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.
Posted by Teresa on March 26, 2009 under Landlord Tips |
If you’ve decided that property management is not for you, you’re not alone. There are thousands of successful property management companies because there is a real demand for their services. They have the expertise and experience to manage your property, plus they’re knowledgeable about all the laws affecting rental housing. They’ll handle all the bookkeeping, rent collection, and emergency issues, while dealing with tenants fairly and objectively.
There are certain disadvantages to using a professional service. First—they’re not free. If your margin between income and expenses is slim, it might not be cost-effective for you to hire a management company. Also, they might not care for your property as well as you, or be as aggressive in filling your vacancies as you would be.
Check out several property management firms before you decide on one. Have a checklist handy and ask at least these basic questions to narrow your choice:
• How will you prepare the rental unit for leasing?
• How will you advertise and show the unit?
• Do you prescreen tenants for credit and criminal records?
• What is the rent collection procedure? What about delinquent rent?
• What do you charge? Are there additional charges?
• Will I receive monthly reports? What do they include?
• How do you handle maintenance? What about emergencies?
• Do you mark up materials and supplies?
• How do you handle tenant complaints?
• How firmly will you enforce my rules and procedures?
• Can you give me an example of your attention to detail?
Always ask for references and follow through with talking to them. A complete client list is even better; specifically check with owners of properties in your size category. Visit the property management company’s office and meet the staff. Don’t sign the contract until you are sure the company has a sound track record. Know that some management companies charge lower fees and make up the difference in repairs, by marking up supplies and labor, or by performing unnecessary repairs.
Finally, make sure the company has adequate insurance. They should also be bonded to protect you, since they will be handling and collecting your money.
Finding the right property manager will make a big difference in your cash flow because they take care of all the issues that affect it. They fill the vacancies, find good, solid tenants, and perform all maintenance and accounting. Make sure you choose a property management company that is squarely on your side.
