Identifying Problem Renters Before They Even Sign the Lease
- Mar 12, 2012
Dallas—Do you really know who’s living in your apartments? MHN interviewed Joseph Killinger, founder and CEO of real estate investment company Learning Links Centers LLC, who, with his partner George Pino, recently launched the Rent Rite Directory. Killinger explains how the free directory can help property managers know if a perspective resident has a problematic renting history or a criminal record. Additionally, Killinger explains how his system can benefit the community.
MHN: Give us a little background on the Rent Rite Directory service.
Killinger: We have an investment company, started in Los Angeles. We moved to the Dallas market a few years ago, and we were having some issues on a property. Now our company, called the Learning Links Centers, mostly focuses on B and C assets—lower- to moderate-income areas. A big part of that in Dallas is that people in these multifamily properties run these specials—$99 to move you in and then the next month you pay your full rent. A lot of people will move in on those $99 [deals] and on their fourth or fifth week when they’re getting ready to pay their full month’s rent, they’ll just take off in the middle of the night and go to a building right next door or a property right down the street. Typically, those are the people who are not doing a lot for the community; they’re typically the ones who are committing crimes. The Learning Links Centers is a socially responsible real estate investment company geared towards tutoring inner-city kids, so it’s kind of a hot spot for us. We thought, there’s got to be somebody tracking these people, so we started searching it, and there was nobody doing that.
We talked to people nation-wide, and it is a big problem. We started meeting with a few people in Dallas, we met with a judge, several attorneys for property management companies in California and New York as well, we’ve got some counsel members involved. It was almost a year we worked on building a site [to make sure] we weren’t violating anybody’s rights—the information that we needed, what we could say, what we couldn’t say. When somebody signs a lease on a property that is Rent Rite Directory approved, there is a lease addendum that we send out to them, and when they’re doing their lease we say, “Look, if you’re doing any of these things to the property, then you will be reported to the Rent Rite Directory.”
That was how we got started. But then we had a couple of situations. On our property, [for example], we had a woman who came in [with] perfect credit, so we put her in an apartment. About a week later, our maintenance crew was walking around and they saw a male that kept going into this apartment. So we knocked on the door and asked who it was, and he goes, “Well I live here.” And he wasn’t on the lease. It turns out that it was that woman’s son, who was a twice-convicted sex offender, living on this property. And this property is just two doors down from the school. Sex offenders don’t have to sign a lease, but they do have to report where they’re living. So the postcard goes out to the community, and everyone is up in arms: “How dare you let this person live in this community around our kids!” Well, we didn’t know about it. The Rent Rite Directory tracks not only sex offenders, but the proxy renters—the people that rent for them. Typically it’s college kids or a parent, or somebody they’ve paid to do it. And it’s the same for drug dealers. They will have somebody else rent the unit, and then they move in and they start dealing drugs, so we also track those people.
Before I started this, I also had no idea how big human trafficking was in the United States. In Dallas there’s an area called Oaklawn that’s not a bad area at all. I was at a crime watch meeting about six months ago, and they had just gone into a house that they’ve been watching, and there were two girls—this guy had met them on Facebook and sent them bus fare. He got them and locked them both in a room, selling them individually. So the Rent Rite Directory tracks all these people.
All that tracking is free—we don’t charge anybody for that. Everything that my partner and I do—all our companies—have a community aspect to it. The way that we make money on the site is by offering background checks and credit checks on the site.
MHN: Do the police get involved?
Killinger: We set it up with police departments, so if there is an officer in the precinct, they can register on our site, and they can go in and send out information to the area the precinct covers, so if they’re looking for an individual, they can set out an email blast. It’s geo-positioned so they can hit their area.
MHN: So people could use the directory to figure out who to rent to and who not to rent to?
Killinger: Well, for example, the people that skip, you’re not going to catch them first generation, because by the time you’ve figured out they’ve skipped, you put them in the system but they’re already living somewhere else. You’ll get them in the second generation. But if they have skipped, talk to the person, do their credit score, get the background on the person, and if that’s all coming out OK, just don’t give them that $99 move in [rate]. Maybe you can work with them and say, “Well, I see you’ve skipped before, so it’s going to be a $500 move in.” And then they can make the decision if they want to do it. The free portion of the site is not meant to not rent to somebody; it’s just meant to make you aware of what’s actually going on and whom you’re actually getting in to your property.
It can be a great tool for communities. And that portion is free, and it’s always going to be free. We really designed it to help communities that really need it. And A-properties might say, “Oh, we don’t need that.” We did a Crime Watch meeting, and we had a lady say, “We don’t need that, we don’t have any crime in my area.” Low and behold, two weeks later a drug deal went bad in her building and a guy was shot in her courtyard. It doesn’t just need to be B- and C-assets, A-assets, too, can use it. It’s a great tool for communities to have, and the more people who get on it, the more effective the tool can be.
MHN: What if someone is on the list who shouldn’t be on?
Killinger: We have a whole appeals process. We report to the Federal Credit Agency with the same guidelines. A person has to put it in writing, they send it to us, and we get back to the individual and say, “We are removing you,” just like a credit check.
MHN: Are there any additional features?
Killinger: There is an auto approve segment that we created so people with single families and buildings with up to 20 units can legally pull a credit and criminal report. This also works for real estate agents when they work with a lease client. The report generates as a “Pass,” “Fail,” or “Pass with Conditions.”
MHN: Just to play devil’s advocate, has there ever been a concern about invasion of privacy?
Killinger: That’s why we took so long to build the site. When you log on, you can only go so far. You have to be a property manager or a property owner. To get registered on the site, we are going to come out and do a tour of your property and take photos of it. If you’re a property management company, we’re going to need proof. You can’t just log on and see everybody’s name. Even if you go into the site and search for somebody’s name, you have to have at least three pieces of information on this individual, such as first name, last name, last four digits of the social security number, or state. You have to have all this information before they will come up for you. Security has been the biggest issue.