applications and background checks typed over blue and white fingerprints

Applications & Background Checks

Landlord Advocacy: Legalities of the Residential Buy & Hold Business Model on Long Island.

Applications and background checks. Should you do them? Absolutely. There’s a lot of reasons why you want to do them. Number one, you want to know who you’re dealing with. You want to identify who these people are that are going to be living in your house.

I had a client once, we took it to trial, we took it to two trials because he never checked out who his people were in the house. And they actually turned out to be gypsies. And when we got to our trial, we actually found newspaper clippings from other States where they basically scammed landlords and they would move in saying, “This is my name.” They would even show them ID. But they were somebody else, and when they’d get the trial they would say, “No, this isn’t me. I don’t know who you” And then we’d have to start over again, bring the case against someone else. And wasn’t them either. It was really like bizarre stuff. And they had attorneys and they were like, “These people are crazy. They’re calling us gypsies. These aren’t gypsies, they’re just normal people.” And then when the case is over and they left, and they left a mess of a house, and they didn’t pay the guy, the attorney just shrugged and he said, “What do you expect? They’re gypsies.”

So know who you’re dealing with.

You want to verify their income and their sources of income. Can they afford your rent? We like to use the federal guidelines of 31% of their gross income, no more than that should be allocated towards housing. It’s a pretty good rule of thumb. So you want to document their income. Emergency contacts. You want to know who your tenants’ emergency contacts are because things happen. I had a tenant once who was slightly autistic, got sick, was holed up in his apartment for months. No one ever heard from him. He was in there sick, wasn’t paying. I had an emergency contact though. It was the sister who actually helped him out a little bit. She actually came in there, moved him out, paid his arrears and that was it. If I didn’t have an emergency contact, who knows he’d probably still be in there right now.

What to look for in background check? Well, number one, you want to look for prior evictions. A good background check will tell you that. You want to check if they were ever foreclosed on. If they were, it’s an indication that maybe they’re not going to treat their monthly housing payment with much respect. Although a few years ago when the whole world was getting foreclosed upon, it wasn’t as much of an issue. You want to look, do they have bad credit due to late payments or for some other reason? Do they have a long history of credit problems? So those are the things that background check will tell you.

But then, there’s other things that a background check won’t tell you, but they’ll give you clues about. So they won’t tell you the circumstances surrounding the default. So if you have someone who is applying for a rental and they got really bad credit, but you dig a little deeper and you found, they had a one time instance where they got divorced and it was really nasty and their credit was shot. Okay. Before that, they had an 800 credit score. It might be okay. Or is it a chronic issue? What kind of job security do they have? You can’t tell that from a background report, but you can talk to them and say, “What do you do for a living?” And if they’re doing something that’s going to be obsolete, like if they’re a landscaper in the summer, but they don’t work in the winter, it might be a problem. So, my recommendation is always do a full background check, and thoroughly know who you’re dealing with.

Above is the full video transcript of following video:

 
 

About the Presentation by Mr. James Clark

The above is a clip from a presentation that attorney, Jim Clark made to the East Coast Real Estate Investors Association (“ECREIA”) in March, 2019 entitled: “Landlord Advocacy: The Legalities of the Residential Buy & Hold Model on Long Island.”

Mr. Clark will be leading a follow-up discussion on these topics, and specifically how they’ve changed under the New York Housing Stability & Tenant Protection Act of 2019 at the monthly meeting of ECREIA at 6:30pm on September 25, 2017 at Domenico’s Restaurant at 3270-A Hempstead, Tpke, Levittown, NY 11756. To learn more about ECREIA, click here.

In this clip, Mr. Clark discussed the importance of Tenant Applications and Background Checks, what you should look for in a background check and what a background check won’t tell you, but that you need to know.

To view the full presentation, click here.

During this presentation, Mr. Clark discusses solutions to some of the most common legal issues landlords face including:

  • How to hold title to a rental property
  • How do I know if it’s a good rental property?
  • Marketing Strategies For Your Rental Property
  • Applications and Tenant Background Checks
  • Anti-Discrimination Laws Effecting Long Island Residential Rentals
  • What About Lease Agreements
  • How About Security Deposits
  • Collecting Rent
  • What To Do When a Tenant Doesn’t Pay
  • The Landlord Mindset

East Coast Real Estate Investors Association is a member group of National REIA and conducts monthly educational and networking meetings for real estate investors. To learn more about ECREIA go to http://www.eastcoastreia.net.

For more information, or if you need help with a landlord-tenant or eviction matter, please contact us.