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Residential Property Management Procedures Manual1TNew Property TakeOver Proceduresaking over or assumingeither the ownership ormanagement of an apartment building requires a systematicapproach to the many tasks thatusually await a new manager orowner. There are numerous detailsbeyond the closing table that youmust learn and address in a timelyand proper fashion in order to insurethat you start out on the right path.If you are purchasing an existingproperty, the first step to a smoothtakeover is learning as much aspossible from the seller. You’ll usuallyfind that sellers are cooperative andwilling to take the time to answerquestions about the property. Tomake your information gatheringsession as effective as possible,prepare questions in advance andkeep detailed notes of the answersyou receive. The New ManagementAssignment Takeover Checklist atthe end of this section provides anexcellent starting point. It contains alist of the key information you’llwant to gather from the seller.PBTenants of a newly acquired buildingare also prime candidates to providevaluable information. Typically aproperty takeover will be the firstmeeting or communication betweenthe new management team and thetenants of the building. This can bean excellent opportunity for you toset a positive tone for your futuredealings with the tenants of thebuilding. If not carefully planned,the first meeting could be poorlyhandled and result in a combativeand potentially disruptive relationship with the tenants of the building.Many novice property owners ormanagers start out with the beliefthat it’s their building, and they’llrun it the way they see fit. Theyoften mistakenly start with attitudessuch as— “The tenants, after all, are justrenters who can be easily replaced.” “Why should I cooperate withrenters? They’re the enemy in theTenant Landlord Wars. It’s mybuilding. I’ll call the shots.”When properly approached, thetenants of the building can be amongyour most valued allies. Theytypically are more familiar with thephysical property than you are, andthey are certainly more aware ofpotential problem tenants. Tenantshelp you pay your mortgage andoperating expenses. If things go asplanned, they will put profit dollarsin your pocket. Many tenants takegreat pride in the place they havechosen to call home and will enthusiastically assist you in keeping thebuilding up and finding new tenantswhen you have a vacancy. Whywould you want to start out therelationship with your tenants on anantagonistic note when what youreally need and should want is a longterm harmonious relationship?

When a building was previouslymismanaged, has some tenants whomay be involved in illegal activities,or was allowed to fall into disrepair,tenant cooperation at initial takeoveris especially important. In these casesyou will face some tenants who areskeptical of your intentions andothers who don’t wish to upset thestatus quo. You will need to quicklyenlist the help of those tenants whoare most likely to cooperate in yourquest to improve the overall condition and reputation of the property.It can be useful to ask the samequestions of each of the groups(sellers, employees, vendors andtenants). You may end up withcompletely different answers basedon the varying perspectives. Whilethat may appear to be troubling, itcan also be insightful. For example,if you ask how well the hallways aremaintained, it’s not uncommon toreceive different impressions fromthe janitor and the tenants. In thisexample, the tenants’ impressions aremore reliable.Existing employees, as well asvendors who previously providedservices to the property are alsovaluable sources of information. Incases where little historic informationabout a building is available, theseindividuals can help you gain theinformation you need to make asmooth transition and get off to apositive start. They’ll also help youanswer questions like, “Where are thehidden flaws? What are the extraspecial maintenance needs? Howwere things handled in the past?”This is all important information thatcan assist you in future planning.You will want to learn about thetenants of the building from theseller, from the other tenants, andfrom the janitorial and maintenancestaff. You’ll learn which tenants aregood neighbors and which aren’t?You’ll also find out who might havesomeone living with them who is noton the lease? Which apartmentshave a high number of visitors at allhours of the day? Who plays theirmusic so loud that they disturb othertenants? Which tenants have gueststhat hang out in the hall and leavegarbage about? The answers yougather can prove very valuable as youmove forward.9

Residential Property Management Procedures ManualNew Management Assignment Takeover ChecklistLocation(s) of PropertyTake Over DateBuilding Phone NumberPrevious Management FirmContact Person(s)Telephone #Existing PersonnelVerify Occupancy:Are fully executed current leases in place?YesNoAre all rents current?YesNoIs there a list of all residents with both home &work phone numbers?YesNoHave the security deposit amounts been verified?With Lease Agreements?YesNoWith Tenants?YesPBNoAre there any pending legal actions involvingtenants?YesNoHave all vacant units been viewed to assure theyare vacant?YesNoAre all delinquent renters in possession of theunits they lease?YesNoHave all delinquent renters been served Termination Notices?YesNo

Services requiring assurance of continuation:Has the electric company been notified of changesand made final readings?YesNoHave you provided for ongoing janitorialservices?YesNoHas the gas company been notified of changes andmade final readings?YesNoHave you provided for ongoing maintenanceservices?YesNoHas the water company been notified of changesand made final readings?YesNoHave you provided for ongoing landscapeservices?YesNoHas the scavenger company been notified of thechange in ownership/management and billing?YesNoBuilding Code Issues:Are there any existing Notices of Violations?YesNoAre there proper locks on windows and doors?YesNoDoes each unit have an operating smoke detector?YesNoAre all windows and screens in good repair?YesNoAre carbon monoxide detectors in place?YesNoHas the building been properly registered withthe city?YesNoEmergency Procedures:Have you contracted with an answering service forafter hours?YesNoHave current residents been informed of anychanges that they’ll be required to make?YesNoHave emergency point people been identifiedand provide with your emergency proceduresplan?YesNoHave emergency service providers been identifiedand contracted with?YesNo11

Residential Property Management Procedures ManualReports from Previous Owner/Agent:Regulatory AgreementsFinancial ReportsInventorySecurity Deposit ListingWaiting ListsLegal ActionsCurrent BillingPersonnel RecordsService Contracts in Place:termstermstermstermsImmediate Actions Needed:Comments:Completed By DatePB

2STenant Selectionelecting tenants is likely tobe one of the first issues youface. It is also one of themost important issues in the operation of your building. You can limitmanagement difficulties by properlypreparing a Tenant Selection Plan andapplying it to everyone who inquiresabout renting at your building. Awell thought out plan will be farmore effective than the “gut instinct”approach to tenant selection. Yet thecommon reaction to the suggestionthat landlords need a Tenant Selection Plan is something like, “Why doI need a Tenant Selection Plan? I’ll justplace an ad in the paper and rent myvacant apartments to whoever respondsto the ad so long as they look like they’llbe good tenants”!There are many reasons to develop awell thought out Tenant SelectionPlan. A Tenant Selection plan willcreate objective measures that can beused to determine which applicantsare more likely to be good tenants.A good plan will, at least, review anapplicant’s: credit history previous landlord references number of people who will residein the apartment and will verify: employmentdamage repair costs. A loud andobnoxious tenant may also drivegood tenants from the building.Though it is possible to evict badtenants, eviction can take monthsand hundreds of dollars to accomplish.A good Tenant Selection Plan won’tguarantee that you will never rent toa bad tenant, but it can lessen thatrisk. A good plan carefully applied toevery applicant will also providesafeguards against possible violationof fair housing laws. income information.Failure to perform basic backgroundchecks can result in leasing anapartment to a bad tenant who notonly won’t pay rent but may alsodestroy your building and its reputation. The end result is a combinationof emotional stress, financial burdensfrom lost rental income, and possibleThe following sample tenant selection plan is intended as a guideline.The building owner and managersmust set the standards for occupancy,income, and previous rental andcredit history. The sections in bolditalics are areas that you shouldmodify to fit the standards youdecide upon.13

Residential Property Management Procedures ManualSample Tenant Selection PlanI. INTRODUCTIONThis Tenant Selection Plan outlines procedures that will be followed in selecting new tenants for the YourApartments building. All apartments within the property will be leased in accordance with all applicablefair housing laws regardless of race, color, creed, religion, sex, national origin, ancestry, familial status,military discharge status, marital status, age, sexual orientation, or handicap of the applicant(s).II. RENTAL UNITSYour Apartments will offer 6 rental units. The number of rental units at the property that are reserved forrental households are as follows:Size of UnitNumber of Units1 BR . 22 BR . 23 BR * . 1* One 3 BR apartment is designated as an owner/manager/model/office apartment and is not available for rent.III. SCHEDULING SHOWINGS OF AVAILABLE UNITSContacting Interested IndividualsWhen a unit becomes available, a showing will be scheduled with interested individual, generatedfrom a waiting list or an advertising program, on a first come, first served basis. Management willindicate what information the applicant should bring to complete a rental application.IV. THE APPLICATION PROCESSA. ApplicationEach prospective tenant will complete a written rental application. Management will charge a 100 application fee. If the applicant is accepted, the application fee will be credited toward thesecurity deposit. If the applicant is rejected, the application fee will be refunded within fourteen(14) days of the date of the rejection notice. If the applicant is accepted for occupancy but refusesa unit, the application fee will be forfeited.B. Credit Check FeeIn addition to the application fee, Management will charge a non-refundable credit check feeof 25.00.C. Verification of Information on ApplicationManagement will take the following actions with respect to all written applications:1. Order a written credit report.2. Request a Verification of Employment or Income.PB

D. Home VisitsAfter Management has completed all other steps in the application process, Management willconduct a home visit on all applicants living within a 25-mile radius of the building at the timeof the application.V. ELIGIBILITY REQUIREMENTSA. IncomeAnnual gross income of households in the building must be equal to or greater than the incomeguidelines attached to this PLAN.B. Households/Unit Size LimitationsThe unit applied for must have enough bedroom space to accommodate the applicant’s household.As a guideline, no more than two people will be permitted to occupy a bedroom. In selecting a unitsize for the applicant, management will balance the need to avoid over-crowding a unit with theobjective of maximum utilization of space. (Chicago’s building code requires a minimum of 125 sq.ft. of floor area per person)VI. SELECTION AND REJECTION CRITERIAThe fact that an applicant meets the eligibility requirements does not mean that the applicant will be asuitable tenant. The prospective tenant must be able to fulfill lease obligations. In making this determination Management will consider various criteria, along with any related explanations offered by the applicantconcerning the facts involved, including changes in circumstance. Rejection of an applicant may be basedon one or more of the following criteria:A. Insufficient/Inaccurate Information on ApplicationManagement will consider whether the applicant refuses to cooperate fully in aspects of his/herapplication process, or whether the information supplied has been intentionally falsified.B. Credit and Financial Standing1. Management will consider the applicants’ history of financial obligations, (including timelypayment of rent, outstanding judgments or a history of late payment of bills). If Managementrejects an application based upon the credit report, Management will give the applicant thereason for rejection and the name of the credit bureau that performed the credit check. Applicants will also be given the opportunity to have corrections made to the report.2. Management will take into account inability to verify credit references. It will take into accountspecial circumstances in which credit has not been established (income, age, marital status, etc.).Lack of credit history will not cause an applicant to be rejected, although, in such circumstances,Management may require that a person with a history of creditworthiness guarantee the lease.3. Management will consider whether the applicant demonstrates financial ability to pay themonthly rent for the apartment.15

Residential Property Management Procedures ManualC. History of ResidencyManagement will verify and document the previous two years of housing for each applicant,including applicants who were homeowners or lived with parents/guardians. As part of thisreview, Management will consider whether the applicant or any other person who will be livingin the unit either has a history of criminal conviction for acts that involved physical violence topersons or property, that endangered the health and safety of other persons; or that involvedthe manufacture or distribution of a controlled substance or is currently addicted to, orengaged in the illegal use of, a controlled substance. If an applicant is currently receiving treatmentfor addiction to a controlled substance, Management will not reject the applicant so long as he or she isacceptable as a tenant in all other respects. Management will consider all circumstances regardingcriminal activity as well as the period during which it occurred.D. Unsanitary HousekeepingManagement will consider unsanitary housekeeping by the applicant. This criteria is notintended to exclude households whose housekeeping is only superficially unclean or disorderlyif such conditions would not appear to affect the health, safety or comfort of other residents.VII.ACCEPTANCE/REJECTION PROCEDURESA. Acceptance NotificationEach accepted applicant will receive a written notification indicating the date that the rental unitwill be available for occupancy (Exhibit A).B. Rejection NotificationManagement will promptly send each rejected applicant a written rejection notice stating thereason(s) for rejection (Exhibit B).VIII. DOCUMENTATIONManagement will document every step of the tenant selection process. Applicant files will be maintained by Management which will include, but not limited to, copies of the following correspondence:Rental ApplicationCredit reportHousekeeping ReportEmployment/Income Verification (see page 17)Exhibit A - Acceptance Notice (see page 14)Exhibit B - Rejection Notice (see page 15)Exhibit C - Underwriting Worksheet (see page 16)Previous Landlord Verification (see page 19)Prepared By: Date:PB

2 TENANT SELECTIONThe Rental ProcessThe following basic steps shouldbe applied for everyone whomakes application for anapartment at your building. Sampleforms that you may use are includedin this section.RENTAL APPLICATIONS should becompleted and signed by everyoneinterested in renting an apartment atyour property. All sections of theapplication should be completed. Becertain that those individuals whowill be responsible for rent paymentssign the application and authorizeyou to investigate their credit history.Requesting and photocopying aphoto ID can help verify the identityof an applicant. Attach the photocopy to the application.The UNDERWRITING WORKSHEET in this section is a form usedto determine the applicants’ ability topay the rental amount you arecharging. Information about theapplicants’ income, and existing debtshould be measured against the rentand other associated housing expenses. A sample form is includedalong with suggested ratios of incometo rent and income to rent and otherdebt. When you stay within therecommended ranges, your chancesof receiving rents on a timely andregular basis are likely to increase.VERIFICATION OF EMPLOYMENT/INCOME forms guide youthrough the process of determiningthe employment status of theapplicants. This form should be filledin and signed by the applicant(s) inthe appropriate spaces. The propertyowner/manager can then mail or faxthe signed form to the personnel orhuman resource department of theemployer. To ensure that the employer completes the form, do notallow the applicant to hand carry theverification form to and from theemployer. You may have to performa telephone follow-up in cases wherea response is not received within fiveworking days.The CURRENT OR PREVIOUSLANDLORD VERIFICATIONFORM is used to determine theapplicants’ current rental status aswell as previous rental history. Thisform should be completed by theapplicant(s) and signed. The formshould then be faxed or mailed to thecurrent and a least one previouslandlord by the owner or manager.Again, do not allow the applicant tohand carry the form. Don’t besurprised if telephone follow-up onyour part becomes necessary.CREDIT REPORTS should beconducted on every applicant whohas sufficient income to qualify foryour apartment. Select a CreditBureau that can provide rapid service.Many companies can provide a reportwithin hours, while others mightrequire a day or two. Some bureauscan provide additional services suchas eviction court searches andcriminal background checks. However, it’s important to realize thatthey are likely to charge additionalfees for these services.If you want to obtain access to publicrecords such as eviction cases,judgments, liens, or criminal convictions, you may wish to visit thecounty building that serves your area.Often the public can use computerterminals for these backgroundchecks.Whatever methods you decide to use,you must apply the same procedurefor screening everyone applying forresidency at your property. Failure toapply the same procedures can resultin fair housing violations. Thefollowing forms can help in selectingtenants and may be modified for yourspecific property. We encourage youto choose selection criteria that canbe employed consistently andspeedily.17

Residential Property Management Procedures ManualEXHIBIT “A”ACCEPTA

Residential Property Management Procedures Manual PB Introduction here was a time when the ownership and management of an apartment building were largely unregulated. Landlords were virtually free to rent and operate their property in any fashion they deemed reasonable. All you really n