Real Estate Investing

Your Picture of Financial Freedom Shapes Investment Strategy

Chris Clothier — Thu, 18 Apr 2024 15:00:00 +0000

Investors – ourselves included – often refer to “financial freedom.” While the concept itself sounds reasonably straightforward, it can mean many things to different people. These ideas lead to diverging goals and priorities. Ultimately, those points of divergence demand unique investment strategies. What you do hinges on where you want to be.

9 Things to Know About Investing in a Property in an HOA Community

Luke Babich — Wed, 17 Apr 2024 18:30:00 +0000

Investing in HOA-managed properties offers upkeep benefits but requires diligence. Pros include community upkeep, while cons involve fees and strict regulations. Investors should scrutinize HOA rules, financial health, and resale trends before buying. Understanding these factors ensures informed decisions and optimal returns in HOA neighborhoods. Homeowners associations or HOAs are present in many neighborhoods as […]

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What are the Risks of a Post Occupancy Agreement?

Mark Ferguson — Tue, 16 Apr 2024 21:00:29 +0000

A post-occupancy agreement, also known as a post-closing possession agreement, allows the seller to remain in the property they just sold to...

5 Tell-Tale Signs of an Overpriced Real Estate Market

Chris Clothier — Tue, 16 Apr 2024 15:00:00 +0000

Is your real estate market overpriced? Navigating today’s housing market isn’t easy. Though inventory is going up and mortgage rates are going down, property prices are still sky-high. For the real estate investor, it’s pretty easy to assess your local market. Things get tougher as you go further afield.

Earth Day for Rentals | Eco-Friendly Ideas Roundup

Brentnie Daggett — Mon, 15 Apr 2024 18:30:00 +0000

As a landlord or property manager, leveraging holidays like Earth Day on April 22nd can strengthen your connection with tenants and promote eco-friendly initiatives. Green features are increasingly sought after by Gen Z and Millennial renters, driving up desirability and potentially saving on energy costs. Hosting Earth Day resident events fosters community and showcases your […]

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Best Tips for Building a Real Estate Portfolio

Kaycee Miller — Fri, 12 Apr 2024 18:30:00 +0000

Building a real estate portfolio requires strategic planning and a growth mindset. Define investment goals, conduct thorough market research, and diversify your assets to mitigate risks. Start small and scale gradually, tracking key metrics to inform decision-making. Consider working with a team and prioritize cash flow to ensure financial stability. Maintain financial discipline, utilize diverse […]

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What the Housing Inventory High Means for Investors

Chris Clothier — Thu, 11 Apr 2024 15:00:00 +0000

U.S. housing inventory is trending in the right direction.

We saw a 12.9% year-over-year increase in new property listings in February. Although total inventory remains flat, we’re finally not seeing a decline in overall inventory for the first time in nine months.

As you’re likely aware, tight inventory is mainly responsible for the stubbornness of the housing market. Even when active demand seemingly froze market activity, prices haven’t budged. Inventory kept rising interest rates from easing home prices. It’s also made the supply and demand balance unsustainable.

Ideally, this increase in new home listings points to a turning point on the horizon. But there are a few problems – and reasons investors shouldn’t sit back and “wait out” low inventory.

Insurance Costs Are Rising: Here’s What Smart Landlords Are Doing

Rose Morrison — Wed, 10 Apr 2024 18:30:00 +0000

Rising property insurance costs pose a significant challenge for landlords, impacting profitability and operational expenses. Factors like natural disasters and property damages contribute to premium hikes, affecting landlords’ bottom line. Strategies such as preventive maintenance, technology integration, and insurance shopping tactics help mitigate these costs. Landlords should leverage property improvements, deductibles, and coverage options to […]

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Rentec Direct Product Development Update: Made Live in Q1 2024

Jackie Cushman — Tue, 09 Apr 2024 18:30:29 +0000

At Rentec Direct, we’re always excited to share our latest updates. Your Rentec Direct development team has worked hard this quarter to bring you fantastic new features and enhancements to simplify your management tasks. Learn more about the exciting product updates and helpful fixes that were made live in Q1 of 2024 in your Rentec Direct […]

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What Makes Low-Cost Properties a Bad Bargain?

Chris Clothier — Tue, 09 Apr 2024 15:00:00 +0000

We get it – houses are expensive, now more than ever. It’s only natural that investors would turn to low-cost properties. On the surface, there’s clear appeal: less capital upfront for an income-generating rental property. Why wouldn’t you go with the cheapest houses you can find?

If you’re like many people, you like to browse real estate listings. Sometimes, you come across a property with a shockingly low price tag in a great part of town. You might think, “Wow! What a deal!” Then, you start looking at the pictures and realize that the whole thing has been stripped down to the studs, and it would take double the asking price or more to get it habitable. Oof.

That opportunity might excite some more hands-on, flip-minded investors, but it’s not for us. At that point, it’s pretty evident that the property will cost you far more than the seemingly low asking price. But it’s not always so obvious. Some properties may not look the best – they’re serviceable – or be in the best neighborhood, but they’re affordable, so why not?

Well, we’re here to tell you. Here’s why investors shouldn’t target low-cost properties.

5 Earth Day Ideas for Your Multifamily Property- Infographic

Brentnie Daggett — Mon, 08 Apr 2024 18:30:00 +0000

Spring is the perfect setting for fostering community, and Earth Day provides the perfect excuse to host a resident event at your rental property. Whatever you choose to do for your residents and Earth Day, be sure to focus on the benefits of green initiatives and create opportunities to develop a sense of community among […]

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Beginners Guide to Property Maintenance for Rentals

Kaycee Miller — Fri, 05 Apr 2024 18:32:12 +0000

As a landlord, understanding the fundamentals of property maintenance for your rental properties is crucial to maintain your investments and ensure tenant satisfaction. Below, you’ll find an in-depth overview of essential practices, tips, and strategies to effectively manage and upkeep your rental properties, so you can preserve your property’s value and also foster long-term tenant […]

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The Real Estate Market Isn't Uniform

Chris Clothier — Thu, 04 Apr 2024 15:00:00 +0000

For real estate investors, it’s relatively easy to look at all the news coming out about the real estate market and lament. You might feel like there’s no place for you anymore, and investing is too hard. Believe us, that’s not the case! Part of the problem is that many of these reports and analyses look at overall medians and averages.

While these are concise ways to talk about overall trends in the country, investors need to zoom in. The real estate market is not uniform. It varies, and investors must take advantage of it. We found these maps by ResiClub (courtesy of Fast Company) helpful in illustrating this point.

These maps effectively represent median home prices within individual markets across the country. While the $380,000+ median price sounds scary, we must recognize that that number doesn’t reflect every market.

So, what do these maps tell us about the real estate market…and investing?

Rentec Direct Announces Tech Mastery Scholarship Application Deadline Fast Approaching

Brentnie Daggett — Wed, 03 Apr 2024 18:30:00 +0000

Rentec Direct Announces Tech Mastery Scholarship Application Deadline Fast Approaching Full Press Release Available on PRWEB Application deadline for Rentec Direct Tech Mastery Scholarship approaching on April 15 Rentec Direct, an award-winning property management software, is pleased to remind students of the ongoing application period for its annual Tech Mastery Scholarship Program. The program awards […]

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How to Get Rid of Squatters

Mark Ferguson — Wed, 03 Apr 2024 14:01:21 +0000

We have all seen horror stories on the news or social media when a squatter moves into a vacant house or rental...

Industry Outlook | NAR Settlement on Real Estate Commissions

Brentnie Daggett — Tue, 02 Apr 2024 19:42:34 +0000

The National Association of REALTORS® announced a $418 million settlement to resolve allegations of conspiring to inflate agents’ commissions, which could have artificially increased home costs. The settlement aims to address concerns about transparency and competition in the real estate market. In what could be an unprecedented shift for the real estate industry, brokers and […]

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The Underlooked Criteria for an Ideal Investment Market

Chris Clothier — Tue, 02 Apr 2024 15:00:00 +0000

You’ve undoubtedly poured over the details when looking for a real estate investment market. You’ve analyzed rental rates, median income, sales prices, local economics, and more…but have you asked about the weather?

Location matters, not just because of the economics, housing affordability, or rental demand but because of the climate.

Both run-of-the-mill weather risks and natural disasters could jeopardize your investment property. If anything, it could be costing you a pretty penny in maintenance and insurance costs! Here’s what you need to consider about the climate as you choose an investment market:

Announcement | New Retro Landlord Kit from Rentec Direct

Heather Peake — Mon, 01 Apr 2024 18:30:26 +0000

April Fools Announcement: New Retro Landlord Kit The long-anticipated New Retro Landlord Kit is finally here. This retro landloring pack has everything a property manager or landlord will need to step back to yesteryear and experience property management in vintage style and return to the joy of penciled in ledger entries and handwritten notices and […]

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This is What Turnkey Investing REALLY Looks Like

Chris Clothier — Thu, 28 Mar 2024 14:00:00 +0000

The term “turnkey” isn’t regulated in this industry. The original concept is clear enough – turnkey properties mean you can “turn the key” and step right into a new or fully renovated property ready to earn passive income. But not everything advertising “turnkey” is doing the same thing. Because the definitions vary and the word is used purely for marketing, investors need to know what they want from a “turnkey” experience.

What do turnkey investing companies ideally do, and what are the signs that something might not really be turnkey? Keep reading to find out.

3 Ways Real Estate Investors Can Invest in Themselves

Chris Clothier — Tue, 26 Mar 2024 14:00:00 +0000

So you’re investing in real estate…but are you investing in yourself? Here’s the harsh truth – none of us are naturally adept at building an ideal financial future on our own. For some, financial success comes from parents who instill lessons of self-discipline and the value of a dollar. For others, it comes from personal research, lots of reading, or even degrees and certifications.

No one expects a passive real estate investor to be an absolute expert. You didn’t sign up for a passive gig just for it to turn into a full-time job!

Is FOMO Hurting Your Investment Portfolio?

Chris Clothier — Thu, 21 Mar 2024 14:00:00 +0000

Sometimes, the best deals you do are the ones you said “no” to.

“How is that possible?” you might ask. We live in a time when the real estate market is competitive and contentious. That’s true for the average buyer, and it’s true for investors. Even now, we sense FOMO – the fear of missing out – plaguing the real estate industry. Potential homebuyers are afraid they won’t win their bid. Investors are worried they’ll miss out on once-in-a-lifetime deals. They think they’re doing something wrong if they’re not participating in the hottest new investment market.

But sometimes, staying out of it is better than jumping in.

7 Ways Housing Inventory Impacts the Real Estate Market

Chris Clothier — Tue, 19 Mar 2024 14:00:00 +0000

Though the factors that sway the rise and fall of the real estate market can be varied and complex, there’s no denying that housing inventory is among the most impactful. As one of the most significant talking points among investors and real estate professionals, we must all understand how inventory impacts what we do – and the industry.

Private Money for Real Estate Investors

Justin Gesso — Wed, 21 Feb 2024 13:55:59 +0000

Getting money to start in real estate investing is the biggest hurdle for people. Traditional lenders have stringent requirements, making it hard for people just getting started and hard for people looking to take their real estate investing to the next level. This is where private money, an alternative to traditional financing, comes in. In ... Read more

How to make a lot of money: learn about money!

Mark Ferguson — Tue, 13 Feb 2024 18:26:22 +0000

Many people want to be rich or make a lot of money. However, most of those people will never do any research on how to make money or how money works. If you want to make a lot of money you need to learn about money! You can’t just hope and pray that someday a ... Read more

Top 5 Mistakes Landlords Make: Avoid Financial Drain and Tenant Problems

Mark Ferguson — Wed, 07 Feb 2024 16:55:21 +0000

I’ve been in the real estate world since 2002 as an investor, agent, broker, and even author. Real estate has changed over the years but I still love it and still invest today. Over the years, I have learned many things and evolved from trying to rent and screen tenants based on gut feelings to ... Read more

How to Prepare Your House for a Sale Without Breaking your Budget

Mark Ferguson — Wed, 31 Jan 2024 18:33:45 +0000

I have sold many houses as an agent, and investor over the last 20 years. I have learned a lot about what helps houses sell and what does not. I have also learned what to spend money on and what not to. If you plan to sell your house, and you want to get the ... Read more

Does Blackrock Buy Houses?

Mark Ferguson — Fri, 19 Jan 2024 20:00:20 +0000

If you were to believe everything that you see on social media you would think Blackrock has bought all of the houses in the US. Or at least most of the houses that have sold in the last few years. The truth is that Blackrock has not bought one house. They do not buy houses ... Read more

My Real Estate Goals for 2024 and a Recap of 2023

Mark Ferguson — Wed, 17 Jan 2024 23:26:05 +0000

Every year, I set goals and review my goals from the previous year. Not only do I set goals and review them but I publish them here for the world to see! This helps keep me accountable for my actions and keeps the goals fresh in my mind. When I set goals, my main objective ... Read more

Top 5 Real Estate Investment Terms Everyone Needs to Know

Justin Gesso — Thu, 11 Jan 2024 23:07:49 +0000

Whether you’re taking your first steps or fine-tuning your strategy, understanding the fundamental language of real estate is paramount. In this post, I’ll cover the top 5 real estate investment terms that are essential for every investor’s toolkit. From cash flow to leverage, these terms form the bedrock of successful investing. I think it is ... Read more

Can you Still Make Money With Rental Properties?

Mark Ferguson — Tue, 09 Jan 2024 21:49:39 +0000

I bought my first rental property in 2010 and I admit it was much easier to buy rentals that cash flowed back. At least it was easier in my area in Northern Colorado. A lot of people wish they could go back in time to buy investment properties (me included) but no one has invented ... Read more

5 ways to collect on a judgment

Laura Agadoni — Wed, 17 Apr 2019 14:00:25 +0000

The bad news: your tenant left owing you money.

The good news: you just won a money judgment in court against that tenant.

Time to celebrate?

Not really.

Although you’re supposed to get the money your tenant owes you after you win a money judgment, actually getting the money is another matter.

It’s not always easy to collect money on a judgment.

The court’s job ends with the judgment. Collecting on that judgment is on you. Your ex-tenant might pay you immediately, and if so, great. Now it is time to celebrate. But what do you do if they don’t?

1. Ask for it

This simple solution often works. Draft a letter to your ex-tenant requesting the money.

Let this person know what they owe you.
Tell them if they don’t pay by X date, you will begin a collection process.
Mention that if you begin a collection process, the transaction will appear on their credit report.
You might wish to remind your ex-tenant that having a collection on their credit report will make it difficult to rent another place or to obtain a mortgage.

Many tenants, not wanting their credit affected, will pay.

2. Garnish wages

Almost every state allows wage garnishment, a process that allows creditors to take up to 25 percent of a debtor’s wages until the debt is paid. You must know where your ex-tenant works to do this. You might have this information on the application your ex-tenant filled out. The rest of the procedure varies by state, but typically, you do the following:

Go to your local courthouse and ask for a garnishment order.
This goes to your ex-tenant’s employer.
The employer then withholds money from your ex-tenant’s paycheck until the debt is paid to you.

3. Garnish bank account

Similar to wage garnishment, you must know something about your ex-tenant—in this case where they bank—and ideally, their bank account number. You might have some bank information on the application your ex-tenant filled out, or you can get the information from a cancelled check. If your tenant paid you by check, then you have it. If not, you might be able to find someone who has received a check by your ex-tenant. You then go to your local courthouse and follow the procedure for garnishing the bank account.

4. Request information from the court

If you don’t know where your ex-tenant works or where they bank, you can request a formal procedure at your local courthouse, usually called a “debtor’s examination.” Your ex-tenant might then be ordered to fill out a form that lists their employer and bank information. Or they may be subpoenaed to appear before the court at a hearing to answer your questions. You will have the opportunity to find out the information you will need to collect money:

Where they work
The contact information of their employer
Where they bank
Their bank account number

5. Hire a collection agency

You’ll have to pay to use a collection agency, but recovering some of your money is better than receiving nothing. Unfortunately, the odds of a collection agent being successful in collecting money your tenant owes you are not that good. But you can increase your chances by hiring a recommended and reputable collection agency that specializes in working with landlords. Ask your lawyer, accountant, or other professional you know for a referral.

The bottom line

Sure, you can collect on a judgment. But there’s no guarantee you’ll be successful or whether it will be worth your time and effort to pursue the money. Only you can make that determination based on how much your tenant owes you and on how busy you are. In most jurisdictions, you have between five and 20 years to collect. So if you’re not up to the job now, or if your ex-tenant has no assets at this time, you might be able to collect your money in the future.

The best course of action is to screen your tenants before renting to them. There’s no guarantee you won’t be burned when you screen tenants, but your chances of renting to a deadbeat tenant are lessened. Keep in mind that the Cozy tenant screening process is free for landlords, and I highly recommend it.

How to screen a foreign-born or international rental applicant?

Nicky Goulimis — Wed, 10 Apr 2019 14:00:04 +0000

As a landlord, one of your primary goals is to find high-quality tenants, often leveraging a credit check service to determine creditworthiness. But it’s not always easy, especially if your applicant is a with a foreigner or international student?

What happens if they don’t have a Social Security number?

What do you do when you have an applicant who recently moved to the U.S. and doesn’t have a Social Security number? Or they were recently issued a Social Security number, so there is limited US credit data behind it?

Immigrants are everywhere

This challenge is only growing. Immigrants make up nearly 14 percent of the U.S. population, and are expected to drive 74 percent of all U.S. population growth by 2065. Each year, 2 million immigrants arrive in the U.S., and 75 percent of these new arrivals are looking to rent. 45 percent of foreign-born arrivals are college educated; they often move to the U.S. for jobs, command high salaries, and have good credit history overseas.

Foreign credit doesn’t mean bad credit

The highly educated foreign-born tend to command higher incomes and have prime or super-prime credit. However, because they can’t carry over their credit history from their home countries, they have thin credit profiles in the U.S., and are locked out of the U.S. rental market. And while they are credit-worthy and make for high-quality borrowers, it makes it difficult for new-to-country residents to rent an apartment.

In turn, it makes it challenging for landlords to rent to these ideal tenants. Landlords are forced to go through a highly manual, tedious process to pull together disparate documents to understand the applicant’s creditworthiness, often relying on things like utility bills, income statements, bank statements, and alternative data that may be in a foreign language and currency.

There is one company that provides international credit reports to independent landlords. Nova Credit is a cross-border credit bureau that provides instant access to international credit profiles.

Nova Credit pulls data from leading international credit bureaus such as Experian, TransUnion, Equifax, CRIF, and Circulo de Credito. It’s free for property managers, and allows for real-time screening of international resident applicants.

Similar in format to a standard U.S. consumer credit report, the data is post-processed to be compliant with U.S. regulation and is standardized across countries.

The Credit Passport includes:

U.S. equivalent credit score
Aggregate risk attributes
Tradelines and repayment history
Derogatory marks
Aggregate statistics
Additional data such as bureau notices, inquiries and employment history

By accessing international credit reports, landlords can better identify high-quality, foreign-born applicants. By unlocking foreign credit data in the U.S., property managers and landlords are able to:

Increase occupancy rates. Convert highly qualified applicants seamlessly to maximize net operating income (NOI).
Reduce operational costs. Decrease the amount of time and money spent manually screening applicants.
Improve risk management. Distinguish between good and bad tenants to ensure great long-term tenants across your portfolio. In turn, you can better manage risk and reduce bad debt across your portfolio.

Accessing an international credit profile also benefits foreign-born applicants. New-to-country applicants may also be able to remove approval conditions such as paying a higher deposit, securing a guarantor / co-signer—or worse, being overlooked entirely because of a lack of U.S. credit history.

Harnessing new technology and reliable data, international credit profiles can help save time and money for property managers and tenants alike. It’s a win for both parties.

About the Guest Author – Nicky Goulimis

Nicky Goulimis is co-founder and COO of Nova Credit, the world’s premier cross-border credit bureau. She leads a team who built a global infrastructure of credit bureau data and delivers it to landlords, property managers and lenders in order for them to finally acquire and serve immigrant customers.

Should I allow vaping in my rental property?

Kathy Adams — Wed, 03 Apr 2019 14:00:25 +0000

You might not allow smoking within your rental units, but what about vaping with e-cigarettes?

About 15 percent of adults under 40 vape, so you might want to allow vaping in your rental property to attract more tenants. But you should learn all you can about e-cigarettes before you do.

Like regular cigarettes and cigars, e-cigarette emissions leave behind a residue that could build up on the walls and floors over time. Even if you decide to allow vaping indoors, it’s worth considering the extra cleanup work that could result when that vaping tenant moves out. So even if your state permits vaping in many public areas, you might want to restrict their use within your rental units.

Cigarettes versus e-cigarettes: the vapors

E-cigarettes: The vapors emitted from an e-cigarette contain far less nicotine than the smoke blown from a regular cigarette.

Cigarettes: Cigarettes leave behind a nicotine-stained film that discolors everything from walls to furniture. And then there’s that stale cigarette stench that’s notoriously hard to remove from a chain-smoker’s home.

E-cigarettes: The vapors emitted from an e-cigarette contain just a fraction of the amount of nicotine found in cigarette smoke.

Cigarettes: Cigarette smoke contains a laundry list of harmful chemicals such as lead, arsenic, and formaldehyde.

E-cigarettes: Vapors in e-cigarettes typically contain less harmful chemicals, although they’re still packed full of chemicals.

The main difference, when it comes to residue left behind from smoke or vapor, is that cigarette-smoke residue builds up faster and reeks. It’s also visibly noticeable, since nicotine discolors some surfaces.

Even though vaping doesn’t cause nicotine stains, the vapor still creates a messy buildup. One substance in the vapor is vegetable glycerin, which leaves behind an oily residue. Oils attract dust and small particles, so a home exposed to frequent vaping ends up with a dirty, greasy buildup.

Cleaning concerns

Cleaning up after a smoker typically involves steam-cleaning carpets and curtains, washing non-porous surfaces thoroughly, and repainting the walls. Removing odors could be extremely difficult, depending upon the amount of smoking done indoors.

Cleaning up vaping residue means deep-cleaning carpets, fabrics, and upholstery; washing non-porous surfaces with equal parts water and vinegar; and potentially repainting walls after wiping them down with the vinegar solution. All surfaces could be harder to clean than similar surfaces in a nonsmoker’s unit, thanks to the oily vaping residue.

What about the law?

As is the case with traditional cigarettes, the laws regulating e-cigarettes vary greatly from one region to another.

San Francisco, for instance, bans use of e-cigs wherever traditional cigarettes are banned.

Minneapolis lawmakers, however, believe e-cigarettes do not violate clean-air laws. In Minnesota, landlords decide whether tenants can smoke cigarettes or e-cigs within their units and on-site outdoor spaces. State law prohibits smoking and vaping in common indoor areas of rental properties, however.

Read up on your state’s laws to determine if there’s already a law regulating e-cigarettes and whether that applies to rental housing. If you choose to ban e-cigarettes and similar electronic vaping products, clearly state this in your rental agreement. Define what forms of smoking and vaping you prohibit. Note any areas where vaping is allowed, such as outdoor spaces far away from rental units. Also clarify any bans on vaping in common indoor and outdoor areas.

Fire hazard is real

Vaping doesn’t carry the same fire hazard as falling asleep with a lit cigarette, but it still has its risks. In an eight-year period ending with the close of 2016, 195 vaping-related fires or explosions were reported in the United States. Many of these incidents happened when the device or spare lithium-ion batteries were in the user’s pocket. Other incidents happened while charging the e-cigarette’s batteries. All of the reported problems related specifically to lithium-ion batteries.

The charging incidents in particular are worth noting, as fires could occur while the tenant is away or asleep. Even so, the number of reported incidents is relatively small, considering that more than 3 percent of all U.S. adults vape, according to 2016 statistics.

Ultimately, it’s up to you whether allowing e-cigarettes is worth the extra cleanup effort or the potential fire hazards. If you decide to allow vaping, it may be worthwhile to note an extra cleaning charge in the rental agreement. Make sure your tenants are well aware of your vaping and smoking rules before renting to them. A questionnaire asking potential tenants about smoking and vaping habits could help protect your property from careless tenants. They’ll be responsible for any excessive repair or cleanup issues that result during or after their tenancy.

Should you offer a deal to find new tenants?

Holly Welles — Wed, 27 Mar 2019 14:00:59 +0000

When your property can’t seem to keep reliable tenants, you might start to consider ways of sweetening the deal, such as offering incentives.

Your property may be great, but that doesn’t mean you’re immune to bouts of bad luck with tenants, increased competition, and environmental nuisances like neighborhood construction projects. When the cards are stacked against you, a discount can help speed up the tenant search and reduce the negative financial effects of vacancies.

The benefit of filling your space may very well be worth the added expense, but make sure you first do a cost-benefit analysis by making sure adding an incentive won’t make your total expenses greater than your total income.

Here are seven practical tips and techniques.

1. Reduce your fees

Review your contract to see if you can be flexible with some of your listed fees. Tenants who review your agreement are likelier to sign on the dotted line if they don’t have to factor an excessive amount of additional costs into their budget. For instance, if you charge for amenities such as laundry or parking, the cost of waiving those fees may be negligible compared to the benefit of winning over a reliable tenant.

If you can manage without the extra income, waive the application fee for background and credit checks. Note that if you use Cozy, applicants are automatically charged for this, but you might apply this charge toward first month’s rent as a way to waive the application fee.

Remember that you’re trying to attract tenants. Applicants have a greater justification for renting with you if they feel like they’re getting a deal they couldn’t find elsewhere. The loss in fee collection is minimal compared to the vacuum of an unoccupied apartment draining your resources.

Of course, make sure that you trust the potential tenant and your screening process before going down this route.

2. Offer discounted rates

Discounted rates are clearly attractive to potential tenants, but this solution requires some careful math on your end.

Evaluate your expenses and the rates offered by your competition. Compare the costs of offering a monthly reduction against those of an extended vacancy, making sure that your property is still profitable with the deal you offer. Do you have the room to lower your rates if it means signing a tenant more quickly?

You could also offer discounts in return for more convenience. If a tenant can pay rent each month through automatic electronic payments rather than physical checks, for example, you can offer a rent reduction for making your financial life a little easier.

3. Consider a longer or shorter lease

Another way you may discount rates is to offer an extended lease for a lower monthly rate. The longer renters stay with you, the more your risk of extended vacancies is reduced.

The point of an extended lease is to keep your renters making regular contributions to your business. Keep an eye on your local market and any proposed tax changes to assess the risk of settling into a longer-term agreement. While you’ll receive less money for your unit, it may prove more consistent and reliable down the road.

On the other hand, some tenants may not be sure if they’ll be sticking around for a full year. If you need to fill a vacancy now, offering a shorter lease that allows for tenant flexibility may prove beneficial. This is especially true if you’re trying to find a tenant in an off-season. If the shorter lease ends in the summer, for example, you’ll have an easier time finding a more long-term renter.

4. Create more flexible terms

Renting an apartment is an enormous commitment, and a strict lease can turn otherwise excited applicants away. If you relax the terms of your agreement, applicants might feel more secure in deciding to sign with you. And there are small, inexpensive changes you can make to your contract to improve its appeal.

Offer a deal to find new tenants who may be perfectly great renters but crave flexibility that other landlords lack. Pet-friendly apartments are enticing to animal lovers searching for a place that accepts their furry friend. Permission to decorate the property may win some prospective tenants over. Others will find an early lease termination clause appealing, giving them a degree of freedom unavailable from your competitors.

5. Offer upgrades

If you can’t swing a rate reduction, property upgrades can be a powerful incentive for new tenants. Replacing an old oven with a newer model, painting the walls a more modern color, or increasing storage might win over tenants looking for a fresher living space. Property upgrades create value for you, too, since they will make your rental more attractive for years to come.

Be careful not to overspend on a project that will eat away at your profits. After all, you’re still responsible for all maintenance costs down the line. You don’t need to offer lavish upgrades to appeal to new tenants when simple improvements can make an impact. Something as simple as installing more shelving can please a renter without extending your regular budget for new projects.

6. Put together a gift basket

For those new tenants who have recently signed a lease, welcoming them to your building with a gift basket can be a great first step toward building a friendship. Renters who feel a closer connection with their landlord are more likely to renew their contract once it expires.

It doesn’t have to cost a lot to look like a nice gesture. Gift cards to local restaurants or the movie theatre, food, or a bottle of wine are all possible options when stocking your gift basket. An edible arrangement can make a good impression on your tenants.

7. Provide a free first month

At first glance, it seems like a ridiculous ask of any landlord. Who in their right mind would sacrifice an entire month’s rent? But consider the money lost on an already vacant unit that’s accruing nothing but dust, and a month of waived rent is well worth the income that will begin to flow in afterward.

When does offering a deal become a gimmick?

Some potential renters are wary of deals, seeing them as “gimmicks” that a landlord uses to attract the naive and gullible. After all, if the landlord has to offer a deal to find new tenants who will stick around, they might think the property suffers from an issue not explicitly advertised.

This is particularly relevant to No. 5 above. Densely crowded urban areas with high rent prices often have apartments that advertise a free month’s rent in exchange for signing a lease. While this isn’t misleading, these concessions can lead tenants to enter an agreement they’re unable to manage.

As a landlord, you need to fill your rentals. The fortunate news is that there are many ways to accomplish this task. As long as you do it with respect and fairness to everyone involved, you’re well on your way toward managing a happy, busy property.

What to do if the deposit doesn’t cover the damage or unpaid rent

Laura Agadoni — Wed, 20 Mar 2019 14:00:43 +0000

You did the right thing in collecting a security deposit. But what happens when that deposit isn’t enough to cover damages or unpaid rent?

Most landlords collect a security deposit equal to one month’s rent at move-in time to cover any damages or unpaid rent at move-out time. But if there were extensive damages to the property or if the tenant left without paying last month’s rent and there were damages, you’re out some money, and that isn’t right.

You have options, though. Let’s explore them.

1. Communicate with your tenant

To legally withhold the security deposit, you must, in most states, send a letter to your tenant explaining why you are holding some or all the deposit. And you must do so within the time limit specified by your state. You can find your state law here.

Here’s a template for documenting and itemizing deductions from the security deposit.

Download a Free Itemized Security Deposit Deduction Form Template

Send this document or one like it to your tenant to let them know why you are withholding some or all the security deposit.

If they still owe you money beyond the security deposit, you’ll also need to send a demand letter.

2. Send a demand letter

Along with sending the itemized list, you need to send a letter asking for what your tenant owes you, called a “demand letter.”

Here’s a sample of a demand letter you can send a tenant who owes you money.

Sample demand letter (when your tenant owes you money)

[Date]

[Tenant’s name]

[Tenant’s address]

Re: Return of security deposit

Dear [tenant’s name],

This letter concerns your security deposit in the amount of [amount of the total deposit] for the premises located at [address of the property] during your lease period of [start and end dates].

I will not be returning your security deposit for the premises located at [address of the property]. I am keeping the security deposit to cover the following:

[Include the itemized list from above.]

The total cost to cover these damages is X.

Because the cost of damages exceeds the security deposit, you owe me X, which represents total damages minus the security deposit, payable immediately.

Please remit your balance to:

[Your name and address]

Sincerely,

[Your name]

[Your signature]

3. Decide whether you should go to small claims court

You might receive the money owed to you after sending the demand letter. But if you don’t, send the letter a second time, attaching the first letter along with the second. If you still get nothing, you need to assess whether it’s worth your time and effort to take your tenant to small claims court.

The upside of going to small claims court is that you’ll likely win a judgment against your tenant if you can prove to the judge that your tenant does, indeed, owe you money. You get your money (theoretically anyway: see about being broke below), and you get satisfaction in that you were not taken advantage of.

But there are downsides to small claims court as well.

It’s time-consuming.

You need to prepare your case, organize the evidence, learn how to go to small claims court, and attend the hearing in the town in which your rental property is located.

Your tenant might be broke.

If you win a judgment, you still need to collect on that judgment. If your tenant has no money and no job, you won’t be able to collect.

You might not have the evidence.

If you didn’t keep proof, such as how your property looked at move-in time compared with how it looked when your tenant left, you might not be able to win in small claims court.

You pay filing fees and might lose pay by taking time off work.

Filing fees are usually less than $100 and you get them back if you win your case, but if you don’t have a strong case and lose, you need to be prepared to lose your filing fee. And depending on how valuable your time is, if you need to take the day off from work, you need to factor that cost in as well.

Your tenant could file a countersuit.

Whether your tenant has a case against you or not, they could file a countersuit. If you haven’t done everything by the book, you actually might go home owing your tenant money.

But if you can say “yes” to the following, you should seriously consider going to small claims court:

Your tenant owes you a significant sum of money.
You have proof of what you are owed.
Your ex-tenant has a job or a source of income.
You have the time and energy for small claims court.

If you don’t think you’ll get much or any money, you might want to write this off as a loss and move on.

Try to prevent excessive damages in the first place

It’s good to know what to do if you’re owed money, but it’s even better to prevent this situation from happening in the first place. Here are three measures to take to help avoid being out any money.

1. Conduct regular inspections

One way to help prevent excessive damage to your rental property is to perform periodic inspections. It’s important to strike the right balance between keeping tabs on what’s going on with your rental property and not becoming intrusive to your tenants. It’s typical to inspect your property at least once a year. Some landlords do this twice a year or even quarterly.

If you notice a problem, such as a tenant sneaking in a pet or an extra tenant or two, or if you notice a dying lawn or a water stain on the ceiling, you can nip the problem in the bud before a small issue becomes an expensive problem.

2. Have a walk-through a month before move-out

The time to do a walk-through is when the tenant is moving out or immediately after they move out. (You do that, right?) A walk-through lets you know whether you will need to withhold any of the security deposit.

But you can also do a walk-through about a month before your tenant moves out. At that time, you can go over with your tenant any items that need fixing. By doing the walk-through a month in advance, you give your tenant a chance to fix any problems so they can get all or most of their deposit back.

3. Screen tenants

A great way to help ensure you don’t lose money is to get good tenants in your property in the first place. And the way to do that is by tenant screening. Of course, screening doesn’t guarantee a perfect landlord/tenant relationship, but it helps immensely.

I use Cozy to screen tenants. I require a background and credit check on all applicants. The applicants pay directly to Cozy for this service, and I receive the information to review, which helps me decide whom to rent my properties to.

Bottom line

Making repairs because of damages tenants cause and being out rent for a month or more from a tenant who stiffed you are risks landlords take. Knowing what to do if this happens to you and helping prevent this from happening in the first place lessens your risk of losing money.

Top 3 tricks landlords should steal from Airbnb hosts (but aren’t!)

Sarah Block — Wed, 13 Mar 2019 14:00:03 +0000

When you go on vacation, you expect an experience. Airbnb hosts and other vacation rental owners spend a lot of time on that point.

To stay in demand, vacation rental owners need to understand how to create a great experience for their customers. This keeps their occupancy high, their rental in demand, and their nightly rate at a premium. By thinking like a vacation rental host, landlords can reduce tenant turnover, keep their units in demand, and charge more for rent.

To level-up their business, landlords should provide great customer service and offer tenant “bonuses” to reduce turnover and increase rent. Below are the top three tricks that long-term landlords should steal from Airbnb hosts.

1. Amazing Communication

The top Airbnb hosts have high communication rates. Furthermore, Super Hosts have a minimum of a 90% response rate. How can you replicate this?

Use Cozy’s maintenance ticket system to quickly respond to repair issues.
Respond quickly when you have requests for a unit showing.
Show future tenants how responsive you are by having current and former tenants review your rental property on Google Maps or your property website.

In fact, 82% of Americans at least sometimes seek out reviews before making any kind of purchase. Your prospective tenant will feel more at ease about entering a year-long commitment with you if they can view reviews beforehand. In addition, from the beginning, you are showing them that their time matters.

2. Welcome Package

A welcome package is an essential part of the experience of staying in a vacation rental. It tells guests about the property, local restaurants, and anything else they might need to know to make the vacation as simple and relaxing as possible. Long-term rentals are no exception.

Landlords should have a welcome package that includes:

Unit rules and regulations
A small welcome gift like flowers, chocolates, or a gift card
Location details like public transportation, local restaurants, local events, local attractions, and anything else that might make their move more seamless.

Related: The perfect move-in package

3. Concierge Services

Lastly, landlords can create a wonderful living experience for their tenants by offering premium services included in the rent. This provides an added selling point and makes life just a little easier for your tenant.

Let’s say your usual tenant is in corporate America and pays a premium to outsource tasks. An added bonus to your rental property could be as simple as including maid service, an Amazon Fresh subscription for quick grocery delivery, and laundry service with the rent. By cutting those chores out of your tenant’s life, you’re providing the best gift you can: time.

Conclusion

To summarize, it doesn’t need to cost a lot to provide a great experience for tenants. Above all, simply caring about their time matters most. By communicating quickly, providing an informative move-in package, and including time-saving services with rent reduces turnover, allows for a premium rental price, and attracts good quality prospective tenants. So think like a Super Host and start thinking outside the box when it comes to being a top landlord.

How to attract long-term tenants

Holly Welles — Wed, 06 Mar 2019 15:00:54 +0000

Fresh out of college with the intention to move from my hometown to a new city, I was searching for an apartment. And when I finally found the listing of my dreams—okay, a listing I could afford—I first had to make sure the landlord was someone I trusted to respect my living situation as much as I respected their property.

For a young renter, meeting with a new landlord can be intimidating. I was nervous about apartment hunting on my own, but even more nervous about failing to see eye-to-eye with my potential landlord.

Fortunately, from our first meeting, my landlord made it clear that my interests were as important as his business. I live in a small building with my landlord residing on the first floor, which makes a healthy rental relationship crucial. Happily, my landlord has a great attitude that has attracted and kept multiple long-term tenants.

I’ve renewed my lease since that first year and have every intention of doing so until my living needs change. How did my landlord inspire this, and how can you take his lead? From moving in to living in harmony, here’s how you can inspire long-term rental relationships with tenants.

1. Consider a compromise

The day I signed my lease, the landlord was showing the listing to two other potential tenants. I had lined up a few viewings and was hesitant to jump on signing without finding out my options. Rather than pressure me to grab the listing while I could, my landlord granted me a grace period—he would not lease the space that day without hearing from me first.

I appreciated that this potential landlord was willing to work with me. His gesture showed me that he valued me as a potential tenant and was understanding of my situation.

If you want to make a good first impression on your tenants, laying the foundation to build a long-term relationship, making even a small gesture can do the trick. A flexible policy can go a long way.

2. Offer a warm welcome

When I moved in, my landlord provided me with a list of his favorite community hotspots and a few restaurant recommendations. His friendliness alleviated all my earlier anxieties about living in a new space, and he established himself as a go-to contact for questions about our neighborhood.

If you want to start off on the right foot, a small welcome gift or some cultivated advice can go a long way. It doesn’t have to cost a lot, but a welcome package is a kind gesture that shows you care. Besides free advice, here are some inexpensive items you might want to include:

Coffee beans
Baked goods
Cleaning supplies
Map of the area
Coupon or gift card for a local favorite
Your contact info on a notecard

Note that if you provide consumables, make sure your tenant is aware of the ingredients.

Welcoming your tenant opens a line of communication early on, encouraging your tenant to call you in case something happens. A welcome package is a perfect first step.

3. Maintain the “little” things

Neglect can drive a wedge in your rental relationships, particularly if the tenant believes you don’t care for their comfort. Landlords should respond to maintenance requests as soon as possible, and this can include more than apartment maintenance.

Parking was an issue during my first week of moving in because I struggled to perfectly maneuver into my tight space. When I mentioned it to my landlord, he guided me into the spot. He even sent me an appreciative text once when he noticed I had parallel parked like a pro. He took time out of his day for this small act, and I felt appreciative.

Related: Be an ethical landlord

4. Make the area safe

With today’s technology, installing security measures in your complex is simpler than ever.

Browse through the broad selection of modern tech and determine which cameras and locks are most suitable for your building. If you make the adjustments to your property, brief your tenants on new procedures and protocol. You can send out an email or place notes on the doors, but make sure to keep them informed.

My landlord has never compromised in this area. Between a security camera by my parking space and his diligence in maintaining my exterior locks, I feel secure living alone as a young woman. His respect for my security contributes to my decision to renew my lease each year.

5. Show respect for privacy

I never have to worry about surprise inspections. That’s not a healthy way to approach the landlord-tenant dynamic, not to mention that the practice is illegal in most jurisdictions. Though you own the property, you should show some tact when navigating a renter’s space.

If you’re planning to enter a tenant’s unit for whatever reason other than an emergency, let them know in advance. Schedule a date and time that won’t inconvenience them, and try your best not to break from it. They should feel happy to see you, not horrified at the prospect you might appear at any given moment for an impromptu check.

In this area, like many others, your relationship rests on your ability to communicate. Maintain a regular back-and-forth where you discuss these things. Tenants deserve privacy, so it’s essential you give them their personal space.

Building long-term rental relationships

My concerns about navigating my new rental relationship were swept away by the respect my landlord has shown for both the apartment I leased and my living situation. None of his actions take much time or money, but they add up. Not only am I more likely to continue this long-term rental relationship, but I’m also encouraged to do everything I can to make my landlord’s life easier as well.

Your tenants can share my positivity. Start with a small gesture, and go from there.

The problem with collection agencies

Laura Agadoni — Wed, 27 Feb 2019 15:00:14 +0000

There needs to be methods for creditors to collect debt owed them. Otherwise, they run the risk of going out of business.

As a landlord, you are a creditor. If your tenant skips out without paying rent, or if they damage your place more than what the security deposit covers, you need to be able to recover your money.

One way to try to get your money is to use a collection agency. Doing so might work for you, but you should first understand the process and what it entails before you go down this path.

Why?

Because there are problems associated with collection agencies.

1. Collection agencies don’t collect

The odds of a collection agency actually collecting the debt they are going after are not good.

Estimates vary in just how successful collection agencies are. A generous estimate is 20 percent, meaning that there is an 80 percent chance that a collection agency won’t be able to collect delinquent debt for you. And some estimates are as low as an industry-wide 11 percent success rate. That’s pretty dismal.

To make matters worse, the success rate for collections is down from decades past, when the collection rate averaged 30 percent. So not only are your odds of getting your money low when you use a collection agency, the odds are getting worse as time goes on.

2. Collection agencies are expensive

Ideally, as a landlord, you should get all the money your tenant owes you for back rent, damages, and late fees (that were specified in the lease).

The best way of doing that is to handle the collection process yourself, typically by sending a demand letter, calling your tenant, or by starting the eviction process. You might not have the time, however, to track down your tenant, or you might have tried but were unsuccessful.

Related:

Getting some of the money you’re owed is better than getting nothing. So if you can’t collect on your own, you might consider a collection agency. You’ll pay either a flat rate or a percentage of what the agent collects.

You’ll probably pay less by paying a flat rate, but see No. 1 above—the odds are not good that the agency will be successful in collecting the money your tenant owes you. If you pay a flat fee, you potentially are out even more money. If you pay a percentage of the collection, expect to pay between 25 percent and 60 percent of the collected debt to the collection agency.

3. Collection agents can be shady

Some collection agencies allow their agents to use unlawful tactics to try to collect debt. You might have heard stories about aggressive collection agents who harass people for money they don’t owe, threaten jail to debtors, or who call employers and put people’s jobs in jeopardy. None of that is legal.

Not only is it wrong to subject people to unlawful collection tactics (even people who owe you money), it gives you a bad reputation by associating with unscrupulous people. You might even find yourself being sued.

Fair Debt Collection Practices Act

Collection agencies must comply with federal law, specifically the Fair Debt Collection Practices Act (FDCPA). Ask agencies you’re considering using if they comply with FDCPA regulations. Under the Act, agencies must adhere to the following:

No calls to debtors before 8 a.m. or after 9 p.m.
No calls at work if the debtor requests that.
Collector must stop contact if the debtor requests so in writing.
No contacting friends and family more than once. And the one contact can only be to get contact information, not to inform friends and family about the debt.
Agent must provide proof of the debt to the debtor.
Debtors cannot be threatened with harm.
Agent cannot threaten to take legal action unless they actually can and will.
Collector cannot lie about who they are.
Collector cannot send fake legal documents to trick the debtor.

Unless you check out the firm you are hiring and find out the tactics they use to collect, you could be contributing to the problem.

Finding a good agency

Many collection agencies are reputable and play by the rules.

Here are some ways of finding a good agency:

Ask for referrals from trusted professionals you know, such as your lawyer or accountant.
See whether the agency you are considering is a member of ACA International, The Association of Credit and Collection Professionals, the leading trade organization for the industry.
Look online for complaints against an agency you’re considering.
Make sure the agency is licensed.

Bottom line

Using a collection agency could work for you, but be prepared for disappointment. You’ll have a better chance of collecting your money if you hire a collection agency that specializes in collecting rent from tenants. Also, the younger the debt the more likely it will be to collect. Provide the agency with your lease, what the tenant owes, and all attempts you have made to try to recover the money yourself.

How to increase your income without raising rent

Sarah Block — Wed, 20 Feb 2019 15:00:52 +0000

Being a landlord has always given me a sense of pride, hope, and entrepreneurship.

There are so many possibilities in how to make money as a landlord, even without raising the rent, and even without having long-term tenants. The money-making possibilities are endless and exciting.

Top 10 ways to increase income without raising the rent

1. Add a vending machine

Adding a vending machine to the laundry area, storage, or common area of your property could add significant income. For example, adding an automated vending machine to one apartment building generated $2,500 a week in revenue. People pay for convenience. A vending machine with food, detergent, Chapstick, and toiletries saves people time, and if they run out of something they need right away, the vending machine is a convenient choice.

New vending machines can be expensive, but smaller properties can buy one used for a few hundred dollars and start generating a new income stream immediately.

2. Charge pet rent

In the United States, 68% of households own a pet. While it is understandable to not allow pets in your rentals, a large portion of renters are cut out. By allowing pets and catering to them, you open a floodgate of opportunities. You can charge a monthly pet rent or a pet fee. Tenants will happily pay a little extra to allow for their pet. As a bonus, you can offer dog walking for tenants. Work with a local dog walker. In exchange for a referral, you can get a percentage of the profits.

3. Use Airbnb during vacancies

Do you have a vacant unit? Don’t stress. Rent it out by the night instead. You will make more per night than with a long-term renter, and you have flexibility with showings. No, you won’t be able to show when you have guests, but you can schedule around the guest calendar. A unit with rent at $1,300 per month might bring in $150/night as a vacation rental. It would only take about nine nights to make up the lost rent.

4. Charge for shed storage

Storage is coveted by most renters. So don’t let your shed go to waste. Even small storage sheds can bring in an extra $35-$50 a month, while larger sheds can bring in as much as $200 a month. Move that lawnmower somewhere else, and take advantage of the extra income.

5. Rent out the garage

When I bought my three-flat, the previous owner was renting out the garage for $200 extra a month! In areas where parking is limited, this is something you need to take advantage of. The amount you can charge per month depends largely on the area. In metropolitan areas, it isn’t unheard of to charge $100-$200 a month. Uncovered parking spots can be rented out for an extra $50-$100 a month.

6. Lease a billboard

If you have a larger building, leasing a billboard can be quite lucrative. One BiggerPockets blogger told the story of a $25,000 fire-damaged apartment building that was getting $2,000 per month per side for a billboard. Imagine $4,000 extra income a month for no extra work.

7. Offer upgrades

Make life a little easier for your tenants by offering upgrades. Think hotel services like dry cleaning, laundry, maid service, or lawn care. People pay extra for their lives to be easier. If they were going to be outsourcing those services anyway, it’s a big bonus to have those available through their landlord or property management company.

8. Lease a cell phone tower

Would you have an interest in earning a passive six figures? That’s well within reason when leasing out space to a cell phone tower. Leasing out space to a cell phone tower averages $1,300 in rent a month. In San Francisco, you can earn as much as $2,500 a month!

9. Provide furnished rentals

Furnished rentals can fetch a higher rental price per month than unfurnished. Corporate, short-term, and cross-country tenants are more likely to rent a furnished apartment and will pay more for it. An extra bonus is that during tenant vacancies the unit can be rented on Airbnb or VRBO. The rent will increase, on average, 25-30% for a furnished unit.

10. Add solar panels

By adding solar panels to your rental property, you can become the utility company. Adding solar panels can generate income in three different ways: 1) increase rent to include energy, 2) sell excess energy to utility company, or 3) charge an electricity bill to tenants for using the solar energy.

In conclusion

Rental income is not the only way to generate money with your rental property. There are many options for adding passive (or not so passive) income to your monthly income. Why not take your rental business to the next level by adding a few new streams of income?

What sparks joy in your rental business?

Sarah Block — Wed, 13 Feb 2019 15:00:51 +0000

Marie Kondo’s new Netflix show “Tidying Up” is inspiring people to find what “Sparks Joy” in their homes. But what about the landlord tasks in your rental business that spark joy in your life (or don’t)?

Landlords have a multitude of tasks involved with their business. Some we love, and some we hate. Life is short. So why aren’t we spending our time doing what we enjoy and outsourcing the rest?

The key is deciding what tasks to keep and what to outsource to someone else. But outsourcing can be difficult for most landlords. Whenever I speak with landlords about this topic, the most common response I hear is, “That reduces my profit.”

It does if you choose to think of it that way. However, if you think of your time in terms of dollars per hour, you factor in how much your time is worth. If you outsource a task you don’t enjoy and it costs less than your value, it frees your time up to make money doing something you enjoy.

Find what sparks joy in your rental business

One of the bests aspects of being a landlord or property manager is there are so many different things to do to make the business work.

Researching and finding the best rental
Preparing the unit to be rented
Advertising
Finding tenants
Screening tenants
Onboarding tenants
Managing maintenance and communication
Handling the finances

The hard part about being a landlord is that you are bound to hate some of those tasks.

How to decide what to outsource

Make a list of everything you do for your rental properties—from cleaning to showings—and number them from 1 (what you love) to 10 (what you hate).

Figure out how much money your time is worth. Consider commute costs, how much you get paid doing other jobs, and any other factors that affect the value of your time to determine how much your hour is worth.

Consider whether special tools or equipment are needed for any of the tasks. What is the cost for those tools?

Look at the tasks you marked in your bottom 5.

How many hours would those tasks take you to complete? Keep in mind, it will take you longer than an expert.
What is the cost of special tools, equipment, or materials for those tasks?
What is the going rate for someone to complete those tasks?

Add up the hours it would take for you to complete the task and multiply it by your value per hour. Add in the cost of materials and equipment needed for the task. What is the cost of that task if you complete it?

Now, how much would it cost someone else to complete it? If this number is less than your number, outsource it.

How to increase profits by “Sparking Joy?”

You might be thinking that this method of outsourcing and doing only what sparks joy for you is all well and good. But not actually getting paid during the time you’re outsourcing a task to someone else isn’t ideal.

But what if you can be paid while you outsource?

Look at the top five tasks on your list, the tasks you love doing. Can you offer any as a service to other landlords?

You have experience doing those tasks. You enjoy doing them. Other landlords might have them on the bottom of their list. Why not build a service business doing what you love?

Conclusion

Life is too short to do tasks you hate. Outsource the landlord responsibilities you don’t enjoy doing, and focus on what you do love.

The end result will be better quality work. And you will find more joy in your life.

How to deduct rental business startup expenses on your taxes

Sarah Block — Wed, 06 Feb 2019 15:00:19 +0000

It’s tax season! If you started a rental business this year, you’ll want to know how to deduct all your expenses. Or perhaps you’re researching how to start a rental business and need to know how taxes work.

This guide explains how to deduct startup expenses, what the tax rules are for expenses after you start the business, and changes to the 2018 tax laws that affect landlords.

Rental property startup expenses

Use the $50K rule.

Keep startup expenses under $50,000. You can deduct $5,000 the first year and amortize the rest over the next 15 years. Above that amount, the first year deduction becomes less and less.

The $50,000 limit is easy to meet for most rental businesses. But it can be exceeded with a BRRR—buy, renovate, rent, refinance. That renovation can certainly add up.

What expenses can be deducted during the startup phase?

The “startup” phase is before the unit is rented and no income is coming in. Any expenses that incur during this period are considered “startup” expenses.

These expenditures can include:

Repairs that get the unit or property ready to rent
Office expenses like office supplies, phone service, or office space
Time related to researching rental properties
Pre move-in rental expenses such as landscaping, handyman, cleaners, or leasing agent
Any business permit or license fees
Fees for attorneys, accountants, property managers, or other professional services

When starting up a rental business, try to keep these expenses under $50,000. Do this by holding off on items that can be purchased after the place is rented. Once it is rented, you can deduct your expenses fully each year.

Tax write-offs for rental businesses

Each year, landlords can deduct many of their expenses related to their rental business.

What can landlords deduct on their taxes?

As a landlord, you can deduct many expenses on your taxes. Keep all your receipts and use a CPA (certified public account) to make sure you don’t miss a write-off. Each one counts!

Interest on the mortgage
Depreciation
Repairs
Personal property used in the rental or office space
Travel to and from the rental—including gas, upkeep, and wear and tear
Contractor costs for repairmen, property managers, leasing agents, cleaners, or handymen
Insurance
Professional services such as lawyers and accountants

How does the 2018 tax law affect landlords?

Landlords benefited from the 2018 tax law.

An updated pass-through law lets landlords “pass-through” the profits from their rental property to their personal tax rate (IRC Sec. 199A). If you make $30,000 in profits on your rental properties, for example, and your personal tax bracket is 24%, you would pay $7,200 in taxes.

If your rental business qualifies as a business, now through 2026, you can deduct 20% of your rental income plus expenses. From the previous example, if you make a profit of $30,000 from your rental properties, you can deduct 20% from your profit. This brings your taxable income to $24,000. If your tax bracket is 24%, you now pay $5,760 in taxes, saving $1,440. Be sure to ask your CPA if you qualify for this bonus deduction.

Conclusion

The updated 2018 tax law benefits landlords. Make sure you get all the new deductions available to you. Find a tax accountant that understands taxes for landlords. The new tax law is complicated, so it’s time to bring in the experts to get your landlord deductions right.

What’s a tenant walk-through?

Laura Agadoni — Wed, 30 Jan 2019 15:00:15 +0000

After you move out of your rental, how can you prove the carpet came with stains already on it or that the countertop didn’t get chipped during your stay?

If you don’t do a tenant walk-through, also called a landlord walk-through or a move-in/move-out walk-through, you often can’t prove existing damage. If that’s the case, it becomes your word against your landlord’s.

Learn how to prove existing damage so it doesn’t become your word against your landlord’s.

Landlords ask for a security deposit to cover any damages caused to the property during a tenant’s stay. Landlords aren’t supposed to charge for normal wear and tear or to pay for brand-new upgrades. (Although a cleaning fee or something along those lines is sometimes required as part of the lease agreement.)

If you’re renting a unit that has some damage, make sure your landlord doesn’t charge you for that damage when you move out. The way to ensure you aren’t is to request a tenant walk-through at two times: move-in and move-out.

The good news is that landlords usually want to do a walk-through just as much as you do. Why? It goes both ways. If you damage something during your stay, the landlord needs to prove that damage was not there when they gave you the keys.

Use a checklist

Before you move into a rental, you need to look at more than the pretty things, such as the nice view from the bedroom window. You need to look for damages or defects, too.

It’s difficult to know what to look for or to know whether you inspected everything you should, so it helps to have a checklist with you. Landlords often provide tenants with a checklist, but if yours doesn’t, you can use this one.

Download a Free Inspection Form Template

Have a copy for yourself, and make a copy for your landlord. Or just take a picture of your checklist after it’s filled out and signed, and send it to your landlord. The important thing is that you both agree with what’s on the list. Once you do, you both need to sign the checklist.

File the checklist with your lease. You can do this in a file folder that you put in a safe place at home. Or save it on your computer. You’ll need to bring this checklist with you when you move out if you have a move-out inspection with your landlord. If you don’t have move-out walk-through with your landlord, you’ll need the checklist in case your landlord tries to charge you for damages already noted on the checklist.

Take pictures and/or video

You can take pictures or video of the rental in addition to or in place of filling out the checklist. This is another way for both landlords and tenants to have proof of what the unit looked like at move-in and at move-out. It’s best to date stamp the photos somehow, such as using an app that shows the date. With video, state the date at the beginning.

When it’s time to move out

A couple of weeks before you move out, you might want to request your landlord do a walk-through with you. That way, if they see possible problems, they can let you know what you need to fix to avoid being charged.

If your landlord isn’t interested in doing that, you can go over your checklist, photos, or video yourself. If you return the unit in the same condition it was in when you moved in (minus normal wear and tear), you should receive all your security deposit.

The day you move out (and after all your stuff is out) is the time to fill out the move-out part of the checklist or to take a second set of photos or another video. Remember to date everything. Now, you have a before-and-after record.

The day you move out, your landlord might do a walk-through with you. But your landlord doesn’t have to do that. They might prefer to conduct the inspection after you leave. Some landlords feel stressed or rushed to conduct a proper walk-through with a tenant following them around.

And that’s okay. Landlords have a certain time limit to return the security deposit or provide a reason why they are holding all or part of it. This varies by state. Look up your state’s law here.

Just make sure if your landlord keeps all or part of your security deposit that it’s for damage you really caused. If your landlord is wrongfully holding your deposit, and if you have completed the checklist or have photos or video, it will be easy enough to prove.

What to do if you’re underwater on your investment property mortgage

Sarah Block — Wed, 23 Jan 2019 15:00:08 +0000

What do you do if you’re underwater on your investment property mortgage?

I have been there. Most likely, many who bought during the infamous real estate bubble have been there, too. In 2009, I thought the bubble had burst and prices dropped as much as they would. How wrong was I? I bought an investment property and quickly became underwater on it. I was drowning on that mortgage, and I didn’t know what to do. However, I had options, and so do you.

Let’s take a look at some baseline numbers to determine your best move.

Are you making a monthly profit?

The first thing you will want to do is look at the month-to-month profitability of the property. While a rental unit might not have equity, it might have profitability each month. To determine the profit you make each month, add up your mortgage, monthly taxes, monthly insurance premium, and anything else you pay. Then, subtract this number from the rental income you make on that property.

(monthly PITI, maintenance, 10% to reserves) – Rental income = Profit

Questions to ask yourself

1. Are you in the positive?

If so, hold out on selling. If you are making a profit, it makes sense to hold the mortgage and wait for the value to increase to build equity.

2. Are you breaking even?

If you are breaking even, it might be a good idea to hold the mortgage. Each year, you pay down the principal a bit more. Your rent check each month brings you closer and closer to the surface. Unless you truly don’t enjoy being a landlord, or it is more work than you can handle at this time in your life, keep it in your portfolio.

3. Are you in the negative?

Did your calculations show that you were in the negative? That doesn’t necessarily warrant selling. Can you foresee an eventual turnaround? Real estate historically increases in value as time goes by.

What if I have a negative cash flow/loss?

For my property that was underwater, I was making negative cash flow the entire time I owned it, but I could afford to cover that cost. I covered the negative cash flow for nine years, knowing that the market would turn around, and it did. Earlier this year, I sold it at a profit. While it didn’t make sense for me to hold it as a rental because my mortgage was too high to ever have a positive cash flow from rent, it did make sense to hold until I could sell for a profit. My renters helped me pay down my mortgage and I made a little money in the end.

Look at your scenario and ask yourself these questions:

Can you afford a negative cash flow?
Will your property ever regain its value?
Do you have consistent renters that help pay down your mortgage balance?

If you answered “Yes” to these questions, it makes sense to hold the property. However, if you answered “No,” it might be time to look at your options.

What are your options to sell an underwater property?

When you have an underwater property that you have decided to unload, you have three options:

1. Short sale

To sell a property with a short sale, the owner needs to negotiate with their lender to accept a lower payoff than the balance. An owner or their Realtor can call the lender and speak with the real estate short sale or work out department to begin the negotiation process. Once you have found a purchaser, the lender needs to approve the purchase price and might decline to pay certain added items such as inspections. After the lender approves the purchase price, you can request they do not report this to credit reporting agencies, and they may or may not comply with your wishes.

2. Foreclosure

While no one wants to go through a foreclosure, sometimes choices are limited. When starting a foreclosure, the first step is defaulting on the loan. After 30 days, a lender sends a notice of default. This likely comes after they have reached out trying to change the loan payments to work with your financial situation. After 90 days of being in default, the owner gets a notice of sale. The last step is selling the property at auction.

3. Sell + pay loan balance

You can avoid short sales and foreclosures if you have cash on hand. The last option for homeowners is to sell the property for what it is worth and bring a certified cashier’s check to the closing for the shortfall. While it is not ideal to pay to get out of the mortgage, it keeps your credit intact.

Conclusion

Investment properties with underwater mortgages can make an owner feel helpless and stuck. However, there are options. In my situation, my property was underwater for about five years. I was losing money each month, but it was a manageable amount. I chose to wait it out, and eventually I sold for a profit. But each person’s financial situation is different. Look at yours to determine what the best move is for your lifestyle.

Can a landlord take possession of an abandoned property?

Laura Agadoni — Wed, 16 Jan 2019 15:00:48 +0000

The answer is a resounding, “Yes!” Landlords can most definitely take over abandoned property.

The real question, though, is how?

Even if you have a signed lease with your tenant, they don’t always stay the entire lease term. Things happen:

Maybe they could no longer afford rent.
They found a better job elsewhere.
They are in jail.
They are in the hospital.

Whatever the reason, if your tenant left without telling you, they have left you with an abandoned property.

It’s never a good idea to have an abandoned property. For one, you’re probably not collecting rent. You can sue your ex-tenant for rent until you find a new tenant—that is if you can find your ex-tenant.

Another reason abandoned property is not good is that it opens your property up to the possibilities of squatters, vandals, water damage, and fire.

I have a clause in my lease that states what happens if the tenants will be gone for just seven days:

Extended Absences by Tenant

Tenant agrees to notify Landlord in the event that Tenant will be away from Premises for seven consecutive days or more. During such absence, Landlord may enter the Premises at times reasonably necessary to maintain the property and inspect for damage and needed repairs.

There is no question that you can and should take control of your abandoned property, but you can’t just start re-keying and tossing out your ex-tenants’ belongings.

Why not?

Your tenant might have left but had every intention of returning to the property. If you took possession in that instance, your tenant could claim wrongful eviction, and you might need to pay damages.

Here’s what to do if you suspect your tenant abandoned your property.

Determine whether the property is truly abandoned:

Unless your tenant told you they were moving out early, you can’t necessarily be sure they abandoned the property just because no one’s been home for a few days or even weeks. Assuming they abandoned the property is not the same as knowing they abandoned the property. Here are some ways to tell.

1. Your tenant is still paying rent

If your tenant continues to pay rent, even though they haven’t been living there for a while, it means the place is not abandoned. In this case, it’s best to contact your tenant to find out what’s going on. If they are away for an extended time, let them know that you or your representative will need to check on the place every week or so until they return. It’s unsafe to leave a property vacant. If your tenant has stopped paying rent and is gone, they might have abandoned the property.

2. Speak with the emergency contacts

This is one of the times to call the emergency contacts listed on your application. Let them know your concerns and ask if they know whether your tenant has moved out.

3. Ask the neighbors

Maybe one of the neighbors saw your tenant moving out.

4. Check to see whether the utilities are off

Give your tenant 24-hours’ notice that you will come in. If you hear back, you can ask what’s going on. But if you don’t get a response, come over and check all the utilities. If they are off, it’s a sign the place might be abandoned.

5. Check for garbage and old food

If the place has old garbage and rotting food in it, you have found another sign that your tenant might have abandoned the property.

What to do with abandoned personal property left behind

If there are valuables such as clothing and furniture still in the unit, the place might not be abandoned. But then again, it might. In this case, you need to get in touch with the tenant. Notify them to pick up their property by a certain date. If they don’t get it by that date, let them know that you will dispose of it, donate it, or keep it for yourself.

Once you determine the place is abandoned:

If your tenant has stopped paying rent, their emergency contacts told you your tenant has moved, the utilities are off, and nothing is left in the rental, you can probably determine that your tenant abandoned the property. Here’s what to do.

1. Send a letter

Send your tenant a letter notifying them they have 10 days to let you know whether they have abandoned the rental unit. If you have not heard from them, you will declare the property abandoned.

2. Take photos

Take photos of the property that demonstrate why you think the place has been abandoned, such as lack of furniture or an overgrown lawn.

3. Document and describe the situation

Document the reasons you believe the place has been abandoned, such as not receiving rent or finding that the utilities have been turned off. Note the date of the last rent payment you received.

4. Record your conversations with the neighbors

Keep a record of any interviews you had with emergency contacts or neighbors.

5. Use USPS certified mail

Send all communication to your tenant through certified mail to prove you tried to contact them about whether they have moved and about picking up their belongings.

It’s never fun to find that your property has been abandoned. Your job now is to mitigate your losses by doing something about it. Take back your property as soon as possible, but make sure you do so the right way.

It’s best to have a lease clause that addresses abandonment issues. But whether you have such a lease clause or not, take the necessary steps to document your reasons for taking back your property.

When is a tenant responsible for repairs?

Kathy Adams — Wed, 09 Jan 2019 15:00:14 +0000

Whether you own a home or rent one, things eventually break, malfunction, or wear out.

Generally if you’re a renter and you break something, you pay to repair it. If something breaks not because of you, such as because of age, the landlord is typically responsible. But what about minor repairs that are inexpensive or simple enough to do yourself?

You might be better off just handling them yourself. Before calling the landlord for every minor maintenance or repair issue, consider who should really be handling those repairs.

Check your lease agreement for repairs

There’s no need to stress out the moment that bathroom sink faucet starts to drip. Before wondering if you’re in charge of such repairs, check your rental agreement. In most cases, the contract discusses which repairs are the landlord’s responsibility and which may be yours.

For instance, Landlordology writer and rental owner Laura Agadoni includes language in her rental agreements noting that tenants are responsible for repairs $50 or less. Anything costing more is her responsibility, as long as the tenant or tenant’s guests didn’t cause the repair issue.

Is it a big deal?

If your lease isn’t clear about who should handle your specific repair issue, consider whether the problem is a big deal or a minor annoyance. For instance, if your entry door won’t lock properly and never has, your landlord should fix it, as your safety is at stake. If your cat uses the window blinds as a ladder, destroying them in the process, this isn’t such a big deal. It’s also an issue that you are definitely responsible for, since your pet caused the problem.

If that leaky faucet keeps you awake at night, the landlord may be willing to fix it, especially if they pay the water bill. It doesn’t hurt to submit a written repair request for something like this if you aren’t sure whether it’s your responsibility. Even so, use those repair requests sparingly, as no landlord enjoys being pestered repeatedly by the same tenant for somewhat minor concerns.

Check your state’s laws

Tenants have a right to habitable living conditions in every state. For instance, a functional heat system is a requirement. If your heating unit breaks down, the landlord must repair it, no matter where in the United States you live.

Some states such as Washington take things farther, noting that a landlord cannot legally make the tenants responsible for any repairs except when the tenant or their guests caused the damage.

If your repair issue is potentially difficult or costly and isn’t an obvious landlord responsibility, check your state laws for more clarity.

Handle what you can

Minor things such as burnt-out light bulbs or mildew in the shower are typically the tenant’s responsibility. Even if this isn’t spelled out in your agreement, it’s usually easier to deal with the issue yourself than to contact the landlord over what amounts to a minor annoyance.

If a screw is missing from the deadbolt hardware, replace it yourself.

A stain on the carpet near the front door is also easier to deal with yourself; the landlord usually isn’t responsible for cleaning-related issues.

On the other hand, if there’s mold and a wet, sagging spot on the bathroom ceiling due to a leak in an upstairs unit, it’s not your responsibility. But you should report it immediately before things get worse.

Definitely your responsibility

Certain maintenance issues are always your responsibility, unless your contract states otherwise.

It’s up to you to replace light bulbs and batteries in smoke detectors.

You also must keep the appliances clean, even if they belong to the landlord.

Even though it’s a rental unit, treat it as if you own the space. Keep the floors, walls, kitchen, and bathroom clean and in the best condition possible. The landlord expects the unit to be in the same condition when you move out as when you moved in, other than normal wear.

What not to do

Even if you have the skills of a general contractor, don’t make major repairs yourself without the landlord’s consent. Patching a nail hole in a wall and repainting the spot to match the wall is okay; painting “ugly” walls an entirely new color is not. Likewise, replacing a window you broke may seem like the right thing to do. In the landlord’s eyes, it might be all wrong. The window may not match the rest of the building’s windows.

Do not make any such repairs without asking the landlord first. The landlord may prefer to use their own contractor or do the work themselves and send you the bill. This ensures the work done meets your landlord’s standards.

In a nutshell, handle simple things such as light bulbs and cleaning yourself. Consult your rental agreement for anything that seems like a gray area. Major issues such as heat and electricity are definitely up to the landlord.

Year in review: the best of 2018

Lucas Hall — Wed, 02 Jan 2019 15:00:20 +0000

Welcome to the new year! As we dive into 2019, we’d like to take a moment and reflect the highlights of the past year. Whether you’re a landlord or a renter, we’re glad you’re here. Please enjoy the best articles of 2018.

2018 summary:

Over 4 million unique visitors
16,371 average daily page views
5,052 comments
10,118 landlord guides downloaded
Published our 500th article
Last but not least, Cozy, the company behind Landlordology, has joined CoStar

We’re proud to be a part of an amazing community of real estate investors, landlords, managers, and renters. Thank you for being there with us.

Without further ado, here are the best articles from last year, based overall on quality, popularity, engagement, and traffic.

Best articles of 2018:

JANUARY

How many pets are too many?

Some landlords believe that even one pet is one pet too many in their rental property. But if you allow pets, you should have a plan on how many to allow. It’s a good idea to have a pet policy in your lease that you go over with your tenants before they move in.

FEBRUARY

Umbrella insurance: can it replace an LLC?

Did you know there’s an alternative to an LLC that protects your finances? It’s umbrella insurance. Landlords can protect themselves from lawsuits with a simple umbrella insurance policy and avoid the problems involved with an LLC.

MARCH

Offer incentives to current tenants so they stay

If you do your job properly when it comes to taking care of the tenants, they’ll ultimately take care of you by wanting to stay. After all, every renter wants and deserves a good landlord and a well-kept property.

APRIL

Cleaning and repair rules when you move out

If you leave your rental in bad shape when you move out, your landlord can hold the cleaning costs from your security deposit. After all, it’s your mess. But the security deposit is your money. You want as much of it back as possible, right? So what are your responsibilities?

MAY

When can you withhold rent?

Tenants will learn when it is legal to withhold rent when the landlord is not making proper repairs. But this can be a very risky move for tenants: it can result in eviction.

JUNE

Rental application fees: what you need to know

Experienced landlords, particularly those who’ve been burned by less-than-exemplary renters, always screen future tenants. And that costs money. Thus, the application fee, which pays for background checks and credit reports for each person on a lease.

JULY

9 maintenance issues tenants are responsible for

A landlord is required to provide a safe and habitable residence, but landlords and tenants share responsibility for keeping it that way. Tenants should maintain sanitary conditions and contact the landlord whenever repairs are needed.

AUGUST

Tenant move-out letter plus two other free templates

When your tenant plans to move, you should make the move-out process as smooth as possible. This benefits you and your tenant—when your tenant knows what to expect, they’re more likely to meet your expectations. Here are some templates you can use when your tenants’ leases are about to end.

SEPTEMBER

What to do when your tenant is locked out… again

If you don’t mind being on call 24/7 to deal with every Mr. and Ms. Forgetful you rent to, don’t worry about it. But if you appreciate peace of mind and wish your tenants would learn to be more responsible, there’s a few things you can do about those lost-key situations.

OCTOBER

Should I accept credit card payments as rent?

Is it a good choice to pay rent with a credit card? Learn the pros and cons of which payment method makes the most sense for your finances.

NOVEMBER

When is rent considered received?

It’s best not to push the limits on your monthly rent calendar if you want to avoid landlord-tenant friction, or worse yet, eviction. Although many mortgage companies offer a payment grace period beyond the listed due date, the same is usually not true for rental payments.

DECEMBER

A basic guide to landlord and tenant responsibilities

Landlord and tenant responsibilities can be complicated. This guide will outline which party is responsible for common landlord/tenant issues.

9 tips for getting your property ready to rent

Chris Deziel — Thu, 27 Dec 2018 15:00:37 +0000

A turnover gives you a little time to spruce up a rental in a way you can’t while it’s occupied.

You may not need to do a major cleanup or repair, but you can take care of some of the small but important details that make a rental attractive to quality tenants and ready to rent. You should always make repairs necessary to satisfy habitability requirements, but don’t stop there.

Here are 9 tips for getting your property ready to rent.

4 essential and inexpensive tasks

Once your rental is empty and disrupting tenants is not an issue, seize the opportunity by completing tasks that affect habitability, such as checking the smoke alarms and making sure all the electrical outlets and plumbing fixtures work and are safe. While you’re at it, pay attention to the following four tasks:

1. Test and service appliances

Turn on the oven to verify that the temperature on the dial and that recorded by a thermometer inside are the same.
Check the water heater pilot to make sure it’s steady and blue.
Wash a load in the washing machine and dry it in the dryer.
Clean out the dryer vents.
Perform any repairs that your tests indicate are needed.

2. Clean and deodorize

The entire unit needs cleaning after a lengthy tenancy, but especially the kitchen and bathrooms.

Grease buildup in the kitchen may call for a strong detergent, such as TSP, for removal.
Use liberal amounts of disinfecting cleaner in the bathroom.

Also clean the carpets. Unless the tenants who just moved out were particularly conscientious, they will probably need shampooing.

3. Search for and eradicate mold

Look for mold in the following places:

Dark corners of the laundry room
Bathroom tiles and fixtures
Closets

Scrub mold with soap and water, but don’t try to scrub mold out of drywall. Unless the mold is clearly only growing on the surface paint, the only way to eradicate it is to replace the affected drywall.

4. Re-key or change the locks

It’s a good idea to change locks between tenants. If you can’t re-key the existing locks on the entry doors, replace them. This might be a good time to install keypunch locks that you can simply reprogram during the next turnover.

5 important jobs that may cost a bit

If you’re prepared to devote a modest sum—in the neighborhood of $1,000—toward getting your unit ready to rent, the following items should be high on your to-do list so that you can attract quality tenants who’ll pay top dollar.

5. Paint the walls

Repainting a rental unit before occupancy is a good idea, but it isn’t something you always have to do to get a unit ready to rent. However, painting freshens up the space in a way that cleaning can’t. Professional painting costs from $400 to $700 per room, but you can reduce this cost by more than half by doing the work yourself.

6. Spruce up the landscaping

If you’re renting a detached unit, pay some attention to the lawn, garden, and entryway.

Trim back foliage that covers windows or hangs over the roof
Edge the walkways
Plant a few decorative plants

You might even consider paying a contractor $100 to $150 to paint the front door, which Realtors advise is the easiest and most effective way to upgrade the exterior of a home.

7. Clean or replace curtains and window screens, and wash the windows

Take the curtains down, and put them in the washing machine or have them dry cleaned.
Remove the window screens, and wash them or replace them if they are torn or the frames are bent.
Consider having the windows professionally cleaned to bring light into the house.

8. Service the central air system

A vacancy provides a golden opportunity to bring in a technician to do a furnace and cooling system tune-up. It will include checking the seals in the compressor and blower, replacing the filters, and inspecting for small other small problems that could turn into big ones at some inopportune moment when an emergency repair is the last thing you need.

9. Restore hardwood floors

A floor restoration, unlike a refinish, doesn’t involve sanding off the finish. Instead, you merely scuff up the finish with a floor buffer and apply a refresher coat. It costs a fraction of what refinishing costs and can make a floor in good shape—but dulled by years of traffic—look new again.

Don’t be afraid to spend money to make a unit ready to rent

The amount of time and money you have to invest in getting a unit ready to rent depends on the rental market and the condition of the unit. In a community with rental shortages, you may not have to invest much money or time at all. Things are different in a competitive market, but don’t worry if you need to make a small investment.

By working to attract renters, you’ll reduce downtime and future maintenance costs, thus recouping your investment and keeping your books in the black.

How to convert your home to a rental property

Laura Agadoni — Wed, 19 Dec 2018 15:00:14 +0000

You’ve made the decision to convert the home in which you live, in other words, your primary residence, to a rental house.

Maybe you’re moving, or maybe you figure you can make some good money, collecting that all-important cash flow, by making your home your rental property. Whatever the reason for the change, congratulations on your decision!

But you can’t just move out and declare your home a rental. There are some things you need to do first. Find out what they are.

You need to take care of some business before you can turn your primary home into a rental property.

You might need to wait if you have a mortgage

Do you have a mortgage on your home? If so, you generally need to live in the home for at least 12 months before converting it into a rental. Why? Certain perks are associated with buying a primary residence as opposed to investment property.

You often get a lower interest rate and can put down less of a down payment when the mortgage loan is for your primary home versus a vacation home or an investment property.

If you say you’ll live in the house but you really are buying it as investment property, you are committing mortgage fraud. The penalty? Your lender could call in the loan immediately upon finding out. And that will probably lead to foreclosure.

Read your loan paperwork or call your lender to find out the waiting rules that apply to your loan. After you’ve lived in the home for the required time for your mortgage, you’re free to turn your primary residence to rental property.

Find out whether you can get another mortgage

When you move from your primary home, you might want to buy another home to live in. If that’s the case, find out whether you’ll qualify for another mortgage before you rent out your current home.

Your lender might consider the rental income you’ll get, but they might not. Either way, get the ball rolling by talking with a mortgage lender before you make any moves.

Check with your homeowners association

If your home is in a neighborhood governed by an HOA, you need to find out whether there are any restrictions regarding renting out your house. Some HOAs have no restrictions, some allow only a certain percentage or a certain number of homes in the neighborhood to be rentals, and some ban the practice altogether.

Change your homeowners insurance policy

Insurance policies for primary homes differ from insurance policies for rental properties. “In my experience, the insurance classification is really the biggest issue when converting a primary home to a rental property,” says Lucas Hall, Landlordology’s founder and Head of Industry Relations at Cozy.

And Lucas makes a great point. Why? If you need to file an insurance claim after you convert your home to a rental, but your policy has not been changed to a landlord policy, your insurer could deny your claim. “New landlords need to make sure they change the policy from a homeowner occupied policy to a landlord’s policy,” says Lucas.

Related:

Learn about tax changes

It’s best to consult a tax professional both for your rental property and for your primary residence. But you shouldn’t be totally in the dark about taxes. Here’s what you need to know.

The bad news (regarding taxes) is that if you make money, that money is taxable income, so you should figure out how that might change your tax rate.

But here’s some good news. Once you have rental property, you get to take these deductions for rental property expenses:

Utilities (if you pay them)
Homeowners association fees
Landlord insurance policy
Repairs you make to the house
Property taxes
Mortgage interest

Ask your tax advisor or find out from your local municipality about the homestead exemption you probably have on your current home. You are allowed to have that only on your primary residence, so find out what you need to do when you wish to convert your home to a rental.

Ready your property

Look at the competition. Are the rental homes in your area upgraded? If they are and your home isn’t, you should consider putting some money into your home to help ensure you’ll get renters and at market rate.

A new coat of neutral paint throughout the house and nice landscaping in front are good starts. You might want to then make a list of all the improvements you’d like to make and get them done gradually. At the very least, make sure your home is well-maintained and that everything is in working order.

Learn how to be a landlord

Once you rent out your home … hello, you’re a landlord. Many of us, myself included, learned the business by jumping in headfirst. But, you are apt to make costly mistakes this way. I know I did.

But lucky you: If you happened to find this site, browse around. We are here to help you along the way with informative articles, a comprehensive state law section, and a toolbox with tons of resources to help landlords succeed.

A basic guide to landlord and tenant responsibilities

Sarah Block — Thu, 13 Dec 2018 14:57:14 +0000

Who’s responsible for what in a tenant/landlord relationship?

I have my fair share of crazy landlord stories. I once had a tenant who wanted to move out a month after moving in. The question was: did they need to abide by the lease even though it just started? A year later, I had a tenant file a lawsuit because they believed damage in the unit was the landlord’s responsibility. So, who was right in each of these scenarios? What responsibilities did each party have?

We are going to dive into the not so fun, but always relevant, topic of responsibility. Laws vary between states, and even cities, so pay particular attention to your jurisdiction’s laws. Additionally, the lease will have specific rights outlined that must be obeyed. To learn specific landlord/tenant laws by state, visit this comprehensive guide.

Top 5 debated tenant/landlord responsibilities

1. Security deposit

Landlords are responsible for returning security deposits, usually within 15-45 days of the move-out date, but this varies by jurisdiction, so be sure to know yours. Landlords who own between 10 and 25 units or more often need to hold the security deposit in an interest bearing account. This also varies by state.

If the landlord is withholding any of the security deposit for loss of rent or damage costs, an itemized list needs to be sent to the tenant within the legal time frame for your jurisdiction. What happens if a landlord ignores this law? They can owe the tenant twice the security deposit plus court fees.

2. Lease termination notice

Occasionally, tenants need to break a lease for various reasons. Whether moving out of state or fighting with a roommate, the law needs to be followed. Annual leases lapse on the date listed in the lease. Although, state-by-state the laws vary, and you might need to give notice that you will not be renewing.

When ending a lease early, additional issues arise. The lease generally outlines requirements for breaking a lease; however, a rule of thumb is that the tenant is responsible for the rent until either the end of the lease or a new tenant takes over the lease, whatever happens first.

Monthly leases, in general, require 30-days’ notice from the date rent is due.

So what happened with my tenant who wanted to move out a month after moving in? When that tenant wanted to break the lease so soon, we went by the lease agreement. The tenant paid a fee to have the unit re-listed and was responsible for the rent until new tenants signed a lease.

Related: Can my tenant break the lease?

3. Damage responsibility

The party responsible for rental property damage is a touchy subject, and the reason is clear. The answer is not cut and dry. The general understanding is that the tenant is not responsible for normal wear and tear but is responsible for the damage they have caused. The question is: what is normal wear and tear?

Normal wear and tear falls within these categories:

Minor paint damage
Faded or worn carpets
Faded lamp and window coverings
Lightbulb replacements
Rust or mold in the bathroom
Smelly garbage disposal

As you can see, normal wear and tear are items that would have happened if anyone was was living in the unit; you, your tenant, your mom, your mom’s tenant, etc.

However, more extensive damage is the tenant’s responsibility, such as:

Broken window coverings
Holes in the wall
Pet damage
Broken items—doors, windows, appliances
Unapproved decor

And here’s what happened with my tenants who thought damage in the unit was my responsibility: When my tenants sued us over the definition of normal wear and tear, the judge decided that all damage above the wear of general use was considered damage that needed to be repaid. Something to note: the judge did not allow us to charge based on quotes to repair damage, only repair receipts.

4. Habitability

Landlords have a responsibility to provide a habitable place for their tenants to live. But what does habitability mean? Habitability means a safe and healthy environment. Plumbing, electricity, heating, and (in some areas) cooling need to be in working order. Doors and locks must be working correctly. The structure needs to be sound.

Landlords are required to:

Ensure the building structure is intact
Maintain common areas
Keep utilities in working order
Remove rodent infestations
Manage environmental hazards

5. Utilities

The party responsible for utilities can be complicated to determine. While landlords have the right to require tenants to pay for their own utilities, the renter has the right to working utilities to meet “habitability” requirements.

A good course of action is to have a solid lease with clear responsibilities. The lease must outline who is responsible for paying utilities. Many utility companies have landlord provisions. A landlord can contact a utility company and set it up so if a tenant does not pay the bill, the landlord is notified. This way, the utilities won’t be turned off for nonpayment, and the landlord can avoid frozen pipes or a lawsuit for a rental property that is not habitable. The landlord can then bill the tenant for the nonpayment, and there should be a provision in the lease for utility nonpayment and associated fees.

In conclusion

While I have acquired some crazy landlord stories during my years in the industry, they have each taught me something new. I became an expert in my local jurisdiction’s rental laws and became better able to protect myself in the future. When taking on a new tenant and lease, re-examine your lease and make sure that the responsibilities are legal and clearly outlined so there are no gray areas. Gray areas are the cause of many landlord and tenant headaches.

I’d love to hear your landlord-tenant stories. Feel free to leave them in the comments below.

Rental property in a snowy area? 5 pieces of snow removal equipment you need

Chris Deziel — Wed, 05 Dec 2018 15:18:41 +0000

Owning snow removal equipment is practically a basic need in a snowy climate. And in many communities, snow removal is mandatory.

If you have a rental unit where snow accumulates, check the local bylaws. You’re likely to find that someone has to remove snow from public thoroughfares that cross your property, and there is often a time limit. For instance, cities like Ann Arbor, Michigan, give you 24 hours from the time it stops snowing to get rid of the white stuff.

Whether you do the work yourself, pass the responsibility to tenants through the lease, or hire maintenance personnel, someone has to remove snow if you want to get around, and they’ll need equipment and supplies to do so. As the property owner, you’re responsible for non-compliance with snow removal ordinances, so it’s best if you make sure snow removal equipment is available. Here’s a list of what you should have:

1. Snow shovels

And not just one—you need two or three. You need them even if you have a snowblower. One of the shovels should have the capacity to move a lot of snow at once, but the others should be smaller. Snow is heavy when it’s slushy, and you don’t want anyone to pull a muscle, so the smaller shovels are an option if using the big one is impractical. They also come in handy should a snow shoveling party develop.

Snow shovels are lightweight, usually made of plastic, and they’re inexpensive, so there’s no reason not to have a collection. Keep them on the property so they are ready when the need arises.

2. Scraper

Where there’s snow, there’s usually ice, and clearing it off thoroughfares is part of the job of snow removal. You need a scraper to remove ice, and it should have a long handle so you don’t have to bend over. The scraper itself is usually nothing more elaborate than a flat piece of metal with a slight edge. A spade shovel will do the job in a pinch, but a scraper is lighter and easier to use. Save the spade for digging and spend $30 on a scraper.

3. Snow broom

When you get less than an inch of accumulation, it’s easier to sweep snow off walkways and driveways than to shovel it. While you can use any broom, a snow broom, which is a push broom with moderately hard bristles, works best. Some snow brooms come with a scraper installed on the other end of the long handle, and some come with LED work lights, which makes sweeping easier at night. These are great for sweeping snow off railings and steps.

4. Salt or sand spreader

The stuff that falls from the sky in winter isn’t always snow. If the temperature hovers just above the freezing point during the day, precipitation can take the form of sleet or rain. When the temperature drops at night, though, you’ve often got a frozen mess and a slipping hazard on your walkways.

Salt or sand is a must for these situations, so you should have some. You should also have a spreader to distribute it evenly. It’s akin to a fertilizer spreader for the lawn, and in a pinch, that’s what you can use. However, if you use a spreader for salt, don’t use it for fertilizer. Residual salt in your fertilizer spreader is bad for your lawn.

5. Snowblower …maybe

Sure, a snowblower makes fast work of a large driveway or a long sidewalk after a nice powdery dumping, but it doesn’t work nearly as well in slushy snow. Not only that—someone has to start it. A snowblower engine is like a lawnmower engine, and if you’ve ever tried to start one of those in the spring after a long, wet winter, you know how difficult that can be. How much harder is it to start it in the middle of a wet winter? Often very.

If you have a tenant or maintenance staffer who is savvy about small engines and a warm, dry storage place, a snowblower can be a good investment. Otherwise, consider joining a neighborhood snowblower pool, or stick to manual snow removal equipment.

Snow removal liability can be confusing

Communities in northern climates are usually specific about snow removal requirements, and the bylaws are easy to understand. Not so in communities in which snow is uncommon. For example, Jonesboro, Arkansas, has no law regarding snow removal, so when the town got a 2-inch accumulation in 2013, some landlords let the snow melt rather than clear it. The result was general pandemonium in the town for a week.

One way to avoid liability and keep the community safe is to pass the responsibility to tenants by including a snow removal clause in the lease. Tenants are often in a better position to assess the situation after a snowfall than landlords. In multi-family dwellings or large apartment complexes, it’s probably a better idea to contract snow removal with a third party. Either option is better than doing nothing.