Posted by Teresa on August 9, 2010 under Landlord and Tenant FAQs, Rents and Deposits | 
When a tenant informs you that they will not be renewing their lease, provide them with move-out instructions. Written notice of your expectations is always a good idea when it comes to dealing with tenants.
What Should Move Out Instructions Cover?
- The first item should be that a written move-out notice is required from the tenant. This helps clear up any possibility of confusion over dates and terms of the move-out.
- Ask the tenant to provide an address to which you can return the security deposit, after deducting legitimate expenses for repairs or cleaning.
- Inform the tenant you will be contacting them to conduct the move-out inspection. Let them know this is not optional: you will need the tenant to be present to initial and sign the inspection list.
- Let the tenants know that according to the terms of the lease, the unit must be returned to the same condition it was in when they moved it. If they’ve painted a different color on the walls, they need to repaint it. If they don’t clean the unit thoroughly, you can hire cleaners and deduct the fee from the tenant’s security deposit. Any damage repair costs will also be deducted from the deposit.
- If there is a fireplace in the unit, let tenants know they must have it professionally cleaned before moving.
- Tenants might not know that the last day of the lease is the day they must be out. Inform them that any extra days will be charged a prorated amount of their monthly rent. To calculate daily rent, divide the total rent by 30.
- Ask the tenant to set the thermostat at whatever temperature you prefer.
- Utilities need to be transferred to you or turned off, according to what works for you. If ther is another tenant lined up, then obviously you don’t need to turn them off. Let the tenant know to inform the utility companies, including gas, electric, cable, water and sewer, of the last day they will be in the space. Warn them not to have the utilities transferred or turned off until the end of the last day of their lease.
- Let the tenant know where to leave any extra trash and where to drop off the keys.
One thing landlords can count on is that eventually, all of their tenants will move out. Whether it’s a good thing or bad, it can be a smooth process when you’re organized and approach each move-out the same way.
Posted by Teresa on May 21, 2010 under Landlord Tips, Rents and Deposits |
Every landlord we know would agree with this understatement: rent is important. Actually, it’s more than just important—rent is like a fertilizer that keeps your rental business growing and healthy. Rent is as necessary to your rental property business as rain is to plants.
If only collecting rent was as easy as collecting the rain when it falls from the sky. Rent collecting can be an easy task—or it can be a monthly struggle. It all depends on how you set up your leases, your management skills, expectations, and consequences.
Lease Language: Make sure your lease clearly states the amount of the rent, the day of the month rent is due, any grace period, late fees and when they are added, and number of days until eviction action is taken for non-payment.
Terms of Acceptance: Let multi-roommate units know that you do not accept multiple checks—you don’t want the hassle of chasing down several tenants for rent. Let your tenants figure out who owes whom how much, and collect one check from someone. Also, it’s best to avoid accepting partial payments. Evictions for non-payment are difficult to obtain if you’ve accepted a payment!
Manage the process: It’s up to you to determine how things are going to run in your rental property business. After all, nobody else is taking on the responsibility and liability of owning rental property. So manage your business like the boss that you are. Keep excellent records, establish procedures, and stick to them. Let your tenants know that you don’t waive late fees, and that you will file for eviction if they don’t pay within an agreed-upon time frame.
Expectations and consequences: If you’re managing your rental property well, your tenants know exactly what is expected for rent: they are to pay you on the day the rent is due, not later; they are to pay with one check; they are not to bounce checks; and they are to notify you if any of the previous terms are impossible, due to circumstances beyond their control.
It’s your job to clearly communicate your expectations to every tenant. Let them know up front the consequences for not meeting your expectations, too. Not every tenant has been asked to strictly keep to the terms of a lease. Let your tenants know that you expect them to, and they will be more likely to do so.
More and more landlords are turning to online rent collection. It’s a convenience for you and for your tenants. There are many services to choose from, so ask your friends in the business if they’ve had good experiences with online rent collection. It certainly eliminates the need to make runs to your post office box and the bank, as well as a tenant blaming the U.S. Postal Service for late rent checks!
Posted by Teresa on April 16, 2010 under Landlord Tips, Landlord and Tenant FAQs, Rents and Deposits |
Ask ten landlords about rent due dates and last charges, and you’ll probably get ten different answers—none of them wrong. The thing about running a rental property business is that you get to establish your own procedures and practices to suit your needs—within the limits of federal, state, and local laws, of course. And if they don’t work for you, you can always change them (your procedures, not the law)!
Here we present the results of an informal survey we conducted among four landlords we know:
Landlord #1: This landlord is a stickler for rules. Rent is due on the 1st of the month. It’s late on the 2nd, which is when he posts his pay or quit notice. He doesn’t mess around—and he has excellent cash flow numbers to back up his policy. “A grace period means rent isn’t due until the grace period is over,” he says. Using an online rent payment system helps—all of his tenants arrange to pay their rent online on the 1st of each month.
Landlord #2: Rent is due on the 1st, and a 10% late fee is tacked on the 4th. Each day after, $10 more is added to the late fees. The eviction notice, however, is posted on the door on the 3rd of the month—to encourage payment.
Landlord #3: With many older tenants who depend on Social Security and Section 8, this landlord knows that rent due on the 1st doesn’t work. So, while rent is due on the 1st, there is a grace period until 5 p.m. on the 4th. On the 5th, the 3-day eviction notice is posted; if rent is paid during that time, the landlord adds a $50 late fee.
Landlord #4: This landlord wins the “flexibility” award. Rent due dates are negotiated with each tenant during the lease signing, depending on when the tenant can pay each month. Some have Social Security arriving on the 8th of the month, so that is when their rent is due. Others are paid on the 1st and 15th of the month, so the rent is due on the 2nd. Still others want to pay out of the second paycheck, so theirs is due on the 16th. All of these due dates would cause some landlords to pull their hair out—but this woman says when it comes to money that is owed to her, she can easily keep track of it.
The most important advice these landlords give is to check your local laws—you may not be able to charge a late fee at all, and many states will dictate when you may post an eviction notice.
Posted by Teresa on March 2, 2010 under Landlord and Tenant FAQs, Rents and Deposits |
While some landlords avoid bounced checks by requiring cash or money orders from tenants, most still accept checks—and the risk that goes with that. Studies show that while the number of online payment options grows, the number of checks being written is declining. Still, plenty of folks pay their bills—including rent—with checks.
What are your options when a tenant’s check is returned by your bank?
Depending on the state in which you do business, writing a bad check can range from a misdemeanor to a felony. And, bad checks can be treated by law enforcement as a serious matter—or as a nuisance. Follow these steps to avoid the need to involve your local police or sheriff’s department.
- The first thing most landlords do is to demand full payment from the tenant, including the amount of the check, plus a handling fee. Make sure this fee covers any bank charges for returned checks and your bookkeeping time.
- Check your state and local laws to determine if there is a limit to the amount you can collect as a returned check fee. Some states allow for penalties and interest; others limit landlords to a flat fee.
- Give your tenant a time limit to pay in full. Many landlords and property managers begin eviction proceedings if they have not collected the full amount due by the end of the time limit.
- It is perfectly reasonable to require payment in the form of a money order or certified check—and to require subsequent rent be paid in the same way.
- If you charge a late fee for late rent, remember your tenant will be responsible for that if they pay in full after the agreed-upon date. So add it to the total tab.
- When drawing up lease and rental agreements, be sure to include a provision that covers your policy on returned checks. Include the compensation language, time limits, and late fees, and your requirements for money orders and/or certified checks.
Posted by Teresa on February 3, 2010 under Landlord Paperwork and Forms, Landlord Tips, Rents and Deposits |
Landlords have many options for collecting rent from tenants—some more secure than others. Take a look at our readers’ tips and decide which is best for you.
1. In person:
A dicey choice, for sure, and one of the more old-fashioned methods for rent collecting. Some landlords physically visit tenants and pick up rent, or tenants drop it by their office.
Pros: You see your tenants every month and can check in with them. If you’re personally picking up the rent, you can check on your property. You’ll have the rent in your hand—no “check’s in the mail.”
Cons: If you’re collecting in cash, it’s dangerous. Depending on your schedule and number of rental units, it could be inconvenient and time-consuming (especially if tenants are away or don’t have the rent ready for you when you arrive).
2. By mail: A time-proven method.
Pros: Landlords don’t need to leave the comfort of your home or office. It’s convenient for tenants to write and mail rent checks on their own schedules.
Cons: You’ll often experience a time lag between the day rent is due and when it is received. Who makes the trips to the post office to collect envelopes? How often will all rent checks arrive at the same time? What if your bank charges per deposited item? And everyone’s favorite: How often will you hear that a check is in the mail, got lost in the mail, or was rerouted to Peru on its way to your PO Box?
3. With an online pay system:
Property owners can set up an online payment system account (such as Pay Pal) so tenants can pay online either with a credit card of through a bank account. Or, landlords have several options with online rent payment portals that are easy to set up and use.
Pros: no checks to deposit—rent funds are deposited directly to your bank account of choice. No waiting for checks to arrive in the mail. A much more secure system to receive payments—no cash involved. Some rent collection packages offer reports and other valuable information to help run your business more efficiently.
Cons: there are usually transaction fees involved—so if the rent is $1000, you could actually receive 2% to 3% less. Transfers can take a few days. If tenants pay by credit card, there is always the possibility they will dispute a charge and cause a chargeback, which ties up the funds until the dispute is settled. Not all tenants have Internet access.
4. Direct deposit/Electronics Fund Transfer (EFT):
Pros: More tenants are paying their bills online. Automatic transfer of rent is one less hassle for them. Funds are automatically deducted every month from tenant’s account and deposited to yours. Safe, secure, and no checks to wait for and then deposit.
Cons: There is the possibility that tenants will not have the funds available when rent is due. Plus, there is the small detail of another form to fill out, explain to tenants, and obtain their authorization.
Whether you collect cash, checks, money orders, or just review your bank statements online and watch your funds transfer in, the best method of rent collecting is an ongoing debate with landlords and property managers.
Posted by Teresa on December 30, 2009 under Landlord and Tenant FAQs, Rents and Deposits, Screening and Background Checks |
If one of your New Year’s Resolutions is to increase your cash flow, one way to do so is through application fees. Landlords and property managers use these fees to recover their expenses for background screening, credit checks, and the time it takes to vet a potential tenant.
If you’re really lucky and have several applicants for the same unit, you may opt to screen the best (on paper) applicant first and refund the fees to the remaining applicants. Or, you can screen all at once and choose the strongest applicant. In this case, the other applicants would not receive refunds, since the background check was conducted.
If you decide to keep application fees to cover expenses, avoid issues with applicants by stating very clearly both verbally and on the written application that fees are non-refundable. You’ll also want to determine your policy for refunding fees in the event the tenant changes his or her mind about going through with the rental agreement.
Obviously, a landlord would want to avoid accepting any deposit funds until all background screening has been completed and the tenant’s application approved.
Check your state and local laws for guidance—laws vary greatly and you could face limitations on keeping fees and/or time constraints for returning them. If your application fee policy is questioned, be ready to prove expenses with accounting records. Keep the application fee on a different line item from security deposits and rents in your books.
Smart—and honest—landlords also avoid questions of integrity around fees by only accepting applications for units that are truly available, and by doing some initial screening prior to running the tenant background check. If the applicant’s income is below your minimum, do everyone a favor and just turn down the application.
If one of your New Year’s Resolutions is to increase your cash flow, one way to do so is through application fees. Landlords and property managers use these fees to recover their expenses for background screening, credit checks, and the time it takes to vet a potential tenant.
If you’re really lucky and have several applicants for the same unit, you may opt to screen the best (on paper) applicant first and, upon approval, refund the fees to the remaining applicants. Or, you can screen all at once and choose the strongest applicant. In this case, the other applicants would not receive refunds, since the background check on each was conducted.
If you decide to keep tenant application fees to cover expenses, avoid issues with applicants by stating very clearly both verbally and on the written application that fees are non-refundable. You’ll also want to determine your policy for refunding fees in the event the tenant changes his or her mind about going through with the rental agreement.
Obviously, a landlord would want to avoid accepting any deposit funds until all background screening has been completed and the tenant’s application approved.
Check your state and local laws for guidance—laws vary greatly and you could face limitations on keeping fees and/or time constraints for returning them. If your application fee policy is questioned, be ready to prove expenses with accounting records. Keep the application fee on a different line item from security deposits and rents in your books.
Smart—and honest—landlords also avoid questions of integrity around fees by only accepting applications for rental units that are truly available, and by doing some initial screening prior to running the tenant background check. If the applicant’s income is below your minimum, do everyone a favor and just turn down the application.
Posted by Teresa on November 17, 2009 under Landlord Tips, Rents and Deposits |
Rent collecting is the number one headache we hear from landlords. Lots of tenants, it seems, cannot seem to pay on time. Plus, there’s the time wasted making collection phone calls, picking up rent personally, dealing with checks and bank deposits, bad checks, and visits to the post office.
More people than ever pay their bills online. Health clubs have automatically debited their monthly fees from members’ accounts for years. Your tenants probably already pay insurance and car payments automatically every month. Why not offer them a way to pay their rent online, too?
Rentmatic is an automated rent payment service that debits your tenants’ bank accounts on the day rent is due, and transfers the funds to your designated account. It’s free to sign up, but they charge a fee of $3.95 for each unit that is on the automatic system (there is a discount for 25 units or more). The company also offers dynamic features like free data storage and an online tenant communication, where tenants can request maintenance and the landlord can email all or selected tenants. And, they offer tenants an incentive to pay online, with a chance to win a $50 prize every month.
ClearNow collects and transfers rent payments through the ACH protocol. The service is $14.95 per month, including one tenant, plus $2 per additional tenant. The service sends reminder emails eight days prior to debiting tenants’ accounts, which is done on the first banking day of the month. Three days after debiting tenant accounts, the funds are credited to the landlord’s account.
Required paperwork for online rent payment services is minimal; you can incorporate the authorization into your new tenant paperwork easily. Be sure to keep copies of all signed agreements and authorizations in your tenant files.
We recommend you also automatically
screen all tenants as part of your application process. For more landlord resources, including forms and information on
tenant screening, turn to
E-Renter.com. .
Posted by Teresa on October 20, 2009 under Landlord Tips, Marketing for Landlords, Rents and Deposits |
If you’re a landlord with a vacancy or two, fall can be a difficult time or year to fill them. Coupled with the renter’s market we’re in, you could need to think more creatively to turn those vacancies into occupied rentals. Here are some great ideas to try if you want to attract great tenants:
Lower the rent: lowering your rent might be the last thing you want to do, but sometimes it’s necessary. Do you know what the market rents are for similar properties in your area? If you haven’t checked them out lately, you may find that they’ve dropped—while you’re still asking a previum for your property. HUD publishes the Fair Market Rents for every metropolitan area in the United States, which is accessible on their website: http://www.huduser.org.
Landlords can also check out rentometer.com, which uses a proprietary algorithm to tell you if the rent you are charging for a property is too low, way too high, or reasonable. Just enter the address, number of bedrooms, and rent you are considering, and you’ll get an idea of what other units in the neighborhood are renting for. Smart tenants know. You should, too.
Waive one month’s rent: If your rent is where it should be, or you don’t want to set the precedent of lowering it, offer a free month’s rent to a qualified tenant. Mathematically, it could work out the same for your bank account, but psychologically, “free” is a major enticement to the tenant. It’s up to you to give the free month up front, in the middle, or at the end of the lease.
Upgrade or pray the utilities: If your rental property has basic cable, offer to pay for an upgrade to premium. Or give the tenant high-speed wireless Internet access for six months or a year. You could even pay the water bill, with a monthly dollar limit to discourage waste.
Replace the carpet, blinds, or an old appliance: If you have a great prospective tenant that you’re afraid will walk away, offer new carpeting if your unit needs it, or upgraded mini-blinds, or install a new stove or refrigerator. Most of these upgrades can be amortized over several years’ worth of tenants—but might be just the thing to entice one to move in now!
Posted by Teresa on October 2, 2009 under General, Landlord Tips, Rents and Deposits |
Allowing pets or not: that is the question. For many landlords, the answer is not quite as simple as it once was. For one thing, it seems that more tenants than ever have or want pets. They expect more rental units to accept pets. And it’s a renter’s market, with a flood of rental properties coming on the market and vacancies at all-time highs in some areas.
If you are a landlord who continues to hold a “no pets” policy, then you are limiting your pool of available tenants—perhaps by half, according to the Humane Society of the United States. If all of your rental properties are leased, then you probably don’t need to revisit your policy—but if you have empty units, a “no pets” policy could be hurting you. If you are considering allowing pets, here are some tips that can help make it a win-win situation for you and your pet-loving tenants.
In a perfect world, all pet owners are responsible and can afford to take care of their four-legged “children.” They happily pay extra pet deposits and will take care of any damages that their dog or cat inflicts on your property. They make it easy to be a landlord in a pet-friendly world! On the other side of the spectrum are the neglectful pet owners, who don’t take proper care of their pets, don’t care where they relive themselves or if they tear up the carpet, yard, or woodwork. Keep these folks in mind when you write your tenant pet policy.
First, determine the type and size of pets you will allow in your rentals. You can decide if you want to limit tenants to keeping just dogs, or dogs and cats, or everything from iguanas, to snakes, to birds. Next, decide if you will block certain breeds of dogs, such as so-called “dangerous” breeds, or limit dogs to a maximum weight.
You can reserve the right to screen your tenants’ pets just as you screen tenants. Meet the animal to see if they are friendly or badly behaved. Does the tenant have control over the pet—or vice versa? Consider how long the tenant has had the pet—if it is brand new to the tenant, the unknown factor could be more than you want to take on.
Consider charging a pet security deposit on top of your standard deposit. Most pet owners are comfortable with paying extra for their pets. Check your state and local security deposit guidelines for legalities.
Outline your tenants’ responsibilities clearly in the pet policy. Indicate where the dog is allowed, that it must be kept on a leash outside if that’s what you desire; spell out that the tenant must properly dispose of waste; and that excessive barking or other noise will not be tolerated.
Make sure your liability insurance covers tenant pets; consider requiring your tenants with pets to carry their own renter’s insurance as well. Check with your insurance agent for specifics.
Check the pet’s references, too! If the tenant has had his or her cat, for example, in previous rentals, the landlord or property manager will usually tell you exactly what they faced when the tenant vacated the property. Some cats can inflict a great deal of damage—especially when they are not altered—so ask for references—and check them!
According to the Humane Society of the United States, millions of animals are abandoned to shelters every year because their owners are moving or because a new rental does not allow animals. Writing a strict tenant pet policy and communicating your expectations to your tenants can allow some of those pets to remain with their families—and keep your rental units filled.
Posted by Teresa on August 25, 2009 under Landlord Tips, Rents and Deposits, Tenant Credit Checks |
As the housing marketing continues to struggle, many landlords are finding themselves in a tough spot. Perhaps you’re one of them: vacancies are rising, your bank is tightening up your credit line and won’t refinance your mortgage, and you really need a positive cash flow.
If your tenants are smart, they know that in some areas, it’s a renter’s market—and they could be planning to ask you for a rent reduction, especially if they feel they’re paying more than the market dictates.
What should a landlord do if a tenant asks for lower rent?
- Determine whether or not your tenant has a valid case for a reduction in rent. Look at your local rent market, and compare your rents to similar units. You should always be aware of the fair market value in your area—and there are plenty of resources to guide you.
- Analyze your cash flow. If you determine your rent is above market value, but you can’t lower the rent and stay profitable, look for ways to reduce expenses. Perhaps you can take over landscaping duties from your contracted service. Or, perform small repair and maintenance yourself for awhile. You could even offer a compromise, such as keeping the rent the same, but covering some utility costs.
- Analyze the tenant’s history. Does the tenant pay on time every month? Have there been any complaints against them? How careful are they with your property? If they have been a great tenant, compare the rent reduction request with the hassle of finding a new tenant. You may find that peace of mind will make the reduction more palatable.
- Advise that you will be conducting a tenant credit check—and then follow through. If your tenant’s credit status has changed since the lease was signed, a thorough screening is the only way to find out. You may discover credit problems that indicate the tenant is not a good candidate for lower rent negotiations.
As a landlord, you are in a constant balance act to obtain and keep good tenants who pay on time. As the economy starts to slowly recover, you may have to concede to belt-tightening or reducing rents in order to attract and keep your best tenants.
When a tenant informs you that they will not be renewing their lease, provide them with move-out instructions. Written notice of your expectations is always a good idea when it comes to dealing with tenants.