RMFI Academy
December 1, 2023

Oh, still preparing. Okay, there we go. Hey, good morning, everybody. I hope everyone or good afternoon depending on where you are, but everyone’s having an awesome Thursday. I am so excited. I have been waiting for this interview for literally months. I have been kicking back and forth with Alexandra for a while place in December about trying to get her on to interview her. And I am so excited that the time is finally here. So welcome Alexandra Alvarado from the American apartment owners association.


Thank you for having me, Stacy. I’m glad this is happening too. I mean, it’s definitely been a long time coming. And I met you a years ago now. And you know, we’ve talked, we’ve been wanting to do this. And here we are. And I think now is actually a really good time to do it. So thank you.


Yeah, awesome. Thank you so much. So just to give everyone a little bit of background. You know, there’s a lot of different ways as landlords that you can get resources and pull people’s background checks and stuff like that. For the last several years, I’ve been using a Oh A, which is American apartment owners association, and they have so many resources. Well, I mean, I’ve been in property, and I started a property management company in 2004. So I’ve been in the business a long time, but somehow, this program eluded me up until a couple of years ago, and it’s called lease guarantee. And so I’ve had numerous conversations with Alexandra over the last couple of years about that program. I use it and I wanted her to come on and just tell you guys about it, because to me it is it is a very little known resource out there that can strip a lot of the risk away. So why don’t we just start Alexandra with tell us a little bit about you and your backgrounds, AOA and kind of whatever you think is appropriate along that but let us get to know you a little bit. Yeah, absolutely.


So it’s funny you say 2004? Because that’s actually when AOA was founded. Oh, Amy, are you started, AOA was founded. And it was started, as you said it really just as a place for resources that people could go to, for managing their own properties, primarily starting with tenant screening as the main tool. And then since then, we’ve added a lot more tools like forms and lease guarantee in recent years, to really help landlords, you know, manage their properties better manage their risk. And since then, we’ve come up to over 100,000 members. So we’re, I think the largest landlord association in the country still, I work for AOA, I’ve been with them now for almost six years, which is, gosh, it flies by really. I’m the director of marketing and education there now and basically manage their education have any sort of like news webinars, that kind of thing, articles that we put out, just to keep our landlords informed, especially now, I think it’s so important that landlords are just continuously educating themselves, and learning about what’s out there, what kind of resources are out there. And that’s kind of my job is to tell people about those things.


Awesome. All right. So what let’s let’s talk about the lease guarantee program, because as far as forms and background checks, and stuff like that, I think for the most part, people are aware of those types of things. But it was kind of a newer concept. For me, and I really haven’t I think I’ve seen one other place where it was mentioned just recently, but before that, I’ve never, never even heard of it. So I wanted to share with the share with our group just about it. What are the benefits? And yeah,


absolutely. So it’s super exciting. And I know that you’ve used it before, so you’re familiar with it. But basically, when somebody comes to our website, and they screen a tenant at that point, they’re able to see if they qualify for the lease guarantee program. And what lease guarantee basically does is it mitigates a landlord’s risk, so that if later on that tenant that they screened, ends up not paying rent, or let’s say maybe damages the apartment more than the security deposit that was provided, and you’re out of money, you’re probably going to take them to court, but you’re probably never gonna see that money. Right. So that’s kind of the issue that lease guarantee addresses is instead of relying on the tenant to somehow come up with the money for it, even though they never probably paid you before. You can use least guarantee and least guarantee basically, you just show them a court judgment. Lease guarantee reimburses you for the cost, that court judgment that total and then you end up as a landlord with money in your pocket, you’re able to fill a vacancy faster, with less risk and ultimately less loss. So you get to see those dollars come back to you and that’s really the goal is how do we put more dollars in landlords pockets because most landlords have just kind of, you know given up in there Just like, well, you know, if they stop paying rent, the best I can do is get them out of my house, or get them out of my apartment. And we say, No, that is not the best you could do, we can do better, we can actually get you the funds that you need right away. So that you’re not having to bear that risk bear that cost so hard, and maybe, you know, also, then hire a collection agency, and who knows when, or how much you’re gonna you’re gonna get back. So that’s, that’s really where we’re coming from is providing that kind of resource.


Gotcha. So I kind of want to share my share with everyone from the user experience, kind of what that looks like, and what it has, what the benefit has been like, to Jennifer and I in our business. So you know, as a landlord, we get applications for different places when we run their credit and or widget background check. And sometimes stuff comes back that, well, sometimes it’s just an obvious, no, I don’t think so not happening. But sometimes it comes back and it’s like, we’ll shoot their their strong hair, but they don’t have a long previous rental history or a long job is your what there’s just some thing that makes it like, there’s a little bit riskier, from our standpoint. Now, I know, at least guarantee only certain tenants qualify like they have to have a certain credit score. So they tend to be a lower risk from a financial standpoint. So what I find is that using it doesn’t, it’s not like I’m going to have just someone who just has had terrible credit coming to get linked least guaranteed, because that’s not going to happen. But what we’ve been able to do, Alexandra for us is we’ve been able to have someone who didn’t have great credit, but they have the income, they have the rental history. And we basically say you would need to have the equivalent of a cosigner, but what you can do instead is you can co lease with somebody in your family who’s willing who has who has better credit. And if they qualify, then we’ll do the lease in both of your names. And we’ve been able to do that a couple of times, like for someone who’s really young, it’s their first apartment, and they just don’t have the rental history. So a parent or a sibling has gone on. And it’s allowed us to invite tenants into our, our units that seemed like they would be great tenants, they just didn’t quite qualify. And they were a little bit risky, which creates a lot of angst, yes, for the landlord having to make that decision once you make the wrong decision. And so the thing that’s been really great for us is if somebody qualifies, and if they qualify, but there’s no reason I can really ask them to pay for it. Because they’re just like, they’re the perfect tenant, what am I going to ask for, like, I’m not going to have them pay for insurance policy, because I just can’t come up with a reason. But if it’s anything other than that, that’s something we’ve been able to offer to them. And our tenants have been paying for it, but out of their security deposit. So no more out of pocket, I just explained them, like, Look, I can’t write to you unless we’re going to do a much bigger deposit or something else. But here’s this other option. But the amount of $400, whatever it is, is going to come out of your security deposit, but it’ll pay for this thing, and then we can rent to you. And we’ve had every single time that we’ve made the offer, the tenant has said yes. And usually they’re great. Usually they’re great, we have no problem. But every once in a while they have a life circumstance that throws them into this place of like one of our tenants got an eye injury at work. Well, he’s a truck driver. I mean, you can’t work when your eye has a big gash in it. So he all of a sudden lost his job. He was he was decent on credit before, but all of a sudden, he couldn’t pay that and move in with family. And they just like Jen, and we were like, Uh, okay. And so we would have lost money from that. And we had police guarantee in place. And so we were able to get reimbursed for the money that we lost up until the time we got it re rented.


That’s fantastic. I love hearing stories like that, because that’s really why we wanted to have this option available for landlords, and I think you said it well. So I don’t think I mentioned it, but lease guarantee is usually paid by the tenant, we give the option for landlords to pay for it. But it’s really more so so that the landlord can just build the tenant on their own. So usually the tenant pays for it. So it is a negotiation tool. It’s also a way to fill the vacancy faster. So let’s say you do have an applicant who comes in and maybe they are borderline, they don’t really have 100% of all the qualifications, but they’re not that bad either. Those are the ones that normally people would have said before oh, I’ll just wait for somebody who comes by who’s better. And then now the you know, the rentals vacant longer, you’re not getting rental income. So instead of doing that, you can have them get lease guarantee, and then move them in more comfortably. Or like you were saying that’s a great idea if they have a cosigner if they have somebody who they’re living with who does qualify for lease guarantee, even if they don’t qualify, but the other person who’s on the lease Does that’s good enough that person can get lease guarantee. And now the entire lease agreement is covered. So it’s really only one lease guarantee per lease, which I think is is important and one qualified tenant or cosigner per per lease guarantee is needed. So you don’t really need to have an amazing tenant two are with great credit to qualify for lease guarantee, you can have somebody a little bit on the lower end, or they can have somebody on the lease who maybe does have better credit, qualify. So


yeah, that’s been your that is huge. I didn’t think about us getting tenants and faster because of it. But that is true. Because if we come across someone, like someone that we just rent it to I, I’m pretty sure we’re never going to need to make a claim her credit was like 735. And like it was it was stellar. But she had a divorce, and after the divorce moved from an apartment to living a family, and then family living with friends, and now she’s getting your own place that you meet her employment like her, her income is great, your employments great, her credit is stellar. But it’s hard because I can’t go back and ask any landlord other than the one that was with her ex husband, about any kind of rental history, and it just creates a sense of risk. I can’t talk to anyone who’s ever ready to deliver for you. She has great credit, but she’s psychotic. And you know, it’s like everything apart. Obviously, we don’t think so. But it made it. So I was able to say, Well, look, I would like to build at least two. But here’s the deal. I can’t verify, you know, a good, a good tenant history. And I understand it’s no judgment, it’s just is what it is. But hey, we have this option, I’d like to build a rent to you, but out of your deposit will come we’ll pay the thing and you know, Are you good with that? And she was like, Yeah, that’s fine. And so far, everybody I’ve made the offer to is like,


sure. I think it’s interesting that you said that everybody that you make the offer to accepts it because I think landlords forget the position that a lot of these tenants are in, and that they’re searching for rentals, sometimes for months, and they’re living on somebody’s couch, maybe their mom, maybe their cousin, whoever, and they’re looking for a new start sometimes, and you know, they’re just as happy as you are to get lease guarantee and have that option. You know, it’s a win win on both sides. And I’ve had landlords say to me like, oh, I don’t think so and so is going to pay for the lease guarantee. And I’m like, Well, have you asked them is have you given them the option. And sometimes they’ll say no, and I always say like, you know, the, the worst you could do is just decline them straight out lose that opportunity, they lose the opportunity as well. You know, you can at least offer them this, and then maybe have them have a new start have a fresh opportunity and your risk is lower as well. So it’s, it’s really something that I don’t think most tenants would say no to, especially tenants that are in that position, and especially if you have a rental in a hot market that they want, that’s something you can definitely require. And, you know, I think as well, even if you’re in a market where you do have vacancies for a bit longer, you can still require it. You know, it’s it’s something where people who don’t really meet all those qualifications, but they want your rental there, they’re still going to they’re still going to want the rental. They’re going to figure out how to get it.


Yeah. And first because we I think because we have made it so that they’re not because moving is expensive, right? They’re coming up with first month’s rent and Security Plus, it just the cost of moving is is pricey. So that was something we had to consider when we’re using it like how can we do this in a way that allows them to still be able to do it, but without coming out of pocket more, which they probably don’t have the ability to do or, you know, less the case, it’s going to stretch them financially. And for us that was it taking the lower secure or would end up being a lower security deposit. But that doesn’t increase our risk at all. Because the lower security deposit, we have an insurance policy. If we need it, if they move out, they do damage, then we have the insurance policy of the least guarantee in place. That I think actually I don’t know how many people would at least guarantee with a lot and we rarely need to make a claim. That’s really, yeah. Nice.


Yeah, we’ve seen that on our end to where a lot of these tenants, especially the ones that are really jumping on the opportunity, like the one that you were talking about the the woman with the 735 credit score, the likelihood is probably still lower, that she’s probably going to default, it’s probably not very high. But at the same time, you know, now you have this new level of protection, and she’s more than willing to do it. So it’s it really is a win win for both people, I’d say. Yeah,


the handful of times are handled the two times I can think of where the tenant was like solid like it’s not always high credit. She was an X I’ve never seen any of our tenants come up with that high credit before but she had exceptionally high credit but if they were like they’re pretty good candidate You know, so I really wasn’t worried about it, but they qualified. And I was able to come up with some reason like, well, we would I really want everyone to get on it because it takes away all of my risk. But two times I had the guy with the eye injury that was really unexpected. And I think we ended up, we lost like a month and a half of rent. And plus, when they moved out, they just they did some damage. And so we had a claim, and I remember how much it was like $2,000. But that would have been out of pocket. And then it wasn’t, and then someone else, a boyfriend and a girlfriend, they were, you know, great for like, eight months, and all of a sudden, something happened, his job change, he moved, like, somewhere far away, no problem, I’ll still pay the rent, still pay the rent, and then just didn’t were like, Okay, well, we have to evict and I never would have seen that coming. But I was glad that we had it in place. Because I didn’t end up taking a financial hit on that. I mean, I’ve certainly take my fair share of financial hits on other ones where I made the decision to rent to them, and they didn’t qualify so but it really, it really makes it so that it’s not so angst full for me to make a decision to rent to someone when there’s something that doesn’t quite fit. Like our


Yeah, and I think a lot of landlords use it in the way that you’ve been using it. But I’ve also seen some cases where we have some property management companies that are using this also as a way to attract more qualified tenants, by offering it as a security deposit alternative completely, which is interesting, it’s an interesting approach, because you talked about moving costs a little bit. And moving costs are actually a bigger deal to people than you think, you know, the whole cost of moving and I know a lot of you probably haven’t moved in many years, renters move on a regular basis, you know, sometimes it’s every year, and every time they move, they lose money because they have to pay the moving company, they have to pay the security deposit, usually they don’t get the whole thing back. And so they go through a lot of costs, right. So even if somebody has really great credit, even if they have money in the bank, that might not be something that they necessarily want to spend money on, they probably want to spend the money on something else rather than a really large security deposit. So if it means getting a lease guarantee, which is usually like three to $500, in most cases, for our most popular policy amount, which is 2500. Okay, yeah, I always get, I think that’s the one you get. So it ranges between zero between 1010 $1,000. So the $2,500 protection policy is probably the most popular, and that one’s going to be a few $100. So people are looking at, especially in in states where we’re rent is kind of expensive, two months security deposit could be you know, $3,000, right, so paying $3,000 out of a security deposit, and maybe they didn’t get their security, all their security deposit back. Maybe they didn’t think it was fair from before. And then they also have to pay for moving costs and all that. They’re probably if they have great credit, they’re probably going to pay you on time. But if you have the lease guarantee instead, sometimes they’d rather pay for lease guarantee, you know, three to $500, instead of that 3000 For the security deposit. And then they’ll get the place they have more money in pocket. Although they might not get the they’re not going to get the lease guarantee refunded to them. That’s the only thing but at the same time you think about okay, well, money now is probably I can do I can do things with that money rather than having it held up for a year or two years. 1000s of dollars sometimes held up for years, that are technically theirs, but you’re holding on to it. So sometimes if they have really good credit, they’re willing to, you know, pay a non refundable lease guarantee fee instead.


I hadn’t thought about doing it. Like instead that’s that’s a very interesting idea, and especially probably right now where it’s going to be well, I guess we’ll see, it seems like it’s gonna be a little bit more difficult to get your units rented mainly because of logistics people are clearly still moving, but just showing property right now. Unless you have a big property management company and you can you know, have people go show themselves or there’s just it’s hard with Coronavirus. It’s just a hard thing to do. There’s some logistics you have to work around. So having something that kind of gives you a leg up and to be more competitive than other landlords who have units. You know, that’s I hadn’t thought about that. I was like, well, we will Yeah, 100 $100 off the security deposit. Or I guess you can say if you qualify for at least guaranteed just pay the policy and we have effectively the security deposit,


essentially Yeah, and sometimes even more in some cases like if you were to get the $5,000 Protection Plan $5,000 is usually more than two months security deposit Did you know so you’re getting more actually, it which is is is kind of great, really for landlords. I mean, you’re getting a ton of protection more than you would with a security deposit. And I think yeah, it’s a great marketing tool, especially now, I was reading a statistic that there’s about, you know, 25% drop now in renters that are searching for rental that were before and then now have changed their mind. And that’s just based on tracking on Google searches for rental. So based on Google search results for rentals and how many people are searching, it’s dropped, like a lot.


People are like if I don’t have to move. Yeah. Also, if


you have a vacancy right now that you need to fill, take what you can take get the get the tenant in, but at the same time, don’t increase your risk. You don’t need to


write. Agree. Yeah. Awesome. Alexandria, is there anything else that you could think of you want to tell? Talk a little bit about like AOA as an organization, and if people in our group want to get involved or join, what are some of the benefits? You want to talk a little bit about that standpoint?


Sure. Sure. So, you know, we have a free membership we always have from the beginning, which is a little different than any other association I know of. So you can at least get in for free start to subscribe to our newsletter. We do give out every once in a while some free webinars as well, most recently Coronavirus and landlords webinar hosted by two fantastic attorneys this week. And last week we did to back to back one week after another sort of like an emergency webinar to really answer people’s questions. So if you become a free member@aol.com, you get access to those kinds of resources. But then there’s also a paid membership if you want to upgrade to get discounts and more features for tenant screening landlord forms and whatnot. So it definitely has a lot more than just the lease guarantee resource. But I mean, that’s definitely one one of the biggest I think, differentiators. I haven’t seen any other associations that offer something like this yet. And, you know, we’re trying to get the word out there as much as possible. And I’m really glad that you had a song because I think now a lot more people will know about it. And that’s what we’re trying to do.


Awesome. Awesome. Well, thank you so much for spending time and coming on. And I look forward to continuing to work with you. And if anyone has any questions or like what’s the best way for someone to get more information about the association or at least guarantee or


Yeah, so aaa.com That’s a Oh a.com That’s our website, that’s going to be the best place to go up at the top of the menu is a lease guarantee tab. So you can learn all about it there. My personal information because I love answering questions and taking calls. And that’s how you and me connected. So I definitely love making connections with people. So you can also contact me directly, which is just my name Alexandra at AE o ae.com. And I’d love to answer any of your questions about lease guarantee. You know, talk about how it can fit into what your current rental processes because I think you know, that that deserves some thinking about and you know, where the rentals are, I know you have people who are watching from all over the country. So and even outside, outside. So I we were not international just Yeah. The US Right, right. So, so if you guys need anything at all, please reach out to me. And then I highly suggest joining the Association for free@aol.com. That’s really that’s really going to be something I don’t see any downside to you know. So if you want more information, I would just go there.


Awesome. Thank you so much. Have an amazing day. And I’m sure we’ll be talking again soon, hopefully. All right. Take care everyone. Bye


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