Rentec Direct - Property Management Software

I read the following the other day..

In response to complaints from tenants that more and more landlords are requiring rental payments be made only online, California lawmakers are considering a bill that may dictate how landlords collect rent.

“A growing number of landlords are no longer accepting checks or money orders from tenants,” says Sen Ted Lieu.  “Instead, they have begun to change rental agreements to require tenants – including the elderly, disabled and poor – to pay their rent online.”

The issue came to light late in 2011 when hundreds of tenants in apartment complexes in Los Angeles objected when the property-management group notified residents of a 300-unit complex that the only way they could soon pay rent was online.

Current law does not specify how rent is to be paid. The new bill revises the law to prohibit landlords from requiring online only rental payments.

So while I'm in absolute favor of adding payment options to tenants, taking payment options away is a big mistake.  Here's some ideas on how to provide online payments successfully:

• Add it an an option, not a requirement.
• Add both online check as well as online credit card (with a fee).  Some tenants would rather charge rent to a credit card for a fee than risk being delinquent.
• Add an incentive for online or automatic payments, such as a $10/mo discount.
• Provide a method a non computer savvy person can take advantage of it, such as an authorization form which the property manager processes online.

Being a landlord is not just collecting rent and taking care of repairs, it is a customer service position.  Would a company dare think that removing payment options from their customers is going to increase customer satisfaction?  Not likely, and nor should a property manager.

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Nathan is a member of Rentec Direct who provides property management software, tenant ach payment processing, and tenant screening for property managers and landlords nationwide.

I think this is a very positive step for making it practical for property managers to accept rent via all retail means, including credit cards.  Previously no discounts or preference could be made by a property manager (merchant) towards any payment method if they accepted VI/MC.  With MC and Disc offering a special interchange rate of 1.1% to property managers and AMEX/VI not, it's now perfectly legit to guide tenants through any means necessary (including discounts) to pay using the cheapest method for the merchant which might be the special MC/Disc rate or via ACH which is a small flat rate costing less than $1 per transaction.  Hopefully this opens up more competition between the credit brands too and ultimately reduces their fees which are pretty insane right now.

A very similar announcement to the one below was announced by MasterCard as well.

In October 2010, Visa announced a settlement with the U.S. Department of Justice (DOJ) and several state attorneys general to resolve antitrust investigations into Visa’s merchant acceptance rules in the United States. On July 20, 2011, the court approved the settlement and entered final judgment in the case. The final judgment is available at www.justice.gov/atr/cases/f273100/273170.pdf. We’re writing to inform you of the changes Visa has made to its rules, effective July 20, 2011, and to describe certain merchant acceptance practices that are now permitted and that may assist you in better managing your costs associated with accepting payment cards. The text of Visa’s revised rules is available at http://usa.visa.com/merchants/operations/op regulations.html.

Visa’s Operating Regulations already allowed merchants to steer customers to other forms of payment and offer discounts to customers who choose to pay with cash, check, or PIN debit. Following the settlement, U.S. Merchants may steer customers to use a particular network brand, such as Visa or MasterCard; to a type of payment card, such as a “non-reward” credit card; or to another preferred form of payment. U.S. Merchants may also encourage a customer who initially presents a Visa card to use a payment card with a different network brand, a different type of payment card, or a different form of payment. Merchants may engage in any of the following steering activities:

• Offering a customer a discount or rebate, including an immediate discount or rebate at the point of sale;
• Offering a free or discounted product;
• Offering a free or discounted or enhanced service;
• Offering the customer an incentive, encouragement or benefit;
• Expressing a preference for the use of a particular brand or type of general purpose card or a particular form of payment;
• Promoting a particular brand or type of general purpose card or a particular form or forms of payment through posted information, through the size, prominence or sequencing of payment choices, or through other communications to a customer;
• Communicating to a customer the reasonably estimated or actual costs incurred by the merchant when a customer uses a particular brand or type of general purpose card or a particular form of payment or the relative costs of using different brands or types of general purpose cards or different forms of payment; or
• Engaging in any other practices substantially equivalent to these.

Visa also revised its rules regarding the size, color, and prominence of the Visa mark displayed at the point of sale for U.S. Merchants. Under Visa’s revised rules, a U.S. Merchant is not required to display the Visa mark in a size as large as other payment marks. U.S.

 
Merchants may promote acceptance brands other than Visa through the size, prominence, or sequencing of payment choices. The rule changes enhance merchants’ ability to manage the costs associated with accepting electronic payments. However, the merchant must continue to respect a cardholder’s ultimate decision to pay with Visa: the settlement does not impact merchants’ existing obligation to accept for payment properly presented Visa cards, including rewards cards. Surcharging of Visa cards and steering among Visa cards based on the issuing bank are not permitted. Merchants must ensure that their steering practices are not performed in a confusing manner.

Acquirers are permitted to provide to their U.S. Merchants or agents information regarding the costs or fees a merchant would incur in accepting a Visa card, including BIN information and other product-identifying data. In addition, Visa’s Product Eligibility
Inquiry Service messages can help merchants electronically identify the card product type. Introduced in 2006, product identification messages give merchants accurate, real-time information at the point of sale about the type of card presented (e.g.,
a reward credit card) for all U.S. consumer and commercial card programs. The same information is also provided in every Visa authorization response message for U.S.-issued cards. Your acquirer can provide more information about electronic identification of
card products.

Acquirers are prohibited from adopting or enforcing rules, agreements, or practices with respect to U.S. Merchants’ acceptance of Visa cards that Visa would be prohibited from adopting or maintaining under the final judgment.

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Nathan is a member of Rentec Direct who provides property management software, cc & ach payment processing, and tenant screening for property managers and landlords nationwide.

I am an online business providing software solutions to landlords and property managers.  As such, industry acceptance and trust is an absolute must.  I struggled with this decision for the last couple years on whether to take the leap and apply for BBB Accreditation.  For anyone unfamiliar with BBB Accreditation it is an official seal from the BBB confirming a company is established, legit, honest, and handles customer complaints (if any). 

Officially from the BBB website: If a business has been accredited by the BBB, it means BBB has determined that the business meets accreditation standards which include a commitment to make a good faith effort to resolve any consumer complaints.

Their accrediation standards can be reviewed here.

The upsides as I see them:

• The BBB is basically a 3rd party endorsement that you are a real business
• Being an accredited business is third party endorsement that your company meets all the standards above.  Otherwise they pull your membership right?
• You get listed within their accredited business directory, and they refer business to you both electronically and over the phone if they receive inquiries about your market / location.
  
• If your not already listed on their site as an unaccredited business, it provides another link into your website that otherwise didn't exist which is good for SEO.

The downsides:

• Cost.  I believe it's different in various parts of the USA; however, an online business forks out about $800/yr to be a member in the northwest.

I've read articles stating the BBB is an unnecessary entity since anybody anywhere can search out a companies reputation online, and that along with the cost itself of joining the BBB are what kept me on the fence the last two years.

I opted to go ahead for accreditation, and was approved just the other day, YAY!! Here's why:

Take my industry for example, our website provides property management software and tenant screening to property managers and landlords.  I've done it, many times, searched for property management software reviews, and other variations. Unfortunatly there is not a single site out there with unbiased information.  Most of the sites are owned by competitors just plugging their product, or advertising companies trying to retrieve and refer the sale.  In my industry there are very few, if any, legitimate and unbiased third party reviews.  I imagine the same holds true for most industries including real estate professionals.

When I have customers ask if we are legit I now have a place that is instantly recognized (the BBB) as a legitimate source of trusted information to refer them to.

Opinions on BBB Accreditation, Thoughts, Suggesstions?  How does it work in YOUR industry?

One of the most important steps a landlord can take to protect their property, cash flow, and sanity is to properly screen tenants prior to placement. Failing to properly screen a tenant can result in any or all of the following problems, all of which are far more costly than a tenant screening report.  Be warned, this is a meaty document; it's not your typical "3 simple steps" report, but it is a comprehensive guide to making the best possible screening policies.  The two minutes it takes to read and understand it are well worth the time for serious property managers and landlords.

Problem 1: Tenant has had past evictions, and run landlords through the court system numerous times costing landlords thousands, to tens of thousands of dollars in lost rent. Generally a tenant frequently delinquent on rent if uncollectable, so the landlord who takes this tenant stands to lose a great deal of money both in lost rent and legal fees.

Problem 2: Criminal activity. Criminal activity in a rental property can lead to significant damage to the property, irritated or irate neighbors, case civil suits from neighbors or renters for landlord neglect. Worst case would be liability which can extend in to the hundreds of thousands of dollars, perhaps even more if somebody gets hurt, for an action by your tenant which could have been prevented with proper screening.

Problem 3: A history of poor credit decisions and late payments can indicate how a prospective tenant may treat you, their new landlord, with the same late payments, bounced checks, and other financial woes. Many landlords count on the rent arriving and clearing in order to pay the mortgage payment. Statistics show that renters with past delinquencies are significantly higher risk to have future delinquencies than those with better credit.

You can protect yourself from these common problems by taking a few simple steps to verify the eligibility of the tenant prior to placing them in your property. This is a guide explaining best practices with resources to get you started today.

Step 1. When you have a vacant property or unit the first step is to get the word out through whichever means you find works best. To some this is the local classified, craigslist, or other online rental databases. When placing the ad, provided you are not limited by wording it is best to keep those who would not qualify from calling in the first place. This is done by announcing within the ad the qualifications and screening process. This often costs nothing and can save you quite a lot of time showing the property to unqualified applicants. It can be very simple and those who know they would fail any of the listed criteria won't call in the first place saving you quite a bit of time. Here is an example message following an ad:

Tenant references, background, and eviction history will be verified.

Step 2. Be sure your application packet includes wording to give you permission to verify the information they provided. The FCRA stipulates you must have permission from a prospective tenant in order to run a background check on them. The best permission is written permission. Be sure to check with your local state guidelines and verify the application form you provide meets any local regulations. Most states allow the collection of an application fee to cover your reasonable cost in processing their application, including your costs to run background checks. Reasonable costs vary from state to state, but generally range from $25 to $65. Check to see what other local property management companies charge, and set your rate near there's to be safe.

Click here to download a sample application form.

Step 3. Credit, state and national criminal, and nationwide eviction records are best obtained from a trusted source and all can be returned instantly. The simplest way to obtain these are via an online source which can take your order, query the necessary databases, and return the results to you right away on your computer screen. Your cost for a credit report should be no more than $15.00, nationwide criminal, around $10, and eviction searches also around $10. For reference, as of December 2010, Rentec Direct's tenant screening division offers the following discounted rates to members:

• TransUnion Credit Report: $8.95
• Nationwide Criminal Search: $8.75
• Statewide Criminal Search: $6.00
• Eviction Search: $8.50
  

Rentec Direct provides these products as a service to property managers and landlords near cost to ensure the success and well being of landlords within our care. 

Step 4. Verify references. Tenants who have created problems for past landlords generally do not get good references. Taking 10-15 minutes to verify references is always a worthwhile effort. Previous landlord references are generally far more valuable than personal references. Always require the tenant provide previous landlord contact information. If there is a gap in periods of time, it probably means there is a landlord they do not want to list and that is important to follow-up on. If the tenant is of age 22 or older and claims to not have had a previous landlord, be sure to verify that fact with the parents.

Step 5. If it's within reasonable distance, drive by their current address and observe the current condition of the property they rent today. The state of that property is going to be very similar to how your property is treated. Likewise, when showing them the property, take a look inside their car to get an idea of how well they take care of their possessions. Generally speaking a renter will take better care of the car they own, than the property they rent. If the inside of the car is a mess, you can be sure your property will look the same or worse very soon.

Step 6. Be fair and treat everyone equally. Virtually every state requires landlords to maintain equal criteria regardless of age, race, religion, or any other status. Set your criteria in advance on what you are willing and not willing to accept for your rental and use that same criteria throughout the applicant process. Any unfair actions by treating one person differently from another are often against the law.

Step 7. Finally, before the tenant moves in, take pictures or video of the condition of the property. Even the best screened tenants have accidents, or visitors who can cause damage. It is vital that you have a permanent backed up record of the condition of the property prior to move-in. It's best to store this data in a safe location such as online secure file storage to ensure they are never lost and readily available if needed.

If you have any questions about these steps, best practices for screening tenants, or anything else related to property management, feel free to contact the property management experts at Rentec Direct for answers or pointers whether you are a customer or not. If we aren't able to directly answer or help, we'll point you to somebody that can.

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The author is a founding member of Rentec Direct.  Rentec Direct provides property management software which includes ach for landlords, tenant screening, and online documentation and file storage.  While the above article may speak of products we offer or use screenshots from a product we offer, we encourage landlords to do their research and make up their own minds when selecting a new product.  That said, we of course welcome ActiveRain members with open arms.

US Census 2010 data shows that rental vacancy rates are at the highest points they've been since the 1950s when the data begun being tracked.   Today rental vacancy rates are 10.6% or 1 in 10 homes do not have a tenant.  One might ponder; how can this be given all the foreclosures and new renters in the market?

There are 3 primary reasons and by taking a few critical steps you can cut your vacancy rates in half or more.  Read on if you are a property manager or landlord and don't want to fall into the trap so many other property managers have in today's declining real-estate market.

1. We're in a recession.  Despite our government telling us it was over in 2009; it's not for most of us, especially those in the real-estate or property management business.  Because times are tight right now owners are skimping on maintenance such as putting off the new paint job or new carpet until next year when times are better.  That line of thinking will ensure that next year will be no better.  The maintenance has to be done eventually anyways, and if the money to do it can be scraped up to repair the problem today, the outlook for tomorrow will be much better because your vacancy rates are going to go down.  Fact is, tenants do shop and it is more of a tenant's market today than ever, so if there is a better house available (that doesn't need new carpet for instance), you are going to lose that tenant.  If you manage your own properties make the decision to keep up the maintenance, and if you manage somebody elses properties, provide them this compelling data so they will.  Pay specific attention to these items, in order of importance:  Exterior paint, front yard landscaping, front door and entryway, living area & kitchen.
    
2. Who is your customer?  Running a property management software service we hear from a lot of property managers, owners, as well as tenants.  What is the #1 gripe from tenants these days we're hearing?  "We're not treated with respect".  Property managers often forget that their customer is the tenant.  It can be easy for us to get wound up in the screening process and be so strict, for the protection of the property, that we reduce our friendliness to the prospective tenant.  Make your customer love you and they will not go somewhere else!  This starts with the application process, showing the property, and the continued relationship.  One huge mistake in this process we see time and time again is making the tenant wait on your schedule to see a property.  If a property cannot be shown until tomorrow and they can see a property today from your competitor you just lost a customer and have done a disservice to your client, the property owner, by further increasing their vacancy rate.  I feel it's important to have the staffing available to bend over backwards for tenants and treat them as equals, or better yet, in the same way you would treat a property owner looking for a manager, in the utmost respect and courtesy.
    
3. Do it better.  Great property managers and landlords today are providing services to their tenants to make their lives easier.  Make your tenants fall in love with you by providing them something that makes their lives easier and most importantly, something they won't get if they move away.  Be creative, every market is different; however, here are a few examples that work in almost every market. 
   
   Offer automated ACH.  Automated ACH not only makes your tenant's life easier because the rent happens automatically, but it also increases your retention rate and level of importance for a tenants monthly expenses.  It's also been observed that an automated payment isn't as emotionally stressful to a tenant as if they have to write a check each month for what is often their largest monthly bill.
   
   Offer a tenant portal.  80%+ of your tenants today have online access and that number steadily grows every year.  Tenants check their bank balances online, pay their bills online, and merchants have embraced online tools to save them time and money along with providing an extra convenience to their customers.  These same tools are available to landlords now, and if you aren't providing them and your competitors are, guess who's making their tenants more happy which is equating to longer term tenants and lower vacancy rates.
   
   Keep up on maintenance.  Even when occupied it's important to inspect and maintain a property.  More often than not your tenants are not cleaning the carpets or painting the walls.  If the home gets run-down, even if it is the fault of the tenant, they will feel less happy with the home and always be eying a fresh new place to live that is being kept up.  There's an emotional factor to a clean, maintained home that keeps tenants longer.

1) Vacancy Data Source:  http://www.census.gov/hhes/www/housing/hvs/historic/files/histtab1.xls

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The author is a founding member of Rentec Direct.  Rentec Direct provides property management software which includes ach for landlords, tenant screening, and online documentation and file storage.  While the above article may speak of products we offer or use screenshots from a product we offer, we encourage landlords to do their research and make up their own minds when selecting a new product.  That said, we of course welcome ActiveRain members with open arms.