October 13, 2015

Landlord Fraud

Landlord Fraud defined:
When a property manager or landlord advertises a vacancy, and accepts applications and application fees, without any intent of filling the vacancy.
The concept of Landlord Fraud is absurd.  Who would do such a thing?

Well, there isn't any data that can tell us how often this happens, yet it happens.

When the national average application fee is $40, a dishonest landlord can make some quick cash by just placing a FOR RENT sign out in front of his property.

Consider high-demand locations like California's Bay Area as a worst-case example.  Landlords there can raise as much as $10,000 over a weekend in application fees for a $3,000/month rental.  We've posted on this before.

Victims of Landlord Fraud will be told they didn't pass the background screening, or that another applicant beat them to the unit.  Or maybe they just don't get a call back.  Who follows up on this?


Landlord Fraud is easy, yet surprisingly some can't pull it off.  Just this week we learned that Rashawn Jones, posing as a landlord here in Cincinnati, engaged in Landlord Fraud.  His mistake: he gave the applicants move-in dates.

WCPO Cincinnati:
When each victim [applicant] replied, Jones met them, provided a lease agreement, took applications and fees, security deposits and gave them dates to move in.
There is only one way to protect oneself from Landlord Fraud:  Pay an intermediary service your application fee to eliminate any financial incentive.

Here is a current list of America's Apply-Online services who fully protect against Landlord Fraud:

1) RentValet


Hat tip: Pat S.

October 12, 2015

Screen Before You Meet


“You mean I get to see the applicant’s criminal report before I meet him?”

A female landlord asked this of my wife last month after hearing about RentValet.

We might save her 5-10 hours per vacancy.  She might enjoy our FREE and unlimited services.  But what is most important to this woman is her safety.

She is the typical real-estate investor, as over 60% of all rental units are owned by individuals.  She has several single family homes in the area and she has a full time job.  The only time she can meet a prospective tenant is in the evenings or on the weekends.  Her goal is to fill vacancies as fast as possible with qualified applicants, and she currently meets them at a time of their choosing.

She prioritized her business over her own safety because, until RentValet, there was no other option.

RentValet is located in Cincinnati, where a recent serial rapist operated in 2006.  The Blue-Eyed Rapist was his nickname and he terrorized the Cincinnati area, including bordering towns in Indiana and Kentucky.


His modus-operandi: David Hopper (above) would schedule showings at model homes in the evenings with female real-estate agents.  Then he’d rob and rape them.

The threat is real, and as of today only one Internet service provides a Screen-Before-You-Meet solution: RentValet.

Hopper was finally caught and is serving, or owes, prison time in all three states.

Media Links: News5 (2007), Dayton Daily News (2009), and Fox19 (2010).

Another blog post inspired by RentValet friend Bob K.

October 11, 2015

We've Updated 'Get Link'

We are excited to announce an update to our Get Link feature for Property Managers.

Now you can choose between placing a text link into your vacancy advertisement, or a RentValet Apply-Online button.

Here is a closeup of the NEW RentValet Get Link screen:



Like all features at RentValet, Get Link is FREE.

The link or button will take the tenant-applicant directly into the RentValet Apply-Online application form.  That is where they complete their full application form, pay the RentValet fee, and trigger a notification back to you.  The notification includes their income-to-rent ratio and other vacancy criteria.  

Be one of the first property managers to offer an Apply-Online service in your advertisement!

Would an applicant rather drive across town and fill out paper forms, or click your Apply-Online link and stay online? 

Imagine!  No more phone calls.  No more email messages.  Just completed applications, with background reports, from serious tenant-applicants.  And always FREE.

Remember - The Get Link code is associated with the specific property.  If you have multiple properties in your account, you’ll want to use the Get Link feature in the property that has the current vacancy.  

You’ll find this feature within the property’s window:


Enjoy!  And don’t hesitate to tell us where we can improve this further, or what you did with all of your free time.


October 10, 2015

$10,000 in Application Fees. Fair?

The redistribution of wealth is a common topic in the beautiful city of San Francisco, but we suspect the proponents would qualify their opinions after reading this Bay Citizen article by Scott James: In SF's Tight Rental Market, Paying Just to Look.

San Francisco has one of the hottest rental markets, which means more applicants than rentals.  

Mr. James tells us of a vacancy that received 250 applications during a showing, which netted the landlord roughly $10,000 in application fees.  It is a $3,500/month rental.

Is this wrong?


Are tenant-applicants being exploited in San Francisco?  Not if they understand they may be one of 250 and are willing to hand over $40 application fees for each desired vacancy.  

Using the same math and assuming all San Francisco renters are equal in their credit worthiness, an applicant will have to budget $10,000 to submit as many as 250 applications before being invited to rent.

The dynamics of San Francisco's rental market are far outside the expected market behavior for RentValet's target markets, but this story gives us the chance to present the RentValet paradigm shift.

RentValet is the first to provide applicants with the ability to notify multiple property managers with a single fee of $19.99.  Federal Law requires RentValet to present applicant privacy information to a single landlord.  This creates a first-come first-served opportunity for landlords.  The first to respond to the applicant captures that applicant, then leads that applicant through our online screening and leasing process.


Had the San Francisco landlord and his applicants used RentValet, the landlord would have received $0 in application fees.  He would have received notifications from the 250 applicants, each presenting their Income-to-Rent Ratio.  This is a key factor in qualifying applicants.  At a glance, even with 250 interested applicants, the landlord could select the best qualified applicant and complete the application process online.  

The remaining 249 RentValet applicants would still have an 'Open' transaction at RentValet.  They could add more vacancies to this transaction, at no cost, and continue to communicate with area landlords until they were captured.  Their total out-of-pocket costs would be $19.99 each, whether they end up sending their interest to 2 landlords, or 250.

San Francisco tenant applicants have four options:

  1. Status Quo - Continue to pay exorbitant fees,
  2. Live elsewhere,
  3. Adopt RentValet,
  4. Pass and enforce a law against application fees.
Our thanks to RentValet friend Bob K. for sharing this story.

October 9, 2015

Dr. Alfred Weinstein and Fair Housing

I just completed a wonderful 2010 book by Laura Hillenbrand, Unbroken.

If you like history, this is a great read.  It is about a WWII Army Air Corp B-24 crew in the Pacific.  Their lives before the war, their B-24 and POW experiences, and their lives after the war. Many struggled with post-traumatic stress disorder and other challenges.

In one case, the results of spending years in a Japanese POW camp led one veteran to post restrictions in his rental ads.  This is a violation of Fair Housing laws today, but was legal then.

Doctor Alfred Weinstein returned to Atlanta after the war.  He took out a $600k loan and built a 140-unit apartment complex.  His rental ads for the sub $50 monthly rentals included these priorities for applicants:

1) Ex-POWs,
2) Veterans with one or more Purple Hearts,
3) Overseas Veterans,
4) Veterans,
5) And last, Civilians.

His ads further stated:

We prefer Ex-GI's, and Marines and enlisted personnel of the Navy.  
Ex-Air Corps men may apply if they quit telling us how they won the war.

He also banned any KKK members from applying.  This led to threats.  He responded by giving the KKK members his home address and telling them:

I still have my .45.

So an anti-racist, pro-veteran apartment manager who would be sued out of existence with today's Fair Housing laws demonstrates not all restrictions are bad.

Fair Housing is a black cloud over the heads of America's property managers.  Like most laws, it is a big stick that was created to modify the behavior of a few bad eggs.  Ask any property manager today - they want a respectful tenant with a history of paying their bills on time and who will stay for years.  They will tell you this because it is their business, not because of some law from the 1960's.

Dr. Weinstein put limits on his prospective tenants that would violate today's Fair Housing laws.  His example is not consistent with the few Fair Housing issues that we see today - blatant discrimination based on race, religion, gender, etc.  Personally, I think we need more rental ads that deny KKK members the opportunity to apply.  I wouldn't be offended.

A fun story.  A good excuse to add a blog post on the punitive nature of today's laws.  And a good chance to remind property managers that although RentValet is oriented to the tenant-applicant, nearly 90% of our automation is a) built to save the property manager 5-10 hours in the rental application process, and b) built to provide added protections against Fair Housing claims.

RentValet introduces a win-win - saving time and money for landlords and their tenant-applicants.

October 8, 2015

Renting as a College Student; A Tool for Parents


Finding housing for a college student can be a stressful undertaking? Parents want their children to have affordable and safe housing, but few consider the risks associated with the rental process. What used to require a landlord to take out an ad in the newspaper, advertising their property, can now be accomplished in minutes online, in many cases for free. So, what measures are in place to protect renter? The answer is, not many. This leaves students exposed to possible identity theft, loss of applications fees (typically $35/application) Landlord Fraud, and time.

RentValet is the first business to offer a patented process that mitigates the risks associated with renting and provides a reassuring solution to parents. We ensure that rental application fees are used for the correct purpose, purchasing a credit report, not buying the landlord lunch. We require our landlords to verify proof of ownership further reducing potential fraud. This offers parents and college students a piece of mind and additional confidence as they go through the rental process.

I personally experienced this when I attended Xavier University in Cincinnati, Ohio as an undergraduate. I moved off campus in 2003 seeking more independence and a place where I could live with a friend. We searched advertisements placed in the school newspaper and classifieds in the Cincinnati Enquirer, in addition to online sites. After identifying properties we wanted to see, we began the arduous process of calling each landlord and setting up an appointment. Several landlords failed to return our calls, some stood us up at the viewing, and others never responded after collecting our application fees.  We landed a great apartment after hours of time going through the process, but the experience was frustrating and every step was manual. Additionally, every application we completed included personal data like dates of birth, social security numbers. I really hope those were shredded.

Here is our video about Landlord Fraud:

October 7, 2015

Case Study - Large Property Management Company

We recently completed a study with an area property management company with over 6,000 residential units under management.

Question:  How much would the FREE RentValet service save the firm in one year?

We used their application fee pricing, salaries, turnover, screening costs and other data.

They confirmed our analysis and math.

Answer:  $114,750

The 5-page case study is now available - here.

October 6, 2015

Case Study - The Application Experience UPDATED

My son is headed to The Ohio State University this Fall for his freshman year of college.

His friend, and future roommate, drove 90 minutes to the campus area and found an apartment last week.  The roommate brought back application forms and co-signer forms for the parents.

My wife will make the 180-mile roundtrip to submit the forms and the application fees.  Here are some of the requested items:
  • Four personal references - for the renter and co-signer!  
  • Multiple questions about criminal past (or present) - for the renter and co-signer!  
  • Current or past drug convictions or rental evictions - for the renter and co-signer!  
  • Any outstanding debts to landlords - for the renter and co-signer!
  • Three signatures for credit report release - one for each source of background report!
These questions are outrageous and over the top, but with no state or national standard, this is a common hassle for America's renters.  Every rental property has its own form and its own application process.

This paperwork also highlights today's improper relationship between the potential customer and the business.

What other business demands 3-page forms and application fees so the customer can commit to writing their largest monthly check each month for a 12-month minimum?

Answer: None.

The only other business we are aware of that requires potential customers to go through a lengthy application process is a country club!  Even mortgage applications are automated.

This isn't to blame the business side of this transaction.  Before RentValet, America's landlord had no other option.  The landlord is the investor and therefore the risk-taker in this relationship  He has every right to evaluate his risk before offering a lease.  He just hasn't had an option until RentValet.

RentValet applicants will never see these questions in the RentValet system.  Nor will RentValet landlords be forced to inconvenience their prospective customers with excessive forms, fees and personal questions.

Why?

RentValet landlords get the relevant screening information from top national reporting sources - the same sources that leading property management companies turn to.  They get these reports for FREE with every RentValet applicant.

The RentValet system will always ask for the minimum necessary information to pull the necessary credit, criminal and other background reports, plus other relevant information such as employment, residence and vehicle information.  And the beauty of RentValet: we'll only ask once.  Applicant data is saved and only a brief update is required in a future rental application.

This experience touches on some of our future marketing messages:
  • RentValet applicants should be wary of landlords who refuse to use RentValet:
    • the applicant is forced to make the trip to complete the application form,
    • the applicant, and any co-applicants, are forced to pay high application fees (the national average is $35),
    • the applicant risks Landlord Fraud (where a landlord collects the application fee with no intention of filling a vacancy), and
    • the applicant must answer excessive and personal questions.
    • Likewise, RentValet landlords should be wary of applicants who refuse to use RentValet:
      • The applicant who asks to be inconvenienced with a drive across town, paper forms and high fees is hoping the landlord will choose to save a few dollars and skip a full background screening - something they get for free at RentValet.
    This is not an easy process to tackle, but we've done it at RentValet.  If RentValet were fully adopted, it would save America's renters over $450 million in rental application fees and over 30 million hours each year.  And property managers would save over 330 million hours.

    Update Aug 25:

    Good news.  Not only did my son pass the criminal background screening, so did his co-signing parents!  He has made his move and has joined the ranks of the third of Americans who rent.  Hopefully he'll use Rentvalet for next year's apartment...