you in the future, and put emphasis on three things when you are qualifying applicants.

By David Pickron

There is a famous statement that reads, “Live in the present and forget the past.”  Rarely do we hear “live in the past and forget the present,” but right now we find ourselves in tough times, managing our properties in a slightly different way than we used to.

Everyone is focused on social distancing in showings, move-in or move-out inspections, and work orders. But I want you to think about this question: “Is an eviction from April 2020 to August 2020 the same as an eviction a year ago, when we saw the best economic numbers this nation has ever seen?”

Unemployment was at a record low in all categories and the jobs market was booming for all income levels.  Now we find ourselves looking at 36 million unemployment claims to date and only growing.

Businesses have been forced to close by state governments to stop the spread of Covid-19.  Many state governors have stopped evictions, and the Federal Cares Act prohibits filing evictions for 120 days ending July 26, 2020.  In all estimates, this country will see record eviction filings in August, when landlords who were limited by the Cares Act have the green light to process evictions on those who are delinquent.

Most people won’t be able to get from under three to four months of past-due rent.  Will good people get caught up in this mess?  Yes.  Will many of them be great renters in the future?  Yes.  So my property management advice is maybe it’s time to look to the past – and forget the present – to find those next renters who will be with you paying rent for the next five years.

Property management advice?

Consider putting more weight on these three items as you qualify your applicants over the next couple years:

  • First, pay attention to time. How were the applicants doing prior to March of 2020?  Did they have any blemishes or an eviction in the previous?  Did they have any judgments or negative credit prior to COVID-19?  Would you have rented to them in February of 2020?
  • Second, analyze their employment. Were they employed throughout COVID-19 but still had an eviction?  Maybe they took advantage of the situation when it was presented to them.  That is much different from a restaurant worker whose job was taken by government mandate.  No matter what the situation is, can they pay the rent today?  Do they have a current stable job moving forward?  Check their paycheck stubs; specifically their year-to-date totals, to get an idea of how long they have been working.  A call to the employer might be necessary if a paycheck stub cannot be produced.  I personally ask for two paycheck stubs.  It’s easy to doctor up one, but to change two paycheck stubs and make all the year-to-date figures match is too much work for a scam artist. An emergency-room nurse in my neighborhood was furloughed by the local hospital because no one was coming to the emergency room.  You might think all medical personnel should have kept their jobs, but with elective surgeries stopped by most governors, all trades were affected, not just restaurants, tattoo shops and bowling alleys.  Steady employment through these times is going to be hard to find in the rental world for the next couple years.
  • Third, a good rental verification will give you information a credit bureau cannot. Last-year evictions were removed from credit bureaus.  There are only two ways to find evictions now: doing a direct court search of civil filings, or calling past landlords.  Many landlords have been coached by their attorney to only give out move-in and move-out data, but other landlords will give you more than you want.  Most of the time if a landlord did not get their rent, they want to protect other landlords and will spill the beans.  But be cautious because if a tenant is really bad, a current landlord will say anything to get rid of them.  I always advise my clients to go two landlords back to get the truth.  A past landlord has nothing to lose and the truth will come out.

In 2009, I took a chance on three families who had lost their homes to foreclosure. They are still with me 10 years later.  These were people who had homeowner mentalities, renting my homes.  They went through a tough time with their homes being underwater and losing those homes, but they kept their heads high and knew that they were caught up in in forces outside their control.

We will find people in the same situation here.  I believe some of our best renters will come from people who had a great past, but rocky present.

About the author:

Property management advice from David Pickron

David Pickron is the President of Crimshield and Rent Perfect in Mesa, Arizona.

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