Judgment and Tax Lien Information Deleted from Credit Reports. How Does that Affect Credit Decisions?

By Robert L. Cain, Copyright 2017. Written for Zip Reports, visit their website

Tax lien and civil-judgment information may be missing from credit reports beginning July 1, 2017. The deletion comes on the heels of a deal that the three major credit-reporting agencies made with 31 state attorneys general in 2015.  That means that some judgments and tax liens normally on credit reports may disappear and some FICO scores may increase as a result.  But all judgments and tax liens may not disappear depending on specific conditions.

The question is, does it make any difference to businesses that check the credit of prospective employees and tenants?  As we’ll see, possibly not, and even if it does make a difference, there are still ways to look for judgments and tax liens.

The new requirements say that any judgment appearing on a credit report must contain a minimum of a name, address, and Social Security number and/or date of birth.  They also require that representatives of credit reporting agencies visit county courthouses at a minimum of every 90 days. The reason for the change is that some judgment reporting is simply inaccurate. LexisNexis estimates that 96 percent of information about tax liens and 50 percent about civil judgments can’t be verified, reports Penny Crossman in a March 30, 2017 article in American Banker.  “Some observers note that tax lien and civil judgment information is sometimes attached to the wrong consumer’s file due to a lack of identity information,” continues Crossman.  The key word here is “sometimes.” The advantage for employers and landlords is that all judgments and tax liens we see on a credit report after July 1 are those of the person whose credit report it is, so no more getting away with saying “that’s a mistake on my report.”

Civil judgment and tax lien reporting are an essential part of predicting credit risk, explains John Ulzheimer, credit reporting and credit scoring expert.  He says this move “dilutes” the value of a credit report.  Well, maybe.

By far the biggest beneficiaries of the change are those whose credit falls in the subprime category.  The net effect, besides the deleted judgment and tax lien information, is a possible bump in FICO scores.  Fair Isaac, the company that provides FICO scores, predicts that about 11 million consumers will see an increase of under than 20 points, with 0.35 percent seeing a bump of 40 points or more. But tax lien and judgments often correlate with other derogatory information such as collections and serious delinquencies because people with judgments and such usually have other credit issues, too, thus “diluting” the bump in FICO scores.

Do we even care about FICO scores when we look at a credit report?  Probably not so much.  That is only a secondary indicator. The result of removing much of the judgment and tax lien data from credit reports and the resulting increase in FICO scores is much like holding a match under a thermometer.  The temperature reading goes up, but it’s still 45 degrees outside.  The upshot will be that lenders will rely less and less on a FICO score and more and more on “alternative data” and “trended data.”

Alternative data is probably a better predictor of someone’s credit behavior than is a FICO score. Included in “alternative data” are

  1. public and institutional data such as educational history and professional licensing
  2. property asset and ownership data such as home ownership, deed and appraisal sourced residence valuation, and recreational licensing
  3. court sources of derogatory items such as foreclosures, evictions, and bankruptcies, and
  4. economic health such as address instability and cost of living economic trajectory [where their income is and has been headed] (Lexis Nexus)

Also included will be utility and phone bills, items that are not reported to credit agencies unless they are egregiously past due and/or turned over to collection.

“Most of these sources don’t report to the traditional credit bureaus and aren’t included in commercial credit bureau scores.” (Lexis Nexus, “Alternative Data and Fair Lending” Aug. 2013).  That, of course, may change.

Then there is  what is called “trended data.” It is a superior predictor of credit worthiness.  “Trended, historical, longitudinal or time-series data is an invaluable tool for gaining practical perspective into consumer behavior,” says Equifax in a 2014 report on trended data.  They advise “You can gain a deeper understanding of specific consumer behavior history, including:

  • Spending patterns
  • Credit utilization
  • Past balances
  • Payment history

As Equifax explains on its website, “two consumers can have the same credit score, but one consumer’s score could be moving up while another’s could be moving down. That give those who check credit the ability to use “trended data to assess a consumer’s credit behavior over time.”

Equifax goes on to say that a consumer’s past behavior can help predict future behavior.  That means when we analyze a credit report, we don’t just look at how many past-due bills he or she has but also what that person’s current spending and paying habits are.  It might take a while for a FICO score to catch up, but we can spot either danger or positive signals by looking at trended data.

Along comes Vantage Score.  Vantage Score, explains the Vantage Score website,  shunts aside the exclusion of  many judgments and tax liens so that “predictive performance loss is minimal due to the fact that each scorecard within the algorithm incorporates a combination of derogatory behavioral attributes.”  What that means in plain English is that they use trended data. In addition, explains credit.com, it “not only provides scores to general consumers but also helps 30 to 35 million adults who may not have a credit profile . . . whether because they’re new to the world of credit or don’t use credit frequently.”  Vantage Score currently gets about 10 percent of the credit-scoring business.

FICO scores are simply the thermometer, not a real predictor of credit worthiness, any more than the thermometer is a guaranteed accurate reporter of temperature since it can be affected by so many variables that can change its reading independent of the actual temperature.  And that thermometer analogy will become more appropriate as judgments and tax liens vanish from credit reports.  We want to know if there is a danger of bad debts lurking ready to bite someone who wants to rent from us or work for us and if our applicant pays bills at least close to on time.  Looking at past due balances, payment history, and imminent repossessions is far more telling than an artificially created number.  If necessary or desirable, judgment and tax lien information is still available from county courthouses, but by using other data reporting information, that may be unnecessary.  Judgment and tax lien information is not required to judge credit worthiness since we have other information that we can be assured is accurate.

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A Generation in Debt

By Robert L. Cain, Copyright 2017

Most, 54 percent, are concerned about paying their student loans. Only about 36 percent own a home, while almost one-third of them, 32 percent, owe more than their home is worth. One-quarter of those, 24 percent, have been late with mortgage payments. And more than one in three, 35 percent have unpaid medical bills.  Those are the millennials reports a study by the National Endowment for Financial Education.   The young, fresh faces who are entering the workforce and excitedly renting their first homes, come with crippling debt burdens

In spite of that, some 64 percent, almost two in three, give themselves a high mark for their financial knowledge.  They mostly have checking accounts, about 85 percent, but 29 percent of them say they overdraw occasionally. They have retirement accounts, too; about  36 percent have a self-directed IRA, but 17 percent of them took a loan on it in the previous 12 months and 14 percent took a hardship withdrawal.

My how times have changed. “Young adults are increasingly at risk of starting their adult careers buried under a mountain of debt with no hope of repayment,” reports Jason N. Houle, Dartmouth College professor of Sociology, in his paper “A Generation Indebted: Young Adult Debt across Three Cohorts.”  Houle adds, “newer cohorts of young adults face unique risks and circumstances in young adulthood that earlier born cohorts did not.” [my emphasis]  Houle continues, “From 1970 through the present day, the proportion of households with debt has increased, and median household debt has risen from $20,000 to over $67,000 in constant inflation adjusted 2010 dollars.”

Young adults are not so adult anymore, either.  “Early Baby Boomers, those 24-28 from 1976-1978, moved quickly from their parents’ home, completed their education, entered the labor market, got married, and had a child in quick succession (and typically in that order) by the time they were in their mid-twenties,” reports Houle.  Young adults today overall have not gotten to the point preceding generations did.  Many rely on parents to make ends meet and one in three still live with parents, and for the first time in 130 years more young adults live with parents than with a partner, a Pew Research poll found.

But a college degree isn’t the ticket to the better life it used to be. College degrees are commonplace anymore, and so graduates have a more difficult time finding full-time jobs that equate with their college degrees, so we have the barista with the BA. Moreover, college enrollment has increased but college graduation rates have not, meaning that more students drop out of college and are still saddled with student loan debt while lacking the wage advantage a college degree brings.  Now imagine those fresh-faced young folks who dropped out of college. Their incomes are about $16,000 a year less than are those of college graduates reports the US Census Bureau.

How has it gotten to this point?  The culture in this country has changed from one where we expected to pay cash and avoid debt to one where we are expected to buy now and figure out how to pay for it later.  The Baby Boom generation didn’t succumb to the degree the millennials have. Millennials were raised with the idea that debt was not only just fine but the way people are expected to live.

Then there are the helicopter parents. A Forbes magazine article July 7, 2015 by Jennifer Calonia explained, “These parents routinely hover over their children, micromanaging their lives for fear that their kids will bring harm and failure unto themselves with poor decisions. More millennials are experiencing helicopter parenting into their mid- to late-twenties, often leading to stunted financial stability and success.”  These are the same parents who delivered their kids to soccer practice and playdates in their minivans, and not only clucked over, but interfered with, every event in their children’s lives never allowing their kids to make their own mistakes and learn from them.  That has carried over into the time when their children should be acting like adults, but mom and dad are afraid to let them leave the house.

Another reason for this disconnect is credit cards.  Until 2009 with the passage of the Credit Card Act, credit card companies had free reign on college campuses. “For decades, they were everywhere on campuses across the United States, hawking T-shirts and free food to students in exchange for filled-out credit card applications,” wrote Connie Prater on creditcards.com in 2008. Until the Credit Card Act of 2009, credit card companies signed up college students and told them to charge away.  They must have figured mom and dad would pony up for the bills when their son or daughter couldn’t.  Those college students, now the new generation in the workplace, got in the habit of charging everything right down to packs of gum and their daily Starbucks fix.  This cavalier attitude toward debt is coming home to roost with millennials discovering that they may have “no hope of repayment.”

Wages have stagnated or even fallen, so households need to try to make up that shortfall with increased borrowing.   Consumption has also become more important even as income inequality increased. And the price of higher education has skyrocketed over the past several decades, which means young people who graduate with more debt have an increased likelihood of needing to borrow more money to finance consumption once they start working.  They differ from the more stable generations we are used to, the baby boomer and Generation Xers, but they are coming to work for us and renting from us. This is the new normal and what we must expect with millennials.

No part of this article may be reproduced in any form without the express written consent of the author.

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Debts in Collection: How They Can Affect Hiring and Renting

by Robert L. Cain, Copyright 2016, Written for Zip Reports. Visit their website.

Almost one-third of Americans got calls and/or letters from a collection agency in the past year about debts they hadn’t paid. Over half of those, 57 percent, were contacted about two to four debts. So reports the Consumer Finance Protection Bureau (CFPB) in its Consumer Experiences with Debt Collection report.  You don’t get a call from a collection agency unless you are severely delinquent with a bill, usually if you haven’t paid it for 180 days.  Creditors don’t have to wait that long, and some types of bills usually go sooner or later, but that’s the rule of thumb and a step closer to the creditor taking legal action, from which garnishments and attachments can result.

The CFPB report breaks down the collections in several ways, by income, ethnicity, type of debt (bills or loans), and number of errors in the bills under collection.  It is instructive in what we might look for when examining an applicant’s credit.

First, 68 percent of consumers were NOT contacted about a debt in the previous year, but of those who were, 27 percent were contacted about one debt, 57 percent about two to four debts, and 16 percent about five or more debts.

The people with a non-prime, not sub-prime, credit score, that is a FICO score between 640 and 720, were far more likely to be contacted than those with a prime score, 720 or higher. Two in three people, some 66 percent, with a non-prime score were contacted.  And over half, 53 percent of them, had two or more debts in collection.  Over all, people with a non-prime score amount to only 37 percent of the population but have two-thirds of the debts in collection.

By far the most prevalent collection debt for loans was that for a credit or charge card, some 44 percent, followed by student loan debt, 28 percent.  Auto purchase loans were 18 percent, mortgages 12 percent, and payday loans 11 percent.  Student loans have a little more forbearance and become delinquent after the borrower has failed to make a payment for 270 days. That is typically when a student loan gets turned over to a collection agency. (34 Code of Federal Regulations 685.102)

For bills, as opposed to loans, by far the most common was medical bills with 59 percent of the people whom collection agencies contacted owing those followed by telecom bills at 37 percent and utility bills at 28 percent.  Collection agencies also contacted them about taxes, legal judgments or expenses, and rent.  The federal reserve says medical bills amount to more than half of the accounts in collection.

Of particular interest to employers and landlords is the number of auto loans in collection.  Statistics.com reports that .95 percent of all car loans were in default last year but 4.61 percent of sub-prime car loans were, those customers with FICO scores below 640.  Cars can be repossessed after a borrower misses even on payment explains nolo.com, but the collection efforts may continue for the amount of the missed payments.  And depending on the terms of the loan or lease, a lender can even come after a defaulted borrower for the total amount of the contracted unpaid balance.  Thus if you see an auto loan in default, even after the car has been repossessed, your applicant could still get collection calls and notices, and even be sued for the total unpaid balance.  Just think, no car but still in the clutches of a debt collector.

As we might expect, income correlates with the likelihood of loans going to collection.  More than half, 52 percent, of those with incomes of less than $20,000 had debts in collection followed closely by those with incomes between $20,000 and $39,999 at 41 percent.  However, lower income does not correlate with medical bills as those are relatively consistent at around 60 percent across all income levels.

Also of interest is the number of people who said the debt the collector claimed they owed was incorrect.  Some 28 percent said they didn’t owe the debt, a mistake by the creditor.  Another third, 33 percent, said the amount owed was incorrect, and 16 percent said that the debt was that of a family member, not them.  What is important for employers and landlords is that we are in no position to judge the accuracy of a debt, nor are we in a position to offer advice about what a debtor should do.  Our main concern is if the debt, legitimate or not, will affect the work or ability to pay rent of the applicant.

Ideally we hire people and rent to people who are current on their bills.  But we don’t live in an ideal world.  If someone has debts either in collection or past due, we have to decide whether those debts might end up affecting someone’s ability to get to work and work effectively or to pay the rent on time.

Read the full CFPB report at files.consumerfinance.gov/f/documents/201701_cfpb_Debt-Collection-Survey-Report.pdf

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How do you screen for nice?

By Robert L. Cain, Copyright 2017, Cain Publications, Inc.
Originally written for Zip Reports, Visit them here.

When Gary hired Jennifer to work in his print shop some 15 years ago, he of course wanted someone who could keep the daily books, make sure jobs got out on time, issue receipts, make occasional copies, and do other things that the assistant in a print shop does.  But he wanted something more.  He wanted nice.  Sure all those basic skills were important but most important was that Jennifer represented his company.   Now 15 years later, Jennifer is still there doing all the things she did at the outset and in addition mostly managing the print shop while Gary does what he loves and why he started the business, printing.  And Jennifer is still nice, a pleasure to do business with.

Gary screened for nice.  Lots of people had the skills necessary for the job, but few of them met his more important criterion.  For many business owners and landlords, the most important thing is qualifications.  Sure, qualifications are vital to success, but qualities are what will make or break a company or tenancy.  Qualifications don’t build a company, but qualities do, at least the right ones.

Putting qualifications in second place might require a big change in the thinking of employers and rental owners.  After all, you want someone who can do the job or you want someone who will pay the rent and be a good neighbor.  But those are only part of the picture for employment or tenancy success.

Say you need a rocket scientist.  Of course the candidate you hire will know about trajectory calculations, thrust analysis, payload weights, be able to do advanced calculus, and most likely have several advanced degrees, but if he or she is a constant thorn in the side of fellow rocket scientists, support staff, and management, it will be one crisis after another, one employee squabble after another, one job vacancy after another.  Instead, someone whom people enjoy being around, not necessarily a good time Charlie or Jane, does wonders for a productive workplace.

You are hiring a warehouse worker.  Yes, you want someone who may have worked in a warehouse before and have education enough to read and do the basic math required, but if he or she is constantly bickering with fellow employees, it makes the workplace a black hole.  What you look for is, just like the rocket scientist, someone whom people enjoy being around, who is helpful and kind.

You are renting an apartment.  You want someone who is able to pay the rent, who has a history of doing so, and who has not been evicted.  There are lots and lots of them.  But if you get a not-so-nice tenant, he or she will constantly disturb neighbors and fight with other tenants. The other tenants will move out and you will have a revolving door of vacancies.

How can you create rental and employment criteria to screen for nice?  First start with the qualifications, just like you always have.  If a minimum skill level is required, then the applicants must meet that minimum.  Then comes the important part, the part that will affect the success of your business or the long-term prospects for tenants, how nice the applicant is.

You might start with the ad. I thought of this as a possibility:

“We are looking for nice people. We’re looking for people who can not only do the job but also are a pleasure to work with.  We’re not talking about a team player here but rather someone who prides him or herself on pleasant surroundings, a business where people get along and help each other.  Drive is great as long as it’s not at the expense of someone else.  We want people who realize that workplace success is a cooperative process.  We are looking for people who are assertive, who will speak up with their ideas and thoughts, but not people who are aggressive, who try to intimidate others.”

You may have worked in an organization where the politics and backbiting made it a horrible place to work.  I know I have.  You dreaded going to work every day, maybe still do.  Anything that gets done is done in spite of the politics and backbiting.  Companies with a culture like that rarely are as successful as companies that make themselves inviting workplaces.

You know the minimum requirements to do the job you have a vacancy for.  Those will be different with each job and each company.  But you also have a duty to protect your investment and that includes trying to ensure that employees are all working toward making your company successful.

What do you look for when you screen for nice?  One thing is length of time of the job.  Job hoppers often wear out their welcomes wherever they work.  It’s easy enough to check “qualifications” such as education and knowledge. But not so easy to check for nice. Sometimes a call to a previous employer will find what you want to know.  Sometimes not. Even so, the more you can find out from third-party screening, the better.

The job interview can tell you lots, too.  “How did you get along with your last boss?  How about the one before that?  How did you get along with your fellow employees?”  Now listen to the answer.  If you hear things such as they were all out to get him or her, that nobody listened to all the great ideas he or she had, that he or she was unappreciated, you might think about going on to the next applicant.

People who job hop or move often are often expert at conning an interviewer.  They know all the right things to say, and that’s why they get hired or rented to over and over.  The interview needs to cut through the pat answers and listen for the real reasons they left a job or moved.

It’s the Goldilocks effect.  You don’t want a wimp, but you also don’t want some overpowering boor who makes life unpleasant for those around him or her.  If you have a go-getter, a take-no-prisoners type person, that may fit your idea of the type of person it takes to run a successful business.  In fact, as a business owner he or she might remind you of you when you started out.  But how does that go-getter work with customers, get along with fellow employees, and neighbors?  Will a go-getter help your business?  Will a go-getter make your property a pleasant place to live?

It’s someone easy to work with, a politician without the deceit, a leader who encourages rather than intimidates.

Businesses become great with great employees, those employees people like to do business with.  Rental properties are successful when nice, welcoming people live in them.  As I heard Zig Ziglar say years ago, “You can’t make a good deal with a bad guy.”  But nice guys?  The sky’s the limit.

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Proprietary Credit Scoring for Your Business

By Robert L. Cain, Copyright 2016, Cain Publications, Inc.
Originally written for Zip Reports, Visit them here.

They have special credit scores, the so-called “sophisticated” lenders.  In fact, Fair Isaac (FICO) even offers industry-specific scores for mortgage lenders (FICO Mortgage), auto lenders (FICO Auto) and credit card lenders (FICO bankcard).  Other lenders can ask FICO to give more or less weight for different factors important to their industries.  The reason for this weighting is that a basic credit score doesn’t “directly reflect income or all existing monetary obligations, which obviously contribute to the affordability of a new loan or line of credit,” wrote Odysseas Papdimitoriou on Dec. 6, 2016 in USA Today.  In other words, the generic score we get isn’t the same as the score that “sophisticated” lenders get.

John Ulzheimer, president of consumer education at SmartCredit.com and a former credit manager at FICO pointed out, “I care how you pay your auto loan for my decision, but I really care about how you pay your auto loan if you’re applying for an auto loan.”  By the same token, we care if you pay your rent on time, but we really care if you pay your rent on time if you are applying to rent from us.

How do these “sophisticated” lenders set their systems up?  They won’t tell because it’s considered proprietary.  Even so, we can create our own “proprietary” scoring system. Mostly creating our own system involves adding and subtracting for different factors, possibly with a point system.  Even though there’s no FICO Rental Property or FICO Employer, we can create a point system that will predict the quality of applicants.  I’ll tell you one additional advantage of creating our own system in a minute.

Below I am suggesting how this might work.  It is not prescriptive because I just made it up as I went, so you can give weight to the different factors in a way you believe is most appropriate.

A points system takes away the subjective measure of how well we can expect a tenant or an employee to perform.

  • Two years at one residence: add 10 points
  • More than one year: add 5 points
  • 6 to 12 months 0 points
  • Less than 6 months: subtract 5 points
  • Two or more years on the job: add 10 points
  • One to two years on the job: add 5 points
  • More than six months: 0 points
  • Less than six months: subtract 5 points
  • Use the same formula for previous employers, add 10, add 5, add 0, or subtract 5.

FICO score:

  • 640-679; add 5 points
  • 680-699: add 7 points
  • 700-plus: add 10 points

Good references (employer or landlord), you decide what constitutes “good,” add 10 points.  Derogatory references, subtract 10 points. (Maybe that’s not enough, you decide.)

Debt-to-Income Ratio:

  • 30 percent or less: add 10 points
  • 40 to 50 percent: add 5 points
  • 50 percent: 0 points
  • More than 50 percent: subtract 5 points
  • All bills current: add 10 points
  • Fewer than three 30 days late: 0 points
  • Three or more 30 days late or any 60 days late: subtract 10 points
  • Bankruptcy as seven years: subtract 20 points

Rent always paid on time in past year: add 10 points

  • Rent late once in past year: add 0 points
  • Rent late two or more times in past year: subtract 10 points
  • Eviction in past five years: subtract 20 points.
  • Rent payments are important for employers, too, since an employee who is evicted may not be as effective an employee as one with a stable home.
  • Can’t verify any information on application: subtract 100 points

Using those criteria and points, what would be a total that would indicate a “quality” applicant?  There are a total of 80 possible points for 100 percent, so maybe 55 points, about 70 percent, could work.  Lacking anyone with at least 55 points, using the demographics of your typical applicants you would have to decide what point total is acceptable after that.

Here’s the advantage I mentioned earlier.  If you reject on the basis of a credit report or score, you have to inform applicants where the information came from and allow them to dispute any derogatory information.  Not so with “an underwriting system that considers one or more factors in addition to credit information,” [emphasis mine] says the Final Rule of the Federal Reserve System in regard to 12 CFR Part 202 on July 15, 2011.

That means that you might not reject on the information in the credit report you received but would on the points you attached to length of time on the job, an eviction, or inability to verify information on the application. None of these would be an integral part of a credit score unless the eviction showed up as a judgment.  But certainly a debt-to-income point scoring doesn’t rely directly on a credit report but only on your point add-ons involved in your decision-making.

But do you want to reveal your system to applicants?  It’s up to you.  But what you most likely will have done is set up your own acceptable criteria for renting or employment.  For example, you can say in your rental policies and standards that you regard at least two years at a previous residence and at least two years on the job as acceptable figures.  But just because an applicant has neither doesn’t necessarily mean he or she won’t measure up as a tenant or employee.  You have simply weighted those criteria along with the others you consider such as how the applicant conducts him or herself in an interview.

What are the most important factors to you when you assess the quality of a prospective tenant or a prospective employee?  You decide and assign weighted measures for those factors just like the “sophisticated” lenders do.

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Chapter One: What Marketing Is, Why You Might Care, and How It Affects Renting Property

It’s because of marketing anyone buys anything. When a tenant rents a new home, it’s because of marketing a landlord did.

  • Everything we do could be marketing.
  • Why People Buy
  • How to turn what we do to your advantage to “get it rented.”
  • Some tricks to think about marketing

Here’s one secret.  Top-notch tenants, you know, the ones who are considerate neighbors, who take care of their homes, who pay the rent on time, like to rent top-notch properties and rent from landlords who are businesslike and competent.  Bad tenants, you know, the ones with chips on their shoulders, who don’t care much about their homes, who pay the rent when the mood strikes, don’t expect to be able to rent top-notch properties and avoid businesslike and capable landlords like a power outage.

Do you have as many top-notch applicants as you want eager to rent your properties? Why not? How about units sitting vacant with no applicants or only unacceptable applicants? Why? If that’s your situation, you are far from alone.  Many other landlords face the same problem. Too many landlords can’t seem to “Get It Rented.”

What are they doing wrong?  Why don’t all those rental owners have full units with outstanding tenants?  One reason is sloppy, indifferent or NO marketing.  After all, good tenants are going to rent from someone, so why not from you? It is the marketing.

Our aim here is for you to get it rented, not just rented but rented to good tenants. As we will discuss in this book, effective marketing begins in the owner’s mind.  Effective marketing is a system, a system of always paying attention and doing the things that cost little or nothing but are more effective than an ad. So many rental owners think they only have to pay attention to marketing when they have or are about to have a vacancy.  Then it’s too late.  They end up like every other landlord who can’t figure out what to do to get that property rented.  They don’t know why the phone doesn’t ring and why it seems that nobody wants to see their property.  Or just as bad, they can’t figure out why everyone who calls shouldn’t be able to rent even a Barbie Playhouse.

Here’s how to adjust your thinking. If the other rental owners aren’t paying attention, all the better for you.  You get the edge that could mean that your properties make a profit every year, your bank account bulges, and you will be able to retire in comfort.  It begins with marketing.

A Second Secret
Here’s a second secret.  You don’t have to be infinitely better than other rental owners to shine.  After all, it only takes one stroke to win a golf tournament and one millimeter to win a race, but we remember the winners.  And in the rental property business, if somebody wins, somebody else misses out.  To win the best tenants, you only have to be a smidgen better than the competition.  That’s what you will learn in this book, the smidgens that win.  It’s only a tiny bit, but you will seem to stand head and shoulders above other rental owners.

Could Everything Be Marketing?
We can’t escape it.  Everywhere we look, everything we see, everything we hear, touch or feel may be marketing. Much of it, if you aren’t up on the tricks they use, you may not think of as marketing at all.

Marketing is everywhere and we can learn things that work for our rental properties by watching not just how the pros do it but also what other techniques can be even more effective.  Everyone buys (or rents) for his or her own reasons, not ours.  So in order to be effective, we need to appeal to as many of those reasons as we can to hit the bull’s-eye of why a particular person buys.

Product placement is one example.  Next time you watch a TV program or movie where someone uses a laptop computer, notice what brand it is.  Chances are it’s a Mac.  You can tell by the Apple with the bite out of it on the cover of the laptop. That’s in spite of the fact that Macintosh computers account for less than 10 percent of the computers in use.

Apple proudly announces that it doesn’t buy ads. But an article in Business Insider Aug 7, 2012, reported that “Apple products appeared in 891 TV shows in 2011 alone. According to Brandchannel, iDevices were in 40 percent of movie box office hits.”  In fact, “Of the 35 number one movies in the U.S. during the course of 2014, Apple products appeared in 9,” reported a March 8, 2015, article in Digital Trends. That’s 26 percent for a product that doesn’t even sell to 10 percent of the market. From watching movies and TV programs, you’d think that most of the world used Macs.  Product placement is marketing that never enters our conscious unless we know what we’re looking at.

Why did you buy the house you live in? Your rental properties? How did you learn about them? How did you make the decision to sign on the dotted line? Possibly you saw an ad for an open house and visited, but that wasn’t what got you to buy.  Some other factor did.  It could have been the location, the way the property looked, the balance sheet of the rental property, or any number of other things.  I don’t imagine you called the owner or Realtor on the phone when you saw the ad and said, “I want to buy that. Where do I sign?”  Another factor entered in, and that other factor most likely had to do with marketing of some kind.

No matter what factor prompted you to buy anything, we will discuss it in this book. Why anyone buys has to do with marketing.  And it’s more than just the advertising, believe me.  Many people believe that marketing and advertising are the same thing, but advertising is just one piece of the marketing picture. In fact, advertising may have had nothing whatsoever to do with why someone ends up buying.  We will look at how each factor affects getting a unit rented.

Just so, almost anything could be considered marketing. Yeah, right, you say. We watch sports on television because of marketing.  Taking kids to a soccer game has to do with marketing.  Even brushing my teeth has to do with marketing? What we’ll look at here are first, how marketing permeates our lives, and second, how we can take advantage of that in getting it rented.

When you watch sports on television, you endure commercials, lots of them.  In fact, usually more time goes to commercials than the actual game. But during the games, you will see athletes wearing one brand of shoes, shorts, or using a brand of equipment or product.  That’s product endorsement.  Those athletes get paid to wear the shoes, use the products or equipment, or put on the shirts with the company logo.  More product placement.  After all, if a basketball player sees Stephen Curry wearing Under Armour shoes, he or she might be prompted to beg mom and dad to buy them, too.   Professional athletes often make more endorsing products than their own salaries.

And then, why did you choose to watch that particular team play?  Maybe you went to college there or it’s the team whose franchise is in your city.  And they got your attention all different ways, only some of them by advertising.

I watch the NCAA Championship basketball game just about every year, and the program lasts more than two hours.  But there are only 40 minutes of actual basketball in a college game plus a 20-minute half time break. I turn off the sound during the commercials because I’d rather not be insulted with their inanity and repetition, but pay attention and they provide lessons on what might work in selling ourselves and our product, our rental properties.  Years ago, though, when I was an account executive for an advertising agency, I used to watch (and listen to) all the commercials on TV and analyze the techniques the ad guys used to try to sell me stuff.

While we’re on sports, though, let me add one more thing.  Decades ago when my children played Little League and my son played Babe Ruth Baseball, every team had a sponsor. Every uniform had the sponsor’s name on it and every cap had the sponsor’s initials, at least.  Those kids wore the hats wherever they went.  My daughter played one year for a team sponsored by a real estate agency.  Whenever my daughter’s team played, there, prominently displayed was Jacqueline’s Realty.  I thought about sponsoring a team.  After all, it was only $150 for the season, but my business does not lend itself to consumer sales.  But $150 for not only the uniform, but the good will, and a little ad in the league program, what a deal!

My son, when he played Babe Ruth Baseball, played on a team sponsored by a State Farm Insurance agency.  The agency even supplied the hats with the State Farm logo.  So when the parents thought about insurance, who first came to mind unless they were already locked in to an agent?

When you drive your kids to soccer games, you most likely have the radio playing, maybe not to the station and music you prefer, but playing.  They play commercials on the radio that, unless you have satellite radio as I do, you have to either listen to or push the button to a station that isn’t playing a commercial right then.

And that brings up the question, why do I have satellite radio?  Why do I pay something over $20 a month for satellite radio in my wife’s and my vehicles?  It’s because I don’t have to endure advertisers’ and announcers’ inane blather.  What was the marketing that sold me that?  No commercials and no inane babbling, oh, and over 150 stations to choose from. The benefit to me was that I could listen to music not useless chatter and commercials.

But one more question:  how did you decide to buy that car you’re driving your kids to the soccer game in?  I know it wasn’t by throwing a dart at a board full of pictures of cars. It had to do with someone’s marketing.  Maybe it was the ad but maybe it was because of something your father told you when you were growing up.

I used to work with Al (name changed to protect the less-than-objective). He’s a “Ford Man.”  He considers any other brand of vehicle not worth his attention except to ridicule it, something he is eager to do, and accuse those who drive them as somewhat less than intelligent and possibly a danger to society, though his words are far more colorful. I used to kid him about what FORD stood for, “fix or repair daily” or “found on road dead.”  But his father was a “Ford Man,” too.  Al didn’t have a chance. He had Ford pumped into his brain from the time he was old enough to listen. So in spite of the fact that his car was in the shop once a month (I do not exaggerate), he still had a new Ford every three years when their leases were up. His father was the marketing that affected him.  That’s word of mouth to the extreme.

I drive a Toyota pickup.  Why?  Because of marketing.  What was the marketing?  Toyotas are reliable.  Just check the JD Power ratings.  I bought my current truck new 150,000 miles ago.  The only things I’ve had to do with it are buy a new set of tires, new brakes a couple of times, and a new battery a couple of times, plus change the oil.  The marketing that sold me was that I could depend on it.  It’s also good for bringing home stuff that would in no way fit in the trunk of a car.

My wife drives a Hyundai. We bought that new, too.  What was the marketing that sold us that?  Once again, reliability. They warranty them for 10 years or 100,000 miles. Several years ago we got a flyer in the mail from a local car dealer listing the most reliable vehicles as judged by JD Power and Associates.  Right at the top of the list was Hyundai. We weren’t in the market for a new car then, but we put that list on our refrigerator and left it there several years.  So every time we thought about a new car, what came to mind?  My wife also asked people at her work who drove Hyundais how they liked them.  The testimonials were 100 percent positive.  What was the benefit to buying those vehicles?  We weren’t inconvenienced by having to take them to the repair shops and we could depend on them to start when we turned the key, go when we pressed the gas pedal, stop when we hit the brakes, and get us where we wanted to go.

How about brushing your teeth?  Why did you buy that particular brand of toothpaste?  I think we use Colgate at our house.  I can’t be sure without going into the bathroom and looking, but I think the tube is red and white, Colgate’s colors.  We always buy that toothpaste. I believe my wife originally bought it because of the cap.  It flips up so requires no unscrewing and eliminates forgetting to put the cap back on.  Somewhere in the past undoubtedly Colgate had an ad or marketing that promoted their patented cap.  I do remember the colors and design of Colgate, though.  That has to do with branding.  We will discuss how you can brand yourself and your rental properties in the next chapter.

The toothpaste commercials never enter my consciousness. My point here is that we can’t know the factor, feature or benefit that will prompt someone to buy.  Fathers, reliability, no commercials,  or caps, we can’t predict what the selling point will be that tips the scales in favor of a product or service.  But it will be something, and maybe something we least expect.

Why People Buy
Geoff Ayling in his book Rapid Response Advertising (available from Amazon, but not as an e-book) provides wannabe guerrilla marketers with a full fifty reasons why people buy. There are really far more than fifty, but I have a feeling that these fifty will get your creative juices flowing.

1. To make more money – even though it can’t buy happiness

2. To become more comfortable, even a bit more

3. To attract praise – because almost everybody loves it

4. To increase enjoyment – of life, of business, of virtually anything

5. To possess things of beauty – because they nourish the soul

6. To avoid criticism – which nobody wants

7. To make their work easier – a constant need to many people

8. To speed up their work – because people know that time is precious

9. To keep up with the Joneses – there are Joneses in everybody’s lives

10. To feel opulent – a rare, but valid reason to make a purchase

11. To look younger – due to the reverence placed upon youthfulness

12. To become more efficient – because efficiency saves time

13. To buy friendship – I didn’t know it’s for sale, but it often is

14. To avoid effort – because nobody loves to work too hard

15. To escape or avoid pain – which is an easy path to making a sale

16. To protect their possessions – because they worked hard to get them

17. To be in style – because few people enjoy being out of style

18. To avoid trouble – because trouble is never a joy

19. To access opportunities – because they open the doors to good things

20. To express love – one of the noblest reasons to make any purchase

21. To be entertained – because entertainment is usually fun

22. To be organized – because order makes lives simpler

23. To feel safe – because security is a basic human need

24. To conserve energy – their own or their planet’s sources of energy

25. To be accepted – because that means security as well as love

26. To save time ?? because they know time is more valuable than money

27. To become more fit and healthy ?? seems to me that’s an easy sale

28. To attract the opposite sex – never undermine the power of love

29. To protect their family – tapping into another basic human need

30. To emulate others – because the world is teeming with role models

31. To protect their reputation – because they worked hard to build it

32. To feel superior – which is why status symbols are sought after

33. To be trendy – because they know their friends will notice

34. To be excited – because people need excitement in a humdrum life

35. To communicate better ?? because they want to be understood

36. To preserve the environment – giving rise to cause?related marketing

37. To satisfy an impulse – a basic reason behind a multitude of purchases

38. To save money – the most important reason to 14% of the population

39. To be cleaner – because unclean often goes with unhealthy and unloved

40. To be popular – because inclusion beats exclusion every time

41. To gratify curiosity ?? it killed the cat but motivates the sale

42. To satisfy their appetite – because hunger is not a good thing

43. To be individual – because all of us are, and some of us need assurance

44. To escape stress – need I explain?

45. To gain convenience – because simplicity makes life easier

46. To be informed – because it’s no joy to be perceived as ignorant

47. To give to others – another way you can nourish your soul

48. To feel younger – because that equates with vitality and energy

49. To pursue a hobby – because all work and no play etc. etc. etc.

50. To leave a legacy – because that’s a way to live forever  (Used with permission)

But two reasons override all others, fear of loss and hope of gain, with fear of loss by far the most “persuasive” reason.  People fear losing one of the buying reasons above.  We will discuss that in much more detail in Chapter Six when we work on advertising and writing headlines.

Here’s where it starts
If you have not read the book Guerrilla Marketing by Jay Conrad Levinson, I encourage you to get your hands on it.  It is written for more than just the small business person.  In it are tips and ideas that every landlord can use to make his or her marketing not only work but stand head and shoulders above that of almost every other landlord.

The life of every business is fed, either fattened, starved, or just kept creaking and groaning along, by the marketing it does.  You are in the rental property business, or you wouldn’t be reading this.  And if you think you’re not in business as a rental property owner and manager, stop reading right now, put for sale signs up in front of your rental properties, all of them, and sell them.  Get rid of them.  If you don’t, you will be out of the business you don’t believe you’re in within a couple of years. It will drain every penny you have through bad tenants, maintenance disasters, and indifferent management.  You will become a part of the “get-rich-quick” landlords who end up wondering whose stupid idea it was to buy rental property in the first place because they not only did they not get rich, their investments ate them alive.

Rental property ownership and management is a business that requires attention, a lot of attention.  It is a hands-on business, and by no means a passive income business as some real estate investing “gurus” might claim.  Even if you hire a management company to tend to your property, you need to manage the management company. Trust me. In Chapter 7 I tell a story about how a management company can mess up getting a property rented. Part of that management is attention to marketing. In this book, we discuss how to get good tenants to want to rent from you; we don’t discuss how to select and ensure good tenants because that’s another topic entirely and the subject of another book I wrote, Profitable Tenant Selection. Even so, how you market can subconsciously tell bad tenants to not even think about calling you, not to even think about looking at your property, to not even think about filling out a rental application.

We also examine how careful and conscientious maintenance enhances the marketability of your properties and their appeal to good tenants; we don’t discuss how to maintain the value of your properties; again that’s another topic entirely. But how your property looks tells good tenants either that you are someone they will want to rent from or someone they want to avoid. We examine how to see marketing potential in a property, potential that will make marketing more productive. We don’t discuss how to invest wisely. Look on Amazon and you will find hundreds of books on that subject.  But if your first attention is to marketing, you will know which properties will rent easily.

Marketing starts with the packaging of yourself and your properties.  In the next chapter, we discuss how people like to buy from people they like and how to look at your properties as products to be sold, not much different from a can of soup on the grocery shelf, just bigger and more expensive.  Rental properties are products, products that people “buy” when they rent them.  And they buy them for specific reasons where enticing packaging helps in their decisions. Believe it or not, it works both ways.  Good tenants rent well-maintained properties and bad tenants expect to rent poorly maintained ones.

Of course, advertising is part of marketing, but the classified ads you call marketing are a minuscule part of it and, unfortunately, often done poorly, ineffectively, or in a way that actually drives off prospective tenants.

The most effective marketing you can do is marketing on the telephone or face to face.  We will study how to answer the telephone, how to hold rental open houses, how to show property, and how to ask prospects to fill out a rental application.  That’s all part of marketing, the most powerful part, the part that determines if you get the property rented.  And if the prospect is on the phone or in front of you because of word of mouth, because you were recommended by a friend or relative, you’re halfway there.

But there’s one more thing, a caveat that terrifies landlords, and rightfully so, into being afraid to do any “creative” marketing—Fair Housing.  They may be afraid to even tell anyone they have a vacancy because they believe they have to rent to the first warm body who shows up, money in hand, wanting to rent.  They cower in dread that they will say the “wrong” thing and end up on the receiving end of a Fair Housing complaint.  Those fears are justified.  Anymore, people are programmed to be insulted, to assume the worst, to take things the wrong way when nothing at all was meant by it, to be “victims.” Plus, there are those who are looking to make a quick buck by claiming discrimination and getting a payoff from the “offending” rental property owner.  But in the chapter on marketing and Fair Housing, we will look at how you can keep from having a complaint filed against you because your marketing will be open, above board, and welcoming to every applicant who is qualified.  Good tenants come in all different races, colors, religions, national origins, handicaps and families.  Their being members of a “protected class” has nothing whatsoever to do with their quality as tenants.

Be conscious of your rental property marketing at all times.  There’s no telling what will bring your next outstanding tenant to your available property, eager to rent from you.

The most important job a landlord has is getting good tenants into his or her rental properties.  Good tenants pay the rent, take care of and take pride in their homes, pay your mortgage and taxes, and increase the value of your investments. Good tenants appreciate well-maintained properties and landlords who are careful in their businesses and have their businesses organized effectively.

Get it rented.

Copyright 2016, Cain Publications, Inc.
All rights reserved.  No part of this book may be used or reproduced in any manner whatsoever without written permission of the author except for brief quotations in critical articles or reviews.  For more information, address Property News Service, PO Box 68761, Oro Valley, Arizona 85737.

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Table of Contents and Introduction–Get It Rented

Get It Rented

In this technique- and idea-filled book, Robert Cain brings his 30 years of property management training and publishing experience to show how to use effective and usually inexpensive on-going rental marketing techniques.  These techniques entice the most qualified applicants to respond to that marketing and that the best tenants not only want to continue renting from a landlord but also tell their friends about the great place they live. You will find templates of marketing forms and examples you can use right away and easy systems for keeping track of how your marketing is doing.

Chapter One: What Marketing Is, Why You Might Care, and How It Affects Renting Property.
Chapter Two: Packaging Yourself:  Setting Yourself Apart
Chapter Three: Packaging Your Property.
Chapter Four: Do the Opposite.
Chapter Five: Know Your Market
Chapter Six: Advertising.

  • How to write a good ad.
  • Classified ad in community newspapers.
  • Advertising on rental websites.

Chapter Seven: Other Even More Effective and  Cheaper Types of Marketing.

  • Part One:  How to Use Flyers to Get a Property Rented.
  • Part Two: Buy mailing list and mail about your property.
  • Part Three: Get local merchants to put your flyer in their bags.
  • Part Four: Detailed flyers to hand to prospects.
  • Part Five: The Benefits Sheet
  • Part Six: Set Up a Facebook Page.

Chapter Eight: The Telephone and the Public.

  • Part One: Answering the Telephone.
  • Part Two: Meeting the Public and Prospective Tenants.
  • Part Three:  Complete Instructions for Holding a Super-Duper, Whiz-Bang Rental Open House
  • Part Four:  One More Trick for Presenting the Property.

Chapter Nine: The Most Cost-Effective Kind of Marketing:   Keeping Good Tenants.
Chapter Ten: Salesmanship.
Chapter Eleven: Fair Housing and Marketing.
Chapter Twelve: Fair Housing Basics.


The Census Bureau published “The Property Owners and Managers Survey” several years ago in which it analyzed rental owners and rental properties. The study found that “Overall, 58 percent of multifamily properties made a profit or broke even. About 27 percent had a loss, and for 16 percent the owners did not know whether they made or lost money. About 58 percent of small and medium size properties had a profit or broke even, compared to 51 percent of large properties.”  Think of that; just over half of multifamily properties did not lose money.

Notice the figures are for making a profit or breaking even.  We can deduce from that that fewer than half of the rental owners made an actual profit.  But a telling figure is that 16 percent of owners, one in six, had no clue if they made any money or not (and they’re in business?).

I heard one thing consistently in the 25 years I traveled around the country giving speeches and seminars and conducting trainings for rental property owners and managers,  “I can’t get enough good tenants.”  That puzzled me because some 95 percent or more of tenants fall into the “good” category, and they are going to live somewhere.  What were these rental owners doing or not doing that kept them from getting top-notch applicants?

Why they didn’t draw enough, or any,  “good tenants” who wanted to rent their properties? As I eventually sorted out, it was because of poor marketing.  They simply had no clue about how to do a proper job of it. In fact, the one thing they did do is the least effective method, and they didn’t even do that well.

I have been a student of marketing for over 25 years and wrote about marketing tips and tricks regularly in the Rental Property Reporter, which I published until 2014. I have put marketing articles, teleseminars, and material from seminars together into one place, and added and edited so they flowed logically and well to create Get It Rented.

It answers all the marketing questions I can think of, though in spite of my obsession with trying to think of everything, I might have missed one or two. I organized them logically in an easy-to-read, technique-filled book.  It includes templates and forms that I will make available on one of my websites for those who are wise, or desperate, enough to buy the book.

So what are those rental owners doing wrong?  Why aren’t all of them ahead of the game?  Why aren’t good tenants flocking to them, making the phone ring off the hook, clamoring to see these owners’ properties? One of the reasons is sloppy, indifferent or even NO marketing.

Here’s how to adjust your thinking. If the other rental owners aren’t paying attention, all the better for you.  You will get the edge that could mean that your properties make a profit every year, your bank account bulges, and you will be able to retire in comfort.  It begins with marketing.

Marketing is everywhere and we can learn things that work for our rental properties by watching not just how the pros do it but also what other techniques can be even more effective.  Everyone buys (or rents) for his or her own reasons, not ours.  So in order to be effective, we need to appeal to as many of those reasons as we can to hit the bull’s-eye of why a particular person buys. We need to use as many marketing techniques as we can to attract the attention of those excellent prospective tenants who are looking for a new home.  We don’t know which avenue will attract which prospect, so the more we use, the more likely it will be that we reach them.

Whatever factor prompted you to buy something, we will discuss it in this book. It has to do with marketing.  And it’s more than just the advertising, believe me.  Many people believe that marketing and advertising are the same thing, but advertising is just one piece of the marketing picture. In fact, advertising may have had nothing whatsoever to do with why someone ends up buying.  We will look at how each factor affects getting a unit rented.

Do all these work every time?  Of course not, nothing works every time.  Will you need to use every one of these techniques to generate the kind of traffic that you deserve as result of your expertise and experience in rental property management?  Of course not, you pick the techniques you are most comfortable with and use them.  Some techniques work better in conjunction with others, but you’ll be able to figure that out easily.  Try the things that work for you and see what kind of results you get.  Few of them cost much money and some none at all, so you have no risk.

Enjoy this book and “Get It Rented”!

This book is scheduled for release Jan. 31, 2017 both as an ebook and a hard copy. To reserve your own copy, email me.

Copyright 2016, Cain Publications, Inc.

All rights reserved.  No part of this book may be used or reproduced in any manner whatsoever without written permission of the author except for brief quotations in critical articles or reviews.  For more information, address Property News Service, PO Box 68761, Oro Valley, Arizona 85737.

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The False Options

By Robert L, Cain, Copyright 2015, Cain Publications, Inc.
Originally written for Zip Reports, October 2015

Barbara’s son had been transferred from Hawaii to Chicago for a new position in his company. To get his home sold, he was interviewing Realtors to do the job for him.  He had interviewed two.  Pat asked my help in deciding which one was the better choice.

I had done consulting for Barbara before and she was confident that I could help work out this dilemma.  I told her that I wasn’t a Realtor so didn’t know if I could help, but she sent me the materials both Realtors had given to her son. When I looked at the materials, I knew what the problem was. Neither was acceptable.  It turns out this “choice” was a False Dilemma.

The False Dilemma fallacy, also known as the Either/Or Fallacy or Black and White Thinking, is where people believe that they have to choose between two options, and two options only.  In his book 76 Fallacies, Michael Labossiere described it

This line of “reasoning” is fallacious because if both claims could be false, then it cannot be inferred that one is true because the other is false.  That this is the case is made clear by the following example:

  1. Either 1+1=4 or 1+1=12.
  2. It is not the case that 1+1=4.
  3. Therefore 1+1=12. (76 Fallacies)

Of course, sometimes that reasoning must be true such as the case where “Joe is either alive or dead,” but it behooves us to think it through and if there is another or are other alternatives, we can avoid the False Dilemma.

Both employers and landlords can fall into the False Dilemma trap.  Two prospects apply for a job or an apartment and neither is acceptable according to company standards.  But since that’s all who have applied, the owner feels obligated to choose one or the other.

It can be difficult to decide that neither will work and reject both applications because that’s all there are and no more may ever show up—or even worse ones may.  But rejecting both breaks out of the false dilemma trap.

In good business times, it can sometimes be difficult to get acceptable applicants and businesses end up hiring and landlords end up renting to people they are less than sure about.

But the False Dilemma might be the result of our own doing. We all have standards we want to uphold in hiring and renting, but if we continually see applicants who don’t meet those standards, possibly the standards are not reasonable either for that job or that apartment.  In that case, a  reexamination of our standards may be warranted.

One way to examine the standards is to look at good or acceptable existing employees or tenants to see if all of them, using current standards, are people we would hire or rent to if they showed up today.  If they are people we would send on their way, possibly our current standards are not appropriate.  What to look at are where current employees or renters fail to meet those standards and examine if those standards may be requiring more than is reasonable for the position or the apartment.  For example, if asking for a credit score of at least 680 when the vast majority of employees and tenants are somewhere around 650, means that standard just might be cutting off your nose to spite your face. .

Of course, there are absolute requirements that every applicant must meet no matter what.  The first one is that you can verify everything on the application.  The second is that the application is completely filled out.  The third is that the applicant was completely truthful on the application.  That means that all previous addresses and employers, say in the last five years, are included in the appropriate spaces.  The fourth is that the applicant have appropriate picture ID.

After that, most other requirements are up for discussion. Every business is different and every rental property is different, so each has its own permutations and combinations for workable standards.

But back to the False Dilemma.  If after examining the current standards, you find them reasonable and workable, if your current employees or tenants would meet them, you are still usually not stuck with choosing one or the other applicant.  Keep looking.  And back to Barbara,  I emailed her that I wouldn’t hire either of those Realtors and that there must be someone else who could do the job.  It turns out there was, and her son hired someone with considerable experience in selling property on the island and was extremely pleased with the results.

Does your company need content for its website?  How about editing for marketing and intra-company materials?  We offer both those and more at Cain Publications.  We make your written communication shine. If you believe we may of use to your company, email me at bob@cainpublications.com or call 520-975-2435 9am to 5 pm Monday through Friday Mountain Standard Time.

By the way, this article is copyrighted and no part of it may be reproduced in any form without the express written permission of Cain Publications, Inc.

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Encryption and Why It Is Important

By Robert L. Cain, Copyright 2015 Cain Publications, Inc.
originally written for Zip Reports Sept. 2015

Cryptography (encryption) is as old as human written communication.  Early Greeks used it to keep enemies from reading their battle plans as did the Romans.  People have used various devices, which became more and more sophisticated as those who might intercept messages became more and more clever about breaking the cryptography.  During the American Revolution, George Washington developed a code to communicate with the American colonists fighting the British, so an intercepted message was indecipherable, something that was in part responsible for American independence.

The movie “The Imitation Game” was all about the cracking of the encryption of the enigma machine, used by the Germans during World War II.

Those were all codes that required physical handling of the coded material, the messages.  Today, however, coding (cryptography) has become infinitely more sophisticated.  It is used for transactions that involve online purchases, communications, and banking, so must be able to keep prying eyes from reading the information and using it for their own nefarious purposes.  And those prying eyes become more and more clever every day about cracking the codes and stealing information.

What is encryption?  How does it work?  Should we trust it with our information?

Bryan Clark in an article “How Does Encryption Work, and Is It Really Safe?”  wrote, “While there is still a (relatively) small demographic that doesn’t trust online banking or making purchases at Amazon or other online retailers, the rest of us are quite a bit safer shopping online (from trusted sources) than we would be from taking that same shopping trip at our local mall.”

As Clark wrote, “Encryption is a modern form of cryptography that allows a user to hide information from others. Encryption uses a complex algorithm called a cipher in order to turn normalized data (plaintext) into a series of seemingly random characters (ciphertext) that is unreadable by those without a special key in which to decrypt it.”  It has become more and more sophisticated because of the ability of computers to decode relatively simple ciphertext.  So ciphertext has become incredibly complex.

Here’s how encryption works, explained in a simple way.  Suppose Jack and Jill want to physically, as in person, send a message to each other without anyone else being able to access it.  They use a metal box.  The box contains a padlock; let’s call that the public key, with a key required to open it, the private key.  In the more advanced form of encryption, asymmetric, there are two different keys.  He opens the box, plops in his message, and locks the padlock, securing the box.

Jack can’t reopen the box since it requires Jill’s private key to unlock it.  Once Jill gets the box, she uses her private key to open the padlock.  Now Jill wants to send a message back to Jack, something like a get-well message for “breaking your crown” after going up the hill to fetch a pail of water.  She plops her message into the box and locks Jack’s padlock onto it.  That padlock requires Jack’s private key to open it.  She sends it off to Jack with her open padlock in the box so Jack can send her back a secret message.

Online encryption, what they use to make the information we transmit on the internet, works mostly the same way only with numbers so large, prime numbers of 100+ characters translated into gibberish as keys, that it would require the most sophisticated computer in the world in the neighborhood of one million years to crack using what’s known as the “brute force” method, that is, trying things until they come up with the right key.  That’s counter-productive for crooks.  But there’s another way we will look at in a minute.  We can spot when a website is encrypted because we see an https in front of the web address and a small lock in the web address slot.

I won’t go into the math that is used to encrypt.  For a complete and somewhat head-scratching explanation, go to Bryan Clark’s excellent article at www.makeuseof.com/tag/encryption-care.

They still use two keys.  They just aren’t physical keys, but as long as both sets of keys remain secret or unbreakable, everything is fine. The private and public keys are still used. You may have seen an example of a “key” at some time, but here’s what one looks like:

Good luck trying to crack the code!

Version: GnuPG v1.4.5 (GNU/Linux)

pre+FOhLuyw3pzpglr5G5braQeGo9HOPWXLr0ukl3fgW0uwBVgdK5lfmCrEKnMQM pOrtlMiheQ09EYMqtCQBt+bI27Swd0WgFkkDkuTdcFVp72C2/g5zPiLVc2j3qhgV go5RntvCoTOQ+oQbt9ioUePm9JH4DNoTzd41tybIL/6ekgWoObBETEQKCixfaP3w hQEOAxgx8INo4cXhEAQAhU44e428lReSMKECqsZ/6/SXg+bud7eP6L+KN2/W9JIJ G6VHVfDaf7svXvRs8V0yteVSvH5Bym9WecaJaD200y18CuV5iK10dLL4nw1B99I8 6zwnWSZsRDomJ69N9h6oR92/Npsb5Af0dML9MaKTBM0OrcjCvIchvZbGVAymoHoE AJFH8GoYQH3r22k7iJC2JkfF5j5+K7EQLQrSDq5nIZG/iI6Tn+mhJulcMnxpBjE6 uciq47eWiodBmHxBu4H008/fVmcV3BixNaiVmD9DYJ1p/z6AlyyifeCpr6hG9kng jeWVNQ5ReZZR+FAr61zIvwaMH4hRA0oblN8SH9qNVD+700AEjb8AFS7egMvBnXQL qb2ARo+zKN/yV9FNnyTuWXCBt3TqCYm3Z/X9Y3HKdyYeImwG6DiP5vzHB+uMNCpX avr3kLY8TsKwmUEUL1rYs3FIuXO2u4siSSbLr2UzPmtgpRIS2BdwBnNIc9yLuHVn
—–END PGP MESSAGE—– (explainthatstuff.com)

Other encryption will look and be just as unreadable. No one can read the encrypted information we send to Amazon to buy something.  No one can read the encryption we exchange with banks to bank online.  No one can read the encryption from the Starbucks terminal that we use to buy a $6.00 cup of coffee. That’s where the hackers come in.  In a Wall Street Journal article April 20, 2015, Elizabeth Dwoskin explained, “If a hacker obtains the encryption keys, or the formula that unlocks the code, all that encryption was for naught.”  After all, Target had good encryption, as did Home Depot, as did the US Government’s employee database, as did Ashley Madison, as did Sony, as did many others, but hackers got in by finding a back door, a place with a password that was easily cracked, to sneak into the database of these and more companies.

They did that by using insecure passwords that allowed them access to the entire database of a company.  Many times these were from contractors, third-parties, who had or needed access to the affected company’s main database.  It was all downhill for customers and consumers from there.

Many times one password they got was used in several other places so could be used to access company and personal information, such as bank and credit accounts, confidential records, and legal documents.

The warnings are clear.  We don’t need to be concerned about our data being compromised as long as all the keys stay in the possession of the people they are intended for.  It’s when they fall into the hands of those who are less than honorable that we should start worrying.

Does your company need content for its website?  How about editing for marketing and intra-company materials?  We offer both those and more at Cain Publications.  We make your written communication shine.   If you believe we may be able to help, please email me at bob@cainpublications.com or call 520-975-2435, 9 am to 5 pm Mountain Standard Time.

By the way, this article is copyrighted and no part of it may be reproduced in any form without the express written permission of Cain Publications, Inc.

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CIO Magazine Tech Poll Reveals Momentum in Mobile App Investments

CIO Magazine Tech Poll Reveals Momentum in Mobile App Investments

IT Leaders Embrace Next Waves of IT Innovation

FRAMINGHAM, MA–(Marketwired – Dec 19, 2013) – IDG’s CIO — the executive-level IT media brand providing insight into business technology leadership — releases the CIO Magazine Tech Poll results for November 2013. According to the poll, a majority of IT leaders plan to increase IT spending in the next year across multiple edge technologies.

Results from more than 200 top IT executives reveals that organizations, on average are seeing an overall increase of 5.2% to their budgets in the coming year, with an investment focus on enabling business process innovation. Aligning with this business objective, IT leaders continue to allocate more of their budget on edge technologies, particularly, mobile apps (58%), tablets (55%), business intelligence and analytics (54%), and cloud computing (51%). Currently, 52% of enterprises are researching or piloting mobile apps, with an additional 23% already producing a mobile app for their business unit or division.

Read the rest of the article at http://www.marketwired.com/press-release/CIO-Magazine-Tech-Poll-Reveals-Momentum-in-Mobile-App-Investments-1864323.htm

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