Rentec Direct - Property Management Software

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.

It might seem really basic to order criminal reports on prospective tenants, but there certainly is more to it than meets the eye.  One of the most common problems landlords run into when running background criminal is how criminal reports are indexed.  Unlike credit where every person has a unique identifier, their SSN, criminal reports are typically indexed only by name and birth date.

Our goal is to get the most accurate data to make a decision on the potential tenant.  The first step in ensuring this with any tenant screening organization is to provide a correctly spelled name, and exact birth date.  The best way I’ve found to get this is require a copy of the applicant’s state issued ID along with their application.  This way you can verify the spelling of the name and birth date which can sometimes be misspelled (either unintentionally or intentionally) on the rental application.

Once you submit for the background report on your subject there is a good chance, especially with common names, that you may get numerous entries back which may be un-related to your applicant.  This is especially true if your applicant has a common name.  Your report should be showing you the match criteria for each record.  For instance, it might say “name match only”, or “name and dob”, or “partial name match”.  Name and DOB matches are the most accurate because it means both the name and date of birth of the applicant match the record.  This type of entry is most likely a solid match.  If it states either name only or partial name it is possible this match corresponds to a different person.  I’m asked a lot how to determine if the records belong to their applicant.  There are a few ways:

We offer what’s called a SSN Verification report (example below).  It’s really inexpensive and provides a complete address history for the applicant based upon any credit application, loans, and utility billing.  It is one of the most accurate ways to determine the actual physical history of an applicant.  Other tenant screening organizations might have a similarly named report with the same data.  You can use this report to cross reference the locations of any records on the criminal report.  If the criminal report shows a hit by name only in Chicago, IL and the SSN Verification report shows that your applicant lived in Chicago, IL during the same dates, it is highly likely that the criminal report is for your applicant.

If your screening vendor doesn’t have such a report you can always ask your applicant.  Keeping it vague generally produces the best results.  A question like “So where did you live in the 90’s?” will prompt a more accurate response (especially if somebody is trying to hide their past) than “Did you commit any felonies in Chicago, IL in 1995?”

Finally, you can also order a county level criminal report either direct from the county courthouse of the offense, or from your screening vendor.  Ordering the report directly from the county will produce the most up to date results with the most information available for you to make a decision on the particular offense and if it matches your applicant.

We help landlords and property managers read thousands of credit and criminal reports.  If you have a questions about how to read them, we can help right here.  Don’t publish any personal or private information publicly though when requesting help on either credit or criminal reports, nor should any information which could identify an individual ever be posted publicly when requesting help.

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

To a landlord or property manager, vacancies are generally the worst possible thing since a vacancy is catastrophic to cash flow.  It’s important that when a property becomes vacant the term until the next tenant moving in is as short as possible.

Aggregating information from many landlords, I’ve put together a solid list of tips which works well for most property managers.

Start Early – Some markets handle this better than others; however, when you get your 30 day notice from the existing tenant that is the time to start thinking about marketing your soon to be vacant home.  Write (or refresh) your classified ad, make sure you have up to date pictures, and begin your online marketing efforts.  If you don’t mind getting calls early to create a list or applicants, go ahead and publish your listings as soon as 30 days before it is available.

Get the Word Out – You want as many potential renters seeing your listing as possible.  Be sure to use as many possible advertising methods as you can to get the widest audience.  Here are examples of solutions that always work for landlords and property managers alike:

• Craigslist – It’s free to list and is often one of the most productive places to list rentals available.  Be sure your listing stands out by creating stunning craigslist property listings right from your property management software or other solution like postlets.
• Rental Search Sites – Some popular real-estate sites now accept rental listings.  Sites such as Zillow, Trulia, Hotpads, and dozens others.  These sites are often one of the first places tenants will be looking for rentals as they offer comparables, and nice graphical map displays which help tenants find homes faster.  Be sure your listings are up there or you’re losing out.  You can either post these manually on each site which is time consuming, or ideally your property management software will automatically post your listings to all of them for you.
• Conventional Sources - Don’t forget about conventional sources like the newspaper classifieds and putting a For Rent sign in a visible location from the street on the property.  Also be sure to tell your friends and colleagues.

Be Honest – Is it an older house, then don’t list it as a “newer home” or “like new”, and likewise if parking is poor don’t highlight the “great on-street parking”.  The more honest and accurate your ad is the more qualified applicants you are going to receive and you won’t be wasting time processing applications, showing the property, and fielding phone calls for tenants who are turned off by a misleading fact when they visit the property.  Your time is much better spent focused on the tenants who are looking for exactly what you have available.  Lots of current pictures available for tenants to peruse online will help you out a lot.

Provide Your Criteria in the Listing – If you require credit or criminal background checks, put that in the listing.  That alone will eliminate anyone who feels they may not pass a credit or criminal scan thereby saving you time, money, and hassle.  Be sure not to put anything discriminating in the ad however as that can land a landlord in a bucket of trouble.

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The author is a founder and user of Rentec Direct.  Rentec Direct provides property management software that includes ach for landlords and tenant screening.

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.

I've been a landlord for many years now and when I think back on the biggest challenges I'd have to pick two things.  Placing tenants and collecting rent.  The best advise I can give about placing tenants is be absolutely sure to screen them carefully.  Oh, and look at the inside of their car as an indication of how well they treat things.  Today however I'm going to talk more about collecting rent.

I know I'm not the only one out there that has a nagging feeling in their head when the beginning of the month rolls around.  I pro-rate my tenants so they are all due on the first, and typically give a 3 day grace.  There's the select few tenants that pay on the 1st.  That breed of tenants has mostly vanished.  The remainder tend to push that grace limit to it's maximum and come in on the 3rd or 4th of the month.  The whole time I'm worried if they will be in at all.  If the 5th rolls around and nobody is around, just the thought of notices and eviction sets me on fire because I know it's going to be a painful process no matter what.

The scenarios may be:

1. The tenant just forgot to bring it by, or was out of town.
2. The check got stuck in the mail.
3. Just happened to me this month, once the mail reached my office it ended up in a different co-workers box, so while the rent arrived on the 4th, I didn't get it until the 7th.
4. Maybe the tenant really is looking to lose their residence.

In most cases it's just an accident that the rent didn't make it on time.  Most tenants want to stay and they just aren't prioritizing their bills well.  Even so if you've begun the eviction or notification process for non-payment it's creating a strain on your landlord/tenant relationship and it's costing you time and money.

Enter ACH for landlords.  Also commonly known as electronic check, e-check, automated draft, and a few other creative names.  ACH is the system banks use to transfer money.  When you place a check in Bank A that is drawn on Bank B, Bank A submits the amounts via the ACH system to get the funds from Bank B to your account at Bank A.  Your cable, satellite, credit card, and utility companies all use ACH to offer automatic debit from your checking or savings account.  This functionality is now available to property managers and landlords.  It means you can now electronically initiate the rent payment on behalf of the tenant on an agreeable day of the month or schedule one time payments.

Once initiated, your ACH provider securely transmits the funds from your tenants checking or savings account to your own operating bank account.  The tenant doesn't have to remember to write a check, or deliver it.  You don't have to cash it.  The way it works in our software is a recurring transaction gets debited from the tenants checking account (say on the 1st), and a few days later it is in your checking account.  Simple as that.  You find out about NSFs faster as well because on average of 24 hours after submission you find out if the account is NSF.  That is 3 to 10 days faster than with paper checks.  A report shows you what transactions have completed, which have failed, and which are scheduled to occur.  It takes all the guesswork and paperwork out of processing rent.

More benefits:

• Your renter doesn't have to remember to drop off rent.  It happens automatically.
• Because it's automatic, your rent payment is prioritized over all other tenant discretionary spending.  All of a sudden rent is priority #1, as it should have been in the first place.
• Quicker funds delivery.  ACH is electronic and involves no trips to the bank or checks to manually process by you and the teller.  This amounts to funds being in your account quicker.
• When coupled with a good property management software the transactions are automatically recorded into your bank and tenant ledgers thereby eliminating manual work as well as potential mistakes.
• Overall processing costs are dramatically reduced.

It's easier than you think to use.  There's no comlicated merchant services you have to setup, or credit apps.  It's also inexpensive.  Our company charges $2.00 per ACH transaction with no monthly fees and no percentages for our landlords and property managers.  Costs elsewhere vary from as high as $5.00 per transaction to as low as $0.50 per transaction (with additional monthly fees or percentages).  Regardless where you get the service, and even at the higher priced sources, the cost and time savings to switch from a paper check system to automated check are enormous.


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This author is a founder of Rentec Direct.  Rentec Direct offers ach for landlords, tenant screening, and of course property management software to simplify and organize your property management accounting.  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 new customers with open arms.

I'm somewhat confused by our government's choices in stimulus money.  The last homebuyer $8000 tax credit was for first time home-buyers only.  Obviously any property investor is out of luck on this one.   This new one is a $6500 for a repeat home buyer, as long as it is for their primary residence.  Again, unless your willing to move, and your current primary residence would make a good rental, this procludes property investors.

Meanwhile..

• A huge quantity of vacant forclosed homes continue to sit on the market.  Quite literally rotting.
• Some banks are renting out these foreclosed homes, driving down the rental market.
• Contractors who still hold onto some of these developments do the same, rent them since they aren't selling, further bringing down rental rates.
• The dollar continues to inflate at all time highs (the other tax)

So I do get that Uncle Sam wants to prioritize first time homebuyers to get people into their own home.  That is great.  Now homeowners that want to upgrade are incented, great too!  But the point is to get these vacant homes off the market and in turn get property values back on their way up.  I would submit that many property investors who buy homes to rent are far better equipped than most first time home buyers to complete property purchases.  The $8000 or $6500 cash incentive would go a LONG ways in making a huge number of properties currently on the market profitable when converted to a rental.  I believe if this credit were opened up to investors as well, housing inventory would go down at least 100% faster, for the betterment of all.

So why does the government exclude property investors?  I've been told it's because it was property investors that caused a lot of the problem in the first place.  And to correct that, I was told it was actually builders who purchased investment loans to overbuild in so many areas and then of course they defaulted on their investment/building loans.  The banks grouped all the builders as "investors", and said that was the cause of their collapse.  Yet actual property investors who do things right are paying their monthly mortgage payment like clockwork and definitely are NOT the problem that caused the banks lending issues.

So all I can really say is that I don't understand what our government is thinking, but their line of thinking is not aimed to fix the problem is all I can tell.  I think we're in for continued inflation and continued real-estate devaluation, and despite a few sporadic mentions of housing pricing improving here and there, overall I don't believe it's happening.  Any increases in home values are FAR less than the 300% inflation our dollar has seen over the past 6 years.  Point of fact, compared to 2003, $1.00 today is worth about $0.30.

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Rentec Direct provides property management software free to landlords and property managers and it includes full deduction and depreciation tracking and reporting. Because of the importance of thorough screening for prospective tenants, we have integrated tenant screening directly into the software so in just a few clicks a complete and comprehensive background check including previous evictions can be done on any new tenants.

Be forewarned, this post isn't a get rich quick idea, or a magical formula to turn straw into gold.  Not much comes without some hard work to even the best of us these days, not since at least 2005 that is, when phantom property values topped out.

What I am suggessting is that investment realestate owners who are looking at their bottom line closely these days absolutely have a choice to save $100, $200 or more per month right away!  To get to the point, I'm talking about property management.  Take the following very short quiz:

1. Do you live within 30 minutes of your investment properties? Yes/No
2. Can you balance your own checkbook?  Yes/No
3. Do you have a computer with a printer, or typewriter? Yes/No

Did you answer Yes to #1?  If so you are an excellent cantidate.  Items 2 and 3 are optional because there are other tools to get around those, but I trust anybody reading this article has 2 and 3 covered anyways.

Investors are often giving up to 15% of their PROFIT on their properties away.  I'm certainly no exception, I used property management for years.  Right before I chose to discontinue their services, I discovered what they really do.  They place tenants, collect rent, post notices, and take care of repairs.  Most property management companies charge very expensive placement fees for placing tenants, and I know many successful landlords who know how to place a classified or craigslist ad and often fill their units quicker than property management ever did.  Collecting rent is easy, posting notices is just as easy, and repairs can be handled extremely cheap with all the out of work professionals in the country.

There's some that mistakenly believe property management companies take on some or all of the liability of a property owner.  This may well have been true in the past, but not so much anymore.  Every property management contract I've seen in the last 3 years has defense clauses in it that state not only are they not assuming any liability, but if they get sued by your tenant, you must pay for their lawyer as well.  Check your contract.

I missed on important item above.  You know that monthly statement you get in the mail from your property management company.  I used to love those things!  At the end of the year I could just hand the December statement to my CPA and thats all he needed for my Schedule-E on my federal taxes.

OK, here's the plug, not just for our software, but almost any property management software.  If you answered yes to #1 up there, then a good property management software like Rentec Direct can help you with all the rest of the items.

Placing Tenants - Rentec Direct, and other services can give you instant tenant screening results and also help you place property ads online for greater visibility.

Collecting Rent - Your tenants can drop off a payment to you or mail it to your address just as easily as they can send it to a property management company.  Your property management software will help you keep track of these payments and who's do when.  It will also keep track of late fees.

Post Notices - Notices can often be posted on the door of the tenant and/or mailed to their address.  There are plenty of free resources online for notice templates.  Sending them is just the cost of a stamp.  Keep track of the times/dates in your property management software.

Repairs - Open up craigslist and post an ad for a handyman, or a specialized professional for your repair needs.  With this economy, or even when times are good, there is always somebody responding to these ads.  They go in the gigs section of craigslist.  You'll probably find someone you like and continue using them for years.

Monthly Report / Taxes - A good property management software like Rentec Direct will provide these reports to you monthly, or whenever you need.  Additionally, there's a specialized form designed to track tax deductable expenses automatically that you can print out at the end of the year and just hand to your CPA.

So while some investors have a legitimate need to hire property management, or just like giving money away, others have a choice to manage their own properties.  With a good software application to help out, I've found it's hardly any more work than managing a property management company.  In most cases because you become materially involved in the property management yourself you get significant additional tax breaks as well.  Some of us only have 10-15% profit in an investment property, lets keep it!

p.s.  Before taking my advice, check your property management contract for terms and exit costs.