As a landlord, you must cover your expenses of the maintenance and repairs

Examples of Damage or Excessive Cleaning Required
• Broken tile in bathroom or kitchen
• Water stains caused by open windows
• Damaged or missing mini blinds or window treatments
• Large holes in walls
• Stopped-up toilet due to debris, diapers, or other items left inside
• Doors pulled off hinges
• Gouges in walls or floors that require filling
• Cigarette burns or stains anywhere
• Stains in carpet
• Excessive dirt, grime and stickiness, on countertops, floors, etc.

However, landlords may not deduct money from a tenant’s security deposit to cover ordinary wear and tear.

Examples of Ordinary Wear and Tear
• Minor wall scuffs
• Small tack or nail holes in the wall
• Faded paint or carpet
• Worn areas in carpet or hardwood or linoleum floors
• Dusty or dirty mini blinds
• Water stains in the bathroom or kitchen caused by faulty faucets or hard water
• Dents in walls caused by doorknobs
• Mild dirt or spots on carpets

To facilitate the return of a tenant’s deposit, set up a move-in checklist and inspection for each tenant, and compare it to a move-out inspection and checklist. Conduct the move-out inspection with your tenant, and indicate which items need to be replaced or repaired. Get the tenant’s signature to prove they were present and agree to the list of damages. And don’t forget that you’ll avoid disagreements over security deposits by being reasonable—cover your expenses, but don’t gouge your tenants.

Other utilities in Seattle, such as electricity, gas, cable and internet, are all available directly to tenants, paid by tenants in their own accounts. So why the change in the water/sewer/garbage service?

The Seattle Public Utility (SPU) says that owners were ultimately responsible for water, sewer and garbage debt incurred by their tenants anyway, and they believe that financial management of tenant accounts “should lie with the owners.”

The SPU also stated that the cost of maintaining approximately 20,000 tenant accounts should be shifted from the rest of the account holders to the landlords.

As tenants close accounts when they move to another residence or out of the area, the SPU will automatically activate a new account for the owner of the property. The account will remain in the owner’s name from then on.

This change brings up potential problems for landlords, and maybe for tenants, too:

• Will tenants waste water, knowing they won’t be receiving a bill?
• How will landlords charge tenants for water, sewer and garbage, since the bill will fluctuate depending on use?
• What about tenants who qualify for utility discounts or assistance?
• How can a landlord determine how to set the rent at a rate that will cover the water bill?
• And what about the tenant whose landlord stops paying the water bill?

The SPU indicates that there is no “hard evidence” that tenants will waste water if they don’t get a bill. But in reality, people tend to use an “out of sight, out of mind” approach to most things in life—utility bills included. The biggest detriment to using too much electricity, water and telephone minutes is receiving an unusually high bill. Who doesn’t remember their mom or dad shutting off all the lights the day after the electric bill arrived?

It looks as if landlords in Seattle have one more headache to deal with.

How do you handle bounced checks from your tenants?

Many landlords we know demand immediate full payment from the tenant for the rent, any applicable late fees, and a separate handling fee. The handling fee should cover both your bank’s returned check charge and your administrative time. If the full rent payment comes in after late fees have been assessed, be sure to add them to the total due.

Check your local and state laws regarding the amount of late and returned check fees you can charge. You may be able to charge a tenant penalties and interest; or you may be limited to a flat fee.

In addition, check local and state ordinances or with a landlord/tenant attorney regarding whether late and returned check fees must be spelled out in lease agreements. In some states and localities, fees must be clearly stated in the lease or the landlord may not charge them. In others, whether or not the lease includes the fees has no bearing.

Of course, including all applicable terms and fees in the lease is always a good idea. If your lease clearly spells out the consequences for bounced checks, including late fees, repayment requirements and time limits before eviction proceedings begin, your tenants should have no questions or surprises if and when they do write a rent check without having sufficient funds to cover it.

In a perfect world, every tenant would pay their rent

In reality, tenants come with a wide assortment of likes, dislikes and financial challenges. Some refuse to keep a checking account (or can’t get a bank to open one). Others are not computer-savvy and will be unable to navigate an online rent payment system. Online payments may be difficult for the the elderly or disabled to deal with. Still other tenants just prefer to deal in cash.

Depending on your rental property and typical tenant, it might be unrealistic to demand that all tenants mail you a check or pay rent online. Making it easier for your tenants to pay their rent on time by offering options that work for everyone might take some effort—but it can pay off. Just make sure that it works for you, as well.

Some options to consider for tenant rent payments:

• Dropping off cash or money orders on-site: this is not a good idea, as it invites theft!
• Set up a rent-receiving bank account and distribute deposit slips to tenants: Indicate each name on the slip, and tenants make deposits directly to the account. The landlord can track deposits online, and usually view and print a copy of the deposit slip.
• Collect rent personally: Many landlords prefer to pick up rent payments themselves because it gives them a chance to check on the property and have some face-to-face tenant time. It can also prevent late payments, since the tenant either has to pay up or explain why they can’t. However, this can be dangerous—especially when cash is involved.
• Provide self-addressed envelopes: Whether you provide the stamps or not is up to you; many tenants find it easy to drop a money order or check in an envelope that is ready to go. It may seem like going too far to make things easier for the tenant, but if it helps your cash flow—why not?
• Direct deposit or electronic transfer: In this situation, the tenant agrees to automatic electronic transfer from their bank account to yours on a specific day of the month. Automatic bill pay is becoming the way people pay bills, so why not rent as well?

Creative rent payment solutions can help keep your tenants paying on time–and keep you in the black!

Consider online rent collection. After all, if you already pay your bills online—it makes sense to use this technology for your rental income, too. And if you asked your tenants, they’d probably vote in favor of online rent payment.

Five Online Rent Payment Services:

1. SmartRentOnline.com: Fees are limited to $2 per transaction; no monthly or setup fees are charged. This service allows you to choose who pays the transaction fee: you, your tenants, or a 50/50 split. Tenants set up their bank account information and rent funds are transferred through Automatic Clearing House (ACH) transactions to your bank. Auto-payment means the tenant doesn’t need to worry about it—rent is deducted on the same day of the month, every month. Or, tenants can choose manual payment with reminder emails.
2. Simplify’em Pay Rent: With this awkwardly-named service, $5 per tenant per month, gets you get unlimited transactions, tenant billing, and detailed reports. Full income and expense tracking is available to integrate with the company’s property management software.
3. RAMSrent offers landlords and property managers a portal through which tenants can apply for housing and pay rent. Tenants may choose to pay by check, Visa, or MasterCard, with a discount on convenience fees.
4. PayourRent.com also allows tenants to set up automatic rent payments through e-check or credit card. It offers additional features, too, such as online rental application and maintenance requests, plus a portal to connect all utilities (electric, gas, cable, internet and more) through one interface. You can even post announcements for tenants to see when they check in to pay their rent. There are no setup fees and no monthly fees for 10 or more transactions per month. Multiple bank accounts are okay, too.
5. PayClix.com is a secure site with no monthly fees and full reporting, such as email notification each time a payment is made. Landlords and property managers can choose to accept or reject each payment. This eliminates the issue of accepting partial rent payments from tenants, which can complicate eviction proceedings.

Eliminating the hassle of collecting rent checks could be worth the fees involved in online rent payment services. Check out the sites above (none of which is affiliated with E-Renter.com) and see if there is one that fits your needs!

What Should Move Out Instructions Cover?

1. 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.
2. Ask the tenant to provide an address to which you can return the security deposit, after deducting legitimate expenses for repairs or cleaning.
3. 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.
4. 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.
5. If there is a fireplace in the unit, let tenants know they must have it professionally cleaned before moving.
6. 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.
7. Ask the tenant to set the thermostat at whatever temperature you prefer.
8. 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.
9. 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.

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!

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.

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.

Landlords

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.