We spend a lot of time talking about bad landlords here at RentConfident. After all, our business exists to protect tenants from the worst of the bunch. But we also do make a point to give credit when it's due for the Chicago landlords that are working hard and doing their best to stay afloat in the face of incredibly dense legislation and ever-rising costs.
As we head into tax season, those costs are a focal point for folks on both sides of the rental industry. With that in mind, today we'll be comparing the cost of being a homeowner vs being a landlord in Chicago by comparing the operating costs of two buildings sitting side by side. I'm not going to do an apples-to-apples comparison here. This is not about the difference between a single family home and a two-flat. This is more about the difference between housing as a personal thing and housing as a business.
Building #1 will be a single family home, owned and occupied by a family of four.
Building #2 will be a much larger apartment building. Of course, there are many different styles of apartment buildings, from tiny two-flats to enormous high rises. For the sake of keeping it real and something I can estimate, we'll focus on something very familiar to me - a vintage courtyard style apartment building with about 30 units. Like most buildings of this caliber, it has steam heat included in the rent, no air conditioning and no parking lot.
Let's choose a neighborhood that's not too upscale, not too troubled, with reasonably good schools and acceptable crime rates - a side street in Ravenswood will do nicely.
In order to obtain all the data I needed, I've had to base my numbers on a combination of a handful of properties in that area along with some usage statistics for things like water and gas costs. In both cases the buildings are fictional, but the numbers come from real research. I have done some rounding and adjusting for inflation, so if you're a homeowner, home buyer or landlord I would not suggest using these numbers for budgeting.
First let's compare the fixed costs - the ones that are pretty consistent every month. Continue reading Where Does Your Rent Payment Go? What it Costs to be a Landlord in Chicago
This week I did a little experiment with the Google search bar. I typed in the beginning of a question about apartments or landlords and let Google fill in the rest with what people across the country (world, universe?) were asking. The questions seemed ridiculous at first. I laughed a lot until I tried my best to answer them. Then they got slightly less ridiculous. This is the result of that little experiment.
Why does my apartment smell like cigarette smoke?
Smoke gets in through the same gaps that allow air into your apartment. No living space can or should be fully sealed, or you would suffocate. Cigarette smoke could be getting into your apartment through drafts, heating ducts and pipes, a slightly open window, a loose doorsweep, or just because hot smoke naturally rises. Continue reading Seven Common Questions that Renters Ask of Google (with Answers)
There are a ton of flaws with the way landlords screen their tenants. Any number of companies have tried to fix matters, but I don't know that anything can really salvage the tenant background check system. I have no solutions, myself. RentConfident screens landlords, not tenants. However, I've worked for many landlords. I've screened thousands of tenants. It was my experience with screening tenants that led me to design a consistent, objective system for screening landlords. I'm here to tell you, the current state of tenant background checks is a completely and utterly broken, and I've got 10 solid points to back up that claim.
- Credit reports don't show rent payments. Landlords rely heavily on a tenant's credit report as an indicator of how reliably they'll pay their rent. The good renters will pay their rent before anything that appears on their report, meaning their reports will show them in the worst possible light. The worst renters will only pay off the debts that appear on the credit report so that they look good on paper, leaving things like rent for last.
- There isn't just one "credit score." There's at least 16 FICO variants, plus VantageScore. Beyond FICO there's over 400 consumer reporting agencies including Equifax, TransUnion, Experian and a ton of specialty scoring companies. If a landlord says they want a "650 or higher", they usually mean on the FICO 8, but that isn't always what they get. In fact, a lot of the budget credit reports offered as part of tenant screening packages don't include a score at all. I could say a lot more here about credit reports as they apply to tenant screening, but I covered a lot of it in an article at my old real estate blog.
- Landlords are not checking criminal history. Some landlords claim that they check criminal history. The closest you can come to an accurate criminal background check, including all arrests, incidents and other naughty stuff that you don't want happening in an apartment building, is to get RAP sheets from the last few states where an applicant has lived. However, RAP sheets aren't issued to landlords - the tenant would have to provide them. They also have a turnaround time of several weeks. Fat chance. The National Employment Law Project estimates that about 30% of working-age adults have criminal records. You don't see 30% of all renters getting turned down for their criminal history. It ain't happening.
- ... Even if they think they're checking criminal history, they're not checking criminal history. The next closest approximation to an accurate criminal background check requires querying multiple sources. You go to the courthouse and obtain court documents for any criminal lawsuits. You check with the department of corrections to see if they've ever been in a federal prison for a really egregious crime. You check the sex offense registry, which is the only public, national database of criminal activity. These three steps together make up the usual "criminal background check" that you pay for online. There are companies that offer this service as part of their screening packages. It takes 2-3 days, and the results are extremely vague and loaded with false positives. Given that most renters hear back about a rental application in a matter of hours, it's safe to say that this type of criminal screening also is not happening, no matter what landlords may claim in their marketing materials.
- Employment verification is a disaster. Many companies haved outsourced their Human Resources departments to third party companies that charge an arm and a leg for actual verifications. Other companies have very strict policies on not giving any sort of verifications. This means that most landlords are relying instead on paystubs or tax returns provided by the applicant as proof of employment, and yet they won't allow tenants to provide their own credit reports because of the risk of forgery.
- Internationals need not apply. Anyone without a social security number is excluded from standard screening. This includes people on student and work visas.
- No, they do not screen for terrorism. Following from the above, any landlord who says they screen for "terrorism" is lying. They probably check against a list called the "Specially Designated Nationals and Blocked Persons" list that is issued by the Office of Foreign Assets Control (OFAC). This is a list issued by the Treasury Department, home of the IRS. It consists of people who are not allowed to do business with the US government because of their known affiliation with hostile foreign interests. It is not a list of terrorists. It can only be searched by name, not social security number or birthdate, which means that people with common names may trigger a false positive match. Using this as a security check would be like calling your bank instead of 911 when you've been stabbed. A better list to check might be the "No Fly" list or the Terrorist Screening Database, both maintained by the Department of Homeland Security. However, both of these lists have been criticized for inaccuracy, and neither can be searched by civilians.
- Policy? What policy? Many landlords do not have a consistent list of criteria that they use to approve or deny tenants. Any reports that they order are lip service towards fair housing compliance. If they want to turn you down they will find a reason to do so, even if it means that they're holding you to a different standard than the next guy.
- Once and done. After moving in, renters are never re-evaluated. Most tenants are not going to tell their landlord when they lose a job or start selling drugs or eating small children. Tenants would probably balk at having to be screened annually, especially since they'd probably have to pay for it. Even if a landlord found a problem on a re-screening, it's not like they could easily get the tenant out of the apartment. However, every "problem tenant" was originally a good tenant when they moved in - at least once.
- It all may soon be obsolete, if not illegal. Using credit reports and criminal history as the sole means of screening renters may well be a violation of fair housing laws. Yes, they're designed to ensure compliance with fair housing, but clean credit and criminal histories are both largely the domain of wealthy white folks. There's definitely landlords out there who use 21st century tenant screening methods as codified, shiny versions of 19th century discrimination. Employment practice has already started moving away from the practice of rejecting applicants with low credit scores or criminal records. I think it's only a matter of time before the government cracks down on the credit & criminal report style of tenant screening as well.
Tenant screening methods have been adapted by landlords who see how banks, mortgage brokers and insurance companies assess consumers for risk and want to have access to similar predictive power. However, your average landlord does not have the clout of a Chase Bank or Allstate Insurance. They've had to cobble together the data that's available to citizens, dress it up to make it look like it's complying with fair housing laws, and pretend that it has some sort of correlation with how a tenant will behave once they've moved in.
The real impact of screening procedures is psychological. Tenants who know they look bad on paper will be discouraged from applying for apartments that advertise intensive screening procedures. Tenants who are concerned about living in a squeaky clean environment will be attracted to apartments that are tough on the screening. The result may well be that fewer bad tenants wind up living in the building, but it's a result of self-selection and marketing more than the actual content of the screening reports.
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Some St. Patrick's Day parties start early in the day. Sometimes they last all night too. Sometimes all the corned beef and cabbage in the world can't stop some bad things from happening to your apartment and areas in your apartment building. If you want to make amends or request repairs but aren't feeling so well today, don't worry. Just use this handy fill-in-the-blank form and you'll be well on your way to atonement.
Note for the truly hungover: We do not condone actually submitting or printing this form for use with your real landlord.
Tenant-Landlord Form 317: St. Patrick's Day Apology
My name is . I live at .
Regarding yesterday's events, I would like to apologize for my lack of respectful behavior towards this property and the people living in it. The following checklist contains the details of my apology.
I apologize for... Continue reading [Humor] Crazy party? Wrecked your apartment? No worries! We’ve got a form for that.
There's a lot of holidays going on this week. There's Pi Day for the science majors, the Ides of March for the liberal arts majors, Purim for the Jewish folks, and of course St. Patrick's Day for Irish (and not-so-Irish) folks.
In the lesser-known holidays category, we've also got True Confessions Day on Tuesday, Awkward Moments Day and Forgive Mom and Dad Day on Friday, and both Swallows Return to San Juan Capistrano Day and National Quilting Day on Saturday.
Jammed in with all of that is the anniversary of 4th US President James Madison, the man largely responsible for drafting the US Constitution on Wednesday the 16th. Of course, calling it "Madison's Birthday" wouldn't be cool, so we call it "Freedom of Information Day."
Freedom of Information is pretty important to us here at RentConfident. In fact, without it and similar laws regarding open access to government records we wouldn't be able to obtain the information that allows us to exist. Therefore, in honor of Freedom of Information Day, here's some things you might not know about the "Act to amend section 3 of the Administrative Procedure Act, chapter 324, of the Act of June 11 1946 (60 Stat. 238), to clarify and protect the right of the public to information, and for other purposes" - known to its friends and family as FOIA. Continue reading 10 Awesome Bits of Trivia about the Freedom of Information Act