From the Trenches, reprise - Posted by Jim Locker

Posted by Jim Locker on January 18, 2001 at 15:51:29:

I mean both. When all this data is collected in one place and collated it becomes valuable. Also, as you go, you will accumulate information that normally would not be found in the public record, such as a tenant’s address and landlord history, linked with their SSAN.

This is the true value of the service; by coming to you people can obtain information that they can’t get themselves from public records. I have a database of everyone we have ever screened, cross referenced with clients, other landlords, and addresses. It is a very common occurrence for a client to send us an application for someone we have screened two or three times before. We can immediately compare what they say now with what they said then. We wind up knowing a lot, and it is stuff that we wouldn’t want circulating casually.

We also maintain a blacklist that landlords can place tenants in. This way, we pick up those people who rip up a place and move in the middle of the night. This information has to be treated as rumors, and we guard it carefully. When we tell a client that an applicant is in our blacklist, we tell them that Joe Landlord says this about this tenant. If you need more information, here’s Joe’s phone number.

We also run across landlords that lie to us. We almost invariably catch them when they do, and into the database they go. If you are our client, we’ll tell you that Jane PropManager gave this tenant a great reference. However, we have caught Jane PropManager lying to us before, and you should take this into consideration when considering the reference.

Of course, physical protection of the data is an obvious thing. You should take steps to protect against theft by the burglar who comes when you are home, and theft by the employee who is ambitious and wants to set up a service to compete with you.

You musnt’ leave out the possibility that your business will burn down one night, putting you out of business unless you have offsite backups.

And the most common occurrence is corruption due to crashes, or failed drives, or whatever. Routine backup procedures protect you here, along with the use of good quality commercial grade hard drives.

My critical systems run Windows NT configured to be a high security environment. Critical data is kept in encrypted files. We open the files at the beginning of the day and close them at night.

On our network, I am the only administrator - and my password is kept in a safety deposit box accessible to me and my wife (so if I die or become incapacitated, she can carry on). Only administrators can use the removable media drives on the network. Users are locked out of the floppies, the Zip drives, and the CD/RW drives. So that ambitious employee cannot steal the data by copying it onto a floppy or zip and walking off. Also, the employees don’t know the passphrases to open the encrypted files, so even stealing the server at night wouldn’t help.

All communications to/from the server are logged, so if an employee should download the data to another computer during the day, then steal the machine at night, there will be a solid record of the fact. Since we maintain password protocols on the network (secure passwords, no writing them down, etc) I will always know WHO DID IT.

Setting up the security is a bit of a pain, but once it is up it is no trouble at all. And I sleep better knowing that we are a “hard nut” to crack.

From the Trenches, reprise - Posted by Jim Locker

Posted by Jim Locker on January 17, 2001 at 09:50:35:

I am starting a new thread since the old one is getting way down on the list.

>>Wow Jim, that’s some great information. I am going to start calling today about this. The Tulsa land and tax records are online; all libraries have terminals to look up the info. I need to see if there’s a way to look from home. I’m concerned the courthouses will offer some resistance to selling the eviction info, but I’m going to call them today. I need to remember all of this info is public record.

Actually, it has been my experience that, once the courthouses figure out what you are doing, they appreciate it. I have had clerks and judges tell me that they see the same people appearing in their court over and over, and they wish that the landlords would find a way to keep these people out. I find the courts to be quite helpful, since they know why we are collecting the information.

>>Overall, it sounds like you have a great service that provides excellent value to the landlords in your area. That’s great. And thanks for the informative reply! By the way is this a business you run in addition to REI?

We do provide a very good value. Making money off the screening service is a secondary consideration for me. There are a couple factors. First, we encourage our clients to charge the screening fee to the tenants. There is a limit to what the traffic will bear in that respect and if we go above that our clients start to complain (of course, letting them complain a bit is ok, but we have to keep it in bounds).

Second, I own a lot of real estate in the area, and this area has had its troubles over the last 15 years ago. It is my explicit goal to clean up the town, and therefore cause my property values to go up. The jobs situation in the area is gradually taking care of itself, so I am working the other side of the street, getting rid of the deadbeats and druglords, and working with the city and the landlords to try to make things better.

So, this business makes me a bit of money directly, but not much. It generates a couple thousand a month, net, for part time work (about 3 hours a day). I have an employee do the work. This defrays all my office expenses, which is good enough. In a larger market, it would do better.

>>By the way is this a business you run in addition to REI?

I have 4 businesses. My real estate operation mostly runs itself. I sign leases, fix air conditioners, and that’s about it. My staff takes care of everything else.

I have an employee run the tenant screening business.

I myself write software and market it through my website (a very nice property management package - shameless plug).

I also have a number of commercial customers whose computer networks I service and support.

Re: From the Trenches, reprise - Posted by Dan (MO)

Posted by Dan (MO) on January 17, 2001 at 23:28:15:

Jim,
Thanks for the great posts! Very helpful. You have my interest piqued. Sounds right up my alley, especially since I can access alot of information in my area from my computer. May I ask how much you charge to a landlord wanting to use your screening service? What online credit service do you use? what is the link? and how much do they charge?
What is a good and efficient database program to use for something like this?
Sorry for all the questions. Sounds like a winner though for a business. One more question: How much startup money would you think would be needed to set everything up?
Thanks,
Dan

Re: From the Trenches, reprise - Posted by JayHoward

Posted by JayHoward on January 17, 2001 at 17:09:02:

Jim, you’re my hero. My goal is to have 3-4 different sources of income instead of the 8-5 ball and chain I’ve got now. I’m just starting to take the necessary steps in that direction, so it’s encouraging to talk to others actually doing what I dream of.

I made a call to the courthouse, but just talked to a clerk without much success. I’ll probably need to go down in person and talk to someone a little higher up. I also called around to some of the credit reporting and larger property managers to get a feel for any companies currently offering this kind of service. Most seemed to be located in other states, which I feel would give me an advantage. I don’t see how a company based in Houston can provide the same level of service as a local company, unless they got people in all the areas doing the legwork (which I kinda doubt). Also some were using multiple companies for the different info i.e. one company for credit info and another for the legal/civil info.

Thanks again for all the help.
JayHoward

Re: From the Trenches, reprise - Posted by David

Posted by David on January 17, 2001 at 12:03:31:

Jim, I am in the market for property management software; what is your website address?

Tenant Screening - Finding good Tenants - Posted by Frank Chin

Posted by Frank Chin on January 17, 2001 at 11:45:08:

It would be nice to get good pointers on getting good tenants. The trick to the rental business is tenant selection. I try to be really careful:

1- Always get the driver licneses of renters and keep a copy on file.

2- Always submit to credit, eviction, employment checks. Self employed are a little tricky.

3- Have a walk-through and inspection form filled on moving in and moving out.

I got a clunky two page rental application form from a real estate investor book. It turned out to be the best phsychological screening test for tenants. I now insist they fill it out on site if they really want the apartment.

a- Some people fill in best they can, leaving half the application blank. These people generally forget to take garbage out, forget its the first of the month etc. etc.

b- Others go through the form point by point, even going home to get the required info, then come back. These turn out to be the best tenants. They follow all the rules.

c- Others complain about the stupid form. Why so many questions. As it turns out, they complain about everything after they become tenants.

I’m now thinking of expanding it to a three page form.

Re: From the Trenches, reprise - Posted by Kate (VA)

Posted by Kate (VA) on January 17, 2001 at 11:11:36:

Jim,

I am just curious about your tenant screening company. What information do you generally collect and where do you collect it from? This sounds like a great service to landlords and may be something worth trying to set up in my area (DC Metro).

As always, thanks for sharing.

Kate

Re: From the Trenches, reprise - Posted by Jim Locker

Posted by Jim Locker on January 18, 2001 at 07:59:07:

We charge $25 per name or per married couple. We search our database, pull credit, verify that the indicated LL owns the property, contact current and previous LLs, and often contact LLs we discover, and we verify employment and the existence of the employer. Normally takes about 1/2 hour total per name and a direct cost to us of about $3.00 (plus labor, plus overhead - which includes maintaining the databases and paying for subscription services).

We do not use an online database; we are members of the local credit bureau and use their dial up service.

I do all my database work in Superbase. www.superbase.com. I am a VAR for Superbase due to my property management software package and could sell you a copy of Superbase Personal for about $100 plus tax and shipping.

I have written some dedicated software to integrate our various databases and automate the search.

Startup costs should run on the order of $3K to $5K. I would advise against using your home computer. There are security issues associated with keeping all this data, and also reliability issues. I recommend a commercial grade system - which costs more up front but is justified fully the first time its capabilities “save your bacon”.

Just be careful… - Posted by Brandi_TX

Posted by Brandi_TX on January 18, 2001 at 19:19:11:

I, like you, have set multi-source income goals. My problem has been rushing into the second and third before the one prior was more self sustaining. UGH - what a mess at times. I feel like I have 4 of my old “8-5’s” and no time for anything I enjoy! Oh yeah and now it is tax time, sheesh!

(Just ask the folks around here - I haven’t had time to post or chat in a LONG time!)

Brandi_TX

Re: From the Trenches, reprise - Posted by Jim Locker

Posted by Jim Locker on January 17, 2001 at 18:11:39:

Yes, there are a few national services. The coverage is very spotty, but that seems to be the trend for the future. There are clear advantages to it, if and when it is a complete network.

I have been giving thought to franchising my own system. I haven’t because it would take a lot of time and money to get rolling, and then it would take many years to build enough national coverage to make it worthwhile. I would need something like 50 franchisees in each state of the union (average) and at least a couple hundred in CA to provide adequate coverage nationwide.

Also, I only have so much time, and I think my property management package will at once be more profitable for me and take less of my time (total).

Most areas have a local service or two. I exchange information with another local service that is outside our coverage area; effectively we increase each other’s coverage on a quid pro quo basis.

This is a niche that is not adequately served in a lot of areas. It makes a decent income stream for part time activity, and a large enough market could keep three or four full time employees busy.

Re: Tenant Screening - Finding good Tenants - Posted by Jim Locker

Posted by Jim Locker on January 17, 2001 at 18:14:04:

>>It would be nice to get good pointers on getting good tenants. The trick to the rental business is tenant selection. I try to be really careful.

Follow this link to a message I posted awhile back on that subject:

http://boards.fool.com/Message.asp?mid=12860224

Re: From the Trenches, reprise - Posted by Jim Locker

Posted by Jim Locker on January 17, 2001 at 11:58:57:

Check the “From the Trenches” thread from a few days ago. That information is there.

Re: From the Trenches, reprise - Posted by JayHoward

Posted by JayHoward on January 18, 2001 at 13:48:29:

Jim,

When you say “security issues associated with keeping all this data” are you referring to the physical protection of it from deletion or corruption? Or do you mean security from unauthorized viewing? If the latter, I assumed all the data you maintained was public record.

I found out the Tulsa land records are available for a fee through dial-up access. As you said in an earlier post, that would certainly be an effective way to maintain that portion of the data.

JH

Re: Tenant Screening - Finding good Tenants - Posted by Frank Chin

Posted by Frank Chin on January 18, 2001 at 08:28:31:

Thanks Jim. I read the message, and it was a great post.

Horror stories about bad tenants is one big fear that many of my friends expressed in thinking about going into rental properties. This greatly reduces the number of people getting into the name, Carleton Sheets not withstanding.

Perhaps your can write a book on some of the bad tenants you’ve come across, and how you found out about it. etc. I couldn’t find anything on this subject matter though.

Another idea. How about a guide to tenant rating services and rating tenant screening services like the Zagat survey of restaurants.