The Fair Housing Act (FHA) governs rental properties, requiring landlords to follow all laws established under the Act. Owners of rental properties may not discriminate on the basis of religion, sex, race, family status, national origin, or disability.
Under the disability section of the FHA, it states that landlords must make reasonable exceptions to their policies to ensure that people with disabilities receive equal housing opportunities.
This means that if you have a no-pets policy, you may be required to make an exception for service or companion animals that people with disabilities depend on to manage their lives.
But not all disabilities are obvious. The Americans With Disabilities Act (ADA) defines an individual with a disability as “a person who has a physical or mental impairment that substantially limits one or more major life activities, a person who has a history or record of such an impairment, or a person who is perceived by others as having such impairment.”
It’s a broad definition, but that doesn’t necessarily mean that every animal kept by a person with disabilities must be allowed. Not all dogs are service dogs—some are simply pets. Certain court cases have ruled in favor of landlords, such as when a dog owned by person with a hearing impairment was found to be completely untrained, and not an assistance animal at all.
Other examples include a case where a property management company changed its pet policy to ban all animals. One tenant had lived there for years, and owned a dog. When it came time to renew his lease, he was asked about whether he would be giving the dog away or leaving his apartment to comply with the new policy. He stated that since he’d been in an accident a year before, he needed his dog as a companion animal. He supplied evidence from his physician, and was allowed to keep his dog.
If you have an issue with a tenant over whether or not the service or companion animal they’re keeping truly fits the definition, consult your attorney. Keep in mind that some disabilities, like heart trouble, depression and diabetes cannot be seen. Assuming your tenant does not have a disability can be considered discriminatory in itself. Be sensitive, proceed with caution, and give your tenant the respect he or she deserves.
If you’re guessing that New York City or Los Angeles is the bedbug capital of America, guess again: it’s Chicago. And in response to this “honor,” the city’s aldermen are introducing legislation to address the problem of increasing infestations of bedbugs in city residences.
Unfortunately, the proposed law is targeted at landlords, and calls for fines of up to $1,000 a day if they don’t deal with bedbug infestations. As one property manager said, this type of one-sided legislation simply “opens the doors for tenant rights lawyers to take advantage—and only they win.”
Landlords with experience know that bedbugs are a shared responsibility. The pests can certainly cause tenants many sleepless nights and the misery of painful bites. And most landlords are willing to take the necessary and costly steps to get rid of bedbugs.
However, when tenants fail to do their part to fight bedbugs, it becomes an unfair burden to any landlord. Two ways tenants can help are inspecting their units frequently and being more vigilant against bringing bedbugs home after traveling.
According to the proposed ordinance, landlords would be required to hire pest management professionals “as many times as necessary to eliminate the bugs.” They would also be required to maintain records of their efforts. Current Chicago law requires landlords to treat bedbug infestations only when two or more units are affected, and doesn’t require any record keeping.
Landlords say that education and vigilance are much more effective against bedbugs than legislation.
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.
Our last post was about whether or not allowing tenants to do their own repairs is a good idea (we say, “not”). We’ve also heard about landlords who won’t allow tenants to perform their own repairs, but require them to be present while the repairs are being done.
Of course, a tenant with a leaking dishwasher would need to be notified of the day and time the plumber is coming by. But it’s not the tenant’s responsibility to stick around to let the plumber in and to lock up when he or she leaves.
That’s the landlord or property manager’s job. It’s generally understood that the landlord, building superintendent or property manager is the go-to person when maintenance and repair people need to work on rental units. Sure, it’s convenient if the tenant is at home and can be stick around while the repairs are being done. But think about the liability issues at stake here. Having strangers entering your rental units could potentially put your tenants and their families at risk of harm. You may have no reason to mistrust your contractors, but anything can happen.
Even if your plumber or electrician is the most upstanding person in the community, some people just want to make trouble. It’s possible that a disgruntled tenant could “invent” an issue – and you could have a lawsuit on your hands. Without a witness, it becomes a case of the tenant’s word against the contractor’s word.
It might be convenient to require a tenant to be at home when repairs are being made, but it could also lead to more trouble than you bargained for. It’s better to keep things professional, and handle contractor visits yourself or with the help of your property manager.
If you’re a new real estate investor—having purchased property to rent out in 2012—you may qualify for special tax breaks on improvements. But you’ll have just a few months to make them.
Many new landlords jumped into the business this year, as prices dropped and demand rose. Vacancies are down throughout the country, and rents have been projected to stay stable for the next few years. For lots of investors, 2012 was a good year to get into the real estate rental market.
Attracting quality tenants is perhaps the most important thing to learn for new landlords. But what do good tenants want? In most cases, they want to feel comfortable and safe. For higher-end properties, they also want amenities like wood floors, tile bathrooms, gas fireplaces and upgraded appliances.
If you’re a new landlord thinking of making improvements to your property, ask your tax advisor about the IRS Bonus Depreciation of “personal property improvements” and Increased Section 179 Deduction. Briefly, this section of the tax code allows businesses to write off most or all of the purchase price of qualifying equipment and depreciate updates made in the first year of ownership, with certain limitations and restrictions. It was enacted after 9/11 to encourage businesses to invest in themselves.
December 31 2012 is the deadline; new landlords could qualify for breaks on improvements if they move fast. Some improvements, such as cabinets or new tubs, don’t qualify because they are part of the property. But new appliances, floor coverings, fixtures and paint could qualify—and could help you compete for the best tenants.
Of course, it’s always wise to consult a tax expert BEFORE spending any money that you think you’ll be able to deduct as an expense or depreciate.
The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining financial or tax advice applicable to your situation. Please consult your tax advisor.
Perhaps you’re a new rental property owner, and you’re not sure how to go about managing your property. Or maybe you’re a successful landlord who is thinking about turning over the day-to-day management of your properties to a professional company. Perhaps you’ll even take it easy and enjoy some free time again.
Whichever the case may be, hiring a property management company has its upsides—like no more tenant phone calls in the middle of the night. It also has its downsides. For example, no company will care for your property like you do.
Before you decide whether or not to hire a management company, here are some additional pros and cons to consider.
Pros and Cons of Hiring a Property Management Company
Property management companies are professionals and are experienced. Here are considerations that make it worth hiring one:
- You’ll spend less time working on (and worrying about) your rental properties.
- You’ll save travel time going to and from your properties.
- You will have the peace of mind that comes with not dealing directly with tenants for rent collection, complaints and other issues.
- Someone else will handle maintenance and repairs.
- They will determine the best rent, based on the market and what your property offers.
- A quality PM company will find the most qualified tenants.
- They have connections with lawn, snow removal and maintenance and other service companies, and can often procure services at better rates.
On the other hand, property management companies cost money, so before you hire one, take the following into consideration:
- You won’t have the advantages of hands-on, do-it-yourself management, such as seeing for yourself how things are going at your properties.
- You may not need all of the services provided by property management companies. For example, if your property doesn’t require a great deal of upkeep, you could be overpaying.
- A property management company may not feel as compelled as you would to keep your vacancies low.
- You will have to manage the property management company. This could take substantial time and effort.
- Do you have the extra cash every month to pay 8–10% of your income to a PM company?
For some landlords, hiring a property management company is an unnecessary expense. For others, the additional free time and decrease in stress makes it worth every penny.
What do you think? Do you prefer to manage your own properties or was hiring a professional company the best decision for you?
Years ago, apartment residents were accustomed to receiving printed newsletters in their mailboxes or on their doorsteps. Since print is going the way of the rotary phone, many property managers now use e-newsletters to communicate with tenants. But some who started a newsletter with all good intentions have let it slide, and now find it’s been months—or years—since the last issue.
Newsletters don’t have to be difficult or terribly time-consuming. And not using them to communicate with residents is a missed opportunity. You might think residents don’t care about what’s happening around your community, the truth is that most would greatly appreciate it.
Here are some easy tips for interesting newsletters you’ll enjoy putting together and your tenants will enjoy reading:
- Add a “news” section. In it you can announce new staff, upgrades, additions to your fitness center, DVD or book library.
- Seasonal items are easy to include. Since Halloween is coming, then Thanksgiving and the winter holidays, you’ll have plenty of opportunities to write about parties, decorating ideas and safety tips. Add a calendar of events from your town or city.
- Include contests. Promote your Facebook page by encouraging residents to “like” your page. Offer a prize drawing each month for movie or play tickets, or gift certificates to local businesses.
- Promote early rent payment. Conduct a monthly drawing that includes only residents who pay their rent early. Offer a $100 prize and see how quickly you see rent payments come in early!
- Reminder tenants about policies. Include a short piece each month that features one policy. You might want to explain the reason for the policy and review guidelines.
- Partner with local schools and community groups to include their events in your newsletter. Include volunteer opportunities, too.
- Add interesting facts and figures. For example, list the number of dogs and cats in the community, local crime stats or the number of trees on the property.
- Have a monthly poll. Ask questions like, “What is your favorite thing about living here?” or “What is one thing we can do better?” Ask fun questions such as favorite pie, best cupcake in town or “most interesting thing you saw on your way to work today.”
Remember, the purpose of a newsletter is to improve communication with residents. Include the basics, like contact information for all staff, emergency after-hours numbers, email addresses, and website and Facebook urls. Use your newsletters as an opportunity to tell residents what’s new, help them get to know your staff better and learn more about living there. Make it fun and interesting, and tenants will read it!
Across the country, college students are gearing up for a new school year. That means securing housing, and for many of these kids, campus housing is not an option. Whether their school is short on housing, their parents are looking for ways to save from ever-rising room and board fees or they simply prefer to live off campus, they’ll choose renting a house or an apartment.
For landlords, student tenants can be lucrative. Many college towns have limited housing available, so vacancy is rarely a problem, and getting market rent—or above—is not unusual. In addition, mom and dad are often paying the rent, so that’s not a problem, either.
On the other hand, student tenants don’t always work out. Some are on their own for the first time and don’t yet realize the impact their actions have on others. Others don’t have mom and dad to back them up, so paying rent on time could be a problem. Students can be noisy, messy, and disrespectful of you, your property and the neighbors. They may not understand the terms of the lease or think that certain rules actually apply to them.
In other words, student tenants are just like the rest of the population. Some are good, some are not so good. So is it worth the hassle to rent to students? Many landlords say “yes!” Renting to students can be a sound business decision when approached from a business standpoint, with firm management, enforcement of the terms of the lease, as well as your rules and regulations.
Ten Tips For Renting to Students
- Never rent without a lease. Go into more detail than you think you need, and review it with your prospective tenants.
- When setting rents and security deposits, take into consideration the potential for higher repair and maintenance costs.
- Get each student tenant’s parent to co-sign the lease, making them responsible for late rent, damages, etc.
- Reinforce to student tenants that unauthorized guests or roommates are not allowed. Each occupant must be on the lease.
- Screen each potential tenant. Even though the students may be young, they could have criminal histories or be a poor credit risk. Tenant screening is a must.
- Determine whether your lease will run for 12 months or for the school year, which could be fewer then 12.
- Be sure the lease states that all tenants are responsible for the entire rent. If one student moves out, his or her share is still due and payable by the remaining tenants.
- Offer online rent payment for the convenience of your tenants and fewer hassles for you.
- Contact the parents or co-signers at the first sign of trouble, whether it’s property damage, noise problems or late rent.
- Enforce your rules. When students know what to expect from you, as well as the consequences of their actions, they are more likely to behave.
Situation: Water pipe starts leaking in wall behind washer and dryer.
Who’s Responsible? Most likely, the landlord. It’s possible that an inside-the-wall leak won’t be noticed until water starts leaking out onto the floor, which could be hours or even days later. Landlords will generally be responsible for a leak like this, but if the tenants fail to inform the landlord immediately (ideally, in accordance with the terms of the lease), the tenant could be liable for a portion of the damages.
Situation: Tenant goes away on vacation and their house sitter leaves the tub faucet on until it overflows. Nobody notices for several hours, and there is damage to the floor, subfloor and ceiling of the unit below.
Who’s Responsible? The tenant is ultimately responsible for negligence damages to the rental property, regardless of whether or not he or she was there when it occurred. The tenant can then try to collect any loss from the house sitter. Hopefully, they have renter’s insurance. In any case, this is definitely not the landlord’s responsibility.
Situation: Toilet overflows.
Who’s Responsible? This might be another case that depends on the circumstances. If the pipes are damaged or root-clogged, it’s not the tenant’s fault. However, if the tenant clogs the toilet up and doesn’t attempt to clear the clog, it’s not the landlord’s fault.
How to Minimize the Chances of Water Damage
- Show tenants the location of the water main shut-off valve. Teach them how to turn off the main water supply. Have tenants initial a clause in the lease that they have been shown where the main is, how to turn it off, and that they are responsible for water damages if they fail to do so (unless nobody is home when the leak starts).
- Insist that all tenants carry a renter’s insurance policy. Many landlords require it, since without such protection, tenants can’t always afford to pay for repairs on the damages they cause to rental properties. If someone is injured on the property, such as from a tenant’s dog or from falling in the rental unit, the tenant’s policy will usually cover the damages, saving the landlord from having to submit a claim.
- Supply a toilet plunger in each bathroom. They’re not expensive, and can prevent many headaches. Include a clause in the lease that the tenant must agree to plunge any clogs they cause or they will be responsible for subsequent damages.
- Include in your lease that tenants must contact you immediately when they discover any water leaks. Give them an emergency contact number and make sure you are available at that number. Emphasize that tenants should not email this information—you must be notified immediately.
- Consider installing drip pans in under-sink cabinets, in case pipes ever leak.
Water leaks and overflows are no fun. Every landlord knows leaks can cause major damages, such as rotted subflooring and drywall, warped wood flooring, mold and mildew. Preventing water damages whenever possible is in every landlord’s best interest.
No matter how competitive your rents are, you need to protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.
Experienced landlords know that being tough is an important part of their job descriptions. With the economy still suffering and unemployment still high, many prospective tenants’ credit scores have taken a beating. But should landlords take into consideration the difficult economic circumstances of many American families when deciding whether or not to approve a lease application?
In other words, should landlords overlook lower credit scores or bankruptcy filings and try to help lease applicants?
Certainly, every situation is different. Many landlords will not budge on their credit requirements. Others look at the whole picture, and will pass a less-than-stellar credit score if the tenant has a steady paycheck that more than covers rent and other living expenses. Still others check prior evictions, and if there are none, then they will take a chance on the tenant.
And then there are the landlords who aren’t tough enough to say “no” to a prospective tenant with a poor credit history and no steady job. Whether they feel a sense of obligation or feel sorry for the tenant, they sign the lease and hope for the best. Often, they end up losing money, can’t get rid of the tenants and rack up thousands of dollars in eviction fees.
Trying to help people is noble, but it’s not a landlord’s job. A landlord’s job is to provide safe housing, to protect other tenants from potential harm, and to earn a profit from leasing property. You may hear sad stories of job loss, divorce, illness, death of loved ones and tough times. There is no doubt that it’s difficult to make a decent life for a family these days, when good jobs are hard to find.
Nobody wants to see a family out on the streets. But landlords have to be tough to protect themselves and their sizable investment. Checking tenant credit histories, conducting background checks, and sticking to your minimum qualifications will keep your rental property business strong and sustainable into the future. If you’re not tough enough, you may not have a future in the landlording business.
If you’re thinking about investing in rental property, particularly as demand for rentals is increasing and housing prices are at the low point in many markets, there is a lot you’ll need to learn. Some aspects of landlording can only be learned through experience, but others are important to understand from the very beginning, to ensure you’re in compliance with property and tenant regulations.
Even if you’ve been a landlord in the past, you’ll need to brush up on new laws. For example, in many states, certain disclosures are required to protect tenant health. You may be required to reveal exposure to floods, mold or radon. Some states require indoor air tests or other environmental testing. Federal laws require landlords to disclose lead-based paint hazards in buildings built prior to 1978. You may be required to provide smoke detectors, carbon monoxide detectors, or both.
The federal Fair Housing Act prohibits discrimination in renting property based on a person’s race, color, religion, national origin, gender, marital status or disability. Landlords may not prohibit children in rental property, unless it is a senior-only community.
Landlords are required to provide safe and habitable units for tenants, according to local and state housing and health codes. All utilities must be operational. Necessary repairs must be made promptly. Lighting, locks and grounds should be maintained to prevent crime and injuries. Landlords cannot force tenants to move by turning off heat, lights, or water, by changing locks or removing the tenant’s property. Check local statutes for the guidelines and proper process for evicting tenants.
In many states, security deposits are strictly regulated, including the amount that may be charged, where the funds are kept (such as in a separate bank account from rents or in an interest-earning account) and how they are disbursed to former tenants. You may also be limited as to what the security deposit can cover. Some states allow deposits to cover unpaid rent, while others limit their use to just damages. Landlords may be required to refund a security deposit in a certain number of days.
The proper handling of a tenant’s property is another potentially sticky area. When a tenant leaves property behind, you may be required to prepare an inventory and have a law enforcement officer sign off on it. Depending on where you live, a landlord may be prohibited from moving a tenant’s property off the premises; or they may be allowed to dispose of it after a set period of time. Check your local laws to ensure compliance.
Becoming a landlord can be a profitable venture. Just be sure you’re in compliance with local, state and federal laws, or you may have legal fees that can wipe out your potential gain.