Posted by Teresa on March 31, 2011 under Landlord Tips | 
So, you’ve landed a new tenant for that vacant rental you’ve been showing. He paid the deposit, and you’re in the tenant background check phase of your due diligence process. Now you can take down the flier you posted at the local coffee shop, stop showing the unit and cancel your ads, right?
Sure, if you’re betting that the deposit check won’t bounce, the tenant credit report will come back at an acceptable level and the tenant’s references will all check out. But smart landlords know that anything can happen between the lease application and the lease signing. Tenants change their minds every day. References don’t check out. And credit scores are more iffy than ever these days. Maybe showing the rental property to additional prospective tenants is the better way to go.
Every landlord should have a back-up plan, just in case the shiny new tenant doesn’t prove to be 100% reliable. Besides, unless and until you have a signed lease, you don’t really have a new tenant.
There are several advantages to continue marketing a pending rental property:
- You’ll have prospects for your additional rental properties.
- Murphy’s Law says that as soon as you stop marketing one rental property, another one will become vacant!
- You can refer your prospects to other landlords in your network.
- A waiting list can move a hesitant tenant from “just looking” to “where do I sign?”
- You might find a better-qualified tenant than the one you’re working with.
Some landlords would say that “never” is when they stop marketing their rental properties. As in any profession, being proactive is better than being reactive in the rental property business. No matter how good a prospective tenant looks, make sure you have a back-up plan. Keep marketing and showing your rental unit and gather names for a waiting list—just in case the deal falls through.
Posted by Teresa on March 26, 2011 under Landlord Tips |
Pest control in rental properties is a continual issue in some areas—and not such a big deal in others. Unfortunately, mice (and rats) live almost everywhere, while scorpions, cockroaches and certain other multi-legged intruders are more bothersome to landlords in warmer climates.
In years past, landlords often kept bugs under control with regular spraying of chemical pesticides. A greater awareness of the toxicity associated with these pest control treatments is prompting many rental property owners to revisit their standard control methods in favor of healthier alternatives for their tenants.
Fortunately, landlords now have more options when it comes to controlling cockroaches, ants, mice, rats, fleas, centipedes and even bed bugs in their rental properties. Cedar and other essential oils, along with enzymes are safe to use around pets, kids and food, and are used by increasing numbers of professional pest control companies.
One example is the use of microscopic animals called nematodes to control termites. Nematodes are added to water and then poured into termite nests, where they kill either the queen or enough worker termites that the queen eventually starves. Check with your pest control company to see if they offer natural and non-toxic alternatives.
Don’t forget that you can take control of certain pest problems without chemicals on your own. Peppermint oil is said to deter rats from entering an area, but it requires regular application. Keeping garbage secure and sealed tightly is another effective rat deterrent—so instruct tenants on proper garbage procedures. It’s never a good idea to put rat poison out where any other animal or child could ingest it!
Boric acid, which is very low in toxicity to people and pets, is often used to control carpenter ants and cockroaches. However, it is not always advised for use around food, where cockroaches tend to be. The best cockroach prevention is cleanliness. Frequent vacuuming, eliminating standing water and leaks, and keeping grocery bags and boxes outside are all methods that can help keep cockroaches under control.
If you’re trying to improve your green living score, take a look at one of the most toxic areas of managing rental properties: pest control. A little extra effort can keep your tenants safer and help them live healthier lives.
Posted by Teresa on March 21, 2011 under Landlord Tips |
One of the biggest challenges for landlords is maintaining their rental properties. Failure to do so can lead to further damage, unhappy tenants and lower property values.
Some landlords prefer to do all their own maintenance; others are not capable or simply don’t have the time to perform maintenance. Still others make the attempt to do it themselves, only to realize they’re in over their heads.
If you’re thinking about hiring a contractor or handyman service to take care of routine maintenance and emergency repairs on your rental properties, here are a few tips.
- Do you need occasional help or a full-time maintenance person? Would you rather hire expert plumbers, electricians and carpenters each time you need specialty work? Knowing what you need is the first step. A long-term contract for routine maintenance plus regular repairs might be more economical than calling an expensive contractor for a smaller job. And don’t forget that availability is sometimes a problem with busy general contractors. A regular maintenance contract means priority when you have an emergency.
- Once you determine your rental property maintenance needs, ask for referrals.When working with an contractor, it’s sometimes difficult to know whether you’re getting a good deal and getting good work—or being ripped off. Your local builder and remodeler association is the perfect place to start your research. Also ask other rental property owners in your network. You might hear an earful about whom to avoid—and who is most trustworthy.
- Once you’ve narrowed your choices down, it’s a good idea to conduct a “job interview” with each one. Even though they will likely be a subcontractor, and not an employee, you’ll still need to be sure that there is a good rapport and mutual respect between you. If you’ve found the right person, you might be in partnership for a long time—and you want to make sure you can get along.
- Conducting due diligence on your potential handyman is another important to-do item. Check with your state licensing board to ensure your prospective contractor holds proper business and contracting licenses, and is bonded and insured. Individuals without proper licenses are best avoided. And don’t rule out conducting a background check. Anyone with access to your rental property puts you and your tenants at risk. Mitigate that risk by knowing exactly whom you are hiring. Be sure to ask for and check references before you make your final decision.
Posted by Teresa on March 9, 2011 under Landlord Paperwork and Forms, Landlord Tips |
Just when a landlord thinks that business is quiet—or even under control—something unexpected happens. Like you receive notice that a tenant is moving out. If it’s a great tenant, you might feel a pang of regret; if not, perhaps you’ll hear a sigh of relief.
Either way, the minute you receive that notice is when the tenant transition begins.
- Most leases require a 30- or 60-day notice when either party is intending to not renew. It’s a good idea to regularly review your lease expiration dates so you’re not surprised by a tenant’s notice. If you see one that will soon expire, go ahead and check in with your tenants to see if they’re planning on staying or leaving. The more time you have to prepare, the better.
- Of course, you’ll want to begin the search for a qualified new tenant immediately. Start by advertising in all your usual places, and put signs up in the neighborhood and on the property.
- Let the vacating tenant know you’ll be showing the rental unit to prospective new tenants. Try to be respectful of their time and privacy; but do insist on your rights to show the unit if they prove to be difficult about scheduling.
- You might want to make an appointment with your tenant to take a quick look through the unit to determine any work that needs to be done after they move out. Be sure to explain that this visit is NOT a move-out inspection, which will be performed after the unit is empty. This is just a helpful way to plan any painting, repairs and upgrades that will need to be completed before the next tenant moves in.
- Schedule the move-out inspection for moving day. Let your tenant know they’ll need time to move their belongings and clean the unit before you arrive. Remind them to pull out their move-in/move-out checklist to see what items you’ll be inspecting. Bring your copy of this document with you when you inspect.
- Once the rental unit is empty, you should be ready to immediately begin painting, repairs, replacing fixtures or floor tiles, and any pest treatment or carpet cleaning that is needed.
- Continue to show the property while repairs and painting are taking place. Remind prospective tenants that the unit will be completely ready for move-in day. Have photos available to show.
Posted by Teresa on February 19, 2011 under Landlord Tips |
Verify Before You Hand Over the Keys to a New Tenant
When a new tenant moves in, do you welcome them with open arms, or just hand over the keys? Great tenants are few and far between, and even good tenants make your life much easier. So why not show your appreciation and start the landlord/tenant relationship off right?
Lots of landlords we know present a new tenant with a welcome package of goodies. Some cost them little to nothing out of pocket—say, $10 – $15. Others keep it strictly business and include just the legalities.
If you choose the former, here are a few items to include in a welcome package that will make your new tenant feel right at home:
- A list of emergency phone numbers. This might seem old-fashioned when a simple call to 911 will fetch police, fire and ambulance. But your tenants also need to know how to get in touch with your preferred maintenance people in an emergency. Do include the numbers for your plumber, electrician and general maintenance provider, along with utility companies.
- A floor plan clearly indicating the emergency evacuation route, location of fire extinguishers and smoke alarms and emergency water shut-offs.
- Coupons for local businesses. Stop by the neighborhood pizza shop, dry cleaner, deli and other businesses that might love to have your new tenants for customers. See if you can strike a deal with the pizza shop for discounted gift cards and include one as a gift for move-in day.
- Bus routes, trail and bike maps. More and more tenants are ditching their cars for alternative forms of transportation. Make it easier for them to find the right bus, bike to work, or go for a walk or run on nearby trail.
- A few of life’s necessities, like toilet paper, paper towels and a few extra batteries for the smoke detectors. These low-cost items can really make a big difference when moving into a new place.
Remember, a small effort can actually go a long way to establishing a good relationship with your new tenants. And even if some don’t seem to appreciate it, you might be reaping unseen rewards in the form of fewer problems and happier tenants!
Posted by Teresa on December 7, 2010 under Tenant Credit Checks, Tenant Screening & Background Checks |
Why Pre-Screen Tenant Applicants?
There are several advantages to screening tenants prior to signing a lease. One is that you can avoid discrimination issues by applying the same approval standards to every lease applicant—including a standard background and credit check. Another advantage is the reduction of risk. Why take a chance on a tenant who could have a history of evictions or an income that cannot support the rent? Mitigate risk by conducting a thorough credit check on every tenant.
What Will I Learn From a Tenant Credit Check?
You can learn at a glance if your prospective tenant pays credit card bills and loans promptly, as well as if there are any outstanding judgments against him or her. Previous bankruptcies are also typically reported. or bankruptcy filings. You can determine the minimum level of approval for your applicants, based on a good record of responsible finances and living within their means.
Be sure to compare the report’s list of an applicant’s previous addresses with those provided on the lease application. Are there inconsistencies? If so, the tenant is hiding something, or there is a legitimate explanation. Either way, you need to know before you sign a lease.
The information you gather from a tenant credit report must be held in strictest confidence, and never shared with third parties. Your applicant may have a right to the report—check your state’s guidelines and the Fair Credit Reporting Act (FCRA) to be sure you are compliant. If you reject an applicant for credit reasons, you must advise them in writing. Your best and easiest way to screen tenants is through a reputable, professional tenant screening service.
Consistency Counts When Screening Tenants
It’s important to be consistent when it comes to pre-screening tenants.
- Screen all lease applicants, no matter how they look, dress, or what kind of car they drive.
- Use the same screening procedures for each prospective tenant. Exceptions could be interpreted as favoritism toward or discrimination against a certain group.
- Establish a clear policy of background checks on all applicants to protect your rental property business.
Remember! Use a screening service with nationwide coverage and access to all three credit bureaus.
Posted by Teresa on April 29, 2009 under Landlord Tips |
Are you thinking, “it’s a little late for tax advice?” Well, read on, because this information is intended to make April 2010 a little easier to face by helping you save money. Remember, we’re not tax professionals, so check with your tax advisor or a qualified tax planner for the details about what you can and cannot deduct. In general, track and keep good records of these expenses so you can deduct them from your rental income next year!
Interest: From mortgage interest on your rental property, to credit card interest on purchases made on behalf of the property, most interest is deductible. If you don’t already, consider acquiring a separate credit card for your rental property to make record keeping easier.
Advertising: All expenses to advertise your rental property are deductible. This includes newspaper and online rental ads, as well as website expenses.
Professional Fees: Legal and accounting expenses, as well as expenses for professional management, advertising and web design, or cleaning and maintenance help can be deducted.
Depreciation: You cannot deduct the full cost of the rental home in the year it is purchased. Instead, an equal portion is deducted each year over 27.5 years.
Travel: Local and long-distance travel related to your rental property is deductible. If you have a vehicle dedicated only to the rental property, then all expenses (gas, insurance, repairs, and maintenance) are deductible. If not, then keep good records for property management-related trips. Record the mileage for visits to your rental property to collect rent, inspect, or make repairs. For long-distance travel, track mileage or airfare, lodging, and meal expenses. To avoid any problems with the IRS, don’t claim deductions without the receipts to back them up!
Home Office: Expenses related to maintaining a home office, workshop, or storage areas to manage your rental property are deductible. There are minimum requirements to meet, so be sure to follow your tax professional’s guidelines.
Theft or Casualty Losses: In case of theft, vandalism, or events like floods or fires, a portion of your loss may be tax deductible. Your insurance coverage will likely impact the amount you can deduct.
Insurance: Speaking of insurance, all premiums you pay to cover your property are deductible, including fire, theft, flood, and liability insurance.
Miscellaneous Expenses: Don’t forget to track expenses like office or household supplies, condo fees, utilities paid on behalf of your tenants, snow removal, landscaping, taxes, and repairs.
Be sure to ask your tax professional about all of these deductions—but start saving those receipts and keeping good records now. You’ll be very glad you did at tax time in 2010!
For more landlord resources, including everything you need to know about
tenant screening, turn to
E-Renter.com. You’ll know that you have the best possible tenants when you
prescreen tenants.
Posted by Teresa on April 27, 2009 under Landlord Paperwork and Forms, Landlord Tips |
Photo Courtesy of flickr
Our last post covered a few tips for making tenant move-out day a little less stress-inducing. Today we’ll cover a couple other helpful procedures you may not be following, and we’ll talk about the elusive definition of “ordinary wear and tear.”
If your experience with the tenant has been positive, maintain a good relationship by offering to provide your soon-to-be-former tenant with a letter of reference. A good recommendation is very helpful, whether they are moving to another rental or buying a home, and your tenant will probably appreciate the offer. They may even do an extra-good cleanup job on your property—and they’ll be sure to tell their friends and family about it. Good publicity is always good to have.
The Move-Out Inspection
It’s best to schedule the final walk-through after the unit is completely vacant, and the tenants have turned in their keys. Then, there is no possibility of additional damage after the official inspection is completed. The tenant should be present. Make sure you work off of the original Check-In Sheet with the tenant’s signature. Compare each item on the checklist with its condition upon move in day. The tenant may claim to have no knowledge of how damage occurred (or that there even was damage); the fact remains that they are responsible.
Once the inspection is completed, inform the tenant that you will have an estimate for the damages in a timely manner. Most tenants are anxious to get their security deposit back; if you indicate the full deposit is in jeopardy, they might offer to do some more cleaning or repair damages. Remember that you are under no obligation to allow this. However, if you know the tenant’s ability and feel they are capable of completing repairs, you may opt to give them a second chance. Keep in mind that a sloppy paint job or improper repair work will cost you more in the long run!
Defining “Ordinary Wear and Tear”
You are entitled to charge tenants for damages beyond ordinary wear and tear. It’s your job to know the difference between “wear and tear” and serious damage that can be deducted from a tenant’s security deposit.
The standard definition of “ordinary wear and tear” in most states is deterioration or damage to the property expected to occur with normal usage. There are no concrete rules, however, so it’s a tricky judgment call in most cases. Here are some examples:
- Smudges on walls and switch plates: Ordinary wear and tear
- Crayon marks on walls: Damage
- A few small tack or nail holes: Ordinary wear and tear
- Numerous nail holes requiring patching and painting: Damage
- Carpet worn thin from use: Ordinary wear and tear
- Carpet stains or bleach spots: Damage
- Dusty or dirty blinds: Ordinary wear and tear
- Bent or missing blinds: Damage
Making Deductions from Security Deposit
First, make sure that your paperwork is accurate, detailed, and thorough. An incomplete list of charges is asking for trouble. Your tenant could decide to challenge the deductions or even instigate court action. Explain how damage is beyond ordinary wear and tear. For example, just listing “Pet Damage, $50” is not adequate. You must provide details, such as cleaning or replacement receipts. Be thorough and avoid the hassle of fighting it out with your tenants. Here are a few guidelines to follow:
- Name each specific item damaged on a separate line.
- Indicate the exact location of the item.
- Detail the damage, including type and extent. Use specific language like minor scratch, excessive staining, five burn holes.
- Detail the repair completed or that the item required replacing.
- Include repair estimates or replacement receipts for each item.
All tenants move out, but following established procedures and keeping communication open can make it a much easier experience for you and your tenants!
For more landlord resources, including everything you need to know about
tenant screening, turn to
E-Renter.com. You’ll know that you have the best possible tenants when you
prescreen tenants.
Posted by Teresa on April 22, 2009 under Landlord Paperwork and Forms, Landlord Tips, Rents and Deposits |
Photo Courtesy of flickr
Tenants move out. That’s a reality that every landlord and property manager faces. And when working with all types of tenants, it follows that you’ll have all kinds of move-out experiences—some good, some very bad. Here are a few things to look out for, and some procedures you might find helpful.
Preparing for Move-Out Day
You should really have started preparing for move-out day when your tenant moved in. If you were proactively communicating with your tenant from the start, you already completed a Check-In Sheet. Establishing the condition of the unit upon signing the lease, then using the same list to evaluate on move-out day, is a simple way to track any damage and appropriate charges.
Be Consistent
Maintaining clear communication and working from established procedures are two themes we visit often in this blog. If you have standard procedures and forms in place, every interaction with your tenants will be easier on both parties—and will keep you covered from a legal standpoint as well. Remember that you do not want to be seen as discriminating against any tenants, so you must require the same paperwork and notices from all.
Security Deposit Disputes
This is the number one problem in landlord tenant relationships. Many tenants have a fear of not receiving their security deposit back. If you’ve been inspecting the property on a regular basis, then your tenant has had ample opportunity to point out any problems that could affect their deposit. Still, your definition of “ordinary wear and tear” could vary greatly from your tenants’. Be fair, but firm, take reasonable deductions and provide a thorough accounting of the security deposit. Return the balance promptly, and comply with all local laws covering interest and time limits.
Written Notice
If your tenant mentions in passing or calls specifically to inform you they’re moving, let them know you require written notice. Remind them that the rental agreement states this clearly, and that you need to be sure all are in compliance with the lease and with the law. Provide them with a simple Tenant’s Notice to Vacate Rental Unit form, covering the property address, names, dates, reason for moving, and allowing you access to the unit to inspect and show the unit to prospective tenants or repair people. Do not allow the tenant to skip giving you notice in writing—it brings too many possibilities for problems!
Next post: In Tenants Moving Out, Part II, we’ll explore some additional suggested procedures, the Move-Out Inspection, and help define “ordinary wear and tear.”
Posted by Teresa on April 16, 2009 under General, Housing Trends |
The apartment vacancy rate for the top 79 US markets reached an average 7.2% in the first quarter of 2009, according to Reis Inc., a New York research firm. This is a full percentage point increase from the previous two quarters. Reis predicts rents down as much as 2% for the year, and apartment vacancy rates above 8%.
Increased perks, like lower or free rents, have not helped the situation. In the past, these concessions by property managers led to lower vacancies—but not now. Part of the problem is an oversupply, as unsold condominiums are converted to rental properties. Plus, continued rising unemployment, coupled with the downturn in housing markets, are not bringing former homeowners back as renters. Many are renting their homes, and are now property managers themselves.
Where are all these foreclosed homeowners living? Good question. It’s possible there are more folks living with family or friends. In addition, cash-strapped homeowners are renting rooms to boarders. Packing existing housing with more bodies seems to be the nationwide trend.
In LA County, 41,000 people moved out of an apartment in 2008, while only 29,000 moved in during the last five years. But not all areas are being affected equally. Well-run properties in real estate markets where people want to live are holding steady, while areas of overbuilding are hurting.
Other areas with big increases in vacancy rates in Q1 2009 include Austin, TX, from 7.5% to 9.2%; Fairfield County, CT, from 4.3% to 6%, and Knoxville, TN, from 5.3% to 7%. [Source: the Wall Street Journal.]
It looks like for the remainder of 2009, renters will find more choices within their budgets, while many landlords will be forced to continue cutting rents in an effort to attract new tenants or keep the ones they have. Well-positioned rental property investors could take advantage of unprecedented buying opportunities in certain markets.
For more landlord resources, including everything you need to know about
tenant screening, turn to
E-Renter.com. You’ll know that you have the best possible tenants when you
prescreen.
So, you’ve landed a new tenant for that vacant rental you’ve been showing. He paid the deposit, and you’re in the tenant background check phase of your due diligence process. Now you can take down the flier you posted at the local coffee shop, stop showing the unit and cancel your ads, right?
