When Tenants Want to Sublease

Posted by Teresa on March 10, 2013 under Lease and Rental Agreements, Tenant Screening & Background Checks | icon: commentBe the First to Comment

tenant screeningLandlords typically include language in the lease that prohibits subleasing without permission. But what exactly is subleasing, when and why would a tenant want to do it, and how should landlords proceed?

Subleasing is different from transferring a lease to another party. In the latter situation, another tenant takes over a current lease and the original tenant is absolved of any responsibility for its terms.

In subletting, the subtenant is granted the rights contained in a sublease, but the original tenant is still responsible for the terms of the original lease. In essence, the subtenant is renting from the original tenant, who is still bound by the contract with the landlord. For example, a subtenant is allowed to live in the unit but must pay rent. If they do not, the original tenant is still liable for the missed rent.

Tenants might be interested in subleasing if they are going away for an extended length of time, but wish to return to their apartment. It wouldn’t make sense to go to the trouble of subleasing for a trip of a few weeks. But if your tenant were planning on traveling through Europe or South America for three months, subleasing is a way to cover the rent without having to break the lease and start over when they return.

Tenants who are interested in subleasing may ask permission, even if the lease states you do not allow it. Remember, it’s always up to the landlord whether or not to allow the sublease. If you decide to allow a tenant to sublease your property, follow these tips for a more successful outcome:

  • Write up a Consent to Sublease agreement between yourself or your company and the two parties.
  • Include elements such as effective date, the tenant and subtenant’s names, the property address, and the monthly rent.
  • Be sure to state that the tenant is still responsible for his or her duties under the original lease.
  • If you decide to allow subleases, be sure to create a policy. Don’t let one tenant sublease, and forbid another from subleasing. This could lead to charges of discrimination.
  • Be sure your tenant also has a sublease agreement with the subtenant. This is a different document from your Consent to Sublease agreement, and covers the legalities between those two parties. If expectations are not made clear, you could find yourself stuck in the middle of their disagreements.
  • Keep in mind that if the subtenant damages the unit, leaves before the lease expires or breaks any other condition of the lease, you may hold the original tenant responsible. He or she can will have to get satisfaction from the subtenant.
  • Just as you screen all your prospective tenants before signing a lease, you should make it clear that any subtenants will also be required to undergo tenant screening.

Subleasing can be a hassle, but if you have good tenants whom you want to keep, allowing them to sublet while they’re away can make sense. Remember, it’s completely up to you!

Start your tenant relationship off right by knowing who you’re leasing to. Protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.

Can Landlords Ban Firearms From Their Properties?

Posted by Teresa on March 7, 2013 under Landlord and Tenant FAQs, Legal | icon: commentBe the First to Comment

tenant screening, tenant credit checkA landlord recently asked a question regarding firearms:


“Since the Newtown, Conn. shooting, I’ve been thinking that I’d rather not have any guns in my properties. I’m concerned that a tenant or a child could be shot by accident or as a result of a domestic disturbance. And what if a shot went through the wall to another tenant’s apartment? Can I ban firearms?”

It’s true that guns and gun laws are a hot news topic. Many landlords are wondering if they have the right to ban firearms from their properties. The answer in most places is “yes.” It’s always best to check your state and local laws to be sure. Minnesota, for example, does not allow landlords to restrict the lawful carry or possession of firearms by tenants or their guests.

While the second amendment to the U.S. Constitution is widely quoted by firearms owners and enthusiasts, it only covers the government’s response to guns held by private citizens. Just as landlords can ban pets, waterbeds and campers, they can ban guns from their properties.

If they prefer to keep a gun-free property, landlords can choose not to rent to gun owners, who, unlike persons with disabilities or other groups, are not a protected class.

Now, we’re not saying that banning guns will make a landlord more popular. It might make prospective tenants angry. Some gun owners might ignore the rule and bring guns onto the property anyway. If you do find a firearm on the property, the tenant would be in breach of the lease.

But if you feel better instituting a no-guns rule, check with an attorney versed in landlord-tenant law, or check your state’s gun laws before instituting it. For tenants with current leases, you’ll have to wait until renewal to add the new provision. Some may choose to move out. And of course, once you have a signed lease, you would not be allowed to conduct a search of a tenant’s unit to look for firearms.

What Tax Deductions Can Rental Property Owners Take?

Posted by Teresa on March 1, 2013 under Landlord Tips, Legal | icon: commentBe the First to Comment

tenant screeningFirst of all, let it be known that we do tenant screening—not tax returns. Therefore, please do not construe this post as tax advice. Get that from a professional. The following is general information that landlords might find useful.

The housing bubble turned lots of homeowners into landlords, when they couldn’t sell their properties and instead had to rent them out to tenants. These new landlords may not realize what veteran rental property owners know: that one of the advantages of being in the business is the opportunity to offset income by deducting certain expenses from their tax returns.

When you own rental property, you can generally deduct the following:

  • Mortgage interest
  • Depreciation
  • Taxes
  • Insurance
  • Maintenance and upkeep
  • Utilities paid by you
  • Upgrades to rental units
  • Advertising expenses
  • Professional fees (tax advisor, lawyer, bookkeeper)
  • Website expenses
  • Local travel (including meeting with tenants, checking on units, traveling to hardware stores for parts, etc.)
  • Long distance travel related to rental properties
  • Cleaning expenses
  • Painting, carpet replacement and other repairs done between tenants
  • Home office expenses

Rental property offers other benefits, as well. Remember, one day the mortgage will be paid off and the income can help with your retirement, too!

Find a good tax advisor and make sure you get all the deductions you’re entitled to. Make your rental property work hard for you, and don’t pay more in taxes than is required.

Investors Look to College Towns as Students Face Higher Costs to Live On Campus

Posted by Teresa on February 27, 2013 under Housing Trends, Landlord Tips | icon: commentBe the First to Comment

tenant screening, tenant background checkCollege expenses are climbing higher and higher. Not only are tuition and fees going up, but so are room and board. Parents and independent college students are looking for cheaper alternatives to campus housing.

And more investors are looking into this market, because college student housing can be a lucrative investment. When housing is hard to come by, vacancy is not usually a problem. Nor is getting market rents or above.

While renting to students has its downsides, the parents are often footing the bill, so the rent checks come in regularly from mom and dad. After all, they don’t want their kids coming home, so they’d better pay the rent, right?

Here are some tips for renting to students:

  • Make sure you have an solid lease. Include details about noise restrictions, unauthorized roommates, damages and any other expectations you have for your tenants.
  • Have each student who will be living in your rental property apply separately, put each on the lease and have their parents or guardians co-sign the lease.
  • Screen each potential tenant. Tenant screening for younger college students might seem unnecessary, but most students have a credit history—and many have criminal histories. You nee to know who you are renting to.
  • Let each tenant know that they are jointly and individually responsible for the entire rent payment. If one roommate can’t pay his or her share, it is up to the rest to cover it. Make it clear that you won’t accept partial rent payments.
  • Enforce your rules whenever there is an incident. Young people often push limits to see how far they can go. When they see you mean business, they will—hopefully—act accordingly.
  • Make sure your insurance policy covers renting to students. Many companies are starting to restrict coverage in certain towns.

Countless landlords successfully lease their properties to college students. And many of them actually enjoy it! Just keep an eye on your property and the lines of communication open.

Start your tenant relationship off right by knowing who you’re leasing to. Protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.

Why Landlords Should Require Renter’s Insurance

Posted by Teresa on February 22, 2013 under Landlord Tips, Lease and Rental Agreements | icon: commentRead the First Comment

tenant screeningExperienced landlords know: anything can happen in the rental business. Natural disasters strike, vandals damage property, fires break out and thieves are everywhere.

Of course, rental property owners carry insurance protection on their properties to protect themselves from liability and loss. Most policies cover damages and accidents that occur on the property, but not the tenants’ possessions.

Tenant’s insurance, or renter’s insurance, covers personal property in a rental home or apartment against fire, theft, water damage (but not flooding) and vandalism. It also protects tenants in the event that someone is injured in their unit.

It’s a good idea for tenants to buy an insurance policy, but can landlords require it? Absolutely! In fact, many do and for good reasons:

  1. Tenants with renter’s insurance will be less likely to try to sue the landlord in the event of a loss or injury, since they have their own coverage.
  2. Renter’s insurance can protect rental property from tenants’ misuse or negligence. For example, if a tenant floods the unit, his or her insurance will pay for the cleanup. Those without renter’s insurance could just move out and leave the mess for the landlord to deal with.
  3. Having tenants with their own insurance can help landlords avoid claims on their own policies.
  4. Renter’s insurance can protect tenants and landlords against claims in case of dog bites from tenants’ pets. The renter’s policy can cover the claim, so the injured party is less likely to sue the landlord.
  5. The peace of mind in knowing your tenants are covered in case of a fire or other disaster can be worth its weight in gold. Insurance proceeds can replace clothing, furniture and other necessities, as well as pay for living expenses in case tenants have to temporarily relocate.

If you do require renter’s insurance, make sure it is clearly explained in the lease agreement. It’s also a good idea to be named as a secondary insured, so you can be notified of lapses in coverage.

The cost of renter’s insurance is often less than $20 per month. If you have prospective tenants who balk at the insurance requirement, perhaps they are not qualified to live in your properties!

Common Landlord Mistakes

Posted by Teresa on February 19, 2013 under Landlord Paperwork and Forms, Landlord Tips | icon: commentBe the First to Comment

tenant screening, tenant credit reportNot raising the rent: most landlords raise the rent at regular intervals, to cover increases in maintenance costs and property taxes. Some do it annually, or whenever the lease is up for renewal. Others hesitate to raise the rent on good tenants who pay on time, for fear they will move out. But if your costs are increasing, you can’t keep rents steady—even for the best tenants. Besides, if new tenants move in and find out you’re charging them more than an existing tenant (and they will find out), they won’t be happy.

Treating tenants differently: To continue, it’s all about treating tenants equally. If Unit A pays $600 per month, so should Unit B. If there is a no smoking rule, it must be enforced with all tenants. Don’t respond quickly when “nice” tenants have a leaking faucet, but make “problem” tenants wait. Failure to be fair and equitable to all tenants could leave you vulnerable to a fair housing complaint. It’s also a lot easier to explain to tenants asking for exceptions that you have to apply the rules equally to everyone.

Failure to conduct tenant screening: Time and again, landlords go on their “gut feeling” about tenants. That’s a mistake in two ways: 1) Making decisions based on appearance, the type of car a tenant drives or other arbitrary qualifications sets you up for discrimination claims. 2) No matter how long you’ve trusted your gut feelings about prospective tenants, you could be dead wrong. Check employment, previous landlords, conduct tenant background screening, and run a credit check on every applicant.

Asking the wrong questions: Here’s another potentially harmful situation that’s easy for landlords to get into. If you ask a prospective tenant if they plan on having children, or a female tenant if she’s married, you could be breaking the law. Keep things strictly business and avoid asking tenants personal questions.

Being unclear on policies and expectations: Clarify each policy, including rent payments, security deposits, parking, pets, smoking, maintenance schedules, excessive noise, garbage pickup, common areas, etc. Explain how security deposits work, and let tenants know up front how you handle deductions when they move out.

Letting tenants pay rent late: For some reason, many landlords and tenants play a little game every month where the rent is due on the first, but there’s a grace period of a few days, so the tenant doesn’t pay until the grace period is over, but then when they miss that deadline, the landlord gives them a few more days… and so on and so on, every month. Don’t be that landlord. If rent is due on the first, make sure your tenants know it. Don’t allow partial rent payments, either. And when they’re late, follow through with whatever consequences are laid out in your lease. Make it easier for everyone by allowing online rent payment or automatic payments from the tenant’s checking account to yours.

Holding on to Good Tenants

Posted by Teresa on February 15, 2013 under Eviction, Lease and Rental Agreements | icon: commentBe the First to Comment

tenantscreeningblog, tenant screening, background checkEven in a good rental market, it’s important to hold onto good tenants. What defines a “good tenant?” Well, nobody’s perfect, but if your tenant pays the rent on time, follows your rules and doesn’t cause any problems, that’s pretty close!

But good tenants sometimes fall short, and it can be tempting to draw the line and get rid of them in favor of an even better tenant. Or you might just cross your fingers and hope they move at the end of the lease.

Unless a tenant is breaking the terms of the lease by paying rent late, keeping pets that aren’t allowed, smoking or making too much noise (or any of the long list of grievances landlords have against their tenants), it might be worth your while to let them stay or to entice them to renew their lease.

Keeping good tenants is just good business. Turnover costs money. When a unit is empty, it creates no income. In the meantime, you still have associated overhead costs. Taxes, mortgage expense, lawn service and interest will go on after the tenant leaves. It might not take long to get a new tenant, but then again, it could be a month, two months or longer.

Getting new tenants costs money, too. You’ll need to clean the unit, have the carpets professionally cleaned, touch up the paint (or do a complete repaint) and do all the necessary repairs. Plus, you’ll need to advertise the rental, conduct tenant screening on applicants, and take the time to show the unit.

Empty units look bad to existing and potential tenants. Your other tenants may wonder why others are leaving. Prospects may see “for rent” signs in front of your property too frequently and wonder what’s wrong.

On the other hand, stable tenants mean a stable property. Stability is very valuable in the long run, both financially and in terms of landlord sanity!

While no landlord or property manager should ever allow tenants to pay the rent late, break the terms of the lease or walk all over you, good tenants are worth keeping.

Start your tenant relationship off right by knowing who you’re leasing to. Protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.

Roommate Agreements: Help Roommates be Better Tenants

Posted by Teresa on February 13, 2013 under Landlord Paperwork and Forms, Landlord Tips | icon: commentBe the First to Comment

tenant screening, tenant background checkAs the economic recovery slogs on, tenants continue to double- or triple-up in rental units. In many cases, landlords are not aware of roommate situations; in others, property managers approve one roommate, only to find out he moved out months ago and has been replaced by two others.

Tenants often think that once they sign a lease, they can have anyone they want move in to help pay the rent. For many reasons, this is a bad idea. First, landlords alone get to decide who lives in their properties. Second, tenants don’t always make the best choices in roommates. Third, it’s potentially dangerous to have unknown people living in your apartment building or single family rental house.

That’s why most landlords insist that everyone living in a unit must apply and be on the lease. The property owner may then conduct thorough tenant screening, check credit reports and verify employment and income.

Tenants may think it’s easier to just have a friend move in and hope the landlord doesn’t notice. But it’s actually better for tenants if the new roommate is vetted and approved. Who wants to find out a month or two into the new living arrangement that their roomie is actually unemployed, has poor credit or has a felony record?

Smart landlords will stipulate in the lease that no roommates are allowed without the permission of the owner, and that all residents of a unit must be on the lease. To facilitate good roommate relationships and establish legal responsibilities, you might want to provide tenants with a Roommate Agreement for all to sign and keep with the lease.

Roommate Agreements

  • Include language that each tenant/roommate is liable for all terms of the lease or rental agreement. Have your attorney review it before providing to your tenants.
  • Include things like the lease term, start date and lease renewal procedures.
  • Have a place for each roommate’s name, Social Security Number, and emergency contact.
  • List some roommate rules, stating which share of the rent and security deposit each is liable for, which rooms are designated shared and private, and how damages will be handled.
  • State the procedure for paying utilities: who gathers the funds and pays the bills, when the bills are due and consequences for late payments.
  • Cover parking, garbage and recycling, and other details.
  • Determine how guests will be handled, where they may stay and for how long.
  • Include guidelines for quiet hours, pets, cleaning, food and other details.

Putting agreements in black and white can go a long way to reducing tension and improving relationships between roommates. And helping your tenants have better roommate relationships can only be a good thing for you as a landlord or property manager.

Landlord Basics: Which Applicant Gets a Lease?

Posted by Teresa on February 7, 2013 under Rents and Deposits, Screening and Background Checks | icon: commentBe the First to Comment

tenant screeningIf you’re like many landlords, you often have more than one qualified tenant wanting to sign a lease. Let’s assume you’ve already gone through your standard process: application, application fee, tenant background screening and tenant credit check, verifying employers and income, and checking references. Now you have two or more approved prospects, and only one vacant unit.

What do you do? Here are a few guidelines to help you decide:

  • Who wants to move in first? Each day your unit is empty, you’re losing money. We give extra points to the tenant whose move-in date comes first. How do you know? Hopefully, you’ve either had this conversation at some point in the process, or your lease application contains the question, “When do you want to move in?”.
  • Who has the security deposit and first month’s rent ready? Obviously, it’s a good thing to have all your prospective tenants ready to pay you rent and deposit, but this isn’t always the case. If any approved prospects need some time to come up with the money, move on. And cash is always nice. Let all your applicants know that you will continue accepting applications and showing the unit until the first month’s rent and security deposit are paid.
  • Don’t give in to your emotions. You may hear that a prospect can’t pay the security deposit until they move out of their current place. You may hear that they need a week or two to get the rent and deposit together, but they definitely want the unit. They might be nice people, and excellent tenants, but… don’t let them get the upper hand. Don’t forget that he or she may not get the deposit back for awhile, and may not get it all back. So they need to be able to come up with full rent and security deposit for you.
  • Be realistic. If a good prospect is looking at your vacancy on the 25th of the month, and want you to hold it until the 1st, it’s not likely you’ll have anyone else ready to move in before then. You can always ask for a deposit to hold the place, and convert it to the security deposit. Adjust your procedures when it makes good business sense.

For More Effective Rental Advertising, Add Photos

Posted by Teresa on February 5, 2013 under Landlord Tips, Marketing for Landlords | icon: commentBe the First to Comment

tenant, screening, background checkHave you changed the way you advertise your rentals? Or, are you still sticking to the simple, short description? Whether you advertise in print, on the bulletin board at the local Laundromat or online, you may be missing something: photos.

Your prospective tenants are a cross-section of the population at large, and as such, you can count on one thing—they’re visually focused. Think about it: everyone is filming everything they do, eat, drink, see, wear and buy. Photos of great-looking plates of food appear on Twitter and Facebook as soon as the server sets them on the table. Kids are taking pictures with mom’s and dad’s phones when they can barely speak. And every vocal or musical performance seems to be seen through the lens of a phone video camera than through the eyes of the beholders.

People like pictures. So, along with the basics: number of bedrooms and bathrooms, location, contact information and rent, you should definitely include as many photos as possible in your rental advertising.

Here are a few tips for taking photos of your rental property:

  • Include outside shots: This will help prospective tenants find the property.
  • Think about making rooms and closets look spacious. Stay in the corner and shoot from above.
  • Keep the camera level by propping it on a box or counter whenever possible.
  • Of course, the unit must be immaculate. Wait until the cleaners, painters and repair people have finished their work. You want it to look ready to move into.
  • Pay attention to the light. Avoid taking photos during the brightest part of the day. Late afternoon or evening light is good.
  • Be sure to take photos of any amenities, such as storage areas, swimming pools, laundry rooms or workout facilities.
  • Place a large potted plant in the shot to add some interest. Make sure it’s healthy.
  • If you have lovely grounds, nice landscaping, trees and flowers, be sure to include them in your photos.
  • Don’t take photos of residents—especially children. You could be violating their privacy.
  • Remember to avoid things that could be considered discriminatory. Don’t take photos of the nearby church or school, or you could be implying that you prefer churchgoers or families with children. However, it is perfectly okay to include a shot of the cozy coffeehouse down the street.

Even in a strong rental market, you need to be competitive in order to attract the best possible tenants. Write a strong ad and include photos, which is easy to do when you advertise online. And if you don’t know how to upload photos to a website, ask any young person in your family or neighborhood for help. Or, hire someone to handle it all for you.