by David Pickron, RentPerfect
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” Yet 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 26 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 prohibited filing evictions for 120 days ending July 26th, 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 3 to 4 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 maybe its time to look to the past and forget the present to find those next renters that will be with you paying rent for the next 5 years.
Consider putting more weight on these 3 items as you qualify your applicants over the next couple of years.
First, pay attention to time. How were they doing before March of this year? Did they have any blemishes or eviction last year? Did they have any judgments or negative credit before CoVid? Would you have rented to them in February?
The second item of importance of analyzing their employment. Were they employed throughout Covid 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 from them 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 ask for 2 paycheck stubs. Its easy to doctor up to one, but to change two paycheck stubs and make all the YTD 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 ER. You might think all medical personnel should have kept their job, 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 of years.
Third, a good rental verification will give you information a credit bureau can not. Last year, evictions were removed from credit bureaus. There are only two ways to find evictions now. One is through a direct court search of civil filing and 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 client 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 3 families that lost their home to foreclosure, they are still with me today 10 years later. I found people with a homeowner mentality of renting my homes. They went through a tough time with their homes being underwater and having to lose their home. They kept their heads high and knew that they were caught up 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.