No landlord wants to get the call that their tenants no longer want to live together. Whether they are romantic partners or not, these conversations are rarely easy. One tenant may want something from you, such as releasing them or the other tenant from the lease. Maybe they want you to take care of kicking the other person out of the unit for them. You did your best to set up your lease agreement so that you did not have to deal with this, so what should you do now?  

First, check your lease

Do you have an early lease termination clause? This will define what happens if the tenant wants to break out of the lease. What if only one party wants to leave? Have you addressed this in your document? This document often includes the notice that must be given and a penalty that will be due.

If you did not include an early termination clause in your lease, or if you have not addressed when one party is leaving, then you may need to be willing to compromise after reviewing state law.

You may have also addressed this situation with reference to subletting. If your lease did not prohibit subletting then, subjective to state laws, your tenant may be able to do so. While this allows another tenant to move in and take over for the departing tenant, subleasing comes with a whole new set of headaches for landlords and a tenant that you have not selected. So check your lease!  

Picture what will happen next

Once one of the tenants departs, you’ll be left with the remaining tenant or tenants. Take a look at the tenants you are left with to determine what will happen next.  

•Can your remaining tenant afford the rent on their own? - If the departing tenant was not contributing much to the rent, check in with your tenant to see if they can cover the increase in their portion of the rent. Have a conversation to see how they feel about paying the rent alone.

•Is there an opportunity for a roommate? - Perhaps they would prefer to live alone without bringing another roommate into the situation. Talk to the tenant to see what they have in mind.

•If I let the other tenant out of the lease that means they no longer would have to pay damage. Do I want to let one party off now? – Think about whether these tenants have been respectful of the property so far. Do I need to cut my losses and start over with a new pair of tenants? - Assess how you feel about your remaining tenant, as keeping a great tenant can save you time and money down the line.  

Think about these issues and know how you want to respond to their questions and requests, as they will surely have some. Keep an eye on your state laws, but always keep your best interest in mind. Make sure the departing tenant and the remaining tenant understand exactly what their financial obligations will be. Stay above the fray and do not get involved in any personal issues between these tenants, and don’t allow the tenants to draw you into their drama. If the tenants are feeling emotional about a difficult breakup, be sure to assess whether what they would like to do is feasible. Know your lease, know your laws, and think about what you want along with what your tenants want.

1. It is not personal As you know, being a landlord is a business. You have to protect your property and your own interests. Make sure you are considering your investment as you move through this process, even when you need to make a painful or difficult decision. Naturally, the tenant is considering his or her own situation as well.  
2. If it is not in writing it doesn’t count It can be frustrating when tenants tell you one thing and then end up doing another. When all is said and done, the only promises that matter at the ones that are in writing. Leave any empty promises behind and address the current situation.  
3. Stand your ground  Take a look at your lease to see what recourse you have when a tenant wants to break a lease. Is there wording in your lease that allows for this scenario (for example, they may qualify under the Servicemembers Civil Relief Act, or SCRA). What kind of notice is required by your lease or local laws?

When you set up your lease, you put in every last detail about your requirements to live in your rental. When your tenant signed that lease, they were agreeing to all of those rules. So what should you do when a tenant no longer wants to follow your rules? Maybe they have snuck a pet into the unit, despite a prohibition against it. Or perhaps you have found out that an unauthorized guest has been residing in your rental? If your tenant has not been paying the rent as agreed, then you know you have a problem.  

While the easiest option might be to let it pass without incident, think about your long-term goals and your investment. Terminating the tenancy is not always an option, and it may not be the best course anyway, as it comes with lots of expenses and headaches. By following the right steps you can attempt to minimize the damage, have the tenant agree to follow the rules, and keep the relationship on good terms.  

Here are three factors that will impact how you can handle a tenant who doesn’t love the lease you signed together.  

1. A strong lease helps

A strong lease will include terms to protect your interests, as well as clear solutions for the situation. Has the tenant committed an infraction that has a clear remedy according to your lease? You can also check our ezLandlordForms library for Notices to Cure/Pay or Quit that can help define the next steps. The laws that are specific to your location will also come into play, so be sure you know what the laws allow.  

If you feel like it is time to cut your losses and move on with a more reliable tenant, the strength of that original agreement will be important. If you’re thinking about ending the tenancy, did you include an Early Termination clause that outlined the penalties and processes for the tenant to get out of a lease early?

1. Be polite, but stern

While it might be tempting to just let a tenant have what he or she wants despite what they agreed to in the lease, in most cases you will want the lease to be followed. Remember that an uncollected rent payment or unreimbursed damages come directly out of your pocket. Lean on your lease to back you up and ensure that the proper steps are followed for the tenant to remedy the situation.

1. Keep emotion out of it

The more you can keep the communications professional, the better you will fare. Don’t take your tenant’s complaints personally. Remember that this is a business relationship. These situations can be emotionally charged, but make the effort to check your emotions at the door. Having to deal with a tenant who is not following the terms of your lease is frustrating. Rather than ignoring it or giving in, address the problem promptly and use your lease to guide your decisions.

We had been landlords for years before we had to appear in court for the first time this fall. After losing, and being sued for another $10,000, we went to court again. In addition to these two cases on the East Coast, we experienced one more in California. These are the lessons we learned - the hard way - so that you can learn from our mistakes when  you have your day in court!

1) Everything in writing - In court, the judge may want to see your documentation. This can then be entered into evidence. Having paper copies of your pertinent documents also helps you stay organized and helps to back up your claims.

2) Hire a lawyer - We have decided that we will not go to court without a lawyer again. The one time we did not hire a lawyer we had our worst court outcome. We feel the lawyer has been a big determinant in how the case has proceeded.

3) Show up in person - While we have waited for our case to be called, we have been able to observe other court cases. We have noticed that being present in court, in person, seems to make a big difference in the outcome of the case. This has held true for us as well. As expensive and stressful as it is to show up to court in person, I plan to make being in court my top priority.

4) No children allowed - Trust me; don’t bring your baby to the courtroom. After having to bounce our unhappy (and often screaming) baby for eight hours outside of the courtroom, I can say I will never do that again! It is better to leave them home with a sitter. Be prepared to be away from baby for a long time, as the court docket sometimes moves slowly or changes, and you may be there for an extended period.

5) Professional clothes - You will see people in all types of clothing in the courtroom. Put your best foot forward to show that you are professional and that you take the case seriously.

6) Get there early - It is always important to arrive at court early. You may have to contend with parking hassles and security screenings before you even enter the building. Also, you never know how the docket will be ordered, and when you will actually get to appear.

7) Check if phones are allowed - Some courthouses will allow you to leave your phone off, others will not allow you to bring it into the courthouse at all. You don’t want to arrive at the courtroom with nowhere to store your phone for the day.

8) Be prepared to fund your attorney fee yourself - Just because your contract says you are allowed attorney fees doesn’t mean the judge will reimburse them back in the exact amount. Bear in mind that you might not be reimbursed for what you spend.

9) The legal process can move slowly  - The second time we were sued, the trial did not happen until almost five months later. By the time we went back to court, it was actually ten months after we had sold the property!

10) It is expensive - Taking someone to court can be very expensive. Not only do you have filing fees, you also have court costs, lawyer fees, and their administrative bills. In our experience, the person we were suing was difficult to deal with, and made the process more expensive than we had anticipated. The costs increased rapidly as we had to take extra steps to get them to cooperate.

As always, the views presented here are my personal opinions, and should not be used as legal advice. I hope that as I learned a few things the hard way I can save you some trouble! Please sign up for this month’s webinar where I will discuss this topic further.

Your lease is the legal contract governing the landlord-tenant relationship. Over the course of that relationship, it is unfortunately not uncommon for the tenant’s actions to fall outside of the rules set out in the lease. Some infractions may be minor, such as a failure to bring the trash can up to the building after trash day. Unfortunately, sometimes the offense is major, such as failing to pay rent or damaging your property. While it is very easy to say, “I will see you in court,” the question is whether you really want to commit to taking legal action against your tenant.

What are the pitfalls of going to court?

1. Court is very expensive - Lawyers fees alone can add up quickly. We have paid between $150 and $250 per hour, but rates can go as high as $500 an hour. We have also had a lawyer on retainer, at a cost of $5,000. For our previous cases we have spent as little as $1,100 and as much as $15,000 just in lawyer’s fees. Then consider that there will be court filing fees, as well costs to physically appear in court.

2. The judge’s ruling is never guaranteed - Don’t discount the human element of every court case, even when you feel that you have a solid case to make. Tenants may also take the opportunity to countersue you, depending upon the proceeding and state laws.

3. The court process takes time - When we have been to court in the past it has taken at least two months to get a resolution. Once it nearly took half a year!

These reasons demonstrate why it is important to make sure the investment of time and resources is really worth it before pursuing a legal solution. In my travels I have seen fellow landlords recommend taking their tenants to court over issues that seem too small to be worth it. Many times, going to court is not the best answer. Even though we thought we were in the right each and every time we appeared in court, we only won one of our cases outright. The aggravation may not be worth the outcome, especially knowing that the ruling may not go in your favor.

Modern technology can make it easier than ever to landlord from a distance. However, traveling to a court appearance can still be difficult and expensive. It makes sense to think carefully about whether it is worth the cost, the time taken away from another job or other responsibilities, and the inconveniences of modern travel to make an in-person court appearance.

The first time we went to court I was ill with morning sickness and the damages were less than $1,000, so when a friend offered to represent us we were thrilled! We determined that the trip would have cost us more than we stood to win in court.

We ended up losing the case. Not only did we lose $1,000, but the tenant was able to bring another suit for over $10,000 on many of the same issues brought up in the original court case. When the time came for our next court appearance, we ended up flying across the country with a three-month old in order to ensure that we were appearing in person. This cost us money for the flight and accommodations, as well as time away from our vacation, but it did allow us to minimize the damages. We ended up having to pay the tenant their security deposit plus interest, yet we avoided the huge damages being sought by our ex-tenant.

Both of our experiences in court taught us that what we thought would be the contentious issue was not. In the first case, when the tenant introduced a letter from another previous tenant alleging that we were slumlords, we were caught off guard. Of course, our representative knew nothing of the other tenant and was unable to defend us. We had not prepared her for that line of questioning. On the other hand, when a similar situation occurred during the second hearing, we had a game plan thanks to a quick meeting with our lawyer.

This situation happened to us again the next time we went to court, where what we prepared for and what we had to prove were completely different. Because of our previous experience, we were ready to “expect the unexpected,” and because we were there in person we were able to adapt our argument. In this case, being in court definitely worked to our advantage, and helped us to win the case.

My advice for landlords going to court is to be as prepared as possible for any argument that might come up. Be ready for unexpected angles from your tenant or the judge. When a hearing goes in a different direction, it pays to be there in person, so you can answer to unexpected questions.

There are many factors about going to court that are out of your control, such as the location of the court and the tendencies of the judge. That is why I feel it is extremely important to control the factors that I can, such as always appearing in court in person. In this landlord’s experience, our presence or absence in the courtroom made all of the difference in the final outcome. Now I am committed to make every effort to get to court, every time.

If you are renting to a self-employed tenant, you may feel that the situation is different from any other tenant. However, you will find that the main differences are in the application process, as well as the lease. As always, when building your lease it is important to be mindful of state and local laws. Sometimes local laws will be very specific with regard to these issues. You may want to include the following addenda and additions to protect your lease for your self-employed tenant.

Break Lease Fee – This lease allows you to assign a fee for a tenant breaking a lease.

Subleasing – If the self-employed tenant experiences a fluctuation of income that causes them to bring a different individual into the unit, whether they will stay and live with them as a roommate or not, you do not want to lose control of the situation. Spell out whether subleasing will be allowed, and under what circumstances, to ensure that someone who does not meet your criteria for a tenant will not be able to live in your rental.

Business Activity – Be sure to outline whether you will allow the tenant to operate a home-based business. Check your insurance policy to if it restricts home businesses before you spell out this lease provision.

Security Deposit – You may want to maximize the allowable security deposit, or at least double your typical deposit, if you have concerns about the tenant’s income stream. If you perceive that there is a risk in taking on a particular tenant, increasing the security deposit will give you an additional cushion to protect yourself.

Lease Length - A shorter lease term will allow you greater flexibility to make changes to the terms or to choose to not renew the tenant for an additional term. Longer leases will lock you in to certain situations.

If your tenant will be operating their own business out of your rental, there are additional considerations that you must make, such as these:

Your House - Think about your house, your neighborhood, and the particulars of your area. Consider the daily operation of the business as well as one-time events. If your neighborhood has an HOA, are there rules governing a home-based business that must be considered? Put all of those restrictions in your lease agreement.

Parking - Be sure to specify where patrons of the home-based business may and may not park. Is there a limit to how many cars can park there at a time? Will large trucks be required to make deliveries or pick up products? Think about parking and street traffic and detail what is allowable.

Housing Business Equipment - If your self-employed tenant has a business involving large equipment, be sure to detail whether it is okay for them to park trucks or trailers at your rental property.

At ezLandlordForms, our goal is to help you be successful as a landlord, and anticipate problems before they happen. These tips will help your lease for your self-employed tenant be as comprehensive as possible.

It sounds like an appealing arrangement at first glance: your tenant has offered to perform repairs or improvements to your home in exchange for rent. Your mind may race to all of the needed repairs or desired improvements that your willing laborer could perform. Having your tenant perform the repairs frees you up from the tiresome process of meeting with contractors, obtaining quotes, and having the liquid capital to pay the bill.

If your tenant is performing their own improvements, they will have little room to complain after the fact. They may want to stay in your unit for longer if certain upgrades are made, plus they will be increasing the value of your rental. Performing home improvements may even be their trade or a hobby of theirs, so they may be happy to stay with a landlord who approves this sort of arrangement. Labor is usually a large chunk of the cost for any improvement job. A tenant who is doing their own improvements may be satisfied to live in a work zone, while you might otherwise have to eat the costs of having a vacant unit to perform these upgrades in the future. But before you jump in, there are some serious pitfalls to avoid.

What happens if the work isn’t done?

One bad outcome of this arrangement is what to do when the work is not done. By giving a discount ahead of time, you will be dismayed to find the work isn’t finished or completed at all. Typically in this situation you have little recourse, as discounted rent is difficult to get back.

Control over the workmanship

When you exchange work for rent, you have very little control over the quality of the work. While an outside vendor may be offer a discount for a job that is not performed up to your standards, when a renter is involved it is difficult to get compensated for work that is poorly done.

A better way

Despite these hazards, if you still find yourself needing ready labor or keeping your unit occupied during construction, the best way to move forward is by paying for the work specifically. Pay the tenant for each job that they complete. This method gives the landlord more leverage in obtaining high quality results. It gives you more recourse, despite the blurring of the line between tenant and contractor. It also keeps you from falling into an ongoing arrangement where a monthly discount is given, even though more work may be done in some months that others.

If you do move forward with such an arrangement, there are several important details to hammer out before a single nail is pounded:

Supplies

Make sure there is a clear delineation of who will be paying for what. Do you have hardware and fixtures from previous work that can be utilized? Who will pick up the supplies? Will the tenant pay for supplies and include the cost in their price? Will the tenant use their own personal tools? If specific tools are needed to complete the job, are you willing to purchase them, with or without your approval?

Selection of materials

Since the current tenant will be living in the space, are you open to their selecting some of the components of an upgrade, or will you make all of the choices? If a specific grade of materials must be used, be sure the tenant knows these specifications as well.

How the work gets done

Set up parameters for all of the important considerations. When must the work be completed? Is there a safe work space where the tenant can complete the project? How should construction debris be disposed of, and who will be responsible? Be sure the tenant is also observing any quiet hours.

As the owner, you should be keeping tabs on any work being performed in your property. Ensure that you are keeping tabs on all required permitting and documentation. Schedule progress checks to be sure the quality of the workmanship is satisfactory. Of course, don’t allow a tenant to perform dangerous jobs, or tinker with electricity or other hazardous tasks unless they are licensed to do so. At the end of the day, you are the one responsible for your unit. Any work done on your unit will probably outlast your renter’s tenancy, so keep a sharp eye out for work that will withstand many years of use.

Are you hesitant to place a tenant who is self-employed? Do you feel paralyzed by what to do next? Can you feel confident approving a tenant who is self-employed? Let’s take a look at how to screen a self-employed tenant, so you can feel confident that you are getting the best possible renter.

Look at the past Two Years of Tax Returns

Request the applicant’s tax returns so that you get a more complete picture of the applicant’s finances, as well as the viability of their business. Begin with two years’ worth to ensure that they have been making a steady profit. Ideally their income will amount to three times the rent. Be sure to take a look at their profits after expenses. Pay attention to how much of their profits would be available if you had to take this tenant to court.

Look at Credit History

The applicant’s credit history will provide you with some important information. You will be able to see whether your applicant is able to pay his or her bills, and where most of their debt is tied up. You will learn about the history of their business, as well, and get a sense of whether their business is viable into the future. You can also learn whether the tenant has planned ahead for lean times, and whether their personal finances can withstand fluctuations to their income.

Security Deposits

Asking for a larger security deposit, as allowable by law, will give you peace of mind. If you accept a tenant who demonstrates the ability to pay the rent, but you still have concerns, the extra deposit can help protect you. This will provide a cushion in the instance that you must proceed with an eviction or covering damages.

Prepayment of Rent

Small businesses sometimes will offer prepayment of rent as an extra enticement to take them on as tenants. This situation does offer you all of your rent up front, which is great. But be aware of the tax implications, and be sure this type of arrangement will not prevent you from evicting the tenant. A prepayment comes with possible complications, so know the risks before you agree to this arrangement.

Business Sustainability

Is the tenant’s business sustainable over time? Or is this type of business part of a passing fad? You can feel more confident taking on a tenant who is in an industry with staying power. Additionally, search for reviews and ratings of this practitioner. A business with a bad reputation will have a hard time surviving over the long term.

Renting is a popular choice for self-employed individuals, as they may have a harder time qualifying for a mortgage. Small business owners may focus their time on building their clientele and honing their craft rather than settling down as a homeowner. This means that high caliber renters are available from the ranks of the self-employed. As this demographic continues to grow, stay open to the possibility of a self-employed renter, knowing that you can find a great candidate using thoughtful screening methods.

Before taking on roommates, you will want to think realistically about the financial implications. Rent stabilization and rent control laws can limit how much rent you can charge your roommate, so it is is very important to check your local laws. The law may also dictate how the rent is divided. For example, you may be required to split the rent evenly, even though one of the bedrooms is more spacious than another.

In other areas, the landlord may set the rent amount without any restrictions. You may split the rent evenly, or you may choose to charge different amounts based upon factors such as square footage and amenities used or income.

You may also want to increase or reduce your roommate’s rent based upon some other factors. As the owner, you will be paying for maintenance and repairs, property taxes, and the mortgage. Conversely, you are able to deduct qualifying mortgage payments, improvements, and expenses on your taxes. In some cases, you may want to make arrangements for one of the residents to receive a discounted rental rate in exchange for extra chores performed. All of this will help to figure into what amount to charge, and whether you are making any money in the end.

Rental income is not the only advantage to bringing roommates into your home. Having a roommate means that you will not come home to an empty house at the end of the day. If you travel or occupy another home, a roommate will keep the lights on in your property to keep it from sitting unoccupied.

Writing the right lease

You will notice that the ezLandlordForms lease includes an optional Roommate Addendum. This is the perfect place to list the rules for your roommates. Try to be as specific as possible to head off issues that may emerge later. As always, check that any restrictions are allowable by law in your area.

Our Roommate Addendum includes some suggested clauses that should be in every roommate agreement, including:

• Break lease provision - This prevents people from trying to move out in the middle of a lease term.

• Administrative fee to add a roommate - This fee will help to cover the time and effort required to add an additional roommate.

• Security Deposit Accounting - It is a good idea to spell out how the security deposit will be paid and refunded in the event of an early move out or at the end of the lease term. Addressing this a the start of the tenancy will help avoid disagreements later on.

You may want to modify this fully-editable document to include some other terms specific to your situation. Some issues to consider for your roommate’s lease:

• Definition of shared spaces

• Responsibility for shared costs, such as cable or wi-fi

• Guest policy, including overnight guests

• Quiet hours

• Food purchases and storage (Be sure to address whether food will food be purchased jointly or individually)

• Cleaning and maintenance responsibilities

Every house and area is different, so add special terms that apply to your situation.

Roommates certainly change the landscape of a living space. Your lease with your roommates should address all of those differences. Putting as much in writing as possible will help you and your roommate get off on the right foot with realistic expectations and rules to fall back on.

When screening new tenants, the considerations are many. Sometimes the tenant who seems to be the best fit doesn’t qualify financially. Before you show that tenant the door, you may want to explore having a cosigner on the lease to back up their finances. The cosigner does not live in the unit, but promises to repay money owed by the tenant, should the tenant fail to meet their financial obligations to the landlord. Here are a few factors to remember when thinking about accepting a cosigner on a lease:

Why does the tenant need a cosigner?

Tenants may need a cosigner for all kinds of reasons. Young adults may not have much, or any, credit history. Students or people otherwise unable to work full time may not have enough income. Some people with bad credit may be working to improve their standing, but credit scores tend to move slowly over time. There are many other scenarios that your tenant may present to you. A credit report can tell you much about the source of an applicant’s low credit score.

Would they make great tenant?

Credit and background checks are helpful indicators of good tenants. You can tell a lot about the person’s past, but must bear in mind that looking good on paper does not always translate into being a good tenant. What you ultimately want out of a tenant is someone who will abide by the rules laid out in the lease, and who will pay their rent on time and in full. Check with their employment references, former landlords, and any other references that they can provide to get a better sense of their character.

This is where a cosigner becomes critical. If you feel that the person has the desire to live in your unit and to treat it like their own home, and the cosigner will back up the tenant financially, you may feel better taking a chance on a tenant. This way, if the tenant defaults on the rent, you can still hope to collect the money you are owed.

Before you sign a lease with a cosigner, be sure to perform a credit and background check on the cosigner! When writing your lease through ezLandlordForms, we have a place for all of the pertinent information about your tenant’s cosigner. Having a cosigner can give you the confidence to give a tenant with poor or little credit a chance to be a great tenant!

While many properties are rented by individuals or families who will personally live in the home, there are cases when third party organizations want to pay the rent. As a landlord, you may encounter businesses, houses of worship, or relocation agencies who want to cover the rent on an individual’s behalf. Large companies looking for flexible corporate housing may wish to rent a unit, pay the bill, and have the flexibility to move trainees and temporary workers in and out of the unit as needed. Or religious organizations may cover housing as part of the compensation package for their congregation’s leader.

Landlords need not shy away from these situations for fear of a confusing arrangement or a compromised lease. In fact, sometimes a landlord will be rewarded when these entities pay a higher rate of rent. The first key is to identify exactly what the arrangement will be, to determine who will pay and who will inhabit the property.

An arrangement with a third party payer can be a great deal for the landlord. However, just because a business or congregations steps up to pay the bill, you must evaluate them as you would any other tenant. To help ensure that you are protected, here are some important steps to follow:

1. Do a full background check - First, approve the actual resident whenever possible. This background check and credit check will tell you more about the person who will actually be occupying your unit. Credit checks can also be run on businesses. Seek out key information such as how long the company has been in business, and check with trade organizations that they are a part of. Background and credit checks are key for everyone involved.

2. Meet with everyone involved - Ask if you would allow this person to live in your unit. If a business will be using this for short-term housing only, and does not necessarily know who would be living there next, ask yourself if you are comfortable with that arrangement. A problem tenant will have to be dealt with, whether a company is on the lease or not.

3. Put everyone on the lease - It is crucial to include the third party on the lease agreement as a lessee. This makes the third party responsible for the rent, and you will have the assets of the business or organization to guarantee your rent payments. Be sure to list each person who will be living in the unit on the lease, including any family members. Clarify who will be providing the rent payment. Imagine that you do not get the rent one month. Do you know exactly where the late notice should be sent? You don’t want to be scrambling to figure that out while you are waiting on your rent.

4. Consider higher security deposits as allowed by the law - If you are still feeling a bit unsure about the third party arrangement, think about increasing your security deposit. This additional cushion may help to put your mind at ease. It is critical to check your local laws regarding the security deposit.

You can also protect yourself by requiring that the tenant get renters insurance, as allowable by law. Find out what insurance the business or other entity can bring to the table. Make sure your liability insurance is giving you coverage for property damage. Make a note of these in the lease so that there is no question on responsibility for any damages to your rental property.

In the final tally, every tenant comes with risks. Even a tenant who has a perfect credit score may cause you issues in other departments. In the non-traditional arrangement with a third party, you gain the security of working with an additional entity to guarantee your rent.

As a property owner, you can design a pleasing exterior while keeping the safety of your property and your tenant in mind. Natural elements, smart landscape design, and strategic plant selection can be incorporated to keep your property safe. Check out these easy exterior solutions to safeguard your rental property.

Keep Walkways in Good Repair

Regularly maintaining the walkways of your rental property can help prevent injuries. Tenants and guests can easily trip and fall on a walkway, causing a lot of headaches for rental property owners. Make sure that the walkways around your property are in good condition. Clearly mark areas that are uneven, or any objects that are obstructing the path, and repair unsafe pathways as soon as possible. Keep the walkways clear of snow and ice in the winter to minimize the risk of injury.

Use Borders

Planting borders on either side of walkways and paths of your rental property will help keep renters and visitors within a natural barrier. Borders along main walkways will discourage foot traffic on the nearby lawn. This is especially helpful in keeping bare areas from turning into muddy pits during the rainy season or in wet climates.

Invest in Landscaping

Not only do landscaped areas add overall beauty, interest, and even monetary value to your property, but they also help to protect certain areas of the building itself. Consider landscaping all around the base of your property in order to create a natural barrier to protect the foundation from vandalism. Landscaping also keeps equipment from getting too close to the building and causing a lot of damage.

Plant Hedges

Hedges are a great way to protect your tenants from people passing by and create a sense of division and privacy in the outdoor living space. A defined and manicured outdoor space can be a sought-after amenity in a rental property. Creating a barrier between neighbors also helps to protect your renters and the building itself from being vandalized. Those seeking entry into a rental property may think twice about doing so if there is a natural barrier that would hinder their quick escape.

Create Shade with Trees

Trees help create a desirable outdoor living environment for renters, providing comfortable shade and boosting the monthly rent. The shade from large trees can help you regulate the temperature in your units, which can be important in hotter climates. Shade will help cut down on energy costs as well as keep the building cooler and more comfortable for tenants. Planting trees is an investment that will easily pay off once the trees reach full mature size.

Keep Hydrants Clear

Fires are a real danger to rental properties. Ensuring that firefighters can easily access the fire hydrant is vital to keeping your tenants and your building safe from harm. Clear the radius around the hydrant on a regular basis and call the city if you think the hydrant needs to be repaired or repainted.

Ensuring that your rental property is safe for tenants, as well as visitors, is an important part of owning a rental property. Using natural borders and landscaping can also help to keep your building safe and in good repair, while increasing your earning potential. Make sure to consider all of these easy solutions to safeguard your rental property.

Emily Higgins is a writer and homeowner inspired by retro pinup–she is constantly working on revamping her fixer upper to have a more chic vintage style. When she’s not working on remodeling, she can be found tending to her organic garden and cooking for family and friends.

The end of the year is often a time for giving. Religious and secular holidays alike include elements of thankfulness and giving gifts. This is also the close of the fiscal year for many companies, when annual bonuses or gifts of appreciation are given to employees, vendors, and customers.

As a landlord, you may be wondering whether it is expected or appropriate to make any holiday gestures toward your tenants; they are your customers, after all. In this article we will discuss the considerations around giving gifts, trinkets, or even rent reductions at the giving time of year.

Landlords walk a fine line in their business. While you are in the industry to make money, it’s hard to ignore that the product you are selling is very meaningful to your tenants. There is little more personal than the place where your tenants hang their hats at the end of each day. Whether gift giving is appropriate is unique to each situation. Your relationship with your tenant is a highly individual matter, and you will have to decide whether to recognize a tenant for choosing your home as their home.

Perhaps you have a long-standing relationship with the tenant and know him or her very well. On the other hand, if you have had to issue frequent reminders or warnings to your tenant, you may be cautious about making the relationship anything other than a business transaction. Most landlord-tenant relationships will fall somewhere between the extremes.

When all factors are considered, if you have decided to give a present, the question becomes what sort of gift to give. Some landlords consider a “bonus” in the form of a one month reduction of rent. Perhaps you know that your tenant could use rent relief more than any other gift. When considering rent reduction, weigh whether any difficult precedents will be set. In certain landlord-tenant relationships it might work, but for other landlords there may be a better plan.

Small gifts of gourmet treats, gift cards, or other tokens offer another option. These can be tailored to the tenant’s tastes and interests if you know your renter well. Or, perhaps a written greeting card strikes the right balance between a formal thanks you and a sincere acknowledgement of thanks to your tenants.

As any homeowner knows, the changing seasons bring lots of maintenance chores. But what about your rental? Who is responsible for all of the tasks that must be done? The best way to spell out these terms is directly in your lease agreement. If you and the tenants are unsure of the division of labor, the chances increase that maintenance will be overlooked or left undone. In the end, this can damage your property and cause unnecessary expenses, and your tenant may become frustrated or complacent. With some forethought, your lease can specify how the maintenance responsibilities are divided, and save negative feelings, unsightly overgrowth, and costly repairs. Here are some of the maintenance responsibilities every landlord should keep in mind each autumn.

Removing Leaves, Pruning Shrubs, and Other Landscaping Chores

Look at all of the trees, shrubs, and other landscaping on your property. Take inventory of the seasonal tasks that keep your trees and flower beds looking their best. Some plantings require little care in the fall, while others must be properly pruned in order to bloom next year. Perhaps your tenants can be expected to rake leaves, but think about whether your other landscaping expectations are realistic. Consider hiring a landscape professional if you have elaborate plantings that need special care.

Snow Removal

Think about snow removal before the snow and ice arrive! While tenants often perform some or all snow removal, you may want to get referrals and quotes for someone to clear parking spots or common areas. It is critical that the sidewalks are being take care of, as many towns and cities have ordinances that require these areas to be cleared. Such laws typically specify how soon after a snowfall the area must be shoveled.

Winterizing Sprinkler

This is an important step to avoid costly damage to your sprinkler system. Some landlords may hire a company to carry this out. Even in this case, the tenant may need to be involved to give the contractor access to the proper control systems. Another option is to provide the tenant with detailed winterizing instructions to complete.

Pool Closing

Winterizing a pool or other water feature must be done properly. Don’t forget to include instructions for cleaning and storing all of the pool equipment and filter parts. Closing your pool is another task that could be farmed out to professionals. Be sure to decide who will provide the required supplies and chemicals for winterizing the pool.

Plumbing

It is critical that your tenants know how to keep the pipes from freezing. Outdoor plumbing must be winterized, but tenants can care for indoor plumbing as well. Consider enforcing a minimum indoor temperature, so that your tenant does not turn off the heat before going on vacation. A burst pipe could cause destruction that would render your unit uninhabitable for weeks or even months.

Cleaning Gutters

Falling leaves, pine needles, or other debris can clog gutters. Overflowing rainwater or ice can ruin your siding or stucco, rot your wood infrastructure, leak through your ceilings, or sink your foundation. Be sure to think about when and how often your gutters need to be cleaned.

Removing Moss from the Roof

In damp climates, it is important to treat for moss at least once a year. Without treatment, moss can significantly shorten the life of your roof. This task is slippery and dangerous, so entrusting this chore to a professional is a good idea.

Your lease will set the expectations for how winterizing gets done. You will find many suggested rules and regulations, as well as addenda, through the ezLandlordForms lease builder. Bear in mind that you may have tenants who are unwilling or unable to take on these responsibilities, or you might have renters who ask to do these tasks in exchange for a rent reduction. Whether you will utilize a hired professional or your tenant, either one could be unreliable. The responsibility to protect your investment ultimately rests with you, so make arrangements to follow up and be sure these jobs are done correctly. While you are thinking about all of these chores, it is a good time to encourage - or require - your tenant to carry their own renter’s insurance.

It pays off to have your tenant feel at home in your property. You want them to love it there so they stay year after year, and care for the property as much as you would. On the other hand, the property is your financial investment, and some decorations can cause permanent damage to your rental unit. That is why it is important to think about this issue in advance. You can ensure that the tenant is aware of your expectations

If you maintain an open line of communication, hopefully your tenants will come to you if they have specific questions. If the tenant is asking about a specific kind of decoration, be sure you consider hazards outside of the decoration itself. How will the decoration be secured to the house, wall, or yard? If the decoration requires electricity, how will the power line be routed, and how will it be secured and made safe? How is the tenant planning to actually install the decoration, without endangering life, limb, or property? Here are some other factors to consider:

Outdoor decorations

While outdoor decor used to be limited to the month of December, the recent increase in Halloween festivities means that your exterior may be facing two rounds of tacks, hooks, and nails each fall. It is essential that if you decide to allow decorations like strings of lights, oversized inflatable decorations, and other exterior decorations, you specify exactly what is acceptable. You can prohibit the tenant from making any holes on the exterior surfaces.  Soffits, fascia, siding, and gutters can be fragile and easily damaged or dislodged by hanging decorations from them. Advise tenants not to climb onto the roof to hang decorations, for the sake of your shingles, the chimney, and their safety.

Indoor decorations

With several easy-to-remove hanging options on the market, a tenant need not put holes in walls in order to hang decorations. Test the products out yourself to see how well they work. Use your lease to inform your tenant of which hardware and adhesives are allowed or prohibited to avoid confusion and unnecessary damage to your home.

Christmas trees

Live Christmas trees can be a hazard if they are not kept watered. A dried out tree provides easy tinder for a fire, especially if lights will be used on the tree.

Fireplaces

A crackling fire evokes cozy thoughts. But are you willing to incur the risks of allowing your tenant to use the fireplace? Even if your unit includes a functional fireplace, you can prohibit the tenant from using it for a fire. If you will allow the unit to be used, be sure to indicate who is responsible for maintenance. A dirty flue represents a house fire waiting to happen. Having a gas fireplace does not relieve the landlord from making critical maintenance decisions. A gas fireplace should be inspected to ensure that the lines are not leaking, all seals are tights, and electrical connections are safe.

Because it is difficult to spell out every possible scenario, your lease should have some overarching rules that can address some general rules for seasonal decorations. Be sure that you include language to discuss:

• making alterations to the unit

• fireplaces, wood or pellets stoves, or the like

• renter’s insurance, including liability coverage

Addenda such as these - which can all be found at ezLandlordForms.com - help to cover specific issues at a global level. This helps cover your home for large and small concerns, without having to explicitly name each hazard.

Thinking about holiday decorations ahead of time is the key to having a festive, and safe, holiday season.

Collecting rental debt from a tenant who moves out is never fun. Unpaid rent collection becomes even more frustrating when the tenant is difficult to locate. This process can cost a lot of money and time, but the following eleven strategies can help you recoup more of your money, more quickly.
1. Think judiciously
Remember, filing a lawsuit against a tenant in small claims court is not free. You will need to purchase a summons, which usually costs around $100. You need to serve the tenant by hiring a sheriff or a private process server, which usually costs between $35 and $100. If you will represent yourself in court, be prepared to spend time and resources preparing. Obviously, hiring a lawyer comes with its own costs So before going to court, think judiciously; ask yourself whether or not the amount your tenant owes you is worth the time and money.
2. Use the tenant’s application for clues
Do you have the application form that your tenant originally filled out? Did he mention his office location or his employer’s address? Do you know the name and address of your tenant’s bank? Did she mention an emergency contact number of a relative or close friend? If yes, use this collected information to try to reach the debtor as soon as possible. Once you reach the tenant, try to sort out the matter before going to the court.
3. Offer a debt repayment option
If you can track down the tenant and have a discussion, you may learn of a financial hardship that is making it difficult to pay off his debts. Now is the time to offer your ex-tenant a flexible debt repayment option. You can decide whether you want the full amount repaid over time, or you may decide to settle the debt through a lesser amount that he can commit to. If the tenant rejects your offer of a repayment plan or a settlement amount, then you have to contact a debt collection agency to collect the debt.
4. Contact your local rent recovery solution
In some states, the rent recovery solution helps the landlord to collect the unpaid debt from the tenant who moves out. The rent recovery solution files the amount with the credit agency to get the damage recovery. Though the service is free, you may not get the full debt payment.
5. Hire a debt collection agency to collect the money
If nothing else works, then you can hire a debt collector to get the money back. Choose a good debt collection agency to do the work. They will charge you for their services. However, some debt collection companies only charge if they are successful in getting back the money from the debtor.
6. Use the tenant’s security deposit (if allowable by state law)
If your tenant moves out without paying rent, then you can take the security deposit money to cover the rent. If the deposit is not enough to cover the owed rent amount, your next step is to sue the tenant.
7. File a lawsuit in your local small claims court
Remember, you have to file the lawsuit against the runaway tenant in the county where the debt was incurred. You cannot file the lawsuit in the state where your former tenant is currently staying. For example, if the tenant owes rent on your unit in Florida, but you located the tenant in Michigan, you need to file your lawsuit in Florida. The local court in Florida will send a notice to the debtor.
8. Publish a notice of the court date in your local newspaper
You can publish a notice containing the court date in your local newspaper. This is especially important if you have not been able to track your tenant down.
9. Know the laws
Be aware of the law about filing a lawsuit against a runaway tenant.
The landlord may be able to sue a tenant:

* If the tenancy is month-to-month and the tenant has moved out without giving the specified amount of prior notice.

* If the tenant has signed a lease and breaks the agreement by moving out before the term is up.
10. Be well prepared before knocking the court’s door
Make sure the case you are going to fight against your tenant is a good one, so as not to damage your credibility as a plaintiff in the eyes of the court. You may need assistance from the court in the future, and you want to show that you are making your case in good faith.
Precautions a landlord should consider to avoid runaway tenants
Runaway tenants cost a landlord  time, money, and energy. Careful preparation can help you avoid the headache of runaway tenants.
Be educated about local tenancy laws
To avoid difficult and mischievous tenants, you should become a tenancy expert. Make the tenant aware that you know the local laws, so that tenants will think twice before taking advantage of you.
Perform an in-person interview to screen a tenant
While telephone screenings can be convenient, consider an in-person interview to screen your tenant. It will help you to understand a person’s behavior and mentality. Ask the applicant's full name, address, phone number, prior address, employment contact, and credit reference, and also collect this information on a written form. This gives you the opportunity to find any discrepancies in the tenant’s information, and also gives the tenant a good opportunity to explain any differences to you.
Contact references
Don’t rely on the provided information alone; contact the references to know about the person’s past payment history and records. It will help you to get a good tenant.
Build a strong lease
Build your landlord-tenant relationship on the solid foundation of a strong lease. This will set up expectations and provide remedies for any violations.
Even with all of these precautions, runaway tenants can happen to any of us. If it happens to you, be sure to act promptly to increase the chance that you’ll recoup some money. Remember that if the case goes to court, that process does take time. Prepare yourself against any counterclaim that may arise. Get help along the way from a good property management company or a skilled lawyer, and hopefully your tale of the runaway tenant will have a happy ending.

Click here for more information about this content or to reach the author Patricia Sanders directly.

How to grow your rental portfolio using 1031 Exchanges.

Hi, I am Elizabeth Colegrove from Reluctant Landlord. I wanted to share with you how I rapidly grew our net worth over the past 15 months using 1031 Exchanges to differ the capital gain taxes.

Before we get started, a little background: My husband and I are 30 and 32 years old, respectively. For the past eight years we have lived frugally and used the frequent moving required by my husband’s military service to grow our property investment portfolio. At one point we had houses in Virginia, South Carolina, and California. I have an MBA and I love buying houses in depressed areas that have great economic opportunities. This means I seek out properties with potential that others have not realized.

This variety in locale and circumstance has meant adapting to different markets.

When we first got started, this meant buying a foreclosure, fixing it up, then renting it out.

Then we realized that we could find great values in short sales. As the market improved and short sales were less available, we started buying new construction homes.

New construction costs are on the upswing, so now we look for landlords who are looking to get out of the rental business. Often these properties need some work until they are ready to rent out.

As our dreams are to retire young, every dollar has to be stretched to the fullest. I evaluate my portfolio every three to six months to make sure I am not missing any opportunities. When conditions change in the housing market, in the municipality, or even in the structure itself, there are times when holding on to a specific property stops making sense.

That is where a 1031 Exchange has come into play, allowing me to rapidly grow my portfolio

When evaluating your properties, there are so many factors to consider, such as the value of the house, the monthly rent amount, the balance remaining on the mortgage, and the age of the house and its durable components.

If you have realized that the equity in your property could put a nice dent into the price of a higher value property, where you can collect a higher rent amount, you might want to think about upgrading to a new rental. We once upgraded a $230,000 house for a $325, 000 house. Not only were we able to increase our monthly rental income, but we were also able to get a newer house, where less maintenance would be required.

As in the above example, by keeping a close eye on your properties, you can find ways to leverage a property that is performing adequately into a property that performs even better!

Between 2011 and 2016 we bought seven houses. By the end of next year we will have sold five of them as 1031 Exchanges to upgrade those properties. This allowed us to improve our rental portfolio and pull in more income.

Working with an exchange coordinator

If you make a mistake when performing a like-kind exchange, it can cost you real money, as you may disqualify your sale and purchase from the tax deferral benefits. To avoid costly mistakes, we work with an exchange coordinator to help us untangle the red tape. Be sure to do your research to end up with someone whom you can trust. I use Patrick at 1031 Exector (http://exeter1031.com). He is accessible and answers all of our questions and concerns. The company offers a ton of useful resources as well.

Other Teammates

When we are executing a 1031 Exchange, we always have our CPA and our real estate agent on board. It is important that you have professionals who understand how this type of transaction works, and how to report it. Attention to detail can make the difference between whether you are successful or not.

Long-term goal

Our long-term goal is to build our portfolio in order to produce as much cash as possible. We use the 1031 Exchange to trade in lower producing units for higher producing ones. Eventually we would like to get into commercial property, or sub-divide larger properties into multiple units. The Like-Kind Exchange is helping us to work our way toward all of those goals, bit by bit.

Conclusion

Using a 1031 Exchange is a great way to grow your portfolio. It is very important that you work with a knowledgeable exchange coordinator to ensure you are executing that process properly in order to reap the tax benefits. We use our tax deferred profits to invest in additional and better properties. It is just another tool that landlords should have in their toolbox to enjoy as much success as possible!

It is called a like-kind exchange under Internal Revenue Code, Section 1031, “when you exchange real property used for business or held as an investment solely for other business or investment property that is the same type or ‘like-kind’.” Under this rule, you are allowed to defer the taxes that you owe on the sale of the first property. This means that you can sell one rental property in order to invest those earnings in another property that meets your needs better.

The 1031 Exchange allows you to defer the taxes due when you sell one property for another property of like or greater value. In the event that a property of less value is purchased, there could be tax implications. It is very important to discuss your plans for taking advantage of a 1031 Exchange with a professional to ensure you will meet all the criteria.

Why is this great for investors?

The equity that you have built in your current rental can be really helpful in funding a new property with even more income potential. Given that the cost to sell a property can be around ten percent of the sale price, deferring your taxes on those capital gains may give you the extra leverage you need to afford upgrading your rental. The like-kind exchange allows you to re-invest your equity in a new rental property.

Fine Print

As with every IRS transaction there are quite a few conditions in order to qualify under the Like-Kind Exchanges rule.

Because the process can be cumbersome and fraught with red tape, it is critical to read the pertinent IRS regulations, and speak with a professional to execute the sale and subsequent purchase correctly.

Conclusion

1031 Exchanges are a great way to grow your rental portfolio while deferring the taxes. Just be sure to have knowledgeable, experienced professionals to lead you through the process.

Whether you are building equity in your rental through handsome upgrades, a hefty rent hike, or one monthly payment at a time, the hope is that over time your property will become more and more valuable. It’s always tempting to think about how much money you could make by cashing out a rental unit, especially if the market where you live is heating up.

Remember, selling a home usually requires an investment of time and money. Your CPA or other financial advisor can help to give you the hard numbers if you decide to sell. Here are just some of the costs that may cut into your profits.

Agent Costs

Typically, the seller pays all agent costs. This is usually six percent of the purchase price, with three percent for the seller’s agent and three percent for the buyer’s agent. These numbers may vary slightly depending upon your locale.

Closing Costs

These costs are market dependent. Typically, the buyers are responsible for their own closing costs. However, in a slower market, or when dealing with a first-time buyer, the seller may be pick up the closing costs to sweeten the deal. Plan on around three percent for closing costs.

Required Fees

Don’t forget to account for many required fees that may be necessary in your locale. Set aside one percent of the purchase price for various fees where you live.

Overall Sales Cost

A good rule of thumb is to set aside about ten percent of your selling price to cover overall costs and fees. This number does not include any tax obligation.

IRS Obligations

You will need to pay taxes on the sale of your property.

Once you take into account the cost to sell your house, don’t forget that the income you make will be taxable as allowable by law.

Capital Gains

This is the amount that you pay on your profit. If you have personally lived in the house for part of the time that you have owned the house, you will be able to write off part of the profit. For example, if you have lived in the house for 2 out of 5 years, then you can protect yourself from paying taxes on up to  $250,000 worth of profit (or twice that amount if you are married filing jointly). This tax is a federal tax. Depending upon your state, there may be additional rules and requirements. There are different requirements for members of the military as well. See IRS Publication 523 for additional details.

Depreciation

This federal tax is assessed based upon the formula of your house value minus the land value, divided by 27.5. This must be repaid at 25 percent when you sell your home as a rental.

Repairs or Improvements

Along the way, you have inevitably put money into your rental property for repairs or improvements. Be sure to consider how much money you have put into the home, and think about whether your profits will help you recoup these expenses.

Carrying Costs to Sell the House

Selling a property is expensive. In order to get top dollar, you will probably need to make some improvements that you would not necessarily need to do otherwise. In addition, if you leave the property vacant during the process of selling you will lose rental income.

After you consider all of the hidden costs of selling your rental property, you should have a better idea of whether this sale will be the windfall you were expecting. In some cases, you may decide to keep using the property as a rental, and let someone else continue to contribute to your mortgage.

Acquisition tenants can be an added bonus when purchasing a rental property. The landlord inherits a paying tenant as soon as the house closes, allowing them to start making money right away. After closing, most mortgages allow for up to 60 days before the first payment is due, depending upon the terms of the loan, so this is a great time to save up before the first payment is due.

However, the inherited tenant can also come with complications. An acquired tenant who is not paying their rent, is otherwise violating their lease, or who is causing other problems can mean early headaches on a newly purchased property. This tenant who came with the property was not of your choosing, and so you never know what sort of tenant you are going to get. With a problem tenant, you will have to make the effort to rectify non-payment or other violations, or to proceed through the eviction process. Even with a non-renewal at the end of the term, you will have to work around one tenant moving out while you make preparations for a new one to move in. This can cost you time and energy if your inherited tenant is not working out.

How good of a deal are you getting?

Will your profit margins on this property be enough to offset costs that you will have to expend in the worst case scenario? If not, are you willing to risk a financial hit to remove your inherited tenant if necessary? Don’t forget that your time and effort also have a value, so consider these costs as you negotiate your purchase.

What do you know about the inherited tenants?

Ask yourself, if you encountered the current tenants as applicants for your property, would you rent to them? If not, remember that you cannot simply get rid of these tenants for personal reasons. The current lease in place must be followed, and you will be restricted by those terms.

How is the inherited paperwork?

Take a good look at the lease agreement that is already in place. If you have owned other properties, you know the value of an airtight, comprehensive lease that covers every possible situation. Does the lease that is in place address all of the details it should? Or will the existing arrangement make it hard for you to reprimand the inherited tenant if they are creating issues.

Is the unit affordable?

Be sure to research comparable properties; not just for the purchase price that you will pay for the property, but also for nearby rentals. Is the rent for the unit that you will purchase priced properly? This will matter more if the existing lease will be in place for several more months, or if the property you are purchasing has multiple underpriced units. If the rental is underpriced, factor that into your costs.

In some markets, housing prices have been on the rise, making it harder to afford real estate investments. Consider different options for your dollar. Sometimes a multiplex is a better investment, because of the opportunity to take advantage of multiple returns on your investment at once. Having a tenant already placed may help you qualify for your mortgage more easily, especially for those loans that are harder to get, as it shows that a portion of the monthly payment is already provided for.

Final thoughts

State and local laws must always be kept in mind in acquisition tenant situations. Some state laws will favor the inherited tenant, while others give the landlord more wiggle room in this situation. This makes having an acquired tenant easier in some locations than others. Use this knowledge to help inform whether an inherited tenant is for you.

Now that you know about the tenants you may have just inherited or whether you should buy a property with current tenants, join us for our August Webinar for a Q&A about Acquisition Tenants!

As always, this article does not provide or imply legal advice. Check with your local, state, and federal laws. This article provides some guidelines to keep in mind as you begin your tenancy with an acquired tenant.

Purchasing a property with an acquired tenant can be a wonderful experience, where you’ll benefit from instant cash flow without having to find and place a tenant. It can also be scary, as you wonder whether you’ll be walking into one headache after another. As you consider a property with an inherited tenant, these are just some of the questions that you may be asking yourself.

1. Should I keep the tenant?

Every owner sells for a reason. As a new owner, it is important to figure out whether the inherited tenant will help you meet your goals or not. If it becomes clear that the tenant you have inherited is not the tenant for you, you will have to take a look at your local and state laws. Tenants have specific rights that will vary by jurisdiction, and tenants who have been in a residence for a long time may have additional legal rights.

2. Can I instantly raise rent on an under-market tenant?

It is not uncommon in an acquired tenant situation to find that the rent has been set below value for the area, especially when tenants have been in the unit for a long time. Never raise rent without knowing the law. Your local and state laws will likely dictate many aspects of raising rent, such as how often, by how much, and how soon you may raise rates on an inherited tenant. Rent-controlled tenants and Section 8 housing will be subject to additional restrictions.

3. Do I have to fulfill their lease?

Yes, unless the lease or local or state laws say otherwise. In most instances, you will have to fulfill the lease requirement. Additionally, check the terms of the lease as well as local laws with reference to renewals. Renewals are typically automatic unless notice is given, and terms for that notice will also vary.

4. Can I make changes to their lease?

No, lease changes cannot be made until the current lease expires, unless your lease provides special permissions. The lease will be specific to the property that has been rented. By the same token, lease violations can still be handled with notices and even eviction actions where they are warranted and allowable by the lease agreement. The time to make changes is once the lease expires. If you will be renewing the inherited tenant, rather than a one-page renewal, be sure to create a brand new lease. The ezLandlordForms lease wizard will walk you through the process of creating a comprehensive lease that will help to cover the landlord.

5. What paperwork should I send to the inherited tenant when I take ownership?

You may wish to send a welcome letter, introducing yourself, giving rent payment details, and contact information. This is a great time to set a positive tone with the tenants.

These represent just a few commonly asked questions when a tenant comes with your purchased property. It is important to keep in mind that this can be a stressful situation for both parties. The tenant will probably feel uneasy with a new landlord, until they can assess the landlord’s intentions and expectations. While it is all business for the landlord (as it should be), for the tenant the home they rent from you is where the hang their hat each night. Keep an open mind regarding what you learn from the selling landlord, and be sure to take time to form your own opinions before taking action. You would not want to write off an inherited renter too quickly, as the acquired tenant provides immediate income, and saves you the work and carrying costs of having to find a renter.

What is an acquisition tenant?

An acquisition tenant is an inherited renter currently residing at a property that you buy. Acquisition tenants come in all varieties. They may be in typical 12-month leases, or often they have lived at the property for years. In some cases, paperwork for these tenants may be old, incomplete, or nonexistent. Most importantly, these are tenants that you did not get to screen, choose, or have a say in selecting. They come with the property.

What should you request from an acquisition tenant?

Every landlord should be sure to adhere to state and local standards, as they will vary widely. Forms that landlords may want to have in-hand include the current lease, an estoppel, contact information, and the tenant’s original move-in paperwork.

Estoppel

The lender may require an estoppel before the purchase, but you may wish to require one as well. An estoppel is a legal document that confirms or clarifies certain aspects of the rental situation, such as the rent paid to date, the lease expiration date, the security deposit that was paid, and the like. You may wish to clarify any portions of the lease that are murky or unclear. An estoppel is a helpful way to ensure that the lease reflects the actual rental arrangement. Are the people living in the property all named on the lease? Is the rent amount spelled out in the lease the amount that is actually being paid? Is the tenant’s rent paid to date? The tenant will sign the estoppel to validate these terms, and the landlord will gain peace of mind from this extra check that the rental situation is as they expect.

Lease

The lease is a legally binding agreement that comes with the property. The lease remains in effect at the time of property transfer, unless the lease itself or state law allows for the landlord to end the current renter’s tenancy with notice. Since the new owner must follow the existing lease, you must be sure to obtain a copy of the agreement, including any addenda.

Contact Information

Without contact information, you will have no way to contact your tenant without speaking with him or her personally, or posting a notice to the door. The estoppel represents a great time to confirm that the contact information you have received is correct.

Move-in Paperwork

The move-in paperwork will serve you in a couple of ways. First, it may alert you to issues regarding the condition of the rental unit that you may not have been aware of. The move-in condition document will also make the process much easier when the tenant moves out. It will help ensure the tenant does not try to pass off damage they caused as pre-existing.

Other Correspondence

Request as much of the landlord-tenant correspondence as the departing landlord can provide to you. It would be ideal to know about any previous run-ins between renter and landlord. You can ask to receive any notices that have been issued, then you will know if a rule has been broken and whether the notice is for a first infraction or a repeated problem.

When purchasing any rental property, one question you should consider is why the owner is selling that unit or getting out of the landlord business altogether. Is the landlord retiring, moving, or facing a health issue? Or is the rental unit losing money, or undesirable to tenants? This is especially important to consider when you will be inheriting a tenant as well as purchasing the property. Consider whether a problem tenant was a final straw in the decision to sell the property before you dive in.

The great thing about ezLandlordForms and other technological tools is that so many tasks can be done long-distance. You no longer need to be in the same location as your rental. If you line up your resources beforehand, you can feel confident that you can take on the challenge of managing your own rental, even if you will be managing from afar. As a long-distance landlord, keep these four guidelines in mind:

Property management can be a round-the-clock job

Murphy’s Law just loves to upset the plans of any landlord. As a homeowner, you may put up with a broken air conditioner on July 4th, but don’t expect every tenant to be so patient. Be ready to answer your phone and problem solve, even when you’re not in town. For one example, see this scenario about placing a tenant while vacationing: http://www.reluctantlandlord.net/tenant-while-vacationing-in-fiji/

Get connected with other landlords

When repairs are necessary, it is your job to find contractors, set up appointments, and make sure the work is done correctly.  Your tenant may be willing to help in setting the appointment to make it at a time that is convenient to them. Be sure the repairs are being documented with photographs. Your job is to facilitate, ensure that everything runs smoothly, and of course, to pay the bill.

Use resources such as Google Reviews, Yelp, Angie’s List, online forums, and Facebook groups to connect and chat with fellow landlords. Online reviews and recommendations are your best bet for finding reliable vendors at a reasonable price. Once you use a contractor, hold on to the contact information for the next time.

Written Documentation

As a property manager, you want to be sure you always “put it in writing.” If the courts ever get involved in a dispute between you and a tenant, written documentation becomes essential. Make sure your documentation has enough substance to be relied upon in any legal challenge. Back up any electronic communications; you don’t want to lose documentation during a phone upgrade or a device failure. Luckily ezLandlordForms has templates for many common issues, and even some that are out of the ordinary.

In-Person Visits

Making occasional in-person visits to see your property is important. While tenants may be telling you that a carpet or fixture needs to be replaced, there is nothing like seeing it yourself to make a decision. While you are in the unit, you’ll be able to examine every nook and cranny, and check that things are being maintained the way you expect. Take this opportunity to be sure that, as a remote property manager, you are doing a good job.

Managing from a distance can be challenging. With smart use of technology, and a responsive and cooperative tenant, you can do it. Be sure that you screen for the best tenant you can find, and use the most comprehensive lease you can; tools to accomplish both can be found at ezLandlordForms.com. After all, your rental unit represents your investment – be sure to do your best to safeguard it!

Much of the effort in being a landlord comes at the beginning of a tenancy. You may be wondering if there is any way to place a tenant yourself if you live in a different town or time zone than your rental. The answer is, through smart utilization of technology and some hard work, you can!

Advertise your Rental

First you need to advertise the unit that you will be renting. You can utilize free sites like Zillow manager, craigslist, and local websites. You can find a complete listing of locations where you can list your rental at http://www.reluctantlandlord.net/17-places-list-house/.  If you are going to give yourself the job and title of property manager, commit to doing it well. Be sure to respond to inquiries in a timely manner, or you will risk losing a tenant to another landlord. Describe your unit as accurately as possible, so that you don’t waste time with renters who will be turned off when they find out there is only on-street parking or no on-site laundry.

Show the House

Opening your unit for showings can be a logistical challenge, let alone when you will not be in the area to do the showings yourself. Vacating tenants may be willing to show the property for their landlord if requested. If the tenant cannot, or if you do not want the tenant to show the property, ask a local friend or relative to open the door for you. If you are having someone assist you, do your best to group the showings together, spaced 15 to 30 minutes apart. These group showings are better than doing an open house, and are a more effective use of time. You can see more about scheduling efficient showings here: http://www.reluctantlandlord.net/efficiently-set-showings/. If you are struggling to find help with showing your rental property from afar, make some calls to property managers. Some property managers will list your unit on the MLS and place your tenant for a flat fee. Once this is done, you can resume your role as property manager.

Complete the Application

After you have an interested party, have the potential renter complete a rental application, and background and credit checks. ezLandlordForms offers all of these documents in a paper-free, electronic process. You can even order a screening of previous evictions. These tools can be ordered and completed remotely, and will tell you a lot about a tenant whom you will not be able to meet in person. Be sure to keep your listing up until the tenant is placed and you have received their security deposit.

Lease

Once you have found the right tenant for you, the next step is completing your lease agreement. Remember, your lease is not for the times when things are going well at your property, but when things go wrong. Make sure you cover every situation with a comprehensive, state-specific lease. Here is a list of considerations to make, along with suggested wording: http://www.reluctantlandlord.net/everything-lease-addendum-landlords/. The ezLandlordForms lease allows you and your tenants to eSign, so you can get your rental agreement executed from any location around the globe.

Key Exchange

The last step is to walk through the unit and hand the keys to your new tenant. If you plan to make occasional trips back to your property, this is an ideal time to do so. If you must have a surrogate perform the walkthrough, consider a video call so that you may respond directly to any questions the tenant has. Any damage that must be noted at move in time can be documented via photos.

With careful planning and thoughtful use of technology, you can handle your rental from a distance. Each new experience will yield a new skill that you can add to your toolkit.

There are two options for managing your rental property: hiring a property manager, or managing the unit yourself. If you happen to live far away from your rental, that doesn’t necessarily mean self-management won’t work for you. Although it may seem daunting to manage your property from afar, it can be done, and technology can help you do it.

Managing for yourself

No one is going to care more about your property than you do. As the legal owner, and the person who pays the mortgage, your vested interest makes the property’s success your top priority. You know the ins and out of the structure, and will not be fooled when the property is damaged or a tenant makes an unreasonable complaint or request. If you own a small portfolio of units, you will not be distracted by other priorities or trying to recruit new clients, as a hired property manager might be.

The fast paced acceleration of technology means a host of new apps and tools that you can take advantage of to monitor your property. Home monitoring apps can alert you to the status of electricity use, whether external lights are illuminating the property, and to any malfunctions with automatic tools like irrigation systems. Security cameras can enhance your peace of mind, and may be monitored from afar. If work does need to be performed, hiring a technician or contractor remotely has never been easier. Websites that give ratings and reviews abound, and you can use online tools to track contractors down, and to hear how previous customers rated their services.

Be prepared for a steep learning curve when you first attempt to manage your property yourself. The inevitable missteps along the way may cause stress, or even cost you money. The question you should address is whether the savings you may reap from managing for yourself is worth the time and effort. It may be easier to take on managing from afar if you have a local resource, whether it is a hired assistant or a family member, who is willing to perform any on-site necessities for a fee.

Hiring a property manager

Professional property managers bring a wealth of resources and knowledge that can be deployed immediately, without the need for hesitation. The property manager will have relationships built that may promote faster service and quality guarantees. If your unit needs a plumber immediately, a property manager most likely has the experience to know the most contractors. They can handle scheduling, admit the contractor to the unit, and can even handle other necessary tasks. For example, if water damage means that a construction permit will be required to complete repairs, the property manager may help with your municipality laws and regulations. Their familiarity with local laws is a definite plus.

The best property manager can be a definite asset. Unfortunately, property managers are a bit like insurance companies: you don’t need them until you need them. Also like insurance, you don’t know whether you have chosen a good or bad property manager until you get into a jam, and their skills are put to the test. The trick is finding an excellent property manager. The best property managers can come at a premium. Here are 80 questions to think about when hiring a property manager: http://www.reluctantlandlord.net/80-questions-to-ask-your-property-manager/

Making the decision

A professional definitely can pay off in the long run. The question is whether you are willing to pay that premium, or if you are willing to roll the dice while you get up to speed on everything you need to know. Explore your remote resources before you need them, so that you can feel confident when that tough situation arises.

Whichever route you choose, always be willing to fire a bad property manager who is not getting the job done. That means being realistic when you must “fire’ yourself from this assignment and hire out instead. Ask no less of yourself than you would a paid property manager. Be sure to hold yourself to a high standard and be diligent in solving every problem efficiently and effectively.

Neither landlords nor tenants enjoy handling the cost of utilities, which leads many people to try alternative options to heat or cool their residences. For example, a tenant may try to use space heaters to reduce their monthly heating bill. While using a space heater may be a great option to keep you warm in a confined space, using several will likely lead you to spend more money than you’re saving.

Instead of using temporary fixes, landlords can employ other strategies to save themselves or their tenants when the monthly bills arrive. Heat pumps are becoming more popular in buildings across the United States, giving tenants the option to easily and efficiently switch between cooling and heating. But there is actually a range of other ways to save your tenants money on heating and cooling, including these two foolproof methods.

Insulation: The Key to Making the Most of Your Climate Control

One of the best ways to conserve more energy and make the most of your heating and cooling system is to ensure the home is properly insulated. By insulating the wall cavities, the roof, and other spaces in the home, you can guarantee that air doesn’t escape as much or as often. For optimizing energy efficiency, the foundation of the home is the first place that a landlord should start in terms of insulation. Don’t overlook unfinished attic spaces and exterior walls, and replace windows with replacement or storm windows.

Today, you can find a wide variety of options for insulating a residence, including installing foam boards, concrete forms (ICFs), reflective systems, sprayed foam or foamed-in-place insulation, and structural insulated panels (SIPs). Even if you’ve lived in a home or other residence without proper insulation for some time, most of these options can be easily added to an existing home and help you to instantly start saving on heating and cooling.

Getting Creative In How You Keep Heated or Cooled Air Inside

The type of heating and cooling system used, and the insulation installed in your home, residence, or building are both important factors in your climate control. Another factor that cannot be overlooked is human behavior. How you actually utilize your thermostat will allow you to reduce your use of energy and ultimately save money over the long term. Also, letting out heated and cooled air—even if you aren’t intending to—is a huge source of wasted energy and wasted money. By adjusting some of your daily habits, you will notice a decrease in your utility bills as a direct result of trapping more of the climate-controlled air.

Landlords may suggest that tenants reexamine the temperature that they are used to. A lot of times, tenants may think they need to crank their thermostat low as soon as it gets a little hot outside. In actuality, opening the windows and keeping the thermostat at a mid-range temperature may be a better option for saving energy. Plus, tenants can find a new normal temperature that they like better than before, and not expend so much energy in the process.

Another idea is to suggest turning down the heat at night after the space has been warmed throughout the day. Keeping the heat running all night long is not necessary, especially when the tenant is wrapped in blankets and asleep.

Additionally, landlords can coach tenants to stop air from escaping by changing some of their lifestyle habits. Some people may not realize how much heat they are letting out from their homes when they open and close their doors, but this is a surprisingly massive way that heat is wasted. For example, when unloading groceries from your car, try not to leave the door open the entire time. The quicker you open and close the door, the less heat will escape.

A final suggestion is to cover up holes to the outside, like keyholes and electrical boxes. You can also try to block heat from escaping underneath door thresholds by adjusting them. Sometimes, you can raise the threshold of a door on your own, or purchase a draft excluder. By covering up these holes to the outside, you can make sure that as much hot or cool air as possible remains indoors.

In knowing these options, and by making sure the central furnace and air conditioning system is as up-to-date and efficient as possible, homeowners can reduce the amount of energy they are spending on heating and cooling their homes. By considering all of these options, landlords can minimize the regular cost of heating and cooling for tenants in a way that is both consistent with their budget and generally more efficient for a building.

Whether you are using your personal home or your rental unit, there are certain steps to take to start offering a furnished rental unit. These six tips will get you started.

Who is your client?

In the short term market, clients travel for business or pleasure. These two groups have very different needs. Business travelers tend to stay longer, but pay a lower rate. Vacation travelers stay for a short period of time, but may be willing to pay top dollar for a prime location or peak season. Will you offer a rental with amenities to compete with a hotel, or will you pack your unit with lots of beds and pullout sofas to sleep as many guests as possible? Figure out which target client will be the most successful in your area, then furnish your house accordingly.

Determine a rental price

Per night, short term rentals give you the most bang for your buck. However, what happens when you can’t rent your unit at any point? This step will require research to determine when the most potential clients will be in town. Business travelers may be available for a longer season than vacationers. Along with missed income through vacancies, keep your other expenses in mind. Are your utility costs high, low, or variable? Other costs such as landscaping and pool service may be seasonal as well.

Be sure to consider additional costs for supplies that must be provided, such as paper products, toiletries, and utensils that you will provide, and occasionally replace, to fully outfit your unit.

At first, you may have to make a large investment in furniture, even if you will be renting your own home. You may need to purchase additional beds or flexible furniture that can be reconfigured for waking and sleeping hours. You may want to replace valuable, fragile, or sentimentally significant pieces with more durable ones. Remember the figure in the cost of outfitting all areas, especially kitchens, with the tools that will be needed to provide a comfortable stay to your renters.

Know what you will have to make in order to break even, but also research your competition. All factors considered, is your target price reasonable?

Put your best face forward

In our digital age, photos are crucially important to introduce your audience to your property. You want photos that clearly show your unit, including outdoor spaces. Panoramic shots can help give a better sense of the complete space. Consider bringing in a professional to take your photos. When you stage the photos, don’t feature amenities that you do not plan to provide. You don’t want to set up false expectations for your renters.

Even as technology allows the world to become cheaper and easier to explore, traveling is still expensive. Increasingly, short term rentals through sites like VRBO, Airbnb and the like have become popular for vacationers and business travelers alike. You already pay for your housing costs, so why not offset your mortgage with some rental income during the times when you are not home? Turning your personal dwelling into a short term rental might be a good idea for you, but first you must weigh the pros and cons. Here are five things to keep in mind when exploring this option.

Is it legal for you to rent out your home?

If you are currently a renter in your dwelling, get out your lease and take a close look. Many leases do not allow subleasing. If your home is part of an HOA, there may also be restrictions against renting your home, or against short term rentals. Even some counties and municipalities have begun restricting the practice. Don’t forget to check your homeowners insurance, as many policies do not cover damage caused by short term tenants.

Are you able to leave the house during the peak season?

The key to making money in the short term market is renting your house during peak season for your area. If you can only make your home available during the off-season, you may find it hard to fill your house with the desired clientele at your target price. In order to maximize your profits, you need to rent out when there is low supply and high demand. Does your small town host an event that brings throngs of people to the area during a particular holiday, weekend, or time of year? If so, that could be the perfect time for you to get out of town and make some money.

Are you willing to let strangers use your items?

People looking for short term rentals have an expectation of a fully furnished home, including furniture, supplies, and a full complement of household items. You must be prepared for everyday wear and tear as well as damage from accidents, spills, and other mishaps. Your furniture and appliances may experience scratches, dents, and stains. You must be willing to have complete strangers live in your house as if it were their own, and use your things. For your irreplaceable items, think about where you might store them for safekeeping in your absence. Do you have a storage area in the home, or can you put a lock on a closet?

Are you able to take your pets with you?

What about your pets? If you are accustomed to hiring a sitter to watch your pet in your home, can you make arrangements to board him or take her with you?

Are your plans fixed?

Your short term renter is your customer. They will be relying upon your place to be their home away from home. While you may be leaving the area, you should be sure to have a proxy in place in case of emergency. Also, consider cancellation policies carefully. If your tenant cancels, what will the penalties be? And what are the penalties if you have had to rent a place to stay and must cancel in turn?

Renting out your primary residence while you are vacationing, traveling for business, or during a big event is a great way to earn some extra cash. The best way to avoid unwanted surprises is preparation and research. If it works for you, you can turn your vacant home into extra mortgage payments.

Websites such as Airbnb, FlipKey, and VRBO have given rise to the increasing popularity of short term rentals. As explore whether this kind of rental will work for your home or rental property, there are several considerations to make. It is important to make sure this rental model meets your rental goals before adjusting your rental strategy. Here are several items to consider when evaluating whether to make your rental into a short term rental property.

Which property are you planning to transition - your personal dwelling (when you are vacationing, traveling, or living somewhere else) or a dedicated rental unit?

If you are renting out your personal property, it means that any extra money you can make when you are not there is a bonus. You can strategically rent it out during peak season to maximize your profits. However, you must assess your comfort level with allowing a stranger into your own home. If you are creating a dedicated, furnished short term rental, much more work may be involved. Also, seasonal peaks and droughts may mean that the rental will sit empty at times, costing you money each time you have a vacancy. Your profit during peak season must cover your expenses during leaner times.

What does it cost to rent your house out?

If you are renting out your personal dwelling, the cost to rent your house is relatively small. You are already paying for items like utilities, cable, furniture, and furnishings. The monetary cost may not be as large as outfitting an entire rental unit from scratch, but there may be a psychological cost to having strangers in your home.

On the other hand, turning a traditional rental into a short term rental requires much more investment of time and money. Short term renters will be relying upon you to provide much more in terms of furniture, home accessories, kitchen supplies, and many other items that a traditional tenant would have to supply on their own to outfit the home. In addition to these costs, you will have to pay for utilities, landscaping, pest control, and other maintenance concerns. Once this rental is set up, however, you can focus on marketing and filling it for as much of the year as possible.

What does your house rent for in peak season and during the off-season?

When you rent your house as a furnished rental, your income can vary widely based upon the rental season, while your costs will still have to be paid. It is important to ensure that you can make enough during the peak season to cover the expenses of the down time.

Do you have the time to invest in a vacation rental?

Furnished rentals are very time-intensive. While a conventional rental lasts for a year or longer, short term rentals can be as short as one day per renter. You could be marketing, scheduling, and turning over the unit several times a month instead of once a year. Each time you turn over the unit, the task list includes cleaning and prepping the unit, making sure the tenant gets in, and being available for anything else the tenant needs. The renters who you will attract to a short term rental will likely be vacationers or business travelers. As such, they won’t have the time or inclination to unclog a toilet or supply their own bottle opener - they’ll call you instead. Investing your time into a short term rental may mean less flexibility in your personal life. Consider whether you are willing to put in the effort to constantly recruit, book, and tend to renters, all while maintaining the cleanliness and readiness of the rental unit.

Is your home in an area that allows short term rentals?

At this point you may have determined that you want in on the short term market, but the question is, does the short term market want you? You must determine whether your area is not only desirable as a short term rental, but also whether it is allowed. Be sure to check your HOA covenants. Some states, such as Florida, and counties, such as Virginia Beach, charge extra taxes on rentals that are shorter than a given amount of time. Be sure to explore all of the rules. Finally, check out the competition to see if there is a need for short term rentals, or if too many other options exist in your locale.

As you take all of these consideration, be honest in your assessment of the above issues. With realistic expectations of the work required, and the rewards to be reaped, you will enter the short term rental market as an informed landlord.

Certain costs are to be expected when a rental unit turns over. But when your costs exceed your profits, your biggest asset can turn into your biggest liability. The security deposit is intended to protect against the costs of damages from a departing tenant, but what happens when the costs exceed the deposit amount? When there is damage, the keys are proving that the damage exceeds normal wear and tear, and showing that it is the tenant’s fault.

The first important step is that you and your tenants clearly document the condition of your rental upon move in. This documentation will be important upon move out to distinguish between wear and tear and damage. It also proves that any damage occured during this renter’s tenancy.

As an Owner:

Every part of the unit should be documented, including everything that was included with the unit and all areas of the property, inside and out. Take note of the appliances, other amenities and features, as well as the cleanliness. There is more than one way to document the status, and you should take advantage of as many of these as you can. Here are some ways you can record your unit’s condition.

Invoices and Receipts

Keep all of the invoices and receipts for any repairs and improvements that you performed on the unit. If you put in new flooring, paint, or made other improvements, keeping a record allows you to show the age of the items. This also includes general cleanliness of both the carpets and house. Organized receipts and invoices will help to give a sense of what the condition should be, given the age of the property and amenities.

Photos

Take pictures of your property,with clear time and date stamps. As you are making your photographic record, take pictures of as many elements of the home as possible, including close-up details and zoomed out images. You never know in advance which photo will be important, but the more photographic evidence the better.

Video

The rules for photos also apply to video. Some landlords prefer video over photo as it is easier to get a sense of the unit as a whole. A video will show every aspect of the room, so you are less likely to miss a feature, as you might when taking a series of still photos.

Written Paperwork

Using a condition form, such as ezLandlordForms Move-In Condition, gives you written documentation. Since both parties sign off on this document, the tenant will have a difficult time disputing the original condition.

Not only is it important as a landlord to document the condition of the rental property, but also have your tenant record any issues that they perceive. This way, you can fix any issues at the outset, so that they do not become a lingering problem. An easy way to do this is to send them a form and request it back within a certain timeframe. You can find a copy of the form here.

With this document, it is a good idea to stipulate that if the document is not returned, the tenant acknowledges that the property has no issues. This gives the tenant incentive to return the document, and keeps you from chasing a procrastinating tenant. This also keeps the problem from hanging over your head, and gives you documentation showing that a tenant who did not return declined to record the problem. As always, check your local and state laws regarding this issue.

Being a landlord does not come with any guarantees. Your safeguard against excessive damage is doing your best to cover all of the bases. You can use receipts, pictures of the condition, and documentation from the tenant to memorialize chronicle the condition of the property and the parties’ agreement about that. The key is to have as much proof and documentation as possible.

The application process can be tricky. As the landlord, you are trying to get as much useful information as you can, while the applicant may have other concerns. You may be dealing with applicants who are local or from out of state. In today’s world, there is no reason to be juggling a mix of email, text, and paper copies. The application process can be streamlined for everyone involved by taking advantage of an online screening process, like the one offered by ezLandlordForms. What are the parts of a tenant screening and how do you get each piece completed using electronic record keeping?

Application

Through our online portal, ezLandlordForms allows you to send a screening application to multiple potential tenants.

Background and Credit Check

Once you have reviewed your potential tenants, you can choose the best one or two applicants and move forward with additional screenings. Through ezLandlordForms you can send order a background and credit check. Our system streamlines the payment process, as you can select who pays! The credit check will give you lots of important information; in addition to the credit score itself, be sure to take into account items like late payments, open accounts, and overall debt burden. You can add an optional eviction report as well.

Pay Stubs

The standard requirement is to see income of three times the rental amount for a given time period. Pay stubs can easily be sent electronically through email.

Driver’s License

This is an item that can be scanned and sent through email if you would like to have it electronically.

Electronic Storage

With web-based email or document storage, you can feel confident that the documents you need are always close at hand. Just as you would with any paper record keeping, be sure to stay up to date on virus protection, firewall security, and secure web protocols to protect yourself and your applicants.

Landlord Recommendations

When obtaining a recommendation from a previous landlord, whether over the phone or in writing, always keep the human factor in mind. Landlords who fear a lawsuit may not offer much information other than confirming basic facts. A landlord who is encouraging a tenant to move elsewhere might not tell you full story, out of concerns that the tenant will not find a new place to live. No two people get along in the same way, so be wary of extra baggage in the tenant-landlord relationship.

Screening Is Not Your Only Defense

Hopefully the screening process helps you to find the best tenant you can. But it’s impossible to predict what will happen during the course of a lease term, even with the best tenant. Your lease is the legal protection that the relationship will proceed with certain expectations and consequences. Remember to write a lease to protect your investment and your interests, even when you think an applicant will make the perfect tenant.

A lease document always spells out some key terms about your rental arrangement. The address of the property, names of the parties, and dates of occupancy are obvious information to include. But there is so much more that your lease can do for you. The agreement may seem unneeded when times are great, but it is there to cover you when issues arise. That is when you need your document to reflect every detail that you and your tenant agreed to. These are the times when a verbal agreement just will not do. A comprehensive lease gives you a detailed roadmap along the journey of being a landlord.

State Specific Regulations

Every state has different rules regulating the landlord tenant relationship, so it is important to use a lease that addresses state laws. You can find ezLandlordForms’ state specific leases here. It is important that you use a trusted state specific lease in order to make sure you are covered for the unique regulations of your municipality, as these can vary widely. This way, you can feel confident if you must ever go to court over a dispute.

Tailor Your Lease to Your Property

The next key is knowing the ins and outs of your property. Think of every eventuality that could take place within your unit, and how you want it to be handled. This is your chance to spell out rules, regulations, consequences, and the actions that you will take if needed. Any issue or feature that does not appear in your original lease may come to light when it becomes a problem. As the landlord, it is easier to establish the terms at the outset of the lease period, rather than having to negotiate them with a renter who is settled into your property. Here are just a few of the issues that you should be thinking about.

Pets

Thinking about pets entails more than whether you will allow them or not. Specifically what kind of pets will be allowed? Will you allow an aquarium that could flood your unit if it fails? You may be okay with a 20 pound dachshund, but what about a 120 pound Great Dane? If pets are not allowed, what are the penalties if you find pets in the unit? Are you going to charge pet fees or non-refundable deposits?

Home Business

Home businesses take many forms. Consider whether your tenant may operate a hair salon, host demonstrations as a sales consultant, or repair automobiles in and on your property.

Landscaping

If the tenant will be taking care of the lawn and property in any measure, spell out your expectations. Will the tenant handle mowing the lawn only, or will they also care for beds, perform weed whacking, and the like? What happens when winter weather strikes?

“As-Is” Appliances

Will all included appliances be replaced if they stop working? Typically included appliances are expected to be maintained in the same condition. Think about specialized appliances, such as a trash compactor, and spell out whether that will be replaced. In many states, if you do not specifically spell out appliances that will not be replaced, the landlord will be responsible.

Move Out Cleaning

What is the expectation when tenants move out of the house? Do you require professional cleaning? Along with the walls and carpets, don’t forget to think about other types of cleaning you might want, such as cleaning ducts.

Final Thoughts

Everyone house is different! These are just some examples of the things you should think about when you are writing your lease. If you have more than one property, remember to tailor each lease for each individual property. And always keep local laws in mind.

Your goal is to create a lease that stands up to every day of the tenancy, not just the days when everything is running smoothly. Be specific and meticulous to be sure that the things that are important to you are covered.

Click Here to Join us for this Months Webinar for Preparing Your Legal Documents:

Every landlord has encountered a difficult tenant, with issues ranging from payment, property upkeep, or just general neediness. These are the tenants who make renewal decisions the most difficult. But the grass is not always greener on the other side. How can you decide whether to retain your difficult tenant for another rental term?

Whether you send them a lease renewal or a non-renewal document comes down to your long-term goal, the property itself, and the rental market. Here are a few things to think about:

1. What makes this tenant a problem child?

Is it because they melted the siding on your rental home with their grill and the house smells like wet dogs? Or is it because they pay on the fourth of the month, within the grace period, but after the official due date. Evicting a tenant whose habits are annoying but not illegal may not be your best move. Try to distill the issue down to its essence, and figure out whether the problem is costing you money, either now or in the future, or whether it is only an inconvenience.

2. Is the problem fixable?

If you haven’t issued a notice about the issue, then do so right away. This will put the tenant on notice that they need to remedy the issue immediately, and lets them know you are paying attention. It’s always wise to document any problem areas, and a lease renewal is a great time to modify your lease to codify your expectations. For example, if your tenant is always paying on day five of the grace period, then amend the lease to remove any grace period on rent payments (state law permitting). If they always pay beyond the grace period, increase the late fee (again, in accordance with local laws). It is reasonable to ask tenants to pay a deductible on repairs if they are always calling the repair person for “false alarms.” More stringent terms could mean that you lose the tenant through non-renewal, but if the situation is causing you stress, you owe it to yourself to try the remedies available to you.

3. Can you increase the rent to make it worth your energy?

Would an extra $50 or $300 make it more worthwhile to deal with the tenant and their baggage? If so, the most important question is whether your market would support the rate increase.

4. Do you have time for the eviction and replacement process?

If you don’t renew the tenant, do you have time to place another one? Consider that the tenant being removed may not be easy to work with in the process, as they may have wanted to remain.

5. Do you have property updates that are needed before you can rerent?

Some move outs can be done on the same day, if no repairs or updates are needed. Other times, a new paint job, new carpet, or new countertops may be in order. Along with costs that may soar in the thousands, scheduling and completing these replacements will extend your vacancy timeline, which adds up to lost rental income. Have some idea of your unit’s condition and have a cost estimate in mind before you go through with an eviction.

6. Is the grass greener on the other side?

There is no such thing as a perfect tenant. Know that a difficult tenant may be worth holding onto, depending upon the circumstances. And a normally easygoing tenant may put up roadblocks if you try to remove them from your rental. A realistic outlook will help you make the best decision, rather than imagining how removing a troublesome tenant will take care of all of your problems.  

Hindsight is always 20/20. Be sure to consider the possible remedies and consequences of cutting a problematic tenant loose. Be realistic when answering the question “Is dealing with this tenant worth it?

Click Here to Join us for next weeks Webinar of the Best Practices for Raising Rents:

Ever-present technology means that breaking news and social media are regular fixtures during our waking hours. When every opinion has an outlet, you may see more and more rental horror stories that can scare you out of being a landlord. While it is true that being a landlord can have its awful moments, there is room for the mundane and true rewards in the life of the landlord as well. As you look a little closer, you will realize that good landlord practices will help to protect against nightmare tenants.

1. Did you write a strong lease?

A good lease will have a clear list of expectations, along with consequences for violating the rules. Fees and penalties will be clearly spelled out. Having an airtight lease to fall back on will give you a road map to follow if things turn south with your tenant. You will be able to rest easier knowing that you are on solid legal footing, such as the state specific lease you can create using ezLandlordForms.

2. Did you run a background and credit check?

A background and credit check help you to find tenants who care about their credit, and who wouldn’t want to damage their standing through an issue with a landlord. The “worst case” stories that you see online may involve people who have been in court time and time again. Criminal and credit checks help you make a decision based on data, rather than whether or not the person looks responsible. Adding an optional eviction report to your screening can help you learn from another landlord’s misfortune. Impartial third parties will definitely give you more reliable information than any clickbait article that crosses your screen.

3. Did you charge market rate?

Giving your tenants a break on their rent can easily come back to haunt you. If you have not charged enough to account for necessary upkeep as well as emergency situations, you are doing yourself and your tenants a disservice. Without a reasonable rental rate, any situation can easily snowball into a you said, they said scenario. Don’t give your tenants an excuse to paint you as a nightmare landlord. Be sure to charge the right rate from the right tenant.

4. Are you keeping your tenants accountable?

Your well-written, comprehensive lease and your reserve funds are only good tools if you use them properly. Once you have everything in place you have to keep your tenants honest. If you don’t ever use your lease to correct problems, your tenants may continue to take advantage of the situation until the you have few deterrents from committing violations. For example, if you do not impose late fees, then your tenant is not dissuaded from paying late each and every month. Some of the worst case stories that you may hear come from a landlord who has not been imposing consequences all along the way. Using the lease as your guide takes emotion out of the equation, and sets  an excellent precedent of action to promote compliance.

Yes, things can go wrong with real estate management, and sometimes situations spiral out of a landlord’s control. Just remember that the horror stories get more clicks than the more common success stories. The tale of “The Tenant Who Destroyed My House” will garner more exposure than the story of “The Tenant Who Helped Fund My Retirement.” Read the shock stories if you want, but look for clues along the way; sometimes the landlord could have prevented the worst case scenario or kept the situation in check with foresight and close attention to details.

Setting your rental rate is a delicate balance. The best way to increase your cash flow is to increase the rental amounts. Whether you are placing a new renter or renewing a long-time tenant, there are careful considerations that must be made.

Often, the easiest time to increase rent is when initially placing a new tenant. When the old tenant leaves and a new tenant arrives, there are no emotional attachments or preconceived notions to deal with. The key is figuring out the how much of an increase the market can support.

To do that, first check your local comparable listings, or comps. Beware not to put much stock in Zillow or rent estimates as those are often inaccurate. Instead, compare real offerings that are as equal to your rental as possible. Ideally you are looking for:

     •the same number of bedrooms

     •the same square feet

     •the same number of garage doors, or similar parking or transit amenities

     •the same school district

     •the same community amenities (although be thoughtful about these, as renters may not be willing to pay more because you are in an HOA with a pool or lawn service)

While upgrades such as new paint, carpet, granite, and landscaping are often considered “plusses,” some markets will not support a higher rent price for these features. Keep in mind that if you are putting certain prohibitions on your renters, such as not allowing pets, you are automatically reducing your potential rental pool. You may not be able to get the same price for the rental from this smaller share of the market.

Researching an appropriate price is important, but until you test the price in the real world you won’t know for sure what the market will bear. As you know, you only need one person looking for what you have to offer, and willing to pay your price. You can try to post your house with enough time built in to lower the price if you are not getting the right applicants, or any applicants at all. Even a small difference in monthly rental certainly adds up over time. The trick is not to wait too long to adjust your advertised price, as vacancy will quickly eat into your profits.

Renewals

Renewing tenants have a tendency to lull you into complacency, but don’t become a victim of a familiarity. A regular renewal date serves as a good reminder to reexamine your rent at least once a year. Annual rent adjustments are important to keep your tenant at the market rate.

Raising the rent on an existing rental requires a delicate touch, as you may not want to lose a good tenant over a rental increase. Remember the old phrase about the bird in hand? When thinking about renewals, here are three things to keep in mind:

1.What will the costs be to turn over your unit to a new tenant? If you have had the same tenant for an extended period of time, you may have been able to defer some improvements that will now need to be completed to attract a new tenant. Items such as countertops or flooring may need to be replaced. Also consider your carrying costs during any vacancy.

2. What is your new rent rate? Do your due diligence and look at comps to help you set a new rate. If your rent increase threatens to price a good tenant out of your unit, is your new rate realistic? Can you really find a tenant willing to pay?

3. If you are self managing, do you have the time to dedicate to a turn over? Life will keep coming at you whether or not you are turning a property over. If you cannot dedicate the time to turn the property over efficiently, your bottom line will suffer.

Keep In mind that raising rent is an important factor in your management as a landlord. Even though there may be an emotional component with renewing tenants, eventually rent increases will demand to be addressed. Small but regular increases will be easier than large, forced increases. Use the opportunity provided by placing a new tenant, or when renewing an existing tenant, to reassess and reset your rent amounts.

Depreciation is defined by the IRS as “an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property. It is an annual allowance for the wear and tear, deterioration, or obsolescence of the property.”

The annualized deduction is calculated by dividing the house value (not including the land value) by 27.5. That deduction may create a “book loss” that allows you to show a loss on your income taxes to offset your positive cash flow. This in turn allows you to take the loss off your personal taxes.

For example, your property market value $300,000 is broken up to a house value of $200,000 and a land value equalling $100,000.

Your depreciation would be $200,000 divided by 27.5, equaling $7,272.

That would allow you to claim $7,272 off of your yearly expenses.

Of course, every area has a different land value versus house value. Urban areas will have greater land values relative to rural areas. It is important to be sure to know the specific values and breakdowns for your property.

Tax Impact

Depreciation is a useful tax tool because it allows a landlord to book a loss, even as they have made income. Depending on your household’s adjusted gross income (AGI), that loss may help to reduce your tax payment. For example, if you made $100,000 of income, depreciation may give you a $4,000 “loss” on your taxes. Your AGI is now $96,000. That lower income amount may put you into a lower tax bracket, with a lower tax rate. All of these factors can lead to a reduction of the taxes that you owe for the year.

So why doesn’t everyone love depreciation?

The problem with depreciation is, it is not “free money.” Unless you die and a new basis is created for your estate, you eventually have to pay depreciation back when you sell the house. A deferment is available through a 1031 exchange, but if you ever sell outright, for many it can be a huge burden.

The current IRS payback rate is 25 percent. Based on our previous example, if your depreciation is $7,272 a year, you would have to pay the IRS back $1,818 per year of depreciation taken.

The issue with depreciation is that these numbers are the same for everyone, no matter if you filed as married or single, and regardless of your tax bracket. The depreciation and repayment rates are the same for everyone.

In addition, there are AGI limitations. The IRS only allows a maximum loss of $25,000 for incomes up to $100,00. Beyond that, the maximum allowable loss decreases as your AGI increases, so that incomes of $150,000 and up may not deduct the losses at all (for a married couple filing jointly).

Those in higher income brackets may not benefit from depreciation. So why claim depreciation in the first place? Depreciation must be paid back when you sell the property whether you have taken it or not.

For some, depreciation is an added bonus and for others it is a burden.

However, it is important to remember that in the complicated landscape of U.S. tax law, every situation is different. If you have any doubts about your understanding of depreciation or any other aspect of completing your taxes, you may benefit from the expertise of a certified public accountant to walk you through the process and explain all of the ins and outs.

When serving as a landlord for the first time, there are many lessons to be learned along the way. One common mistake comes in preparing your taxes as a landlord for the first time. Two forms that can easily be confused are Schedule A and Schedule E. It is easy to make a mistake in this area if you do not know the difference between the two schedules. First let’s look at how each schedule is used on your taxes.

Schedule A

This document is for your personal deduction itemization. You use it to list your personal expenses, such as medical costs, certain types of interest paid, and charitable contributions. This is explicitly for personal reporting.

Schedule E

This form is used to record income gains or losses owing to several sources, including rental real estate.

Now that each schedule has have been defined, the key is to understand when to use each form. If your house is your personal dwelling then you use Schedule A. This is where you list all your expenses. If these deductions together exceed the standard deduction, you can use this itemized list on your returns. Otherwise, it behooves you to take the standard deduction and not count these itemized payments on your tax return.

Dealing with a partial year rental

The biggest pitfall in doing your taxes for your rental property is putting your income and expenses on the wrong forms. This is especially easy to confuse if you have used your house as your private dwelling for part of the year, and as a rental for the rest of the year. If you have listed rental income on Schedule E, but you have listed your expenses on Schedule A, you may see an unusually large profit for your first year. After counting in depreciation, it is not uncommon to see a loss on your taxes. Checking your stated profit serves as a good double-check.

When completing your taxes, keep the differences between Schedule A and Schedule E in mind. The rental income and expenses claimed on Schedule E factor into your adjusted gross income. If you fail to offset your rental gains with expenses entered on Schedule E, your income may be artificially high, causing you to pay inflated taxes.

Tax season is overwhelming enough just filling out a 1040EZ. Adding in a rental property Schedule E can make you feel completely lost. Many tax programs such as TurboTax and H&R Block have extended versions you can buy covering rental properties, using the IRS form Schedule E. The question facing many landlords is whether to use these increasingly intuitive electronic programs to file their tax returns, or to hire a CPA to be sure the form is completed by a professional.

There are three key factors to consider when considering this question.

Cost Considerations:

It’s a good idea to evaluate the value of hiring a CPA or IRS enrolled agent. After all, the cost of hiring a licensed professional is typically considerably more than the cost of purchasing the software.

Tax preparation software advertises that it will walk you through the entire process. That is fine if you understand the questions that you are being asked and the options you have to choose from. However, if you do not understand the correct answers to queries about depreciation, mileage, marketing expenses, or repairs versus capital expenditures, these queries in the software will do you little good. If you do not know how to answer these questions in your best interest, your tax returns could be incorrect, and could cost you a little, or a lot, of money.

If you do know the correct answers, then you may be able to use software to file your taxes. You may arrive at the same end results as a tax professional at a fraction of the cost. In looking at your situation, a CPA may know of deductions that a software algorithm may not. This matter is one of trust: do you trust the software makers, or do you trust your tax professional to get you the greatest and most fair return.

Second: Effort

Perhaps you have been completing your federal tax return for decades. Or maybe you are at the beginning of your career and have only just begun to pay taxes. You may be confronting, for the first time, the question of how adding a rental property will impact your taxes.

Whether you will have a tax professional prepare your return or will do it yourself, you should allot extra time to complete your return, or to hire and meet with your tax advisor. One way or the other, you will need to have the supporting paperwork to submit with your return or to submit to your CPA. Taking the time to organize these materials will smooth the process of completing your return.

Also, bear in mind that within the intricacies of the tax law, there may be more than one way to classify certain income or expenditures. This can be the case with improvements (which must be capitalized and depreciated) versus repairs (which can be deducted all at once). While there are guidelines differentiating the two kinds of work, gray areas do exist. A tax professional should be able to help you navigate these pitfalls without having to learn all of the correct information from scratch.

When filing with a tax professional, there may be a lag time while you wait for them to complete their work. When you do it yourself, it may take considerable time and effort to find out the correct answer to each question, or to double and triple check your figures. Your level of competence and confidence will help determine whether the electronic return will take you a little or a lot of effort.

Third: Access

Maybe you have decided that hiring a CPA is the best route for you. You’re prepared to provide the information and pay the fee, but sometimes finding a certified accountant is challenging. While tax software seems to be available everywhere, for some, hiring a CPA might prove overwhelming.

Here are three ways to find a CPA or enrolled agent:

1. Conduct an internet search: Look for local CPA firms that are highly rated by the Better Business Bureau.

2. Ask around - Whether you out the call for recommendations in person or via social media, you may find that many people in your network rely on services from a trusted CPA. This is also a great way to find a professional with any specializations you may need.

3. Check your state board of accountancy - Both CPAs and enrolled agents have passed very specific requirements and therefore can be found by their certifications.

Just remember that not it’s important to have a good working relationship with your CPA. If the first CPA doesn’t work out, makes sure you continue to look and you will find someone who perfectly fits your needs.

Conclusion:

When approaching the question of whether to complete your taxes with a computer application versus paying a CPA, be sure to keep an open mind. There are many factors to consider, and your goal is to make an informed decision. Just remember that the total cost could be more than just the out-of-pocket expense. In reality, lost deductions cost you.

It sounds like a dream come true: sell your house to the person who is currently renting it. By doing so, you can avoid the costs of turning over the property as well as fees associated with selling your home. But is it all positive?

Pros

No Marketing or Real Estate Agent Costs

By selling to your tenant you may not have to hire a realtor at around six percent (this varies by market, but typically three percent goes to the buyer’s agent and three percent to seller’s agent).  You also don’t have to prepare your home for showings or open houses. Showing your home can come with many additional expenses, such as cleaning up minor cosmetic fixes, or having to spend money staying out of your house for the day.

No Empty Cost House Costs

Since your tenant is buying the house it never goes empty, and they will be paying rent right up until the purchase closing date. Depending on your market, your house could easily be on the market for 30 days while you are looking for a buyer, and then another 45 to 60 days until it closes. This could easily mean three months or more of rent that is lost when you sell to an outside buyer versus your tenant.  

Cons

Expect Concessions

Most home buyers - even first time home buyers - know that selling a house costs a lot of money, and that your For Sale By Owner saves you money. Therefore, when they are negotiating the price, they may expect to benefit from the savings, too! They may ask for closing cost assistance or maybe even a lower price. When you sell your home yourself, you still have to do the work for accepting these concessions. This may mean coordinating with the title company or closing attorney, hiring contractors to perform repairs, or completing all required paperwork. If you have made your discount too steep, your savings may be offset by lost profit.

Losing Money By Pricing Too Low

When you sell to your tenants you are not opening the house up to the market. In a buyer’s market this typically isn’t a problem. However, many markets now are seller’s markets, where there is low inventory and high demand. A house with multiple offers will raise selling prices higher than anticipated. That means that those who don’t open to the public will miss out on this increased potential. Being unaware of the market conditions may end up costing you thousands of dollars.

Time Is Money

Lastly, when you sell as your own agent, you will be on your own, without professional knowledge and experience. While you can certainly put a team together, this will not be the same as someone who does many transactions a year. In addition, you will be serving as the landlord and the seller, and will be coordinating directly with the buyer. There will be no third party intermediary, and no buffer between the two sides, just as emotions are running high.

Conclusion:

The key is evaluating your market, your tenant and yourself. Some people don’t mind putting in the extra effort to close the deal. For others, a real estate agent could be hired to do the paperwork. While this isn’t available everywhere, in some areas agents will facilitate the deal for two to three percent. They will organize inspectors, appraisers, and the like for both parties. This gives the best of both worlds by including professional representation while reducing the costs.

As social media becomes more popular, and as ubiquitous as emailing, texting, or calling, you may be wondering whether to engage with your tenant on social media.

Pros

Easy communication

With almost everyone having a twitter, facebook, or snapchat account on their phone, it is simple and convenient to communicate via social media. These apps may be more reliable than cell phone reception, especially when working internationally.

Keep an Eye on the House

On social media, some people let their guards down. As they show images of their everyday lives, they may also reveal pets that are not allowed, drawings on the wall by their kids, and other activities that violate the lease agreement. Following them on social media can allow you to keep an eye on your property without invasive inspections. This may allow you to catch minor things before they turn major.

Cons

Exposure to Your Life

As much as you are able to see into the tenant’s life, they will be equally able to see yours if you connect electronically. Not only will they be able to observe your life milestones, but also when you kid paints your carpet with flour or your dog chews the molding. This sort of familiarity may make your interactions feel awkward or hypocritical. It may make it harder to enforce the rules when your tenant has seen candid scenes from your life.

Tenants May Feel Like You Are Prying

No one likes to feel like Big Brother is watching. In this case, there may be such a thing as too much information. Once you have seen an issue via social media, it is hard to ignore. While it is good to know when your tenant is starting a pet daycare out of your house, you may also see smaller, borderline offenses that could be difficult to navigate without seeming overbearing.

Conclusion:

This decision is a personal one. Consider whether you would like the tenant to treat your relationship strictly on business terms, or whether you enjoy the crossover with your personal life.

More and more tenants are requesting to pay their rents all at once, for many reasons. Whether they just sold their house, or they want to offer a lump sum due to a poor credit rating, the occasional tenant may want to put a large quantity of cash in your hand. While that sounds like a dream come true, it is important to evaluate why the tenant is requesting this, and if this makes sense for you.

Here are key issues to think about when deciding whether accepting rental prepayments makes sense for you.

Why are they paying their rent in a large amount?

The natural first question to ask is why are requesting to prepay several months’ rent at once. There are many reasons one might want to pay in a large sum. A tenant who has just sold a come into an inheritance or other sizable payment may want to pay for several months up front. Prepaying may provide an advantage for a tenant who has less-than-stellar credit, but who has funds readily available. Consider whether there are other costs that will be paid monthly, such as utilities, and whether the tenant has shown they will be able to pay these. Assess your comfort level with this unconventional arrangement after hearing why the tenant is requesting prepayment.

Are they asking for a discount?

Prepayment is often used as an incentive to get a discount. Think about whether it is worth having many months’ worth of rent in order to give a discount of five to 10 percent. Is it worth it to you, or do you really need so much of the rent to be paid at once?

Will this negatively affect your taxes?

Most people report income based on when it is received, and expenses when they are spent. This may lead to a large chunk of your income coming in during one year, while your business expenses may occur in another. Assess whether you would like these two accounting categories to be in sync.

Will the tenant be able to pay if you would like to renew the lease?

As a landlord you hope to never go through an eviction, and to limit how often you must turn your property over to a new tenant. If the tenant is making a lump sum payment from one-time income, such as an inheritance or the sale of valuable property, you should consider whether this tenant would be able to sustain payments after renewal time. While it is nice to ensure that rent will be paid, remember that there are costs every time your rental is turned over, whether it is from an eviction or simply a non-renewal of lease.

What happens if they break the lease?

Unfortunately tenants break leases. It happens more frequently than one would like to admit. This raises the question of what happens if the tenant leaves early. While some states allow you to require entire lease fulfillment, others do not. Other states have very specific rules on broken leases. Think about including an early lease termination clause in your lease to spell out how you would handle this situation, especially with regard to the prepayment arrangement.

Do your local laws support accepting large prepayments?

Finally, check into your local laws to find out the legal implications if you accept this much rent up front. For example, is it allowed in your municipality? Does this payment impact eviction scenarios?

Conclusion:

Like most issues in real estate, there is not a one-size-fits-all solution. It comes down to what works best for you personally as well as for your business. Some landlords may like having all of the rent paid up front, guaranteeing that this income is collected. In a hot market, it may not make sense to lock into a limited paycheck. Consider how much administrative time you spend on rent collection and receipting. Perhaps you have personal expenses that require you to have cash in hand, making it worth any discount that you may give the tenant. The key is to think about what fits best for you and your business.

The thing that I learned from these two FSBO experiences is that selling FSBO does not guarantee more profit in your pocket just because you are saving on realtor costs. Furthermore, while some FSBO do work out well, they are not all equal, as they depend on the house and the market.

Here are four questions to ask yourself when deciding between FSBO or hiring a realtor

Are you appealing to an investor audience or open market?

The first FSBO was an old house that needed significant work. The target buyer was going to be a cash buyer, as there as a high chance it would fail appraisal inspection. While a renovation loan might have worked, it was not likely, it seemed impractical, and it was not conducive to the quick sale the family desired.

Due to the amount of cash that was needed to buy the home, it was quickly apparent that the typical MLS market was not needed as cash buyers were used to off-market methods. FSBO worked perfectly: by listing on craigslist, Postlets and holding an open house, the desired audience was reached and responded to the marketing.

On the other hand, we lost $15k on a house in a cookie cutter neighborhood that appealed to the first-time homebuyer market. This meant that by not using a realtor, we lost appeal to people who would not be comfortable in FSBO or would not be looking outside of the MLS.

Do you have an accurate value of the house?

The house we lost money on ended up being priced too low with too many concessions given away (primarily closing costs). We know this from selling an almost identical house just down the street a few weeks later. A realtor could have prevented these miscalculations.

Are you giving in to concessions?

Since the house that was aimed at investors was given a cash price, and this market was accustomed to working without realtors or closing costs, we went in without planning to give any concessions. We were able to close the deal this way.

With the regular sale, we sold the house to existing rental tenants. Although this eliminated some issues, we had no third party to help negotiations. We felt pressure for closing costs, repair requests, and other contingent items because of the existing landlord/tenant relationship. Our negotiations suffered from the lack of professional expertise and bargaining experience.

Do you want to put the work into the sale?

Doing an FSBO is a lot more work than just listing with a realtor. Once I had all my advertising up via several online sites, I created a Google Voice account to collect all of the inquiries and questions. I also did a two-day open house with flyers. I probably spent over 50 hours working on advertising and another 50 hours dealing with all the complications through the sale.

Some advertising work can be discarded if you sell to an existing rental tenant without putting the house on the open market, but there may be other issues that you must anticipate due to the existing relationship.

Even my FSBO to my tenant took hours, between the paperwork securing the title company, making sure everything was going well with the sale, and finally dealing with all the random issues that came up. Of course, as there was an unexpected delay, this meant I was doing most of the heaviest lifting during an Alaskan cruise!

What is the final verdict?

After selling both ways, I can truly say I prefer a realtor for anything other than a home appealing to cash buyers. Cash buyers have a bottom line, so involving third parties may not add enough value to make it worthwhile. The reality is that open markets can do unpredictable things when multiple people have the opportunity to see your offering. The MLS and realtors help you to make your property visible to the majority of buyers. Having an expert who watches the market at all helps you catch subtle shifts or major jumps in the market, which can make a difference.

While I am sure I will do another FSBO at some point, these two FSBO experiences certainly made me a believer in the value of hiring a realtor!

What to Consider When Determining Whether to Offer a Furnished Rental

What are the local laws regarding short-term rentals?

Amidst the growing popularity of sites such as Airbnb, VRBO, and FlipKey, many municipalities have issued ordinances setting minimum times for rentals, changing tax laws for short-term landlords, and even banning short-term rentals outright. The first thing to do before turning your property into a furnished rental is to research the rules where you live. In many areas these additional restrictions only apply if your rental is shorter than a certain amount of time. While the length can vary greatly, 30 days is a common restriction. Once you know your local laws you can decide whether it is still worth it to turn your house into a furnished rental and what your rental length will be.

Do you have the time to manage frequent move-ins and move-outs?

Our furnished rentals are great, but they certainly are not as easy as our traditional rentals. Our traditional rentals use an 18-page lease with a one-year minimum term. Our tenants assume most of the responsibility of basic maintenance, such as changing filters, completing landscaping, and supplying their own washer and dryer. This means that other than collecting the rent (direct deposit, of course) and answering the phone when major items break, the houses are very much like an annuity. One tenant who recently called about a broken garage door sensor hadn’t contacted us for any issues over the preceding 18 months.

On the other hand, my furnished rentals are the opposite. In the case of daily rentals, I must manage a constant flow of inquiries in order to figure out availability and fill openings. The inconveniences can be minor or major, such as helping the tenant find the wifi password, even if that is at midnight on Thanksgiving night after you have spent a long day traveling! While you are always on call for all tenants, your furnished rental tenants will be insisting on creature comforts, like can openers or cutting boards, that your traditional tenants won’t. Even if your rental is for a month of longer, this problem can be more frequent than with your traditional renters.

To be honest, when your tenant is paying $200 a night or $3000-5,000 a month, this is to be expected. People simply expect a higher standard. The question is whether the net income is worth it to you for the amount of time you must put in?

What are your expenses?

Another thing to keep in mind is that furnished rentals are all inclusive. That means you supply cable, internet, trash, water, gas, electric, landscaping, and pool service (if applicable). For my vacation rentals I provide linens (which need to be replaced often as they become worn out), toilet paper, paper towels, starter laundry detergent, dishwasher soap, shampoo, conditioner, and the like, which can add up quickly. For guests who are renting for at least three months, you don’t need to feel obligated to provide such personal care items. It is also easier to put limits on the utilities.

Be sure to anticipate all costs. The monthly electric bill for one of our vacation rentals varied from $450 to over $800. A similar phenomenon occurred with our water bill and paper good costs. The reality is that when guest are not paying for utilities, their usage can go way up and vary wildly, depending upon the renters and the time of year.

Are you a great cleaner or do you have a great cleaner available?

If you are doing frequent turn overs - many of them same day - you will either always need to be available to do the cleaning, or you need to have a great cleaning crew that is reliable and fast. We went through four cleaning crews until we found our current cleaner, who does an amazing job.

Can you or a handyman be on call?

Corporate or vacation guests will treat your house like a hotel, so it is critical to fix problems right away. Negative reviews on social media can do great harm to your business. For example, if a smoke detector starts going off, the renter will not stop to change the battery, they will call you right away and want you there ten minutes ago. This means that you are never off the clock, even when calls come in late at night or early in the morning. If you have a great handyman to help share the burden, remember that these costs will also add up.

How much will it cost to furnish the home?

When thinking about a furnished rental, don’t forget the furniture! This includes kitchen appliances, pots and pans, dishes, linens and everything else you might find in a home or hotel suite. Keep in mind that the physical furniture – tables, chairs, beds – may not be the most expensive party. I quickly realized it was not the furniture, but everything else that adds up. And all of these items, from the top to the bottom of your rental, will wear out and have to be replaced.

What is your seasonal availability and can it support the house?

While peak season should always be profitable for you, the key is knowing your down time and being able to survive it. If the winter months will be slow in your area, you not only need to cover your costs during the summer, but you’ll need to make enough to cover the slow months, too. Be realistic when you think about your expected profits and the conditions in your region.

What is your true take-home profit and is it worth all the work?

This is the biggest and most important question: What are you truly bringing home after expenses? Is it worth it compared to all of the work? Do not let the big numbers that you could charge for a short-term, or even nightly, rental blind you to the actual costs and time that are required.

These are only a few of the questions to consider when deciding whether or not to furnish a rental. Making this determination is a personal process with many more variables. I personally love having both furnished and unfurnished houses. Our unfurnished houses allow me to have relatively hands-off, passive income. While we don’t make that much on them, they are paying their mortgages, and are less work. While our furnished rentals are almost a full-time job, the payout makes the additional workload worth it. It helps us diversify our cash flow, our risk, and our work. With the unpredictable nature of furnished rentals, bear in mind that you can protect yourself by ensuring that any property you convert to a furnished rental also works well as a traditional rental, in case you ever need to switch gears. Surviving the real estate world requires multiple exit plans.

As a real estate agent, you would think my response would be “Always!” but here is my unbiased opinion on this matter. Choosing a tenant, although time consuming, is not exactly rocket science; however, there is some skill involved. For this reason, brokers may be necessary to make the lives of property owners easier; but this convenience comes at a cost.  Here are a few questions you should ask yourself before you decide to hire a broker or DIY.

1.     Can you afford it? Is the investment revenue from your rental enough to justify the real estate broker’s fee (typically one month’s rent)? If not, consider screening and choosing the tenant on your own, or requiring a two-year lease so the real estate agent’s fee gets you twice as much time.

2.     Is your rental in demand? Demand is based on how many people are looking for your type of unit, the price, and the time of year. If your unit is in demand, and it’s the right time of year, you’ll save money by doing it yourself. However, if it’s the dead of winter and the applications are few and far between, using an agent can save you money. They can put your property on the multiple listing service and get it in front of many more people than your “for rent” sign. With all the extra exposure, it will take less time to find a good tenant using a professional. To help determine demand you can always try on your own for a week or so and gauge the response. Also, keep in mind that spring is a much easier time to rent than winter, and a smaller affordable unit is easier to rent than a big house, since you have a larger pool of candidates to choose from.

3.     Do you know how to put your listing online and which websites to use? Several years ago, there were only a few places to list your rental online, so the decision was fairly simple. Now there are hundreds of websites that offer this service. It’s difficult to know which one will work best without spending hours manually listing your rental on each of them one at a time. Without knowing which website is best in your area, you could be wasting your time. One of the most useful services a real estate broker provides is exposure for your rental. A lot of brokerages pay for services that send your listing to tons of online sites, not to mention the benefit of having your listing automatically marketed to other real estate brokers, who stand to make a commission if they provide a qualified renter.

4.     Do you have the time to deal with it? Finding a tenant takes quite a bit of time; you’ll be taking calls, setting up appointments, driving back and forth to the rental, running and reviewing credit checks, writing up a lease and getting it signed, and more. This could be particularly time consuming if you live far from your rental or price it wrong. Choosing the wrong price can lead to many people browsing and checking out your unit, but never actually applying. All of this can cost precious time and money.

5.     How well do you know the market? Pricing your unit can be tough if you don't have intimate market knowledge. You can learn about the market by checking other websites for comparable rentals in your area. However, brokers have access to more information via their local multiple listing services and may be able to get you a higher price than you thought. In this case, a broker’s fee may be justified if they secure a higher rent for you.

6.     Do you understand the laws and restrictions in your state? Do you know how to write up a lease, and what to do with a security deposit? It’s always recommended that you get educated, but if you don't want to become an expert on the topic, you may want to hire one.

The decision to hire a real estate agent or do it yourself hinges on many factors, so consider all of your options before you choose. If anyone out there is looking for a real estate broker in the Chicagoland area, feel free to reach out! My website is LucaLollino.com.

When choosing a new tenant, it can be difficult to navigate the information overload that confronts you.  You must analyze each tenant's work history, references, number of occupants, and the like.  Here are five red flags that can act as shortcuts, and weed out some potentially problematic renters. While these aren’t 100 percent accurate all of the time, they will save you from headaches most of the time! If your prospect does any of these things, take a step back and ask yourself, is it worth the risk?

1. Tries to convince you not to run their credit or doesn’t want to fill out the application - Always require a written application that includes all of the adult residents. You may hear excuses like, “I don't want to get an inquiry on my credit,” or “Here is a credit report that I ran myself last month.” It’s better to be safe than sorry, and if a tenant is serious and has nothing to hide, they will let you run their credit without any hassle. 

2. Shows up very late or not at all with no courtesy call - Emergencies happen, but if they are just being inconsiderate, then why would they be a considerate tenant in the future or pay the rent on time? Try asking the applicant to call you an hour before the showing just to confirm the appointment. Will they follow a simple direction and call you? Ultimately, if they're more than 15 minutes late and don't call or text, they will plant seeds of doubt about their ability to keep commitments. 

3. The number of occupants keep growing as the conversation proceeds - When you ask them how many people will be living in this unit, it should be very clear.  Two, three, or four? What about significant others, children, and other family members? Often you will talk to people who start off looking for a place for two people, but before you know it that number doubles or triples.e. Maybe you have experienced a conversation that progresses like this: "It's just me and my wife. Well, actually, my son will stay with us, but it’s only over the summer, and his girlfriend may come. Oh yeah, also my grandkids will spend weekends here, and my daughter will stay but only every other day.."  Even if your unit can legally accommodate that many people, honesty  is an important part of the landlord-tenant relationship.

4. Their story doesn't match up with their application - When you interview applicants, be informal and ask questions, but listening is more important. Let them talk and learn as much as you can. If their written application doesn't match what they are telling you, something isn't right.

5. Wanting to seal the deal right now with cash, and no paperwork - When it’s too good to be true, it probably is. Some people will offer you two months’ rent in cash right now if you give them the unit,  no questions asked. Always go through your application process and don't cheat because you are blinded by the money in hand! This is often a tactic used by people with a history of eviction.

While it's impossible to be certain about any one applicant, staying alert for these five red flags will certainly increase your chances of steering clear of troublesome tenants.  For more info on tenant selection, check out my ebook here How to Find Tenants that will PAY, STAY, and OBEY: A Practical Guide for Simply and Effectively Screening Tenants for Your Residential Rental Unit

Traditionally when a renter moves into a new apartment the landlord requires a security deposit (usually equal to one month’s rent) to pay for any damages that may occur. Coming up with a security deposit and the first month’s rent all at once may be difficult for some people, so tenants may try to pay in increments or negotiate a lower security deposit. While you may feel sympathy for their struggle, it’s imperative to get some form of collateral from them to give you peace of mind, and assist you in case of any damage to your property. With that being said, the “security deposit” doesn’t have to be fixed at one month’s rent or even be a security deposit at all. In fact sometimes a security deposit is the wrong move!

Let’s tackle traditional security deposits first. Take a look around your market and see what people typically charge. In some markets, it is acceptable to require two month’s rent as a deposit. Be sure to take a look around and make sure you’re not selling yourself short. Conversely, in some struggling markets, landlords may offer a reduced deposit amount. Also, if a prospective tenant doesn’t have the best credit, but all of their other financials look good, you can ask for more money up front to mitigate your risk in the event something goes wrong. Additional deposits can be taken for things like having pets. Survey your market to find out the going rate. Please note that some states or municipalities may have rules about the amount of security deposit that may be collected.

A downside to security deposits is that some municipalities like the city of Chicago impose difficult rules for landlords to follow in handling security deposits. These rules can include having separate bank accounts for each deposit and paying interest (not much, but still something you have to remember) with penalties that are extreme for landlords, even if they make unintentional mistakes. This has encouraged landlords to ask for a nonrefundable move-in fee from tenants, which is usually about half of one month’s rent, but is sometimes just a flat fee. This fee is not returned to the tenant at the end of their lease so it’s considered revenue for the landlord. The benefits to the landlord are that this is actual revenue that doesn't have to be returned and they don't have to deal with  complicated rules; however, if there is damage to their property they have less in their bank account to fix it. To make up the difference, they would have to go after the tenant in court. The move-in fee is good for the tenant because it’s less to come up with up front, but they don’t get the money back, even if they keep up the apartment perfectly. 

Sometimes, a combination of the security deposit and fees works best, especially in the case of pets or condo associations, which can require a move-in fee from the tenant regardless of your deal with them.

In summary, get educated about your current market and know that you can ask for a security deposit, move-in fee, or a combination of both. Think about what works best for your situation and the prospective tenant’s situation. Stay flexible but always follow your own rules and get the money up front to protect yourself!

For more info on finding great tenants check out my ebook here How to Find Tenants that will PAY, STAY, and OBEY: A Practical Guide for Simply and Effectively Screening Tenants for Your Residential Rental Unit

What happens if someone slips on a snowy or icy walk at your rental property, and then sues for injuries? It depends on who was found to be negligent. If terms in the lease agreement clearly state that the tenant is responsible for shoveling and salting during winter, then failure to do so would make the tenant negligent. But the landlord could have some liability, too.

That’s because landlords can’t assume that tenants are carrying out their responsibilities. In fact, if a tenant has routinely failed to shovel walks, then someone could argue that the landlord knew, or should have known, that walks were not safely maintained.

If your rental agreement states that removing snow and ice is your tenant’s responsibility, then you should routinely inspect the property after storms, to make sure that your tenant is clearing them. Inspections are a critical part of investment property management. They should be done on a periodic basis, such as monthly; and, they should occur when there is a potential for safety issues, such as after a snowstorm.

For more information on winterizing your rental, check out Did Your Tenant Let the Pipes Freeze?

No matter who pays the bills, a landlord’s chances of getting and retaining the best renters improve with the ability to cut energy costs.

Either tenants renew the lease because the landlord gives them ways to save on their utility bills, or they stay because the landlord controls rising energy charges, rather than automatically boosting the rent.

As National Real Estate Investor has noted, tenants in top tier units can afford to be picky about where they live, and they can easily handle the cost of moving. So, raising the rent to cover energy bills, or foisting utility bills onto them without trying to control costs, could alienate them. At the other end of the spectrum, those living in what the Investor refers to as “Class C” and “Class D” units are spending a third or more of their income on rent. They’re less likely to afford the cost of moving, but they are also ill-equipped to cover a boost in utilities or a rent hike based on rising energy bills. When tenants can’t afford the bills, they must move out or be evicted.

Commit to an energy saving plan this winter in order to position your rental for the best tenants, cut costs so that you boost profits, and make you and your tenant feel like you’re doing your part to help the environment.

Is the effort really worth it?

In a strong landlord’s market, you may ask yourself why you should go to the trouble of finding ways to save on heat, electricity and water. Maybe your tenants cover their utility costs without complaint. Maybe they are already conscientious, carefully watching their energy consumption. But property investors are always vulnerable to changes in the market, to tenants moving out, and to unexpected expenses. Looking for ways to save should be an automatic and continuous effort.

Energy bills are vulnerable, too. Although the current administration has promised tax cuts that benefit business, it has also called for rolling back wholesale electricity markets. In recent years, this competition has driven electricity prices down by as much as 40 percent in some areas. Rolling back those markets would send electricity rates soaring.

Finally, many efforts that are aimed at urging energy conservation come from the state and city level. Lawmakers increasingly require businesses and homeowners to use water, electricity, and gas more efficiently. So, it makes sense to evaluate the typical rental unit energy costs, and uncover potential savings.

Average monthly utility bills of $386 break down like this in the U.S.:

• Average monthly electric bill is $183
• Average monthly gas bill is $82
• Average monthly water/sewer bill is $40
• Average monthly trash/recycling bill is $12-$20
• Average monthly cable bill is $100
• Average monthly internet bill is $47

Remarkable savings are possible by making even minor changes at a property. Among them: 

• Use LED or fluorescent instead of incandescent light bulbs, and save $97 or more yearly.
• Turn down the heat; for each degree lower, save three percent on the bill. That’s at least $31 a year if you heat with gas, $66 if heating with electricity.
• Lower the water heater temperature; for every 10 degree decrease, save $10 a month, or $120 a year.
• Programmable thermostats can save 30 percent on heating and cooling bills. If you heat and cool with gas, that’s a $300 yearly savings. It’s a savings of $659 a year with electricity.

Using these two lists, you can see how just a few changes could cut annual energy costs by between $46 and $79 a month. That’s between $548 and $948 a year.

Now, imagine a landlord wants to keep a good tenant, or attract new tenants in a competitive market. If the landlord took the above energy-saving measures, rent could be lowered by $46 to $79 a month, while keeping profits stable. These changes could also be made to offset potential rent hikes that come as a result of higher taxes or increased property insurance rates. If the rental is in a strong market, where rent cuts aren’t critical, the landlord could boost rainy day savings or simply pocket the extra profits.

How to get started

Home audits are the favored tool for finding energy leaks. They identify where electricity, water, or gas is being wasted, and reveal ways to cut down or eliminate waste. Audits can be done by:

• Certified professional home energy auditors
• Utility companies that are currently providing service to the home
• Yourself! The U.S. Department of Energy provides this helpful tool.

Audits offer general guidance — such as explaining the benefits of replacing aging appliances with energy efficient models. (Keep in mind that rentals don’t qualify for federal tax credits through the purchase of Energy Star products, but these efficient products do cost less to operate.) Audits also provide custom tips. For example, an audit may reveal inadequate insulation in an attic, leaking ductwork, or restricted air flow that keeps an area of the house too cold or too warm. In many cases, a home can be made more efficient for little or no cost.

Be sure to share tips and advice with tenants when there are things they can do to conserve. Trulia offers many easy fixes for saving energy,

some of which are as simple as vacuuming refrigerator fans and vents so the appliance doesn’t have to run as hard to keep food cold. Some tenants will embrace these ideas because they love to save. Others may respond best when conservation measures are required by the lease, or when doing so could lead to a rent reduction. Landlords and their tenants have to work together to safeguard energy, and keep a handle on expenses.  

When things turn sour with a tenant who hasn’t paid the rent, or who has broken other terms of a lease, it’s time to consider eviction. Evicting a tenant is a stressful event, and it is rarely an easy process. To compound matters, there are so many myths about the legal steps that can and cannot be taken during eviction. One pervasive fiction is that tenants can’t be turned out of the rental during cold weather.

Is this true? Mostly, no. However, there are actions that a landlord may not take during the eviction process. There are also very strict regulations about cutting off heat-related utilities when the thermometer plummets.

Cold weather property management needs your attention, from preparing for snow removal to insulating water pipes. And, you should set a procedure in advance for dealing with a winter eviction. Understand the facts about eviction, no matter what the weather is; and follow the proper notice-to-quit process to ensure that your rental stays profitable year-round.

What circumstances could block an eviction?

Legal evictions rest on a landlord’s grounds to remove the tenant. This generally means the tenant must have broken a rule (or rules) listed in the lease agreement, and the landlord has sent the required notice to quit. The eviction process applies in cases of both written and verbal agreements. The violation could be active, such as hosting a loud party that disturbs neighbors, damaging the rental structure, committing a crime, or moving an authorized occupant into the home. It could also be passive violation, such as not paying rent, not maintaining the rental, not fulfilling a responsibility defined in the lease, or not moving out when the lease term ends.

There are some circumstances that could delay or even prevent an eviction. The court will take into account any failure on the landlord’s part to follow the correct, legal process. If the landlord missed a step, or tried to evict based on an illegal premise, the court is likely to deny an eviction claim. A denial could be based on one of the following:

•      Landlord failed to send the tenant a notice to quit or cure.

•      Landlord is evicting in retaliation for the tenant complaining.

•      Landlord tries to evict based on a reason that is considered discriminatory.

•      Landlord failed to send tenants proper notice of nonrenewal before end of lease term (when one is specified in the lease).

•      Tenant stopped paying rent because the rental unit is uninhabitable.

What if it’s freezing out?

Winter evictions in the U.S. and in Canada follow the same rules for evictions during other times of the year. After a court approves a landlord’s order of possession, the order must be carried out by authorities if the tenant doesn’t leave on his or her own. The outside temperature is not a consideration in virtually any eviction enforcement. Tenant advocacy organizations stress this fact to renters who ask about the eviction process.

However, in a very few cases, delays can occur due to the cold. In Cook County**, Illinois, for example, sheriff’s deputies have routinely delayed eviction enforcement when temperatures are below 15 degrees. The eviction judgement is official, but the sheriff’s office holds off on the actual ejection. And, if the court’s possession order expires before temperatures rise above 15 degrees, the landlord must pay the sheriff’s office a rescheduling fee to set another eviction enforcement date.

Cook was the only location we found that routinely imposes cold weather delays; however, any landlord who evicts during winter should ask if the local court sets any special rules for evictions in winter.

Can landlords cut off utilities if rent is not paid?

The worst thing a landlord can do is to take the law into his or her own hands. If a tenant isn’t paying rent or is breaking the rental agreement in some other way, the correct reaction is to send a notice, and then file for eviction. Otherwise, continue complying with the terms of the lease. Don’t withhold services, change door locks, or take other illegal measures to force out a tenant — no matter how many rent payments have been missed.

Landlords must also continue to provide water, gas, or electricity if those services are specified in the lease. If the lease dictates that tenants register and pay utilities in their names, and power is shut off for non-payment, the landlord should consult with an attorney before taking action to either restore power or switch utilities back into the landlord’s name.

Courts have gotten particularly sensitive to cases where the poor have lost access to heat in winter citing, among other concerns, the tendency to use kerosene or wood to heat, and the potential for fire. In fact, states have set their own guidelines that utility companies must follow before cutting off power for nonpayment. The federal Department of Health and Human Services lists each state’s guidelines, here.

Keep track of all unpaid rent and fees, and any unpaid utility bills, so that, if your case does go to eviction court, the judge can include those amounts in any favorable judgement. Landlords don’t have to put up with unpaid rent, and they are not expected to forego profits during winter. But the wrong measures can compound your problems. To be on the safe side, review eviction rules for your state and city before you start the process. And, if you are responsible for paying heat bills, keep paying throughout the process until the eviction is enforced, and the tenant is gone.

* A written rental agreement makes rules clear, and a landlord can easily point to a violation. An oral lease is more difficult for the landlord to enforce, because each party may remember a conversation differently; the landlord may face difficulty proving that a rule existed.

** Cook County has also delayed carrying out eviction orders between Christmas and New Year’s Day.

Years ago, I leased a small second-floor apartment over a detached garage. They don’t let you do that in my town anymore. I think it has to do with updated building codes and safety rules. Anyway, like most college students, I abandoned my apartment over the holidays for a trip home. I saw what I thought was a good opportunity to save on my utility bills, and turned the heat way down.

Not surprisingly, when I returned, a fountain had formed in one of the garage bays. Freezing temperatures had burst a pipe, sending water gushing across the concrete floor. The event did not endear me to my landlord and, needless to say, I didn’t get my deposit back.

Things could have been worse; much, much worse, such as the $100,000 in damage caused to a Detroit home in 2015. A water pipe on the third floor burst, and water flooded the house, causing the second floor to collapse onto the first floor. Sheets of water spilled from windows, forming giant icicles. It was the sort of catastrophe that occurs with properties in climates where temperatures get well below freezing - and stay there. The Insurance Institute for Business and Home Safety estimates that frozen pipes are among the biggest culprits for property damage during cold weather. They estimate that burst pipes typically cost thousands to repair.

But it doesn’t have to happen. A little foresight and planning can prevent such emergencies. Simply put, a rental agreement can include terms that prevent a clueless tenant from causing serious destruction. And a winter checklist can keep a landlord on top of cold weather maintenance.

Tenants who haven’t been homeowners may not know how to take precautions in cold weather. They need explicit instructions to minimize risk to the property. Most tenants would also be unprepared to pay for repairs when they are held responsible for damages. As for the landlord, knowing that a tenant will have to pay for repairs is cold comfort in the midst of dealing with a flooded property. The landlord is still faced with scheduling emergency repairs. A unit without running water is considered uninhabitable, so repairs would have to occur quickly. Collecting the money from a tenant who doesn’t have it could bring another set of problems.

This is the time of year to plan for winter’s effects on your rentals, whether it’s insulating pipes, setting the thermostat, sealing furnace ducts, or tuning up the snow blower. As noted by Chicago blogger The Urban Landlady, if your unit will be vacant during winter, take extra precautions now to prevent disasters. Then, add clear terms to your leases on cold weather care of the property - and what will happen if the tenant slacks off.

Who pays when things break?

Questions on who is accountable for rental property damages often come up for the first time after something is destroyed. Obviously, a deliberate effort by a tenant to wreck the unit puts the fault on him or her. In other cases, the lease agreement should be perfectly clear on who is responsible for maintenance. A typical lease agreement states that if the damage is the result of a tenant’s neglect, then the tenant is responsible. If the lease fails to address the issue of damages, or is too vague, it could be up to a court to decide who pays. A judgement could require damages to be split between the parties.

The landlord has a responsibility to caution tenants about known property issues. For instance, months after I moved out of my garage apartment, I learned that the pipes there had repeatedly frozen. That’s because tenants were usually students, and students usually left over winter break, and they usually turned down the heat before they left. The landlord could have saved himself (and tenants) money and hassle by stating in the lease that a minimum temperature must be maintained at the unit, and that tenants would be on the hook for repairs.

Landlords will also want to address potential hazards from the use of supplemental heating during winter months. Portable heating units could be expressly prohibited; or, the landlord could permit UL-tested, electric space heaters with tip-over safety switches, while banning portable kerosene heaters.

The lease agreement is the official guidebook on who is responsible for what. Most landlords expect tenants to keep the rental clean and perform routine maintenance, thus minimizing the likelihood that damages will occur. For instance, stovetops that are kept clean are unlikely to catch fire, and bathtub drains routinely cleared of hair usually remain clog-free, and so on. Some leases have tenants cover the cost of repairs up to specific dollar amount. Others state that the tenant must report all needed repairs.

Also, in order to minimize legal challenges from tenants, landlords must be ready to show proof that tenants were advised on how to maintain the property, and whether they were responsible for repairs. That way, if damage occurs as a result of tenant negligence, the landlord has a strong case for passing on repair bills.

Protect your rental from winter damage

A lease agreement should require tenants to maintain a clean rental, and to alert the landlord immediately when repairs are needed. It should also set very specific rules on monitoring systems that the landlord knows are prone to cold weather damage when neglected - such as plumbing in cold weather.

Winter brings special maintenance issues; some are routine, while others may come up just once a year. For instance, icy walks must be cleared and consistent heating must be maintained throughout the season. During deep-freezes and storms with heavy snow accumulation, it may be necessary to remove snow from rooftops, or manage without power for a day or two. Precautions taken in the event of power outages can be as simple as having candles and matches on hand, or as complex as stocking bottled water and canned food, and having extra blankets for warmth.

Specifically, a lease could require the landlord or tenant to take these and other measures by a certain date:  

• Turn off all outside faucets and drain hoses.
• Wrap heat tape around pipes in unheated rooms, such as attic and basement.
• Close air vents and lower or install storm windows.
• Remove window air conditioning units.
• Check seals on exterior doors.
• Check carbon monoxide and smoke detector batteries.
• Clean and inspect fireplaces; and clean air circulation passages for gas fireplaces.
• Keep attic and porch doors closed.

The lease could instruct tenants to follow property care rules throughout winter:

• Maintain heat at 55 degrees or warmer throughout rental unit.
• Remove snow and ice from driveway and walks within 48 hours of accumulation. (Some towns require snow removal within 24 hours.)
• Contact landlord if there is a loss of power or if ice dams form around drains; and, if more than four feet of fresh snow accumulates on roof. (Packed snow and ice weigh more than fresh snow and accumulation should not exceed two feet or four inches, respectively.)
• Monitor National Weather Service alerts.
• Immediately alert landlord, or call a plumber, if a faucet is opened and no water runs out. This usually indicates that a pipe has frozen. 

Weather-related care tips don’t have to be limited to winter. In warmer climate, it will be just as important to list specific chores in the lease. Last summer, for instance, one California landlord was crestfallen to discover that a beautiful, mature orange tree had withered and died because the tenant failed to water the tree. Lawn maintenance was listed in the lease as a tenant responsibility and specified mowing, pruning and weeding, but watering was not specified. The landlord would have had a difficult time seeking damages for the lost tree.

What if I forgot to add winter maintenance to my lease?

If you haven’t assigned specific cold weather chores to the tenant, you may be able to amend the existing lease to add winter care terms. A lease amendment changes the original legal rental agreement, and must be signed by both parties to be enforceable. The tenant doesn’t have to agree to substantial changes to a lease, however, so the landlord may decide to negotiate a substantial change. For instance, if the amendment calls for the existing tenant to remove all snow, the landlord may offer a rent reduction. When the time for a lease renewal rolls around, the landlord should include winter maintenance responsibilities in the new agreement.

Ultimately, the landlord is responsible for who performs maintenance and when. Winter doles out heavy-duty lessons when a homeowner overlooks proper care - whether a rental is occupied or not. As The Urban Landlady notes, “I fully understand the temptation to try to save on heating costs by choosing not to run the furnace in an empty unit.  But this is a gamble where you can lose big. It’s not worth it,” she says. So, if prepping water pipes and snow-shoveling aren’t your thing, enlist a professional. Make a cold weather checklist for yourself, pull it out each autumn, and follow it.

Texas - According to the Texas Apartment Association, a property owner isn’t liable to tenants or their guests if injury or damage to property occurs as a result of natural disasters. If the rental unit is livable but requires repairs, the landlord must complete repairs within a reasonable time. When damages are so severe that a rental is completely unlivable, a landlord may decide to end the lease agreement.

Florida - State statutes are clear on what happens when repairs are needed following a natural disaster. Either the landlord or the tenant can end the lease when a rental unit is destroyed. If only part of the unit is damaged, the landlord must reduce the rent during repairs, and must make sincere efforts to complete repairs in a reasonable time.

Puerto Rico - In Puerto Rico, there is no regulated landlord-tenant law; however, under the territory’s civil code, landlords are considered responsible for maintenance and repair of rental units. In the event of a natural disaster that destroys the rental property, the tenant may end the lease agreement and move out. If the rental is still livable, but a portion is damaged and requires repairs, the landlord must reduce the rent during repairs.

Every state designates who is responsible for repairing natural disaster damage. If you live in an area where hurricanes, flooding, and other natural disasters typically occur, it’s important to note that in your lease. Check out some of the laws pertaining to repairs after natural disasters, below. For more information on your state’s landlord-tenant law, visit the government website or see our state law summaries.

Don't sign a lease with the first applicant who comes along. You could end up with problems that would have been avoided with a thorough initial inquiry into an applicant's background. Before signing a lease, you should know how many people are applying to live in your rental, whether there are pets, when a tenant hopes to move in, and other background information. Get to know potential tenants the before making a rental decision.

If you would like to share a tip, and be featured on our video, please send your tip to erica@ezlandlordforms.com

A realistic dummy laid on a lawn in Michigan each Halloween caused panic when passersby didn’t realize it was a prank. Many thought someone was seriously hurt and called 911 as the homeowner giggled inside the house. A much more gruesome scene, hosted each October on a front porch in Texas, included a child’s crib filled with zombie babies. And, in Illinois, a homeowners association felt compelled to enact new rules about Halloween displays after receiving complaints about a home whose decorations included 2,000 lights that blazed for weeks.

Are you seeing excessive Halloween decor at your rentals? Do your suggestions for a more tasteful harvest design fall on deaf ears? Is there anything you can do - without seeming like a witch - about a tenant who overdoes it on Halloween?

Goblins and ghouls are certainly becoming more prevalent. People are spending money on Halloween like never before. This year, U.S. consumers are expected to shell out roughly $8.5 billion on costumes, candy, decorations, party favors and greeting cards. According to the National Retail Federation, 48.6 percent of those surveyed on celebrating the holiday said they decorated their home and yard.

That’s a lot of pumpkins, cobwebs, witches and skeletons. And some decorators take their craft very seriously, with elaborate new designs each year. Many yard displays are tasteful, and most are temporary, with set-up occurring a week or two before Halloween, and breakdown typically a short time after Trick or Treat. However, outside decor can linger for months. Some ornamentation is tacky, excessive, offensive, or downright crude. That leaves communities, homeowner associations and yes, landlords, wondering whether to rein in some of the exhibits.

How do you draw the line?

Typically, only three entities get an official say on Halloween decorations: The local municipality, a homeowner or condominium association, and landlords or property managers. If, for instance, a display is too noisy or interferes with traffic, police can shut it down.

No one prevented the Detroit resident from littering her lawn with realistic dummies. But then, in 2016, she traded the macabre display aimed at laughs into one that makes political statements about serious, current issues including police shootings. The yard still gets stares - and many supporters - but no more terror-stricken passersby.

In the Illinois case mentioned above, it was a homeowners association that set limits after receiving complaints about Nick Thomas’ home in Naperville, outside Chicago. Each year, Thomas erected dozens of tombstones and full-sized ghosts and skeletons on his property. He strung 2,000 lights - synchronized with music. There were so many decorations, Thomas rented four storage units to contain them in the off-season. The season, by the way, extended for months at his home.

The Thomas display drew 8,000 visitors to his street, according to the Chicago Tribune. Many neighbors said they loved it, and Thomas collected thousands of dollars for nonprofits over the course of the season. Then, the association’s new Holiday Decorations Rule rule limited decor to no more than half the yard, and limited light displays to 30 days before and 30 days after Halloween. The rules not only curtailed his display, Thomas decided to stop decorating altogether.

As for setting rules on rental property decorations, landlords regularly specify limits, both inside and outside the rental unit, through the rental agreement. Outside limitations usually address lawn maintenance, with the landlord requiring a tenant to mow grass, remove snow, and landscape - raking leaves, weeding, and pruning shrubs. In fact, if the rental is a condominium, or in a neighborhood with an homeowner association, the rental exterior may be required to conform to certain standards. Inside restrictions typically prohibit changes to paint and carpeting, among other alterations, without landlord permission.

A good lease foresees problems and states how they will be addressed. For instance, it establishes whether a late rent payment will result in a late fee, if there is a limit on how long guests may stay, and whether or not the rental may be sublet. The same goes for any property modification.

How far can lease rules go in defining what is appropriate?

But how, exactly, do you legislate decor, especially in those instances where things can go too far? Are landlords allowed to set limits on decorating for Halloween or any other holiday? Can a lease prohibit bad taste?

It’s one thing to tell tenants to refrain from driving stakes in the yard to hold props, or to forgo hanging dummies that could cause the neighbors alarm. And a landlord would certainly be within his rights if utilities are included in the rent, and the tenant erects a light display that boosts the electric bill. But it could be overreaching to prohibit goblins, ghouls, witches and, yes, even zombies. Those common symbols of Halloween and Trick or Treat are mainstream and widely accepted. What can be off limits is any holiday trim that requires altering a part of the unit.

Alterations to the unit could include nailing or screwing objects onto walls, doors or house trim; erecting displays that use the rental structure for support; and changing the use of the rental, such as operating a haunted house in the garage. Shrubs, trees and other landscaping should not be used to hang skeletons or drape cobwebs. 

And of course, tenants should be told that they are responsible for damages caused by their actions or negligence. This way, if their Halloween display brings crowds that trample turf and landscaping, the landlord can issue a lease violation. Also, if Halloween celebrations lead to neighbor complaints or police calls, then clearly the tenant has gone too far, and a violation notice is called for.

In cases where the rental is on the market, the landlord may want to be more specific. According to Realtor.com, blood and gore, clowns, and any excessive decorating are no-nos when potential buyers could be dropping by. Ask the tenant to stick to minimal flourishes that are neutral. Send tenants a notice of your intention to sell the property, so that they understand your expectations for keeping the unit presentable at all times.

Finally, keep in mind that if a short-lived display is not a landlord’s style, but meets the common sense standard - decor is temporary, causes no damage, and draws no complaints - the landlord may just want to overlook it. Giant spiders and a few red-eyed demons aren’t such a bad price to pay to keep a good tenant happy.

Difficult tenant situations can make landlords feel as if they must turn into ogres to put things right. The tenant promises to pay back rent and never does. Garbage that should be bagged and on the curb each week is piling up and stinking. The lease says that only Mr. Jones may live in the rental, but three friends appear to have moved in with him. And, on and on.

Fortunately, someone invented written notices. These simple, straightforward directives take feelings out of the equation, and place the focus on the broken rules. They help landlords manage rentals like a business, rather than a social service. And notices only need to mention basic details:

• The rule that was broken
• When it was broken
• How it must be corrected
• When it must be corrected
• What will happen if it isn’t corrected

It really is that easy, and landlords don’t need a law degree to issue notices. What’s more, a written notice does a better job of showing that the landlord is serious than an angry phone call or a nasty conversation. Tenants understand that, when it’s in writing, the expectation won’t go away; because the notice tells them what will happen next.

And to clear up a common myth: Sending a notice is NOT the same as evicting a renter. Tenants who ignore notices may eventually be evicted, and the court may want to see copies of any ignored notices, because they set the stage for an eviction. But, notices are designed to fix a problem. Longtime landlords know that a notice works best when it:  

• Is sent as soon as a rule is broken
• Is properly delivered to the tenant
• Is followed up to ensure the problem is fixed

Top 10 reasons for sending a notice

The most common issues that result in a written notice to renters are lease violations, nonpayment of rent, and changes that will be made to the rental agreement. In most cases, the contents of a notice will not surprise to the tenant. Tenants will very likely know when they are breaking a rental rule, although they may not expect the landlord to issue a written notice.

Common reasons for sending lease violations notices include:

• Damaging the rental unit
• Having an unauthorized occupant in the unit
• Keeping an unauthorized pet
• Smoking when the unit is smoke-free
• Causing excessive noise
• Violating landscaping rules - such as failing to mow the grass.  

Typical nonpayment notices are issued for:

• Unpaid rent
• Unpaid utility bills

And, notices to amend a lease are routinely sent to:

• Announce a rent increase
• Announce that the lease will not be renewed

This is not an exhaustive list. There are dozens of other triggers for tenant notices. Notices can be used in any instance of a tenant defying lease agreement rules.

How to send a tenant notice

You identified a broken rule, and you wrote a notice. Now what? Landlords are required to properly deliver written notices, and there are several acceptable methods for doing so. If the notice is providing routine information, such as when an inspection must be scheduled, it may be mailed. If a violation or late rent is being addressed, the notice typically should be sent via U.S. Postal Service certified mail or delivered by a process server. This way, the landlord has proof that his or her renter received the notice. Always check to see whether your local jurisdiction requires a specific delivery method.

Certified mail requires the tenant to sign for the notice, and the Post Office provides the landlord with proof that the tenant accepted the notice. (You are also able to pay an extra $2.90 to get the Return Receipt Signature.) If the tenant cannot be found at the rental address, or refuses to accept certified mail, then the Post Office returns the unclaimed notice to the landlord.

Using a process server is a simple procedure, and fees range from $25 to more than $100.  Process servers are listed online and in phone books. They are private individuals or companies, and notices are personally delivered. Officers who work for county sheriffs’ offices also serve notices, but typically only when notices are warrants or connected to active court cases.

In some states, servers who work privately must be licensed. They may charge for mileage, and there may be additional fees for having the affidavit - or statement that a notice was delivered - notarized. A server may have to visit the rental property more than once to successfully serve the notice. In some cases, the process server may hand the notice to an adult other than the tenant, or may hang the notice on the rental door.  Servers will state in advance whether there will be a charge if they cannot successfully deliver a notice.

Follow up on tenant notices A tenant has been given a deadline to fix a problem. It is up to the landlord to check and see whether the deadline was met. An unauthorized pet notice tells the renter that the animal must be removed immediately. So, if the notice was delivered on Monday, the animal should be gone by Tuesday. A notice that describes damages at the rental must include a deadline for repairs; if the tenant has until Nov. 1 to complete repairs, then the landlord should inspect the unit on Nov. 1.

When a deadline passes and the lease violation hasn’t been remedied, a second notice should immediately be sent to the tenant. This is an especially important step in situations where a renter may later be evicted. Courts expect landlords to show that there have been repeated problems, and that repeated notices have been issued.

When tenants meet your deadline, the lease carries on as before. A renter may break a rule, get a notice, and never violate the lease agreement again. That’s when the written notice has truly served its purpose: it cleared up a problem, restated expectations, and brought a resolution. The tenant could go on to be one of the best tenants you’ve ever had.

Devastation from Hurricanes Harvey and Irma is still underway, and total damages won’t be known until the storms recede. Estimates so far have nudged $200 billion. These record-setting disasters have turned people out of their homes, and closed down whole cities. Rain and flooding are still affecting communities along the Gulf and Atlantic coasts, as well as towns that are hundreds of miles inland.

That’s a lot of rental property. Tension between landlords and tenants can be at its highest during crises like these, as the Houston Chronicle described just days after rain from Hurricane Harvey finally tapered off. Landlords saw their properties all but ruined, and tenants were suddenly homeless, Everyone is struggling to move forward.

The same crisis has occurred in rentals elsewhere in the nation this year. Flooding in Idaho. Huge wildfires in Montana. Chicago neighborhoods this summer endured evacuations and destruction caused by flooding. And Southern California was pummeled by storms that featured fire-causing lightning strikes that shut down power stations and closed highways, leaving yet another trail of ruin.

Since nearly 40 percent of all residential property in the U.S. is occupied by renters - and there will always be menacing weather events - many landlords could confront the scenario now playing out in Houston, the Florida Keys, Charleston, S.C., Atlanta, Ga. and elsewhere.

What can be done when your rental is damaged or destroyed in a natural disaster? What are your obligations to the tenant? Are there precautions you can take in the future?

Immediate concerns

If your residential rental is destroyed, or damaged to the extent that it is temporarily uninhabitable, the tenant will have to move out. Generally speaking, if the landlord expects to hold the tenant to the lease, and needs to make repairs before the tenant can move back in, the landlord must pay the tenant’s temporary housing costs. If damage is such that the landlord must end the lease, and the tenant must find new housing, then notice must be sent, no more rent may be collected, and the security deposit will likely need to be returned.

Keep in mind, there is a wide range of scenarios that can play out in emergencies like these. Every rental situation may be slightly different. For instance, it may be that phones and Internet are down, roads aren’t passable, and it is impossible to communicate with tenants about evacuating the rental unit. This is where common sense and compassion play critical roles. Landlords must do the best they can to contact tenants and thoroughly explain expectations. Landlords should state that the unit is unsafe, and that tenants must move out for their own safety so that the damage can be addressed. Correspondence must explain whether the lease is terminated, and how soon the tenant must remove possessions. Take that extra step to explain that, while having to move out in a short time may be stressful, a flooded unit faces serious risks even when waters recede. Mold starts growing immediately, for example. Also make it clear that the tenant’s salvageable belongings must be removed. If the tenant has insurance for possessions in the property, then they will need time to record damage so that they can file their own claim.

If a tenant refuses to move out of an unsafe rental, then the landlord must contact local authorities for help. In no case should a landlord try to physically remove a tenant, no matter how tense things get.

If the rental unit escaped damage, but other area destruction has caused a tenant to need to move - perhaps the hurricane closed down the tenant’s employer - the landlord has the option of letting the tenant terminate the lease early. This may not be required, but there is wisdom in releasing a tenant who is suddenly unemployed and wants to move out. After all, an unemployed tenant won’t be able to pay rent. Additionally, demand for housing typically soars in the days following a disaster like Hurricanes Harvey and Irma. Finding a new tenant may be the fastest and most economical course of action.

Hurricanes, floods, and fire - does insurance provide all the protection needed?

Anyone who has borrowed money to buy property knows that lenders require comprehensive insurance coverage. If the property is in a flood zone, the bank or mortgage company will also require federal flood insurance, along with the homeowner’s policy. Flood plans are supplied by both private insurers and the Federal Emergency Management Agency (FEMA). No one wants to have to file a claim, and that may be why many owners commonly skip over the fine print. But landlords can’t assume that, just because they have a policy, all damages are covered. For instance, a flood insurance policy won’t cover a finished basement, or any personal property stored there.

Those who live outside - but close to - a floodplain can also purchase flood coverage. As FEMA states in one of numerous documents it supplies on the topic: “More than 25 percent of the National Flood Insurance Program’s… flood insurance claims are for structures outside identified floodplains. Floods can occur anywhere. An area that is near a levee or a dam is at risk of levee or dam breakage. People who face even moderate flood risks should get insurance, which can be purchased for as little as $80 per year.”

Less straightforward, is the process of insuring against hurricanes or damaging winds. These plans may have high deductibles, limited coverage or, in some cases - such as when covered damage occurs in tandem with non-covered damage - no coverage at all. That’s a pretty big incentive to carefully read those policies first.

As for covering the loss of renters’ personal property, landlords can advise tenants to purchase their own renters insurance policy when the lease term begins. In fact, many states permit landlords to require tenants to purchase renters insurance. Since flood insurance policies are also available to tenants, lease terms for rentals in risky areas could add flood insurance as a rental requirement.

In some severe weather communities, there may be a state or local requirement to offer tenants special insurance coverage. Typically, this is in the vacation rental industry, but landlords should always check. In North Carolina, with its thousands of beachfront vacation rentals, the attorney general specifies that landlords must offer visitors renter insurance. This way, if storms force evacuations, the insurance reimburses the vacationer. If the rental agent failed to offer renter insurance to guests, then the owner must reimburse the guest. 

A final avenue for protection for rental investments in cases of weather destruction is business income insurance. This kicks in when damage makes a unit unlivable and therefore unable to produce income. Depending on the policy, the time that it takes to repair a rental may be included in the claim period.

Preparation every landlord should consider

Insurance coverage is a major part of the preparation process, but rental owners can do more to be hazard-ready. Coastal and other rental markets that are susceptible to severe damage require stringent catastrophe planning. The easiest measures are those that make certain areas of the premises off-limits to tenants. For instance, since flood insurance won’t cover a finished basement, owners shouldn’t finish walls or floors or ceilings, let alone permit tenants to use the basement as living space. In fact, many owners move furnaces, water heaters, and circuit breakers into first-floor closets, even though those items typically are covered in claims.

The South Florida Regional Planning Council put out a great guide on the heels of destruction caused by Hurricane Andrew, in 2000. Many tips it listed can be applied in areas prone to flooding, wildfires and other disasters, as well.

And preparation chores must be shared with tenants. After all, your rental unit is their home. Regardless of location, every residential lease should require tenants to report needed repairs to landlords. These include missing roof shingles, clogged drains and downspouts, leaks, and blocked doors and windows.

The lease can also lay out clear expectations for routine maintenance of the rental that will reduce the likelihood of damage in the event of a hurricane or other disaster. For instance, tenants could be required to establish an evacuation plan they share it with the landlord, as well as maintain an emergency kit. The lease could state that if an extreme weather event is forecast, tenants must:

• Close all open doors and windows
• Move outdoor furniture inside
• Keep pets inside
• Shut off circuit breakers
• Turn on emergency generators

Again, FEMA supplies excellent help with designing plans and preparing for the worst. A tenant who has been well tutored in the principles of disaster planning can be a great assist to owners.

Stanley Roper, the grumpy landlord in the ‘70s pop sitcom “Three’s Company,” lived in the apartment directly beneath his tenants’ apartment. If something went wrong - and of course things routinely went awry to keep viewers watching - Roper knew about it within minutes.

Without a doubt, landlords must supervise their rental properties, but a landlord needn’t listen through the pipes, as Roper did, to stay on top of things. They want to assess problems and resolve them before they get worse - and more expensive to fix. In particular, appliances, plumbing, and a home’s heating, ventilation and air conditioning system - HVAC - require routine inspections and servicing.

For landlords who have the skills and the time to keep these systems humming, great. Most of us don’t. For those who lack the time or skill to make repairs, and who haven’t established relationships with local repair companies, a home warranty plan could be the perfect solution.

These plans delegate emergency repairs and routine replacements to an outside company. Instead of the landlord rushing to the rental when the air conditioning stops working, or a water pipe is leaking, the service is called to step in. 

Home warranty plans are not the same as homeowner insurance policies; they don’t cover fire damage or flood cleanup. The plans also differ from manufacturer warranties that come with new appliances, furnaces, and other fixtures. Instead, a home warranty plan is a service contract for specific repairs and replacements. There is an annual premium - between $300 and $500 - plus smaller fees for service trips - starting at $50 per repair. Most plans have a yearly ceiling on repairs and some include deductibles. 

Plans are optional, and are not required by mortgage companies. Their popularity grew as real estate agents, who are more likely to close a

sale when a home includes a warranty, began adding them to deals. Now, however, more landlords are turning to these contracts, so, we wanted to see how the plans fared in reviews. Consumer Reports, the gold standard for unbiased reviews by a completely independent nonprofit, has not yet reviewed home warranty plans. The reviewers listed below accept payments to promote various products, so we urge you to consider ratings as information that is not fully impartial, rather than as objective data.

Reviewers use different criteria to judge plans

All home warranty plans carry an annual premium, and offer explicit coverage with very specific exclusions. Each plan sets its own rules for responding to service requests and claims. Reviewers compiled extensive lists of information that can help a buyer determine whether coverage meets their needs. However, keep in mind that the reviewers listed below did not use the same criteria to judge plans. And some reviewers said they struggled to get the information needed to complete reviews.

Reviews.com said some firms failed to comply when asked for a sample service contract, so those firms were not evaluated. Reviews also said that it didn’t rate plans whose reps were rude, unhelpful or ignored Reviews’ questions. So, some plans may not be listed.

Consumer Affairs and Home Warranty Reviews both rated home warranty plans, in part, according to published customer reviews. Both show how many customer reviews each plan drew. Pay attention to this number, as a plan may have a high rating, but be based on a small number of customer reviews.

Consumers Advocate offers a chart that shows how it weighs six different plan features. GoBankingRates, along with some of the other reviewers, includes the grade that home warranty plans have been assigned by the Better Business Bureau. Safe Smart Living includes a handy chart depicting the average cost to repair and replace common home appliances and systems.

While ratings offer a lot of good information, experts say that the most important thing to do in comparing plans is to read the fine print to fully understand what is included.  

Are the plans worth the cost?  

Repairs and routine replacement must be expected with a rental property. The ideal home warranty plan offers a nearly worry-free experience for owners. But Consumer Reports states that owners may be better off setting aside a percent of rental income each month to pay for repairs as they are needed.

Consumer Reports also notes that there has been widespread disappointment with home warranty plans that fell short of customer expectations.

“To be sure, having a home warranty can provide you with peace of mind if things go wrong,” Consumer Reports writes, in its June, 2017 overview. “But you should also realize that the providers of these plans have built-in wiggle room that can make it easier for them not to make payments. As a result, hundreds of consumers have complained to the Better Business Bureau about their plans, often because they didn’t get the payouts they expected, according to Katherine Hutt, a spokesperson for the Bureau.”

Today.com agreed in its piece, “Home Warranties Don't Always Provide Peace of Mind,” and noted that homeowners who buy them lose the freedom to choose who does repairs. “One more important factor to consider: The warranty company decides which repair company comes to your house. You don’t have any say in that. If you have a trusted plumber, electrician or appliance service, a home warranty may not be for you,” Today.com wrote.  

Of course, for many, the plans are helpful precisely for those owners who have no established relationships with local repair businesses.

Experts seem to agree that a home warranty plan is probably unnecessary with a new property.

“When buying a newly constructed home, you probably don’t need a home warranty. Many states require the builder to repair defects in materials and workmanship for a few years – typically two to 10 years. And the new appliances in those new homes are almost always protected by one-year warranties,” writes Home Tips.com founder Don Vandervort, for USNews.com.

Landlords who do opt for home warranty plans typically purchase them for assets they expect to hold onto for many years. They deduct the premiums, and most also boost rents to cover the annual cost and service trip fees. If a tenant is leasing-to-buy, then the lease could state that home warranty plan costs will be added to the rent.

Top Rated Home Warranty Plans

Here are the reviewers and their ratings for top home warranty plans:

• Reviews.com: American Home Shield, Total Protect Home Warranty, Sears Home Warranty, First American Home Warranty
• Consumer Affairs: American Home Shield, Choice Home Warranty, First American Home Warranty, Select Home Warranty
• Consumers Advocate: American Home Shield, America’s First Choice Home Club, Choice Home Warranty, The Home Service Club
• Home Warranty Reviews, NeoTick, LLC: American Home Shield, The Home Service Club, First American Home Warranty, Select Home Warranty
• GO Banking Rates: First American Home Buyers Protection Corporation, Fidelity National Home Warranty, Old Republic Home Protection, One Guard Home Warranties
• Safe Smart Living*: Total Protect Home Warranty, American Home Shield Review, America’s First Choice Home Club
  *Only rated top three plans, but included information on a dozen additional plans.

It is so much easier to track landlord income and expenses when you maintain separate bank accounts for your personal and business transactions. Landlords may also want to open an account just for security deposits. Many states require the landlord to track income earned on tenants' security deposits. Check your state laws to be sure.

If you would like to share a tip, and be featured on our video, please send your tip to erica@ezlandlordforms.com

How well do you know the intricacies of being a landlord? Test yourself with our poll! If you answer wrong, don’t worry. We are a leading source for education on managing rental property. Get started on your Landlord Literacy skills with any of the articles, below.

New landlords often consider dipping into the pool of family and friends to fill vacancies in their rentals. After all, these people are known entities, whereas complete strangers come with unfamiliar histories.

Why, then, do some experts advise landlords to steer clear of relatives and pals? The easy answer is that doing so carries unnecessary financial risk. Specifically, landlords risk lost tax deductions and lost profits.

Here are some measures to consider if you are thinking of renting your property to some friends, or your adult children, or other relatives. If you have already leased to family or friends, see if you took the proper precautions to protect your investment.

And, if a relative or friend is living in your rental, and you’re having problems with late rent or lease violations, see our suggestions, below, for resolving problems.

Tax deductions - you risk losing yours if you rent to family

Successful landlords track income and expenses with great care. Rental income is just one number that gets recorded; equally important are a landlord’s expenses. Costs are subtracted from income (known as taking a deduction), so that the true property income is established and you know how profitable your investment property is. The government sets criteria for rental property business deductions. And if the rules aren’t followed, certain expenses cannot be deducted.

As Janet Berry-Johnson, CPA, explains in this Forbes article, “When you rent a home to a relative, such as a spouse, child, grandchild, parent, grandparent, or sibling, any day rented at less than the fair rental price is considered a personal use day. To avoid having the rental days considered personal days, the property must be rented at fair market rates and be the renter's principal residence.”

Otherwise, the landlord cannot claim costs as business expenses because the IRS considers the property to be the landlord’s personal residence.

Here’s a simplified view of a yearly profit/loss statement for a rental valued at the national average of $188,900 that is rented to family for $1,500 a month - $400 less than market:

• Income: $18,000
• Expenses: $0 (No costs - mortgage, taxes, insurance, repairs - can be deducted)
• Net income: $18,000

Here’s what the yearly numbers look like if the landlord is charging family members a market rent of $1,900 on the home bought for $188,900:

• Income: $22,800
• Expenses:
  • Mortgage - $10,200 (assuming a 30-year mortgage, 20 percent down payment and interest rate of about 3.8 percent)
  • Taxes - $2,172 (assuming the median property tax rate of 1.15 percent)
  • Insurance - $986 ($822 for non-rental insurance premium)
  • Repairs - $3,778 (assuming 2 percent of property value)
• Net income: $9,064

Although the above example is simplified, the math is clear: By reducing the rent for family members, in the example above, the landlord is sacrificing thousands in business deductions. For a lengthier explanation, see BiggerPockets’ helpful guide on Renting to Family Members.

Are deductions the only consideration?

Set aside the issue of whether your rental costs can be deducted. Can you expect a steady rental income from someone you know? Or, will that friend or relative balk at giving you their hard-earned money? Will they delay paying rent on time if they see you taking a vacation, or buying a new car, because they think you really don’t need the money? Are you prepared to have difficult conversations, and maybe even send eviction notices if rent goes unpaid?

Would a person close to you push the limits on rules that have been set for your rental property? For instance, would they allow friends to move in without your permission, or bring in pets in spite of rules forbidding pets? And, are you ready to issue lease violations for rule-breaking?

The important thing to remember is that your rental agreement gives tenants legal possession of your property. You can’t just tell them to move out if the relationship sours. In spite of tenants being family or friends, you can’t go into the property without proper notice. The law is on the tenants’ side with respect to possession.

So, while you and your nephew, or your sister, or coworker, or fellow club member might come to an easy understanding at the start of the term, if difficulties arise once they occupy your rental, you will be legally obligated to address them correctly.

How can problems be avoided?

If you do lease to family or friends, be upfront about your expectations. Tell them that your lease will have specific rules - and that there will be fees or other outcomes if rules aren’t followed. Of course, the landlord is responsible to fully uphold his or her legal obligations, as well. Make all of this clear before tenants take possession of (move into) the rental property.

A well-written lease is the best device for protecting both the landlord and the tenants. In fact, as Orlando property management firm Warner Quinlan, Inc., points out, “Property owners might agree verbally with their tenants that a certain amount will be paid, but there’s no documentation to prove it once those tenants stop paying. This goes wrong 99 times out of... 100. You cannot operate without a (written) lease.”

Every question that could come up through the tenants’ stay should be addressed in the lease agreement (some call this a rental agreement). This way, there is no confusion about your expectations. Here are just a few issues that a written lease should clarify:

  Pets - If permitted, how many, what size, what fees?

Guests - How many allowed? How long may they stay?

Late fees - How much? What is the grace period?

Parking - Where? How many spaces?

Trash and Recycling bins - Where do they get placed? Which days?
Renewal - Does the lease automatically renew? For a year? Month to month?

Written notices are the other important tool for managing rental properties. A notice should be the landlord’s immediate response to any lease rules that are broken. Whether or not the tenant is a relative or friend, unpaid rent and other lease violations are not subjects for a verbal discussion; they are matters that must be recorded in writing and monitored until resolved. If you can’t picture yourself having a process server deliver a late rent notice to your adult children, or sister-in-law, or longtime friend, then you may need to hire a property manager who can do that for you.

No rental arrangement is guaranteed to be uncomplicated. However, honest communication at the start, a good written lease, and the ability to immediately enforce the rules you set will eliminate much of the potential for misunderstanding. They may even help preserve relationships if you decide to rent to friend or family.

The Nest summarizes it nicely in saying, “Build the proper framework from the beginning and avoid conflict.” After all, renting to friends and family isn’t the same as inviting those folks to celebrate Thanksgiving dinner at your house. It is strictly a business relationship, and must be handled like one.

Offering a discount for early rent payments can be a win-win. The landlord rarely, if ever, must send a late rent notice or charge a late rent fee. The tenant appreciates the chance to pay a reduced rent. Add early rent discount terms to your lease, and enjoy a more stable rental income.

If you would like to share a tip, and be featured on our video, please send your tip to erica@ezlandlordforms.com

More rumors surround the subject of eviction than perhaps any other rental topic. Landlords and tenants alike seem to rely on word-of-mouth information, which seems rather inappropriate considering that the eviction process follows fixed guidelines. States and local municipalities set these guidelines, and very few are identical. One feature of virtually all eviction laws is a requirement that landlords give tenants written notices before filing eviction court cases.

This is where things get confusing. It takes more than a notice from a landlord for a situation to become an eviction case. A complaint must be filed in court for a case to be officially recorded. Even after a case is recorded, the outcome is not necessarily that a tenant will be evicted.

It’s our guess that finding accurate information is difficult because every case is slightly different, and because eviction is a subject fraught with frustration, and often anger, on both sides. Hopefully, this guide will help.

Typical eviction terms:

Cause - a reason that legal action is being taken.

Cease and desist - Court order directing someone to immediately stop an activity.

Cure or vacate (also called Comply or vacate, Perform or vacate, Perform or quit) - Obey a lease term (other than paying rent) or move out.

Complaint - Action filed with a specific court claiming legal rights against someone (tenant).

State laws are posted on websites, and many break out Landlord Tenant law in special sections.

Civil court - (Prothonotary) Setting for landlord-tenant and other non-criminal complaints.

Demand for compliance - Obey a lease term (including paying rent) or move out of the rental, or further action will be taken, likely an eviction.

Demand for possession - Move out or obey a lease term by a specific deadline.

Ejectment - Legal process to remove someone - usually not a tenant - from your property.

Eviction - Legal process to remove a tenant from your rental property.

Forcible entry and detainer - A court action that seeks to remove a tenant who has not responded to previous notices.

Lease violation notice (Notice of noncompliance) - A notice explaining which lease terms or rules were broken, and how to remedy them.

Notice of abandonment - A notice sent to a tenant whom the landlord believes has moved out of the rental, but has left behind personal property.

Notice of service (Service of process, Summons) - Formal written notice that one party gives to a second party to inform the second party that it has been named in a lawsuit; notice is accompanied by a copy of the court complaint, and delivery must follow court rules. 

Notice of termination (Notice of nonrenewal) - Notice that a lease will not be renewed at the end of the lease term.

Notice to cure - Tells a tenant which lease term or rule was broken, and how to remedy it.

Notice to vacate (Notice to quit possession) - Tells tenants they must move out by a certain date, or be evicted.

Pay or quit (Pay or vacate) - Pay overdue rent by a certain date or move out. 

Petition - A request to a court that a case be heard.

Summons - A court order to appear in court.

Unpaid rent notice - Reminder that rent is overdue. May include a pay or quit notice.

Everything starts with the proper notice - but notices don’t always lead to eviction

Eviction is a process built on written notices and court filings. Notices and other written correspondence between a landlord and tenant form the critical paper trail to show cause for an eviction. The thing is, sending a notice for unpaid rent, or other lease violation, may not result in an eviction. If a tenant gets a notice, and then pays the late rent, or stops making noise that draws neighbor complaints, and or fixes other violations listed in a notice, then the issue is considered to be resolved.

If there is a pattern of rule-breaking, and repeated lease violation notices don’t resolve things, then eviction is the likely solution. Even in this case, though, if a landlord sends the tenant a pay or quit notice - or a perform or quit notice - and the tenant pays or performs, then the landlord typically cannot pursue eviction.

A landlord can usually only file an eviction complaint in a civil court when a previous notice, or notices, failed to resolve lease violations. Until then, the documentation that a tenant has broken lease terms exists only in the landlord’s personal files. This is routinely misunderstood by landlords who check court records to compile a tenant applicant’s background. Landlords must contact an applicant’s former landlords to learn whether there was unpaid rent or lease violations that did not result in eviction complaints.

Eviction records begin in the courthouse

An official court record begins the minute a landlord files an eviction complaint in civil court. Until then, there will be no public record of an eviction case against a tenant. Eviction complaints begin at the lower court level, in most states. If the case is dropped - perhaps because the tenant moved out - then no more action will be taken, but the record (with no resolution) will remain because the tenant has been named as a defendant.

If the judge rules in favor of the landlord, there typically is also a financial judgement, or a cost to the tenant for unpaid rent, fees and court costs.

Other potential outcomes in an eviction case:

• Settlement - Instead of the court deciding whether to approve eviction, it could approve a plan in which a tenant agrees to immediately move out and pay back rent.
• Dismissal -  The court could dismiss the complaint after determining that there is inadequate evidence of a lease violation, or that the violation does not warrant eviction, or that the tenant did not receive proper notice of a lease violation.
• Judgement by default - If a tenant fails to appear for the court hearing, the court could rule in favor of the landlord.

Getting help with eviction

A thorough, written lease agreement - and a habit of sending lease violation notices the minute a violation occurs - can minimize the chance that you will have to evict a tenant. Yet, nearly every landlord has either confronted a possible eviction case or simply contemplated an eviction scenario. It can be a complex process and may require legal guidance from an attorney knowledgeable in your area’s landlord tenant law.

Preparation is critically important, as New York City Civil Court judge, the Hon. Margaret Cammer, noted in her helpful guide, published in 2006. Although every court may handle the hearing process a little differently, Judge Cammer’s advice on how a trial is conducted and acceptable behavior in a courtroom takes away some of the mystery and reduces apprehension about the experience.

Eviction is an unfortunate part of managing investment property, but it doesn’t have to be overwhelming, and it doesn’t have to be a guessing game. State laws are posted on websites, and many break out Landlord Tenant law in special sections. Also, local court staff can provide complaint forms, guidelines for completing them, and general information on the local court process.

]]> https://www.ezlandlordforms.com/articles/educational/1/692/should-you-accept-applicants-with-shaky-financial-histories/ https://www.ezlandlordforms.com/articles/educational/1/692/should-you-accept-applicants-with-shaky-financial-histories/ Mon, 26 Jun 2017 10:34:21 GMT

A really nice tenant applied for your rental, but you’re on the fence. You like this person; in fact, you and this applicant have mutual friends and they vouched for the applicant’s warmth, courtesy and friendliness. The personal references checked out, you confirmed employment, and you reviewed recent paystubs.

But this applicant has had financial problems. Serious problems. Bankruptcy, a low credit score and even a prior eviction came up on the background check you ordered. The applicant was completely straightforward about the past, telling you in advance about an unfortunate divorce, a lengthy illness, and other unexpected setbacks that would appear on the background check.

The person doesn’t meet your applicant criteria, but something is stopping you from rejecting their application. You find yourself thinking about that person, and asking yourself how you’d feel if you were an applicant in their situation.

What should you do? Fortunately, there are great guidelines for making decisions like these. Check out these tips, and see if they help you find the answer you need.

What are your screening criteria?

Income property can’t be managed successfully on hunches. You will never know for sure whether an applicant is qualified if you haven’t set criteria for accepting applications. Decide, in advance, how much income your tenant will need, among other benchmarks. Here are common criteria for tenant applicants:

• Adequate income: Typically, their monthly income should be at least three times the rent.
• Pets: Yes or no? Decide in advance. (Service animals are not considered pets.)
• Number of potential residents: How many people can comfortably live in your rental?
• Credit history: Do applicants have a record of paying bills on time?
• Criminal history: Has an applicant been convicted of crimes? Which crimes? (Some states have strict rules on this question.)
• Eviction record: Has an applicant been evicted for nonpayment or other lease violations?

Having these requirements removes much of the guesswork from accepting a tenant application. However, no single list can guarantee that a tenant will always pay rent on time and always follow lease rules. There are areas that require extra thought.

For example, an applicant may meet all of your criteria, but may be late for appointments, fail to return calls, or behave in other unprofessional ways. That’s when a landlord does a gut check. For a first-time landlord, the gut check is challenging. There is no history with other tenants to fall back on. If this is the case, ask other landlords. If you don’t know any, find a local landlord or property manager association.

The big decision   

Okay, so you’re armed with all the information you need to make a decision about whether or not to accept a tenant applicant. You have the full background report, you’ve interviewed former landlords, and you’ve met three times with the applicant.

Still, you don’t know what to do. Your gut check is leaning toward acceptance, but you’re worried about being burned.

Well, it’s time to crunch some numbers. Can you afford it if the new tenant misses a rent payment? What if the tenant misses two payments? What, exactly, would you do to handle the income loss? And, how long would unpaid rent set back your personal rental income goals? Would you need to delay retirement? Ask yourself if you would be giving more financial consideration to the applicant than you would to friends and family. If so, are you okay with that?

Finally, since this really nice applicant has a history of money troubles, are you prepared to go through a financially and emotionally costly eviction process if they run into more trouble and just cannot pay rent?

You have been putting yourself in your applicant’s shoes. Take a minute to put yourself in the shoes of another business person, someone who runs a for-profit business. Ask yourself if your bank’s loan officer would cut you a break on collateral requirements because you’re such a nice guy/gal. Would your contractor let you skip a payment because you had a lengthy illness? Would you feel comfortable asking your contractor for that payment forgiveness?

If you turn them down

It is a violation of federal law to turn away applicants because of their race, religion and family status, among other reasons. Some states require landlords to apply identical standards to all applicants and to tell them, in advance, what your acceptance criteria are. This makes some landlords very nervous about denying applications.

But there is no reason to be nervous if you are fairly applying legal criteria. And, ability to pay rent is the primary qualification criterion. A tenant who has a record of inability to pay can be rejected without qualms.

In denying an application, keep the message polite and concise. You might use a form that includes denial language, or you might write your own note.

If you accept them
 

Veteran landlords usually have strong opinions about whether to take a chance on an applicant with a shaky financial history. Some will never risk it. Others claim that some of their best tenants have been those with a bankruptcy or other credit problem - BUT they hold these tenants accountable at every step.

If you decide to accept an applicant whose financial history has been unstable, include a set of conditions that will protect you and will make your rent and security deposit expectations crystal clear. Don’t waver on these conditions. This will send the message that you are not overlooking a poor financial history; rather, you are willing to take specific, but limited, steps to work with that history.

Insist on a lease agreement that includes language that protects you legally in the event of nonpayment. These might include:

• A cosigner agreement. Be sure that the cosigner meets all of your financial criteria. This person does not live in the rental, but will make payments if your tenant does not.
• A late payment fee. Impose a fee for every late payment. Some states limit the amount of fees.
• Full payment of security deposit. Require this at lease signing. A tenant who can’t pay a deposit is expecting you to cover property damage, lost keys and other expenses out of your pocket. That is a giant “ask.”
• Returned check fee. Impose this fee within the limits of your state law.
• Biweekly payment addendum. If you are allowing partial payments, spell out the exact terms in the lease. Leave nothing to chance.
• Renewal leases. If you have a good year with a tenant whose finances are iffy, don’t let down your guard at lease renewal time. Keep your rules in place and keep your tenant accountable.

If after all this guidance, you’re still struggling with whether or not to accept an applicant with a shaky financial history, visit our Forum and see what other landlords have to say, or post your own question for our landlord community to answer.

]]> https://www.ezlandlordforms.com/articles/news/690/video-tip-know-your-state-laws/ https://www.ezlandlordforms.com/articles/news/690/video-tip-know-your-state-laws/ Wed, 21 Jun 2017 13:22:24 GMT

You may be managing one rental unit right in your home state, or you may operate multiple investment properties across the country. Either way, your lease forms must comply with your state's Landlord Tenant laws. We keep track of these laws, and we follow updates. This makes it easy for you to apply them correctly by reading our informative, State Assist instructions. Look over these instructions so that your lease forms are compliant.

If you would like to share a tip, and be featured on our video, please send your tip to erica@ezlandlordforms.com

 

]]> https://www.ezlandlordforms.com/articles/educational/5/688/what-is-an-addendum-and-how-is-it-used/ https://www.ezlandlordforms.com/articles/educational/5/688/what-is-an-addendum-and-how-is-it-used/ Tue, 13 Jun 2017 15:25:36 GMT

The Latin word “addendum” appeared more than 230 years ago to define “something added.” Here we are in the early 21st century, and no one on Earth speaks Latin as his or her native language.

Yet, that word, addendum, is still in heavy use to describe something added to a book, to a magazine, to a yearbook, and, yes, to a lease agreement.

Even if you are in that small minority of folks who still remember a few words from long-ago Latin lessons, the use of lease addenda (that’s plural for addendum) may still stump you. So here’s the 411 on that important form.

• A lease addendum is usually a page or two long, and often uses simple language.
• A lease addendum typically addresses just one topic.
• A lease addendum can be used even if you already have a comprehensive lease agreement.
• A lease addendum is as important as the rest of the lease.
• Rules in a lease addendum aren’t optional; they must be followed by tenants.

When do you use a lease addendum?

There are common misconceptions about using lease addenda. Among them is the belief that an addendum is drawn up after a lease has been signed, in order to change some existing term. However, the more common tool used to make changes after a rental lease is signed is the lease amendment. 

Another myth is that a solid lease shouldn’t need addenda; after all, the thinking goes, any rental property rule should be listed in the rental lease. That may be true for rules that can be explained in a sentence or two. However, some lease rules need more explanation, extra details and a separate signature or place for a tenant to add their initials.

These are a few examples of rules that may not need an addendum, followed by examples of rules which probably need to be explained in an addendum:

Addenda typically not needed when including these rules:

• No pets are allowed.
• Subleasing is not permitted.
• Bedbug or other pest problems must be reported to the landlord.
• No landscaping is permitted without the landlord’s written permission.
• Smoking prohibited on the leased premises or rental property common areas.

Addenda recommended for these rules:

• Tenant has the option to purchase the leased property.
• Pets are permitted but tenant must follow certain rules and pay a pet deposit.
• Tenant’s guests may visit for no more than a specified number of days in a row.
• Tenants who move out before a lease expires must pay a specified early termination fee.
• Installing a satellite or antenna must be done according to the landlord’s guidelines.

What are the advantages to using addenda with your lease?

The primary purposes of a written lease agreement are to have a document that outlines the parties’ rights and responsibilities, and to remove any doubt about terms and rules. It plays a critical role in minimizing potential misunderstandings and disputes.

It’s common for questions to come up throughout the time a tenant has possession of your rental property. A comprehensive lease with necessary addenda anticipates the questions that may arise, and spells out the answers in advance. This makes the lease the most important go-to source for both tenant and landlord.

The length of the lease will depend in great part on the number of addenda and disclosures (both optional and required by law) that are included. Obviously, addenda will make a lease agreement longer, but they offer the benefit of breaking a long document into sections that make the lease easier to read and refer to.

Addenda also come in very handy when terms that are in the basic lease don’t need to be changed with every new tenant. The landlord can retain rules that will apply to every new tenant - and then select addenda that may address a specific tenant’s needs.

The pet addendum is a good example of this. If an incoming tenant has no pets, the lease can simply state that there will be no pets. There is no need for a pet addenda that is typically used to spell out how many pets will be living in the rental property.

Likewise, a roommate addendum may have been used in the past but, if the new tenant lives alone, there is no need to include a roommate addendum. 

Can I write my own addendum?

To apply our earlier Latin lesson, a lease “addendum” simply means information that is added to a lease. Since every leasing situation is a little different, it makes perfect sense to craft your own lease addendum to address unique terms. If you can’t find an addendum that applies to your special situation, create your own.

Type in terms on a computer rather than handwriting them. Give your addendum a title that includes “addendum.” Enter a date, the rental property address, and the parties’ names, just as they appear in other addenda. A blank addendum template has those fields and allows the landlord to enter just the information on the specific rule to be addressed.

Whether using a template or starting from scratch, use clear language to define the rule and list guidelines and fees, if appropriate. Explain how the tenant must report any problems or issues that could be encountered with the rule.

Addenda that you create on your own must comply with Landlord Tenant laws, so be sure that your addendum is not violating those rules.

Don’t be concerned if addenda make your lease agreement longer than you expected. Veteran landlords know that the more information a tenant has, the better the tenant can follow your expectations.

]]> https://www.ezlandlordforms.com/articles/educational/4/687/when-you-have-to-evict-birds/ https://www.ezlandlordforms.com/articles/educational/4/687/when-you-have-to-evict-birds/ Thu, 25 May 2017 15:33:47 GMT

There’s nothing fiercer than a momma protecting her young, and this goes for birds as well as humans. And, while society’s view of animals - especially pets - has seen a remarkable shift in recent decades, the age-old conflict of unwelcome birds occupying man’s roof eaves, dryer ducts, and stove fan vents continues.

It’s no fun having to dislodge a nest of invasive English House Sparrows, let alone beautiful natives like Purple Martins, Chimney Swifts, Red-Headed Woodpeckers and Mourning Doves. The hatchlings shriek and the momma dive-bombs, and falling off a ladder becomes a distinct possibility.

Yet, homeowners have no choice but to dislodge these interlopers when damages occur. The acid in bird droppings eats away at roof tar. Nests are made with flammable materials. Those round, harmless-looking piles of twine and twig can block gutters and allow water to build up and cause a roof to collapse. When a home’s chimney or vents are blocked by sparrows, starlings, or other birds, the home’s occupants are at risk. Mites can migrate from the nest into the home, and gasses that can’t escape can build up indoors. There have even been reports of people nearly dying as a result of blocked vents.

When birds invade your rental property, it’s critical to stay on top of the problem - both for the tenant’s comfort and to protect your investment.

In fact, tenants should be told in advance that you want to know if nests appear in or on the structure. It’s a good idea to ask tenants in advance if they plan to use birdfeeders; if so, you will need to warn them that they will have to remove feeders if birds become a problem. If birds have already been a problem, you may prohibit bird-feeding with a clause in the lease.

Why do they pick my house?

Birds are opportunists. Why put effort into crafting a nice warm cavity for hatching eggs, when the perfect niches are already available in house gutters and eaves? Homes are magnets for insects that are drawn to light and shelter, and insects make up the bulk of many bird diets.

Many birds are creatures of habit and will return to the same nesting area year after year. Birds are also smart enough to make the most of a homeowner’s failure to immediately fix small cracks in siding, rotting soffit, and any other opening that can be used as a nesting spot. (Visits from woodpeckers may actually be a warning signal that your home has an insect infestation, as the bird will peck wooden siding to get at the bugs.)

The biggest factor in determining which bird will most likely to seek shelter in and around your rental home is its location. Pigeons are plentiful in the city and can be extremely difficult to deter, whereas, sparrows and starlings are most likely to congregate in suburban settings.

How do I get rid of them?

So, the birds have taken over and you must get rid of them; but, there doesn’t seem to be an easy and quick solution. For instance, it is illegal under federal and state laws to poison, shoot or otherwise destroy most wild birds. English Sparrows, rock pigeons and European Starlings are not protected by those laws, but many of us aren’t equipped with the tools (or fortitude) to kill birds, let alone dispose of the evidence.

As soon as you notice a bird problem - or your tenant brings it to your attention - walk the property and make notes on all the nesting evidence you see. Then, consult a professional, or set your own removal plan in motion. Tenants should not do the removal or cleanup.

Professional trap and removal services can humanely remove nests and birds, and can deter bird flocks. Fees vary depending on how much work is involved; that is, how many trips are required to rid a property of birds, and on whether the service includes repairing the damage caused by birds.

Sources on DIY bird-removal abound online and many sites are university-affiliated, so the  advice comes from wildlife biologists. Sites sponsored by the U.S. Department of Agriculture Cooperative Extension System provide education and offer phone numbers for those who want to talk over their bird problem. Many private pest control services also offer helpful, online FAQs on dealing with pesky birds.

Eradicating established nests typically requires waiting for eggs to hatch and the young to leave. Once they are gone, pull out the nest and close off the area they found, so that another bird family won’t move in. Then, be sure to remove droppings in and around the area.

The experts emphasize the importance of prevention. In other words, if you anticipate where bird problems could develop, then take precautionary steps, you will greatly reduce the potential for unwanted colonies on your property.

Keep ‘em out

For example, Purdue University entomologists, in their Animal Damage Management publication on pigeons, describe a barrier made of wire that can be laid on surfaces to prevent pigeons from roosting. The authors also state that: “Openings to lofts, steeples, vents, and eaves should be blocked with wood, metal, glass, masonry, or 3/4 inch rust-proofed wire mesh. Plastic or nylon netting can often be substituted for wire mesh, but may have to be replaced more frequently.”

The university offers a similar paper on preventing woodpeckers from turning your property into a bird hotel.

In its many tips on discouraging starlings, the Humane Society recommends sealing off popular nesting areas - stove, dryer and exhaust fan vents - with the correct materials: “Use hardware cloth, metal flashing, or commercial vent covers to seal opening, (the commercially available ones are probably the easiest to work with). Lighter material, such as plastic netting or window screening, rarely keeps determined starlings out. Any vent covering you use for starlings should be checked periodically to make sure the vent is working properly and is not impeded by a buildup of any material, such as lint from a dryer.”

Advice offered more than a decade ago, in a New York Times article, still rings true, as

the battle with nesting birds will likely endure for many years to come. Again, the focus is on thinking like a bird. Size up potential nesting spots, then seal them off with safe materials that won’t block vent flow.

It may take weeks or even months to deter birds; but, if they repeatedly fail to get a foothold on your eaves, in your gutters, or at your vents, they will eventually move on to the next property. When they do, it’s a good idea to continue to check (or ask tenants to check) for nests or damage, so that any newcomer birds can be quickly dealt with.

]]> https://www.ezlandlordforms.com/articles/educational/1/684/5-critical-steps-to-tenant-screening-why-this-is-the-do-or-die-moment-in-landlording/ https://www.ezlandlordforms.com/articles/educational/1/684/5-critical-steps-to-tenant-screening-why-this-is-the-do-or-die-moment-in-landlording/ Thu, 25 May 2017 15:31:38 GMT

Achieving success as a landlord does not happen overnight. It requires investing in the right properties and tenants, among other things, which can feel overwhelming at first. However, if you play your cards right, you will build a cash-flowing portfolio that makes you the most money with the least headaches.

The first step, of course, is to secure a property before screening tenants. Here’s what you need to know about where to best invest your capital:

• A basic understanding of real estate trends, demographics, property values, and interest rates

• Once a geographic area is selected, you have to find the right building at the right price. This includes comparing building materials (brick or frame), condition, and mechanics (furnace, AC unit, etc.).

• It is also useful to be aware of the life-expectancy of items like the roof (average lifespan of 15 to 20 years) and furnace (18 to 20 years) to budget for repair or replacement.

• How to purchase the property. What kind of mortgage will you choose? Do you have a sufficient down payment?
   

Now you need tenants to rent the properties, and it is essential to have a working knowledge of landlord/tenant rules and laws so you can treat your tenants fairly and avoid getting yourself into trouble. You’ll be dealing with tenant conflicts, collecting rent, appliances breaking, and trying to fill inevitable vacancies with great tenants.  

Here are 5 critical steps to tenant-screening:

1) Use a rental application
Rental applications are necessary for screening purposes and verifying the information a prospect is providing. It also saves you time by letting you know who is really serious about renting.

2) Check credit, background, and eviction history yourself
Don't accept reports run by prospects themselves. Set minimum requirements for credit and stick to them.

3) Always require a security deposit/move-in fee
While this seems like standard operating procedure, it’s not uncommon for landlords to allow prospective tenants to begin renting without a security deposit or move-in fee. Landlords offer this as a good-faith gesture, assuming they will collect at a later time that is convenient for the tenants when in fact, they are putting themselves at risk. Security deposits and move-in fees should be treated as non-negotiable items, as they provide protection and safeguards in the event something goes wrong.

4) Verify. Do your due diligence
Always verify their employment and income. Look them up on Google as well. You can find a lot from a simple online search.

5) Stick to your own rules
Most importantly, create a set of rules and be consistent with all of your prospects. Don’t allow emotions to cloud your judgement. For example, never bend the rules for someone because they seem nice. If you make exceptions, do so sparingly, otherwise you can get burned.

Many investors get lost in the minutiae, forgetting that it’s all about the people. The only thing worse than no tenants is bad tenants. Your success as a landlord is practically guaranteed if you do one simple thing: screen your tenants well.



These are just the basics.  For more information, check out my ebook How to Find Tenants that will PAY, STAY, and OBEY: A Practical Guide for Simply and Effectively Screening Tenants for Your Residential Rental Unit.

]]> https://www.ezlandlordforms.com/articles/educational/1/686/video-use-a-comprehensive-lease/ https://www.ezlandlordforms.com/articles/educational/1/686/video-use-a-comprehensive-lease/ Thu, 25 May 2017 14:44:26 GMT

Protecting your rental investment is so important. The best safeguard you can use is a lease agreement that covers every potential tenant issue. A comprehensive lease includes both required disclosures and clauses, as well as your own preferred rules. If you would like to share a tip, and be featured on our video, please send your tip to erica@ezlandlordforms.com

]]> https://www.ezlandlordforms.com/articles/educational/4/683/get-ready-to-evict-your-tenant/ https://www.ezlandlordforms.com/articles/educational/4/683/get-ready-to-evict-your-tenant/ Mon, 15 May 2017 10:39:39 GMT

Your new tenant just moved into your rental unit. He seems like a great guy. He has a sterling credit record and great references. The security deposit and first month’s rent check came two days early.

Not only that, when you stopped by to drop off an extra set of keys, the grass was already mowed, and the house looked cleaner than when he moved in!

Well, it’s time to get an eviction plan in place.

That’s right. It is time to list the specific measures you’ll take to evict Mr. Perfect Tenant if the time comes. That’s because no matter how wonderful your tenant now seems, things can turn bad. No one wants that to happen, but, when a tenant breaks the rules, you can’t afford to lose time researching the next step.

How often is eviction necessary?

Experienced landlords know that they must be prepared to evict - even while they hope they never need to take that step to resolve lease violations. Statistics bear out this, as eviction rates in some cities may be as high as one in every 11 rental households.

Studies point to a lack of affordable housing as the primary catalyst for higher eviction rates. Tenants with high income-to-rent ratios - generally their rent is more than a third of their income - struggle to meet monthly rent. It becomes nearly impossible to catch up if they fall behind. As Pulitzer Prize-winning author Matthew Desmond notes in his extensive research on poverty, housing and eviction, “Today, the majority of poor renting families spend at least half of their income on housing costs.“

But tenants’ inability to pay rent isn’t the only cause of eviction. Rentals in unstable communities with high crime tend to experience higher eviction rates. Eviction is also the endgame when a tenant repeatedly breaks the lease by allowing unauthorized roommates to move in, repeatedly causes damages, or fails to keep up with basic maintenance like regularly removing trash.  

Then, there are the true, Pacific Heights-style nightmare tenant situations that get resolved only through eviction. In that 1990 movie thriller, tenant Carter Hayes, played by Michael Keaton, never pays rent, changes the door locks on the apartment and removes every appliance and fixture before ultimately disappearing, leaving his landlords emotionally destroyed and financially diminished.

How can you prepare for an eviction?

Rather than wait for a negative situation to arise, consider how to handle lease violations in advance. Veteran landlords say that when lease rules are broken, a written notice is immediately in order. So, imagine that a violation has occurred with your rental, then write down  the steps that you take.

Here is a possible scenario of a tenant who is in the fifth month of a 12-month lease, followed by two different landlord approaches to handling problems that arise:

Six months ago, you signed a lease with a new tenant, a professional whose job transfer brought her to the city where you own rental units. Things went great at first. Then, in the third month, she paid rent late. On the fourth month, she was late again, and she moved her mother in without your permission. The fifth month came and went, and the rent still hasn’t been paid.

The landlord with no eviction plan was caught off guard by the late rent payment but just hoped that it wouldn’t happen again. When it happened the second time, the landlord asked the tenant to be on time with rent. After the tenant’s mother moved in, the landlord was very unhappy and complained to friends, but didn’t take action. When the tenant failed to pay rent in the fifth month, the landlord was left wondering what to do next. Was there a special form that should be sent? Should a lawyer be consulted? Would a court want proof of the problems that the landlord was having?

The landlord with an eviction plan sent the tenant a Demand for Rent notice and applied a late fee (as outlined in the lease) the very day that the third month’s rent was late. When the tenant was late in the fourth month, and moved her mother in, the landlord sent three notices and used a process server to deliver the notices, which required the tenant’s signature acknowledging she received the notices:

• Demand for Rent notice that included a second late fee
• Unauthorized Occupant notice, demanding the mother immediately vacate the premises.
• 7 Day Notice to Pay or Quit, specific to the state the rental was in, that listed each late rent payment. The notice demanded payment within 7 days, and stated that if payment was not received, the lease would terminate and the tenant would have to leave immediately.

When the tenant failed to pay rent in the fifth month, the landlord went to his local court with a copy of every notice he had sent, and filed a request for an eviction hearing.

The second landlord is already ahead, because he established a record on non-compliance and has the paperwork to prove it. He knew that he could not file for eviction without giving the tenant a chance to resolve the issues. He now has a better chance of getting paid or removing the tenant for non-payment.

The first landlord sent no notices. He will have to do that before filing for eviction. He has already suffered late rent, did not receive the fifth month’s rent, and can probably expect that the sixth month’s rent will go unpaid while he establishes a record of sending proper notices.

Reduce your risk of eviction

Landlords sometimes wonder if there is anything that can be done to avoid eviction. It’s pretty hard to manage an investment property with no rental income. So, how can you improve the chances that rent will be paid, rules will be followed, and you won’t have to evict?

The answer lies in the steps you take before even writing a lease and allowing the tenant to move into your rental.

The most important step - and one that landlords sometimes skip thinking that they can simply interview an applicant - is to order a credit and criminal background check, interview prior landlords, and demand proof of income.

In “Pacific Heights,” the tenant talked the landlord into skipping the background check. He gave the landlord a few bogus, personal references, then waved a tempting payment under the landlord’s nose - six months rent paid in advance via wire transfer.

Even if you didn’t see the flick, you can probably guess that the money transfer never came. By then, it was too late, because the landlord handed over the keys and the tenant had legal possession of the apartment. Once someone is legally living in your rental property, you cannot just kick them out.

What if I never need to evict?

Maybe you will never need to put your eviction plan in action. We certainly hope you don’t. It is an unpleasant process for landlord and tenant alike. Veteran landlords typically avoid eviction when they can, and most get no pleasure from having to evict tenants.

In some cases, a veteran landlord may decide to implement a contingency plan, such as a back rent paydown. However, violation notices MUST still be sent to the tenant, and a contingency plan should be written by the landlord and drawn up well in advance of any violations. This keeps the landlord in control of all special arrangements.  

However, even the most well-meaning landlord must consider eviction when unpaid rent impacts his or her own ability to pay the property mortgage, insurance and taxes, as well as set aside an income for himself or herself.

Since it is a very stressful process, and because the steps are deliberately complex to protect tenants from unwarranted evictions, the best approach is to prepare in advance. This doesn’t mean that you are courting trouble. Just the opposite, in fact. Writing your eviction plan ahead of time will save you from sleepless nights wondering how you will deal with unpaid rent and rule-breaking at your rental, if such a situation arises.

]]> https://www.ezlandlordforms.com/articles/educational/3/682/does-your-special-property-need-a-lease-agreement/ https://www.ezlandlordforms.com/articles/educational/3/682/does-your-special-property-need-a-lease-agreement/ Mon, 24 Apr 2017 12:17:35 GMT

Sometimes, it may seem as if a lease really isn’t necessary when renting property. There are situations that differ from the typical house-for-rent scenario. For instance, these:  

• You’ve decided to let your favorite cousin move in for a few months while he looks for a job and his own place. Your cousin wants to be fair and pay something toward room and board and, frankly, you could use the extra cash. Since it’s family, and will be for just a short time, do you really need a lease agreement?
• The two-car garage that came with your home is at the bottom of a steep backyard. Street parking is plentiful out front, and you’re not keen on trekking uphill with heavy bags every time you food shop. The bikes, mower and other outdoor gear fit nicely in the walkout basement. So, when the neighbor asks if she can park her collectible, ‘65 Mustang Fastback in your empty garage for a few bucks a month, you figure, “Why not?” You don’t need a lease agreement, right?
• Someday, you plan to downsize and build a tiny house on that acre plot outside town that you inherited from a distant aunt. Meanwhile, you let a friend with an impressive green thumb plant a large garden at the site each summer. He will give you fresh vegetables in the growing season, and he’ll throw in some upkeep so that the place doesn’t become overgrown. There’s no need for a lease agreement between friends when no money is changing hands, is there?

Yes, yes, and yes.

Each of the above scenarios describes a contractual arrangement. Someone is borrowing something of value from someone else. That cousin/neighbor/friend is leasing property. Even if there is no written document, it is still a lease agreement.

Using a written agreement doesn’t change the fact that there is a contract. It simply puts the terms in writing so there is no guessing on who said what.

Without a written agreement, each party must rely on his or her understanding of what was said. And, if they have a disagreement, a court may have to decide which party is in the right. As Minneapolis attorney Kelly Klein notes, “...the biggest problem with an oral lease is that when there is a conflict between the parties, it’s difficult to prove what the parties agreed upon.”

It is very unusual to get through an entire rental term without some questions arising. Tenants may ask whether it’s okay to have a pet or to park extra cars on the property. Landlords may have a question about whether the tenant obtained renters insurance to cover tenant possessions in case of a fire or other damage. As time passes, people’s memories fade.

Maybe your cousin forgot that you said you wanted to share your house for no more than three months. Perhaps the neighbor with the classic car leaves the garage unlocked and her car is stolen, and now she wants you to submit the loss to your insurance company. Or, you finally hire a contractor to break ground for your tiny home, only to find that your garden friend has installed a locked gate and erected a greenhouse at the site, claiming he has the right to keep planting.

Now, you’re engaged in a conflict with nothing to fall back on but your memory and maybe a text or email. You must scour any records you may have, and then hope to have an amicable conversation with your tenant.

Unfortunately, when things go bad, the property owner may be stuck with the tenant through a long and costly eviction process.

Isn’t a written lease agreement a huge hassle?

Consider the potential for misunderstandings and problems in any rental arrangement, and you’ll realize that the best prevention is a durable lease. And, yes, writing your first lease can be a little overwhelming, but the goal is not perfection.

The aim is to state, in writing, what you and your tenant are agreeing to. Many landlords create their leases, then share a draft with a tenant for input. If the tenant makes a suggestion, and the landlord agrees, the lease can be changed before signing.

Be sure to cover the basics:

• Landlord name
• Tenant name(s)
• Address and description of property
• Length of lease and whether it will renew automatically or end by a certain date
• Rent amount and when it is due
• Security deposit
• Who will pay utilities
• Any other rules, especially on the care and acceptable use of the property    

But also keep in mind that, the more you cover in the lease, the less likely your cousin/neighbor/friend - i.e. tenant - will misunderstand your expectations.

What types of rentals can be addressed with a written lease agreement?

People expect to sign a written lease when they rent out a home or office. Some states even require landlords to use written leases in certain circumstances, such as when leasing units in a multiunit property.

However, a lease agreement can be used with any space. Along with the room, garage and land examples, above, here are more examples of property rentals:

• Attic
• Barn
• Basement
• Bedroom
• Boat slip
• Driveway
• Farm
• Pasture land
• Sublease
• Undeveloped lot  

Court dockets are packed with Landlord Tenant filings, an indication of just how often frictions develop over rent, security deposits and other terms.

Having an oral-only agreement leaves both the landlord and the tenant vulnerable to court action, and a potentially long and expensive dispute. If you’re considering accepting rent for use of property that you own, minimize the chance you could end up in court with a written lease agreement.

]]> https://www.ezlandlordforms.com/articles/educational/1/680/will-swag-bring-you-better-tenants/ https://www.ezlandlordforms.com/articles/educational/1/680/will-swag-bring-you-better-tenants/ Tue, 11 Apr 2017 09:39:37 GMT

Competition for college-student tenants is so fierce in some communities that landlords and property managers have perfected the practice of offering “lease swag,” or perquisites for students who sign rental leases.

From offers of a free month's rent, to gifts like flat-screen TVs, to free shuttle rides to campus, swag is limited only by a landlord's creativity. A landlord in one small Pennsylvania town that hosts a state university offers Beats wireless headphones – worth $500 – to all students who sign a lease agreement 18 months in advance of moving in.

It isn’t only landlords in college towns who offer perks. The practice is common in some big cities, and is an option for any landlord.

Do those perks get better tenants? And how do landlords decide what to offer?

Who offers perks and how do they advertise them?

Some landlords have always offered perks to guarantee that their rental units will be filled by a certain date. They want to limit vacancies, and want to be able to count on rental income.

For others, though, offering perks is a way to draw more applicants in a market temporarily crowded with comparable rentals, or a solution to filling a higher-than-usual number of vacancies.

While investment property appears to be continuing its strong showing since the 2008 recession, there is decreasing competition for rentals in some communities. Perks are especially more likely in cities with a surge in new rental construction.

Landlords in college towns offer swag to rise above the glut of offerings, and to attract sincere applicants willing to plunk down deposits. Perks typically are mentioned upfront in order to grab the attention of those busy young adults. Often, agents follow up, calling and emailing student applicants to ask if they have made a housing decision, and reminding students of the swag that awaits them, should they sign a lease.

One very common approach to offering incentives for signing a lease within a certain timeframe is a free month in the rental. The special deal is described in listings to boost initial interest, then added to agreements at lease signing. Other perks include reduced rent over the term of a lease, added amenities at no extra charge, such as free parking for part or all of a lease term, and waived fees. Renovations are commonly offered as perks in retail and commercial rentals.

Landlords may not mention perks with the listing, but will offer them if a prospective tenant is waffling on committing to a lease. Tenants themselves may ask for perks, such as a bigger apartment for the same rate as a smaller unit or a waived pet fee.

Are there downsides?  

Some professional property managers argue that giving concessions hurts a property’s reputation. They say that a property will be seen as less appealing in a competitive market if the landlord is known to offer perks. Yet, most seem to believe that perks have their place when the landlord needs to nudge his rental ahead of the pack.

Any benefit that will be given during a tenant’s stay should be explained in the lease. For instance, if a month of free rent is offered, the lease must make it clear that rent payments will be due the second and remaining months of the term. If the pet fee was waived as an incentive, explain in the lease that a pet fee may be reinstated when the lease is renewed. (The landlord always has the option to waive the pet fee in subsequent terms as in incentive to retain a good tenant.)

Don’t promise perks you can’t deliver. For example, don’t offer off-street parking in a lot that you don’t own. Don’t promise satellite TV or wireless internet, then stop paying the bill. Landlords also shouldn’t try to recoup the cost of the free month or free amenities by boosting other fees. Tenants will resent it, and may be able to break the lease.

Recording the freebies

Keep track of receipts for the little swag you buy to advertise your rentals, items such as pens, magnets, water bottles and the like. Those expenses can be deducted at tax time.

Also, record rent amounts and amenities that you are giving so you can determine what any perks are costing you at the end of the year. You can’t deduct free month’s rent as a loss, but then again, you won’t pay taxes on rental income you didn’t receive.

It’s also a good idea to limit perks to those times when you really need an edge over competitors. In situations such as an unexpected vacancy, or a vacancy in a slow season, a little swag can be just the thing to get your rental extra attention from tenants in the market.       

]]> https://www.ezlandlordforms.com/articles/news/678/will-the-trend-with-short-term-leases-last/ https://www.ezlandlordforms.com/articles/news/678/will-the-trend-with-short-term-leases-last/ Wed, 05 Apr 2017 13:41:46 GMT

Short-term rentals are eliciting a strong backlash in communities across the nation. Officials from Los Angeles to Capitol Hill are fielding complaints and mulling new regulations as the trend in short-stay leases grows. Airbnb alone has 3 million properties listed for rent worldwide, up from 550,000 in December, 2013.

For residential owners, the chance to host strangers who want to live like locals during brief visits to unfamiliar cities is an opportunity to get ahead on their mortgage or save for retirement. To the visitors themselves, short leases can offer the most affordable vacation opportunity.

Short-term leases are used in business, too. On the West Coast, especially, tech startups and other new companies must be able to limit office and commercial lease terms so they can move quickly as business grows.

But the cost to the landlords who rent out these properties, and to the cities that host them, aren't always easily managed. Turnover is expensive and interim residents may not be invested in their temporary host town. City leaders grapple with competing interests and an overwhelmed community infrastructure.

When did the movement start?

Rooming and boarding houses were common in the 1800s and offered both workers and visitors an affordable lodging option. Amenities were few and lodgers who caused trouble for their hosts were unceremoniously evicted. The popularity of rooming houses declined as salaries rose and people came to expect more spacious living and increased privacy.

Although a number of cities still license rooming houses, and guest rooms are still rented at the YMCA in many towns, unregulated houses operate today in the shadows of authorized apartment and home rentals. Except in cities that lack affordable housing, a rooming house is seen as a last resort in housing options for all but the poorest laborers, students, and undocumented workers.

As workers became more mobile and modern transportation overcame the barrier of geography in the last century, corporate housing companies and motels with long-term residence suites began to fill short-term housing needs. These furnished suites and apartments form a thriving industry, with the housing companies often contracting directly with large companies to supply shelter for transient workers.

Then came Airbnb, in 2008, along with other online, short-term, lodging services that connect homeowners to would-be tenants. Like most disruptive technology, Airbnb and online companies that replaced the traditional rental lodging process have forced communities to rework laws.  

What's all the fuss?

Angry residents in Wilmington, N.C., crowded an elementary school recently for a special meeting on short-term lodging. Some supported the growing use of downtown homes as Airbnb sites; others were furious that neighbors turned their homes into temporary hotels for partying strangers.

A Los Angeles TV news team investigated homes listed on Airbnb and found a homeowner who didn't know her tenant was essentially an Airbnb host who appeared to be subletting the house for weeklong parties.

Attorneys with California-based Best, Best and Krieger summarize the dilemma this way: “The rise of short-term vacation rentals has eroded the affordable housing stock in many cities. Realizing there is more money to be made in short-term renting instead of long-term leasing, investors are now purchasing residential properties and repurposing them as short-term rentals.”

“In some instances, investors have purchased entire apartment buildings to create Airbnb-style complexes. The increase in short-term rentals and corresponding decrease in housing stock has created a housing scarcity, driving up rent in some cities where short-term rentals are prevalent,”  they said

Some cities, including Del Mar, in California, have simply outlawed short-term vacation rentals. Others have enacted new laws or amended existing rules.

Experts advise property owners who consider short-term leasing to check local laws before signing on with Airbnb, VRBO or other services.

Vacation rental industry will survive, but new regulations could impact cost/profit equation

Savvy property investors know that, in spite of near-guaranteed rental income, properties in vacation destinations have always brought unique challenges.

For instance, high tenant/guest turnover means greater wear and tear. Amenities that are sufficient for long-term rentals fall short in vacation properties; so, pots and pans, linens and towels, chairs and umbrellas, dishes and décor, and other items that vacationers expect will add cost for the owner. Time spent vetting tenants, creating leases and managing the property also increases.

The cost/profit equation for owning vacation rentals also must include vacancies, according to       
BiggerPockets' Trey Duling.

“Before you ever purchase a vacation home, you should look at all the monthly bills associated with the property and be comfortable enough with the total amount that you could pay on these bills even if the vacation home did not bring in any money,” Duling says.

“The National Realtors Association estimates that you should budget for 1.5% of the cost of your home to be spent on repairs and general upkeep every year. So if you purchase a $200,000 vacation home, you should budget to put $3,000 back into the property every year,” he says. “Now, if you are renting your vacation home out to short-term renters, you might need to budget a little more. Guests may not treat a vacation home as nicely as they would their own house.”

Add in new rules aimed at reducing short-term rental problems – such as new licensing and inspection regulations and potential fees – and the cost/profit equation for short-term vacation rentals could require reworking.

Lenders pose a challenge

For commercial property owners, the ability to be flexible on lease length can be a plus, especially in a market with rental space shortages. Owners can boost the monthly rent for startup tenants who want short leases – less than the usual several years or more - because expected growth will prompt tenants to leave for larger quarters in a year or even months.

Problems with neighbors complaining about parties aren't a worry for owners of office and commercial space who offer short leases, but funding can be. It's difficult to meet costs with a revolving door of tenants, and lenders are still very cautious.

Banks and mortgage companies aren't keen on lending when rental income may be unstable. That's why Nate Prouty, a senior VP with Minneapolis-based commercial lender NorthMarq, advises limiting short-term commercial leases to occupants in properties with multiple units. That way, losses connected to a vacancy in one unit can be offset by income from other units.

The need for business lease flexibility is partly behind the rise in shared work spaces. Shared work space is used by small firms, freelancers and others who want to split rent, utility and wifi bills, and even support staff or, by those who simply want to work in a communal setting. Shorter leases are possible because most co-working offices operate on a sublease basis. Temporary tenants sign contracts much like lease agreements.

Shared work spaces is one area where short-term leases are likely to grow. And numerous listing services, such as PivotDesk, LiquidSpace and others, are making it easy to find a spot to lease for brief periods.

Short-term residential leases, on the other hand, are likely to face a rocky future until communities find a workable method for regulating them. A complete ban is likely to be challenged by owners who enjoy a new way to profit from their investment. Owner-occupied residents, though, are just as likely to insist on controls.

 

]]> https://www.ezlandlordforms.com/articles/educational/1/663/how-many-applicants-will-your-rental-get-and-how-do-you-choose-the-most-qualified/ https://www.ezlandlordforms.com/articles/educational/1/663/how-many-applicants-will-your-rental-get-and-how-do-you-choose-the-most-qualified/ Wed, 15 Mar 2017 18:35:14 GMT

The perfect tenant rarely just appears on your doorstep the day you're ready to start leasing your rental property. Typically, it takes some work to find the right person, or people. But, there are established steps that can smooth the process and remove some of the mystery involved in sussing out a good applicant.

Applicants will find your rental through word of mouth, an open house, or an ad or online listing. Have a process ready for gathering their contact information. Dated sign-in sheets requesting a name, email address and phone number are perfect for an open house. It's also a good idea to start a file, and then make an entry with a date, name, email address and number each time a potential tenant calls.

Set your expectations for the rental in advance. Decide how many people it can comfortably accommodate, and figure out the monthly income an applicant must earn to cover the rent. The most commonly shared formula is 3-to-1, that is, the combined income of all tenants who will be living in the unit should be three times the monthly rent.

Have these expectations in mind as you collect applicant information. That way, if a family of six applies for your one-bedroom unit, you'll know not to bother sending them an application. If a tenant sends an application listing income that barely exceeds the rent, you'll save yourself and them time by immediately ruling them out. 

What is a good number?

You only need one good applicant to fill your rental but if you only receive one application, you may be doing something wrong. You should also be concerned if you are flooded with applications.

Clients of property management software company Rentec Direct received an average of three to four applications per vacant unit in early 2017, according to company President Nathan Miller. However, the Oregon-based company that serves owners across the nation found a broad range in that time.

“We reviewed some statistics from 5,236 rental applications received during the first two months of 2017,” Miller said. “Of those applications, 56 percent of the units we rented after receiving just one application. The remaining units received between 2 and 63 applicants per unit. The average overall was 3.54 applicants per unit to find and place a tenant.”

Time of year and rental unit features will have an impact on tenant interest. Rentals that permit pets and forbid smoking tend to draw the most interest, and interest in units in college towns is likely to peak in Spring.  

If you are so overwhelmed by applications that you can't possibly review them all, and you're not in one of the top rental markets, it may be that you priced the rent way too low. Compare the rent to that charged at similar properties and adjust upward. If you set rent too high, you can always lower it in $100 increments.

Applications are the first step

Email or hand out paper applications that collect their basic information, such as name, date of birth, and other identifying information. They will list their income, work history and current employment, number of pets and vehicles. Also, they'll share current financial obligations and whether or not they've ever been evicted.

This data will form the basis of your decision on whether or not to proceed with a background check on an applicant. The information is volunteered by the applicant, and it is not confirmed by an objective party. However, it will give the landlord a starting point for deciding whether to proceed.

An incomplete application, or one that arrives long after the applicant promised to send it, can be a red flags for the landlord. People who are earnest about applying to your rental and believe they are qualified to live there will typically meet or exceed deadlines to share their information.

Tenants vs. occupants

Everyone who lives in a rental will be an occupant, but not all occupants will be a tenant. Typically, tenants are those who sign the lease agreement and are responsible for rent payments.

Occupants, meanwhile, are anyone else who will be living in the rental unit. They include all children and extended family members such as grandparents. 

Each adult who wants to live in your unit should complete an application, even if they will not be helping to pay rent, such as an adult child who will be attending college. Landlords have a duty to learn all they can about all people who may occupy an investment property. That's because property laws give tenants the right of legal possession during the lease period.

Although an adult occupant may not sign the lease and pay rent, they will share possession with tenants and therefore should meet a landlord's expectations for conscientiousness and responsibility.

Screening backgrounds is critical

Narrow the pile of applications to several which appear to have the best qualifications to live in your rental. Don't dispose of the others just yet.

Order background checks, or screening, on applicants using a reputable service. A thorough screening will supply a credit score, a complete record of credit accounts and payment history, bankruptcy proceedings and eviction judgments. It will also show possible criminal records.

Screenings carry a fee, and some services will collect the fee directly from applicants. This spares landlords from having to handle money.

Screen every single adult who will live in your property, whether they will be listed as a tenant or an occupant. The cost more than pays for itself by supplying background information that is critical to making a good leasing decision.

Look favorably on applicants who quickly respond to your request for screening. They are interested and believe they are qualified for your unit.

In years past, landlords were required to get a signed authorization form from applicants, giving the landlord permission to check the applicant's background. It was also common for landlords to collect an applicant's social security number in advance. Both of those practices have been largely abandoned. Many screening services now require only an applicant's name and email address and, as part of the screening, verify an applicant's identity.

Narrow the field

Background reports allow the landlord to choose the most qualified applicants. Review credit records and be wary of a record of late payments or bankruptcy. Ask applicants to explain any criminal records that may be returned. They may or may not be the same person. Eliminate those who are unqualified. 

Many landlords are quick to dismiss an applicant with a so-so FICO score. Others weigh the FICO score against bill-paying habits, income and employment history. Keep in mind that those with top FICO scores may be more likely to qualify for home purchase, and may not pursue rentals. 

Business Insider states that a score between 679 and 739 is good and that any score of 579 or less is poor. Yet, an applicant with a score of 579 who has been screened with, say, a spouse with a score of 745, may be a good choice.  

Although landlords have the right to expect applicants will have enough income to cover rent, beware of setting standards that violate anti-discrimination laws. It is illegal under the federal Fair Housing Act to refuse to rent to applicants based on their race, religion, disability, gender, family makeup such as having young children, or other features.

Call references and former landlords and request proof of income

Asking for potential tenants' rental history isn't just a way to flesh out an application. Landlords must call those former landlords and ask if tenants paid rent on time and took care of the rental property. Experts recommend calling at least the last two landlords.

Likewise, tenant references should be contacted and interviewed. Finally, request pay stubs from the last two months to verify income, even if you have already verified that the applicant is employed.

After completing the above steps, you may have more than one top candidate. The decision then comes down to choosing the first qualified candidate. Many landlords also perform a quick gut check. It's important not to get personal or allow emotions to govern property management; landlords don't have to enjoy a tenant's company. However, the landlord should explore any information that gives him or her a feeling that something is not quite right.

Notify applicants you've made a decision

Let potential tenants know that you have accepted their application. It's best to do this with a phone call or a message that requires a reply, so that you can schedule lease-signing with them. It's a common practice to tell applicants that you screened but you haven't chosen that another candidate has been selected.

Set a deadline for lease-signing so that if the applicant decides not to rent your property, you can quickly move on to the next qualified candidate.

If you collect a hold deposit because the tenant cannot move in immediately, be sure to set a deadline for the lease to be signed and for the first month's rent to be paid. Many states have rules on handling hold deposits so be sure to follow them.

Now, you're ready for the big move-in. Give yourself a pat on the back. Vetting tenants is a complex and lengthy process but it gets easier with time.

]]> https://www.ezlandlordforms.com/articles/educational/5/662/how-do-you-know-it-s-time-to-renovate-and-will-improvements-allow-you-to-raise-the-rent/ https://www.ezlandlordforms.com/articles/educational/5/662/how-do-you-know-it-s-time-to-renovate-and-will-improvements-allow-you-to-raise-the-rent/ Tue, 14 Mar 2017 09:43:39 GMT

Landlords typically clean carpets, repaint and make minor repairs when a tenant moves out and before a new tenant moves in. At some point, however, addressing normal wear and tear just isn't enough to give a rental the facelift it needs. In that case, it may be time to consider a serious renovation.

How much work should a landlord perform to update a rental property? And, will the work merely keep a unit competitive, or do upgrades merit a rent increase?

The project scope, feasibility, timetable and return on upgrade investment each require careful consideration before taking a plunge into an overhaul of an investment property.

Will the work be cosmetic, structural or both?

The amount of work you undertake depends on the age of the unit and the date of the most recent upgrades. A home that hasn't been updated in 20-plus years may need a systems overhaul, especially if it has been a rental property for much of that time.

Plumbing and electric should be evaluated by a professional for wear and compliance with building codes. The life expectancy of a roof ranges from 15 years to more than 30, depending on the materials used. Older homes also tend to have less efficient heating and cooling systems. Windows and doors, and inadequate or worn out insulation, allow heat to escape.

Once any structural repair and replacement needs are established, it's time to make an honest assessment of the unit's appearance.

Compare your rental to nearby units, and ask yourself how it measures up to properties that are renting for more than you currently charge. Do the more expensive units offer more storage? Are hardwood floors refinished? Do they just look nicer from the outside than yours? If so, consider cosmetic improvements, especially those that modernize kitchens and baths.

Improvements that boost natural light and open up rooms will put your rental in a completely different category than rentals that are dim or appear crowded. Typically, opening up a floor plan requires removing a wall, or walls, and rethinking room layout. Yet, opening rooms could be a matter of merely adding lighting, removing window treatments to let in natural light, decluttering or downsizing any furniture included in the rental.

Can You Afford to Renovate?

Remodels can be funded with money you've set aside through the years for just this purpose. Otherwise, if you've built up enough equity to borrow against your rental property, and loan payments fit in the budget, then it's time to shop loan rates.

Be sure to factor in the loss of rental income, both during the renovation period and over the time it takes to advertise, screen applicants and get a new tenant.

Don't try to save money through buying cheap paint, flooring and other materials. Rentals must be durable enough to withstand the frequent moving in and moving out. Although many tenants will treat your unit with care, others will slam doors, ding walls and scratch floors. Choose materials that will last through heavy use.

The next step is to get project estimates. Nearly every landlord will put in some labor on his or her investment property, even if it's simply carting debris to a Dumpster. However, unless you are a tradesman, or know one who's willing to closely supervise, save the big projects for the pros. You'll control costs by fully discussing the project in advance, setting a time line with your contractors, and having them sign a contract that includes discounted fees for work that is not performed by deadlines.

Decide on a schedule.

Flexibility is key. Some rooms simply require more time to remodel than others. Rather than hoping the work will go faster, plan on the project taking slightly longer than estimated. And be ready to adapt when delays, or opportunities, come up.

A Pittsburgh landlord began overhauling his four-unit property in the city's North Side when it was clear that the 1960s build was no longer competitive with other rentals in his neighborhood. Among other changes, he updated fixtures and laid ceramic tile floors in the kitchens and baths. He replaced sliding glass doors off balconies, refinished hardwood floors, added storage and updated light fixtures and switch plates.

He planned to spread the project over two years, both for his budget and because it had to be planned around vacancies. Midway through the work, however, the sister of a mutual acquaintance moved to the city for a new job. She needed a place that was a little less than going rent and wasn't picky about amenities.

The Pittsburgh landlord made a calculated decision to delay upgrades on one of the units. He agreed to rent it to the newcomer for $775 a month, more than 20 percent less than the $1000 he was charging for upgraded units. He also included a clause in the lease that laid out a schedule for repairs. This alerted the tenant to expect regular visits that involved noise and inconvenience.

The landlord's flexibility benefited all involved. Delaying upgrades on one of the units postponed costs, and maintained rental income. It also allowed him to work at a more casual pace, which would be important if he encountered unexpected work elsewhere in his building.

To get a head start on work, you or your contractor can start applying for building permits before units are vacant and ready for remodeling. Having permits in hand will eliminate paperwork delays.

How much more rent?
When investor and blogger Paula Pant finished a major renovation project, she raised the rent by 40 percent – from $750 to $1,050 – but found she was still undercharging. She realized this when she was flooded with tenant applications.

So, she boosted the rent to $1,150 the next time the unit was vacant. She still received overwhelming interest before selecting a tenant. Finally, the next time it was vacant, she advertised the rent at quite a bit more – $1,750 – and then dropped it a little each week until she was fielding between five and 10 inquiries a day. The new rent is $1,490, nearly double the original rent before renovations.

Not all landlords will see that kind of rent increase, but Pant put more than $17,000 into her unit. More often, renovations will run between $5,000 and $10,000, and rents will increase between 10 percent and 30 percent.

There are limits on how much the rent can increase. No matter how expensive the remodel and no matter how beautiful the unit looks in the end, tenants must be able to afford it and must want to live in your rental neighborhood.

Track nearby rents throughout the remodel process to see what comparable properties are charging. If your unit is truly better, try a higher rent, but be willing to come down in price if applicants aren't biting.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/661/can-i-add-that-clause-to-my-lease/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/661/can-i-add-that-clause-to-my-lease/ Thu, 09 Mar 2017 15:54:23 GMT

With hundreds of thousands of landlords across the United States, there are few tenant issues that haven't been encountered by someone, somewhere, at some time. And out of those experiences come new lease clauses.

At the very least, rental agreements or leases – terms we use interchangeably here – cover dates, rent and security deposit amounts and who pays utilities. Clauses modify and expand those basic terms, just as they do in any contract. A clause can be a short sentence setting out a rule about parking. It can be a complete addendum that lists requirements, and any no-nos, for the handling of trash and recyclables.

An addendum (more than one and they're called addenda) is simply an addition to the other terms in the lease. They are attached at the bottom of the lease because they typically contain too much information to be added in a sentence. A tenant is expected to sign or initial addenda when adding his or her signature to the lease.

Clauses and addenda can make things clear for both the landlord and tenant. They strengthen rental agreements and protect both parties from misunderstandings as long as terms do not violate state or province laws. When clauses and addenda are violated, the parties have a recourse, or the right to turn to the courts for justice.

Which clauses or addenda should I use?    

There are three important areas to consider as you select the appropriate clauses and addenda for your lease:

• Location and demographics. Is your rental property in a college town where students are apt to be your tenants? If so, you'll be a step ahead with an addendum that lists rules on parties. Do you live in a big city where many people are likely to be sharing common space with your tenants, such as parking, courtyards and laundry facilities? If so, a clause that explains how those spaces must be shared would enhance the rental agreement. And any city will have bed bugs, no matter how clean the property, so a bed bug addendum is the perfect tool for stating exact steps tenants must take if they confront that problem.
• Rental property features. Does your rental have amenities like a pool, wood stove or generous parking that would allow multiple cars, a boat or RV? Each of those features can be abused unless rules for their use are listed in a clause or addendum. If you agree that a tenant with professional tradesman skill may paint, repair or perform other renovations on your rental property in exchange for reduced rent, an addendum can specify the work that will be done and a schedule for its completion.
• Past Experience. Many landlords adjust their rental agreements after each tenant. Why? Because they confronted a new situation with the last tenant and learned that they need to be better prepared. Perhaps the last tenant had a friend visit; the friend stayed for weeks, then months, but never paid any rent. Or, the tenant said there would be one small dog living in the unit, but then acquired two new, much larger dogs. A guest addendum and pet addendum, respectively, could be included in future leases so that if those situations come up, the tenant knows where the landlord stands.

Can you make your own addenda?

What if the typical clauses and addenda don't cover an issue you faced with your last tenant, or a feature on your rental property? Then, you design your own.

Wording of a custom addendum is a personal matter but must address a specific issue and clearly list the rules and the consequences for violating them.

For instance, if an area of the property is off limits to the tenant – say a basement, attic or closet – then a clause could state that those areas may not be used by the tenant. Maybe you have extensive landscaping that you don't want the tenant to disturb; spell it out in a clause. In fact, an addendum is the perfect tool for laying out your expectations for care outside the home, both with mowing the grass and timely snow shoveling.

If an issue crops up after a lease has begun, you can still add a clause or addendum. You will just need to send your tenant written notice of the change, preferably with a lease amendment, and then get your tenant's signature on the new amendment.

Remember that a lease is not a static, unchanging instrument. It is meant to be updated over time. So, with each new tenant, review the agreement you used with the last tenant. Look for holes that need to be filled with a new clause. Search for areas that could be better worded so there is no confusion over what is expected.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/658/are-rental-lease-rules-really-different-from-state-to-state/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/658/are-rental-lease-rules-really-different-from-state-to-state/ Wed, 01 Mar 2017 17:47:52 GMT

Did you know that if you are a Pennsylvania landlord with a tenant who hasn't paid rent - and your written lease agreement states that no notice is required to evict for non-payment of rent - that you can legally start the eviction process without sending your tenant a notice?

Yes, that's allowed by Pa. law.

But you'd better not try that in the adjacent state of New Jersey. Rights of tenants in the Garden State cannot be waived. A N.J. lease agreement that declares tenant rights are waived, even if the tenant signed the lease, is unenforceable.

In the U.S., some lease basics are addressed in federal laws. For instance, tenants must be informed in writing when lead may be present, and landlords must follow rules on fairness in evaluating potential tenants. On top of that, all 50 state legislatures have the power to expand on federal guidelines, making state-specific leases a real necessity.

What sort of rules do different states have?

Some states, such as California, have sweeping landlord tenant laws that add very specific regulations for leases. Other states have very general rules with one or more specific regulations. See the list below for examples of individual state requirements.

Michigan landlords, for instance, must take an inventory of the contents of rental units and must give the tenant two copies of that list before the tenant moves in. The idea is that tenants can note the condition of any landlord possessions in the unit. After the tenant moves out, the landlord must go through the rental and write down any damages on his own inventory list.

There can be as much difference in states' landlord tenant laws as there are differences in states' landmarks, geography and culture. It makes sense when you think about it. In Florida, where cases of mosquito-borne illness drew the greatest attention recently, landlords must, by law, check and replace punctured window screens every year.

And, each year, lawmakers add new rules or change existing rules. These rules may take effect Jan. 1 of a new year or later in a year. Michigan lawmakers enacted a change in 2016 that starts April 1, 2017: Landlords can forbid the cultivation or smoking of marijuana for medical use as long as that prohibition is written into the lease.

Who keeps track of these landlord tenant law changes?

Attorneys who specialize in landlord tenant law follow changes made in laws. In most cases, attorneys specialize in the law in their own state. They and their staff follow changes and often must research whether changes apply in every rental case.

Even when state legislatures vote to add or remove guidelines on lease agreements, those guidelines are regularly tested in courts.

For example, the state Supreme Court in Iowa last year ruled that landlords could not automatically charge a carpet cleaning fee when tenants moved out of a rental. This had been a long-standing practice. However, the Supreme Court affirmed a district court ruling that found an automatic carpet-cleaning fee violated Iowa's landlord tenant laws.

If an Iowa landlord keeps this clause in a lease, the tenant has no obligation to pay the cleaning fee. And if landlord ends up in court over another matter (say the tenant owes back rent), the unconstitutional clause could weaken his case.

Landlord Tenant Law examples:*  

In addition to the state examples cited above, here are just some of the rules that other states have for lease agreements:

Alaska – Security deposit rules are different for rents below $2,000 a month and above $2,000 a month. Alabama – Bad check fees can't exceed the amount charged by the landlord's bank.
Arkansas – Bad check fees can exceed the amount charged by the landlord's bank by no more than $25.
Arizona – Out of state landlords must have an in-state agent to handle tenant notices.
Colorado – Leases can require tenants to purchase renter insurance.
Connecticut – Landlords must give at least 30 days’ notice to end or renew a lease.
District of Columbia – Tenants must be given copies of leases and all addenda within 7 days of signing.
Delaware – Notice to renew or end a lease must be given on the first day of the month preceding the last month of tenancy.
Georgia – The amount of notice needed to renew or end a lease is completely up to the landlord, but dates must be stated in the lease.
Hawaii – Tenants can sublet without permission unless the landlord writes a lease forbidding subletting.
Idaho – Landlords must bank security deposits separate from rent payments.
Illinois – Landlords cannot deny a reasonable subletting request.
Indiana – Leases that are for three or more years must be filed in the county recorder’s office.
Kansas – A pet security deposit may not exceed half the amount of monthly rent.
Kentucky – Landlords must list all existing property damage and cost to repair before tenants move in.
Louisiana – No state law forces landlords to allow tenants to sublease.
Massachusetts – Landlords can add the cost of buying and installing a new lock when collecting the first rent and security deposit.
Maryland – Lease must include landlord's address and phone number. It's illegal to require upfront payment of the last month's rent    
Maine – Notice to end leases, no matter how long the term is, must be 30 days unless the lease states otherwise.
Minnesota – Every tenant who has signed the lease must get his or her own copy.
Missouri – Notice to end a year lease must be given at least 60 days in advance.
Mississippi – No limit is placed on security deposit amounts but the law says it must be “reasonable.”
Montana – If heat is included in rent, the landlord can't turn it off between Oct. 1 and May 1.
North Carolina – Landlords must give tenants written notice of the name of the bank holding a security deposit.
North Dakota – Even if a lease has an automatic renewal clause, the landlord must still tell the tenant it will renew, through 30 days’ written notice delivered personally or sent via first class mail.
Nebraska – Security deposits cannot exceed the amount of a month's rent.
New Hampshire – Landlords must tell new tenants in writing that, if any repairs are needed, the tenant must give the landlord a written list within five days of moving in.
New Mexico – If the lease is for one year or less, the security deposit may not exceed one month's rent.
Nevada – Every fee charged to a tenant must be explained in the lease with the reason it is required.
New York – Landlords are prohibited from accepting only electronic rent payments.
Ohio – Landlords must pay the tenant interest earned on any security deposit amount greater than one month rent.
Oklahoma – A tenant's security deposit must be held in an Oklahoma, federally insured bank.
Oregon – Landlords must hand out a written list of all rent and fees before a tenant signs the lease and before accepting any payment.
Rhode Island – Out of state landlords must register with the township or city, and with the Rhode Island Secretary of State.
South Carolina – Written names and addresses of all people who will act as the landlord’s agents must be given to tenants before move-in.
South Dakota – Landlords may increase rent or make other lease term changes with 30 days’ notice. However, tenants then may end the lease on the first day of the next month by giving notice to the landlord within 15 days of receipt of the landlord's notice of modification.
Tennessee – This state's landlord tenant law applies only to some counties (those with 75,000 or more residents) and doesn't apply at all to commercial leases. However, other consumer laws may apply to commercial leases and leases in counties with fewer than 75,000 residents.
Texas – Strict rules on placement and regular upkeep of smoke detectors include this one: A smoke detector designed for the hearing impaired must be supplied at no cost to hearing impaired tenants who request them.
Utah –
Virginia – Like Tennessee, this state also exempts certain properties from adhering to its landlord tenant laws, but it is not based on location of the unit. It is based on how many and what type of rentals a landlord owns. Again, other laws may apply to lease agreements.
Vermont – Authorities in individual towns should be consulted for limits on acceptable security deposits.
Washington – Leases must be notarized if they are for a period longer than one year.
West Virginia – Late fees, security deposits and some other payments must be “reasonable.”
Wisconsin – Leases must include a security deposit disclosure form and property checklist.
Wyoming – Landlords do not have to allow subletting but, if they do, they may not charge a sublet fee.

*This list is not all-inclusive. States have many additional requirements for rental lease agreements.

]]> https://www.ezlandlordforms.com/articles/educational/2/657/real-estate-investment-and-the-trump-effect/ https://www.ezlandlordforms.com/articles/educational/2/657/real-estate-investment-and-the-trump-effect/ Sun, 19 Feb 2017 19:41:38 GMT

Landlords across the nation had a unique perspective last year when it became clear that one of their own would be moving into the White House. Real estate investors couldn't help but hope for an income boost since, while the new president's current financial success is closely tied to branding efforts, his family built its fortune on New York residential real estate.

Hopes for cuts in taxes and reduced government oversight excited investors and capitalists of all stripes, writes the New York Times' Gretchen Morgenson.

“When Donald J. Trump won the presidential election, investors seemed positively giddy about what he was going to do to improve the nation’s economy. Believing that his promises to reduce corporate taxes and curtail costly regulations would unleash economic growth, investors pushed stock indexes to new heights,” writes Morgenson.

Some accounts have warned that the so-called “Trump Bump” in investor optimism could be short-lived, especially under fickle White House policies. Also, Trump policies could affect real estate investing in different ways, depending on whether investments are in commercial or residential property, and depending on investment location.

As Real Estate Research Corporation President Kenneth Riggs Jr. writes, in Pensions and Investments, the Commercial Real Estate Market (CRM) could see elevated risk.

“The president's protectionist stance on trade and the refugee crisis have generated concerns about global economic growth, giving investors pause. In the CRE market, the president's opposition to illegal immigration, as well as the high percentage of illegal immigrants in the construction industry, might exacerbate existing construction labor shortages,” writes Riggs.

Instead, Riggs writes, “Alternative property types, such as student housing, storage (and) medical-related assets are gaining appeal.”

Could residential be the safest real estate investment?

If the Federal Reserve continues to implement higher mortgage rates in 2017 - rates have already risen a half point this year - potential home buyers will have to delay purchases. And those future homeowners also may have to save a little longer to afford home insurance following the Trump administration's suspension of the Federal Housing Administration's insurance premium reduction.

Those factors are encouraging for a rental housing market that has been going strong since the economic collapse in 2008. When fewer people can afford to buy homes, the tenant pool expands. 

Plus, the new White House has promised to continue the spark in job growth that started under the previous administration. Trump made job growth central to his election platform, and has demonstrated a willingness to fight efforts to move jobs out of the U.S.

As Axiometrics' Chuck Ehmann notes, there is a strong correlation between the rental market and job growth, with the top markets continuing to be New York, Dallas, Atlanta, Los Angeles, Boston, Denver and Riverside.  

What about Real Estate Investment Trusts (REITs)?

Investment expert Brett Owens claims that REITs are poised to withstand any Trump effect. He says that the investment vehicle is protected from potentially higher rates, thanks to efforts to cut debt.

And, he writes in Forbes, REITs continue to routinely outperform stock yields.

“REITs would benefit if Trump’s tax and infrastructure plans goose U.S. gross domestic product, which already grew at a healthy 3.5 percent clip in the third quarter,” of 2016, Owens writes.

The real estate market in general is bound to benefit from a Trump White House, according to Rentec Direct President Nathan Miller.

“The Trump presidency will flat-out improve the real estate market... The reasoning is pretty simple: Trump is a real estate guy and his mentors, policies and cabinet are going lean in the direction of real estate investments. Real estate is a market Trump knows well, so whether it's a conscious decision or not, his moves in the White House will improve the real estate market.”

How important is location?

Geography may be one limiting factor in property investment purchases, although it isn't yet clear how this will play out.

The president's real estate investments aren't limited to New York. That may be the home base for the family's investments, but Trump has expanded real estate investment outside that state and abroad to the extent that Forbes refers to him as a “global real estate man.”

But for the rest of us investing stateside, there could be winning and losing regions for property investment if Trump proposals on immigration become rule.

For instance, as Riggs points out, relying on illegal immigrant labor for construction could be dicey. And landlords in communities with higher-than-average immigrants, such as Los Angeles, Miami and Chicago could see a reduction in potential tenants.

Should you take the leap?

Ultimately, the combination of less regulation on lending, business-friendly legislation and potential volatility in the stock market as a result of Trump policies could make 2017 a good year to become a landlord. However, factors to consider go beyond the current climate in government.

Property investment – especially for a hands-on landlord – continues to require oversight. It is not a set-it-and-forget-it enterprise.

Careful screening of potential tenants, a sturdy lease that meets state laws, routine communication with tenants and rental unit inspections will continue to be minimum requirements for successful property management.  

]]> https://www.ezlandlordforms.com/articles/educational/3/653/my-tenant-backed-out-of-the-lease-now-what/ https://www.ezlandlordforms.com/articles/educational/3/653/my-tenant-backed-out-of-the-lease-now-what/ Thu, 22 Dec 2016 09:43:00 GMT

You gathered a pile of applications for your rental property. You narrowed it to several finalists and, after screening a few backgrounds, you finally settled on the best candidate for your next tenant.

Now, that tenant is backing out of the lease at the very last minute. What should you do, besides tearing your hair out?

It depends on whether or not the tenant signed your lease agreement, and whether you obtained a Hold Deposit. Also, did your lease include an Early Termination clause?

Know the answers to these questions before reading further - they matter!

Unsigned lease with no hold deposit

If this is your situation then, briefly, you'd better start advertising for another tenant ASAP.

That's because a written lease is useless unless the tenant actually signs it - even if the tenant read through the lease and verbally agreed to sign it in the future. (A verbal lease, by the way, is never a good idea for many reasons, and it typically can only be enforced if the tenant moved in or paid the landlord.)

Landlords who share a draft of their lease for tenant feedback may find themselves especially disappointed when, after revising terms to incorporate a tenant's suggestions, they get word the tenant is not taking the unit after all. Just as frustrating is the tenant who demands upgrades before moving in, only to cancel at the last minute.

The lesson here is that lease concessions and rental unit improvements should happen on the landlord's timeline, not to meet the demands of potential tenants. Wait until the ink is dry on the lease before repainting, replacing flooring, or making other improvements that a potential tenant requested.

Unsigned lease with a paid hold deposit

The lease hasn't been signed but you have collected a hold deposit. Good for you! This money is not the same as a security deposit, although some landlords agree to transfer hold deposit money into a security deposit account AFTER the lease is signed.

A hold deposit is just like a reservation fee paid to guarantee a hotel room, cruise trip, or other high-ticket item. It is a refundable fee that either gets returned to the tenant after the lease is signed, or is applied as a security deposit or rent payment. The key here is to provide the tenant with a written receipt and a disclosure that describes the terms of the hold deposit.

If the tenant backs out, he or she forfeits the hold deposit. The exception is in cases where the rental property is Section 8, federally subsidized housing. In those situations, the landlord may be required to refund the hold deposit even if the tenant backs out.

Tenants who pay hold deposits are far more likely to carry out their plans to move in, which is why landlords collect the fee. Be sure to send a follow-up notice to the tenant who backed out, explaining that he or she has relinquished rights to the money.

Signed lease

The tenant who signed a lease then backed out must immediately pay a year's worth of rent, and the landlord can just leave the unit vacant and collect the money for the next 12 months, right?

WRONG!!

It is true that the tenant is legally obligated to honor the contract but, in many states, the landlord must try to find another tenant to rent the property. Landlord mitigation laws spell out these different requirements.

Until a new tenant can take over the rental, the former tenant is on the hook for rent. In fact, in some states, the tenant who backs out may have to pay the landlord's cost to advertise the property. Yet, the landlord has responsibilities, too, and is expected to make reasonable efforts to find a new, qualified tenant.

It's in the landlord's best interest to move quickly through anger or disappointment and focus on finding a good replacement tenant. Don't let emotions get the best of you or dwell on what might have been. Indeed, a tenant who backs out at the last minute is probably an occupant the landlord would be better off without.

Early termination clause, security deposits, and how to move on

A strong lease includes provisions for all possible circumstances, including a tenant who wants to end the lease before it expires. These addenda lay out, in advance, what will happen if a tenant moves early.

Many landlords write early termination clauses into their leases; the clauses call for a one-time charge to the tenant. This means that, even if the landlord is able to find another occupant for the property, the tenant who's leaving must pay the early exit charge.

Security deposits are handled somewhat differently. Most leases define a security deposit as a refundable payment that can be partially or fully used to repair damages caused by a tenant. These are damages that go beyond simple wear and tear. Some states require the landlord to hold the money in an interest-bearing account, and to provide tenants with a statement showing the deposit and interest rate that will be earned. When the tenant moves out, the landlord must itemize any security deposit amount that won't be returned to the tenant and the reason for the deduction. The money must be returned quickly. In California, for instance, any deposit that is being returned must be given to the tenant within three weeks.

Landlords may be tempted to keep security deposits paid by a tenant who backs out of a lease at the last minute, but this could be illegal unless lease terms and laws for your state allow you to use security deposit money for unpaid rent. Since security deposits are set aside, in part, to cover property damages, you may be taking an unnecessary risk if you keep it when the tenant never moved in.

Property management, like any business, is filled with risks and disappointments and some are greater than others. Maybe you really liked the tenant who backed out. Or, perhaps, you were counting on rental deposits to begin and you'll have to scramble to make up the lost income.

However irritating this setback may be, it is not a landlord's job to “teach the tenant a lesson” but to minimize losses and get back to business. Your business is real estate investment and your profits come from keeping your properties rented, not spending time and money on court battles. If the tenant who backed out has a decent reason for doing so, it is probably in your best interests to let them go. Start sending out new applications, contact previous applicants to see if they're still looking, and schedule showings as soon as possible. On the plus side, at least you won't lose time prepping the rental unit since it's already ready to go.       

 

]]> https://www.ezlandlordforms.com/articles/educational/4/652/why-does-eviction-take-so-long/ https://www.ezlandlordforms.com/articles/educational/4/652/why-does-eviction-take-so-long/ Tue, 13 Dec 2016 09:30:42 GMT

You want your tenants out and you want them out today. You have been more than patient, your tenants are taking advantage of you, and things are only going to get worse.

So, why can't you just kick them out immediately? Wouldn't any judge understand that eviction is appropriate under these typical scenarios?

• Tenants haven't paid rent in months.
• Tenants let other people move in and never told you or asked permission.
• The last time tenants let you in to inspect, you saw the unit was trashed.

These examples – among many others – are lease violations and landlords do not have to put up with them. And, yes, action is definitely called for. Unfortunately, far too many landlords make wrong assumptions about the action they are permitted to take.

No matter how negligent, rude, unfair or expensive a tenant or lease violation is, and no matter how long it has gone on, there are certain legal steps the landlord must take. Taking shortcuts or trying to “get back” at a tenant will backfire. Without taking the proper steps, a landlord cannot:

• Change the locks.
• Place tenant possessions on the curb.
• Ask the police to remove the tenant.
• Enter the rental unit without notice.
• Threaten the tenant with harm.

But my friend heard that it's okay to...

Oh, if we had a quarter for every time we heard that. Everyone who's watched an episode of TV’s “Judge Judy” thinks they know the law, but Judge Sheindlin does more than interpret law. She also exercises wisdom gained through her 40 years on the bench.

How many of the friends or family members offering you eviction advice have that kind of resume?

Landlords certainly need support, because property management is a tough job and not everyone is cut out for it. So, the smartest thing you can do when you seek advice on evicting a tenant is to choose a reliable source. For some, advice will come from a lawyer. Others will study their community's landlord tenant laws. Often, other, experienced landlords share their experiences.

The very best source on how to evict a specific tenant is the lease that the landlord and the tenant signed. (For rentals that are occupied by someone who never signed a lease, see “Have they established tenancy?” below.)

A good lease defines how unpaid rent shall be handled. It establishes fees and other consequences for lease violations. It is legal proof that a tenant agreed to certain rules and now is breaking them. When a tenant is evicted, the lease will be referred to again and again by the landlord, tenant and court.

It can take time to evict, but landlords do have some control over how quickly things happen. It depends how quickly the landlord takes action.

Notices, notice, notices...

When you forget to pay the electric bill, what does the utility company do? They send a notice. When a book you reserved at the library comes in, the librarian calls or emails a notice. When folks don't get around to shoveling snow from city walks, the municipality sends a notice.

None of these entities wait to see what might happen. They don't watch the calendar and count the days that go by, hoping you'll realize that your bill/book/snow needs to be taken care of.

Landlords, however, are often guilty of playing the waiting game. Sometimes, the landlord will call or drop by the unit and verbally remind a tenant that rent is overdue. They may send the tenant an email or text. Those measures have no teeth. They offer little or no proof that steps have been taken.

A written notice should be prepared immediately after a lease violation, and should be given to the tenant. This isn't the landlord getting nasty or pushy; instead, it is the legal way to establish proof that the landlord has noticed a violation and has informed the tenant. It is the step that a judge, lawyer or court official will expect to see before eviction complaints can be filed.

Plus, the written notice starts the clock on an eventual eviction. If the notice doesn't motivate the tenant to pay overdue rent or fix other violations, the way is cleared for the landlord to file an eviction complaint in court.

But my tenant won't answer the phone and hides every time I come over

Notices can, in most cases, be delivered in person, posted on the door of the rental unit, or sent by certified mail. The person delivering the notice completes an Affidavit of Service, or a signed statement declaring that they have delivered the form.

There's also a great procedure that can be used in cases where a tenant is playing possum. It's called process serving. A private process server or a deputy working for an elected sheriff is paid to personally deliver the written notice to the tenant.

Fees average $60 per notice served. The cost depends on how quickly a notice must be served and how many times a server must visit the property to connect with the tenant. If that fee sounds steep, think about the mounting total of unpaid rent.

In most cases, the landlord who wants to evict will need to show proof that the written notice was successfully delivered to a tenant. A process server can help meet that requirement. Another advantage with using a server is that a tenant who is handed a notice by a process server no longer doubts that the landlord is serious.

Have they established tenancy?

What if the landlord wants to evict someone who was never approved as a tenant in the first place? Many landlords think that the law is completely on their side if the person they want to evict never signed a lease. They think situations like these give them the automatic right to evict:

• Person is squatting in the rental property.
• Person is living there on a verbal agreement.
• Person stayed behind when a former tenant moved out.
• Person is a family member for whom the landlord briefly provided a place to stay.
• Person is a friend who briefly needed a place to stay.

But here's the fact: Nearly anyone who is living in a rental has established tenancy merely by living there for a time. Each community may have different rules, but conditions that are considered in determining if someone is a tenant include whether they:

• Pay rent
• Receive mail at the address
• Moved their possessions into the unit
• Have lived in the unit for 30 days or more
• Have no other residence

If a squatter, or a guest of a prior tenant, or any other person meets the tenancy definition, the landlord must send them written notices that the “lease” arrangement will not be renewed and that the “tenant” must move out. Required notice typically is between one week and 30 days.

How do I avoid tenants who don't pay rent and trash my rental?

Great question! A thorough background check on your potential tenants will save you heartache; do it before signing your next lease. This importance of this step cannot be overstated.

Then, write a solid lease. Add fees for late rent. Schedule regular inspections so damages can't be hidden for months. Strong leases send tenants the message that the landlord takes property management seriously, like it's a business, which it is.

Landlords who behave professionally and who make their rules clear tend to have less tenant trouble. That doesn't mean landlords should be hard-nosed and hostile. It means that they plan for worst-case scenario, and they state in the lease what the consequences will be.

The last thing any landlord should do when a tenancy turns bad is to take things into his or her own hands. Courts don't like tit for tat; they like procedure. It may feel really unfair, and a resolution may be a few weeks - or even months – away. And that stinks.

While you're waiting for the eviction process to end, turn to productive tasks. Draft the next lease, plan clean-up at your rental, and start sending out rental applications. Narrow down the applications to top candidates and order their background checks. That way, when the eviction is finished, you'll be ready to move forward with better results. 

]]> https://www.ezlandlordforms.com/articles/educational/1/650/should-i-call-my-tenant-s-previous-landlords/ https://www.ezlandlordforms.com/articles/educational/1/650/should-i-call-my-tenant-s-previous-landlords/ Mon, 28 Nov 2016 12:59:37 GMT

Applicants for your rental property completed their forms, agreed to a background checked and showed you recent pay stubs to verify their income. You've met with them and have a good feeling in your gut. It's decision time, right?

Well, not quite.

You have a few more questions to ask before you should sign a lease with these applicants. But the answers are only a phone call away. Obtain your applicant's permission, and then reach out to current and former landlords and interview them.

These people have, or had, a relationship with your applicant. Ask if the tenant pays or paid rent on time. Ask if they took care of the unit during their time there. Ask whether neighbors ever complained about the tenant.

How do I contact the prior landlords?

Applicants for your rental know that new landlords will want to know about past landlord relationships. Some tenants ask their landlords for a reference letter when applying to live in a new rental property. Others come to see your unit prepared to share former landlords' names, numbers and email addresses.

An applicant who balks at providing contact information for former landlords should raise a red flag. It may mean that the applicant has a poor record of paying rent on time or has broken a lease. Since it could simply mean that the applicant hasn't told his or her landlord about plans to move, ask the applicant why he or she is hesitating.

Your potential tenant's response to that question can also reveal information about the applicant. Do they stumble over a reply? Do they look away or change the subject? Do they tell you what a jerk their last landlord was? Or, do they immediately explain their hesitation?

Use your best judgment to evaluate an applicant's reluctance to give you contact information for their most recent landlord. Maybe there's a good explanation.

A Colorado landlord has gotten attention for stating he will not lease the apartment he owns to a supporter of President-elect Donald Trump. Imagine if a former tenant, who happened to be a Trump supporter, asked this owner for a reference. That tenant would surely fear a negative review.

If an applicant's reason seems plausible, ask them how you can reach their other former landlords. Insist on this, saying you can't make a rental decision without all the relevant background.

What should I ask the former landlords?

This is where things can get tricky. There are questions that, under the law, you may not ask. For instance, you can't ask someone for their age, race, religion, nationality, gender identification or how many children they have. In fact, concerns over what the landlord may legally ask have caused some real estate attorneys to advise landlords to skip this step.

There is also information you may not use to make a leasing decision, even if it's freely offered by a former landlord. For example, you can't decide against a tenant applicant because their former landlord said that they have a disability, that they are pregnant, or that they were arrested.

So, what can you ask? Former Chicago real estate agent Kay Cleaves offers a list of common questions that get to the heart of your concern: Is this applicant likely to make a good tenant?

• What dates did the tenant live in your unit?
• What rent rate did the tenant pay?
• Did the tenant pay all rent owed?
• Was rent paid late? If so, how often and how late were payments?
• Did you serve notices on them?
• Did you evict the tenant?
• Did you offer to renew the lease?
• Did you receive notice that the tenant is moving?
• Did the tenant violate the lease rules for your unit?

You don't have to ask all of these, but be sure to include the ones that are most important to you.

What if the old landlord refuses to answer?

It's a good idea to write down your questions ahead of time. If you aren't used to interviewing people, make a trial run with a friend or business partner. That exercise may make you feel a little silly, but interviewing is a skill that improves with practice.

The most difficult aspect of questioning someone is actually listening to the answers, instead of thinking ahead to the next question. So, when you call former landlords, pay careful attention to what they say and take notes to help you remember important details. Be polite, but don't be afraid to repeat a question if you didn't get an answer the first time you asked.

Be on the alert for comments that don't address your questions, and for comments that make you suspicious about who you are really talking to. There have been reports of tenant applicants getting friends to pretend they're a former landlord in order to receive positive reviews.   

Some landlords will refuse to give references or answer questions about a former tenant. That's their right, and there's little that can be done to get them to talk. Just move on to the next former landlord until you've talked to as many as possible.

How do I use the information I get?

It is critical that you make your leasing decision based on reasons that do not discriminate against protected groups. So, you cannot consider things such as race, nationality or whether they have children.

Consider whether the information shared by former landlords is what you want in a tenant.

An applicant with a so-so credit history who nonetheless has a stable, well-paying job and positive reviews from several former landlords may be a good choice for your rental. On the other hand, an applicant whose landlords gave rave reviews but whose credit is poor, and who cannot provide income verification, may be a riskier bet for your rental property.

Interviews with former landlords, just like a completed rental application and a background report, verified employment and income, and other factors, are important parts of the tenant screening process. On their own, they may not tell you much; but, put together, they give you an overall picture of the applicant.

The experience of calling former landlords will also give you good experience for that day when another landlord calls you to ask about a tenant.

]]> https://www.ezlandlordforms.com/articles/educational/3/647/should-i-call-a-lawyer/ https://www.ezlandlordforms.com/articles/educational/3/647/should-i-call-a-lawyer/ Thu, 10 Nov 2016 10:32:59 GMT

Property management revolves around legal contracts – purchase agreements, loans, leases – so, the law is integral to every aspect of the rental business. Usually, after the rental property is purchased, most “contract time” will be spent on writing strong leases. A good lease that meets state laws provides protection from tenants who mistreat the rental, fail to pay utility bills or stop paying rent.

However, even the very best leases get tested. Maybe a tenant gets a new job one month into a yearlong lease and wants to move. Or a departing tenant insists that the carpet was stained when he moved in and demands the return of his full security deposit. Perhaps roommates have a fight, one moves out and the remaining roommate invites in a new roommate without mentioning it to the landlord.

Those cases can be unsettling because they call for action and many landlords struggle with deciding which action is the right one to take. Should they send the tenant a notice saying he or she is violating the lease? Should they sit tight and see what the tenant's next move is?

Or, is it time to call a lawyer?

When is it 'time'?

If the lease spells out how to handle a situation that comes up, it may be best to send a notice to tenants reminding them of consequences that are described in the lease.

For instance, many leases include Early Termination clauses stating that if the tenant moves out before the end of the lease, they will be expected to pay a specific fee. The tenant who got a new job can be reminded of that clause. If the lease described the carpets as stain-free at the start of the lease and the tenant signed off on that description, but those carpets are now covered in dark splotches, the landlord can send a Security Deposit accounting statement that shows a deduction for carpet cleaning.

And roommates who have disagreements are on the hook for the full rental term as long as they are listed in the lease. If they vow they can't live together any longer, the landlord has the option of allowing one to move out and a new roommate to move in; but, the landlord isn't obligated to accommodate bickering tenants.

But when a lease doesn't address a problem that comes up, or it's apparent the issue could be difficult to resolve, it may be time to seek advice. Many landlords have an informal network of friends and other property investors who can share their experiences and offer one another guidance. It also doesn't hurt to learn as much as you can about your options by reading your state's Landlord Tenant Law.  

However, professional advice from a paid attorney can spare a landlord costly wrong turns and unnecessary delays in resolving a difficult or complicated issue with a tenant.

Lawyers spend at least three years beyond their four-year degree studying statutes and case law. They learn the law - but they are also taught how to problem-solve and offer guidance. They become experts at organizing and preparing as they ready themselves for bar exams.

In other words, they are trained to handle a legal dilemma.

Seeing a lawyer

For someone who has never sought legal advice for their rentals, visiting a lawyer can be intimidating. So, we tossed Harrisburg, Pa. lawyer Doug Marsico some basic questions that landlords may have.

Q: What kind of lawyer should I go to?

A: A lawyer who advertises as a real estate lawyer and/or specifically landlord/tenant law.

Q: What kinds of things will the lawyer ask me?

A: A lawyer will ask you a variety of questions to help understand your legal issues and provide the proper advice.

Q: What should I take with me?

A: A copy of your lease, photographs depicting damage, eviction notice, relevant emails/texts from or to tenant, any court papers if action is already filed.

Q: How much time will the lawyer want to spend talking to me?

A: Most lawyers will do a 30 minute consultation.

Q: Should I write down everything the lawyer says?

A: It’s not a bad idea to take notes regarding the lawyer’s advice so you won’t forget it or can refer to it later.

Q: Will I have to pay the lawyer at the appointment?

A: Yes, most lawyers work on an hourly rate or may have a flat fee for a consultation. Prices vary based upon locale.

What will it end up costing?

It's tough enough to confront a difficult tenant situation without the additional worry of not knowing if taking legal action will drain your bank account and require you to spend hours in court. Then again, inaction isn't really an option when a tenant stops paying rent.

Attorneys aren't cheap. The median hourly rate for Pennsylvania lawyers is $325, according to a survey conducted two years ago by the National Consumer Law Center. Yet, some tasks will be handed off to the lawyer's paralegal or secretary, who earns considerably less. And your lawyer will strive to find the fastest, most effective solution.

In fact, attorneys typically attempt to keep landlord tenant cases out of court completely by proposing settlements. According to The Milwaukee Area Renters Study, which polled 1,100 renters from 2009 to 2011, the majority of eviction cases never even reach a courtroom. Thirteen percent of tenants who were polled had been forced to move out of rental housing. Of those, about half left through informal evictions, while 24 percent were formally evicted. The remaining evictions were the result of property foreclosure and the rental property bring condemned.

A fair question to ask during that first consultation with a lawyer is how much time they think your case will take and what the estimated total cost will be. Even if your rental dilemma requires you to hire an attorney, nothing says you can't ask what the price tag is likely to be.  

When a lawyer isn't the answer

Good attorneys will tell you how best to approach your rental problem. They should also counsel you to handle a tenant matter on your own if that makes the most sense, because there are times when using a lawyer isn't necessary or wise. Those times include when the landlord is angry, or embarrassed or humiliated by a tenant, or just wants to make a point.      

Seattle attorney Wendy S. Goffe, writing for Forbes, said that she has turned away clients who want to sue over principles or because they're offended.

Goffe said that “the bottom line is, weigh your options and the potential costs – financial and emotional – before hiring a lawyer. Fighting over principles is unsatisfying for everyone involved. Putting money that might have been spent on a lawyer to a different use, or simply socking it away for the education of your kids or grandkids – or your retirement – may ultimately bring you much greater satisfaction.”

Sometimes, just talking over the issue with a tenant can help lead to a satisfying conclusion for both parties.

For example a tenant who is adamant about breaking the lease by moving out may agree to a Mutual Termination of Tenancy agreement. That agreement lets the renter move out early in return for certain concessions to the landlord, such as a fee or forgoing the security deposit.

If it seems that seeking legal advice is necessary, try to let the lawyer do most of the talking. Clients sometimes mistakenly believe they must be prepared to tell their lawyer what to do. A lawyer's job is to listen to the facts, tell the client what can be done and then the client decide how to proceed.

 

]]> https://www.ezlandlordforms.com/articles/educational/5/646/america-s-most-famous-temporary-housing/ https://www.ezlandlordforms.com/articles/educational/5/646/america-s-most-famous-temporary-housing/ Mon, 07 Nov 2016 15:23:41 GMT

As a nation, we are preparing to hand over the keys to the White House, one of the world’s most famous home-offices. The White House is an iconic building and National Historic Landmark with a colorful history, but in some ways it is just like any other temporary housing. The standard lease term is four years, with the opportunity for a renewal. The unit boasts 132 rooms and 35 bathrooms, with a private residence on the second floor. We have compiled some more White House history that can instruct today’s landlords in managing a successful rental property.

Moving Day

As her husband’s second term comes to a close, First Lady Michelle Obama recently joked that her family has to “get the old house cleaned up so we can get our security deposit back.” The transfer of the First Family’s belongings is a well-coordinated event, just like the careful attention required when any tenant moves out.

Forms such as a move-in/move-out condition report can ensure both parties agree on the state of the unit. A security deposit accounting statement can be used to tally any expenses retained by the landlord. You can use a Receipt of Keys form to keep track of when the residence has been handed over. And of course, always use a comprehensive, state or province-specific lease agreement!

Famous Occupants

In addition to presidents’ spouses, many children have also lived in the White House, including Esther Cleveland, the first baby born to a sitting president. The bachelor president, James Buchanan, had his niece Harriet Rebecca Lane Johnston serve as his First Lady. Barack Obama’s mother-in-law, Marian Robinson, moved into the White House in 2009 to become the first grandmother-in-residence.

For your rental properties, in addition to listing tenants, be sure to list all occupants by name on the lease agreement. Occupants are individuals living in the residence who are not legally responsible for paying the rent.

Presidential Pets

The White House has been home to animals of all shapes and varieties over the years. In fact, only two presidents are recorded as having kept no pets. John F. Kennedy’s daughter Caroline received a dog, Pushinka, as a gift from Soviet leader Nikita Khrushchev. Presidents Howard Taft and Benjamin Harrison pastured cows on the White House lawn. The Lincolns had a turkey and a pig, while James Buchanan’s pets included two bald eagles. John Quincy Adams reportedly kept a pet alligator in a bathtub at the White House. Perhaps the wildest menagerie belonged to Calvin and Grace Coolidge, whose pets included raccoons, lion cubs, a wallaby, a bobcat, a Pygmy hippopotamus, a donkey, a goose, a black bear, and many more critters.

To keep your rental from becoming a veritable zoo, use specific language regarding pets. If you do choose to allow pets, you can impose detailed restrictions on the number and types of pets allowed, as well as their size and weight. Of course, don’t forget that certain types of pets may run afoul of the regulations of your municipality or HOA. Perhaps you can follow the example of Congress, who reputedly forced Martin Van Buren to turn over a gift of two tiger cubs to the zoo.

A Whitewashed House

Sixteen-hundred Pennsylvania Avenue was referred to as the White House for decades before President Theodore Roosevelt made the nickname official. The moniker originated from the lime-based whitewash that was applied to protect the structure and to fill in cracks. In 1818 the White House was painted with lead paint for the first time. Today, it takes around 570 gallons of white paint to cover the building’s exterior.

Federal law specifies information and disclosures be provided to tenants residing in a building built in 1978 or prior due to the threat of lead paint. Additionally, some states have their own lead paint documents and requirements. Exposure to lead paint can cause severe and lasting health problems, especially in children.

Fire!

British troops torched the White House during the War of 1812. President James Madison and his wife Dolley were able to evacuate before the fire, and she managed to rescue a copy of Gilbert Stuart’s famous painting of George Washington. However, they were unable to inhabit the White House after the blaze.

The Federal Emergency Management Agency (FEMA) offers several fire fact sheets discussing fire safety. Also, if you provide a wood burning device in your rental, be sure to include information on safe operation and maintenance. Don’t forget to address fire extinguishers, smoke alarms, carbon monoxide detectors, fire escapes, and restrictions on smoking and burning candles in your lease agreement!

A Rowdy Crowd

After Andrew Jackson, the “People’s President,” was inaugurated, the White House received an unexpected number of revelers. While accounts of the actual destruction caused by the crowd vary, some attendees reported that the crowd broke items in the White House and caused Jackson to escape the mob by slipping out a window or back door.

If boisterous tenants threaten to disturb the peace, leave the property unclean, or even damage your rental, take swift recourse by using a violation notice. The Notice to Tenant to Repair Damages holds the tenant responsible for recent destruction to the rental. Loud parties can cause problems with neighbors as well as law enforcement, but you can take action by issuing an Excessive Noise notice. Unacceptable conditions can occur because of a single raucous party or from prolonged neglect. Either way, the Maintenance/Cleanliness Violation Notice fits a number of situations where untidiness is causing problems at your rental property.

Making rental history

While the White House’s history is indeed remarkable, in the rental business, boring can be good! Whether your rental is a single room or a spacious mansion, the same rules apply: well-documented guidelines help set the expectations, and legal violation notices can keep things on the right track.

 

]]> https://www.ezlandlordforms.com/articles/educational/2/648/a-proposed-federal-rule-change-has-landlords-anxious/ https://www.ezlandlordforms.com/articles/educational/2/648/a-proposed-federal-rule-change-has-landlords-anxious/ Mon, 07 Nov 2016 14:03:54 GMT

Alarm is spreading among rental property owners over a proposal that would hold them liable if they failed to stop their tenants from harassing other tenants who are protected by anti-discrimination laws.

The Federal Department of Housing and Urban Development rule could be enacted as early as this fall.

What has landlords with multiunit properties worried is that they would be held responsible for failing to stop discrimination action by one tenant against another tenant in a protected class – even if the landlord didn't know the discrimination was occurring.

No need to panic, according to HUD. The rule is only a clarification of an existing policy. And since it doesn't call for any new duties on the part of landlords, HUD states, it “adds no additional costs to housing providers and others engaged in housing transactions.”

Under the Fair Housing Act, persons already are protected from discrimination based on race, color, national origin, religion, sex, disability or familial status. The clarification, according to HUD, is that they are protected from all discrimination they encounter in housing, not just direct discrimination by landlords and property managers.

 “...(I)n HUD’s experience, there is significant misunderstanding among public and private housing providers as to the circumstances under which they will be subject to liability under the Fair Housing Act for discriminatory housing practices undertaken by others,” the proposal explains.

  One of the things the rule clarifies is that prohibited actions aren't limited to a refusal to rent or sell a home to someone in a protected class. Discriminatory comments, gestures, signs or images toward protected persons are also prohibited.

“It may include the use of racial, religious or ethnic epithets, derogatory statements or expressions of a sexual nature, taunting or teasing related to a person’s disability, or threatening statements. In addition, the unwelcome conduct may be communicated to the targeted individual in direct and indirect ways. For example, the unwelcome conduct may involve the use of email, text messages, or social media,” the proposal states.

Most notable is the clarification stating that discriminatory actions by “non-agents” of the landlord, such as other tenants, are the landlord's responsibility. Landlords can reduce the potential for that by establishing anti-discrimination standards and making them clear to all tenants, HUD says.

“This should facilitate more effective training to avoid discriminatory harassment in housing and should decrease the need for protracted litigation to resolve disputed claims,” according to HUD.  

National housing associations have registered their concern, according to the Wall Street Journal, saying that HUD would be putting landlords in the middle of neighbor disagreements.

Landlords don't have the resources to monitor their tenants' potentially discriminatory actions, they said, and they worry that they could be held liable for harassment that occurs between tenants while they are away from the rental property.

]]> https://www.ezlandlordforms.com/articles/educational/2/645/is-it-time-to-green-up-your-rentals/ https://www.ezlandlordforms.com/articles/educational/2/645/is-it-time-to-green-up-your-rentals/ Thu, 06 Oct 2016 13:31:30 GMT

The green movement may be about environmental consciousness and conservation, but when it comes to your rental properties, there may be an added bonus to going green – it may lead to more green in your wallet.

As international lawmakers have focused on greener policies, energy consumption has become an area of increased regulation.

The trend started with increased attention from government regulators on energy consumption. That led to tax breaks being available for property owners who install new energy-saving equipment.

Landlords have always been alert to escalating utility bills. It used to be that as landlords saw utility costs cut into profits, they separated most utility bills from rent and handed the responsibility for cutting water, electric and gas waste to tenants. (Some cities require water bills to remain in the landlord's name.) When waste hits tenants in their wallet, they tend to be more conscious of overuse and reduce their consumption.

Now, though, tenants have started expecting help from the landlord in controlling heating, cooling and electricity bills. They are demanding appliances that further reduce energy use. They want homes with a tight “building envelope,” that is, walls, doors, windows and floors that can prevent warmth and cool air to escape. Some also want to live in rentals that meet 21st century standards for green living – a unit that is within walking distance of work and shopping, a kitchen with recycling sorters, bicycle racks in the foyer and so on.

Naturally, landlords are looking for ways to attract and retain these climate-conscious tenants.

How widespread is this movement?

The push for change is much further along in the U.K. where it will be illegal, starting in April, 2018, for a landlord to rent a home or commercial property with an energy efficiency rating grade below E. Any landlord who defies this new guideline and rents out a property graded F or G will face fines up to £4,000.

Landlords in the U.S. don't face those standards, but a handful of cities have passed laws on disclosure and will fine landlords who don't make their unit's energy consumption statistics available.

In Canada, currently, owners of larger commercial buildings must have a professional assess their energy efficiency and must display efficiency certificates at their properties. Elsewhere, many landlords of commercial properties are voluntarily writing so-called "Green Leases" to cut energy costs.

Newer buildings are more apt to already adhere to new energy standards because of updated, national building code requirements. Individual states have also set requirements and some towns and cities have added their own rules for new builds.

Landlords are renovating older buildings to bring them in line with new energy consumption recommendations, too. They have incentives to reduce energy waste thanks to tax rebates.

What can be done to improve my rentals?

The first question to ask is how much energy is being used and if any of it is being wasted. Professional energy audits are the ultimate tool for uncovering wasted energy and potential savings. The U.S. Energy Department offers an informative infographic that shows exactly what a professional auditor will do.

But there are plenty of steps you can take on your own, too:

• Look for air leaks and seal them with caulk or weather-stripping. Make sure you maintain proper ventilation with heating systems that burn fuel.
• Check common spots for inadequate insulation, such as the attic hatch.
• If the basement or crawl space is not insulated, add insulation beneath the first level flooring.
• Change forced-air furnace filters regularly and have a pro perform annual cleaning.
• Calculate energy use by appliances. The Energy Department lets you do that here. Focus on the older appliances in your units that really suck energy.

How should I handle wasteful tenants?

Nothing is more frustrating to a landlord who is conscientious about saving energy than seeing a tenant crank the heat to tropical temps, leave on lights or waste water. Before blowing your cool – or heat as the case may be – try working with your tenant.

Not everyone has your environmental awareness, so a little education can go a long way. You can make some pretty solid ethical arguments that may appeal to your tenant's conscience. Explain that wasting energy increases air pollution (maybe someone in the home has asthma), water pollution, and even pollution within the home.

Many landlords offer incentives through appliance replacement. It works like this: Landlord buys a new, efficient appliance such as a refrigerator and raises the rent slightly to cover the cost. Tenant pays slightly more rent but still pays less overall because of decreases in the utility bill.  

If you pay the water bill and receive a higher-than-usual bill, you can send your tenant a warning that continued high use will result in a charge to them. Then, if water waste persists, you may send a notice with the charge for that excessive use.

Make changes and save over the long term

So, do you wait until new standards are compulsory for your rentals or do you get a leg up on the energy issue now? The advantages to cutting your rental property's energy use – thus paying less on utilities - could be worth initial outlays on modern HVAC systems and improved building materials.

For residential properties, landlords can use the free Cash Flow Opportunity Calculator to see if they're losing money by waiting for lower interest rates before buying that new energy efficient furnace, and learn whether that tankless water heater should be financed or bought with cash from a future budget.

The bottom line is that it's not just an issue for climate change connoisseurs. Sure, you leave the world in better condition than you found it by updating energy systems. But you can also boost your ROI and draw a more discerning pool of tenant applicants who want to do their bit for the environment.

]]> https://www.ezlandlordforms.com/articles/educational/5/644/let-s-be-roomies/ https://www.ezlandlordforms.com/articles/educational/5/644/let-s-be-roomies/ Wed, 28 Sep 2016 15:12:25 GMT

How many times have you heard that proposal being made among friends? It is a living arrangement that once was mostly reserved for college students, graduates and other young adults who wanted to save on rent until they moved into more permanent lodgings. Now, it’s an increasingly popular option for 30-something singles and older adults who want to cut living expenses.

The financial advantages seem obvious; yet, are today’s roommates completely thinking things through before co-signing a lease? Do they recognize the challenges that come with sharing a living space long-term, with fairly splitting utility bills, and with dealing with someone else’s leftovers stinking up the refrigerator on a regular basis?

Landlords confront their own issues when multiple tenants share one rented space. For instance:

• Should there be one lease or two?
• Should there be one rent check or two?
• Should background checks be performed on one or all tenants?

And the one, loaded question that worries landlords who seek stability for their rental properties: What happens if one roommate decides to move out?

How common is the roommate situation?

Today’s relationships are fluid, with adults doubling up now more than ever. Numbers from U.S. Census Bureau reports show a dramatic decrease in the number of traditional, married couple households and an increase in unrelated, or non-family, households.

In Chicago, according to a report in the Illinois-based publication, My Suburban Life, 36 percent of working adults now share a rental unit with roommates. The report noted that 32 percent of 23-to-65-year-olds share a household with other adults, compared to 25 percent in 2000. 

The shrinking of the nation’s middle class and dips in household income since 1999 - along with the return of multi-generational families and social acceptance of unmarried couples living together - has meant that household configurations are less predictable.

In areas where rents are high or there is a housing shortage, living with a roommate is a common solution. As a result, landlords today commonly receive rental applications from such groups as a married couple and the wife’s brother, or three adults who are friends or work colleagues.

What do roommates need to consider?

Sharing is the key concept here. Yes, having a roommate means only owing half the rent bill, but it also means having access to the oven or laundry facilities only half the time, too. Choosing a roommate is like choosing a family member, and we all know that families come with friction. The most important means for minimizing household strife is communication.

Roommates must discuss, in advance of moving in, how costs will be split, how furniture will be arranged, and how cleaning, parking and use of common areas - including that major trigger point the ‘fridge - will be handled. This often is an ongoing conversation as the relationship evolves; the best roommate relationships rely on regularly discussing living arrangements.

Online tools for tackling shared space abound. Roomsketcher.com, for example, offers an interactive furniture arranger to test whether it really is possible for both roommates to have their sofas in the rental unit living room. Then, there’s Thekitchn.com, which lays out easy rules for divvying up shelves in a refrigerator so roommates can store food and leftovers in their own space as well as easily identify if the gross smell is coming from their shelf or their roommate’s.

What should the landlord keep in mind?

When two or more adults propose living together as roommates, the landlord has several issues to consider:

• Should each roommate be screened?
• Will the roommates be equally responsible for the rent?
• Will any of the roommates be allowed to move out, leaving the remaining tenants on the hook for the remainder of a lease?

Every adult who will be a tenant should be listed on one, shared lease, whether it is a married couple or two or more unrelated individuals. And a background check should be performed on every adult, including adult children living in the unit. (In the case of adult children, the parents may opt to be listed as the tenants who are responsible for rent, but everyone 18 and older should be screened so that troublesome records are revealed before a lease is signed.)

Landlords can make sure that each roommate understands he or she is equally responsible for rent and other costs by attaching a roommate addendum to the lease. Each tenant should sign the lease and addenda, and then the landlord may make several copies of the single lease with addenda to share with each roommate.

The roommate addendum also sets the tone for a good roommate relationship. In listing how common areas are to be shared, the landlord eliminates some potential conflict between the roommates. The addendum can be as brief or as comprehensive as the landlord wants and as the situation seems to require. Too much detail may interfere with a healthy relationship between roommates; on the other hand, a lack of guidance can put the landlord in the uncomfortable position of having to referee roommate differences.

While an addendum can explain that all tenants are responsible for rent, utilities and fees, the landlord can also help by sharing online tools that roommates can use as a guide as they figure out, among themselves, their exact share of those costs.

Finally, in spite of landlords’ worries about one roommate moving out and leaving rent unpaid, all roommates are equally responsible for honoring the lease and paying rent on time. One roommate can’t just decide to move out and expect to be off the hook for rent. Naturally, relationships change over time. Just as some marriages end in divorce, roommates sometimes do “break up.” If that happens, and a tenant wishes to move out, it is up to all roommates to propose an amendment to the lease. The landlord has the right to accept or reject such an amendment; after all, the lease is a legal contract between the landlord and all of the original roommates.

Overall, leasing to roommates can be successful, provided the roommates have given plenty of thought to equal responsibility for their living arrangement, and the landlord creates a lease that spells out all those responsibilities.  

]]> https://www.ezlandlordforms.com/articles/educational/1/643/landlord-recalls-newbie-days-and-shares-his-top-tips/ https://www.ezlandlordforms.com/articles/educational/1/643/landlord-recalls-newbie-days-and-shares-his-top-tips/ Wed, 14 Sep 2016 15:19:55 GMT

Kevin Williams* picked up the phone and heard his rattled tenant say that there were flies in his apartment. Kevin said he'd be there soon. He swung by the hardware store for some bug spray and met his tenant at the unit.

Kevin could have rolled his eyes and told his tenant to calm down. He could have told the tenant to buy some insect repellant and send a receipt with his next rent check. But he didn't. Instead, Kevin did what he's done since he bought his first investment property in Illinois nearly 30 years ago. He showed that he cared about his tenant and was committed to first-rate maintenance. Kevin knows that such thoughtfulness will be returned, enhancing his investments.

The retired financial consultant has been an ezLandlordForms member since 2009. He tracks every rental property expense so that he knows the return on investments. Helping a tenant with ants may not boost numbers on a spreadsheet but it will have a payoff – namely tenants who treat his properties with care, pay their rent on time and foster a good relationship with their landlord.

“If they see that you’re taking care of the place and you are quick to respond, they will know that you care and so they will be more likely to care,” Kevin said. “Keeping good tenants and reducing turnover are key to good returns.”

That tip was among many valuable insights he shared in a recent interview with EZ Landlord Forms. Here are some of the highlights.

Don't buy a house in a hole: We’re not talking about sinkholes here. We’re talking about topography, or the lay of the land. Kevin’s very first property was a sweet deal at $26,000, but the home sat at the base of gently sloping hills. As a result, the basement repeatedly took on water. He and his investing partner did their best to fix the water problems, even joking about their “in-ground pool,” but there was no way to avoid the problems with runoff. Kevin said, “Water infiltration is the one issue that I would advise to avoid at all costs.”

Mix it up: Don't dismiss opportunities to invest in commercial, industrial or agricultural property just because you have always bought residential rentals. When real estate values started to tank as the nation entered a recession a decade ago, Kevin's diversified holdings kept him in the black. “My residential assets got killed but the farm assets went the other direction. It made it easier to weather everything,” he said.

Rental properties are a long-term investment: “People think this is a get-rich-quick thing. I don’t see it.  I’ve never flipped a house,” Kevin said. “I’d much rather be the tortoise than the hare. Rental investments are great vehicles for building wealth over the long term.” He advised against counting on your investment property value appreciating. If it does grow in value, consider it a bonus, but don’t include appreciation in your initial analysis.

Crunch all the numbers before you buy: Most first-time property investors know they have to consider the cost of insurance, taxes and monthly maintenance along with the purchase price when they're weighing an investment. Kevin said there is more to consider. When calculating your returns, you should also plan to set aside a monthly sum for large repairs and unexpected expenses – Kevin includes $200 to $300 monthly reserves in his return calculations on properties that cost between $100,000 to $150,000. “You will spend that money,” he said. Failing to include it in your initial calculations gives you a false expectation of returns and may lead to a “bad buy.” “I actually pay that reserve amount into an account and it sits there until I spend it,” he said. Otherwise, he said, surprise costs such as a new furnace must come from money you have already paid yourself. That makes paying for the needed repair much more difficult. Further, saving the money in advance of the need makes it much easier to be proactive with property issues. If you have the money to fix little issues as they arise, they are much less likely to become big, expensive problems.

Pay yourself first: “People need to build in a reasonable return to themselves. The reality is, [being a landlord] is work. Your time is your most important asset,” Kevin said. “I can earn 5 percent to 6 percent in dividends on certain trust-preferred shares without lifting a finger. Why should you pour your time and energy into a real estate project unless you’re getting a greater return? In my market, I’m not going to even consider property investment if the property cannot return 8 percent to me annually, and that’s as a cash buyer.”

Keep it professional: It might be tempting to think of your tenants, especially long-term tenants, as family. However, that thinking can impede the business relationship. “You want to be empathetic and you want to have a relationship with them,” Kevin said but, “it’s a contractual relationship. You promise to provide them with a decent place to live and they promise to pay rent.” Be as friendly as you wish but always maintain professionalism in your interactions. Make sure you maintain a business-like tone in all correspondence, including anything you send in email or texts.

Don’t take things personally:  If you find that your tenant is trying to pull you into their personal drama, resist. Be polite but firm. It is not the landlord’s job to referee family disputes, listen to long-winded sagas, and so forth. Also, set aside emotions when your tenant violates the lease in a way that seems thoughtless or even offends you. “You can't get emotional when one of your tenants has done something you don't like,” Kevin said. Don’t take a lease violation or unpaid rent as a personal affront. That’s what notices are for. “The ezLandlordForms 5-Day Notice serves to protect my rights as the landlord - and shows the tenant that the situation is serious - without having a confrontation,” Kevin said. [Kevin uses the state-specific Illinois form. A generic Late Rent form also may be used.] “It also serves as a way to start a dialogue about what is causing the late payments. If you can have a conversation about the issues, you can often determine if the situation is temporary or more permanent. When issues cannot be fixed, try to find some mutually agreeable solution, such as early release from the lease in exchange for a quick and amicable move-out. It is worse for everybody if we have to go to court,” said Kevin.

While you’re at it, keep emotional distance from your investments. “Don't fall in love with any asset. You can't. Once you get emotionally invested, then you're going to make a bad decision,” Kevin said.

You’re not a bank:  Tenants, like everyone else, can run into difficult circumstances that impact their financial record. Kevin does not automatically eliminate applicants with poor credit scores. “There are a lot of people who have credit problems. It might be due to health, they may have lost their job,” Kevin said. Instead of relying solely on a credit score, he prefers to meet with applicants and speak to them face to face before making a decision. On the other hand, applicants who want to sign a lease but are unable to pay the security deposit and first month’s rent raise a red flag for Kevin. Kevin counseled against allowing applicants to move in and make partial payments toward the deposit, whessentially providing an interest-free loan. “If they can't pay (at the start) it's not going to get better,” he said. 

*Name was changed to protect the privacy of the landlord and his tenants.

]]> https://www.ezlandlordforms.com/articles/educational/2/642/pokemon-go-away/ https://www.ezlandlordforms.com/articles/educational/2/642/pokemon-go-away/ Mon, 29 Aug 2016 11:49:01 GMT

Pokemon Go...AWAY!

Things were getting out of hand at the small senior center in Quebec City. Hordes of people gathered every evening on the lawn of the private center on a quiet residential street. Strangers set up chairs and spread blankets as if it were a public park. Using smartphones loaded with a hot new game, the crowds played late into the night.

Some nights, according to seniors who live at the site, groups of more than 100 people played Pokemon Go until 3 a.m., keeping the neighborhood wide awake. The center director finally hired a security guard to shoo away trespassers, some of whom had been urinating on trees and dropping trash on the property.

Constitution Daily describes the game process this way: “The game puts a layer of Pokemon-related content on top of a Google Map program. Players use the GPS feature of their phone to 'walk' through this Pokemon world to find characters and save them to the app.” Players then “capture” a Rattata, Zubat, Pidgey or other Pokemon character that's been spotted with a well-timed swipe of their phone screen.

Pokemon Go players who seek out these characters are causing problems elsewhere in Quebec. Police cited one player who crashed his car into a parked police cruiser while tracking down a Pokemon. The Royal Canadian Mounted Police issued warnings that players who chase the virtual characters onto and through private property are trespassing and can be arrested.

Landlords of commercial properties in the provinces, as well as in the United States and the dozen or so other countries where the game is live, are also being impacted.

Some business owners welcome the foot traffic the game brings because it is helping to revitalize stagnant downtown areas. Others have grown weary of the trespassing and the trash that Pokemon hunters leave in their wake.

How can you keep Pokemon players off your property?

Game developer Niantic Labs appeared to take note of the many complaints about trespassing and, in July, added a warning to the game login screen that tells users not to trespass while searching for Pikachu and other game figures. So far, that hasn't made much of a dent in the worrisome intrusions.

James Douglas Roy, a senior policy analyst in East Vancouver, B.C., became fed up when gamers threatened to trample vegetables in a garden behind his building. A warning sign that he posted, telling players to “GET A LIFE AND STAY OUT OF MY YARD,” thrust him into the internet spotlight and prompted some to call him grumpy. Others said that he could simply complete a form on the Niantic Labs site asking to have his property removed from the game grid.

A New Jersey man has gone a step further. Jeffrey Marder filed a lawsuit in U.S. District Court in Northern California in July against Niantic Labs and his complaint is seeking class action status which, if approved, would permit Marder to argue his case on behalf of all affected landowners. Marder claims that the game encroaches on his enjoyment of his property and is a nuisance, and he has asked the court for an injunction against Niantic Labs as well as damages.  

Along with warning signs, some commercial property owners have issued public cautions. Utility companies in South Carolina, for instance, made pleas through the media asking players to steer clear of dangerous electric substations that house high-voltage lines.

What if the property is a rental?

Rental leases serve as legal agreements that give possession of a property to a tenant for a specified period. A lease typically assigns the responsibility of property care and upkeep to the tenant. Who, then, is responsible if problems with trespassers crop up at rental units – the landlord or the tenant?

“The tenant has the right to enforce against trespassing for the leased space. For many rentals, though,particularly multi-unit, the grounds – yards, walkways, common areas – remain the landlord's domain,” says attorney James Laughlin, general counsel for ezLandlordForms.

“As a practical matter, if landlord and tenant are in agreement that the Pokemon-ers are a nuisance, it probably doesn't matter who takes action,” Laughlin says.

Landlords should consult with their tenants before taking any independent action against Pokemon players.

In fact, Pokemon Go parties can be harmless fun – much like geocaching parties that use GPS coordinates to search for hidden treasures – offering prizes for the person who catches the most characters. Such parties work best when players stay within specified boundaries, eliminating trespass concerns.

Can Pokemon coexist with property rights?

Not everyone is hanging “Keep Out” signs and giving out warnings to Pokemon players. Online humorist Jessye McGarry posted an amusing take on the crowd of Pokemon characters that she said occupy the cyberspace within her apartment; she jokingly suggested that the characters should pony up some rent for all the time they spend in her place.


A landlord in Scotland advertised his vacant rental as a “Pokespot” to help line up potential tenants.  He said the gimmick drew four times the usual number of applicants. And commercial landlords in Australia are connecting with more customers after purchasing Pokemon Go lures that have increased traffic at their shops.

Obviously, there are benefits to the trend. Advocates say that players are more active than they would be otherwise. New friendships develop as players explore neighborhoods and meet one another during a hunt.

Still, as Marder's lawsuit demonstrates, there are concerns about landowners' rights that may be decided by the court. And players who get so absorbed in the game that they pose a safety risk to themselves and others, are bound to cause outrage.

Savvy landlords can minimize potential problems by being alert to tenant complaints and offering to help deter any trespassers. Tenants themselves may need to be cautioned if playing the game leads them to trespass on neighbors' property. Large Pokemon gatherings or parties can be addressed with a Tenant Guest Policy lease addendum that states limits including a ceiling on the number of permitted guests.

However, the best approach is probably to not go looking for trouble. As East Vancouver's Roy noted on his now-famous sign, Pokemon is a trend that eventually will die just like, he wrote, MC Hammer pants, the Macarena and TV's CSI: Miami.

 

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/641/my-new-tenant-is-a-dog/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/641/my-new-tenant-is-a-dog/ Wed, 24 Aug 2016 14:03:58 GMT

It has been more than five years since the federal law on assistance animals got its last major revision; yet, landlords continue to send questions and comments on the topic to our chat, email and online forums.

Admittedly, it was a dramatic shift, requiring rental property owners who had traditionally banned dogs and other animals to accept tenants with assistance animals. Even landlords who welcomed pets have been scratching their heads over new guidelines on animal deposits and fees.

Doubtless, some of the confusion stems from additional rules that individual states set on assistance animals in rentals. Canada's provinces have also set their own guidelines. But basic questions also surround what, exactly, an assistance animal is.

So, here is our primer on the definitions, the rules, and the sources for more information on assistance animals in rental units.

Is my tenant's iguana considered a service animal?

When it comes to stating whether or not a tenant's animal will be accepted in a rental, landlords must be sure they are on the right side of the law.

In both Canada and the U.S., it is illegal to discriminate against those with disabilities; sometimes, the disabled must rely on assistance animals to carry out tasks they can't perform on their own. These animals are not in the same legal class as pets, although they may be loved and considered part of the owner's family.

Canadian landlords should review individual provincial rules in deciding how to handle a tenant's request to allow an assistance animal. The non-profit Canadian Foundation for Animal Assisted Support Services is a good resource. Helpful information also may be found in The Assistance Dogs International's “Guide to Assistance Dog Laws.”

In the U.S., there are two federal laws to consider:

1. The Americans With Disabilities Act (ADA)
2. The Fair Housing Act (FHA)

The ADA mandates that service animals must be permitted in public places and federally-subsidized housing. That means that landlords who receive subsidies must, under most circumstances, permit service animals to live in a rental unit and they may not charge a pet deposit or pet fees.

So, the first thing to consider is whether an animal meets the service animal standard. Say your tenant seeks permission to keep Iggy, the iguana, in the unit, explaining that the reptile provides emotional support. You can be sure that the reptile fails the test for service animal on two counts:

1. Only dogs are considered service animals under the Americans With Disabilities Act (ADA).*
2. Emotional support animals are not considered service animals.

Other species that do not qualify as service animals may be considered assistance animals (as described later in this article). Cats, birds, rats and monkeys, for instance, are used by those with disabilities to carry out tasks and to provide emotional support.

However, in addition to the species requirement, service animals are legally defined as having been trained to supply specific assistance to their handlers, such as recognizing an impending seizure, or guiding a handler who is blind or visually impaired. To determine if the dog in question is a service animal, landlords may ask:

1. Does the tenant have a physical or mental impairment that substantially interferes with his or her main life activities?
2. Does the tenant have a disability-related need for the assistance that the dog is specifically trained to provide?  

If the tenant answers “Yes,” to both questions, the dog qualifies as a service animal. NOTE: If the disability is obvious, such as with a blind tenant or a tenant using a wheelchair; and if the landlord can see that the dog is obviously providing assistance, then the landlord legally may not ask the above questions.

In fact, landlords are prohibited from asking certain questions of service animal owners. For instance, a tenant cannot be asked to show a service animal certificate – not all service animals have them – and the landlord cannot demand that the tenant show proof of his or her disability.

Finally, no dog breed is exempt from being a service animal in the United States. Therefore, landlords may not ban a service dog based on its breed, even if state or local law forbid certain dog breeds, such as Staffordshire bull terriers, American bulldogs or Brazilian mastiffs.

What about animals that do not qualify as service animals?

What if your tenant's animals fails the ADA service animal test? Do you have to allow it in your rental?

The answer here is, “Maybe.”

Under the FHA, an assistance animal is one that helps someone with a disability carry out major life activities. It is considered an essential accommodation and denying a disabled person access to accommodations is discriminatory and illegal. In other words, disabled tenants have a right to have assistance animals.

Even though an assistance animal may not have specific training for the particular service it provides - such as alerting a deaf tenant to a ringing doorbell or providing an autistic person with calming emotional support - it may still qualify as an accepted accommodation.

Unlike the rules on service animals, the landlord is legally permitted to ask questions to determine if the animal is a required accommodation. If a tenant claims he or she uses an animal an assistance animal, and the animal is not a service animal, the landlord may seek the following information:

1. Ask the tenant to certify in writing that he or she has a disability. The landlord may ask the tenant to provide a letter from a doctor or therapist, but may not ask for medical records.
2. Ask the tenant to explain in writing the need for the animal and explain how the animal assists.

If the animal qualifies, the landlord must, in most cases, permit the animal and may not require a pet deposit or charge a pet fee.

The only exceptions to the requirement to accommodate assistance animals in rentals are:

1. An animal poses a direct threat to the health or safety of others that cannot be reduced or eliminated by another reasonable accommodation.
2. The animal in question would cause substantial physical damage to the property of others that cannot be reduced or eliminated by another reasonable accommodation.
3. The rental is a dwelling of four or fewer units and one unit is occupied by the owner; or the rental is a single family home that the landlord leases without help from a broker; or the rental is owned by a private organization that only rents to its members and the disabled tenant is not a member.

So, a cat-lover who would be heartbroken without a feline friend in her rental doesn't meet the assistance animal definition if the cat is merely a companion. Likewise, a dog who helps his master overcome fear of being alone at night doesn't qualify - unless a doctor or therapist has indicated that the owner's fears are debilitating, and that animal assistance is a needed accommodation.    

In addition, therapy and comfort animals, often in use in nursing homes, rehabilitation centers, schools and other settings, are not automatically considered assistance animals.

Will my rentals go to the dogs under these laws?

Just because your tenant has a disability that requires you to permit an assistance animal does not mean that your rental will become a hairy mess. Assistance animals must be under the handler's control at all times. They must be housebroken, and you may set a reasonable outside location for dogs to do their business.

Landlords are permitted, under public health laws, to ban assistance animals from using swimming pools. And if the animal's barking or squawking prompts noise complaints from neighbors, the landlord has the right to require the tenant to keep the animal quieter.

As for damages that many landlords aim to avoid by banning pets, assistance animals and their owners don't get a free pass. If a disabled tenant moves out and repairs are needed because the assistance animal caused damage – beyond normal wear and tear – the landlord may retain security deposit monies just as when any other tenant damages a unit.

In many cases, the landlord and neighbors may not even notice there is an assistance animal in a rental unit. When they do notice, it usually is because the assistance animal is doing an impressive job of assisting its owner. Animals can be trained to detect a diabetic's dropping blood sugar levels, to remind a person to take medication, and to corral a wandering child whose autism prevents him from recognizing danger. They can retrieve items that are out of reach for someone who is paralyzed, and can guide a person who is lost and has Alzheimer's toward home and safety.

Assistance animal guidelines have been enacted to help the disabled achieve independence they previously couldn't have enjoyed. Landlords are required to follow these guidelines, so be very careful about setting restrictions that could violate rights. And, if you're proactive in choosing durable flooring and other materials for your unit that can withstand a little animal activity, you'll be less concerned about the inevitable paw prints and drool that come with those animal helpers.   

*Miniature horses are the only exception to the dog-only rule for service animals; however, they must be individually trained to work with or carry out tasks for those with disabilities.

]]> https://www.ezlandlordforms.com/articles/educational/3/640/should-your-rental-lease-have-a-marijuana-clause/ https://www.ezlandlordforms.com/articles/educational/3/640/should-your-rental-lease-have-a-marijuana-clause/ Wed, 27 Jul 2016 20:28:41 GMT

Imagine that the single family home you own in a quiet neighborhood was just leased to a family that moved from out of state. You pop by a few weeks after lease-signing to drop off extra keys and see how they are settling in. Instead of beds, sofas and other décor, you find that each room has been fitted with grow lights connected to hazardous tangles of electrical cords. Your tenants have stripped your house of furnishings and converted it into a greenhouse for growing marijuana.

That nightmare occurred in a Colorado city that has been known, not for its drugs and crime, but for  art, a rich history and beautiful museums. In fact, Pueblo, Co., made Livability.com's Top 10 Cities for Historic Preservation list. Yet, investigators who searched a rental home there in March found 127 pot plants and growing equipment worth more than $100,000.

Authorities arrested two Cuban nationals and said they appeared to be part of a drug cartel operation that was growing marijuana in Colorado for export to Mexico. The mayor of nearby Colorado Springs – who is also a former Colorado attorney general – claimed that the case was the result of laws that have legalized marijuana in the state.

Mayor John Suthers said that out-of-towners and foreigners are renting Colorado homes with the intent to turn them into industrial pot-growing operations. He said these tenants are “basically trashing the houses because they're making so much freaking money they don't care, and growing hundreds and hundreds and hundreds of plants in each house. And transporting it out of state to marijuana markets nationally and internationally. Literally. Marijuana is going back to Mexico from Colorado.”

Certainly not all marijuana use that follows changing laws is having such horrendous effects. But could what happened in Pueblo happen where you own rental property? Is it only a risk in states where recreational marijuana use is legal? What about medical marijuana? Do medical marijuana users have the right to smoke it in your rental units?

Why landlords need to know marijuana laws

Landlords today cannot dismiss the potential impact that increasing legalization of marijuana use has on their properties.

Medical marijuana has been legalized in 25 states and the District of Columbia. Although doctors can only recommend marijuana, not write a prescription for it, there are already more than 1.2 million registered medical marijuana users in the U.S. Four states – Alaska, Colorado, Oregon and Washington – permit recreational use of the drug. This year, at least seven states will host ballot questions during the November election on policies that could further expand legalization of medicinal and recreational marijuana.

In Canada, medical marijuana was legalized in 2001, making that nation the first to legalize the drug for medical purposes. Recreational marijuana use remains illegal in the provinces, although that may change very soon. The nation's leading party is expected to introduce measures in 2017 that would decriminalize the recreational use of marijuana.

With so many changes in recent years, if you haven't considered how you would handle marijuana use in your rentals, now may be the time to address it.

Indeed, it will soon become as common to attach a marijuana addendum to your leases as it is to add clauses that cover pets, guests and use of communal parking areas.

Do I need a lawyer to figure this out?

There are few issues more confusing for landlords these days than whether they can limit marijuana use by those living in their rentals. Federal and state laws on the subject conflict with one another. Landlords fear they could be charged with disability discrimination if they impose a categorical rule against medical marijuana in their units. At the same time, landlords must take into account the rights of other tenants and neighbors to live in a smoke-free environment. Adding to the complexity is the fact that there is no single source for information that can help landlords decide what to do.

Why is it so complicated? For starters, while many states are legalizing marijuana use, it remains an illegal, Schedule I drug under U.S. federal law; in the same category as heroin and LSD. And yet, the federal government has stated that it will not enforce marijuana law with medical marijuana patients who live in states where medical marijuana use is legal. Furthermore, federal officials may loosen restrictions as early as this year.

The only area in which federal laws on marijuana directly impact rental housing is when a landlord receives Housing and Urban Development (HUD) subsidies. A 2011 memo from the federal government made it clear: Tenants in HUD housing may not use marijuana. Okay, that settles it for the 10 percent or so of U.S. rental units that are registered with HUD programs. What about the other 41 million or so other rental units spread across the country?

The answer lies with your individual state law and it is the landlord's job to know what the law is. "Governing" magazine offers a map on the status of marijuana laws in each state. It and other sites follow changing laws and post regular updates.

What do I tell my tenants?

Prevailing wisdom calls for a lease to clearly state expectations on marijuana use in the rental property - especially in states where recreational marijuana use is legal. Landlords should expect that all tenants may use marijuana. Adding a marijuana clause tells tenants what to expect and leaves little room for misunderstanding.

Although the answers on what is allowable are less than clear, we attempt to provide some guidance here. To simplify the process for considering what your guidelines will be on marijuana in your rentals, we tackle these issues separately: Recreational Use, Medical Use, and Growing Marijuana.

Recreational - Since recreational marijuana use is illegal throughout Canada as of this writing, and in all but four U.S. states, those landlords may prohibit recreational use. A tenant's recreational marijuana use would be considered a crime and the landlord should treat it as such.

In Alaska, Colorado, Oregon and Washington, where recreational use is legally permitted, landlords may also ban the use of marijuana the same way that they may prohibit pets; but, as a report in Alaska Daily news notes, such bans could be a challenge for the landlord to enforce. For instance, how would a landlord know if a tenant baked marijuana into a pan of brownies? Also, keep in mind that in a state that has legalized recreational marijuana, a tenant's use in a rental where it has been prohibited would be a lease violation, not an act that brings criminal charges. Your recourse, as the landlord, is to begin eviction proceedings. As with all evictions, a judge would decide if the eviction was warranted.

One area in which landlords do appear to be on solid ground in prohibiting marijuana in their rentals is with a ban on smoking, because of the effects of secondhand smoke. If the landlord permits recreational use but not via smoking, and a tenant is smoking marijuana in the unit, a smoking violation notice would be used.

Medical – You may forbid medical marijuana use by your tenants if your state bans it. You may also forbid it if your rental units are in the federal HUD program. Elsewhere, marijuana smoking may be forbidden even if your state allows it. That's because secondhand smoke can negatively impact neighbors and the condition of your rental.

Beyond that, if your rental property is in a state that has legalized medical marijuana, you may opt to forbid or allow that use. By forbidding it, experts say, you are not risking much. A tenant with a disability who is medically approved for marijuana use could argue that you are discriminating against  

the disabled, a federally protected class. But that argument relies on federal law, and all marijuana use is illegal under federal law. So far, courts have not clearly established the rights of medical marijuana users in rentals.

Before you opt to approve the medical use of marijuana in your unit, assuming that's legal in your state, experts recommend that you first consult your attorney, who will be familiar with the most recent rulings on accommodating medical marijuana users.

Growing – States that legalized the growing of medical marijuana have enacted strict restrictions on who may grow it, where it may be grown, and how it may be distributed. The non-profit ProCon.org lists these guidelines as they develop. Patients in Connecticut, for instance, must obtain their medical marijuana from a state-approved dispensary, whereas individuals in Hawaii may grow up to seven marijuana plants for medical use. No landlord should be in the business of monitoring marijuana growing, so most experts are recommending that leases prohibit the growing of marijuana at the rental property until the courts develop more clear guidelines.

That applies to growing recreational marijuana. Although states differ once again - Colorado permits individuals to grow it at home but Washington does not - landlords may completely ban the growing of recreational marijuana until those states declare otherwise.

It is certainly unwise to permit a commercial marijuana growing operation within a residence. Plants need light and humidity that homes are not equipped to provide.

What does the future hold?

Federal legalization of medical marijuana has been proposed, and the Drug Enforcement Administration had been expected by June 30 to consider reclassifying marijuana as a Schedule II drug. If it was reclassified, it would be in the same category as morphine, codeine and oxycodone, still controlled and heavily regulated, but not illegal. As of this writing, however, the DEA has not announced a change.

If marijuana became a federally regulated drug, doctors would be permitted to prescribe it and patients would purchase it at a pharmacy. Landlords would not be in a position to know who was taking marijuana in the form of capsules, sprays, pills, patches or suppositories. It's likely that rental leases would address only recreational use and growing marijuana.

If recreational marijuana becomes widely legal – and experts doubt that such a change is imminent – then landlords may omit the mention of marijuana in leases except to include it in a ban on smoking. The drug would only become an issue if its use led to complaints about loud parties, offensive odor or excessive noise.

Being a landlord requires a fair amount of stress. There are so many what-ifs. It could be tempting to dismiss the marijuana addendum as an unnecessary document, especially if your state has a complete ban. Still, the old adage, 'Better safe than sorry,' definitely applies here. When you hand the keys to your rental property to someone who will have legal possession for a year or more, there just shouldn't be any guessing on the rules.    

]]> https://www.ezlandlordforms.com/articles/educational/1/639/technology-resources-for-landlords-offer-security-savings-and-convenience/ https://www.ezlandlordforms.com/articles/educational/1/639/technology-resources-for-landlords-offer-security-savings-and-convenience/ Wed, 13 Jul 2016 14:12:49 GMT

The property management office was off the main drag in the tiny Midwestern town I moved to more years ago than I care to remember. The squat building in an otherwise barren lot wasn't inviting, but then that probably cut down on overhead. I remember commenting to the middle-aged woman at a black, no-nonsense metal desk that it must be a lonely job, waiting for folks to pick up rental forms, fill them in and then drop them back off in exchange for a set of keys. The clerk said she didn't mind the empty hours and she never feared trouble because she had, as she put it, “my equalizer in the desk drawer.”

 

Property management back then wasn't heavy on documentation. No one reviewed my credit score. While there was a bit of small print on the lease, the entire document barely filled two pages. I don't remember anyone coming to inspect the unit before I moved out. And yet, years ago, landlords with even minimal holdings had expenses such as office staff, telephones and fax machines.

 

My, how times have changed. Leases are a lot longer. Tenants these days expect to be put through a background check. Landlords rely on the internet to market their units, track applicants, create leases and funnel rent payments to their banks. And their ”office” is wherever they can use their cellphone and laptop.

 

Technology has cut overhead and shifted record-keeping from piles of paper to management software, lease form automation and cloud-based storage. Understanding and making the most of these new tools will allow you to delegate some of the many tasks on your landlord to-do list.

 

Email is the new social security number

One hugely convenient technology improvement is the ability to scrutinize tenant applicants entirely online. Landlords no longer have to hand out paper forms and then ask for sensitive applicant information, such as social security numbers, in order to delve into a potential tenant's background; and they don't have to collect an application fee to cover the cost of a background check.

Instead, the landlord can submit an applicant's name and address to a screening service, indicate that the applicant will pay the fee, and leave the identity verification to the experts.

 

The internet has dramatically reduced the amount of money-handling landlords must do in leasing situations. Numerous agencies now provide services that allow tenants to make online payments, removing the need for the landlord to pick up rent checks or wait for them to be mailed. Most services charge a fee that covers such benefits as payment processing, email reminders to tenants, and the ability to schedule recurring deposits and automatically add late fees. Banks have made it easy for landlords to accept online rent payments, too. For landlords who don't have a separate bank account set aside for handling rent payments, there's always PayPal or a bill-paying service that the tenant sets up through his or her own bank.

 

As for tenants, they expect to be able to search for rentals online nowadays, according to technology news publisher, TechCrunch.com. So, if you still list your ad in the local newspaper, make sure the paper also posts the ad on its web site, or consider supplementing the ad with your own notice on Zillow, Craigslist or other rental listing site.

“Not many renters, after all, are still leafing through newspaper classifieds in 2016. This has created the expectation for easier online interfaces on the professional side, as well — and made calling or faxing rental contracts and leasing information seem increasingly dated,” TechCrunch.com notes.

 

Also plentiful on the internet are calculators - another must-have tool for property investors who want to know the return on their investment. Most online calculators direct you to fill in simple fields and then they churn out numbers that you can use to decide whether it makes financial sense to buy a particular rental property. Calculators also are available to help you decide whether a specific improvement at your rental property can be expected to result in higher rental income.

 

Investigate new property management tech tools before using them

As helpful as time-saving technology is, you'll want to check out services that have recently hit the market before you use them for the first time. Ask questions of the service provider, find out if the service comes with guarantees, and make sure its use is legally permitted.

Landlords must follow federal privacy laws – specifically the Fair Credit Reporting Act (FCRA) - when delving into tenant applicants' backgrounds and must adhere to federal Fair Housing Act (FHA) guidelines in rejecting tenant applicants. What is still being tested is how those laws might apply to information that is publicly available on such social media sites as Facebook.

 

When the UK-based company Source Assured announced it would launch its new service, Tenant Assured, this summer, it appeared that landlords would have yet another online source for an applicant's background. The service reportedly allows landlords to ask tenant applicants to supply access information to their social media accounts, such as Facebook, Twitter and LinkedIn. Tenant Assured promises to comb the tenant applicant's posts for terms that will be used to compile a report on the tenant. However, the company hasn't revealed exactly how information is used to develop a background report. And, it apparently leaves it to landlords to decide which data in the report may be used to make a leasing decision. Some legal rights groups are questioning if the service will violate FCRA and FHA guidelines and are urging landlords to steer clear, while Source Assured claims that information that is collected is done so with applicants' permission.

 

Landlords must be careful with advertising and selecting tenants even when they're using established sites such as Craigslist, which has been connecting landlords with potential tenants since 1995. A Canadian landlord faced problems when his Craigslist ad specified “Asian only” applicants. Although using that term in the ad may not have broken a law, it did offend some applicants and the landlord could have been cited for refusing to rent to someone who was not Asian.

 

Ultimately, it is the landlord's responsibility to know what is and is not legally permitted in searching for tenants.

 

Looking ahead
Technology for handling rentals is sure to continue evolving with tools and services that streamline property management. With the population of those who occupy rentals predicted to increase by 4.2 million by 2025, there is sure to be a market for breakthrough services.

Owners of New York City's real estate management giant, Rudin Management Co., have just launched

Prescriptive Data, LLC, an operating system that was built to serve as a building's brain, the Wall Street Journal reports.

“The system analyzes information including elevator use, occupancy, electric demand, weather and indoor temperatures, and recommends ways in real time to decrease energy use and costs—an estimated average savings of 50 cents a square foot for landlords,” the Journal states.


Doubtless, there are will come a day when an investor can buy a rental and enter its details into a site that will automate the tenant search, write the lease and collect the rent without the landlord ever having to speak to anyone or sign a document. Maybe tenant applicants will someday have to confirm their identity using biometrics like iris recognition.

 

Meanwhile, there are tools and services that you can use now to lighten your load. There is a wealth of information, available for free, online. And you don't have to ask your secretary to type it up for you.

]]> https://www.ezlandlordforms.com/articles/educational/3/638/whose-job-is-it-your-lease-must-make-it-clear/ https://www.ezlandlordforms.com/articles/educational/3/638/whose-job-is-it-your-lease-must-make-it-clear/ Wed, 22 Jun 2016 20:06:02 GMT

Here's a goose bump-inducing fact for you: Florida is home to more than 80 species of mosquitoes – more than in any other state or province in North America. Is it any wonder that lawmakers in Florida require that windows in rental properties have screens and that landlords repair those screens once every year? It's true! It's part of Florida's landlord-tenant law.

In fact, officials there are stepping up enforcement of that rule in light of the recent revelation that dozens of pregnant women in Florida are being watched for the Zika virus. The virus is carried by some mosquitoes and has been linked to serious birth defects.

Florida isn't alone in setting mandates that require landlords to keep their rental properties in good shape. It's up to the landlord to know the maintenance and repair requirements in the state or province where the rental unit is located, and to make sure that rental agreements follow state laws.

But what about tenant responsibilities? Landlord-tenant laws cover some areas of tenant responsibility but the rest is up to the landlord to explain in advance. No tenant should be expected to guess at the rules that apply at a particular rental property.

For instance, you may know that your city expects its residents to retrieve empty bins from the curb once trash has been picked up on collection days. Will your tenant know that rule? Will he or she know that failing to shovel snow from sidewalks within as little as one day may result in a fine, depending on the town's rules?

How do landlords explain the rules?  

When we buy a new appliance, we expect to get an instruction booklet with it. Those lengthy brochures cover everything from the seemingly obvious - Don't submerse electrical components in water – to such lesser known details as how to replace worn-out parts.

Rental leases work the same way. Everything should be included, from the obvious – No use, possession or sale of illegal drugs – to guidelines on such things as how many overnight guests are permitted and how long guests may stay. That way, any failure to follow the rules becomes a lease violation.

Here's why that's a good thing: Lease violations can be resolved, or “cured”, with a written notice. The notice explains that the violation must be remedied or the tenant could face eviction. If a tenant breaks a rule that isn't in the lease, the landlord has to make a convincing argument against further infractions. Yet, in many cases, a verbal request from the landlord lacks the authority of a lease term.

Imagine your tenant wants to plant a garden and, in order to make room for his vision of vegetables, he digs up beds of flowers that you purchased and carefully planted. Without a lease clause that forbids such action, all that you, the landlord, may be able to do is throw up your hands. Why not attach a New Tenant Welcome Letter to your leases? It explains the steps your tenant must take before changing the landscaping or painting a room, or when minor repairs are needed. Your tenant's signature on the lease is all you need to confirm that he has read its contents.

Landlords who leave out rules can unintentionally hurt tenants. Without knowing it, a tenant may break local laws. That's because most municipalities have ordinances that govern residents' activities. They typically state how many days trash cans can be on a curb in advance of garbage collection days, how soon after a snowfall sidewalks must be shoveled, or how long grass is permitted to grow before it must be mowed. In some Maryland communities, for instance, it's against the law to mow or blow grass clippings into the street or leave them on the sidewalk. If landlords in those Maryland towns fail to include a clause about picking up grass clippings, unsuspecting tenants may get a nasty surprise when local authorities impose a fine for clippings left on the sidewalk or street.

Every guideline that is listed in a lease is a preemptive strike against tenant confusion. Clear expectations save landlords time and money, not to mention anxiety over possible misunderstandings.  

What are the possible scenarios?

Once you establish the rent amount and other lease basics, the best way to decide what else to include is to ask yourself, “What can go wrong?”

For example, every rental will need repairs at some point, even if it's just replacing burned-out bulbs or clearing a clogged kitchen sink trap. Lease agreements can specify who must buy and replace light bulbs. They can state that tenants must cover the cost of repairs up to a certain amount, say, $50, and must provide the landlord with details on the repairs.

Think about scenarios with your specific tenant, too. If you're renting to someone who is an auto mechanic, you may want to specify that no repairs may be done to autos other than the tenant’s own vehicles. You also may want to limit the number of vehicles that may parked on the property at any given time.

Lease terms can set noise limits, prohibit trampolines and forbid tire burnouts in the driveway or parking lot. You can expressly forbid the use of portable heaters and ban the use of the kitchen oven as a room heater. Leases can require the tenant to seek permission to erect a basketball net, swing set, sandbox and wading pool.

Don't let misunderstandings arise over appliances, either. When listing appliances that you will supply and maintain with the unit, be sure to only list those you are actually going to maintain. If a previous tenant left behind a refrigerator that's in good shape, and the new tenant wants to use it, fine, but don't include “refrigerator”on in the list of appliances you will supply, or you will have to repair or replace it if it breaks down.

Lease addenda increase the number of pages in a lease, without a doubt, but that lengthy document is an invaluable resource when questions arise about what is and isn't permitted at the rental. So, take your time when writing a lease, consider possible problems ahead of time and make sure nothing is left to chance.

]]> https://www.ezlandlordforms.com/articles/educational/3/637/when-your-tenant-s-safety-is-at-risk-and-you-must-let-them-break-the-lease/ https://www.ezlandlordforms.com/articles/educational/3/637/when-your-tenant-s-safety-is-at-risk-and-you-must-let-them-break-the-lease/ Wed, 01 Jun 2016 18:48:45 GMT

Your tenant signed a year lease for your rental two months ago, and now she says she is moving out. She explains that she will pay you a prorated sum for the next two weeks while she remains in the unit. Then, she's leaving. And here's the reason she gives: Someone has been stalking her and she now fears for her safety.

Frustrating though the situation may be – lost rental income, short notice to find a new tenant – you may be legally required to agree to the move. And you may have to go along with the short notice as well as the abbreviated rental payments.

The number of states with specific laws addressing the rights of tenants who are victims of domestic violence, sexual assault and stalking is growing. Some states, including California, have recently beefed up those laws with very strict guidelines on what a landlord must do when a tenant is being victimized. Among the guidelines, the landlord must allow the tenant to break the lease with very short notice, and must withhold early lease termination penalties.

Other states, such as Maine, and Canadian cities and provinces, including Toronto in Ontario, have just added new laws that define victims' rights to break rental agreements. Elsewhere, state legislatures are debating proposals. The bottom line is, landlords who confront this situation should determine whether their tenants have similar rights before automatically rejecting early termination requests.

Conflicting government rules can put landlords in the middle.

It can get confusing for a landlord to suss out which set of rules pertains when a tenant becomes a victim of stalking, sexual assault or domestic abuse. That's because some states have laws that seem to contradict rules set by cities within those states.

For instance, some cities have passed ordinances that require landlords to evict tenants whose units are the source of frequent police calls – even if the calls don't result in criminal charges. Tenants who live in those cities, and are victims of domestic violence, may refrain from calling police when they're in danger because they fear the call could lead to eviction.

New state laws aim to remove that threat of eviction, overriding local laws. These laws also seek to relieve victims of potential financial burdens if they move out before their lease expires. Namely, they specify that victims are off the hook for remaining rental payments, are eligible to have security deposits returned to them, and don't have to confront a court judgment against them for violating terms of a lease agreement by leaving early.

When there is a conflict, keep in mind that state laws supersede local municipal laws. Landlords in the U.S. who are unsure can check with their state's attorney general’s office or consumer affairs office. Canadian landlords can refer to the residential tenancy or housing corporation office in their province.

Can any tenant break a lease just by claiming to be a victim?

The movement toward new rights for tenants who are crime victims doesn't mean that landlords must permit any tenant who claims to be a victim to break a lease agreement without a penalty.

Standards differ from state to state but most laws stipulate that a tenant who is a victim must show proof to qualify for an early termination. The bill under review by the Kentucky Senate, for instance, would require a tenant to demonstrate a safety concern to the landlord in order to terminate a lease. If that condition was met, a tenant could move after giving the landlord 30 days written notice.

Most states with these laws have specified that tenants must produce a restraining order or other official proof that they are seeking protection for their safety. California requires a victim to show a copy of a restraining order, police report, or signed form from certain professionals who can verify the tenant's status as a victim. This proof must be no more than 180 days old. The tenant must give at least 14 days notice; the tenant can move before the 14 days end but must pay that two weeks rent.

What about the landlord's rights?

Predictably, landlord and real estate property management firms in communities that have enacted these laws have expressed concerns, saying that laws are a free pass for any tenant who wants to break a lease. However, victims’ rights advocates say the laws are a long-overlooked civil right and that landlords can insist on proof that tenants are in fear for their safety before agreeing to an early lease termination.

Kentucky lawmakers amended the bill under review after hearing from landlords. Now, the proposal would prevent those who commit the domestic abuse, sexual assault or stalking from being able to break leases without penalties. Also added was a clause stating that victims who had a protective order already in place when they signed a lease would not be able to break the lease unless they could show proof of a new safety risk, such as the culprit being released from prison.

Landlords who find themselves faced with a tenant who has the legal right to break a lease because of being in danger should make sure to record the termination with the proper form. Remove mention of any penalties that may have been outlined in the original rental agreement and make sure that the departing tenant signs the form.

Returning the security deposit should be done in the usual manner, itemizing damages and accounting for any deductions. If the rental unit is in a state that requires the deposit be placed in an interest-bearing account, be sure to add accumulated interest.

No landlord wants to deal with a vacant unit months before a lease expires, but an early termination is surely a better outcome than having a tenant attacked, or worse. And there's something to be said for crime victims who are trying to get themselves to a safer setting. Landlords who accommodate such tenants quickly and professionally undoubtedly earn a little karmic credit toward the next rental tenant.

]]> https://www.ezlandlordforms.com/articles/educational/2/636/why-your-vacation-rental-needs-a-lease-and-reservation-policy/ https://www.ezlandlordforms.com/articles/educational/2/636/why-your-vacation-rental-needs-a-lease-and-reservation-policy/ Wed, 11 May 2016 15:14:21 GMT

A lease is a given when it comes to renting residential or commercial property. Tenants expect to receive a lengthy document that spells out rules and includes addenda and disclosures, and they know they had better read the fine print.

Vacationers should expect to sign a rental agreement, too, whether they are renting a cozy cabin for a weekend or beachfront home for an entire summer. Just as even a brief getaway fulfills a vacationer's quest for a change of pace, a lease satisfies the owner's need for asset protection. In fact, short-term tenants are unlikely to view a vacation rental as their “home.” They may stay for a few days and never return, so it's important to provide them with a lease that has straightforward guidelines on caring for your property.

Also, vacationers typically look at multiple rentals before paying a deposit, so they've come across multiple sets of rules before settling on your unit. Your agreement will undoubtedly be a little different from all the others, so tenants will need to be clear on your expectations for your property. That's best handled with a lease.

Do-it-yourself rentals

More homeowners are handling their own reservations and leasing agreements, especially with the increased use of sites like Airbnb.com. The San Francisco-based, privately held company started in 2008 and now boasts more than 2 million listings in 191 countries. HomeAway, Inc., parent company of Vacation Rental By Owner – VRBO – and VacationRentals.com, has been matching property owners with vacationers for a few years longer than Airbnb.

The companies have turned the Short Term Rental – STR – business on its ear, allowing owners to lease out vacation property without a real estate agency or property management company.

But that also means that property owners are on their own when it comes to creating the STR contract.

We've all heard a vacation rental horror story or two.  Airbnb's host guarantee can cover some property damages, but without a vacation lease and a reservation confirmation form, property owners expose themselves to great risk including theft and no-show tenants.

Will vacationers want to bother with a lease agreement?

Typical residential leases can run from nine to 20 pages and longer because they cover a lot of issues. Vacationers would probably be discouraged by a document that long, and few landlords would find it necessary to use such a comprehensive agreement. After all, tenants staying for a few days or a week won't have the same duties as long-term tenants, so details on a lease renewal and getting utilities under the tenant's name, among other areas, are irrelevant with STRs.

In spite of the relative brevity of a vacation lease, basics like rent, a deposit and how damages will be handled are essentials and must be included. Vacation leases also commonly address maximum occupancy and where visitor cars must be parked during the stay, as well as terms that may be governed by the local municipal code.

Landlords leasing an STR should also consider adding terms to address hazards that tenants tend to be a bit less vigilant about when on vacation, suchas burning candles, leaving windows open in inclement weather and using fireworks. Pools and spas can be risky but they're big drivers in the vacation market, so private home rentals that offer them must be sure to follow the federal Pool & Spa Safety Act as well as state and local safety laws. A pool/hot tub addendum is the perfect form to accompany vacation leases for a home with those amenities.

Vacation property owners will find themselves fine-tuning leases over time to deal with new issues that arise - either through tenants' neglect or neighbors' complaints. The idea is to learn from each renter and anticipate problems before they occur, just as when you're leasing to year-round tenants.

What about reservations and cancellations?

Vacation property owners know that keeping the rental filled, especially during busy tourist seasons, takes finesse. Along the U.S. Atlantic coast for instance, vacationers vie for the week around the Fourth of July holiday. In Montreal, Grand Prix du Canada weekend in June draws the biggest holiday crowds. It should be a snap to fill rentals at those times, but landlords must contend with tourists who send out 10-15 booking requests in order to assure they'll snag one good rental. Vacationers may never call to cancel and, unlike a hotel, a private homeowner may be unable to secure a replacement lodger.

Losses mount when tenants cancel, especially “in season” when owners typically can charge higher rents. That's where the reservation policy comes into play.

The policy spells out the rent amount, a deposit amount and whether the deposit is refundable or non-refundable, and due dates for all payments. It isn't a lease agreement – just a promise that a deposit will hold a property for a specified period until full payment is made and an agreement is signed.

Some landlords will fully refund a deposit if they are able to lease the rental to another tenant. Requiring a deposit well in advance of the scheduled stay and insisting on lengthy notice in the event of cancellation benefits both parties, because if the landlord is able to secure a replacement tenant, there is a greater likelihood the deposit will be returned.

Forms to include when you lease a vacation property

Investing in a vacation property can be a marvelous investment, but it calls for careful management. Getting away from it all entails flip flops and light reading for the vacationer, but the fun shouldn't begin until the lease is signed; landlords need peace of mind, too.

Make sure you use all the necessary agreements, below, to manage your vacation property. Then, carve out some time in that seaside cottage or urban townhome for your own getaway so you can reflect on your success with tenants and soak up the rewards of a well-managed rental.

]]> https://www.ezlandlordforms.com/articles/educational/2/635/should-i-buy-a-turn-key-rental-property-or-a-fixer-upper/ https://www.ezlandlordforms.com/articles/educational/2/635/should-i-buy-a-turn-key-rental-property-or-a-fixer-upper/ Thu, 28 Apr 2016 12:12:43 GMT

 

You're in the market for a rental property and you've narrowed the options to several possibilities when you confront an investor's dilemma: Should you make an offer on the tidy unit that's in perfect shape and ready to rent? Or, should you go for the one that's priced for far less, but will need some serious TLC before it can be leased at a rent that meets your target income?

If you're handy around the house and you have free time, the fixer-upper could be worth serious consideration. And if you possess remodeling skills and solid connections with contractors who can do the specialty work that you can't, then a property that needs TLC really might be the best bet.

However, there are still questions to consider before signing the papers. For instance, how close will you be, geographically, to this home-that-needs-love? Will you be able to get a loan, and can your budget accommodate the thousands that you'll need to spend to make improvements? Are those contractor friends going to be available when you need them?

This is a great time to brush up on your Microsoft Exel skills or start a good, old-fashioned paper spreadsheet, because there will be pros and cons with either option.

Consider factors – do your reasearch

Important factors to weigh include the properties' distance from your home base, the rental market where the units are located, and financing costs for both options.

A turn-key property that is already housing a tenant is likely to need less oversight than one that must be upgraded and will probably be vacant while it's worked on. You may not mind an hour or two drive if you only have to perform monthly inspections and screen new tenants once a year or so. On the other hand, if you expect to spend many hours each week remodeling and making repairs, an hour drive could eat into time you need for other enterprises – like working a full time job.

Of course, no matter how modern your unit, no matter how perfect your tenants, there will still be new demands on your time. Unless you intend to have a property management company handle your rental, plan on getting nighttime calls, having your vacation interrupted and overseeing unexpected repairs. That's just part of the job of a landlord and you should be close enough to your unit to get there in a hurry in an emergency.

There's nothing wrong with buying outside your immediate area, but you should be as familiar with the community that hosts your rental as you are with your own, according to Dennis Cisterna, Investability's chief revenue officer.

“Market research has never been easier, so there are no excuses. Talk to local brokers, read the online version of the local newspaper to understand what is happening in the economy and even visit the area if you’re serious. Identify the drivers behind the current housing market and know the historical context,” Cisterna says.

Also, take into account demand for housing in the area you're considering investing in. If that fixer-upper is in a good neighborhood, you'll have a waiting list of tenant applicants when you're ready to lease. If it's surrounded by dumps, however, the expected rental income may not warrant the major upgrades you envision.

The big lure of a fixer-upper is greater profit but Cisterna urges investors to resist the temptation to jump at a bargain, especially one on a long distance property. “The rule of an opportunity being 'too good to be true' is particularly applicable in long distance real estate investment purchases,” he says.

Financing options will dictate, to a great extent, which property you can afford. Banks are apt to set more stringent terms the riskier the investment, and will want to see data that backs up predicted rental income, a more difficult task with a property that has generated little or no rent in recent years. Remember, too, that your aim is good, steady monthly income - not long term value appreciation since you can't count on the future real estate market. In other words, don't buy that needy property with the sole focus of increasing its sales value.

A turn-key property may appear to be the more practical investment for someone seeking immediate income, although you should take time to research all the secondary costs you'll encounter. For instance, what is the tax rate in the area? Is the property in a homeowner's association that is liable to hike annual fees? Are there higher-than-usual insurance risks at the property due to a dry climate, earthquake or flooding history?

In the end, listen to your gut

The decision between buying a turn-key rental or a fixer-upper property is a very personal one and only you know what your comfort zone is. There are financial advantages to both, and each opportunity presents income potential so there is no “right” choice.

Once you're armed with all the facts, pause and consider what you really want out of this investment. Maybe you're a talented carpenter but you'd rather work on your own projects for personal enjoyment than labor over repairs in an investment property. Maybe you're all thumbs, yet part of your investment dream is to become better at remodeling, in which case you will need to have reliable contractors who can guide you as you learn.

Finally, if you hate surprises, a fixer-upper probably isn't for you. Like every property, rental units develop unforeseen problems – there just are usually more with the fixer-upper. But, if watching the movie “Money Pit” made you itch for a chance to grab your tool belt and don a hard hat, that might be a sign that a turn-key property would fall short of your investment dream.

]]> https://www.ezlandlordforms.com/articles/educational/3/634/nothing-s-in-writing/ https://www.ezlandlordforms.com/articles/educational/3/634/nothing-s-in-writing/ Mon, 25 Apr 2016 12:29:57 GMT

A recent dispatch from a Great Britain property investment firm described an alarming statistic: Ten percent of landlords in the UK have no written agreement with their tenants, according to the Manchester-based Select Property Group. That's potential for an awful lot of disagreement.

“Nothing in writing” means that every single term – from rental payments and property rules to the length of the tenant's stay – has been either verbally addressed or not mentioned at all. It means that responsibilities such as who's going to pay for utilities may be anyone's guess. And when money is changing hands, you can bet that ambiguity will lead to discord.

But it isn't just a British thing. News outlets in the U.S. had a field day with the story of a 97-year-old California woman who was fighting eviction from a home she'd occupied for 66 years on a verbal lease. Sadly, Marie Hatch died shortly after getting the eviction notice, but a lawsuit is still pending against the owner of the property. The suit alleges breach of contract, elder abuse and intentional infliction of emotional distress.

Hatch claimed that her friend, the late Vivian Kroeze, as well as Kroeze's descendants, had all verbally agreed that Hatch could stay in the home as long as she lived. However, current owner David Kantz has said that, while he was reluctant to evict the elderly Hatch, he had to do so in order to comply with instructions in a trust that included the property.

Right or wrong, the story stirred people's emotions. A GoFundMe page, for those outraged by the prospect of a 97-year-old woman already suffering from cancer being kicked to the curb, raised more than $45,000 before her death.   

Who rents their property without a written lease agreement?

It's more common than you might think to rely on verbal agreements. Although there may not be a clearinghouse for data on landlords and tenants who have verbal leases, the fact that the issue comes up with regularity signals that the use of “handshake'” agreements is not obsolete.

A Los Angeles Times advice column that was devoted to the topic explained to a worried tenant that his or her oral agreement with the landlord did provide the tenant with legal rights under California's Civil Code. Indeed, most states specifically address oral agreements in landlord tenant laws.

For instance, Florida law spells out how non-renewals must be handled when a tenant is on an oral lease. “The landlord may terminate the tenancy by issuing a notice of non-renewal. If there is no written lease, (Florida law) provides that the lease period is determined by how often the rent is paid. Such 'oral leases' will continue to renew until either the landlord or the tenant issues a notice of non-renewal.”

Talk about guesswork. What if the tenant paid rent in cash and never got receipts? What if the landlord never recorded payments?

Some rental arrangements traditionally are more likely to have been handled with oral leases. Farmland is a good example, according to the Minneapolis-based Corn and Soybean Digest. Oral agreements may have been the norm in the agriculture industry, but new intricacies in that area of the law now demand more sophisticated agreements, the Digest advises. And insisting on written terms when agreeing to rent someone land for crops is not a sign of distrust between the parties. It's insurance for the landowner and the farmer.

Get it in writing

In “First-Time Landlord: Your Guide to Renting Out a Single-Family Home,” attorney authors Janet Portman, Marcia Stewart and Ilona Bray explain why a verbal lease is a bad idea.

“As time passes, people's memories (even yours) have a funny habit of becoming unreliable,” they write. “You can almost count on tenants claiming that you made, but didn't keep, certain oral promises-for example, to repaint their kitchen or not increase their rent.”

“If something goes wrong with an oral agreement or lease, you and your tenants are all too likely to end up in court, arguing over who said what to whom, when and in what context,” the authors write.

Few, if any, landlords get into the rental business so they can go to court, but if you have to dispute a tenant issue, a well-written lease will reduce a negative outcome. A written lease is a legal contract between a landlord and tenant in which both sides are promising to fulfill certain obligations. Some obligations are governed by law, such as requirements that landlords maintain habitable rentals. That means that plumbing works properly, broken glass is replaced, stairways are secure and paint isn't peeling, among many other provisions.

All other stipulations are up to the landlord and tenant to identify and address within the lease terms, because a lease agreement should be as individual as the property that is being rented. Blank, cookie-cutter leases may cover the basics, but they fall short beyond that.

Understandably, creating a written lease may seem like an overwhelming task for some. It doesn't have to be. Much of the legal legwork has already been done in lease templates, so you don't have to come up with technical jargon. And you know better than any lawyer what is important to you in renting your property. The main thing to remember is that a written agreement that has been signed by the landlord and tenant – even if it isn't the best lease ever created - is far better than a verbal lease that offers no proof of what was agreed.

 

]]> https://www.ezlandlordforms.com/articles/educational/4/633/true-stories-the-cost-of-eviction/ https://www.ezlandlordforms.com/articles/educational/4/633/true-stories-the-cost-of-eviction/ Sun, 24 Apr 2016 19:39:40 GMT

When someone says, “evicted”, do you picture notices posted on doors, courtrooms with stern judges, and piles of your tenant's abandoned junk? Those are realistic features of what can be a very unpleasant experience.

But have you ever thought about eviction in terms of the actual price tag? The legal fees, the court costs, lost rental income, and other damages that turn an unpleasant experience into a landlord's horror story? At a minimum, you could spend $2,500 on one eviction.

Let's break it down:

• Legal Fees: The median hourly rate for attorneys in the U.S. in 2013-14 was $350.* The average legal bill for an uncontested eviction starts at $500 and can climb to $5,000 or more for one that is contested by a tenant with his or her own attorney.**
• Court fees: The cost to file court actions varies from state to state, but all charge for filing. In Florida, for example, fees for filing, issuing a summons and serving two defendants start at $275. Filing subsequent actions, such as a summons or a demand for a jury trial, brings additional fees.
• Property damages: The cost to haul away trash and abandoned possessions, with surcharges for handling electronics and hazardous materials, can start at $100 a load. Sadly, some evicted tenants have turned vicious and left expensive messes in their wake, boosting clean-up costs into the thousands of dollars.
• Financial damages: Landlords who win eviction cases still have to collect. Many claim there's little hope of collecting back rent and/or damages from a tenant who couldn't manage to meet regular rent obligations.
• Lost rent: Eviction can take between five weeks and three months. With rents in the U.S. averaging $1,350 a month (they run at an average of $939 a month in Canada) lost rent in the U.S could be between $1,570 and $4,050 (between $1,092 and $2,817 in Canada).

Authors Brandon R. Turner and Heather C. Turner summarize the cost of eviction in their, “The Book on Managing Rental Properties.” The Turners write, “The state-required legal fees involved with an eviction are fairly light, usually no more than a few hundred dollars. However, the attorney fees and the lost rent are the big cash killers. You'll likely spend between $1,500 and $3,000 on attorney's costs, plus several months lost rent and damages done to the property. The eviction process can be complicated, and in most areas, the courts are not as friendly to the landlord as they are to the tenant.”

Best way to deal with evictions? Avoid them!

Alfred Hitchcock, the master of horror and suspense, once described his own aversion to the unknown. “I'm full of fears and I do my best to avoid difficulties and any kind of complications. I like everything around me to be clear as crystal and completely calm,” Hitchcock said.

He could have been talking about landlords! The easiest and best way for a landlord to avoid difficulties and complications is to have a good, written lease and to thoroughly screen tenants.

In fact, many landlords say that screening is the best insurance they can have on their investment property. California attorney David Piotrowski asks this thought-provoking question in describing the risk involved in neglecting background checks. “Think about it – do you really want to hand over the keys to one of your most valuable assets without doing any kind of background check on the person who will be living in your home?” Piotrowski asks in his book, “California Landlord Best Practices and Eviction Overview.”

A credit check and criminal background report is vital in order to decide whether to lease property to an applicant.  Landlords must know whether a court has ruled against an applicant in previous eviction cases, and whether that applicant's credit is good or in ruins. Otherwise, it's a roll of the dice.

Is eviction the only way to regain possession of your rental?

Some landlords, when faced with tenants who have broken the lease agreement, find success with the so-called cash-for-keys alternative to filing for eviction. In this scenario, the landlord offers the tenant a sum to immediately move out of the unit. The rationale for some landlords is that the tenant who's behind on rent is unlikely to have the money to pay a judgment against him of her. Eviction isn't likely to help the landlord recover losses, and the tenant may remain in the unit throughout the sometimes lengthy eviction process. However, cash-for-keys isn't a measure you want to try without an attorney's advice and guidance.

The worst thing any landlord can do is dither. Too often, an inexperienced landlord will delay launching the eviction process because the tenant promises to get caught up on rent or remedy other lease violations. Then, the deadline to catch up passes and the tenant makes yet another promise that the landlord hopes will be honored. Sound familiar?

Well, instead of hoping, savvy landlords and property managers immediately send tenants a notice of violation that warns of the potential for eviction. This way, when the deadline arrives, the landlord can go right to the next step. If the tenant responds positively – that is, pays back rent and fees or cures other lease violations – then the landlord doesn't need to take the next step.

Eviction isn't pretty and even the most careful landlords must occasionally evict tenants. But doing all that you can in advance is still the best precaution against finding yourself in that difficult and complicated – and costly - process.     

* Most recent available salary data from the National Consumer Law Center
**CostHelper Inc.

 

]]> https://www.ezlandlordforms.com/articles/educational/1/632/is-it-okay-to-let-his-girlfriend-move-in/ https://www.ezlandlordforms.com/articles/educational/1/632/is-it-okay-to-let-his-girlfriend-move-in/ Tue, 19 Apr 2016 13:25:23 GMT

A landlord posted this question in our Forum recently and since it's one that comes up fairly often, we're turning it into a little quiz to see how well you know your way around property management.

The landlord's lease with his tenant – we'll call him Mr. Nice Tenant - is up for renewal. Mr. Tenant has been in the unit for a year, never causes problems, pays his rent one full year in advance, and wants to know if it's okay to have his girlfriend move in with him. If you were the landlord, what would you say to Mr. Tenant?

A.  Absolutely. It's my way of thanking you for being a great tenant.

B.  No, I don't want to mess up a good arrangement.

C.  Yes, but I'll have to raise the rent and your girlfriend will need to sign the new lease.

If you were looking for a few more Answer options, good for you! We deliberately offered some simplified answers, but Mr. Tenant's request calls for more careful consideration. The landlord who offers a simple answer will no doubt confront complications eventually.

Answer A. - There's nothing wrong with showing gratitude toor a great tenant; in fact, a trend in bigger cities has been to reward good tenants for extending their stay with perks like a rent-free month or a renewal with no rent increase. Responsible tenants who pay rent on time are an enormous asset and keeping them happy should be your goal even with the mostly good news that continues to dominate the rental market. It's better to keep a good tenant than to weed through new applicants to find another good tenant.

Answer B. - Saying “No.” is absolutely the landlord's right. Landlords aren't compelled to accept changes proposed by a tenant in a lease renewal. Of course, the opposite is also true. Mr. Nice Tenant doesn't have to accept a lease renewal that leaves out things he wants (the girlfriend) or adds things he doesn't want (such as higher rent). The landlord will have to consider whether denying the request will prompt Mr. Tenant to look for a new home.

Answer C. - Having the girlfriend sign the lease is a good start if you agree to add an occupant to the property that Mr. Tenant is living in. Lease renewals are the ideal time to tweak original lease terms including raising monthly rent. Both the landlord and the tenant can propose terms through a lease renewal that address issues that have come up through the last year.

But wait, there's more!

Real protection, 'though, will require more than adding the girlfriend's name to the lease. The landlord must vet her just as he presumably did when he signed a lease with Mr. Nice Tenant. Her credit and criminal background should be screened. Her previous landlords should be checked as references, and the girlfriend should complete a rental application just as every other new tenant would.

After all, maybe Mr. Tenant has blind spots where love is concerned. Maybe his girlfriend is a debt-ridden con who's been repeatedly evicted for nonpayment of rent. Adding her name to the lease could subject the landlord to serious risk.

Okay, maybe that sounds a bit paranoid, but when it comes to a hard-earned investment property, we want the landlord to do all he can to protect that investment that may be his sole source of income or could be his retirement plan. And if Mr. Nice Tenant's girlfriend is as nice as her boyfriend, then she'll understand.   

]]> https://www.ezlandlordforms.com/articles/educational/1/629/should-i-invest-in-the-rental-business/ https://www.ezlandlordforms.com/articles/educational/1/629/should-i-invest-in-the-rental-business/ Thu, 07 Apr 2016 16:58:16 GMT

You've heard it before: Property is wealth. But is it? You're thinking of becoming an investor in rental properties but wondering if it's right for you. Why not check out the research that savvy investors have already done and find out once and for all if it makes fiscal sense to get into rentals?

You can tap traditional sources for information. Books such as Dolf de Roos' New York Times bestseller, “Real Estate Riches: How to Become Rich Using Your Banker's Money,” are a great place to start. But don't discount online sources like real estate advisers and property management bloggers who share their success and failures through entertaining columns.

Sure, you might have to join their mailing list to get access to advice columns and web seminars. Maybe you'll even have to pay a fee to download guides that will help you decide how profitable a particular rental scheme might be. Consider it a deposit on your finance education – tuition, if you will, for lessons that could save you from making expensive mistakes as a first-time investor.

And don't limit yourself to only positive, encouraging articles. Also read those, like the one that Janet Berry-Johnson wrote for Forbes, that lay out the downsides.

You want to be sure that your decision to take a leap into rental investment – or to bypass that particular form of investing – is based on sound financial, structural and market information.     

Who's in this market and who's succeeding?

Do you have to be young and physically strong to be a landlord? Middle-aged and already wealthy? It would be great if you could take a quick test, like those quizzes that are always popping up on social media, to tell you if real estate investment is right for you. You'd tick off boxes in multiple choice questions and, if you chose more B'c than As, Cs or Ds, some algorithm would declare that you're a 'Natural Born Investor.”

Well, it isn't quite that easy, yet a good number of sources do list certain hallmark characteristics of prosperous rental investors. Investor and author James Vermillion, for instance, identified personality and habit traits that seem to be shared by successful investors.

According to a personal finance article in Forbes magazine, winning at rentals appears to come down to having a specific set of abilities and aspirations, and realistic expectations. Notably, it said, “...making a living [solely as a property investor] isn’t always as easy as others would lead you to believe. If you want to earn a living, for example the equivalent of a $50,000 salary, you’ll need to profit more than $4,000 per month. That’s a lot of pressure.”

The common theme then isn't age and background as much as it is pragmatism and practicality as well as the ability to persist in the face of unexpected repairs, vacancies, and bad tenants. And don't think of investments as a way to resolve an existing financial crisis. You'll need to start your venture with good credit, accommodating lenders, and money to spare after the purchase for repairs and other contingencies.

You'd better be a planner, or find a partner who is, so that your real estate investment doesn't drift aimlessly between profits and loss, year after year. InvestFourMore's Mark Ferguson sets annual goals for his rental property business. The wisdom here is that he won't easily be enticed into buying property that doesn't meet his goals. And if a property fails to live up to its income promise, it's time to cut it loose. Ferguson said, during an EZLandlordForms Tweet chat, #REInvestingChat, that hanging on to a home that isn't making money every month is a mistake. Emotional attachment to rental property is a no-no. Landlords who fall into that trap typically are leasing out a home they once lived in.

Finally, landlords tend to help one another out so, while it can feel lonely when a tenant calls at 9 p.m. with a plumbing emergency, as a landlord you'll have friends out there. As an example, the comments that follow J.D. Roth's personal account of buying an investment property at auction are as interesting, and perhaps more so, than Roth's tale itself. Readers share stories of their own experiences with being landlords, trade tips on insurance, discuss how to screen and develop a good relationship with tenants, and talk about how they survived court actions. The comments illustrate the support many find within the landlord community. Indeed, this willingness among landlords to share their stories is a bonus for anyone researching the job.

How to Get Started

In “Real Estate Investing for Dummies,” authors Eric Tyson and Robert S. Griswold advise first-time investors to jettison any thoughts of buying and leasing property as a get-rich-quick scheme. That's not the way it works. Careful study is called for. Research your financial options. The larger the down payment, the lower mortgage payments will be and the more you'll keep as profit when rent is paid each month Then, scrutinize the local market and find out what homes are going for in your area before making any offers.

Among the considerations that they and other investors advise you to take into account if you're going to enter the market:

• Have a trusted team of real estate advisers, a banker, attorney, accountant, and contractors, especially if you intend to invest in more than one property.
• Create a budget and set up bookkeeping, or use a professional service.
• Budget your time. Property management, especially at first, requires a generous commitment.
• Determine if you have the do-it-yourself skills, and do an honest assessment of the time that any rehab will take, before acquiring property that will need work before tenants move in.
• Buy rental property close to home so you're nearby when something comes up.
• Choose neighborhoods that are on the way up but purchase property below its market value.
• Make sure monthly rent will more than cover expenses. Cash flow is more important than long-term appreciation when you're starting out. Ferguson said his formula is, “Cash flow [equals] rent, minus mortgage, taxes, insurance, vacancies and maintenance. I like [cash flow] to equal 15 percent investment.”
• Unless you're familiar with commercial property, start out with residential rentals.

But what if I'm not cut out to be a landlord?

Ferguson says that careful study before investing and even fantastic deals on property won't amount to success if you can't manage your units.

“Finding great deals on rental properties is only one step to a successful investment. You also must manage them well or have a great property manager. You can’t be soft on tenants, and you can’t be lazy renting homes or you will pay for it later on,” he says.

Many landlords have found, sometimes after years into it, that they just don't have the temperament and stamina to deal with prospective tenants, take calls at all hours, and hold firm when a tenant offers yet another sob story about late rent.

If that sounds like you, that doesn't have to mean that rental investment is off the table. In fact, Ferguson is one of many very successful real estate investors who lack the constitution for day-to-day land-lording. That's where property managers come in! They charge a percentage of the rent they collect, so factor that fee into potential expenses before making an offer on a property.

Investing in rentals is not for everyone, even with the help of professionals. If everything you learn about being a landlord turns you off, listen to your gut and consider another type of investment. However, if you've done your research and you're sold on the idea, start small and periodically re-evaluate your investment to make sure you're on track with goals. And, although you can delegate many aspects of being a landlord, the ultimate responsibility will lie with you so be prepared for that ongoing commitment.

 

]]> https://www.ezlandlordforms.com/articles/educational/2/627/how-vulnerable-are-your-assets-as-a-landlord/ https://www.ezlandlordforms.com/articles/educational/2/627/how-vulnerable-are-your-assets-as-a-landlord/ Tue, 15 Mar 2016 16:01:53 GMT

The owner of a Pittsburgh apartment complex is being sued by a woman who claims that when she toured a rental unit, she was so startled by a dog's sudden barking that she fell down a flight of steps. Ten months later, she has filed suit in Pennsylvania Supreme Court, saying that the stairway at the complex was poorly-maintained and that her injuries have required extensive and ongoing treatment.

She is seeking monetary and punitive damages, meaning that she hopes for a judgement that will cover her costs along with a payment that could be as much as double her actual costs. Depending on the seriousness of her injuries, the cost of her medical treatment and loss of wages, a favorable ruling could cost the complex owner hundreds of thousands of dollars. If the suit had been filed in a state that has a higher cap on punitive damages, a ruling in her favor could result in a greater award.

The lesson here is that if you own rental property, you own assets that are at risk. Just as large corporations protect their assets, landlords must be sure their investments are protected, even if they have just one rental property.

Rental property liability encompasses far more than falls and other accidents. For instance, it's easy to violate Fair Housing laws without the intention to discriminate, thus leaving landlords open to lawsuits, and alleged Fair Housing law violations can take years to resolve.

People can be sue-happy and real estate is a prime target for lawsuits. Too few landlords consider these risks or take the proper steps to protect their assets.

How is the landlord at risk?

The Pittsburgh case seems easy enough to understand. A judge will have to decide whether the apartment complex landlord took adequate measures to safeguard tenants and visitors who used the stairway. But there are hundreds of other, less clear, cases where courts must decide if landlords are liable.

Suits stemming from the presence of toxic mold in homes have exploded over the last decade.  Along with mold, environmental hazards such as lead paint and improperly contained asbestos also are on litigators' radar. In every case, courts must tease out where the responsibility for damages lies, how much the landlord is on the hook for, and more.

Then, there is the very real risk of being sued by tenants fighting eviction. Evictions commonly take months to carry out, and savvy tenants who want to milk the landlord know all the delay tactics.

Cases can drag on, leading to months or years of lost rental income not to mention eventual awards or settlements. And even landlords who prevail are unlikely to be able to recoup all their losses.

What can I do to cut my liability?

Real estate management attorneys have long urged rental property owners to set up Limited Liability Corporations – LLCs – to hold and manage property separately from the landlord's personal assets. That way, losing a lawsuit involving rental property doesn't jeopardize the landlord's own home and other assets. Property managers who use LLCs run all rental transactions through the corporate checking account.

Landlord insurance policies should cover rental units as well as property managers who oversee units. Policies should include provisions to cover rental income losses that occur if a property burns down floods or otherwise becomes uninhabitable. 

Keep in mind that insurance plans typically do not cover vacant rentals, so landlords must thoroughly read their policies and make immediate changes if a property will be empty for an extended period of time.

Finally, lease agreement terms must clearly specify liability, for both residential and commercial rentals. An Ontario landlord escaped potentially crippling damages when he was sued by a furniture vendor who leased the commercial premises in a building outside Toronto. The lease required the tenant to have a flood  insurance policy which named the landlord as the insured. The policy was also to protect the landlord from being held responsible for flooding, and be equal to the full replacement value of the furniture business. The tenant failed to meet this obligation, the court found. So, although flooding was caused by a leak in the rental property roof, the Court of Appeal for Ontario ruled, the tenant had accepted full responsibility for insurance coverage and could not shift the responsibility to the landlord.

Protecting rental property investments requires forethought and proactive management. Your units are your stake in a stable and rewarding financial future. Don't risk their success on the whims of tenants, the impulses of a judge or jury, or the latest litigation scheme. Take steps now to build a strong lease, insure your property and create the legal business structure that will safeguard the future you're working so hard to secure. 

]]> https://www.ezlandlordforms.com/articles/educational/1/625/skipping-a-background-check-on-your-tenant-you-can-t-afford-it/ https://www.ezlandlordforms.com/articles/educational/1/625/skipping-a-background-check-on-your-tenant-you-can-t-afford-it/ Tue, 01 Mar 2016 09:41:51 GMT

How many times have you filled in application forms without a thought to all the probing questions you're answering? You hand over all your credit information at the bank, your doctor gets all your health data, and don't get us started on the details you divulge when you adopt a rescue pet.

So, why is that some landlords cringe at the thought of asking rental candidates for information that will help determine whether they might be good tenants?

Screening a tenant applicant has never been easier, and it may cost less than you expect! The cost to run a background check is about 3 percent of one average monthly rent payment, whereas the price tag for skipping that check can be in the thousands of dollars. In addition to various expenses and lost income, having the wrong tenant in your property can also cost you time and patience.

Still, some landlords neglect the important task of probing a rental candidate's background, as though asking someone to confirm their identity and income is an insult. Maybe it goes back to early lessons about politeness – to hearing, as a child, that personal questions are rude.

Maybe, though, it has more to do with a landlord feeling that he or she doesn't have the right to ask too many questions, or doesn't want to be labeled a busybody. If that's what is holding you back, you may not be treating your rental like the business that it is.

Are you renting out your property for fun, to meet new people, and because you have time on your hands and need something to keep you busy? We're pretty sure the answer to that is a resounding, “No.” You're likely doing it to increase your monthly income and build your wealth over the long term. You're hoping to be able to retire at a reasonable age – maybe your rental is your retirement plan.

If that's the case, then signing a lease with someone whose background you haven't checked is like betting your 401K on the horses.

What are the risks?
Landlords who have been in the property management business for a while typically have a story or two about bad experiences with tenants. Websites are filled with examples of rentals gone wrong; one Philadelphia investor even devoted a web page to collecting tenant horror stories and letting readers vote on which is worst.

Landlords who perform no background checks are inviting all kinds of trouble. For instance, an apartment community near Myrtle Beach, S.C., where tenants were not screened, made a Top-10 list of crime calls, with residents living in fear of break-ins and assaults. Management saw crimes drop after instituting background checks.

Previously, according to apartment Manager Amanda Pett, “...the complex had not run official background checks on residents apart from searching local court records. Now, all new residents are checked through the State Law Enforcement Division’s background check system.”

Some landlords, like Ellen Cannon, religiously screen before leasing. Cannon and her husband became landlords in their late 20s, starting by renting out a property that had been their first home.

“Sometimes searching for a new tenant can bring a lot of shenanigans. For instance, we have had people lie on their application about their employment or credit rating. Others have been completely dishonest about having a job at all. After checking one person’s application, we found that they had multiple evictions on their record. Obviously, we didn’t rent to that person!” Cannon writes.    

Screening isn't foolproof. Cannon describes the time she leased to people who passed her background screening but who ended up removing doors, windows and appliances from the rental home and ruining its carpets and walls.

“While most people were celebrating the holidays, we spent the entire month of December repairing that home. Did I mention that I was pregnant at the time? Still, I had to spend my days stressed out at work and my evenings crying and painting at the rental house. I had no choice. For close to a month, the situation consumed our whole lives. We were so glad when the home was finally fixed up and ready to be rented out again,” Cannon writes.

Imagine how things might be if Cannon didn't screen applicants. She likely would be confronting repeated damages at her property and could eventually decide to get out of the landlord business.
It's interesting that Cannon doesn't automatically dismiss applicants with a record of bad credit. She even states that tenants with bad credit have been some of her best renters. Yet, she is armed with that background information BEFORE signing a lease with them, so her choices are informed. Cannon has become an expert in screening applicants because she set her rental criteria and makes sure that applicants meet her standards.

What exactly does a background check cover?<

The Credit/Criminal background check will supply you with real data so you can see if an applicant meets your standards for ability to pay rent. You'll get a FICO score, information on credit accounts and whether an applicant carries a balance and pays accounts on time. Also, you'll see any credit inquiries that have been made into your applicant's accounts. Bankruptcies and civil judgments also will be included.
Criminal background information includes crimes committed by anyone with your applicant's name, as well as whether someone with that name is listed in a national database for sex offenders. Most importantly, the screening will confirm identity, so you'll know if your applicants are who they say they are.

In addition to screening for credit and criminal history, you can do your own sleuthing and request a rental history that will provide applicants' former addresses and landlord contact information. Follow up and contact those landlords, asking whether the applicant paid rent on time and treated the rental with care. In addition, many landlords verify applicants' employment and income.

Finally, follow your gut feelings and follow up on suspicions, because screening your applicants isn't a guarantee you'll be protected from troublesome tenants.

And, when you do land a great tenant you, don't take him or her for granted. Reward good tenants for their on-time rent checks, for letting you know when repairs are needed, and for being a good neighbor to other tenants. Good tenants save you time and money and you want to keep them around.

]]> https://www.ezlandlordforms.com/articles/educational/3/623/ontario-landlord-held-liable-for-tenant-fire-death/ https://www.ezlandlordforms.com/articles/educational/3/623/ontario-landlord-held-liable-for-tenant-fire-death/ Tue, 09 Feb 2016 08:43:07 GMT

An Ontario judge recently upheld a lower court’s ruling that a landlord was responsible for the death of a tenant who perished in a fire, even though the fire was caused by the tenant himself.

The judge in the case R. v Singh sentenced landlord Jasvir Singh to three years in prison for “criminal negligence causing death, criminal negligence causing bodily harm, and four counts of mischief endangering life,” according to court documents.  The reason?  Violation of Ontario’s fire code.

According to the decision, Singh was aware that his tenant was not only a serious alcoholic, but that he often cooked in his room on a hotplate.  Indeed, a fire on the property started when the tenant, who had been drinking heavily, left his hotplate on, causing his blanket and mattress to catch on fire.

The tenant attempted to put out the fire himself, but died from smoke inhalation in the process.  Another tenant on the property was seriously burned and hospitalized while trying to help; two other tenants were treated for smoke inhalation.

The landlord in the case had been warned repeatedly that his property failed to comply with Ontario’s fire code, the trial judge found.  Necessary requirements included a fire alarm system with pulls that linked all of the individual units, smoke alarms in every bedroom and prohibiting cooking in bedrooms.

The trial judge also found that Singh, in addition to his knowledge of the tenant’s risky behavior, knew that smoke alarms in the house didn’t function properly.  He apparently even went so far as to lie to the fire inspector about the tenants living with him so that he wouldn’t have to comply with the fire code.

The landlord’s appeal was based on the claim that the tenant’s careless behavior caused the fire.  The appellant also maintained that because the tenant opted to try to fight the fire himself, the landlord shouldn’t be held liable.

However, the court of appeals stated that the trial judge was correct in citing the case R v. Nette as justification for finding that the landlord’s actions were a “significant contributing cause” of the tenant’s death.

In R. v. Nette, the accused in the case was found guilty of causing the death of a 95-year-old woman, whom he had robbed.  During the robbery, the woman was tied up and sometime during the next two days died of asphyxiation.  Although she had not been killed by the accused during the robbery, his actions were considered “more than a trivial cause” and led to his being convicted of second-degree murder, even though other factors may have contributed to the woman’s death.

Implications for Landlords
There are a few important issues at play here.  First, it’s clear that the landlord made a grave error by deceiving authorities and failing to maintain his property.  This case serves as a reminder that trying to cut corners quite often doesn’t pay.  In this case, it led to loss of life, injury and jail time.  Maintaining smoke detectors, alarms and other safety equipment is crucial for the safety of tenants and helps protect the landlord from liability.  It’s also required by law.

Landlords should also take note of the fact that the landlord in the Ontario fire case was considered at least partially responsible for the tenant’s negligent behavior.  Although there were certainly other factors involved in the final ruling, the trial judge found that the landlord should have taken measures to prevent the tenant from cooking in his room, in accordance with the fire code.

When it comes to your own rental property, conducting regular inspections and making note of your observations as well as those of other tenants is good practice for landlords and can help catch risky behavior that could lead to loss of life or home.  The Ontario Landlord and Tenant Board requires that an “Information for Tenants” pamphlet, which outlines some of the responsibilities that both parties have, be given to the tenant by the landlord before the tenancy begins.  Presenting this with a new lease is a good way to start a conversation about what kinds of tenant behaviors are expected and what you as the landlord can and cannot do.

This case also illustrates that the consequences of actions can have greater weight than the actions themselves.  Even though the tenant in the Ontario case started the fire and then tried to fight it himself, the landlord was still culpable because his own deeds (or misdeeds) contributed to the tenant’s death.  The judges’ rulings suggest that landlords can’t simply hand over the keys and think that the responsibilities end there.  Ultimately, landlords have an obligation to provide all a safe environment for all tenants, not just a safe building.

]]> https://www.ezlandlordforms.com/articles/educational/4/621/what-do-landlords-need-to-prepare-for-eviction-hearings/ https://www.ezlandlordforms.com/articles/educational/4/621/what-do-landlords-need-to-prepare-for-eviction-hearings/ Thu, 21 Jan 2016 08:21:22 GMT

When it comes to evictions, the Boy Scouts got it right: Be prepared.

Granted, the Boy Scouts probably weren’t talking about evictions (if they were, then hats off to the organization for teaching some real-life skills), but their advice is solid nonetheless.  The eviction process is probably the messiest and most anxiety-producing you’ll experience as a landlord.  Having your proverbial ducks in a row when you head into court for your hearing will help calm your nerves and ensure a more successful legal outcome.

The Tip of the Iceberg

Before you read further, let’s make one thing clear: If you haven’t done the eviction legwork ahead of time, there’s no point in heading to court.  Eviction hearings are merely the visible tip of the iceberg, with all of the substantial work and preparation less visible and obvious.

This means that well before you go to court, and even before you’ve made the decision to evict, you need to begin documenting your actions and those of your tenants.  The day before you’re scheduled to appear is not the time to start gathering evidence.  Preparation needs to be done ahead of time (more about this later).

For now, we’ll assume that you’ve kept scrupulous records (an Eviction Record Timeline can help) and are well-versed in what is required by your jurisdiction when it comes to filing an unlawful detainer motion (“unlawful detainer” refers to the fact that because the terms of the lease have been broken, the tenant no longer has a legal right to live in the home.  Ultimately, of course, this will be decided in court.) 

The specific eviction notice, filing forms and requirements vary from state to state, and even within each state depending on the lease violation, so you’ll need to check with yours before proceeding.  In general, though, before you can schedule a hearing, you’ll need to serve the appropriate eviction notices.  Once you’ve filed the paperwork, a court date will be scheduled.

Building Your Case

The eviction notice has been served and the date has been set.  Now what?  Preparation is your best defense, and you’ll need to have several documents with you to present to the judge hearing your case.  Although your documentation might vary depending upon the case you’re trying to build, you can count on needing much of the following:

Lease Agreement: A signed and dated lease agreement will show what the original terms were and allow you to explain how they’ve been violated.  If you have addenda that were included with the original lease agreement, make sure you bring those as well.  If you don’t have a written lease, it doesn’t mean that you don’t have a case.  You’ll just have a harder time proving it.

Notices: You must bring a copy of the eviction notice you served on the tenant to the hearing.  If you issued an informal warning or notice to your tenant, such as a late rent notice or an unauthorized pet lease violation, you’ll want to bring copies.  Remember that bit about needing to do your work ahead of time?  This is where issuing notices in a prompt and systematic manner pays off because you’ll have written proof that you tried to address the issue with the tenant in the past.

Conversations: Although you probably have documentation of written notices given, you may not have it for any conversations you’ve had with the tenant – you probably didn’t have an assistant taking dictation while you spoke.  However you should, just as a general rule, make notes about anything that is shared verbally between you.  If you haven’t been keeping written records, start now.  Again, this is some of that work you should do long before you reach the eviction stage.  Document any phone calls, including date and time, and describe in as much detail as possible what was said.  You can do this for face-to-face interactions as well.

Emails: If any communication with your tenant was via email, print out copies.  It might help to create a special folder in your inbox for each tenant.  Filing the emails in the appropriate folders will make it a cinch to find and gather what you need.  If you have the ability to request “read receipts” from your email provider, do so and save the notifications.  (If you email documents to your tenants through ezLandlordForms, you can select to be notified when they’ve been opened.)

Receipts: If you’ve made any repairs due to damage caused by the tenant, save the receipts or bring copies of the estimates for the work that needs to be done.  This goes for returned checks or any other paperwork that illustrates your history together, especially if it reflects the tenant’s wrongdoing.  You can also use rent receipts to easily keep track of when and how the tenant paid you, as well as to make notes about individual payments.  You may not need any of these, but if the judge asks, you’ll be prepared. 

Photos: Pictures are vital for demonstrating damage to the property.  The best way to show this is before-and-after shots.  Make it a practice to take pictures of your property upon the tenant's move-in, and complete a Move-In/Move-Out Condition Checklist signed by both you and the renter.  Label and date them (ideally with timestamps), which you can do whether the photos are digital or prints.  Then take pictures of damage the tenant has caused.  Since you can’t take your rental property to court, pictures are the next-best thing.

Witnesses: A written statement by a witness who may be able to substantiate your claim won’t hold up in a court of law, even if it’s written under oath.  If you have someone who can help your case, he or she will need to appear in court.  Think about the questions you’d like to ask the witness ahead of time so you’re prepared.  (Buying your witness dinner afterward is also a nice gesture.)

And the Verdict Is…

Whether you represent yourself in court or you hire an attorney, having documentation is your best defense in an eviction case.  You’re much more likely to get a ruling in your favor if you’re able to present strong evidence, and the best time to start working on that is now, ideally before the tenant moves in.  Hopefully you’ll never need to follow your paper trail to court, but if you do you stand a better chance of finding yourself on the winning side, with no help required from a Boy Scout.

]]> https://www.ezlandlordforms.com/articles/news/620/when-your-property-is-under-siege-where-s-the-legal-line/ https://www.ezlandlordforms.com/articles/news/620/when-your-property-is-under-siege-where-s-the-legal-line/ Thu, 14 Jan 2016 06:56:54 GMT

Image courtesy of L.A. Weekly and MSNBC

 

Landlords should never barge into their tenants' home without notice to enter, of course. But what if a horrific tragedy with international repercussions propels them across that threshold... with a horde of journalists at their heels?

That appears to have happened to California landlords Doyle and Judy Miller when their tenants were named in the December shooting rampage in San Bernardino. What followed – the chaotic scene in the Miller's Redlands rental property as reporters from CNN, MSNBC, CBS and the BBC surged into the apartment – has been dissected and analyzed by scores of pundits and property attorneys, not to mention armchair experts across the country and beyond.

But what are property managers saying? “What if that had been me?” “What would I have done?” “How would I have handled the media stampeding to my rental unit, then invading the premises to prowl through rooms and paw tenants' possessions?”

The Millers may not have taken the time for that theoretical exercise. The couple appeared overwhelmed in news reports. Doyle Miller claimed he didn't give reporters permission to enter the apartment. His wife, Judy, tearfully told reporters that she will always ask herself how she could have approved a lease agreement with people who turned out to be capable of such vile, savage acts.

Doubtless, the Millers never imagined themselves in such a dilemma. Panic must have driven their actions. They may have felt compelled to distance themselves from the shooters who lived in their investment property. Maybe they felt a duty to allow the crush of journalists to record each detail. Did the Millers even have time to think?

What about the media? Reporters today are no different from those of yesteryear who were just as pressured by editors to get the story first. The difference now is the immediacy with which they can present the story to news consumers. Social media has reduced the lag time in news competition to mere seconds; and seconds don't permit a copy desk, publishers and media lawyers to weigh in on whether or when a photo or interview should be published.

Yet, the Millers surely had far less experience in managing crisis than the journalists. Until the San Bernardino shootings, their worst confrontation as landlords may have been trying to collect overdue rent or testifying in court on a tenant breaking a lease agreement.   

Did the Millers break the law?

So, were the bewildered Millers just collateral damage in a disaster which also took 14 lives? Or were they scofflaws in all-bets-are-off circumstances? The answer may be that they acted both on emotion and from the standpoint that unprecedented circumstances called for unique action.

Whatever the reason, an argument could be made that their actions, or lack of action to bar the media, violated California landlord/tenant law. When a tenant dies, existing lease agreements become part of his or her estate which must be settled by heirs. An estate must go through the probate process so assets are distributed according to the person's wishes.

Just as each state has its own landlord-tenant law, each can set guidelines for handling repossession of a deceased tenant's unit. Most call for a waiting period before bringing a case for eviction or abandonment, and require landlords to store the late tenant's possessions for a period of time before disposal.

If the heirs in this case pursue legal action, the Millers' lawyer may try to argue that the Millers' right to enter the rental property without advanced, written notice was based on one of the allowable reasons under California landlord-tenant law.

Those reasons include:

• To respond to an emergency
• Tenant has moved out or has abandoned the rental unit.
• Tenant is present and consents to the entry at the time of entry.
• Tenant and landlord have agreed that the landlord will make repairs or supply services, and have agreed orally that the landlord may enter to make the repairs or supply the services.

What about the reporters who came onto the property and handled the tenants' possessions? If it can be successfully argued that reporters trespassed without Millers' permission, could the Millers still be held responsible for not properly securing the apartment to keep out nosy journalists?

The Miller's circumstances are truly unusual and a legal ruling on whether the couple - or the reporters who entered the unit - are culpable, would surely require complex reasoning to arrive at a fair judgment.

Do you have a crisis management plan?

Sure, the Millers had no crystal ball to predict the events of Dec. 2 and the fallout at their Redlands rental. But it appears that they lacked an effective crisis management plan? Who was on their support team to help with that catastrophe? Their alarming experience should be a wake-up call for any property manager without a plan and a list of allies who can step up when disaster hits.

Property Management Insider recommends landlords develop a crisis communications plan. Whether you confront a hurricane, a crime or other emergency, there are steps you can ahead of time that will help you cope and feel a sense of control in chaotic circumstances.

“While it’s impossible to consider every possible crisis situation, considering what could happen is an important exercise. Doing so can help you understand what you’ll need from a communications and business contingency standpoint in the event of a crisis,” the Insider notes.

Create a plan that includes the following measures to be taken in a crisis:

• Establish a chain of command and decide how the members will communicate during crisis.
• List who will need information during crisis and how information will be sent to them.
• Assign yourself or staff to handle specific emergencies. (Some may require training. Decide what and when that will occur.)

Write down the plan you create and keep it handy for instant reference when you need it. Make copies for staff and family members who will be called on to help. Collect contact information business and residential neighbors who live near your rental property. If you manage multi-units, include other tenants on the list of those who will receive information during an emergency.

Many management companies appoint a spokesperson who can field media questions and answer calls from local officials and police. That person may require training so that communication is clear and stems rumors and panic. If your business staff consists simply of you or you and a spouse, be prepared to act as your own spokesperson. Think about how you will respond, both in terms of how much information you should give to a caller and whether the call deserves a response at all. After all, reporters have a job to do but their role in a crisis is secondary to that of emergency, fire and police personnel.

Designing a comprehensive crisis management plan might seem like a big effort for a busy property manager. But you put a lot of effort into screening tenants and crafting solid leases so you could avoid problems like unpaid rent and testifying in court against a lease violator, right? Surely, it's worth your time to minimize repercussions from what could be the worst experience in your landlord career, and to prevent the world's 'experts' from second-guessing your actions in a crisis.

]]> https://www.ezlandlordforms.com/articles/educational/2/619/can-veterans-use-va-loans-for-real-estate-investing/ https://www.ezlandlordforms.com/articles/educational/2/619/can-veterans-use-va-loans-for-real-estate-investing/ Tue, 12 Jan 2016 06:47:35 GMT

Mortgage programs outlined by the Department of Veteran Affairs, with alluringly low interest rates and zero money down, seem too good to be true for real estate investors.  And they are… sort of.  

While it’s true that these loans are designed to help service members purchase homes, not investment properties, they still present an opportunity for investors.  Are they a fast-track to creating a real-estate portfolio?  Maybe not.  But for those who might not otherwise be able to jump into the world of investing, VA loans offer a way to save money and bring in some cash.

Savings for Service Members

VA loans were created by the U.S. government in 1944 to enable service members to purchase their own homes.  Veterans, active members of the military and their families can take advantage of the program.  The mortgages, although offered by private lenders, are backed by the government and come with very attractive terms, terms that conventional loans just can’t match.

Those terms include:

• No down payments
• Lower interest rates
• No PMI (private mortgage insurance) requirement
• Limited closing costs
• No pre-payment penalty (fee for paying the loan off early)

It’s easy to see how quickly the savings can mount.  Consider the purchase of a home costing $200,000.  Immediately, the qualifying borrower can eliminate the need for what would most likely be a down payment of $40,000, or 20 percent.  That amount would be required to avoid PMI, which could be another $166 a month assuming a rate of 1 percent on the full loan amount of $200,000.    

Since these loans are guaranteed by the government, lenders generally offer them at lower interest rates.  A VA loan at a rate of, say, 3 percent as opposed to a conventional loan at 4 percent could save you close to $40,000 over 30 years on that $200,000 home.  The savings continue to grow when you factor in VA limits on closing costs.  If you’re thinking of investing in real estate, terms like these certainly make it easy to get started.

Loan Restrictions

Clearly VA loans are a cost-effective way to finance a home.  Those looking to use them for investment properties, however, will have to understand the restrictions inherent in the program.

First, beyond the requirement that the borrower possess a Certificate of Eligibility, the home must first and foremost be for his or her personal occupancy.  However, that home can be an existing home or new construction, a condo or a residence with more than one unit.  VA loans can also be used to make an existing home more energy efficient.

VA loans don’t come without other caveats.  As with any government program, they’re wrapped in their fair share of red tape.  For example, there are approximately 30 pages explaining the restrictions associated with the purchase of a home in a “common interest community,” or any residence that would have a common area (like a condo.)  This doesn’t mean that VA loans can’t be used for condos, but be aware that lots of conditions will have to be met.

If you were hoping to use the property as a place to live and for a nonresidential purpose (for example a business downstairs, apartment upstairs), you’ll have to make sure that its main purpose is indeed residential.  In fact, no more than 25 percent of the space can be used for anything other than that.  There are also many other “minimum property requirements,” including stipulations that there be areas for living, sleeping, cooking and eating.  That means that trying to pass off a retail space as an apartment isn’t going to work.

Stretching the Loan Amount

While the VA doesn’t put a limit on the amount of money you can borrow to finance your home, it does limit the amount of liability it will assume.  For that reason, most lenders will limit the loan amount, which is generally four times what a veteran’s entitlement is.  The basic entitlement is $36,000, but veterans in most of the country will be able to borrow an amount of $417,000 without a down payment.  Keep in mind, though, that loan limits vary by county just as home values do.

The VA sweetens the deal by allowing any remaining entitlement to be used for another loan.  So if you only used a portion of it for one home, part or all of the remainder can be used for your next purchase. 

That may not sound too generous if you have only $25,000 of your entitlement left.  But according to the VA, most lenders will only require that the guaranty entitlement and any down payment equal 25 percent of the value of the home.  So you could still put no money down and use the remaining $25,000 entitlement to purchase a $100,000 home.  Want a bigger loan?  Make a larger down payment.  See how far that money can stretch?

You can also have your entitlement restored if you’ve paid off the loan on a previously purchased home and you’ve sold that property, or if you sell a property with an existing loan to another service member who will use his or her entitlement to make the purchase.

Investment Opportunities

What does all of this mean for the would-be real estate investor? 

Veterans can use VA loans to acquire a starter home, enjoy living there for a time, then buy another home when they are ready to move while keeping the original as a rental property.  That process can be repeated, as long as they have money in their entitlement.

Keeping in mind that “primary residence” requirement, VA loans offer especially exciting opportunities for flippers, if they’ll be occupying the property while it’s owned and perhaps updated.  The financial advantages of VA loans make it easier for those without large cash reserves to maximize their profits on a flip.  Since you can use your entitlement again and again, there’s really no limit to how many homes you can buy and sell at a profit.  This may be a relatively slow way to build personal wealth, but it can be a substantial one. 

Another exciting possibility lies in the fact that a VA loan can be used to purchase a property with more than one family unit, up to four.  As long as you’ll be living in one of those units, you can rent out the others for additional income.  What’s more, the VA will factor in the income from those units when determining the loan amount.  This means that you could qualify for an even larger loan. 

If you decide to purchase a property with another veteran, the number of units increases according to the number of purchasers – add one unit to the baseline of four for each additional purchaser.  It also increases your buying power and entitlement.

Active military members can also use their basic housing allowance to seriously reduce or even eliminate monthly mortgage payments.  That’s an advantage that most real estate investors simply don’t have.

If all of this has you saying “sign me up,” check the eligibility requirements to make sure you qualify.  As with any type of loan, you’ll want to shop around with different lenders to get the best rate.  You should also work with a broker who has VA loan experience and spend some time studying the program’s benefits and restrictions.

But even with those restrictions, VA loans are a powerful way for veterans without large cash reserves, whether new to the game or experienced investors, to build wealth from real estate, one property at a time.

Related Reading:

How to Secure Military Renters in Your Vacant Rental Properties, and Fast

Understanding Military Tenants, the PCS Process & How to Minimize Military Rental Vacancies

]]> https://www.ezlandlordforms.com/articles/educational/3/618/why-do-lease-agreements-need-addenda-and-disclosures/ https://www.ezlandlordforms.com/articles/educational/3/618/why-do-lease-agreements-need-addenda-and-disclosures/ Mon, 28 Dec 2015 11:58:03 GMT

Why does drafting a new lease agreement feel like buliding a wall piece by piece, to protect against every possible way the renter could cost you money? 

In short, that’s what a strong lease agreement does: it protects you from all (or at least the most common) of the ways tenants cost landlords money.  From unpaid rents, to property damage, to tenant lawsuits, to neglect of property upkeep, to crimes committed by tenants, good rental agreements cover all of these bases and more, through a combination of legal clauses, disclosures and lease addenda.

The resulting lease package will be your property’s Constitution, and your Bill of Rights for the next year or longer, so you need to make sure every likely contingency is considered.

Need to make sure the tenant doesn't bring home pet playmates for that one dog you're permitting?  Use a Pet Addendum.  Don't want your tenants hosting Airbnb or other house guests for long stretches?  Include a Tenant Guest Policy addendum.

Once you establish the basic 'who, what, when and where' of the lease agreement, addenda help you tackle the 'how'.  They are the perfect tools for expanding on regulations and guidelines that are difficult to fully address within a single lease document.

Addenda fill another important need for you and your tenant: they better explain where your responsibilities end and your tenants' begin.

Disclosures are a bit more straightforward.  Generally, these information pieces are attached to a lease to meet legal requirements, for example lead paint disclosures that federal law requires for certain, older properties.  If required lease disclosures aren't included, you will be vulnerable to tenant lawsuits, fines and civil penalties.

Addenda are safeguards – for both parties

Landlords and property managers function as a sort of intermediary between their tenants and the 'real world'.  Landlords pay the real estate taxes, insure the dwelling, and make sure that the building and utilities are maintained to code.

Tenants typically don't give a thought to those responsibilities and that's fine; they have to tend to their own obligations, like paying rent on time.  However, the savvy landlord will use lease addenda to spotlight certain tenant obligations that tenants may not know even know they have.  Renter's insurance is the perfect example.

Including a Waiver of Rental Insurance addendum with the lease preps your tenant for worst-case scenarios with their possessions in your rental unit.  If your property is damaged in a fire, your insurance covers damage to the unit, not to the tenant's clothing, books, computers and other possessions.  Amazingly, though, many young tenants have no idea that's how it works.  In a 2014 survey, Nationwide Insurance found that close to two-thirds of young adults who rent don't have renters insurance.   Further, more than half of those without that coverage don't think they need it.

Most landlords don’t insist that their tenants buy a renter insurance policy, but adding the Waiver of Insurance to the lease agreement tells them that you're not on the hook for their losses.  It gives them a chance to think about whether they want to pay for the coverage.

No, tenants aren't your children.  On the other hand, if you anticipate problems for them and spell out the ways that those problems will be handled, you're bound to save yourself considerable grief.  The informed tenant is better equipped to handle their own crises.

When in doubt, spell it out.    

There also are addenda which protect you in murky legal areas, such as when your state's laws conflict with federal statutes.  That's the current case with marijuana use.  Many states have legalized marijuana for recreational and/or medicinal purposes, but the drug is still illegal in the eyes of the feds:

“It is important to note that Congress has determined that marijuana is a dangerous drug and that the illegal distribution and sale of marijuana is a serious crime.  The Department of Justice (DOJ) is committed to enforcing the Controlled Substances Act (CSA) consistent with these determinations.” -Office of National Drug Control Policy

A Marijuana Addendum forbids all use of the drug and tells the tenant that marijuana use will be considered a lease violation.  It serves as advance warning for the tenant and removes the risk of the landlord being charged with a deliberate federal violation.

Legal inconsistencies that exist between some state and city laws can also be addressed with addenda.  For example, while states require that pets be vaccinated against rabies, some cities go a step further and require pet owners to pay a fee to have their pets registered, sometimes charging higher fees for non-neutered pets.  Therefore, it may not be enough to mention in the lease that a pet is permitted.  A Pet Addendum covers all the potential legal ground by requiring vaccination and registration.

And why not make use of addenda to reduce liability and the risk of damage to your units from tenants' poor maintenance habits?  Mold is a prime example of a preventable issue that, left untreated, has caused many a headache for investment property owners.  The Mold Prevention addendum lists actions a tenant must take to prevent mold growth and requires the tenant to notify the landlord if mold does appear.

A Final Word on Disclosures

Using proper disclosures is a good first step in preventing lawsuits.  The lone federal disclosure requirement for residential leases – Lead-Based Paint Hazard – is designed to warn tenants of potentially unsafe conditions from lead paint that was used in many homes built prior to 1978.

Additionally, each state has its own rules on information all tenants must be given when renting a property.  Most of those are predictable, such as whether pesticides are used on the property.  Others are a little more unusual.

As described by the California Department of Consumer Affairs, landlords are required to tell their new tenants whether anyone has died at the property within the last three years.  The state's lawmakers also passed a rule requiring landlords to tell tenants whether a methamphetamine lab was previously operated on the property.

Wherever you manage rental property, you can be sure the state has rules governing what you must tell your tenants in advance of move-in day.  Make sure your lease agreements carry all required state-specific disclosures, and attach addenda that will eliminate guesswork.

]]> https://www.ezlandlordforms.com/articles/educational/5/617/what-happens-when-your-tenant-decides-to-remodel/ https://www.ezlandlordforms.com/articles/educational/5/617/what-happens-when-your-tenant-decides-to-remodel/ Wed, 09 Dec 2015 03:14:55 GMT

The best tenants are those who treat your rental like it's their own home.  They keep the unit clean, handle minor issues like replacing light bulbs without bothering you, and maybe even apply some fresh paint or plant a flower garden.

Then, there are tenants who come to believe that your unit is their own property.  Right down to major remodeling without your approval.

You may have heard a story or two.  A tenant who built a deck off the house, or replaced kitchen and bath fixtures, or laid new flooring – sometimes surprising the landlord with a bill for the work.

A recent case in New York City sets a new bar for the unbelievable.  Property owner CPW Towers is suing Central Park West resident Josefina Berman in Manhattan Supreme Court, seeking an injunction and $85,000 in damages.  CPW claims that the 64-year-old tenant apparently decided to 'combine' her rental unit with an adjacent condominium that she owns in the same building, and that she is barring the landlord from entering the rental to see what's happening.

No one knew what Berman was up to, the suit claims, until neighbors heard loud noises from hammering and sawing connected to Berman's alleged attempts to take down and erect new walls and to combine the plumbing and electricity in the apartment she has rented for years with the pipes and wires in the adjoining condo she bought in 1998.

The noise and fears of damage to surrounding units was so extreme, according to court documents, that some tenants in the 414-unit building have asked CPW for rent abatements or to be permitted to break their leases and move out.  Meanwhile, CPW states in its suit, Berman never turned in drawings or obtained permits for the work, that the project isn't insured and that unlicensed workers are doing the construction.

Why do some tenants think they own the place?

It would take a team of psychologists to probe all the thought that goes into a tenant developing a feeling of ownership toward a rental.  Doubtless, the longer tenants live in a rental, the more attached they become to the property.  But what prompts tenants to cross that line as Josefina Berman is charged with doing?  We'll follow that lawsuit, which was filed on Nov.  23, 2015, and keep you posted.  But another case – this one on the West Coast – may offer insight.

The scene of conflict is actually outside the Berkeley, Ca., apartment owned by the Anderson family.  Tenant Wally Gorell is fighting the Andersons for the right to maintain the trees, shrubs and flowers he started planting in 1979, when he first moved in.  The Andersons want to cut back the front yard plot, which now includes a two-story palm tree Gorell grew from seed and an irrigation system he installed on his own dime.

Gorell says the garden conflict is a veiled attempt to get him out of the rent-stabilized unit.  He claims the original Anderson landlords loved the green space.  But there is a record of complaints and efforts over the years to rein in the garden.  Currently, the landlord wants to trim back the growth in order to paint the house.  Gorell claims there is plenty of space to paint.  He even organized neighbors in his resistance effort, some of whom joined him in blocking the landlord's workers.

An apparent hands-off approach early on seems to have set the stage for this current crisis.  What if the landlord had performed regular inspections of the garden and required Gorell to limit the spread of greenery, instead of just responding to complaints?  During lease renewals, the Andersons could have used a lease addendum that would have spelled out future terms governing the garden.  If the issue really is about wanting Gorell to move out, the landlord could have simply non-renewed the lease.

Judges rely heavily on lease agreements when deciding cases of tenants renovating rental property.  Clauses can lead a judge to approve or reject tenant demands for payment for unauthorized changes.  A judge can order a tenant to undo renovations and restore a unit to its previous condition, or order the tenant to pay the landlord for unapproved renovations.

Still, a court will also consider the unwritten history between tenant and landlord.  A landlord's lack of action in the face of alterations he knew the tenant was making can be interpreted as tacit agreement with the changes.  Landlords can even end up paying for tenants' remodeling.  All the more reason to conduct regular inspections and halt any mistreatment or modifications a tenant undertakes.

Routine inspections should be done by every property manager.  To strengthen any case you may later have against a tenant who remodeled without permission, follow these steps:

• Maintain a record of inspections, including the date, who conducted it, and which areas of the unit were inspected.
• Note any unauthorized work.
• Give the tenant notices that address improper alterations and any corrections you require
• Note follow-up inspections to confirm corrections were made.

Is it ever a good idea to let the tenant remodel?

In most areas, a tenant can only make their own repairs in emergencies that pose an immediate danger or make a unit uninhabitable.  States and provinces each define circumstances differently, but most specify that tenants must first notify the landlord of serious issues such as having no hot water.  If a landlord fails to make repairs, a tenant may be permitted to pay for repairs and give the bill to the landlord.

Certainly there are handy tenants who offer in advance to make minor repairs on their rental in exchange for reduced rent.  Many landlords willingly incorporate agreements like this in the lease.

There could even be a good payoff for the landlord who permits a tenant to make a major renovation.  Improvements that a landlord may not have the time or money to make herself could boost the property value and bring in higher future rents.

Make sure that any such agreements are in writing and review contracts personally or call in professionals to assess work that you don't have the expertise to judge.  Always follow the progress of agreed-upon work with routine inspections, else be prepared for some nasty surprises later.

 

]]> https://www.ezlandlordforms.com/articles/educational/5/616/hud-proposes-banning-smoking-in-public-housing-should-you-follow-suit/ https://www.ezlandlordforms.com/articles/educational/5/616/hud-proposes-banning-smoking-in-public-housing-should-you-follow-suit/ Sun, 29 Nov 2015 03:14:34 GMT

The Department of Housing and Urban Development has proposed banning smoking in all buildings under its control, another nail in the coffin for dwindling US smokers.

While many HUD properties have been voluntarily smoke-free for years (HUD strongly encouraged them to adopt no-smoking policies beginning in 2009), the proposal would ban lit tobacco products in all rental units, indoor communal areas and administrative office buildings.  Smoking would also be prohibited in outdoor areas within 25 feet of HUD-owned buildings.

HUD’s proposal, which is currently in the public comment process, will require public housing agencies to implement smoke-free policies within 18 months of a final rule.  It will impact residents in over 700,000 units, although the department says that over 500 agencies have already gone smoke-free in at least one of their buildings.

Not affected by the proposed rule are units in mixed-finance buildings (because the public housing agency would not necessarily be the primary owner) and privately owned units with tenants who receive assistance from a Section 8 program, such as the Section 8 Rental Certificate Program.

The benefits of HUD’s proposal are obvious:  improved air quality, improved residents’ health, reduced fire risk and lower maintenance costs.  Apparently residents agree.  According to the proposal, researchers for the Centers for Disease Control found that the majority of residents in multi-unit housing support smoke-free policies.

That’s hardly surprising, given that only about 18 percent of U.S. adults smoke, according to the CDC.  And even if smoking were limited to private spaces, nonsmokers can still be exposed to second-hand smoke from adjacent units.  Surveys of multi-unit housing residents reveal that anywhere from 24 to 60 percent of them say smoke from other units finds its way into their homes.

The fire risk from smoking is also very real.  According to the U.S. Fire Administration, smoking is the leading cause of fire deaths in multi-unit properties.  Coupled with the added maintenance costs caused by smokers (an estimated $1,250-$2,955 per unit), going totally smoke-free makes sense.

It’s still unclear whether products such as hookahs or e-cigarettes, which use water to vaporize tobacco, will be included in the ban.  Public comment is currently being sought on hookahs, and although a ban on e-cigarettes isn’t currently part of the proposal, HUD has indicated that it could appear in the final version.

The Impact on Landlords

Although the smoke-free mandate only applies to HUD public housing and not privately-owned properties that might, for example, fall under the Section 8 umbrella, a policy this sweeping will certainly send ripples through the rental pond.  If nothing else, it gives landlords looking to institute their own smoke-free property policies a template to follow.

If you currently allow smoking in your units, consider the factors that led HUD to create the ban:  Smoking endangers the health of your residents – smokers and nonsmokers alike – and it’s expensive.  Really expensive.  

Smoking Isn’t a Right

If you fear pushback from any of your resident smokers, don’t forget that smoking is not a constitutional right.  Nor is a smoke-free policy discriminatory in any way.  In fact, allowing smoking could leave landlords vulnerable to lawsuits from nonsmoking residents exposed to second-hand smoke in a multi-unit building.  If, for example, a resident suffers from asthma, he or she could argue that allowing smoking is a violation of fair housing laws.  If you have employees who have to work in common areas where smoking is permitted, you could also be in violation of state laws that forbid smoking in the workplace.  And don’t forget that the vast majority of renters prefer smoke-free housing.

One aspect of the proposal is especially noteworthy for landlords: Public housing agencies are not required to create smoking areas and in fact may expand the smoke-free zones beyond the suggested guidelines.  That means you shouldn’t feel obligated to allow smoking anywhere on your property, either.  It may actually be easier to forbid it altogether than to carve out an area where it’s permitted.

Going Smoke-Free

So what do you do if you have smokers in one or more of your properties and you want to go smoke-free, too?  First, have a system in place to deal with infractions.  Because HUD has endorsed smoke-free policies in the past, it has procedures for dealing with violators.  Take a page from their playbook and do the same.

Start with a lease agreement that includes a nonsmoking clause (HUD has indicated that its smoke-free policy will be included in tenants’ lease agreements).  Or, if you currently have a tenant who is a smoker, you can have him or her sign a smoke-free property addendum.  However, it may be easiest to allow a smoker’s current lease to expire rather than to try to enforce a new addendum.  When the original lease term is up, you can include a nonsmoking clause in the new lease contract, making sure you indicate that visitors and guests must also comply with the policy.  If the tenant doesn’t agree to the new terms, then he or she can move on and you can find a tenant who doesn’t smoke.

When you’re trying to find those tenants, make sure you prominently mention in any advertising and property listings that your units are smoke-free.  You’ll automatically avoid potential tenants who smoke and may actually appeal to a larger pool of renters who prefer smoke-free housing.

If practical, post signs on your property that indicate that smoking is not allowed.  If you do decide to allow smoking areas, make sure they’re also well-marked and that you provide safe receptacles for cigarette butts, such as sand or water buckets.

Tracking Down Offenders

The nose may be the best tool when it comes to finding violators.  If you smell smoke, or if other residents tell you they smell it, follow up at the unit in question.  Periodic inspections of the property and any routine maintenance you may perform are good opportunities to check for evidence of smoking, but you’ll need to give the proper notice to enter as required by your state first.

If your tenant is in violation of your nonsmoking policy, make sure you carefully document your findings.  A smoking violation notice is a professional way to let a tenant know he isn’t upholding the terms of the lease and informs him of the consequences.  Deal with these types of lease violations as you would with any other.

Help is Out There

Many states offer toolkits for landlords looking to make their properties smoke-free.  A quick online search will yield plenty of information and resources.  However, you as the landlord can also serve as a resource for your tenants.  Recognize that many smokers would prefer to quit.  Offering them guidance and support as well as suggesting programs that can help them kick the habit is a healthy move for all involved.

]]> https://www.ezlandlordforms.com/articles/educational/2/615/capex-how-even-experienced-landlords-mess-up-cash-flow/ https://www.ezlandlordforms.com/articles/educational/2/615/capex-how-even-experienced-landlords-mess-up-cash-flow/ Mon, 23 Nov 2015 05:53:27 GMT

Ask a novice landlord about cash flow, and they’ll just subtract the mortgage payment from the rent (hopefully they’ll at least include taxes and insurance).  If they’re a little sharper, they’ll build in the cost of vacancies and marketing.  With more experience, they’ll start factoring in basic maintenance and accounting costs.

But that’s still a recipe for failure.

When the roof starts springing leaks in a half dozen places, most landlords are shocked at the sudden $5,000 bill for a new roof.  They reassure themselves (and their spouses) with lines like “This was a one-time setback, I won’t have another bill like this for twenty years.”  Eight months later the furnace breaks down and costs $2,000.  Next year when the tenants leave, the landlord is surprised when they realize they can’t put off updating the old-school bathroom anymore, if they want to attract decent tenants.

Anyone who wants to consistently make a profit as a landlord and rental investor needs to understand CapEx, or capital expenditures.  These are infrequent, but recurring, large expenses that are unavoidable in real estate.  Roofs, air conditioning condensers, furnaces, windows, kitchens, bathrooms, plumbing, wiring, basement waterproofing, siding, mortar, foundations, driveways, appliances.  Everything gets old and eventually needs to be replaced, and long-term rental investors need to factor these costs into their cash flow before buying.  

Let’s look at some sample math.  Emphasis on sample – these are made-up numbers that will vary from property to property.

Capital Expense	Replacement Cost	Lifespan (years)	Annual Cost	Monthly Cost
Roof	$5,000	20	$250	$20.83
HVAC	$4,000	20	$200	$16.67
Water Heater	$750	10	$75	$6.25
Each Bathroom	$2,500	15	$167	$13.89
Kitchen	$5,000	15	$333	$27.78
Other Appliances	$1,000	10	$100	$8.33
Plumbing	$5,000	30	$167	$13.89
Electrical	$10,000	30	$333	$27.78
Windows	$5,000	50	$100	$8.33
Foundation	$10,000	50	$200	$16.67
Framing	$15,000	50	$300	$25.00
Parking/Driveway	$5,000	30	$167	$13.89
Total:			$2,458	$199.31

Note that this list does not include maintenance that should be done between most tenancies: painting, new flooring, landscaping, pest treatments, etc.  Also bear in mind that apartment buildings have two sets of costs to calculate: overall building and grounds costs (e.g. the roof), and per-unit costs (e.g. kitchen updates).

You need to account for all of these costs before buying a long-term rental investment property.  Part of the evaluation process needs to include finding out as much as you can about when each system was last replaced.  Obtain copies of invoices and receipts if possible.  Even though the monthly CapEx projection will be the same regardless of whether the roof was replaced last month or twenty years ago, you'll have a better sense of when these bills will come due.  Out of necessity, you'll need more money held in a cash reserve in order to responsibly buy a rental property with many aging components.

Here are the expenses your cash flow projections should include, when evaluating a potential investment (along with sample numbers):

Mortgage (P&I): $500

Property Taxes: $170

Insurance: $130

Vacancy Rate (example: 10%): $160

Property Management (if applicable): $160

Accounting/Bookkeeping: $25

Regular Maintenance: $100

CapEx: $200

Total Expenses: $1,445

Rent: $1,600

Monthly Cash Flow: $155

Don’t like what you see after doing the math?  Move on to the next property.  Or invest in a REIT as an altenative real estate investment.  But every brick-and-mortar real property that you buy must have CapEx budgeted into the monthly cash flow, so you're not surprised when major repairs rear their ugly head.  

As a final note, consider that your capital expenditures will be a much higher percentage of the rent for lower-end properties.  Yes, CapEx will be a little higher for larger, higher-end homes, but costs don't rise proportionately to home prices.  For a low-end house that rents for $700, having to budget $200/month for CapEx can be a dealbreaker.  For a house that rents for $2,000, budgeting $230/month for CapEx is proportionately a much lower cost.  It really is harder to make money on lower-end rental properties.

Accurately estimating and budgeting for capital expenditures is the difference between buying winning rental properties and buying a money pit.  CapEx is the silent killer of most new landlords, and why so many flee the industry after their first rental property goes south.

Related Reading:

Planning to Buy a Fixer-Upper? Proceed with Caution

Real Estate Investing 101 with Industry Expert Paul Cohen, Esq.

Common Property Issues & Repairs Landlords Should Know (Infographic)

]]> https://www.ezlandlordforms.com/articles/news/614/6-trends-among-landlords-and-tips-to-outperform-the-norm/ https://www.ezlandlordforms.com/articles/news/614/6-trends-among-landlords-and-tips-to-outperform-the-norm/ Wed, 18 Nov 2015 06:18:29 GMT

You may be sick of hearing it, but it’s a great time to be a landlord.  The statistics keep rolling in, and they’re all pointing in the same profitable direction – rental housing supply is low, and demand is high.  The latest confirmation of this landlord bonanza is Rent.com's 2015 Rental Market Report.

The report reflects a survey of 500 property managers, accounting for thousands of rental properties and hundreds of thousands of individual rental units.  This year marks the report’s seventh year.

So do you fit the profile of today’s highly successful landlords?  If you’re anything like the property managers surveyed in the report (and you probably are), then you’ve no doubt been able to cash in on the hot rental market.  A note of caution: the following trends are not tips, or necessarily smart business practices, but we also include a tip alongside each trend.

You are representative of other US landlords if:

1. You’ve raised your rent.  According to the report, 88 percent of property managers raised the rent in the past year.  This confirms US Census Bureau data, which reveals that the median asking rent continues to steadily climb.  The current average of $802 is up from $756 in 2014 and nearly double what it was 20 years ago.  It looks like this trend will continue: 68 percent of those surveyed expect rental rates to increase by 8 percent next year.

Tip: Your rent should remain appropriate for your property in your market, so find out what the going rate for similar properties is before you raise it.  If you are going to raise it, make sure you abide by the notice requirements of the lease agreement and give an appropriate increase of rent notice to your tenant about the increase.

2. You’ve experienced fewer vacancies.  Although the US Census Bureau reports that rental vacancy rates inched upwards a half of a percent to 7.3 percent in the third quarter of 2015, they’re also down slightly from where they were a year ago.  Vacancy rates overall have continued on a downward trend for the past five years.  In fact, you’d have to go back to 1989 to find the same 6.8 vacancy rate experienced in the second quarter of this year.

Tip: Not every area is experiencing the same growth, so your experiences may differ.  Rental units in the western part of the United States, for example, had a 5.2 percent vacancy rate in the third quarter 2015.  By contrast, properties in the Southeast had a rate of 9.3 percent.  If you’re having difficulty filling your units, you may need to step up your marketing efforts and make updates in order to appeal to the renters in your area.

3. You’re renting to a millennial.  This stands to reason given that millennials made up one-third of the US population in 2013.  However, the financial challenges facing millennials, including student loan debt, a tough entry-level job market and tighter mortgage lending have all contributed to millennials making up a large chunk of the renter population.  According to a 2015 Urban Land Institute study, only 37 percent of millennials own their own homes.  The result is that nearly half (45 percent) of property managers from Rent.com’s survey reported having noticed an increase in millennial renters.

Tip:  Not only are millennials a large pool of renters, they’re also renting longer than other cohorts.  Failing to meet their needs when it comes to rental properties can cost you in the long term.  Marketing your property to millennials and providing the amenities they want (open floor plans, large kitchens and closets, access to technology) can stand you in good stead for the long haul, even if the pendulum swings toward homeownership again.

4. You’re getting your current renters to stick around.  It’s hardly surprising that with low availability and high demand, renters are reluctant to give up their spaces.  Thirty-four percent of property managers reported that their renters are opting to renew their lease agreements, up from 29 percent just a year ago.  Although keeping a current renter might be easier than trying to find someone new, many property managers don’t care.  The survey revealed that 53 percent of them are willing to forego renewing a contract in favor of bringing in a new tenant at a higher rate.

Tip: These days finding a new renter, one who won’t bat an eye at your new, higher rental rates, may seem easy.  But vacancies are both time-consuming and expensive, and include the risk of signing a lease with a bad tenant.  If you have a good relationship with your current tenant, it’s almost always more profitable to accept slightly lower-than-market rent to keep a stable, consistently good tenant.

5. You’re not being more selective in choosing your renters.  With rent demand soaring, you might expect that landlords are being pickier in selecting and screening tenants.  The Rent.com survey, however, suggests otherwise.  Fifty-six percent of property managers said they haven’t become choosier despite the high demand for rental properties.  In fact, only 17 percent reported that they’re more selective.  Perhaps the glut of available tenants have made landlords lazy, and unwilling to properly screen tenants for high credit scores, high income-to-rent ratios and excellent rental histories.

Tip: Tenant screening is always a good idea.  The overall upward swing in rents has meant financial strain on some tenants, so making sure applicants are financially capable of paying is more important than ever.  Start by having potential tenants complete a rental application.  You can then conduct a comprehensive background check by using a tenant screening service that includes a full credit report and criminal background check.

6. You’re sticking with the game plan.  Because property managers aren’t struggling to fill their properties, 64 percent of them say they’re not doing anything differently than a year ago to keep them filled.  However, over half of them (54 percent) have changed one thing – they’re less willing to lower the rent or offer other concessions just to fill a vacancy.  With renters lining up at the door, they don’t have to.

Tip:  It’s tempting to take it easy when rental properties seem to be filling themselves.  Complacency, however, is a dangerous habit.  Consider that some of the world’s biggest brands – Disney, Verizon, General Motors – are also some of the biggest spenders on advertising and research.  They’re industry leaders and want to make sure they stay that way.  While you may not need to invest heavily in marketing if your vacancy rate is low, you can definitely keep your rental property well maintained and work to foster tenant relationships to keep your profits aloft.  Even with rental properties, it’s easier to stay on top than to have to climb your way back up if the current market takes a tumble.

]]> https://www.ezlandlordforms.com/articles/educational/4/610/skip-tracing-how-landlords-can-track-down-delinquent-tenants/ https://www.ezlandlordforms.com/articles/educational/4/610/skip-tracing-how-landlords-can-track-down-delinquent-tenants/ Thu, 12 Nov 2015 08:21:04 GMT

Being a landlord is easy money, right?  Not always.

Sometimes tenants simply won’t pay what they owe.  Then come court hearings and evictions.  Often the tenant skips town, owing thousands of dollars.  What next?

If you file for a money judgment against the tenants, how do you go about actually finding the delinquent tenants when they’ve disappeared into the woodwork?

Enter skip tracing.  It might sound like “Dick Tracy” by coincidence, but it actually does bear resemblance to the comic book detective (minus the block-like jaw).

Skip tracing is a relatively new name for an old concept.  The term isn’t found in Merriam-Webster, for example, but is in Wikipedia.  Skip tracing simply means finding a disappeared delinquent (the “skip”) by tracing their movements and locating them.  Sure enough, its roots are in the expression “to skip town,” which implies that someone left without a trace, usually because he or she doesn’t wish to be found.  Like, for example, a tenant who didn’t bother to pay their rent or owes you money for damages.

If you’re thinking that skip tracing sounds an awful lot like bounty hunting, BountyHunterEdu.org (yes, there really is a website for people interested in that career path) makes a distinction between the two.  While bounty hunters also track down missing delinquents, skip tracers aren’t bounty hunters.  Skip tracing only involves locating someone, but bounty hunters also have to actually apprehend their targets.

Thanks to the Internet, skip tracers can access a great deal of information quickly and easily.  They might search credit reports, public tax records, utility bills, vehicle registrations and more.  They often monitor social media activity.  But access to all of the information comes with a catch.  Although public and even some private records are up for grabs, privacy and surveillance laws still apply.  A good skip tracer will be familiar with them and knows how to gather the information legally.

Can you serve as your own skip tracer?  Should you?  The answers are “maybe” and “probably not, but maybe.”  Although the Internet makes a lot of personal information easily accessible either for free or at a price, trying to determine which sites are reliable or whether the information is up-to-date is a different ball game.  Some information, such as financial records, can’t legally be obtained without specific authority.  Online records searches can also be pricey.  If you don’t know what you’re doing, your costs can quickly mount.

However, if your tenant stole away in the night, you can’t even serve them court papers without knowing where they are.  In that case, you can do some simple skip tracing with the information the tenant provided you on the rental application, which is probably where a skip tracer would begin anyway.  (Did you forget that step?  Be prepared next time and have the tenant fill out a rental application.)  Call any phone numbers that might be on the form – employers, relatives, references, etc.  One of those might be able to tell you the ex-tenant’s whereabouts.

You can also easily run a Google search of the tenant’s name or phone number, or check Facebook or other social media sites.  Proceed with caution, however – pretending to be someone you’re not (like creating an alias and “friending” your tenant) can have serious legal consequences. or at the very least be a violation of the website’s terms of use. 

Another common technique: try sending a piece of mail to the tenant’s address you have on file and type “Return Service Requested” on the envelope.  If the tenant submitted a forwarding address to the United States Postal Service, the mail should be returned to you with the new address.  There is a specific manner in which this must be done, so check USPS guidelines.

There are also many public records that can be accessed for free.  Searching them can be time-consuming and may not yield any results, however.  Because most court information is a matter of public record, check the website of any state, county or city where your tenant has lived.  And although it’s unlikely you’ll find anything, you can check city and county property tax records.

All of this records-checking is pretty time-consuming, which is why there are so many private companies that will search records for you… for a fee.  You can sign up for subscription services or pay per search.  There are no guarantees that you’ll find anything, so weigh whether the investment will be worth it.

You can also hand off the job to a private skip tracer or to a collection agency, which will no doubt enlist the services of a skip tracer to do the searching.  Although you’ll have to pay a portion of anything that’s collected, getting some money back is better than none.  At the very least you can have the satisfaction that the tenant's delinquency is now on their credit report, and other landlords or lenders can avoid the same fate.

Even if you are able to successfully locate the tenant, you may never see your money.  Yet another hard truth of landlording: sometimes you have to know when to walk away.  It’s not a very satisfying answer, but the fact is that it’s very difficult to collect money from someone who doesn’t want to pay.

As a final thought, you can consider registering the cancelled the debt with the IRS.  If you have the tenant’s Social Security number, you can file a 1099-C form so that the tenant will have to claim the forgiven debt as income.  A small act of revenge may be just enough to sweeten the situation – no skip tracing required.

Related Reading:

Rent Collection: Quick Response, Debt Collection & Techniques to Collect Rent

Landlords, Collect that Judgment!

]]> https://www.ezlandlordforms.com/articles/educational/5/613/what-happens-when-your-tenants-break-up/ https://www.ezlandlordforms.com/articles/educational/5/613/what-happens-when-your-tenants-break-up/ Wed, 11 Nov 2015 03:33:00 GMT

With seven months to go in the lease term, hubby emails you to say that he and his wife are splitting up.  He already moved out and he wants his half of the security deposit mailed to his new address.

You head over to your unit and catch the wife coming home from work.  She says she's looking for a second job, to be able to cover the rent on her own, adding that she may be a bit late on the next rent payment.

Timeout!

Property management is your business, not a charity project

Put aside all emotions – now is not the time to make decisions based on feelings.

Maybe you sympathize with the partner who got left behind.  Perhaps you're peeved at with the partner who took off and wants to violate the lease they signed with you.

Forget all that – the first thing you need to do is protect your asset.

Attorney and Minneapolis Star Tribune legal columnist Kelly Klein told a landlord in this situation to first review the lease agreement and then consider the options.  If you drafted your lease contract properly, it should list both the husband's name and the wife's name.  If so, then both are liable for the rent, whether or not one moves out, Klein said.

“If both are named, then they are jointly and severally liable for the rent, which means that they are each individually responsible to pay all the rent, whether the other person pays or not,” she advised.

Your rental agreement also dictates how you should handle return of the security deposit.  It doesn't get disbursed until the end of the lease term, when the unit is empty and you inspect it and itemize any damage.  Only then, do you release it to the tenants named in the lease.  Most states require that any deposit money be returned via check and with both names on it.  It is up to the tenants who split up to figure out who gets what.

Demand Media columnist Tony Guerra says that, although the landlord must determine whether to let a divorcing couple out of their lease, a court-approved divorce agreement can spell out which partner is responsible for lease payments.

Should you let one or both of them out of the lease agreement?  What about allowing a new roommate for the remaining spouse?

Let's be honest, though.  While the law may be on your side, you'll also want to apply some common sense if your tenants split up.  You could be saving yourself considerable hassle in eviction and collecting if you weigh any reasonable suggestions your tenants make.

If both want to move out, one option is offering them a mutual early lease termination agreement, with a one-time early termination fee.  If one partner wants to take on a roommate, remember that new arrangements require new lease agreements and new tenant screening.  Screen the roommate's rental application just as you would any other prospective renter before drafting and executing a new lease agreement.

And, before deciding whether you'll permit a tenant to try to go it alone in your unit, make sure he or she will be able to cover the rent.

New research shows that divorcees over 50 are a growing segment of the rental population.  Some may not have sufficient income, or maybe their partner was the one with good credit and the remaining partner has poor credit history.  If that describes a tenant who wants to stay on alone in your unit, you can tap other sources to verify ability to pay, such as recent bank statements and pay stubs, and perhaps a lease cosigner agreement with a third party willing to guarantee the rent payments.

Don't leave your next step to chance

When tenants say they're splitting up, it can be difficult to know what to say and when to say it.  You can't go wrong in giving yourself time to think.  If you're not sure how to handle something, ask a landlord-tenant attorney.

Tempting as it may be, don't get pulled into the couple's bickering.  Don't tell one what the other is saying.  The only way their problems are your issue is if the rent goes unpaid.
Two important tips:

• Don't change the locks.  Unless one partner has a restraining order on the other, both have a legal right to enter the unit until the tenancy is officially terminated.
• Don't amend the old lease or sign a new lease agreement without considering how it will affect your ability to collect rent.  Klein advises landlords not to accept partial rent payments from splitting couples without making sure you know which rights you may be forfeiting.  If you take partial payments, it means restarting any existing eviction actions you've started.   

Finally, any amendment or new lease agreement that comes from the split should get your usual move out/move in treatment.  Inspect your unit, release whatever portion of the security deposit is due back to the renters, remind your tenant(s) of their responsibilities, and collect a full new security deposit, just as you would with any other new tenancy.

Just like your tenants who split up, you're starting over.  And, just like them, you want your next relationship to be a good one.

]]> https://www.ezlandlordforms.com/articles/news/612/the-rise-in-homesharing-redefining-single-family-homes/ https://www.ezlandlordforms.com/articles/news/612/the-rise-in-homesharing-redefining-single-family-homes/ Tue, 10 Nov 2015 08:44:46 GMT

What comes to mind when you hear the term 'homesharing'?

Do you think of hosting a foreign exchange student?  Two couples buying a home in a pricey urban setting that they could only afford by pooling their resources?  Going in on a vacation home with friends?  Maybe your own Airbnb arrangement?  Perhaps a way for aging homeowners to hang onto their independence while also earning some money? 

These kinds of homesharing is fast becoming a communal housing trend that presents opportunity for would-be landlords as well as those seeking affordable housing.

Aging baby boomers, today's mobile world and a competitive rental market have converged to form the perfect setting for a resurgence of homesharing, a practice which got its start in the U.S.  in the 1970s.

The latest region to revive the trend, Napa Valley, is even capitalizing on modern tenant screening services to make sure homesharing roommates are compatible.  Think 'Match.com' for prospective homeshare roommates.

How is it different from just leasing out a room?

Part of it may be renting out home space to someone who probably couldn't afford a place of their own – but with much more than rent, deposit and fees changing hands.

Homesharing agreements typically require tenants to pay rent but also participate as part of the household.  Beyond money, homesharers are expected to contribute some household chores, run errands, perhaps even help care for children.  Agreements outline which of those activities subsidize partial rent payments.  That's why programs often appeal to aging homeowners who want to continue to live in their homes but can't quite manage without help from younger adults.  In those situations, the typical tenant is a working professional or college/graduate student, or perhaps a young family.

Unlike Airbnb rentals that are typically sought by vacationers, homesharing is for longer terms, possibly for years.  The homeowner is part host and part roommate and sometimes older, although some of the aforementioned boomers aren't waiting until they need a roommate to help with chores.  Many homeowners who are single or divorced are embracing homesharing as a perfect arrangement because they want companionship as they age, beyond the extra money.  Or maybe they just hate doing dishes.

But homesharing is not only older homeowners seeking help from younger tenants.  Among Americans of all ages, there is a growing trend of semi-communal living, where several couples join forces to afford a larger home in a better neighborhood and school district.  Nor do the advantages stop with money; they share chores and childrearing responsibilities, reduce the number of cars needed and otherwise live a higher quality of life than they could afford on their own.  In the best such cases, participants are close friends who don’t have to go far when they want to have a wine tasting, and don’t need to scramble last minute for a babysitter when a couple wants to step out for a date.

It's also increasingly common for large families or groups of friends to buy a vacation home as their own private timeshare.  Perhaps usage rotates, or for part of the year the owners may decide to use it as a vacation rental property to cover some of the expenses.

Where do I connect with a homeshare roommate?

According to the UK-based Homeshare International, homesharing usually comes together in one of three ways:

• A counseling service coordinates the match and supplies ongoing support for the pairing.
• A referral service brings a pair together but has no role in setting up the arrangement.
• Participants find one another on their own and work out homesharing terms with no outside help.

Each of the few dozen registered homesharing programs in the US operates a little differently.

Through the new Home Sharing Match-Up Program in Napa Valley, a homeowner and home seeker are paired after a comprehensive evaluation.  Each must fill out extensive questionnaires that probe their commitment and needs in a homesharing arrangement.  Services that will be part of a homeowner's compensation are clearly detailed.

Alternatively, Homeshare Vermont is more hands-off.  That service is only for providers looking for tenants who will pay rent and aren't expected to do specific chores.  The program restricts how much homeowners can charge tenants.  “Our program allows you to charge up to $400/month, but the less it is the more potential candidates we’ll have for you,” Homeshare Vermont notes.

For senior homeowners who could be vulnerable to an unscrupulous tenant, a program like the Napa Valley Match-Up is ideal.  Hosts get to conduct their own interview with their potential new roommate, but Match-Up does criminal and credit background checks as well as probes personal references.

For the more independent boomers, the National Shared Housing Resource Center could be a great place to start.  The information clearinghouse doesn't supervise pairings, but lists dozens of homesharing programs across the country.

Some homesharing services are run by non-profit agencies and are offered for free.  Others charge a fee, like the aptly-named Golden Girls Network based in Bowie, Md., which charges $39 for a six-month membership.

If you track down your own home provider or home seeker, first make sure your community's zoning laws permit homeowners to rent rooms to unrelated persons.

What are my responsibilities?

The best homesharing agreements clearly explain each participant's role.  Compromise is important, but no party should feel as if they are being taken advantage of.  The aim is to enrich life for all participants.

Of course, like every other rental agreement, plenty can go wrong.  Homeowners must protect themselves with a comprehensive lease agreement and must be prepared to take steps to evict a tenant who violates terms of that lease.

That's why rules on everything from overnight guests, to pets, smoking, and who gets to park in the garage and who will park in the driveway must be agreed upon and written into the lease agreement.

If you're the tenant, you'll pay rent and probably help with some household duties, even if it's just cleaning up after yourself in a communal areas like the kitchen, living room and laundry room.   Homesharing leases frequently spell out how each room in a home will be shared (or not shared), so read every word before you sign.

If you're the homeowner, you're not off the hook with chores.  In fact, you could be expected to commit to doing them on a regular, rotating basis with your new roommate.  Prepare for less privacy than you have living alone, but don't hesitate to note in your lease which areas of your home – such as your bedroom – are off limits to your tenant.

Finally, connect with other homesharers to swap tips on maximizing the arrangement.  You may find you have a lot of good things to say.  According to Homeshare International, the practice builds the self-esteem of elderly homeowners by showing them they still have an important role in their community.  And their more youthful tenants gain from the wisdom and experience of their senior roommates, and a more affordable place to live.

Related Reading:

Ever Consider Leasing Furnished Units? Pros, Cons & Quirks of Furnished Rental Units

7 Ways Millennials Are Changing the Leasing (and Homebuying) Process

How Homes Have Evolved Since the 1950s: A Guide for Real Estate Investors

]]> https://www.ezlandlordforms.com/articles/news/611/could-home-values-suffer-the-presidential-election-year-effect-in-2016/ https://www.ezlandlordforms.com/articles/news/611/could-home-values-suffer-the-presidential-election-year-effect-in-2016/ Thu, 05 Nov 2015 06:31:42 GMT

You could be forgiven for tuning out media coverage of the 2016 presidential election, an event that is a year away and crowded with so many candidates it's hard to keep track of them all.  But as the circus plays out, it's worth pausing to look at historical homebuying trends during presidential election years.

Some analysts say watch out for a potential dip in real estate sales and prices next year.

Sure, the last two presidential elections, in 2008 and 2012, certainly came in the midst of turbulent economic times.  But going back even further, some argue that presidential election years are statistically slow years for real estate markets.

So, what's in store for 2016?

Historical clues

In 2012, Movoto.com staff crunched decades' worth of data they collected from the California Association of Realtors (CAR), and concluded that those election years negatively impact home prices.

Movoto's infographic (partially included below) offers a great visual for understanding the collected data.  Movoto editor David Cross explains their theory: “Presidential election years are stressful for the American people and in times of uncertainty people are less likely to take chances – this includes making large purchases such as a new house.”

Specifically, Cross said the research showed that home prices rose by 6 percent during the year before an election, they went up by only 4.5 percent in the election year, and then prices rose 5.3 percent after the election year.



The National Association of Realtors (NAR) claims that more research is needed, and has yet to declare a correlation between election years and home prices.  Still, it's hard to see Cross's numbers and dismiss a potential election year effect.

What is other recent data showing?

Zillow's data shows that home values in the U.S. rose 3.7 percent over the twelve months ending September 30, 2015, and predicts that values will rise by a slimmer 2.4 percent in the twelve month period beginning October 1.  Could part of that projected slowdown be the so-called 'election effect'?

Data aggregator CoreLogic also noted a hike in year-over-year home prices.  It found that prices, including distressed sales, went up by 6.9 percent in the twelve months ending August 31, 2015.  But a further look at CoreLogic data over the years surrounding the 2012 presidential election don't neatly bear out Movoto's theory.

Certainly, U.S. real estate markets are in better shape now than they have been since the housing crisis in 2008.  Although full recovery in the housing market may not be complete, home sales in August were the best they've been since early in 2008, according to Money magazine.

Looking west once again, the CAR has predicted that existing California home prices will go up by 3.2 percent in 2016, compared to the 9.8 percent rise in 2014 and the anticipated rise of 6.5 percent in 2015.  The Association described the hike as the smallest price gain since 2011.  Makes you wonder about that election theory.

Should you buy or sell investment property in 2016?

The CAR's crystal ball is specific to California, of course.  But their economists factored in many national and global variables, in addition to the election.  China's economy, capricious recent stock movements, terrorist activity and geopolitical tensions in addition to local events such as the ongoing California drought, all factored into the CAR housing forecast.

Regardless of whether the election is a contributor, most analysts project slower real estate growth in 2016.  With slower sales comes fresh buying oppoortunities to pick up bargains on real estate.  Now is a good time to consider your investing strategy for the coming year, and to do some real estate investment homework and explore new housing markets.

You also may want to reevaluate your plans to sell in 2016.  Keep an eye on market indicators; existing home sales reports from the NAR are a great start.  Economist magazine offers an excellent interactive tool for understanding global home prices.  The House Price Index from the Federal Housing Finance Agency is loaded with data, and keep average listing times in mind as you make plans to sell.

In slowing markets, don't assume that offers truly reflect what your property is worth, even if buying activity is down.  Money recommends getting a Comparative Market Analysis and, if you list your property for sale by owner, paying for an updated appraisal.  It may simply take longer to sell the same property.

As for election year housing slumps, who knows?  Maybe Californians are just a quirky bunch, and their behavior has no relation to the rest of Americans' buying behavior.  Or maybe there's something to the collective insecurity during presidential election years, and sellers should rethink their timing.

Related Reading:

Do Artists or Starbucks Better Predict the Next Hot Neighborhood?

Counting on Social Security? Fudged Numbers Are More Reason to Diversify Retirement Income

The Life Cycle of a Boomtown: From Jobs Boom to Vices to Housing Spikes to Normalcy

]]> https://www.ezlandlordforms.com/articles/educational/2/607/is-it-possible-to-own-real-estate-anonymously/ https://www.ezlandlordforms.com/articles/educational/2/607/is-it-possible-to-own-real-estate-anonymously/ Tue, 03 Nov 2015 07:46:35 GMT

Landlords are frequent targets of lawsuits.  Who wouldn’t want to own their investment properties anonymously?  But governments don’t like anonymity, especially when it comes to large assets that are frequently at the center of legal actions.  Most states' laws are designed to prevent anonymous ownership of tangible assets.

So is it ever possibly to truly own real estate anonymously?

The short answer is (drum roll please)… not perfectly, but you can make it difficult for anyone to figure out who really owns your property.

That said, it’s pretty easy to buy real estate anonymously.  Anyone can use an associate’s name (a “nominee” in legalese) on the contract of sale.   The nominee can then assign you the contract of sale before settlement with just a signature, or if they buy it in a company name, they can simply assign ownership of the company to you after purchasing.  Easy as pie.  In the latter scenario, your name appears exactly nowhere on the settlement papers, sales contract or articles of incorporation.

Ongoing ownership is harder to hide, however.  To begin with, the IRS knows who owns what properties, assuming you declare income or losses from real estate.  The IRS aside, every state requires a resident agent (who can be served with lawsuit paperwork) registered for non-owner-occupied properties.  For many rental properties, this is the property manager, who receives official mail on your behalf.  Here's the rub: property managers and resident agents usually know who the owner of the property is.  If a tenant sues your holding company (we’ll call it XYZ Inc.), their attorneys will haul your resident agent in for a deposition, shine bright lights in her eyes and and demand everything she knows about you.

Unless you’re very rich and stealthy, that’s where the bubble bursts.  If you are rich, well… you can afford to create a wild goose chase if you want to give litigators a merry run for their money. 

Celebrities buy real estate anonymously all the time.  Some of them even manage to own them pretty anonymously; Jennifer Aniston famously bought a West Village apartment in her dog’s name.  Her business manager signed the paperwork, and one of them clearly couldn't keep a secret since the entire world knows the story.  Still, with celebrity marriages dissolving faster than flies can drop, what celebrity worth their salt in sleaze wouldn’t want to hide assets from their spouse?  Celebrities have all sorts of tricks up their sleeves, in buying properties anonymously and leaving no money trail. 

Those tricks don’t come cheap though, in legal advice and accounting fees.  For primary residences, owning in a company name also means forfeiting your exemption from capital gains taxes when you sell the property.

As an exercise in fun, let’s try to buy an imaginary property anonymously.  Pierre is fabulously wealthy and enlists a nominee to make a cash offer on a property he wants in Maryland.  The nominee buys the property under XYZ Inc. (a Nevada corporation), then assigns ownership to Pierre’s Delaware LLC.  The companies have private mailboxes as the official addresses. 

Pierre sets up an anonymous email account and hires a local property manager.  The property management contract does not have Pierre’s real name anywhere on it, nor an address (a nominee or employee signs on his behalf).  The property manager pays the taxes, completes rental registrations and any other local bureaucratic paperwork.  Each month the property manager converts the rental income to a cryptocurrency (ideally something more stable than bitcoins), then sends it to Pierre’s account on a secure exchange.

It may be worth pausing here to note that when lawsuit paperwork is served on the resident agent, that's generally considered adequate service for the lawsuit to proceed in court.  Anonymity doesn't mean that no one can sue you, just that they don't know who they're suing or what their assets are.

A determined plaintiff could find Pierre eventually.  The nominees and resident agents are points of insecurity, albeit ones that Pierre may be able to hide his true identity from if he’s slippery.  The property manager might glean some information from Pierre's nominee, when negotiating the property management contract.  If Pierre wants to defend himself against a lawsuit, he'll need to send an attorney to appear in court on his behalf, and that attorney will have some information about him.  And of course the IRS has records of these companies and their tax filings, but recovering tax records from the IRS is no trivial task for a civilian plaintiff. 

Pierre is pretty insulated, but this is starting to seem less like fun and more like work.  A lot of work, especially if he has to do this for each property.  Either Pierre is a paranoid schizophrenic, a devout libertarian, a criminal mastermind… or he just doesn’t think his marriage is going to last.

Related Reading:

Landlords' Privacy Guide for Safety, Lawsuit Avoidance & Anonymity

How Useful Are Delaware Series LLCs for Tax- & Asset Protection?

Big Data Is Watching: How Companies Predict Your Real Estate Moves

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/609/north-carolina-resurrects-the-protecting-tenants-at-foreclosure-act/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/609/north-carolina-resurrects-the-protecting-tenants-at-foreclosure-act/ Thu, 29 Oct 2015 12:45:03 GMT

Since the 2008 housing crisis, foreclosures have dropped to normal levels. The current national foreclosure rate, 1.4% of all homes with a mortgage, is the lowest it has been since March 2008.  Thirty-six states have a foreclosure inventory lower than the national mean, one of which is North Carolina, with a foreclosure inventory of just 0.08%.  But in August 2015 North Carolina passed a bill to protect tenants living in properties facing foreclosed.

The bill largely mirrors the Protecting Tenants at Foreclosure Act, a federal law passed after the 2008 financial crisis.  The federal law expired in 2014 and Congress did not re-enact it.  The North Carolina law’s main provision states that when a buyer purchases a foreclosed property, the buyer assumes title to the property subject to any rights of the tenant currntly living there.  Essentially, if there is a tenant in the property, the tenant has the right to remain there until the end of the lease term or one year from the date the buyer acquired the property, whichever is shorter.  

There are exceptions however.  Buyers looking to move in as their primary residence are excluded, and only have to give the renters 90 days to vacate.  Additionally, the tenant may not be the borrower (who is currently in foreclosure) or the parent, child, or spouse of the borrower.  The tenant must also have a written lease agreement that is not “terminable at will,” meaning the landlord does not have the right to end the lease at any time.  The last requirement for the law to apply is that the rent is not “substantially less than fair market rent for the property.”  If the purchaser plans on using the property as a primary residence, or the tenant has an oral lease or a lease that is terminable at will, the buyer must give the current occupants 90 days notice to vacate.

While the intent behind this law is admirable, it poses significant issues for those who purchase foreclosures and tenants.  One of which is the difficulty in determining whether the law applies to a foreclosure.  First, those buying foreclosures do not necessarily have access to know the status of any tenancies, and generally won't know whether the law is applicable until after the closing.  The buyer will have to rely on the current tenants to learn the details of the lease agreement, whether that lease agreement is in writing, and what the rent amount is.  Depending on the current tenants, it may be impossible for the buyer to get this information before purchasing the property.  This will result in the buyers going into a closing without knowing anything about the current tenants or any lease agreements.  Buyers may bid less for the properties, meaning that prior owners in foreclosure will receive less too, and may be the targets of more deficiency lawsuits.

Another issue in determining whether the law applies is the ambiguity of the phrase “substantially less than fair market rent.”  Is "substantially" 15%, or maybe 25%, or perhaps a whopping 40%?  The term is not defined within the statute itself and the only guidance we have from the law is that it does not include rent that is subsidized or reduced by a federal or state subsidy.  Case law interpreting the federal statute provides little guidance with this issue.  The Court of Appeals of Georgia held that 30% below fair market rent qualified as "substantially below fair market rent;" however, the North Carolina courts may not interpret this phrase the same way.  The one North Carolina case on record for the federal law did not address whether the rent is "substantially below fair market rent."

Then there are the more practical concerns.  First, if the property is not the buyer’s primary residence the buyer will be required to become a landlord to the property’s current occupants.  The buyer, who did not have the opportunity to screen the tenants or do any due diligence on their ability to pay rent, will be stuck with the tenants until the end of their lease term, or a year from the purchase of the property.  Perhaps the tenants treat the property terribly, or are a noisy nuisance to neighbors?

The buyer will also be locked into the rent amount the previous landlord agreed to, as long as it is not “substantially less than fair market rent.”  Outside of the ambiguity of what that term actually means, if the previous landlord charged a rent that doesn’t quite meet the standard of “substantially less than fair market rent” but is still less than what the buyer would like to charge, the buyer has no option but to accept the inadequate rent payments until the end of the lease term or for the next year.  While the buyer is not required to renew the lease agreement, this requirement puts them in the position of not only being unwilling landlords, but also not receiving enough income to cover the expenses associated with the tenancy or the property throughout the duration of the lease term.

The law has great intentions of protecting tenants from being forced out of their homes when the property is in foreclosure, but the ambiguity and uncertainty associated with the law may be problematic for both buyers and the foreclosed owners.

Related Reading:

As Foreclosures Ebb, Bargain Investors Turn to the Age-Old Practice of Tax Lien Investing

Wall Street Ramping Up Its Foreclosure-to-Rental Investments

]]> https://www.ezlandlordforms.com/articles/educational/4/605/are-you-being-recorded-covert-tenant-recordings-of-landlords-on-the-rise/ https://www.ezlandlordforms.com/articles/educational/4/605/are-you-being-recorded-covert-tenant-recordings-of-landlords-on-the-rise/ Tue, 27 Oct 2015 08:10:01 GMT

Ever tempted to secretly record a conversation using your smartphone's camera or audio recorder?  Getting solid proof just by hitting "Record" on your smartphone can be pretty tempting, and can be legal in some cases.

But consider the flipside of that temptation.  Have you ever considered that your tenants might be recording you?

Tenants are turning the tables on landlords with everything from smartphones to spy cameras to hidden microphones.  Today's video technology offers HD resolution, voice detection and cloud storage that enable anyone to produce an impressive recording.  With recording technology available to every single American, covert recordings have skyrocketed... along with the lawsuits (one man even left his phone recording during a colonoscopy, and sued after he heard the anesthesiologist mocking him).

Before talking to tenants, just remember your next conversation could be chronicled for eternity.

Isn't That Illegal?

Don't assume that a covert recording will be disqualified as evidence in court.  Challenges to state and federal laws that govern the recording of private conversations are pushing change through the courts at a rapid pace.

And even if the recording isn't usable as evidence in court, tenants can still wind up with an embarrassing recording of you or your property management agents that they could circulate online.

It isn't clear yet whether New York City tenants' secret recordings will be accepted as evidence in a case against their landlord. 

The residents claim they were being illegally pressured to move out of their rent-subsidized units.  The New York Times reported that the tenants took secret video – in one case with an old-fashioned camcorder; in another with a cellphone – of conversations they had with the landlord's agents who visited them in their apartments.  The agents allegedly promised money to tenants who agreed to move out while implying threats for any tenants who stayed.

The building owner, who also faces a number of code violations, has blamed the property management company.  The property management company has denied that it employed the agents who met with tenants.

According to the news story, the city's Housing Court routinely receives tenant videos of maintenance problems, such as leaking pipes, with the aim of showing property owner neglect.  But secret recordings like these have been uncommon until just the last few years.

Different States, Different Laws

New York law permits "one-party" consent, meaning that at least one party in a conversation must consent to being recorded.  Other states require that all parties in a conversation must agree before a recording can legally take place.

California, for instance, sets a high bar for recordings.  It requires all parties in any confidential conversation – whether in person, on the phone, in email or text messages – to give their consent.  Those who record illegally can face criminal charges as well as civil penalties.

The Reporters Committee for Freedom of the Press published a state-by-state guide in 2012, a great place to start researching your state's rules.  Bear in mind that the most recent law updates won't be on this list.

Don't Star in Your Own Bad Movie

Every conversation you have as a property manager should be one you would be proud of hearing replayed in a courtroom.  Or broadcast to all your friends on Facebook, for that matter.  Or posted on websites where tenants rate landlords. 

Still, there's no need to lose sleep worrying about who is recording what, as long your actions are legal and professional.

Have a tenant behind on rent?  Don't let your emotions cause you to spew insults or threats.  Just serve the eviction notice and proceed with the legal eviction process.

Shocked by the condition of your unit during a routine inspection?  Every comment you make could be recorded, so be professional – no screaming or name-calling.  That's what lease violation notices and eviction notices are for, with professional wording and legal clauses.

It can be easy to lose your temper with tenants who constantly fail to pay rent, ignore lease provisions and damage your rental property.  But if landlords want the protections of the legal eviction process, they must behave professionally and send legal eviction notices instead of simply reacting verbally and emotionally to tenant violations.  Minimize your in-person and telephone communications with bad tenants, and send written tenant notices instead.  (Good tenants are another story; these it helps to build a better landlord-tenant relationship with them.)

Courtesy and professionalism pay dividends in satisfied tenants, who are more likely to pay rent and less likely to try and catch their landlord with a furtive recording.

Related Reading:

Is It Legal for Landlords to Install Video Surveillance Around Rental Properties?

Big Data Is Watching: How Companies Predict Your Real Estate Moves

Legal Q&A with Landlord Attorney Paul Cohen, Esq.

]]> https://www.ezlandlordforms.com/articles/educational/1/604/reinvention-turn-your-sleepy-commercial-space-into-a-hot-commodity/ https://www.ezlandlordforms.com/articles/educational/1/604/reinvention-turn-your-sleepy-commercial-space-into-a-hot-commodity/ Mon, 26 Oct 2015 04:30:13 GMT

If you’ve been trying in vain to lease out your commercial property the past few years, you may have wondered if your invitation to the rental party somehow got lost in the mail.  After all, the residential rental market has been gaining like gangbusters.  The commercial leasing market?  Not so much. 

The good news is that commercial landlords are finally being let in on festivities.  Bolstered by a slowly strengthening economy, occupancy rates for commercial properties are on the rise.  But before you pop a cork, dust off your thinking cap, because the commercial leasing market is still a renter's market and landlords need a creative approach to maximized profits.

Increasing Momentum

Some of the factors that have produced more renters and boosted residential demand – higher employee turnover, underemployment, inconsistent growth in hiring – are the same ones that have stunted growth in the commercial rental market.  As the U.S. economic recovery continues and businesses grow, the commercial market is starting to rebound.  According to the most recent National Association of Realtors’ Commercial Real Estate Outlook, office, industrial and retail vacancy rates are all expected to decline into 2016.  Multifamily vacancies, on the other hand, are expected to increase slightly due to the glut of new construction.  

Does this mean you should ditch your apartment buildings?  Nope.  However, it does mean that there are increasing opportunities to lease your commercial spaces.  And if you add a dash of creativity to your marketing efforts and consider new ways for potential tenants to use your properties, you increase your odds of finding stable long-term tenants.

Different Faces for the Same Spaces

A rosier outlook for commercial properties doesn’t mean you won’t have to work at getting your spaces filled.  Even in improving market conditions, office vacancies are projected at a steep 15.5 percent in 2016.  Commercial landlords don’t have the luxury of complacency.  And depending on your market, you may have to hustle harder than ever to find good tenants.

One way to get moving is to think about new ways your commercial property can be used.  Although many think the death knell has sounded for brick-and-mortar retail stores, it’s worth noting that the retail vacancy rate (13.2 percent) is lower than the office vacancy rate and is on a downward trend.  Still, strong tenants for your standard retail business may be tough to find, which is why it may pay to think outside the box.

Clean Up with Pop-Ups

Consider, for example, pop-up businesses to fill in the gaps.  Pop-up businesses (like a costume store at Halloween or a formal-wear store for prom) have high-volume sales in a short time span.  Cobble enough of these short-term leases together and you could find your space occupied year-round, and at potentially higher rates for the shorter-term commercial lease contract.  And right now is the perfect time to consider leasing your space to a political campaign.

Your property might also appeal to artists and artisans.  Establishing it as a cooperative space for a group of artists will make it more affordable and appealing to this growing sector.  Or really think outside the box – the cookie box, that is.  One New Hampshire landlord leased a warehouse to a girls scout troupe to create a drive-through cookie booth.

Office Space

If you have office space to lease, do some research into what business sectors are growing.  Start by checking the Bureau of Labor Statistics for up-to-date information.  Healthcare is a leader, so try targeting doctors and other medical providers in your marketing efforts.  You could also try leasing your property as a meeting space, which would allow organizations that don’t have the funds for a permanent office a way to hold events.  

One reason traditional office space has been harder to fill is the rise in remote/telecommute companies, that have no office.  But not all telecommuters want to work from home, leading to a rise in office cooperatives.  For a monthly membership fee, telecommuters can work in communal office space, along with all the attending amenities: internet, conference rooms, printers, fax machines, scanners, etc. 

Your property might also be perfect as a community college’s satellite campus or for religious congregations.  You could even try parceling out the space, say by renting a front window display or a parking lot.  Demand shifts over time, so just because your space was originally designed for one purpose doesn't mean that is still the highest and best use of it.

To Market, to Market

Now that you’ve looked at your property with fresh eyes, take some time to reevaluate your marketing.  If you aren’t current on rising online rental listing services, now is the time to catch up.  You should be advertising your property on every available platform. That may include online listing sites that specifically cater to commercial leases, such as LoopNet and CoStar, but also Twitter, Craigslist, Facebook and Ebay.    

Wait, Ebay?  The website currently has listings of commercial properties for sale and for apartment and vacation rentals.  A clever landlord might be able to marry the two and find a way to lease a commercial property via online auction, at least short-term.  If traditional online services and print marketing aren’t getting the results you need, then brainstorm about new ways to reach potential renters. 

New Twists on Old Tricks

Sometimes traditional real estate marketing methods can feel fresh when applied to commercial properties.  Holding an open house, and even staging your property to appeal to different types of businesses (a rack and mannequin for a clothing store or a treadmill and mirror for a gym) could be a way to drive traffic to your space.  And the old freshly-baked cookies trick never hurt, for open houses. 

But whether you’re using print marketing or online methods, make sure your descriptions sizzle.  Include lots of pictures and consider using a drone to take aerial photos; impressive photos can be especially important for large commercial properties.  Need help crafting the perfect description?  See “An Internet Dater’s Guide to Creating Irresistible Rental Ads” for tips on how to write an ad that pops.

Businesses and organizations still need space, and there’s no reason that your commercial property can’t fulfill those needs.  A willingness to look in new directions and try a different approach may be all it takes to turn your wallflower into a winner.

Related Reading:

What is a Triple Net Lease, and When Is It Used?

Considering Apartment Building Investing? Consider Both the Risks and the Returns

What Commercial Property Owners Should Know to Avoid Falling Prey to ADA Lawsuits

]]> https://www.ezlandlordforms.com/articles/educational/1/603/more-landlords-charged-with-discrimination-against-families-avoid-being-next/ https://www.ezlandlordforms.com/articles/educational/1/603/more-landlords-charged-with-discrimination-against-families-avoid-being-next/ Wed, 21 Oct 2015 07:57:53 GMT

Earlier this month, HUD announced another discrimination case against a landlord.  Think it could never happen to you?  Don't be so sure.  The landlord was merely trying to place a new renter with young children somewhere other than directly above an older tenant who doesn't like noise.

While most folks agree that children – especially their own – are darling, not everyone wants to live next to them.

Keeping those in the latter camp happy in multi-unit properties typically means confronting complaints about little ones who may be noisy and whose families may seem to add chaos to an otherwise quiet atmosphere.

Then there's the issue of liability in case a youngster is hurt on a rental property.  After all, kids are prone to using stairways, railings, fences and curbs as convenient playgrounds. 

And what about the risk of parents suing because their toddlers managed to find and gulp down old paint chips?  Lead paint lawsuits are common in older buildings, and encasing lead paint is harder than it sounds.

All in all, it's enough to set conscientious property managers to worrying.  Managing properties where families and adult-only renters collide can be like refereeing, well, squabbling children. 

Easy Missteps

Landlords in Pennsylvania and Colorado were charged only days apart earlier this month with discriminating against families with kids.  The Department of Housing and Urban Development (HUD) claims they treated adult tenants and family renters separately. 

In HUD's case against the Colorado landlord, announced on Oct. 7, the landlords are charged with taking measures to place child-free renters in a building at the front of the property and families with children in a building to the rear.  The landlord explained that she needed to place quiet tenants above a woman who otherwise "would have had a fit.”

At the same time, though, the landlord described the rental property as “family-friendly.”  She said that families with children were deliberately placed in the rear building for children's safety, because the front building was closer to a parking lot and road where cars fly by.

In the Pennsylvania case, the landlord allegedly labeled some units off-limits to families with children, saying they weren't “suitable for children due to the exterior landing and stairs."  In trying to avoid injury lawsuits, the landlord ended up in a discrimination lawsuit.

Would you place new tenants in specific units with the rationale that you're trying to keep all tenants happy?  Is it possible you would label some areas in your units off limit to children due to safety concerns?

Why Are Discrimination Lawsuits So Common?

Discrimination laws are complex and liberally interpreted by courts.  It's much easier to run afoul of them than most landlords think.

Many landlords reflexively jump into action in order to appease complaining tenants, especially responsible ones who pay their rent on time and keep their unit clean.  But think carefully before taking any action against families with children.  Be wary of even implying that any of your residential properties are off-limits to them, or you could wind up being charged with federal Fair Housing Act violations.

Surprised?  Family discrimination charges crop up all the time.  A few years ago in Connecticut, HUD found discrimination when a property manager merely chose not to renew a lease to a family.

A year earlier, a Florida-based advertising company was charged after rental ads it ran contained language deemed "discriminating against families."  The Florida advertiser and the Connecticut property managers paid to settle the discrimination claims to the tune of $15,000 – each.

Know the Law

It isn't your job to decide that children would be safer in one unit over another.  (Indeed, rental units have implied warranty of habitability and must meet federal and state standards for safety, but that's an entirely different topic.)  It is your job to know and comply with Fair Housing laws and all landlord-tenant laws.

And, it's illegal to segregate families with kids to appease other tenants who complain.

“Landlords and housing providers have an obligation to treat every applicant the same.  This includes families with children," said Gustavo Velasquez, HUD Assistant Secretary for Fair Housing and Equal Opportunity.

Under the law, "families with children" include:

• Families with children under age 18 living with parents or legal custodians
• Pregnant women
• Those gaining custody of children under 18.

Review Your Process

Property owners who stay on the right side of discrimination laws must pay attention at each step in their tenant application and approval process. 

From advertising to screening to informal chats between applicants and property managers, there are potential pitfalls.  Here's how to avoid them:

• Avoid running ads that even mention family status.  Even stating the obvious, such as "small studio perfect for a single professional", is a violation of Fair Housing laws.
• Families with children may not be charged higher rent than those without children.  This includes imposing any child-related fees.
• As the landlord facing charges in Colorado discovered, it is illegal to group families with children to one area of a building or complex.
• Families may not be evicted because they have a child.  While landlords can choose to non-renew lease agreements at their discretion, do not ever imply that the non-renewal had anything to do with familial status.
• Property rules and procedures can't unfairly target families with children.

Word to the wise: thorough tenant screening provides plenty of legitimate reasons to choose one tenant over another.  Employment history, income, housing history, pets, tenant credit reports, criminal background (although even screening out felons has fallen under fire recently) and current home cleanliness are fair game for tenant screening.

To be fair, the Colorado and Pennsylvania claims mentioned above are just that: claims.  The cases will make their way through legal channels where judges will decide whether they have merit and whether penalties will be imposed.

The wise property manager will take these cases as a caution that all interactions with tenants may come under scrutiny, and that all property management practices must be beyond reproach.  No exceptions, no excuses, but perfect adherence with landlord-tenant laws 100% of the time.  Remember there is no shortage of lawyers who love nothing more than fresh targets for lawsuits.

Related Reading:

Supreme Court Ruling: Didn’t Intend to Discriminate? You Can Still Get Sued

More States & Municipalities Requiring Landlords to Accept Section 8 Tenants

How to Screen Tenants & Reject Bad Applicants – Without Running Afoul of Fair Housing Laws

]]> https://www.ezlandlordforms.com/articles/news/600/big-data-is-watching-how-companies-predict-your-real-estate-moves/ https://www.ezlandlordforms.com/articles/news/600/big-data-is-watching-how-companies-predict-your-real-estate-moves/ Mon, 19 Oct 2015 02:41:51 GMT

"Just because you're paranoid doesn't mean they aren't after you." -Joseph Heller, Catch-22

 

Ever feel like you are being watched?  You’re not the only one.  More reliance on digital technology means more data available to corporations and governments to analyze, predict or even manipulate your behavior.

Realty companies and consulting groups have been using public – and not so public – information to build profiles on potential buyers and sellers.  Public information such as age, marital status, court records and how long one has owned a property are used to analyze who is in a position to sell a high-value property.  More personal information, such as pregnancy, income, net worth or a child graduating high school and leaving for college can also indicate a homeowner is open to selling their home and moving. 

These predictive marketing tools collect massive amounts of data.  One company claims to have 1.3 million gigabytes of data on nearly every homeowner and property in the United States.  Companies like this one will use algorithms to target which homeowners may be likely to consider selling.  Factors include property owners' hobbies and interests, past buying behavior, age, marital status, income and real estate equity.  Companies compile these small pieces of information and analyze it in aggregate to make predictions about what homeowners are likely to do in the future.  

This data is also analyzed according to which variables are most relevant for selling in a specific geographic region.  For instance, one company has identified that in San Jose, seller triggers are homeowner age and LTV ratio.  Yet in Manhattan, household income and the sale price of neighboring homes are the most predictive factors.  While this information is useful for real estate brokers and corporations, it may feel like an invasion of privacy to homeowners.

These companies are creating profiles on individuals, some of which are incredibly detailed.  An example of this, is a profile of a potential seller including information about his topiary collection and where he proposed to his wife.  Companies will then create advertisements designed to lure these folks to consider selling.    Companies can use "big data" to track your behavior,  lifestyle, and finances to predict when you may sell or buy a property.

This is not inherently devious or malicious.  Many companies merely use data anonymously to predict trends.  Even when it is used to identify individuals for marketing, "big data" can be used to custom cater to landlords and real estate investors, perfectly fitting their selling and investing needs.  If you are looking to buy or sell a unique property, this data can be used to match you with a perfect Realtor, who can help match you with the perfect buyer or seller. 

While this makes the process of buying and selling more efficient, this level of data compilation comes with serious risks.  One such risk is that large caches of personal data will be stolen by hackers, with more nefarious plans than mere advertising.

But even being the target of too-personalized advertisements can feel invasive.  In 2012, Target analyzed data to identify specific customers who were expecting a baby, then sent those customers advertisements for pregnancy and baby products.  These advertisements were how one man discovered his teenage daughter was pregnant. 

In the creepiest scenario, advertisers may have enough data on consumers to directly manipulate their behavior.  Imagine the following situation: a couple's youngest child leaves for college, and one parent loses a job, temporarily shrinking their income.  In steps a persuasive real estate broker, urging them to sell their high-value home by preying on their insecurity over the loss of income combined with hefty tuition payments. 

Another troubling example: a corporate property management and investment firm uses data to identify desperate property owners with equity, who are vulnerable financially.  Their algorithm highlights a landlord with low income who recently filed for divorce, and who is extra vulnerable because their tenant is not paying the rent (known because they just filed in court for eviction).  They then approach the desperate landlord with a quick cash offer, to buy their rental property for 70% of its value.

So how can you protect yourself and your information?  Public information used for big data is just that: public.  But other information can be better protected by exercising the opt out option for various companies that collect data.  Sometimes, the best defense is simple common sense and skepticism: don't make any large financial decisions (such as selling real estate) without thoroughly doing your homework and collecting multiple opinions.

Related Reading:

Landlords' Privacy Guide for Safety, Lawsuit Avoidance & Anonymity

Is It Legal for Landlords to Install Video Surveillance Around Rental Properties?

The Growing Specter of State “Exit Taxes” as Residents Abandon High-Tax States

]]> https://www.ezlandlordforms.com/articles/educational/2/602/the-rich-have-multiple-sources-of-investment-income-but-you-should-start-with-one/ https://www.ezlandlordforms.com/articles/educational/2/602/the-rich-have-multiple-sources-of-investment-income-but-you-should-start-with-one/ Mon, 19 Oct 2015 02:11:26 GMT

Millionaires don’t earn that title from only investing in stocks, or just from working and setting aside money in a savings account.  Most of America’s wealthy did not inherit their riches either.  Rather, most millionaires have their income eggs in many baskets… but they didn’t start out that way.  

The majority of Americans have one source of income: their job.  Some have a stock portfolio, which adds a second source.  Rental properties are a third source, for landlords.  Profit from real estate flipping or other businesses is a nice fourth source.  But we’re straying too far ahead.  Before anyone tries to have seven income streams, they should first master one new way of making money.

Become an Expert in One Niche Before Tackling More

Multitasking is murder on productivity.  There are countless studies on the subject; read some if you’re skeptical.  To breed success, choose one field to focus on first.

Focusing on one area will help you become an expert in that field, rather than a dabbler with a surface understanding.  For example, you might choose one niche for real estate investing, such as income properties in college towns, or vacation rental properties in tourist areas.  As you gain experience and expertise in that one area, you’ll find yourself better able to reliably make money in that field.  You'll eventually be able to do it full-time and support youself without a 9-5 job.

But something else happens too.  You’ll begin to be exposed to related skills, people and ideas that you had never encountered before.  New opportunities will present themselves, new doors will open.  In the course of buying and renovating rental properties in that college town, you may find deals perfect for flipping rather than holding.  Or as a regular at local real estate auctions, you may meet the perfect partner for a note investing business.  Or you may be asked to speak at a local real estate investing club, and make useful industry connections afterward.

A critical first step though was becoming an expert in one field that interested you.  Imagine if you started by trying to flip a house, buy a college rental and go into the note buying business all at once?  You would lose your shirt in all three.

Find a niche and become an expert.  Expand from within that niche, and meet as many people in related niches as possible.  Look for new areas of expertise to add.  And with each area of expertise, you will find opportunities to add income streams.



Diversity Breeds Opportunity

As you diversify beyond your initial niche, you’ll be exposed to successful people who think differently about money than the 9-5 crowd does.  You’ll meet people in different industries, who are doing work you had never heard of before.  Each new connection means new opportunities, new ideas, new potential sources of income for you. 

And as you develop new income streams, each new venture will mean less risk, since you already have revenue coming in from other sources.  So what if the vacation rental business wasn’t for you?  Perhaps your time there introduced you to someone looking for a partner for historic building restoration projects.  Or maybe you gleaned an idea for how to improve another aspect of your business.

Each rental property is a separate income stream.  Profits from your business (whether you sell widgets or flip houses) are an income stream.  Dividends from a stock portfolio are an income stream.  As you begin to add income streams, look for tax advantages that can help protect your income.  For instance, your stock portfolio may be best held in a Roth IRA combined with a traditional 401(k).  Or perhaps the profits from a flip should be 1031 exchanged into a new investment, and taxes deferred.

Not All Income Streams Are Created Equal

Diversity can be an advantage in any portfolio, but only to the extent that the complexity is worth the extra administrative work and costs.  For example, is it better to own ten rental properties free and clear, with $1,000/month cash flow apiece, or a hundred properties mortgaged to the hilt, with $100/month cash flow apiece?  (Hint: the accounting alone for a hundred rental properties is nightmarish.)

Likewise, if your real estate flipping business takes up 50% of your work time every week but only produces 10% of your income, perhaps your time is better spent elsewhere.  Notable exception: when you are first learning a new field.

Having multiple income streams is not the goal in itself, it is merely a means to an end: financial security and stability.  The moment one income stream begins to cost more in time or administration than it is worth, it becomes a liability rather than an asset. 

Before running out and trying to stick your fingers in as many pots as possible, start small. Become an expert on one niche.  After you’ve mastered one niche, you’ll be ready when more opportunities knock.

Related Reading:

Who Is “Wealthy”? The 5-Step Ladder Between Middle Class and Wealthy

Want to Join the Top 20%? Invest in Retirement Accounts & Rental Properties

The 25X Rule for Retiring Early (…and How Rental Properties Change the Math)

]]> https://www.ezlandlordforms.com/articles/news/601/how-homes-have-evolved-since-the-1950s-a-guide-for-real-estate-investors/ https://www.ezlandlordforms.com/articles/news/601/how-homes-have-evolved-since-the-1950s-a-guide-for-real-estate-investors/ Mon, 12 Oct 2015 02:43:32 GMT

If millenials seem gripped by nostalgia, well, styles are cyclical, right?  But even as trends repeat, there is a forward evolution that differentiates the styles of yesteryear from today's chic.

Maybe you've seen the return of 1970s avocado green – 'chartreuse' is the trendy new term – in today's kitchen décor.  Or perhaps you noticed that circa-1920s bird cages are back, too, although they're more likely to contain pots of herbs or dried flowers wrapped in ribbons of burlap than actual living birds.

But plenty has changed over the last half century in American homes, and millennials want their homes to be bigger, full of light and designed to entertain a crowd.  Real estate investors and landlords who ignore today's trends are missing a chance to boost their ROI and keep their rentals filled with higher-quality tenants. 

Today's young adults want a very different floorplan than their grandparents did.  They demand more spacious rooms and want open spaces filled with light.  Formal dining rooms are an endangered species, while space for more casual entertaining is a must-have.

Glorious kitchens with large appliances, previously the exclusive domain of professional chefs, are a benchmark in today's homes.  Kitchens are no longer hidden from view, with a hired cook or 1950s homemaker laboring alone over food prep.  Today's kitchens are often the home's centerpiece: large, open and designed to encourage family and guests to chat as their hosts whip up meals.  Families are eating their meals in the kitchen, too, often seated around generous islands.

Large, comfortable, open living spaces flow seamlessly from the kitchen.  They should be a place where renters can relax in front of a TV, or eat dinner, or entertain, or take an afternoon nap.  Many older homes today have knocked down the wall separating the living room from the dining room, creating one large open living space.



Bedrooms, bathrooms and closets are bigger in today's homes, too.  A relatively new concept dating only to the 1980s, master suites sprawl and include double-vanity en suites and, critically, two walk-in closets.  Today's renters want not just larger bathrooms, but more of them, with particular attention paid to the master bathroom.  Over the last thirty years, master bathrooms have evolved to evoke spas and private retreats.  The word "luxurious" should be applicable to the master bathroom's shower, bathtub and vanities.

So, what does all this mean for real estate investors and property managers?

Landlords who want to increase their ROI are paying attention to the housing style coveted by today's 25-to-34-year-olds.  The Freddie Mac 2015 Multifamily Outlook found that rental households made up of millennials are on the rise, and that economic growth promises to push those numbers up even more: “A new peak should be reached this year (2015) or next and continue rising until 2023.  The increase in the population of younger adults will keep demand high for multifamily units.  We expect that as the economy continues expanding the formation of households among young adults will also trend up.”

Take that as a warning bell if you still think you can draw high-quality tenants with aging housing styles and just the basic amenities.  Millenials have their own style and they're poised to demand it in the homes they rent.

Investors are buying properties mindful of renters who won't settle for decades-old floorplans.  They're also staging properties in ways that maximize open space that encourages today's casual, continuous social interaction.

But hold on.  Maybe you've already made many less expensive property upgrades to boost your rental's ROI.  You certainly can't be expected to spend thousands knocking down walls and reconfiguring rooms to bring in light if the budget just isn't there for it.  You may not be able to afford to buy new, eye-catching appliances right now.

Fortunately, there are affordable steps you can take to improve your property in ways that will make it worthy of better tenants – people who will love and care for their rental and will want to stay long-term.

Changing color schemes is perhaps the easiest fix when updating your rentals.  First, do some research.  For instance, a quick Google search will reveal that grey is the new white when it comes to kitchen cupboards, so grab that gallon of paint and get to work. 

While elaborate drapes and frilly tie-back curtains were standard in homes of the 1950s, tenants today want light, light and more light.  Remove those 1970s built-in window valances.  Take down heavy old blinds.

In fact, consider replacing all windows.  It's a reasonably-priced upgrade that can boost natural light and increase energy efficiency, cutting heating and cooling costs.  Look for windows that will let in the most light, and then make sure that appliances, shelving and other fixtures aren't blocking windows.

If your property is short on windows, you can still make the most of lighting fixtures - both inside and outside the property.  There is a bounty of options today for boosting wattage, including LED lights and new, 'bulbing' lamps that throw off multi-dimensional light and open up previously dim spaces.  Updated fixtures instantly give spaces new charm – think blown-glass pendants and vintage chandeliers (which can be bought dirt-cheap if you're willing to clean and rewire them yourself).

Speaking of lighting, make sure bulbs and shades are sparkling clean.  It goes without saying that listed rentals should be completely dust- and dirt-free.  Today's tenants are avid HGTV viewers and they expect that properties they visit will be spotless and clutter-free, just like those spaces that are transformed by interior designer Hilary Farr in the series, “Love It or List It.”

As much as possible, update kitchen appliances, counters and flooring.  They'll bring higher rent and give your property a competitive edge over rentals with older appliances.  After all, while today's tenants may love nostalgia, they also want high-tech convenience and maximum luxury in their kitchens.

Finally, if you allow pets in your rental, show your love for animals!  Where dogs once were relegated to an outside pen or doghouse, today's hounds are considered family members and are treated that way.  That's why you'll see new homes that feature nooks just for the pet dog or cat, along with lower kitchen drawers built for the pet's food and water bowls.

Only your own creativity will limit how you update rentals so that they reflect trends in design and decor.  And if you're short on that characteristic, go to the Internet sites that Millenials use in the same way that tenants of yesteryear relied on news and fashion magazines to keep them in the loop.  Sites like Houzz, Pinterest and Etsy will get you started.

And don't be surprised when thousands of results appear on a search for "chartreuse."

Related Reading:

How to Effectively Market and Rent to Millennials

Tomorrow's Trends in Housing - What Amenities Will the Next Tenant Look for When Renting?

The Changing Face of America’s Renters – and What It Means for Landlords

]]> https://www.ezlandlordforms.com/articles/educational/2/599/should-real-estate-investors-get-their-realtor-license/ https://www.ezlandlordforms.com/articles/educational/2/599/should-real-estate-investors-get-their-realtor-license/ Wed, 07 Oct 2015 06:26:50 GMT

Paying Realtor fees is a cost of doing business as a real estate investor.  But what if you didn’t have to pay some of those fees?  What if you became your own agent, keeping the money you’d normally pay to someone else and increasing your return on investment?  Seems like an easy competitive advantage. 

Well, maybe.  While becoming a licensed real estate agent can be a money-saving venture, it doesn’t necessarily pay to do so.  Like any other major financial decision, there is plenty to consider before diving in.  We’ve rounded up some information about the pros and cons of becoming a licensed agent and what you’ll need to do to make it happen.

The Basics

The licensing requirements for real estate agents vary from state to state, so you’ll need to check with your state’s real estate commission for the specifics.  In general, you’ll need to start by taking classes and passing an exam.  In California, for example, you’re required to pass three college-level real estate classes to be a salesperson; more classes are required to become a broker.  Many colleges and universities offer accredited courses, and there are also online options.  

Other requirements include a background check, obtaining errors and omissions (E&O) insurance and submitting an application for your license.  The order in which these steps need to be taken will depend upon your state.  Once you’ve successfully completed those tasks, you’ll probably be required to find a managing broker to work with, at least for the first two years.  Again, every state is different, so make sure you understand what yours requires.

The Good

It’s All about the Money – Now that you know the basics, you’re ready to get to the good stuff, right?  That probably means money.  And yes, the money you can save by being your own agent can be significant.  When you sell a home you pay approximately 6 percent in commissions, which is generally split between the listing and buyer’s agents.  So imagine keeping half of that money for yourself instead of paying it to another agent.  Even if you do just a few transactions a year, the savings can quickly mount. 

However, you can also make money if you’re buying.  Although the seller fronts the commissions, the buyer’s agent is still making money.  If you’re the buyer’s agent (the buyer, of course, being you), you’ll actually get paid to make that purchase.  Sweet.  And don’t forget that having your license means you can buy and sell for others, too.  The extra income from a few additional transactions might well be worth a little bit of your time.

Direct Access to MLS – Another benefit to being a licensed agent is access to all-important Multiple Listing Services.  Agents provide information about properties they are selling on MLSs, so having immediate and around-the-clock access to those listings as they become available is an invaluable tool for real estate investors.  For vacant rentals, you can post rental listings directly on the MLS without owing any commissions or fees.  You can also research historical data, pricing trends and more. 

You’re in Control – Perhaps the biggest advantage of being your own agent is that you’re in the driver’s seat.  If you’re looking to buy a property, you don’t have to make an appointment with your agent to go looking – you can do that on your own schedule.  You don’t have to try to explain to someone else what it is you’re looking for, or why the property you just viewed didn’t have it. 

Serving as your own agent also means you have greater control over the selling process.  If you want to sweeten the deal for the other agent, you can offer them additional incentives such as a larger commission.  You’ll also be able to give the time and attention to your properties that a full-time agent with many other clients couldn’t, and you’re invested in your properties in a way that another agent could never be. 

The Bad

It’s Still All about the Money – Using the word “license” should conjure up images of dollar signs.  There’s no question that becoming a licensed real estate agent is going to cost you some coin.  Although the amount depends on a variety of factors, you should plan on around $1,500-$2,000 to get started.    

You’ve probably already considered the fact that you’ll need to pay for the required classes and exam fees.  But you might not have thought about paying for insurance or fingerprinting – you will be entering people’s homes, so a criminal background check will be required.

If you’re a brand-new agent, you’ll most likely be required to align yourself with a broker who may have additional fees and requirements, such as a desk fee or membership in local and state associations.  The broker is also going to take a portion of your commissions, so don’t count on being able to keep all of that money.  And that all-important MLS access?  You’ll have to pay for that, too.  Although some of these costs will be one-time deals, others will be on-going expenses.

Time is Money, Too – Getting licensed costs money, and it also costs time.  You’ll need to spend time taking those classes and studying for exams, and if you’re already working or have other commitments, you may only be able to chip away at those a little at a time.  If you’re working for a broker, you may need to put in some front-desk time, and plan on needing continuing education hours even after you’ve gotten your license.    

If you previously used a real estate agent, you weren’t just paying for knowledge and experience – you were also paying for the agent’s time.  If you’re going to do the work yourself, count on lots of hours spent searching for listings, completing paperwork, dealing with other agents and writing contracts.  If real estate is a part-time gig for you, it may be difficult to find the hours to devote to these tasks.

Disclosure – As either a buyer and seller, you'll need to disclose your status as a licensed real estate agent.  This may turn off some buyers or sellers, who might think they'll never get a good deal from you. 

A Fool for a Client? – Abraham Lincoln made the case against self-representation by saying that those who go that route have fools for clients.  Of course, he was talking about lawyers.  But if you’re new to the business, you may not have the breadth of experience that a more seasoned agent would have.  A dedicated agent has a firm pulse on the local real estate market, knows the history of the area and may be able to predict trends.  You may not want to trade that kind of knowledge for the part-time efforts of a newbie (and yes, we’re talking about you).

Before you take the plunge, consider your commitment to real estate investing, both in terms of the time you can devote and your interest.  If you only dabble, it may be worthwhile to pay someone else to handle the sales and purchases for you.  But if you’re an investor looking to take a full-time real estate investing business to the next level, becoming a licensed agent could help you reach it.

Related Reading:

Screening Realtors: How to Find the Best Real Estate Agent for Your Needs

7 Signs a Seller is Not-So-Savvy and May Sell Low

Do Artists or Starbucks Better Predict the Next Hot Neighborhood?

]]> https://www.ezlandlordforms.com/articles/educational/5/591/7-ways-to-improve-your-landlord-tenant-relationships-for-better-roi/ https://www.ezlandlordforms.com/articles/educational/5/591/7-ways-to-improve-your-landlord-tenant-relationships-for-better-roi/ Mon, 05 Oct 2015 06:36:26 GMT

Titans, stripes and polkadots, landlords and tenants… some things just seem destined to clash.

After all, landlords and tenants have plenty of competing interests.  Landlords want to charge the maximum rent that the market will bear, tenants want to pay as little as possible.  Landlords want to spend the minimum amount of money necessary to keep tenants from leaving, and tenants want the most (and best) property updates they can wring out of the landlord. Landlords want the rent early, tenants would just as soon keep their money in their pocket.  And so on.

But pause for a moment to consider how much easier your life would be as a landlord if you could slide the scale to make the relationship more symbiotic, less antagonistic.  If your tenants knew you generally cared about them, might they make more of an effort to get you the rent by the first every month?  They might grab the caulk gun themselves to fix a bathtub leak, rather than forcing you to spend hundreds of dollars to send a plumber out to the property.  They might give you three months’ notice that they have to leave for a new job in another city, rather than wait until the last possible moment to tell you. 

Here are seven ways to improve your relationships with your renters, which are all designed to cost little while paying big dividends in cooperative tenants.

1. Proactively Call the Renter and Ask about Their Improvement Wish List

Once each year, call the renter and ask about their property update wish list.  Explain that you can’t afford to make the improvements right now, but if they pay their rent early for six/nine/twelve months in a row, you will agree to put aside the necessary money and make one of these updates.  Choose the upgrade that will offer the best long-term return: what will make the property more valuable, and boost its market rent for years to come?  One important caveat though: don’t raise the rent immediately after making a property upgrade.  The renter will feel betrayed, perhaps rightfully so.  If you do want to raise the rent at some point, wait at least six months after making your upgrade.

2. Know Your Tenants’ Basic Personal Details

What are their children’s names?  What do they do for a living?  What are their main interests and hobbies?  When calling your residents, open by asking about how their children are doing, or whether they won that bowling competition they were entering the last time you talked.  Just spending ninety seconds on social niceties shifts the framework from “All this person wants from me is money” to “This person knows me, and people who know me are less likely to screw me over.”  If you can’t remember these things, that’s fine, just keep basic notes in your tenant's file on their relevant personal details. 

3. Send Holiday Cards

Likewise, for $2.99/year, you can reinforce the message that you actually think of the renter as a person, not just someone to harangue when they’re late on the rent.  Tailor the card for whatever holiday the tenant celebrates (since you know their personal details!), and keep it light and friendly.  Write a line or two inside the card to make it personal, wish them a wonderful new year to come, and tell them how much you’ve enjoyed having them as tenant and your hopes that they will stay for years to come.

4. Offer an Annual Cash Incentive

Late fees make a great stick, but if you want to shape tenants’ behavior, offer a carrot alongside the stick.  Try offering them a $400 Early Rent Reward each December, but only if they have made every single rent payment early, all year long.  Tell them you will have their reward check to them by December 10, in time for them to use it on their holiday shopping.  This is important though – don’t just offer to take it off their December rent, make sure they mail in their December rent (early), and then send them a payment as a separate reward that comes directly from you. 

5. Send Flowers or Food When a Tragedy Happens

Did the renter lose a parent?  Or worse, a spouse or sibling or child?  Like you would for a friend, send them flowers or food.  Do not send money, and do not take money off the rent.  It should be a human gesture, a way to reach out and sympathize with their loss, not a pity gift.

6. Offer Your Contacts if They Lose Their Job

If your renter loses a job, it’s in everyone’s best interest that they find a new one.  If you have any contacts in their industry, offer to put the resident in touch with them.  Even if it doesn’t work out, your renter will be grateful that you did what you could.  If it does work out, your contact gains a new employee, you gain a solvent tenant, and your renter will be extremely grateful.

7. Call When Sending Important Tenant Notices

Raising the rent?  Sending a non-renewal notice?  Preparing to serve an eviction notice and file in court?  Yes, you still need to serve the tenant notice in writing for your paper trail and the landlord-tenant laws in your state, but give them the courtesy of a phone call when you send the notice.  If raising the rent, you can explain it in terms they can empathize with (the mortgage payment going up, etc.).  If serving them with an eviction notice for a lease violation, they may have additional information for you.  Perhaps they’re late this month because they lost their job (in which case you can exercise #6 above, even though you will still need to start the eviction process).  Or, perhaps they didn’t know that the lease agreement prohibited grilling on the wooden deck, and will be happy to move the grill to the lawn immediately because you called and asked nicely. 

Remember how your mother told you always to be kind and friendly with people like the mailman, security guards, waiters and others that most people overlook?  There’s a good reason to be kind to these people who play only minor roles in the greater drama of your life: at times, these seemingly minor actors will have the power to make your life better or worse.  Landlord-tenant relationships are no different: if you put in just a little effort, go that extra yard to show that you see them as a person, you’ll be amazed how often others will go out of their way to make your life better too.

Related Reading:

5 Ways to Improve Your Tenant Retention Rate

8 Ways to Reduce Rental Vacancy Rates for Better ROI

The Best Property Repairs for Return on Investment

]]> https://www.ezlandlordforms.com/articles/educational/4/598/avoiding-pitfalls-in-the-tenant-eviction-process-a-six-step-program/ https://www.ezlandlordforms.com/articles/educational/4/598/avoiding-pitfalls-in-the-tenant-eviction-process-a-six-step-program/ Wed, 30 Sep 2015 03:53:34 GMT

You thought you had done everything right.  You conducted thorough tenant background checks.  You had a comprehensive lease agreement.  You gave your tenant proper notice when you had to enter the property to make repairs.  Heck, you’ve even made repairs quickly.  In short, you’ve been a model landlord. 

But now your tenant isn’t paying the rent.  Or has decided to breed German shepherd puppies despite a no-pets policy.  Or has committed some other offense that makes it clear that your relationship has to end.

Yes, nothing ruins your rental unit’s ROI like an eviction.

The good news is that acknowledging you have to evict a tenant is the first step.  The other good news is that we’ve created a six-step program to help you avoid common eviction pitfalls. 

Step One – Remember it’s not Personal, it’s Business

Most landlords we know – actually every landlord we know – went into the rental business to make money.  It is a business, which should be operated ethically, but with the same systematized practices that make any business successful.  

Leaving your emotions at the door is critical to seeing a tenant eviction through to the end.  Just as a bank, for example, follows policies and procedures for managing mortgages (some of which may end in foreclosure), so too must you follow a clockwork process for managing your rentals (some of which might end in eviction).  First day the rent is late: serve eviction notice.  First day eviction notice waiting period is up: file in court for eviction.  First day eviction hearing is available: schedule hearing.  First day eviction put-out is available: schedule it.  Stick to a systematized process with every property, every tenant, every time.

Step Two – Know the Tenant’s Rights

Your obligation to the tenant begins even before he or she takes possession of the property.  As soon as you begin advertising your property you’re beholden to a number of laws like the Fair Housing Act, which prohibits discriminatory practices.  Once the tenant moves in, you are required to follow even more regulations, including when you can enter the property, what repairs you’re required to make and what late fees you can charge.   

When it comes to evictions, you will need to do some homework to make sure you understand the tenant’s rights in your state or province, but you can count on having to serve a written eviction notice (the number of days will vary but is often between three and thirty days).  You’ll also need to stop the eviction proceedings if the tenant pays or otherwise fixes the lease violation, and avoid “self-help” eviction techniques like changing the locks or removing property until the tenant is officially out.

Step Three – Know Your Landlord’s Rights

In general, the eviction process tends to be tenant-friendly, which means you may feel as though you’re bending over backwards to get what is legally yours – and unpaid rent is indeed legally yours.  You have the right to receive rent on time, every month.  You have the right to enter your rental property with proper notice.  You have the right to expect that your rental property will be free from excessive damage and abuse. 

However, more than anything, you are entitled to legal satisfaction if your tenant doesn’t uphold their end of the bargain.  Following your state’s eviction procedures to the letter should, in the end, enable you to remove a tenant who has failed to comply with the terms of the lease agreement.  The process will require work on your part, but you’ll get there.

Step Four – Know What Your State or Province Requires

You know that bit in the previous paragraph about following your state’s eviction procedures to the letter?  Highlight that.  Write it on a sticky note and post it to your mirror.  Tattoo it on your hand.  Failing to understand what your state requires (or your municipality, because requirements can vary even within a state) and not strictly following those requirements is the biggest mistake a rookie landlord makes when trying to evict a tenant.

The great thing about having a tenant eviction process to follow is that you don’t have to second-guess your next move.  If your tenant has failed to pay his rent but the state says you need to give seven days’ notice before beginning eviction proceedings, then make sure you serve that notice as soon as possible.  Even if you’ve talked to the tenant and he’s explained why the rent is late and when it will be paid, still serve the eviction notice immediately.  That way if the tenant doesn’t pay the rent as promised – surprise! – you’ll have already gotten the legal ball rolling. 

Step Five – Maintain Scrupulous Records

Even in this digital age, when it comes to the tenant eviction process, paper is your best friend.  As you know by now, there are plenty of legal forms involved, and you’ll need copies of them all if you find yourself in court.  Judges love well-prepared plaintiffs, and you’re much more likely to get a favorable judgment if you have a record of every action you’ve taken... assuming those actions are in compliance with local laws.

Time is money, and having to start the eviction process all over again because you forgot to issue a notice or failed to serve it the right way can be a costly error.  Every day that the tenant fails to pay the rent is one more day that you let him keep your money.  Even if you’re chronically disorganized, you need to maintain scrupulous records (remember this is a business!).  You may find that keeping an eviction record timeline can help you stay on track.

Step Six – Get Your Money

Unless you’re running a charity, you’re in this thing to get paid.  This may mean working with the tenant, perhaps by setting up a payment plan.  If you go this route, though, try to take responsibility for payment out of the tenant’s hands by having the amount automatically drafted from her paycheck or bank account on the day she's paid.  A word of caution here however: accepting a partial payment could stop the eviction clock and force you to restart the eviction process all over.

If you’ve started the tenant eviction process, don’t hesitate to go after all of the back rent you’re owed.  Failure to do so essentially means that you paid your tenant’s rent for them.  You might be able to apply the security deposit against money owed, but once again you’ll need to follow your state’s laws regarding tenant notification. 

Even if the tenant is successfully removed from the property, you may need to file in small claims court to get any back rent, fees and damages owed.  You may have to enlist the services of a collection agency to get your money, and even then you may never see it.  Wage garnishment or property liens (if the tenant happened to own property) are other options, but may not be worth the time and money.  In fact, some landlords are willing to accept cash for keys, which means you actually pay the tenant to hand over the keys and leave.  Galling?  Yes.  But you may find that avoiding the tenant eviction process in the first place is the fastest way to remove terrible tenants, and ultimately mean a faster replacement tenant in place paying rent.

Which, of course, is the seventh step!

]]> https://www.ezlandlordforms.com/articles/educational/2/597/real-estate-investing-101-with-industry-expert-paul-cohen-esq/ https://www.ezlandlordforms.com/articles/educational/2/597/real-estate-investing-101-with-industry-expert-paul-cohen-esq/ Tue, 29 Sep 2015 07:35:12 GMT

Navigating the world of real estate investments can be tricky, to say the least. This is why we have taken your most frequently asked questions and handed them over to the experts. The answers will help you move the needle on building wealth through real estate.

What qualities define a good investment property?

At the risk of stating the obvious, a low buy-in price and either high potential rent or high after-repair value (ARV). Beyond that, most investors should stick with low-crime, low-vacancy neighborhoods, and avoid the risks of properties on the very low end.

Smart investors look for neighborhoods not completely saturated by homeowners, but not all renters either. Stick with working and middle class homes as a general rule, unless you intend to specialize in a niche such as student housing, apartment buildings, low-end, etc.

Investors without experience renovating properties should avoid properties in need of serious repairs. The onslaught of permits and inspections is often difficult and frustrating to navigate, and working with contractors can present its own set of challenges.

Generally speaking, look for a property with an urgent seller, who will accept a lower-than-market price in exchange for a fast purchase, and look for a property with cosmetic blemishes that are inexpensively updated without requiring permits.

What is the best way to procure funding for a property?

It depends on whether you’re looking for a quick, short-term loan, or long-term financing. For properties bought as long-term rentals, try to secure an inexpensive 30-year loan up front. If the property needs repairs, banks will still offer standard 30-year financing if the appraiser deems the property habitable.

If it’s not habitable, you may need bridge financing, but try to avoid this if at all possible: refinancing will mean thousands of dollars in extra closing costs. Some local banks still offer “construction-perm” financing, where the loan comes in two phases: an initial high-interest renovation phase (where the bank reimburses you in draws for the repairs), and then the loan converts to a lower-interest permanent mortgage without forcing you to refinance.

Partnering with others can be helpful to bring more cash and expertise to the table. The right team usually includes experience in real estate investing, property management, general contracting and finance. Assembling a group of investors as an entity where each one brings a talent and cash can be a win-win for all, but be sure to use an iron-clad partnership agreement.

And then there is cash. The advantages are many; one is that many sellers will accept a lower offer if it is in cash and it promises a fast settlement. Mortgage loans are notoriously frustrating to close and are never as smooth as the loan officer promises. Mortgages are also expensive, both in the up-front settlement costs (look at all the lender fees, not just the points!), but over the life of a loan it’s not uncommon for a borrower to pay back three- or four times the amount they borrowed.

What is the best mortgage for a property that I am planning to flip?

Hard money lenders are fast and easy, but are expensive and lend a low percentage of the property’s value (low LTV ratio). For buying, renovating and flipping, hard money lenders can be worth the expense.

You might also consider crowdfunding and even credit cards as alternatives to mortgages. Crowdfunding websites offer shorter-term loans, often unsecured, and with a much easier loan approval process than a conventional mortgage. The total lender fees are often lower too, and even if the interest rate is high, you’ll only hold the loan for a matter of months in most cases. The problem is that crowdfunding websites generally have low loan limits, often around $35,000.

Credit cards are expensive and dangerous to use for many reasons, but there’s nothing faster. Only use credit cards for financing real estate purchases or repairs if you can pay the entire balance back within a few months and you have a contingency plan if the property fails to sell as quickly as you hope.

What are the tax consequences of house flipping?

If the profits on the house are realized in less than a year, you will pay taxes on it as regular income. If you own a property for longer than a year, the proceeds from selling will be taxed at the lower capital gains rate instead (15% for most taxpayers).

Consider using 1031 exchanges to defer paying taxes on proceeds from real estate by investing your profits into your next property acquisition.

What types of property laws come into play when a non-U.S. citizen is looking to buy property in the U.S.?

The United States allows foreign individuals or corporations to buy and own real estate in the United States without restriction. In very limited instances, the Committee on Foreign Investment in the United States (CFIUS) may review transactions that could result in control of a U.S. business by  foreign persons in order to determine the effect of such transactions on the national security of the United States (the sale of a port, for example, has triggered this review in the past).  Also some other countries place restrictions on their own citizen’s purchase of real estate in the U.S. 

Important caveat: foreign non-resident individuals and foreign corporations holding property in the United States may be taxed differently on real estate gains than U.S. citizens/corporations. Consult an attorney when deciding how to structure your investment (e.g. “effectively connected income to a U.S. business” vs. “investment property”), and double check if there are any tax treaties your home country has entered with the U.S.

What laws govern commercial or residential investment property mortgages?

There are many complex intricacies to both commercial and residential property mortgage law. However, there are some key aspects to the law of which you should be aware. Mortgages are governed by each state’s statutory and common law and regulated by federal or state agencies, depending on their source of origination. For example, federally chartered savings associations are regulated by one entity (the Office of Thrift Supervision) while national banks are regulated by another (the Comptroller of the Currency).

Even the legal theory behind mortgages varies from state to state: for example some states follow title theory: title to the security interest rests with the mortgagee (lender). Alternatively, under lien theory, the legal title remains with the mortgagor (borrower) unless there is a foreclosure (and an intermediate theory applies the lien theory, but upon default title theory applies). 

The law of contracts and property govern the transfer of the mortgage's interest. In the event of a foreclosure where there are multiple liens on the property, state law determines the priority of the lien interests (who gets paid first).

While title companies are not supposed to give legal advice, it may not hurt to ask them questions about your specific transaction.

What is the purpose of hiring a property manager?

In a word, delegating. For a fee, the property manager takes over the work and headaches of managing your rental properties. They handle repairs and tenant phone calls at 3 A.M. They prepare vacant rental units and advertise them. They run credit and criminal background checks, and prepare and sign lease agreements.

Generally, landlords pay 8-10% of gross rents to property managers, plus a fee of one month’s rent for filling a vacant rental property. For vacation rental units, the fees may be higher, as management is more labor-intensive.

Real estate investors just starting out should manage their own rental properties. They will learn invaluable insights into what makes a good long-term investment, the pros and cons of different neighborhoods and what to avoid in the future. That said, investors with portfolios that are out of state or a long distance away certainly benefit from hiring a property manager.

If you decide to use a property manager, do your homework to find one who’s both diligent and qualified for your particular type of property. Use social media, and websites like Zillow or HomeLight.com to get ratings to be sure the manager you hire is trustworthy.

So, I just decided to rent out my property for the first time; what will make the property more attractive to renters?

Pricing the property competitively is number one. Be sure that you take a look at the surrounding areas and similar properties to keep the rent viable. Then, start with the basics: tasteful fresh paint, new flooring (appropriate to the quality of the neighborhood and property), modern kitchen and bathrooms, a washer and dryer. For low-end properties, landlords may stop there.

For mid-range properties, look for little things that make a big difference. This could be a “smart” appliance or feature, a few higher-end finishes (counters, sinks, doorknobs, etc.), perhaps even a luxury amenity like a gas fireplace. The goal is to make your property stand out from the competition, to grab attention and tug heartstrings, without spending much money.

Higher-end properties need higher-end materials: hardwood or bamboo floors, granite or marble counters, chic cabinets, fancy faucets, the works. Consider putting in a high-tech feature or two to grab attention. Do a cost/benefit analysis on amenities like fireplaces, hot tubs, deck—how long would it take to recover the initial expense in higher rents? Remember that each expense must be justified with higher rents, so only put money where it will earn a return for you.

Are there restrictions on how many investment properties I can own?

“Restrictions” may be a strong word, but there are consequences and limitations. It is nearly impossible to secure a conventional residential mortgage if you own more than ten properties – investors must use either hard money loans or commercial lenders if they want a mortgage rather than cash, credit cards, crowdfunding, etc.

As investors accrue more real estate, they become increasingly tempting targets for IRS audits. QuickBooks has evolved as a great tool for real estate investing and bookkeeping. With features like attaching a copy of receipts to costs, easy preparation of reports, and setting up properties separately, it can help you track costs and income for straightforward reports for your accountants. The more information you keep in one place, the easier managing becomes.

 

Have comments or questions for our industry experts? Leave one below!

 

About Paul Cohen, Esq.

A veteran landlord-tenant and real estate attorney, Attorney Cohen Paul helped rewrite the Pennsylvania Landlord & Tenant Act, and chairs the Pennsylvania Joint State Government Commission Subcommittee on Landlord Tenant Law.
 

The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/educational/4/596/what-to-do-when-renters-leave-owing-more-than-the-security-deposit/ https://www.ezlandlordforms.com/articles/educational/4/596/what-to-do-when-renters-leave-owing-more-than-the-security-deposit/ Mon, 28 Sep 2015 08:15:29 GMT

It's the end of the tenant’s lease term and you visit the unit for the usual post-move-out inspection.  If you're extremely lucky, you may be pleasantly surprised and find the tenants left the rental unit exactly as it was given to them.  More likely, you'll be slightly disgruntled at the bits of trash left around the unit and a handful of repairs you'll have to spend the time and money to fix.  Or you can walk into a rental and discover that the tenants treated the property like their personal dumping ground and had no reservations about leaving old food, trash and damages in their wake. 

In the real world, tenant security deposits are often not enough to cover the costs of cleaning, repairing, and otherwise preparing the unit for new tenants.  So what can landlords do when renters leave owing more than the security deposit?

Documenting the Damages and Costs

Record & Photograph All Damage.  Because you're diligent and care about your investment property's ROI, you documented the property's move-in condition with the tenant, and took plenty of photos when you first signed the lease agreement.  Do the same now, walking through and documenting every room's condition along with photographs.  This will serve as evidence when discussing the damages with the tenant and if necessary for court.

Document Repairs & Costs.  It is important to prepare an itemized accounting of each and every penny you spend on repairs and cleaning expenses.  This will allow you to have a specific breakdown of each cost and why it was necessary.

Send a Security Deposit Accounting Statement.  Almost all U.S. states and Canadian provinces require landlords to send a security deposit accounting statement (also referred to as the Disposition of Deposit) to the tenant explaining any and all deductions from the security deposit and how the money was spent for the repairs.  This document will also inform the tenant if any money is due towards the repairs or unpaid rent.  It is important to send this document as soon as possible.  Each state and province has different time limits for sending this breakdown, and the penalties for not sending the document within the required time period can range from reducing what can be collected to forfeiture of the entire deposit.

Options for Collecting

How you move forward with seeking reimbursement for the money expended to repair the rental unit will depend on how much the tenant owes and how much time and energy you are willing to spend on the process.



1. Small Claims Court.  If you’ve ever been in small claims court you know it is not a glamourous experience.  Each jurisdiction has a range for claims, so you can only file in small claims court if the tenant's debt to you falls within your local jurisdiction's range.  If higher, there are higher civil courts where you can file your claim.

2. Hiring a Collection Agency.  A collection agency will make attempt to reach the tenant to collect the debt in various ways.  While collection agencies may successfully collect the debt, they also charge very high fees for their services ranging from 15-50% of the debt collected.  You may need to already have a judgment from small claims court, or the collection agency may be willing to file all court paperwork for you.

3. Sending Bills and Negotiating.  If the amount is not significant enough to warrant hiring a collections agency or going to court, your last resort is to continue sending the tenant bills for the damage.  After you send the security deposit accounting statement to the tenant you should reach out to the tenant to discuss the charges, and negotiate the terms of payment.  It may be less headache to mutually agree to an amount the tenant is able and willing to pay to recover at least some of your costs.

4. Write It Off & Screen Better Next Time.  Often it's just not worth the hassle to chase delinquent ex-tenants.  Suck it up, take the loss, but learn from your mistake.  Aggressive tenant screening weeds out most bad tenants before they can cost you money: run criminal and credit checks on all applicants, call prior landlords, verify income and employment, walk through their current residence.  Put in the work now, to protect yourself and avoid trouble later.

Trying to recover money is a frustrating, miserable process.  But proper documentation and promptly sending the tenant paperwork will lay the groundwork for collection efforts, and aggressive tenant screening will help you avoid this predicament in the future.

Related Reading:

Security Deposits: Defining Normal Wear and Tear & How to Handle Security Deposit Disputes

Hard Truths about Hard Neighborhoods: Why Low-End Housing Is Not for Most Investors

Handling Lease Violations: Catching Tenant Violations Early & Why Written Notices Matter

 

]]> https://www.ezlandlordforms.com/articles/educational/2/594/do-artists-or-starbucks-better-predict-the-next-hot-neighborhood/ https://www.ezlandlordforms.com/articles/educational/2/594/do-artists-or-starbucks-better-predict-the-next-hot-neighborhood/ Tue, 15 Sep 2015 06:53:36 GMT

Trying to spot the next hot urban neighborhood before it “pops”?  Get in line.  Everyone has their own opinions about the early signs of urban renewal and gentrification, but what does the data say?

You’ve probably heard the case made that artists are harbingers of higher rents.  Think SoHo fifty years ago, or Brooklyn twenty years ago, or Bushwick or Peckham or Williamsburg.  Case studies of artists moving into poorer urban neighborhoods because it’s what they could afford, and transforming it.  Bohemian bars, coffee shops, art galleries and the like started opening to meet the demands of these new residents, and the neighborhood suddenly has a “cool vibe”.  Then some better-off hipsters arrive, then the rest of the young professionals, then empty nesters with French poodles named Sandra.  Critics cry that longtime residents were priced out of these neighborhoods, but their complaints are amply reported and can be read elsewhere.

A thoughtful critic might instead look deeper into cause and effect in those neighborhoods.  Was there already a centralized force pushing redevelopment there?  Would the neighborhoods have gentrified regardless of the artists’ influence?  Is there actual research data to support a causal relationship between artists and gentrification, or just a handful of case studies?

The most oft-cited case study is SoHo, the South of Houston Street neighborhood in New York City.  Close inspection reveals the artist-fueled renaissance there was directly driven by one wealthy experimental art guru, George Maciunus.  Maciunus converted abandoned industrial space into artist cooperatives and cheap live-work spaces, and it turned out that there were so many poor artists in New York City in the 1960s desperate for large, cheap spaces that they flocked there.

What happens if you analyze Manhattan’s real estate values block-by-block, and correlate their change with the opening of nearby art galleries?  Urban policy analyst Jenny Shuetz did just that, and looked at values before and after art galleries opened nearby.  She found that galleries tended to come after the development tipping point, and did not cause it.

In an academic study last year entitled Gentrification and the Artistic Dividend: The Role of the Arts in Neighborhood Change, the authors also found little evidence to suggest that artists caused dodgy neighborhoods to turn around.  There were connections, but they appear more incidental; yes art galleries and coffee shops pop up as neighborhoods improve, but they look more like catalysts than causes.  The authors found that other, external forces stimulated growth, usually large investments by local governments to target specific areas. 

The study also found different effects for “fine arts” versus “commercial arts”.  Fine arts, such as museums, art schools and performing arts companies, tended to appear in areas that were already stable and only gradually appreciating in value.  If there was any causal relationship between the arts and gentrification, it came from an influx of nearby commercial arts jobs – graphic design firms, film agencies, music studios.  In other words, when high-paying jobs for skilled workers opened in the area, local neighborhoods saw a spike in values.  Not exactly the bohemian image of starving artists transforming poor neighborhoods.

Which is not to say that artists can’t or don’t improve neighborhoods’ real estate values.  Young, educated, temporarily poor people (like artists and hipsters) often have a pulse on neighborhoods with cheap rents but improving prospects.  But by the time the artists and hipsters start buzzing about it, there’s already probably been significant investment.

Aside from attending city council meetings and hanging out in hipster bars looking for tips on up-and-coming neighborhoods, investors might pay attention to another harbinger of higher values: Starbucks.  The company has a frighteningly strong record of predicting hot neighborhoods.  Some even say causing appreciation directly.   

Consider that from 1997-2013, the average U.S. home appreciated by 65%.  But homes near a Starbucks appreciated 96% in that period, appreciating almost 50% faster than the national average.

Not convinced?  Try this: five years after a Starbucks opens, homes within a quarter mile of it appreciate 21% on average.  Farther homes between .25 and .5 miles from a Starbucks appreciate by less: a lower – but still significant – 17%. 

Starbucks has a vast team of real estate experts armed with the best data available.  The Starbucks brand also has cachet – people like living within walking distance of a Starbucks.  It also makes the neighborhood more walkable (a growing trend in neighborhood desirability), having cafés like Starbucks within easy walking distance.

Sharp real estate investors can leverage the research already performed by Starbucks’ experts, and simply track where Starbucks coffee shops are scheduled to open.  Of course, it may still be fun to have a beer at the hipster bar down the street, and ask around about where the artists are flocking these days – after all, diversification is the name of the investing game.

Related Reading:

How to Invest in Unfamiliar Rental Markets

Where Young Adults Are Migrating... and Why It Matters to Real Estate Investors

Think Tinder’s Age Penalty Stings? Study Finds Virtually No Income Growth After 35

]]> https://www.ezlandlordforms.com/articles/educational/4/595/when-to-let-tenants-break-their-lease-early-and-when-to-enforce-it/ https://www.ezlandlordforms.com/articles/educational/4/595/when-to-let-tenants-break-their-lease-early-and-when-to-enforce-it/ Mon, 14 Sep 2015 08:25:20 GMT

Turnovers are expensive, no doubt about it. But even worse are delinquent tenants that cause legal and financial headaches. While long-term leases help prevent tenant turnover, what do you do when a tenant wants to break their lease agreement early?

Many landlords allow early termination only if they absolutely must by law. But this can sometimes lead to drawn-out evictions of delinquent tenants, and time and money wasted in court. Sometimes, it’s the tree that bends rather than breaks that survives best.

In many states and provinces where tenant breaks the lease and leaves early, they are required to pay for the remainder of the lease term or until the rental unit is filled. Some lease agreements also allow for subleases as a relief for early termination.

Advocating for flexibility doesn’t necessarily mean that the tenant gets off scot-free. In most cases of flexible early termination, the landlord charges some combination of early termination fees, kept deposit or current month’s rent. Here’s a look at cases where early terminations might be allowed… and when to enforce the full lease contract.

When to Be Flexible

Tenants who have just undergone a major life change may not be reliable to make consistent rent payments. One example is divorce: divorcing tenants may cause more trouble than they're worth to pursue, if both want to move out and neither can afford the rent solo. Collect an early termination fee if at all possible (see the Mutual Termination of Tenancy Agreement).

Serious illness should warrant a clean break from a lease. These people may need to prioritize health costs over rent, and allowing a termination can protect against future evictions, lost revenue and uncomfortable attempts to collect from an ill tenant.

Also consider an early lease termination due to unexpected job loss. If they want out of the lease, consider let them out before they default and force the long eviction process on you. It may still be worth requiring them to find a replacement tenant however.

Some job transfers are involuntary, and surprise transfers can create a bad situation for everyone involved. Consider letting these tenants out of their lease contract if they pay an early termination fee, or perhaps if they sublease the rental unit for the remaining term. (Notable exception: active-duty military tenants – see below.)

Then there are simply some people who are bad tenants. Maybe they continuously threaten lawsuits and habitability claims or call demanding repairs and upgrades every month? Uncooperative tenants cost landlords in the long run, every time.

If they stay through the lease term, send them a non-renewal notice well in advance of their term ending. If they want to leave early, take them up on it, and collect an early termination fee if possible. Don’t raise the idea of subletting for these tenants – they will still have too much opportunity to cause trouble for you.

When You Legally Must Allow Early Termination

There are generally three reasons when you must allow tenants to break a lease agreement early:

1. Military Orders

Under the Servicemembers Civil Relief Act (SCRA), active duty and reserve military are allowed to break their lease if they are deployed or have a Permanent Change of Station (PCS). That said, be sure to confirm orders with the tenant’s military base or commanding officer before just agreeing blindly.

2. Death

With the exception of commercial property in some states, a tenant’s death is a de facto termination of lease. While you may try to collect from the tenant’s estate, it may be more trouble than it’s worth. Find their next of kin as quickly as possible, and come to the fastest arrangement you can for removing the renter’s belongings.

3. Safety Concerns

In many states, the law requires landlords to allow renters to break their lease if they are a victim of domestic violence, sexual assault or stalking. Similar legal exceptions, like Washington’s RCW 59.18.352 allow tenants to break a lease if threatened by a neighbor with a deadly weapon.

Even if your state or province doesn’t have similar laws, reason and compassion should prevail if a tenant’s safety is on the line.



When to Stand Firm

The above notwithstanding, some people just think the rules don’t apply to them. Here are some sample scenarios where landlords should strictly enforce their lease agreements.

Graduations are predictable and job transfers are voluntary. A general rule is to enforce leases for any tenant whose move is the result of a voluntary action or foreseeable events. A tenant who changes jobs or graduates should not shift the burden to the landlord. Holding a tenant to her lease in these cases can incentivize the tenant to find a qualified subtenant as a replacement.  

Tenants who quit their jobs are another classic case of a voluntary action that should not receive special treatment. Granting exceptions for even one voluntary change can be a costly slippery slope. Offer an early termination fee if you want, or to allow them to find a subtenant, but the subtenant must stand up to the same rigorous tenant screening you do on all normal renters.

The majority of tenants looking to break a lease should be held responsible for what they agreed to: the entire lease term. But always use discretion in what you demand from renters looking to leave early – you're better off without some tenants. By pruning the unreliable, disinterested or troublesome tenants, you can make room for stable long-term residents.

]]> https://www.ezlandlordforms.com/articles/educational/2/593/why-real-estate-investors-should-use-mint-com-to-track-their-progress/ https://www.ezlandlordforms.com/articles/educational/2/593/why-real-estate-investors-should-use-mint-com-to-track-their-progress/ Thu, 03 Sep 2015 07:25:31 GMT

If you didn’t want complex banking and accounting, you should have found another calling in life.

Real estate investing means financial finagling: multiple bank accounts, constant money shuffling and all the accounting headaches that come with the territory.  If you use limited liability companies (LLCs) to hold various properties, each one will need its own checking account.  Likewise for each series in a Delaware Series LLC.  If you have a 401(k), that may well be with a separate investment broker.  Then there are the IRAs, Roth IRAs or perhaps SEP-IRAs for retirement, and the 529 accounts for college savings. 

And that’s just for your assets.  Your liabilities, from mortgage loans to credit cards to student loans to car loans to crowdfunding loans, each is its own account.

My wife and I, between us, have no fewer than twenty accounts. 

But beyond the accounting acrobatics, here’s a question more landlords and real estate investors should be asking themselves: how much richer am I this month than I was last month?  This year, over last year?  What’s the bottom line after all the accounts are (sorry) accounted for?

Enter: Mint.com’s free financial hub.  You select which banks you have accounts with, which lenders you have mortgages with, which investment banks you have retirement accounts with, and enter your login data.  Mint then aggregates all of your accounts, categorizes them, and tracks their balances and transfers in real time automatically for you.  As an especially nice feature for real estate investors, they draw live data from Zillow on your rental properties’ estimated values, and adjust them automatically as the market changes.

Why is any of that important?  Because ultimately, you work and invest for one reason: to get richer.  If 50% of your waking hours are devoted toward a singular goal, you need to make darn sure you’re tracking your progress towards that goal.

It also does a nifty psychological trick for you, in making the growing of your wealth tangible and real.  After all, that extra $500 in your pocket could go towards paying down your rental property’s mortgage… or it could go to that new gadget you’ve been eyeing.  Let’s be honest, for most of us the reward is just too intangible to use extra money to pay down a mortgage faster, especially when compared to something real that we want to hold in our hands right now.  But if you can see daily progress towards growing your net worth, and see time estimates of when you’ll have that mortgage paid off and an extra $500 in your pocket every month instead of just this month, that might tip the scales.

Mint helps you create budgets, and will alert you when you’re approaching (or surpassing) your budget limit each month.  It also monitors your financial trends, and can alert you when a trend is looking dire, or when there’s a sudden change in a normal trend.  And like the mortgage example above, it lets you set financial goals, with all sorts of handy tools to help you reach them.

You also probably know how critical your credit score is to real estate investing.  Mint will track your credit scores for you too, for free.

Sure, you could try to manually track all of these different checking, savings, mortgage, credit card, retirement, loan, college and real estate accounts with a spreadsheet.  Entered by hand.  Every month.  But why waste the time or risk the errors?  As a real estate investor and landlord, your time is valuable, and the more that you can automate the better off you’ll be. 

It is absolutely true that most of us will only ever get rich slowly… but your progress can still be sped up with wealth tracking tools like Mint to help keep you moving on the road to riches.
Related Reading:

Who Is “Wealthy”? The 5-Step Ladder Between Middle Class and Wealthy

Want to Join the Top 20%? Invest in Retirement Accounts & Rental Properties

The 25X Rule for Retiring Early (…and How Rental Properties Change the Math)

]]> https://www.ezlandlordforms.com/articles/educational/5/592/how-to-handle-chronically-late-tenants/ https://www.ezlandlordforms.com/articles/educational/5/592/how-to-handle-chronically-late-tenants/ Wed, 02 Sep 2015 03:01:15 GMT

Have a tenant who never saw a bill they liked to pay on time?  What can you do about it, beyond mailing late rent notices and crossing your fingers?

First, a discussion of late rent fees is in order.  If you don’t charge late fees, you should, and the maximum amount allowed in your state, province or municipality.  Sometimes this is a percentage (5-10%) of the rent, or it may be restricted to what’s “reasonable” (i.e. whatever the judge ends up thinking is reasonable).  The most restrictive laws require late fees to be directly related to the landlord’s expenses incurred due to the late rent (for example, the late fee the landlord pays on their mortgage). 

Regardless, make sure your lease agreement includes clauses explicitly outlining what the late fee is, and when it becomes due (commonly after a five day grace period, but this too varies by state, province and municipality). Charge the maximum allowed by law, on the earliest day allowed – you can always forgive late fees later on a case by case basis, but you can’t raise them.

If the rent hasn’t been received on the first of the month, send a late rent notice that day, clearly warning them of the impending late fee.  The first day the grace period expires and the late fee becomes due, send an eviction notice (this doesn't require you to evict, it's just the prerequisite for filing in court).  With luck, the tenant will shape up and start paying the rent on time to avoid future late rent fees.

If your tenant consistently pays the rent on, say, the 15th of the month and includes the late rent fee, then it’s worth pausing to consider whether their tardiness is actually a problem.  Perhaps it’s worth a few weeks’ delay, to receive the late fee on top of the rent.

The bigger problems arise when tenants consistently don’t bother paying the rent, and have to be chased for it.  Filing eviction is expensive and time-consuming, and unfortunately is often the only way to force grudging tenants to pay what they agreed to in the lease agreement.  Then you have to try to collect the rent, the late fees, the eviction filing costs, any back utility payments… it quickly snowballs to an accounting and collection nightmare.

If your tenant is one of these, always serve an eviction notice to start the eviction process the first day the rent is late.  This isn’t personal, this is business, and in business people pay each other on time, or they face the consequences.  If the resident sees that you mean business and serve eviction notices like clockwork, they may think twice before under-prioritizing their rent in the future.

Enough talk of sticks though; what about carrots?  Are there ways to incentivize tenants to pay early?

When you first sign the lease agreement, consider making the following promise: if the renter makes every rent payment early every month throughout the year, you will agree to renew their lease term for another year, with no rent increase.  This both incentivizes early rent payments, and sets the expectation that you will likely raise the rent after the lease agreement expires if they don’t prioritize making rent payments early.  Added bonus: if they make the rent early each month and earn a second year with no rent increase, they're more likely to actually stick around the second year, helping you reduce your turnover and vacancy rate.

Another doubly beneficial incentive is to call the renter periodically and ask them what upgrades or repairs they would love to see in the property, in a perfect world.  Be careful to explain that you don’t have the money for any upgrades right now, but you’re willing to look into the upgrades they mention.  After hanging up with the tenant, review the upgrades they mentioned: which one would deliver the most return on investment, in higher market rents and higher property value?  A washer/dryer hookup, perhaps?  Bamboo flooring instead of carpet?  Granite countertops in the kitchen?  A smart thermostat controlled by a mobile app?  Do your homework, and when you’ve selected an upgrade you think will make the property more rentable in the long term, call the tenant back and make them an offer.  If they pay the rent early, every month for a year, you will make the property upgrade they requested.  If they miss the rent due date even one time, the twelve month countdown starts over. 

While not as productive as the two options above, another approach is to offer a cash reward in December every year, if the resident make all twelve rent payments early throughout the year.  The cash payment you give to the renter is only a one-time benefit though, a bribe rather than an investment, paying no future returns.

Incentives can be incredibly effective… for the right type of tenant.  If the tenant is fundamentally irresponsible with money, no amount of late rent notices, incentives or late fees will magically make them fiscally responsible.  Some people simply have a hand-to-mouth mentality, and will not pay any bill until they absolutely must.  This type of tenant may leave through eviction, but if they manage to catch the rent up before the eviction date each time, send them a nonrenewal notice before the required notice deadline in your state or province.  In the long run, you’ll be much better off with a renter who is willing and able to pay the rent on time, or even early each month!

Have your own landlord tips for handling late rent payments?  Share them below!

]]> https://www.ezlandlordforms.com/articles/educational/2/590/hard-truths-about-hard-neighborhoods-why-low-end-housing-is-not-for-most-investors/ https://www.ezlandlordforms.com/articles/educational/2/590/hard-truths-about-hard-neighborhoods-why-low-end-housing-is-not-for-most-investors/ Mon, 31 Aug 2015 02:03:17 GMT

Ever thought about trying to go into a low-income neighborhood, buy a vacant shell and renovate it to provide livable housing?  Earn a return and make a difference at the same time?  Think long and hard before jumping into low-income real estate.

The truth is that the oversimplified “2% Rule” completely distorts the investing picture on low-end housing.  It’s easy to find properties in lower-end neighborhoods that will rent for at least 2% of the purchase price, which is why so many new investors are drawn to them.  Besides, when properties are cheap to buy, it’s easy to diversify your real estate portfolio, right?

Wrong.  Diversification is only relevant if you start with the assumption that every individual investment is inherently sound in its own right.  But most landlords (especially new landlords) are simply not prepared for the challenges of low-end real estate.

One such challenge is the higher turnover rates in lower socio-economic neighborhoods.  Statistically, poorer Americans have a far higher “mobility rate” than their middle- and upper-income counterparts.  Turnovers are extremely expensive for landlords, between lost rents, repairs such as new flooring and painting, advertising and other costs associated with placing new tenants in a vacant unit.  Higher turnover rates = lower return on investment.

A related challenge: higher vacancy rates in low-end neighborhoods.  More vacant properties generally means more supply, making it more difficult to lease out vacant rental units.  While a "shortage of affordable housing" is often bemoaned, the fact is that there is a shortage of qualified renters of affordable housing: the average credit score for households earning less than $30,000 is 619 (chart below).  That means longer vacancies in addition to their higher frequency… once again leading to lower returns. 

Then there are the frightening statistics correlating vacant properties with crime.  A 2012 study by the University of Pennsylvania found not only a strong correlation between the number of vacant properties on a given block and the number of assaults, but also a correlation with gun assaults.  And then there’s the property crime, which often means damage to your rental property.  Think broken windows, kicked-in doors, stolen appliances, squatters, graffiti and the like – all of which comes out of your pocket.  If you think insurance will save you, think again: the deductible is usually high, and if you do make a claim, expect much higher premiums in the years to come.



Who lives in low-income neighborhoods, with high vacancy rates, high crime rates and high turnover rates?  To generalize, residents who have often have trouble making their rent payments on time.  Rents often go unpaid, which means more eviction filings, which are in turn time-consuming and expensive.  Once again, this translates to lower ROI in the real world.

Nor is it only about financial returns.  It is a lot more work to chase down tenants who routinely fail to pay their rent, which is time you could have spent with your family and friends.  Going to rent court means time taken off of work, or it means hiring someone to appear in your place.  Higher turnovers means much more work, as you coordinate with contractors on cleaning out the trash left behind by your last tenants, repainting the entire house, replacing the ruined carpets, and so on.  Advertising the property, meeting prospective tenants there, collecting rental applications, screening tenants, signing lease agreements… sure, there’s a certain helpful website for this (ahem), but it still takes time away from your family.

Perhaps your next idea is to hire a property manager to take these time-consuming headaches off your hands.  But lower-end properties mean lower-end property managers, too.  After all, as a property manager paid on commission, would you rather take on $2,000/month properties with stable renters who usually pay on time, or a $700/month property with tenants who make more excuses than rent payments?  It’s a no-brainer for property managers: the only reason to take on the extra work and lower commissions of low-end properties is if they don’t have a choice. 

Lastly, it’s worth considering the political and legal reasons not to invest here.  Many states, provinces and municipalities have a lengthy and difficult eviction process, and extremely tenant-friendly laws.  You don’t get any brownie points for trying to renovate a dilapidated home and provide decent housing for low-income renters; rather you get called a slumlord for filing eviction and "putting hard-working folk out on the street".  Tenants call the local news station, and tell them their slumlord is turning them out on the street, that they live in abject conditions.  (I saw this happen to an old colleague, and the news station jumped on the story, never mind that the cockroaches and squalor in the house were there because the tenant left food and garbage lying all over the house.)

If you want to make a difference in lower-income communities, I commend you for it, but do it as a volunteer at a local non-profit, or by donating goods to local charities, not as an investor.  I have found that donating my time, money and goods has been rewarding spiritually, while my attempts to simultaneously earn a return while making a difference have left me poorer both spiritually and financially.

Are there any reasons to invest in low-end rental properties?  While most investors simply don’t have the skills or stomach necessary to succeed in such a challenging market, it is a niche.  Some investors thrive here, and can even earn strong returns.  But the ugly sides of this market can be hardening; the frequent late rents and evictions, the sad stories of truly desperate people, the crime.  There is a cost to managing and investing in poor neighborhoods, and it goes deeper than financial losses and extra management hours each month.

]]> https://www.ezlandlordforms.com/articles/educational/5/589/7-reasons-landlords-should-inspect-rental-properties-every-few-months/ https://www.ezlandlordforms.com/articles/educational/5/589/7-reasons-landlords-should-inspect-rental-properties-every-few-months/ Tue, 25 Aug 2015 04:25:22 GMT

You can always count on Murphy’s Law, and nowhere is that more true than in real estate.  From failing furnaces to outlaw occupants and pets, plenty can go awry at your property, so savvy landlords know that a property inspection today can prevent major headaches tomorrow.  Sure, everyone knows that a walk-through and property inspection is essential to perform with your tenant before a new lease term begins and when that same lease ends.  But over the life of the lease, regular property inspections can save money in more ways than one. 

Here are the seven reasons why landlords should make regular property inspections.

1. Tenant Compliance.  Is the nice older lady who signed the lease agreement the only occupant, or did her deadbeat son and his pregnant girlfriend move on in too?  Is the renter hoarding moldering magazines and creating a fire hazard?  Is there mildew, mold or mice in the kitchen from old food and dirty dishes lying around?  Are there pets residing the in the property, that were not listed in the original lease agreement?  Tenant compliance is among the most important reasons to inspect properties regularly – catching problems early may mean correcting bad behavior without having to evict them.  And if they still refuse to comply with the lease provisions, at least you can evict them before they do too much damage to your investment.

2. Routine Maintenance.  It’s also critical to double check that routine maintenance is being done, whether the tenant or a third party is responsible for it.  Test the smoke and carbon monoxide detector batteries.  Check the HVAC filter to make sure it’s been replaced within the last three months, and isn’t too dirty.  Is the landscaping and grass being maintained properly?  Are the floors scratched to shreds, or did the tenant comply with your proviso that all furniture have felt pads on the feet? 

3. Weather Wear & Tear.  Weather and human activity can wear on the exterior of any property.  Periodic inspections give you the opportunity to find out if there are any structural or other problems with the home and façade.  For instance:

a. With brick facades, are there any issues with the brick or mortar?  You might be in need of a brick pointer.

b. If there is any aluminum or vinyl siding, is it still maintaining its integrity, or is water getting behind the siding?  It is essential that any loose siding be fixed immediately.

c. Are there any issues with the surrounding grounds, such as the lawn, foliage or any fencing? 

d. A regular roof inspection can indicated problems at the source, before bigger issues arise.

4. Notoriously Difficult Basements & Foundations.  Basement/foundation inspections are critically important, given the exponential increase in repair costs if foundation damage goes unrepaired for too long. 

Cracked foundations and holes can not only cause structural instability, but openings in a foundation are invitations for mice, bugs and other vermin to invade that space.  Water damage can also be a common problem for basements and foundations.  Discovering problems and having them addressed now will save you thousands of dollars in the future.

If there is a basement in your property, the heater and water heating units can be inspected for function, efficiency and leakage.

5. Appliances.  Many of the appliances in your property should be checked to make sure that they are safe and in correct working order.  This can include the stove and oven, refrigerator, washer, dryer and any other appliances supplied by the landlord.  A leaky valve on a gas stove, for example, might just end in a crater and a mushroom cloud – talk about a bad day for everyone involved.

6. Mechanical Systems.  A property is like a body, and the skeleton of that body are the mechanical systems.  Sure, there is inevitable wear and tear, but be sure to periodically check exposed plumbing lines and fixtures for sinks, toilets, tubs and dishwashers, including access panels and under sinks.  Also check electrical switches and outlets, making sure that no breakers are being overloaded.  (A more in-depth inspection of the plumbing and electrical can be done by a contractor between tenancies, or if you suspect a problem now.)

7. Good Tenant Retention.  Attentive landlords keep their good tenants!  Remember that while it may be your investment, but it is also the tenant’s home, and they should want to make sure it’s being well-maintained by the owner.  There are plenty of reasons why tenants should welcome the idea of periodic inspections:

a. Inspections can give them peace of mind that the building’s structure is sound.

b. All periodic replacements of batteries and filters keep the property safe (if not the tenant’s responsibility).

c. A periodic safety inspection can build trust between the tenant and the landlord.

Trust is important in relationships as easily frayed as landlord-tenant relationships, which is why tenants should be notified up front when they sign the original lease that periodic inspections are part of your rental management, for both the property’s and their own safety.  The tenant should also be with the landlord during the inspection whenever possible, to insure that level of trust and prevent accusations of theft.  The landlord should be regarded as a guest, not an intruder. 

Use our Periodic Property Inspection Checklist as you walk through the building, and double check that both your rental property and tenant’s care of it are tip top.  Send or post a Notice of Entry in the legally-required timeframe in your state or province, and phone the renters in addition to giving them the notice, to arrange for them to be present if possible.

You may rather spend Saturday morning golfing than touring your rental properties, but if you want to earn the max return on your rental investments, be proactive and find problems while they’re small and cheap to fix, instead of catastrophes.

Related Reading:

Common Property Issues & Repairs Landlords Should Know (Infographic)

Fall Maintenance Checklist for Landlords & Property Managers

How to Screen Contractors, from Humble Handymen to Pricey Pros

]]> https://www.ezlandlordforms.com/articles/educational/2/588/beginners-guide-to-buying-an-apartment-building/ https://www.ezlandlordforms.com/articles/educational/2/588/beginners-guide-to-buying-an-apartment-building/ Wed, 29 Jul 2015 17:06:09 GMT

Most people dream of buying a home, which is fine, but an apartment building?  Not on most people’s to-do lists.  But if you’re looking for an investment property and want higher returns, it should be on yours.

Buying a multi-unit building is usually for investment only, unless you want to live there too, or you’re generous and have an enormous family.  It’s a substantial amount of money (read: risk), and you need to be willing to put in the time, effort and dollars to make it happen successfully.  However, as daunting as it may sound, it can mean great returns, as many a wealthy real estate tycoon can attest.  Here’s the recipe, and it’s no secret: do your homework and take precautions; you’ll be on the path to success.

Choosing Investments with Strong ROI

If you've never done any real estate deals before, partner with an experienced investor.  They can educate you on permits, working with contractors, common expenses and repairs, financing and a hundred other skills you'll need.  They will want you to put up the bulk of the money and do more of the gopher work, but this is a much cheaper way to learn the ropes than by making expensive mistakes on your own.

That famous real estate refrain – location, location, location – is famous for a reason.  You can change the paint color or throw out those pink flamingos on the front lawn, but you can't change the crime rate, the local schools, the neighborhood's walkability. 

One lucrative approach is buying an old building and having it rezoned for multiple units.  This requires an intimate knowledge of your jurisdiction's zoning laws, the rezoning process and perhaps the administrators themselves (and their favorite cigars or cookies).  Learn these ropes with a partner first.

A more common strategy is to find a property at a bargain price that needs renovation, and charging premium rents after renovating.  This also adds to the future value of the property should you choose to sell it either post-renovation or at a later date. 

Renovating usually requires permits, a vetted contractor and a strong grasp of going rates for the work in question.  Always try contractors on small jobs first, then gradually build them up to larger jobs.  Never use a contractor for the first time on a large-scale apartment building renovation.

Aside from the purchase price and repair costs, which can cost millions of dollars, there are (of course) ancillary costs that will weigh down the ROI party balloons.  These include permit fees, legal fees, property inspections, vacancy rates (always overestimate these), estimated annual repairs and maintenance (overestimate these too), taxes and insurance.  If the building is in turnkey condition and just changes owners, sure you can start collecting rent immediately, but beware of anything that is too easy.  Go back through your profit & loss projections and make them more conservative; turnkey usually means high cost and low return. 

Financing Challenges – And Overcoming Them

More units usually means more return, since they come with a higher price tag and fewer competitors able to finance it. 

In some ways, financing an apartment building purchase is not so different from financing a single home purchase.  You may be able to borrow 80% of the total cost, which takes care of the lion’s share of the investment, at rates not too much higher than home buyers’ if your credit is strong and you can show stable income.  The bank will assume a 25% vacancy rate and let you include 75% of the projected rents from the building as part of your income.

To cover the down payment and any repair costs, some creativity might help.  While banks don’t like to see any part of the down payment borrowed, people really do borrow from friends and family, and there’s always credit card financing.  Crowdsourcing the money can work too, to raise money online from strangers.  You could even try putting other assets up as collateral to the bank, to avoid a down payment altogether, but beware of putting everything you own up as collateral in case the deal goes bad somehow.  No one wants to be homeless over an investment gone wrong.

Tips for Managing Multi-Unit Buildings

Property management is not as easy as it looks, and is a discipline unto itself.  But doing it yourself, at least early on in your real estate investing career, will make you a much better investor.  Here are some tips to get you started:

• If you do nothing else, be thorough and aggressive with tenant screening.  Most landlord-tenant problems can be avoided by screening potential renters' credit and criminal reports, verifying their employment and income, talking to their current landlord and walking through their current home to see how they live.
• Read up on Fair Housing rules, which can be far more complex and dangerous than you think.
• Use state-specific lease agreements, that protect you, your assets and your interests.
• Every communication with renters should be in writing.  If you talk to a tenant on the phone, send a notice to them summarizing what you discussed.  Keep records of every communication; landlord-tenant court is packed with people every day for a reason.
• Serve eviction notices on the day the rent becomes late, every time, like clockwork.  No exceptions.

If you’re serious about the endeavor, you’ll see pretty quickly how exciting buying an apartment building can be.  Be savvy and sensible, and soon enough you’ll be onto your second income property (and early retirement).

Related Reading:

Considering Apartment Building Investing? Consider Both the Risks and the Returns

Six Benefits (and a Few Risks) of Multi-Family Investments

How to Price Your Rental Unit Just Right

]]> https://www.ezlandlordforms.com/articles/educational/5/516/a-landlord-s-guide-to-late-fees-penalties-and-reasonable-charges/ https://www.ezlandlordforms.com/articles/educational/5/516/a-landlord-s-guide-to-late-fees-penalties-and-reasonable-charges/ Mon, 27 Jul 2015 10:21:07 GMT

"Check's in the mail, he he he."  What’s a landlord to do when tenants never bother to pay the rent on time?  Rest assured once a tenant pays late and gets away with it, it will happen again.  Most landlords, newbies and veterans alike, can agree there should be some consequence to paying the rent past its due date.  The question though is how much to charge, and how to structure the late rent fees.

The answer to how much to charge is generally based on what your individual jurisdiction allows (this is usually covered by state or province law, but can also be county-specific).  In some states like Maine and Massachusetts, there are timelines in place as well. Massachusetts has statutory law that requires landlords to wait thirty days before charging a late fee.  There is currently a House Bill #1670 to change this but it has been stagnant since January 2013.  (Word to the wise: in the Late Fees section of the lease wizard, the State Assist or Province Assist tip will let you know your state's law for late fees.)

Sometimes the law only restricts late fees to being "reasonable", defined by the courts as the amount that a "reasonably prudent" landlord or property manager would charge under similar circumstances.  The word "subjective" also comes to mind.

According to attorney James Laughlin, “Courts generally find a late fee of 5% or less (of the monthly rent) to be reasonable but this does not hold true across the board.”  As a general rule of thumb, landlords should provide a grace period of at least five days before the rent is considered late, and should never charge more than 10% of the rent as a late fee (to err on the side of caution, charge 5%).

A somewhat more convoluted issue regarding tenant late payments is the concept of penalties. Charging an unusually high late fee, even when a state only restricts to "reasonable" charges, can raise questions of penalization.  Penalties and punative damages are deeply frowned upon (to say the least) by rent courts.  Charging penalties in some states may result in a fine to landlords.  For instance, in a 1998 Oklahoma Supreme Court decision, judges ruled that, “In reviewing the case at bar, we find that the $5.00 per day “additional rent” sought to be imposed for late-payment or non-payment of rent is a penalty, in the absence of any evidence to the contrary showing actual costs incurred by the Landlord.  The Landlord's damages as a result of late payment of rent are not so difficult to ascertain so as to fall within the exception to the statute.  The $5.00 per diem late charges, in addition to the $20.00 late fee, is excessive in this case.”  The court further acknowledged, “If the per diem charges are liquidated damages, then they are allowable.  If they are a penalty for breach of the lease, they are punishment and therefore not allowable. 

To simplify, if the late fees are to cover actual costs incurred because the rent is late (e.g. mortgage late fees), it would be allowable.  But if the amount is so high that it feels like a penalty, this could be an issue for the landlord.   

What should landlords do to ensure rent payments are made on time and cover any expenses incurred when they are not?  Here are five things landlords should do to collect rent on time and reduce the hassle of late fees.

1. Stop the behavior immediately.  Acting immediately is imperative to show that late rent will not be tolerated; even once and no matter what the reason.  So even if your tenant gives you a story and even if that tenant gives you this heads up prior to the due date; make sure that you have your procedures in place and follow them through like clockwork, the day the rent becomes late. 

2. Everything must be in writing.  Every stipulation in your lease agreement must be in writing.  Landlords should take extra precautions when it comes to relaying information regarding late fees and other finance-related items in the lease.  The specific amount should be detailed in the lease agreement and defined clearly as to whether it represents a percentage of rent or just a specified amount determined by the landlord.  Send a late rent notice.  Do not call!  All communication must be in writing to create a paper trail.  This prevents the he-said/she-said scenario fo often found in court.

3. Call it a late fee.  Landlords are forewarned to be careful to call it a "late fee" and not a "penalty fee", as some jurisdictions do not allow “penalty fees” for late rental payments.  Also, even when referring to late fees as such, if they are somehow deemed to be penalties based on the amount, landlords could find themselves faced with legal action against them.  Judges seldom look favorably upon any fees considered as "penalties" or "punishment" to the tenants. 

4. Beware of per diem late charges. This practice may be permissible in your state, but there are many cases where a daily late charge or fee assessment can be construed as a penalty or considered as punitive.  That being said, they can be used if not prohibited in your state, but beware and be careful.  (Read more about per diem late fees here.)

5. Remember Fair Housing laws.  Treat all tenants the same when it comes to applying late fees.  Don’t play favorites; follow the same procedures and amounts for every tenant who is late, every time.  Make all of your tenants aware of the policy up front and in writing, and follow through with the same consequences for each of them like clockwork.

How do you handle late payments?  Do you agree with the definition of reasonable charges?

Related Reading:

Study Reveals Both Landlords & Tenants Disturbingly Unaware of Laws

Security Deposits: Defining Normal Wear and Tear & How to Handle Security Deposit Disputes

]]> https://www.ezlandlordforms.com/articles/educational/3/564/pros-and-cons-of-month-to-month-rental-agreements-vs-12-month-leases/ https://www.ezlandlordforms.com/articles/educational/3/564/pros-and-cons-of-month-to-month-rental-agreements-vs-12-month-leases/ Thu, 16 Jul 2015 10:22:25 GMT

Have you ever paused to think about the length of your lease terms?  Landlords don’t have to choose traditional 12-month lease agreements for their income properties.  Some landlords prefer multi-year lease agreements, and others prefer to go month-to-month from the beginning.

First, a note on nomenclature: in some regions, landlords refer to a “lease agreement” as being 12 months or longer, and a “rental agreement” as being short-term or month-to-month.  Call them what you will, it makes no difference legally; a lease can be either monthly or for a ten-year term, and can be called names ranging from rental agreement to tenancy agreement to rental contract.

Pros

Flexible for renters.  Flexibility is the biggest advantage of choosing a short-term lease agreement.  It benefits tenants who don’t want to commit for an entire year.  They don’t have to worry about breaking a lease agreement, which can be expensive and difficult.  Tenants are still required to give proper notice before moving out.  Depending on the state landlord-tenant laws, 30-60 days’ notice is usually required.

Flexible for landlords.   Flexibility can also be an advantage for landlords.  You may need to rent out a unit for a short period of time and can’t accommodate a tenant for a full year.  Or maybe you want the flexibility to have an empty unit when you need one; you can issue a non-renewal notice to your month-to-month tenants at any time (with proper notice of course).  And speaking of flexibility, you can raise the rent more often.  Once per month, you have the right to make changes, effective after the usual 30 or 60 day period.  You may also change other parts of the rental agreement, such as deposit amounts or services offered.

Faster to deal with problem tenants.  If you’re not happy with a tenant, you don’t have to wait a full year to ask them to vacate.  You can just send them a non-renewal notice, and if they fail to vacate by the end of the 30 to 60 days, then you are within your rights to evict them. 

Charge higher rental rates.  In most rental markets, landlords can charge renters more for the flexibility of month-to-month rentals.  Tenants who only need an apartment for a few months know they need to pay a premium to do so.  The higher rents can offset some of the risks and costs of a vacant apartment.

May attract more tenants.   Students, for example, may prefer a short-term lease agreement since they may be in the city for four to eight months at a time.  Certain employees, such as consultants or temporary workers, may also prefer a monthly agreement as their work contracts are short, sometimes renewed every month or so.

Perfect for vacation homes for rent.   If your income property is in an area popular with tourists, a month-to-month rental agreement can be useful.  You can get much higher rental rates if your property is fully furnished and used as a vacation property or executive rental.

Cons

More turnover.  Turnovers are extremely expensive for landlords, between clean-up costs, fresh paint, carpet cleaning or replacement, even mandatory inspections in some jurisdictions.  It costs money and time to advertise a unit and perform tenant background checks.  It also takes time to prepare new rental agreements and show the unit to potential tenants. 

Higher vacancies.  With higher tenant turnovers, there’s the potential for more vacancies.  Your unit could sit empty for weeks, even months between each short-term tenant.  That can represent a high opportunity cost as your unit isn’t making you any money when it’s empty.

More wear and tear.  If your unit becomes a revolving door of monthly tenants, you’ll need to deal with higher than normal wear and tear.  Moving in an out can cause damage to floors, doors and walls.  Tenants that are only staying a few months might not care for the unit as they would if they were staying long-term.  You may need to paint more often, and spend more on maintenance than with a year-long tenancy.

Potential for lower quality renters.  The kind of tenant attracted to short-term lease agreements is often a temporary, “just passing through” sort, without long-term ambitions or commitments.  Some tenants may worry the landlord may send a non-renewal notice at any time, and avoid your rental property in favor of the stability of a long-term lease contract.

Final Thoughts

Depending on your rental market, it may be better to have established, longer-term tenants, therefore using yearly rental agreements.  Or it may be best to go with month-to-month leases for their flexibility and potential for higher rents.

Just remember that you still need to give proper notice to your tenants should you need them to leave, and tenants are still accorded the same basic rights under landlord-tenant laws.

Related Reading:

Raising the Rent: The Landlord's Guide to Successfully Raise Rental Income

What's the Difference Between a Rental Agreement and a Lease Agreement?

]]> https://www.ezlandlordforms.com/articles/educational/2/587/5-home-upgrades-that-won-t-add-any-value-to-your-property/ https://www.ezlandlordforms.com/articles/educational/2/587/5-home-upgrades-that-won-t-add-any-value-to-your-property/ Mon, 13 Jul 2015 17:35:11 GMT

We all know people with more money than judgment, and rarely is it more evident than in people’s home improvement ideas.  Whether for their own home or a rental property, people find incredible ways to blow thousands of dollars, often with no chance of seeing most of that money again.  Sure, many of us can appreciate a walnut-enclosed wine cellar, and most people have to admit that hot tubs have a certain sex appeal (figuratively speaking).  And many upgrades will result in higher rents, which may over time pay back their installation costs (especially if you buy second hand).   

Unfortunately, most of these house renovation ideas are commonplace, expensive and completely unnecessary, and will cost far more than they will earn in resale value.

1. Additions

Cue Captain Obvious: additions are extraordinarily expensive.  Yet people build them all the time, from sunrooms to family rooms to expanded master bedroom suites to garage additions and countless more.  These are vanity projects, and inappropriate in both owner-occupied and rental residences.  Unless your property sits on a unique and perfect piece of land, additions are simply a recipe for lost money.  It makes more sense to simply upsize to a bigger house in most cases.

2. High-End Roof Replacement

Roofs sometimes need to be replaced.  But spending $30,000 on a trendy metal roof does not mean your property will sell for $30,000 more; in fact only 55% of the average high-end roof cost is recouped at the time of sale.  Keep it basic, and remember that most people will never look twice at your roof.

3. Fiberglass Doors

They sound vaguely cool, but guess how many home shoppers say “The most important thing to me is that the house has a fiberglass door”?  If your answer was somewhere between nil and none, you guessed correctly.  Yet homeowners and landlords get swept up in thinking about how great their house would be if they just had this or that latest trend, and fiberglass doors are a perfect example.

4. Home Office Remodel

Is it nice to be able to boast in your listing that the property has a home office?  Sure.  But the advantages stop there.  It doesn’t need to have an $11,000 coffee maker, or rainforest hardwood shelving, or a robot that gives back massages.  If ROI matters to you (as it should), then avoid tricking out your home office, because you’ll recover less than 50 cents on every dollar you spend here.  The fact that it exists is enough for buyers and renters, let them do what they want with it.

5. Permanent Backup Power Generators

Yes, we’re all worried about the impending zombie apocalypse, but backup generators that are permanently installed and designed to power the entire house are gratuitous and unnecessary.  If the power goes out for a day, wouldn’t it be nice to light some candles and play a board game, instead of watching TV?

If you desperately want the above for your own house, by all means indulge, but be aware that it’s an indulgence, not an investment.  Don’t justify home renovations and gadgets that you want by telling yourself you’ll make the money back when the property sells, because you won’t.

So, what upgrades are worth doing around the house, and to boost rents on investment properties?

Start with the fundamentals: cleanliness, reasonably fresh paint and flooring.  A wifi-enabled thermostat will not impress anyone if the carpets are shredded and the kitchen smells like mildew.

Next look to the amenities.  The most important amenity to renters today is still a clothes washer and dryer, followed by air conditioning.  Not exactly shiny new technology, but extremely useful for actual day-to-day living. 

If the property is on the low end, stop there – the renters can’t afford to pay more for gizmos like smart stereo systems.  For mid-level properties, consider one or two style touches, like wifi-enabled thermostats, security and/or smoke alarm systems.  The good news is you can spend less than $500 on these smart home features, to add a heavy dollop of “cool” to an otherwise average property.

Have a high-end rental unit?  Look into what comparable properties are renting for if they have other chic touches, such as smart door locks ($200) and coffee makers ($150), wine coolers, etc.  Also remember that the house renovation materials will need to be higher end too: perhaps hardwood flooring instead of carpets, granite countertops instead of composite, stainless steel appliances and gleaming bathrooms.

No matter the price tag, every property could use a curb appeal boost.  Start simple with a few hearty potted plants or basic landscaping, it doesn't have to be complicated or expensive, but curb appeal makes a huge difference to prospective renters and buyers.

 

Every dollar spent on a real estate investment is still exactly that: an investment.  If it fails to provide a good return, then it is not a dollar well spent.  What’s trendy is only useful to the extent that it offers a positive ROI, so beware of home improvement ideas that won’t demonstrably pay for themselves and then some. 

Related Reading:

Common Property Issues & Repairs Landlords Should Know (Infographic)

Summer Home Improvements for Your Rental Property

How to Screen Contractors, from Humble Handymen to Pricey Pros

 

]]> https://www.ezlandlordforms.com/articles/educational/1/586/supreme-court-ruling-didn-t-intend-to-discriminate-you-can-still-get-sued/ https://www.ezlandlordforms.com/articles/educational/1/586/supreme-court-ruling-didn-t-intend-to-discriminate-you-can-still-get-sued/ Wed, 08 Jul 2015 10:09:07 GMT

A recent Supreme Court ruling means that landlords can be sued even if they had no intention of discriminating – “I didn’t have any idea” won’t cut it when it comes to potential Fair Housing Act violations. 

Although it might have gotten lost in the excitement over headline-making Supreme Court rulings on same-sex marriage and Obamacare, the Supreme Court’s decision on the Fair Housing Act has implications for anyone involved with renting, building or selling a home.

The Ruling

In a 5-4 decision, the Supreme Court ruled that lawsuits based on “disparate impact” are allowed under the Fair Housing Act.  This disparate-impact rule means that an action can be considered discriminatory even if the intent was not.

This decision upheld a lower court’s ruling in the case Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.  The Inclusive Communities Project had filed a disparate-impact claim under the Fair Housing Act that maintained that too many tax credits for low-income housing in Dallas were allocated in areas that were primarily minority, inner-city neighborhoods.

Justice Anthony Kennedy, who delivered the majority opinion, wrote that recognizing disparate-impact claims is in line with the Fair Housing Act’s primary purpose to “eradicate discriminatory practices within a sector of our Nation’s economy.”  He stressed that disparate-impact liability is necessary to combat prejudices that may not be easily identified as disparate treatment.

He added that lawsuits that target housing restrictions designed to keep minorities out of certain neighborhoods without just cause are at the “heartland of disparate-impact liability.”

The brief cited an example where a disparate-impact claim struck at some of those restrictions, including a post-Hurricane Katrina ordinance that limited the rental of housing in an area to those who were related by blood.  This particular area was 88.3 percent white and 7.6 percent black.

Disparate-impact liability can also benefit developers, according to the brief.  For example, it can prevent municipalities from enforcing “discriminatory” practices that would block the construction of certain types of housing. 

The decision made note of the fact that disparate-impact liability does not take away the right of developers and housing authorities to explain the validity of business practices that may seem to cause a disparate impact.  Courts are cautioned to not to “inject racial considerations into every housing decision,” Kennedy wrote.

Dissent & Controversy

Of course, not everyone agrees, including the four justices who took the opposing view.  Opponents say that the decision may bring about the very problem it’s trying to prevent – racially-based decision-making.

Justice Clarence Thomas, in his dissenting opinion, wrote that disparate-impact liability can’t be justified if it’s simply used to try to correct racial imbalances that may have nothing to do with illegal actions.

A Minnesota housing case illustrates this, according to Justice Samuel Alito’s own dissenting opinion.  In this instance, landlords were required to make improvements to meet housing codes and then, when rents were increased to cover the added expense, faced a disparate-impact lawsuit because minorities, who were statistically more likely to have lower incomes, would be more greatly affected by the increase in rent. 

Landlords & the Law

The real impact of this case, however, lies more in what might have been if an opposite ruling had been made.  Lower courts have been allowing disparate-impact claims for years.  Had the Supreme Court decision been different, plaintiffs would have had a harder time filing anti-discrimination lawsuits.

The best bet for landlords is to become familiar with the Fair Housing Act, which prohibits discrimination on the basis of race, color, religion, sex, disability, familial status or national origin.  Landlords should also be exhaustively screening all rental applications legally: tenant credit reports and criminal background checks, rental history verifications, income and employment verification.  By collecting all of this information, not only can landlords make an informed decision about prospective renters, but they can show in court that they had valid reasons to select one tenant over another.

Because of the disparate-impact interpretation, fair housing violations can be a bit like quicksand – they seem innocent but can quickly pull a landlord into a sticky, downward spiral that’s difficult to escape.  So whether you’re advertising or showing your property, screening your tenants or setting apartment rules, make sure that you’re in compliance with the law and that any actions you take or policies you set apply to everyone, and can’t be construed as affecting some people but not others.

For example, let’s say a couple comes to view your rental property.  As you’re showing the couple around, you mention that the neighborhood is quiet as there aren’t a lot of families with children in the area.  Guess what?  That could be considered discriminatory.  Or you mention to a potential tenant in a wheelchair that you have a ground-floor apartment that would be perfect for him.  That could be discriminatory as well. 

In some cities, there are even rules forbidding landlords from rejecting felon rental applicants based on their criminal records, citing the disparate impact doctrine.  The legal argument is that because a disproportionate percentage of felons are minorities, rejecting renters because they have been convicted of a felony is discriminatory based on race.

Of course, these examples only become problematic if someone decides to take you to court.  The potential fallout from not being aware of fair housing laws, though, is great enough that you should make sure you’re fully informed.  Know the law, and seek your attorney’s opinion if you have a question about whether you might be breaking it.

Related Reading:

How to Screen Tenants & Reject Bad Applicants – Without Running Afoul of Fair Housing Laws
Fair Housing Enforcement Expands & Evolves: What You Need to Know

Are "Birth Tourist" Renters a Risk for Landlords?

]]> https://www.ezlandlordforms.com/articles/educational/5/585/everything-landlords-need-to-know-about-rent-control/ https://www.ezlandlordforms.com/articles/educational/5/585/everything-landlords-need-to-know-about-rent-control/ Wed, 01 Jul 2015 17:42:28 GMT

Rent control is a tenant's dream come true: what could be better than paying $400 in rent for a property worth $600,000?  It's not so great for the property owner who can't charge what her property is worth.  Aside from "don't buy a property that's rent controlled," here's what all real estate investors and landlords need to know about rent control.

What is Rent Control?

Rent control is usually a local regulation that restricts how much a landlord can charge for rent on a given property, regardless of what neighboring properties rent for, or what the property value might be.  This law may impose limits on how often rents are increased, when they may be increased, and by how much. 

Also known as a "rent ceiling," few cities in the United States have rent control laws.  In California for example, cities like Los Angeles and San Francisco have these laws in place.  So does New York City. 

In the state of New York, it’s known as the War Emergency Tenant Protection Act.  It was created during World War II to avoid war-related shortages in rental housing. 

The rules differ by municipality, state and country.  In San Francisco, rent control has two components: strict rules for evictions and price control.  Increases are tied to the area’s Consumer Price Index (CPI).  New York goes one step further with by adding a vacancy control law.  Landlords are capped when it comes to rent increases on vacant units ready for new tenants.

Ontario, Canada, also has strict rent control laws.  The provincial government sets the yearly allowable rent increase.  The 2015 rate was capped at 1.6 percent.  In 2014, the increase was a measly 0.8 percent.  If a landlord wants to increase the rents by more than the allowed percentage, they must apply to the Ontario Landlord and Tenant Board for permission, which is difficult to get.  Landlords may, however, set the rent as high as they like for vacant units and new tenants. 

Most other areas in the United States don’t have rent control laws.  This allows landlords to set rent as they see fit.  If demand for housing goes up significantly, so can the rent.

What Right Do Tenants Have?

In areas with rent control, tenants’ rights are quite strong.  The onus is on the landlord to increase rents regularly, and in accordance to regulations.

Rent control often prohibits landlords from increasing rents retroactively.  In other words, if a landlord hasn’t raised the rent in many years, they cannot catch-up.  Use it or lose it.

This can create big problems for inexperienced or absentee landlords who don’t stay on top of increases.  Landlord-tenant acts tend to be quite strict in rent control areas.  Landlords can’t evict a tenant because the rent is now too low, but they can’t raise it either.  Eventually, the landlord is forced to pay out of pocket since expenses are higher than the income.

Selling a building with poor rental income is also a big problem.  Even under new ownership, rent control prevents the new landlord from raising the rents.  Landlords have limited options to rectify the situation.

How to Best Handle Rent Control as a Property Owner?

The first step is to be well informed.  Rent control laws are quite rigorous, and can limit the income potential of a rental property.  In rent controlled areas, the rental income is a big part of the property’s market value.  On paper, a fourplex may be worth $500,000 for example, but if rents total only $1,500 per month, no investor will buy it.  If the same building was generating $9,000 per month in rent, investors would be lined up around the block to hand in their purchase offers.  You don’t want to be the chump who overpays and is stuck with a cash flow negative property.

The second step to being a landlord in a rent control area is to stay on top of rental increases.  If the market can support the full increase, landlords likely should raise their rents.  Owners may decide it’s not worth losing a great tenant over a few dollars per month, but they should take the time to make an informed decision.  If market rates take off, they risk being left behind.

Third, landlords need to find out what their options are.  With enough time and patience, it may be possible to salvage a bad situation.  Take income properties in Ontario as an example.  Rent control means landlords can’t increase rents more than the annual government set percentage, which tends to be quite low.  Evicting a tenant in Ontario is also quite difficult, and it can’t be done to increase rent. 

However, there is one possible option for the right landlord who plans to live in one of the building’s units.  Once the tenant’s lease agreement term has ended, the landlord may be able to evict the tenant for personal use of the unit.  It could also be used by a member of the owner’s immediate family.  According to the landlord-tenant act, it must become their primary residence and be done “in good faith”.  If the tenant thinks the property owner is not acting in good faith, they have up to 12 months to file a complaint.  Eventually, if the landlord wishes to move out, they can rent the unit to a new tenant at market rate.

In some rent controlled areas, owners can turn the apartments into condomiums and sell them, instead of continuing to rent them.  This can recover the true market value of the property, and prevent further losses for the landlord, but it actually drives local rents higher by reducing rental housing supply.  Therein lies the problem inherent in all arbitrary interventions in market pricing: forced pricing creates an entire cascade of unintended consequences.

Likewise, what incentives do landlords have to improve the property, or offer better amenities?  None.  Landlords of rent controlled properties are incentivized in the opposite direction: to spend as little as possible on maintaining their buildings, because the rent will be unaffected regardless. 

Carefully research what is legally allowed before trying to salvage a rent controlled building, and speak with an attorney to better understand the requirements.  It’s also wise to contact the local landlord and tenant board to make sure all rules are being followed. 

Would you become a landlord in a rent controlled area?  Any advice for those thinking of buying their first property in this type of market?

Related Reading:

Rent Control Battle Boiling in High-Rent San Francisco

NYC Landlord Ordered to Charge $1 Rent for $2,100 Apartment

Rent Affordability: How Do Incomes Stack up to Rents, Since 2000?

How Does Raising the Minimum Wage Affect Rents?

]]> https://www.ezlandlordforms.com/articles/educational/1/584/an-internet-dater-s-guide-to-creating-irresistible-rental-ads/ https://www.ezlandlordforms.com/articles/educational/1/584/an-internet-dater-s-guide-to-creating-irresistible-rental-ads/ Thu, 25 Jun 2015 12:17:09 GMT

“Tired, 2-bedroom walk-up needing new carpet and a paint job seeks short-term relationship with tenant who will pay the rent at least some of the time.  You bring the low FICO score and loud friends, I’ll bring the banging on the door at 3 a.m.  If this sounds like a match made in rental heaven, please call any time day or night – I’m desperate.”

Not exactly the message you want to send with your rental listing?

Your rental ad will usually be the first impression a prospective tenant gets of your property, so making it sizzle can be the difference between a property that sits empty and one that has suitors lining up at the door. 

Hot Ad Headlines

When potential renters are sifting through countless rental ads, the headline is what will make them explore a property further.  Although you’ll be limited by space constraints, you can pack a big punch with just a few well-chosen words.

Just like with a dating profile, there’s no point in trying to be coy – you can save that for the in-person meeting (actually you probably shouldn't be coy then either).  Make clear the critical details about your property, including the rent and the number of bedrooms and bathrooms.  This is key information that is non-negotiable for most people, so you might as well be clear up front.  Luring someone in by hiding the costs or the space available is a waste of time for everyone involved.

What else should you include in your headline?  Referencing the location is important (“Downtown Austin,” “Old Town Alexandria”), as is the type of housing (apartment, townhouse, detached SFD).  Finally, top it off with a quick mention of a couple of attractive selling points, such as “waterfront,” “country setting” or “historic charm.”

Pictures – Still Worth at Least 1000 Words

A better valuation of pictures is probably “views,” rather than words.  If the headline grabs people, the pictures will reel them in.  A Trip Advisor survey found that 79 percent of vacation rental guests were most attracted to the photographs of a property’s listing.  Zillow reports that homes with more pictures and page views sold more quickly, and it makes sense to apply these findings to residential rental properties as well. 

You really can’t have too many pictures (although the publication or site you list with may limit how many you can use).  Like dating profiles, the photos you include should put the property’s best foot forward – its best angle, best lighting, best “dressing” and cleanliness.  The money shots are kitchens, living rooms, bedrooms and bathrooms.  If you have room to add more, consider including pictures of outdoor areas, amenities such as pools and even a floor plan.

Enlisting the services of a professional photographer may prove to be a smart investment as you can probably use the same pictures if you have to list your property again.  Be sure to view other work the photographer has done, specifically real estate photos, before you commit.

Take Your Best Shot

Don’t feel, however, as though a pro is the only way to go.  You can take perfectly good shots yourself if you keep a few things in mind.  Before you even start taking pictures, make sure the rooms are well lit.  Natural light is best, but you should turn on all of the room’s lights as well.  A camera flash can sometimes make things look a little funny, so try taking some pictures with the flash and some without to see which look better.  Digital photos make it easy to take a ton of shots, so don’t hold back.

Next, try to capture as much of the room as possible in the picture.  You may need to stand in a corner to get the best view.  Make sure that each room’s best features are clearly visible.  That may be a walk-in closet in the bedroom or new stainless-steel appliances in the kitchen.  Finally, make sure that there’s nothing to date the photos, including a date or time stamp or any sort of seasonal décor.

Video speaks even more loudly than photos.  Although you might not be able to add one to your listing, you can include a link to a YouTube video that you shoot yourself.  A quick 2-3 minute video tour will give potential renters the opportunity to walk through the property without your having to show up at all.

Property Descriptions that Pop

No one likes to trudge through paragraphs of text (with the exception of scintillating rental management articles, of course), so you your best bet is probably to keep your description short and sweet.  Start with an introductory sentence, trumpeting those yuppie buzzwords like “airy” and “bright” and “luxurious” and “stunning waterfront view”, but then get down to business with a list of features and amenities.  A bulleted list of features is easy to read and highlights what your property has to offer without all the fluff.

Anything that makes your property special and appealing is worth mentioning.  Your pictures won’t be able to point out everything that’s noteworthy, so your description is where you can fill in the gaps.  Additional details about the location can’t be shown in photos either, so if the rental offers easy access to public transportation, is in walking distance to shopping and restaurants or is close to parks, mention it now.  You should also list any additional fees or incentives.

The following are some of the most searched for rental amenities according to ForRent.com, so if you’ve got ‘em, flaunt ‘em:

1. Washer/dryer in unit
2. Air conditioning
3. Washer/dryer hookups
4. Furnished available
5. Patio or balcony
6. Hardwood floors
7. Dishwasher
8. Fireplace
9. Walk-in closets
10. Wireless Internet access

Make it easy for people to contact you.  Don’t bury your phone number at the bottom of the listing.  And the ezLandlordForms Grammar Police implore you to make sure your listing is error-free – proofread, run spell check and hunt down your high school English teacher if you have to (extra credit for spotting the grammatical faux pas in this sentence).  Typos and misspelled words can make your listing look unprofessional and you careless.  Take the time to get it right.

After your bulleted list of selling points, wrap the listing up with a conclusive sentence that hammers home why this property is such a stellar place to live. 

Don’t Violate Fair Housing Laws

Your rental ad won’t do you much good if it gets you sued.  While fair housing laws are the subject of other articles, a quick summary is useful here: landlords may not discriminate (in any way) against these seven protected classes: race, color, religion, sex, handicap, familial status or national origin. 

It’s easier to run afoul of fair housing laws than you might think.  Have a tiny studio apartment that’s only appropriate for a single person?  You can’t say “perfect for a single person” in the rental listing or ad, else you are discriminating based on familial status.  Have a house in a heavily Jewish neighborhood?  You can’t only advertise the rental property in the local synagogue’s newsletter, or it’s discriminating based on religion.  Even words such as “exclusive” and “traditional” can sometimes be considered discriminatory.

For that matter, even convicted felons are sometimes protected by fair housing laws, as are hoarder tenants, but those are other stories entirely.

Happily Ever After

With rental properties, as with relationships, it’s often best to take things slowly rather than rush into a whirlwind romance.  And while we can’t offer you advice about your love life (well, we could but you wouldn’t want it), we can tell you that taking the time to create a polished ad is the first step in forming a long-term rental relationship.  Screen all tenant applications carefully, verify employment, income, credit history, criminal history, identity and housing history, and you may even find the perfect lifelong renter.

Related Reading:

How to Screen Tenants & Reject Bad Applicants – Without Running Afoul of Fair Housing Laws

More States & Municipalities Requiring Landlords to Accept Section 8 Tenants

Fair Housing Enforcement Expands & Evolves: What You Need to Know

]]> https://www.ezlandlordforms.com/articles/educational/3/583/what-are-green-lease-agreements/ https://www.ezlandlordforms.com/articles/educational/3/583/what-are-green-lease-agreements/ Wed, 24 Jun 2015 09:39:40 GMT

Like the idea of being more eco-friendly?  Consider a green lease agreement.

A green lease is written in such a way to encourage both the landlord and the tenant to adopt environmentally friendly, sustainable practices.  Green leases therefore benefit the landlord, the tenant and the environment. 

There currently is no widely accepted standard for green lease agreements, so one green lease may look and feel quite different from another.  Landlords and tenants have a lot of flexibility, which lets them structure their lease in a way that meets both of their needs.  The key elements of a green lease are usually rent structure, operating expenses, recycling, acceptable products and best practices.  It is essentially a lease agreement that describes how the rental building will be used and operated in an environmentally friendly way. 

The goal of such an arrangement is for the building to have as little impact as possible on the environment.  It starts with the building itself, which is usually built with sustainable materials and systems, such as the following:

HVAC – The heating, ventilating, and air conditioning systems are selected based on their energy efficiency. 

Energy efficient design – When a building is built with the environment in mind, energy efficiency becomes the main focus of the actual design.  These buildings are well insulated, have good ventilation and use high performance materials.  The architects are mindful of window and skylight placement to maximize natural light.

Energy use – Green leases aim to reduce energy use when possible.  Some buildings are designed with alternative energy sources like solar panels or wind power.  Appliances and lighting are chosen based on their energy efficiency.

Water – Reducing water consumption is another key factor in green construction and green leases.  Low flow taps, toilets and showerheads are used throughout the space.  A water recycling system may create grey water to be reused onsite for lawn or garden use.  Sometimes, a water collection and purifying system is in place. 

Recycling and composting – To reduce waste, buildings with green leases use on site solutions to encourage recycling.  Items like compost bins, paperless offices and waste-free options are promoted.

Currently, green leases are mostly used in commercial and corporate settings.  They are, however, gaining popularity with new residential building developments. 

How do Green Leases Affect Landlords?

Landlords play a bigger role when they commit to a green lease. 

When a green lease is in place, landlords have more say on their tenants’ day-to-day use of the building.  Landlords can impose recycling programs and conservation measures.  They can decide which cleaning products are to be used on the premises.  Landlords can even set strict rules for which types of devices, from lighting to office equipment, are allowed in the building.  As long as it is clearly defined in the lease agreement, the landlord can demand it.

Be aware that tenants have higher expectations when it comes to green lease situations.  They are committing to adopt business practices that are environmentally friendly.  They are therefore more likely to make sure the property lives up to these eco-friendly practices, and may be demanding.  They may push for building improvements.  They may request specific certifications.  They may also lobby for new, more energy-efficient systems.  If tenants feel the property owner isn’t holding up their end of the bargain, they may try to hold them accountable.

In the long run, there are many benefits for landlords.  More efficient buildings – and environmentally-conscious tenants – can mean big savings in operating costs, especially in commercial buildings.  Green rental properties also tend to attract higher-quality tenants who are both better educated and willing to pay a premium for going green.  Demonstrably lower utility bills can be an excellent selling point, and will help landlords command higher rents. 

Particularly with newly constructed buildings, the additional costs and work are minimal, so marketing a green lease agreement is can help maximize return on investment while also requiring eco-friendly behavior from renters.  Keep an eye out for tax incentives, both for the construction phase and for property upgrades, to help offset initial costs.

Best Practices for Green Leases

If you’re thinking of adopting a green lease, there are a few key points to keep in mind.  First, don’t do it alone.  As always, the legal wording of your lease agreement is critical, so either use an attorney or a state-specific online service that offers state law tips as you go (ahem!).

Another key factor to a successful green lease is the proper structure of the rent.  As most of the day-to-day energy savings come from the tenants’ use of the building, it’s important for landlords to build a financial incentive into the rental agreement.  This usually means there is a base rent amount, then some kind of incentive for the tenant – either a saving or a penalty – based on energy consumption.  Sometimes, a net lease is adopted; tenants must then pay for all of their utility costs.  Net leases can encourage tenants to reduce energy consumption as they foot the bill.  However, this doesn’t always translate into energy efficiency as it’s harder for the landlord to impose targets. 

Landlords, do you have any green leases?  Do you have any recommendations for those thinking of taking on this type of lease?

Related Reading:

The Skinny on Micro-Cottages: Rental Income, Mobility & Minimalism

Where Young Adults Are Migrating... and Why It Matters to Real Estate Investors

How Surprising Neighborhood Factors Like Trees & Trash Impact Crime Rates

]]> https://www.ezlandlordforms.com/articles/educational/2/582/why-landlords-and-real-estate-investors-need-to-pay-themselves-for-their-time/ https://www.ezlandlordforms.com/articles/educational/2/582/why-landlords-and-real-estate-investors-need-to-pay-themselves-for-their-time/ Tue, 23 Jun 2015 11:22:46 GMT

Don’t punch me, but I’m going to say it: Time is money.

You would not work for $1/hour, but you would probably be willing to work for $1,000/hour.  Your time is worth a certain amount of money; how much depends on you. 

If you flipped a house and earned $1,000, is that a win?  Maybe.  It depends on how much time the deal cost you.  If it only cost you five hours of work, then at $200/hour most people would agree you did well.  If it cost you 100 hours of work, then at $10/hour, maybe you should have run a lemonade stand instead – at least you’d have been able to relax outside. 

Let’s reframe the example above into more useful terms, and this time we’ll use a word that was missing above: profit.  For the sake of argument, let us say that you value your time at $25/hour, somewhere near the median income in America.  You earned $1,000, but not all of that is profit.  If it took you five hours of work, then your labor cost was $125, making your profit $875.

Or, it took you 100 hours of work, so your labor cost was $2,500.  You did not have a profit, you had a loss of $1,500.  You should have stuck with your day job, where you would have earned a reasonable wage for your work.

Consider another relevant example.  Every month, landlords need to make an important decision: Should I manage my rental properties myself, or outsource the work to a property manager?  The answer depends on several variables.  In an average month, how much time does the property demand? How much is my time worth?  How much would it cost to pay a property manager to do that work? 

Let us say that 123 Main Street takes you about three hours each month on average to manage.  That includes depositing the rent, fielding phone calls from the tenant, keeping a rent ledger of income and expenses, maybe mailing late rent notices, sometimes coordinating repairs with a handyman, etc.  Using our $25/hour example wage, that means your labor cost is $75/month on average. 

This provides a firm framework with which to make a rational decision on whether to hire the property manager.  If the property management commission is 10% of a $700 rent, or $70/month, then you should hire the property manager.  But if the commission is 10% of a $1,000 rent, or $100/month, then you should continue doing the work yourself… and paying yourself for it.

Paying yourself for your time ensures that you compare apples to apples, when deciding what work to do yourself, and what to outsource.  It also ensures that you keep profit separate from your labor costs.  After all, you could have invested your money in a stock, and never spent a minute working.  Your return on investment needs to reflect your labor costs, so that you don’t end up working dozens of hours to earn the same ROI that you could have achieved just investing in a mutual fund. 

Property management is particularly time-intensive for vacation rentals, so it's especially critical that landlords account for their labor costs if they want to profitably manage vacation rentals.

Each week, keep a record of how many hours you worked on your investment property.  This exercise alone is extremely valuable; many real estate investors and landlords are shocked when they realize just how many hours they’ve been spending on their real estate investments each month.  Each week you can make an instant online transfer from your business operating account to your personal account for the labor cost, and mark it in your rent ledger.

This practice will make you a better real estate investor, and a better landlord.  It may reveal inefficiencies in your management or investing practices, where you can save time.  It will also clarify your true profit, and the true cost of your real estate investments.  You may even realize that you’ve been doing yourself what you could pay a more qualified professional less money to do for you.

Afraid you won’t like what you see when you account for your labor?  Remember that most businesses are not immediately profitable, and there is a learning curve that most entrepreneurs must go through on their path to profits.  How fast you move along that curve is largely dependent on how willing you are to look at brutal truths like your true profit and loss after all your costs are laid bare.

Labor costs count, whether those are paid to someone else or yourself.  If you clean up your books, you may well find you’ve cleaned up your business and freed up more time in the process.

Related Reading:

Want to Join the Top 20%? Invest in Retirement Accounts & Rental Properties

Vacation Rentals as a Second Home: Tips for Actually Making Money

The 25X Rule for Retiring Early (…and How Rental Properties Change the Math)

]]> https://www.ezlandlordforms.com/articles/educational/2/581/counting-on-social-security-fudged-numbers-are-more-reason-to-diversify-retirement-income/ https://www.ezlandlordforms.com/articles/educational/2/581/counting-on-social-security-fudged-numbers-are-more-reason-to-diversify-retirement-income/ Thu, 18 Jun 2015 14:53:06 GMT

With traditional pensions gone, more retirement accounts dependent on the stock market and Americans living longer than ever, planning for retirement has become dangerously close to gambling.  When the career wheel stops spinning, will your number be high enough?

If the Great Recession taught us anything it’s that no investment is guaranteed and even strategies that worked in decades past can prove ill-fated.  Case in point: Social Security.  Although one would think that retirement income backed by the US government would be a sure thing, a recent report by the Journal of Economic Perspectives suggests otherwise.  The report demonstrates that the Social Security Administration has been gravely overstating the program’s financial health, and misleading the public about its solvency. 

Social Security on Shaky Ground

The fact that Social Security isn’t enough to fund anyone’s retirement is old news.  Many Americans already believe that Social Security won’t be around in thirty years, at least not in its current form.  Younger generations are especially skeptical; a 2014 Pew Research Center survey reports that 51 percent of millennials don’t think that there will be any money left in Social Security when they retire.

Even the Social Security Administration isn’t optimistic.  According to the 2014 Social Security Trustees Annual Report, Social Security reserves are expected to run out in 2033.  After that, only about 75 percent of scheduled benefits will be paid out through 2088, the last year for projections.

What is new, however, is that even though many think Social Security’s status is shaky, it may be even worse than was previously thought.

Fudged Forecasts

A 2015 report by the Journal of Economic Perspectives compares Social Security Administration forecasts with actual outcomes and maintains that while forecasts were unbiased until 2000, they become “systematically biased afterward, and increasingly so over time.”  As a result, policymakers and other people relying on those forecasts for information were led to believe that the Social Security Trust Funds were more financially sound than they actually were.

Why does this matter?  Demographic information, such as mortality, fertility and migration rates, is used to determine how many people will be drawing Social Security benefits and for how long.  If this information is off, even by a small amount, it can skew the actual number of beneficiaries.

For example, the Journal of Economic Perspectives report states that in the years after 2000, every forecast for male and female life expectancy for the year 2010 was underestimated.  In just one instance, the Social Security 2005 Trustees Report under-forecasted male life expectancy at age 65 in the year 2010 by 1.3 years, which translates into approximately 151,000 male beneficiaries.  More beneficiaries could place more strain on Social Security reserves, especially if there aren’t enough tax-paying workers to cover the difference.

The Journal of Economic Perspectives report further notes that the data and methods the Social Security Administration uses to make its forecasts are not made publically available, preventing others from corroborating the SSA’s math and projections.

Diversification

Although the Social Security Administration stands by its forecasts and maintains that it’s impossible to predict the future (especially an economically crippling event like the Great Recession), it’s tough to know how much money you can expect to receive from Social Security.  Or, if retirement is still many years away, if you’ll receive any money at all.  There is an increasing body of data suggesting that most Americans are not saving enough for retirement, which grows scarier every month as baby boomers grow closer to retiring.

Beyond saving enough of a nest egg, the key to any good retirement plan is diversification.  A stock portfolio including a wide range of industries and/or index funds, with low annual fees, is a good place to start.  As you grow closer to retirement, bonds can provide more stability.  Rental properties are excellent for high returns and passive income, but of course require more expertise and time than index funds.  

Rents and property values also tend to rise over time.  Recently the rental market has done more than merely keep up with inflation: demand has surged over the past several years and is set to outpace home value growth of the end of the year, according to Zillow’s January 2015 Real Estate Market Report.  Zillow’s Rent Index from the same month also reveals that out of 859 cities, 72 percent showed rental prices greater than a year ago.

Cash In by Renting Out

For the right person, rental properties make excellent income sources.  They provide a steady stream of income that’s relatively passive, meaning you don’t have to do too much to earn it.  That’s not to say that there’s no work involved, but by properly vetting your applicants, choosing your investments wisely and staying on top of repairs, taxes and the like you can look forward to receiving a regular monthly check without having to check in at the office.

Rental income is also a nice hedge against inflation.  While investments with fixed rates of returns (like bonds) can actually lose money over time to inflation, you can increase rents to match – or even exceed - the rate of inflation.  There’s also the likelihood that your rental property’s value will increase over time, further enhancing your investment.

One of the greatest advantages of rental properties is they are extremely tax efficient.  Aside from being able to deduct every conceivable rental property expense (including paper expenses like depreciation), you can even invest in rental properties as part of your 401(k).

Rentals as Part of the “25X” Strategy

Rental properties also fit in nicely with the “25 times” rule of investment.  This strategy is based on the idea that if you calculate retirement needs based upon what you currently spend – not earn – then you could retire (and live) forever on a nest egg that is at least 25 times your annual spending.  Assuming that your investments offer an annual rate of return, your nest egg will continue to grow as long as you stick to your initial spending levels. 

The great thing about including one or more rental properties in your portfolio is that their profits can easily exceed what you’ll make on other types of investments.  So even though a rental property may make up a relatively modest portion of your portfolio, its rate of return can make up a substantial chunk of the money you’ll need to cover your annual spending.  Read more about the 25X rule for retirement to see how rental properties change the math for retirement. 

This type of investment for retirement is not for everyone.  Keep in mind that you’ll need a cash reserve in order to cover taxes, repairs and potential vacancies.  However, every type of investment carries with it some kind of risk, and you may just decide that the risk involved with leasing out income properties is a safer bet than relying on a Social Security Administration that fudges its numbers to maintain the appearance of solvency.

Related Reading:

Rental Properties as Retirement Income: Golden Rules for the Golden Years

Is There a “Great Senior Sell-Off” Looming over the Next Decade?

]]> https://www.ezlandlordforms.com/articles/educational/5/580/summer-home-improvement-projects-for-your-rental-property/ https://www.ezlandlordforms.com/articles/educational/5/580/summer-home-improvement-projects-for-your-rental-property/ Mon, 15 Jun 2015 16:23:57 GMT

Rental homes have the same maintenance needs as any property. However, the work falls to a landlord who also has his or her own home maintenance tasks, not to mention a full time job and other responsibilities. With its longer, often drier, days, summer allows busy landlords the perfect opportunity to complete projects at their rentals. Replacing a roof, painting, and other work can be spread out over days or even weeks in good weather.

Summer projects can help boost your rental income, and draw more interest from potential tenants. And, a bit of routine maintenance when it’s nice out can help prevent problems once the cold weather returns (see our infographic on common rental property repairs).

Here are a few easy home improvement tips and projects for your investment property that will provide high Return on Investment (ROI) for often minimal effort.

Start by assessing the outside of your property

Summer is a great time to take care of exterior issues. Begin by completing an inspection of the outside of your building:



•      Look for any signs of damage to roof and shingles.

•      Clean out gutters and check them - and downspouts - for cracks or holes.

•      Make sure that the siding, doors, and windows are in good condition - recaulk if needed.

•      Don’t forget to look low: check for cracks in the foundation where water could seep in.

Next, size up the curb appeal of your rental. Stand across the street from your property and take an objective look. What do you notice? Do trees and bushes need to be trimmed? Are plantings looking straggly and unkempt? Is the porch or walkway looking shabby? Is the mailbox rusty?



Low-maintenance fixes are the best. For instance, flower beds can host native plants that grow back every year - cheaper then replanting annuals each spring. Slow-growing shrubs, surrounded by natural mulch to keep down the weeds, will cut back on maintenance costs and labor. In areas where grass won’t grow well - and requires frequent, fussy care - consider replacing turf with pavers, stones or decorative gravel.

Other easy, exterior home improvements that add charm include:

•      Drought-resistant plants and bushes that look good and require less watering.

•      Ornamental grasses that are eye-catching and virtually maintenance-free.

•      New paint on the front door for a pop of color.

•      A new coat of paint on the shutters - subdued but tasteful - to freshen the whole exterior.

•      Replacing a wood garage door with a new steel one, eliminating the need to paint.

•      Replacing the mailbox, house numbers and other hardware.



Don’t forget to drive past your property after the sun sets. You’ll be able to see if your rental home has enough exterior lighting, whether you need to replace bulbs, and if shrubs need to be trimmed to improve nighttime security.

Building or replacing an old wooden deck, porch or or patio can add value for prospective tenants. Choose a simple design and select materials than don’t need much upkeep. Instead of wood, for instance, consider a maintenance-free option like composite decking material. The initial cost typically is higher than wood, with the savings coming in the future because it won’t ever need to be painted, sealed or stained. Deck rails can be composite material or aluminum for the same low-maintenance and long-lasting effect.

If property fencing has seen better days, summer is the perfect time to replace it. Vinyl fencing is popular thanks to its easy care; it won’t rot or warp and the finish won’t peel, which means once you replace your fence, it will retain its new look for years.

Evaluate the inside of your rental home



If your rental property needs a bit more than a refreshed exterior, summer is still an ideal time for larger home improvement projects, especially if you are between tenants. Remember to keep indoor improvements simple so that upkeep is minimal. While there is no need to purchase custom or high-end goods, be sure to choose durable materials that will hold up through tenant turnover.

Home renovations that tend to give the best return on investment generally include bathrooms and kitchens. If the bathroom is dated, then adding new flooring, and a new toilet and vanity, can give the room a modern and clean look. For the kitchen, repainting cabinets may be a quick and affordable option. Also consider replacing only the cabinet doors, or just updating the cabinet hardware. Add a new counter and backsplash and the room will feel really clean and inviting.

Washers and clothes dryers are still high on most tenants’ must-have lists, so if your rental unit doesn’t have them, consider installing lines for them.

Before you get started, have tools and materials assembled in a central area, so that it’s easy to plunge in and work efficiently. If you plan to lease any specialty tools, reserve them in advance.

 

For the quickest, cheapest update, apply a fresh coat of paint throughout the unit. Having the carpets cleaned can also make a big difference. During summer, these projects go more easily because you can keep windows open and air out the house.

In midrange and higher-end rental properties, smart home components that can be controlled and monitored remotely by smartphone are chic and often inexpensive. From thermostats and smoke detectors, to window shades and surveillance systems, individual parts of homes can be connected, programmed and accessible by mobile to maximize tenant satisfaction.

Homes and apartments that include these features, or the smart switches and hubs for add-your-own devices, will command higher rents.

 

Summertime is the best time

Summer can truly be the best time to tackle a new project. The warmer weather and longer days are a DIY-er’s delight. If your rentals are



occupied and you are aiming for major indoor improvements, you may be able to schedule work around a tenant’s out-of-town vacation. Make sure you clear your own calendar, too.

Repairs that are outside your skillset will require professional help. Remember that contractors also take advantage of the summer, and typically are booked months in advance for projects during that season. Don’t wait until the last minute to line up professional services.

Lasltly, be sure to get three estimates, if you are paying a contractor for updates to your investment property. Retain all receipts, for labor and materials, so that you can deduct costs from rental income. And, keep your tenants posted on all schedule changes so they can plan around any inconveniences.

Related Reading:

5 (Relatively) Cheap Upgrades to Boost Market Rents & Property Values

How to Price Your Rental Unit Just Right

Raising the Rent: The Landlord's Guide to Successfully Raise Rental Income

]]> https://www.ezlandlordforms.com/articles/educational/3/579/what-rights-do-tenants-have-with-legalized-marijuana/ https://www.ezlandlordforms.com/articles/educational/3/579/what-rights-do-tenants-have-with-legalized-marijuana/ Mon, 15 Jun 2015 10:17:29 GMT

You pride yourself in being a good landlord.  You keep current on landlord-tenant laws to always be well informed.

But sometimes the laws and rules are clear as mud.

In order to avoid getting into hot water, it’s important to be aware of tenants’ rights.  However, problems arise when the laws, and consequently the tenants’ rights, aren’t entirely clear.  This can happen when changes are being made to current legislation, or interpretation of laws is evolving through case law.

Take the messy legal situation surrounding marijuana.  Currently, it’s legal for adults aged 21 or older to use the drug for recreational purposes in Colorado, Washington and Alaska.  It’s also legal to use marijuana for medical purposes in 23 other states.  At the time of publication, medical marijuana is legal in Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, Oregon, Rhode Island and Vermont.

In some of these states, it’s legal for users to grow their own plants as long as they are for personal use and growers follow the state specific rules.  But growing, selling, buying or consuming marijuana remains illegal by federal law.

To further confuse the issue, although still not legal, recreational marijuana use has been decriminalized in certain states.  This change in the law means anyone caught with marijuana may be given a fine, but they won’t be charged with a criminal offense if they are found with personal-use amounts of the drug.

Landlord-Tenant Laws and Marijuana

If using marijuana is legal according to state laws, tenants may of course want to use it in their residence.  The same applies if growing pot plants is legal in the state.  However, tenants should check the wording of their lease agreement.  If the landlord bans smoking, tenants are legally expected to follow the clauses, just like they are with cigarette smoking.  A change in legislation doesn’t automatically override current agreements or establish new tenants’ rights.

For example, unless specifically prohibited in writing, tenants in Colorado may smoke or use marijuana in their apartments as long as they are 21 or older.  They may also grow up to six marijuana plants as long as no more than three are fully mature.  Plants cannot be cultivated outside as they must be kept in an enclosed area.  The tenant may then legally possess the marijuana they have grown on the premises.

But the laws grow murkier from there.  For example, can landlords ban all uses of marijuana, even if the renter has a prescription?  Is that a violation of patients’ medical rights and treatment?  This is still being determined by the courts as lawsuits slowly start emerging.

What About the Landlord’s Rights?

As a landlord, it all comes down to having it in writing.  Landlords who are not hunky-dory with the smoking of legal marijuana in their rentals need to include a clause to that effect in their lease agreements.  Even in states that have legalized marijuana, it’s legal for landlords to disallow smoking inside their property (but not necessarily other uses, such as ingesting).  Landlords have the right to include a variety of clauses to their lease agreements; some choose to ban pets, tobacco smoking, roommates and more, even though these are otherwise legal for residents.  (See ezLandlordForms' Marijuana Addendum or Smoke-Free Rental Addendum.)

To further cover themselves, landlords can include a clause that bans illegal behavior according to both federal and state laws.  However, it’s always best to make clauses crystal clear – those who want to prohibit marijuana should have it spelled out.  Clear examples or a list of banned activities should be included, and landlords should understand that banning any type of marijuana use might not be enforceable in court.

What Happens Next?

Marijuana laws are rapidly evolving in the United States.  For example, the use of marijuana will be legal in the state of Oregon as of July 1st 2015.  In 2016, expect the issue to come to voters in the states of California and Arizona.  Some states are still working on decriminalizing the drug; others are legalizing it for medical reasons only.  The Obama Administration has opted not to enforce federal marijuana laws in states that have legalized it, deciding not to pick a fight over states’ rights, but it is anyone’s guess what stance the next administration will take.

As more states legalize the use of marijuana, it may eventually become difficult for landlords to enforce clauses that prohibit the drug on their property.  In Colorado for example, some judges are already giving tenants the chance to remedy the situation instead of evicting for issues dealing with legal marijuana.  Tenants’ rights may become stronger – only time will tell. 

For now, it’s up to landlords to decide what they allow on their property.  As long as their lease agreements clearly address the issue, landlords can take a hard line stance if they wish, but be aware that enforcement may require a court battle with renters.

Related Reading:

Can Condo Associations Ban Marijuana Use, Even Where Legal?

The "Growing" Problem of Canadian Grow-Ops... And Why They ARE a Problem (check out the "guard bears")

]]> https://www.ezlandlordforms.com/articles/educational/4/578/what-are-squatter-s-rights/ https://www.ezlandlordforms.com/articles/educational/4/578/what-are-squatter-s-rights/ Wed, 10 Jun 2015 11:08:49 GMT

As a landlord, you never want to hear the words “squatter” or “squatter’s rights”.  They tend to coincide with other words, like long and messy.  And frustrating.  And terribly expensive.

What exactly constitutes a squatter?  While the difference between a trespasser and a squatter is a murky one, a squatter is someone who has occupied and “settled” on a piece of land or building.  Someone who enters for an hour is a trespasser, but someone who has lived there for a year is a squatter.

If that sounds like a reward for doing more of something illegal, well, we live in a strange nation.

Squatters have legal rights, which range from eviction requirements to adverse possession (they could eventually have the right to take legal title of the property). 

Why do these laws even exist?  In part, they are a way to deal with abandoned properties.  If someone is willing to live there long enough to claim ownership, they can legally have it.  The laws around squatter’s rights vary from one state to the other.  Certain municipalities also have specific bylaws in regards to squatters and property ownership.

Another reason for squatting laws is to protect those who have had access to a specific property for many years.  Take, for example, a homeowner who thought his land extended all the way to the existing back fence.  Over the years, he took care of that land as his own.  He built a large garage there.  Then a garden.  Several decades later, a new back neighbor moves in.  He approaches our homeowner, telling him the fence has been in the wrong place all along – it should be moved in by about two feet. 

The new fence location would go right through our homeowner’s garage and garden.  Will he be forced to destroy his garage?  In many cases, the answer would be no.  Our homeowner could claim squatter’s rights to the land, as he’s occupied it for many years.  Since land boundaries weren’t always clearly defined in the past, he would likely win his case and retain legal ownership of the small strip of land. 

Squatter’s rights used to protect long-standing buildings and land-use is one thing, but it’s another story when they are used to protect a trespasser who moves into a residential property illegally.

A landlord can face a variety of situations which can involve a squatter.  Perhaps squatters decide to move right into a vacant property between tenancies, and put their feet up and watch reality shows on TV.  Maybe the lease agreement has ended and the landlord is ready to move back into their home, but the renter refuses to leave.  Or guests staying in a vacation home can refuse to leave after their stay, claiming to still be legally occupying the premises.

Squatting tends to be a problem in abandoned homes.  The housing market crash, for example, led to entire neighborhoods being deserted as homeowners walked away from their underwater mortgages.  Squatters are also a problem in cities that undergo a huge economic crisis, like the recent situation in Detroit.

Squatting isn’t unique to the United States.  In England, this story describes one London landlord’s plight with the legal system and a squatter settlement.  In Canada, one handyman was squatting in the home he was renovating, causing the homeowner all kinds of legal headaches. 

What should landlords do if they discover someone unlawfully occupying their rental unit?  If there’s any case to be made that the intruders are trespassers rather than squatters, call the police and report them as trespassers.  Perhaps local law enforcement will remove the intruders from your property with little difficulty. 

If the person has been living in the property for any length of time, or had any kind of lease agreement – even an oral one that has since expired – the situation grows more complicated.  The landlord may need to go through a formal eviction process, complete with eviction notices, waiting periods, court filing, hearings, and a scheduled ejectment.  Serve the eviction notice immediately, to start the process (it can take a long time).

If you have an unwelcome guest on your property, and any confusion over exactly what should be done, contact a landlord-tenant attorney.  They can provide guidance and help you find a legal solution to your problem.

Landlords, have you had to deal with a situation involving squatter’s rights?  How did the situation resolve itself?

]]> https://www.ezlandlordforms.com/articles/educational/5/576/how-to-be-an-effective-absentee-landlord/ https://www.ezlandlordforms.com/articles/educational/5/576/how-to-be-an-effective-absentee-landlord/ Fri, 05 Jun 2015 15:35:45 GMT

Slumlords, broken windows, overgrown weeds, unhappy renters… are these what come to mind when you hear the words “absentee landlord”?

The term can have a negative connotation.  Some believe it’s impossible to be a good landlord without being reachable at all times. 

In reality, “absentee landlord” isn’t a dirty expression.  It merely means a landlord who is not physically present in the same geographic area.

Living in another city, state or even country doesn’t automatically mean dilapidated buildings and mistreated renters.  In today’s global economy, it has become possible to own income properties elsewhere and still be an effective landlord.

Absentee landlords are becoming the norm in the 21st century age of globalization and technology.  As it gets easier to buy property outside the local area, investors are going where there’s the most money to be made.

Are you ready to buy elsewhere to maximize your return on investment?  Here are our best tips on how to be an effective absentee landlord.

First, Know Your Responsibilities

Before bidding on an apartment building in the next state, find out what their state landlord-tenant laws are like.  Which rules are you bound by?  Are there any restrictions you need to know about? 

Physically present or not, landlord responsibilities include providing a safe living environment to all tenants.  Code and safety violations, for example, can have serious consequences.  Tenants could file a complaint, stop paying rent and then sue the property-owner.

The only way to meet all of your responsibilities as a landlord is by knowing what they are ahead of time.

Use the Proper Legal Forms

When you’re not around on a regular basis, using the right landlord forms can be your saving grace.  Using state-specific lease agreements, disclosures and tenant notices helps you avoid countless potential costs and problems.  For example, most states have specific limits on security deposit amounts – that means not just using a state-specific legal forms, but using tools that help you understand the state’s laws.  (Not trying to toot our own horn here, but if you’re not an expert on a given state’s landlord-tenant laws, make sure you use a service like ours that will provide guidance in addition to state-specific legal forms.) 

Get Help

If you live far away from your rental property, you’ll need to find a way to keep your ear to the ground and know what’s going on in your absence.  The best way to do so is by hiring a property manager.  They can take over the daily and monthly tasks for you.  Most companies offer services which include collecting rent, issuing notices, advertising units, finding new tenants and signing new lease agreements.  Managers can stay on top of maintenance, making sure your building is always in good condition.  Some larger companies will also offer bookkeeping help and bill payments. 

The biggest advantage of using a property management team is having someone to keep an eye on your investment.  If tenants aren’t taking care of the property, your manager can take action.  They can also be the ones who get the middle-of-the-night phone calls when a toilet leaks. 

When investing outside your immediate area, you should include the cost of local property management into your financial projections.  If a property still gives you good return on investment after the cost of your manager, both you and your tenant will be better-off (read more tips here on how to invest in new real estate markets.)

Absentee Doesn’t Mean Ignore

Being an absentee landlord doesn’t mean ignoring your properties.  Even with property management help, you’ll still need to keep an eye on the manager’s performance and make sure they’re paying adequate attention to your rental investments.  Keeping in touch with your manager is important, as is reviewing the finances on a regular basis.

A bit of supervision can avoid more serious problems down the road.  Imagine your property manager has fallen behind on bill payments and didn’t pay the insurance premiums on your rental.  And then there’s a flood.  Or your manager doesn’t follow the fair housing laws well enough and lawsuit papers start flying.  Guess who will also be named in the lawsuit?

As the property-owner, the ultimate responsibility comes back onto you.  You need to protect yourself and your real property investments.  Supervision can mean catching potential issues early.

Advantages of Not Being a Local

There are several advantages of being an absentee landlord.  You can focus on municipalities that offer the best rates of returns, the best landlord laws or the best property taxes.  You can be better diversified, as you can purposely buy properties in different states.  You’re less susceptible to local economy crashes if all of your rentals aren’t in the same city.  And hey – you can live on a beach somewhere sipping daiquiris if you want.

Living out of state lets you focus on the big picture – your real estate portfolio – instead of the day to day headaches of being a landlord.  Like clogged toilets.

Related Reading:

The Starting Point: Real Estate Investing Advice for Beginners

Should You Buy a Rental Property to Lease to Your Adult Children?

Rental Properties as Retirement Income: Golden Rules for the Golden Years

]]> https://www.ezlandlordforms.com/articles/news/575/are-there-any-advantages-to-accepting-rent-through-virtual-currencies/ https://www.ezlandlordforms.com/articles/news/575/are-there-any-advantages-to-accepting-rent-through-virtual-currencies/ Thu, 04 Jun 2015 17:18:30 GMT

Bitcoins, litecoins, peercoins, Linden dollars… virtual currencies are either a great way to anonymize transactions, or to lose a lot of money fast.  Many tech-savvy millennials, speculators and money launderers are chomping at the bit to use them, urging businesses to start accepting them like cash.

But should landlords consider taking the plunge?

There are surprisingly few landlords that accept any type of online payment.  Credit cards?  Nope, the tenant could dispute the charges, and the fees are too high.  What about an online bill payment through our bank’s website?  I can’t force all of my tenants to pay their rent that way, so it just creates more work for me.  What's more, some tenants don’t even have a computer.  PayPal and email money transfers?  More headaches for my bookkeeping.  I don’t want to offer five different ways for tenants to pay their rent!

Throw in the tenants’ fear – or landlords’ fear for that matter – of being hacked or defrauded.  No wonder so many tenants still prefer to send a good ol’ fashioned check or money order, and landlords still accept them.

With the lack of interest in taking our rent transactions online, are there any advantages to accepting rent through virtual currencies?  Is it the way of the future, or just the way to make our business more complicated and risky?

There are pros to going virtual.  Once your account is set up, using or receiving bitcoins is quick and easy.  There are no such things as holds on the money like when depositing checks.  They can’t bounce either.  Transactions can be done instantly.  For those who want a confirmation of available funds, the money is still in your account within a few minutes.

Surprisingly, even though virtual currencies are all, well, virtual, they can be more secure than credit cards or other online payment methods (provided the exchange platform is secure).  While Mt. Gox famously collapsed in scandal last year, there is little to no personal information that can be stolen, copied or hacked the same way credit cards can. 

But that brings us to the major drawbacks to using a virtual currency like bitcoin.  One big risk is the constant currency fluctuations.  At the time of writing this article, one bitcoin is worth $237.41.  This morning, its opening value was $241.19.   Back in late 2013, a bitcoin was worth over $1,100!

If you receive rent in bitcoin, you will need to deal with the constant change in value.  If you convert to American dollars, the value will never be the same from one month to the next.  It’s like accepting rent in a foreign – and volatile – currency.  A constantly changing value creates quite the bookkeeping nightmare.  If the value drops too much, it can throw a wrench into your automatic mortgage or utility payments. 

Another drawback is the fees for using virtual currencies.  Although lower than credit card fees, expect to pay about 1 percent of all transactions in fees.

Lastly, virtual currency exchanges can be hacked, or worse, defrauded by administrators (like the Mt. Gox fiasco).  Because virtual currencies are meant to be anonymous and similar to cash, they are difficult to trace, and leave little paper trail.

For landlords looking to grow their real estate portfolio, you might run into an additional problem.  Lenders require proof of income in order to qualify you for new financing.  If your tenants pay in bitcoins, it may be difficult to convince your bank that you have a safe source of income. 

So is it being done?  It’s pretty rare, but some large rental companies are starting to allow virtual currency payments.  So are a few larger property managers.

Instead of accepting bitcoins for rent, some investors are using them to invest in real estate.  Described as “LendingClub for real estate”, RealtyShares is now accepting bitcoins as payment.  The virtual currency makes it easier for international investors to use the crowdfunding-style website to invest in both residential and commercial real estate.

Perhaps if virtual currencies become mainstream, paying rent in bitcoins will become the new normal.  Or, failing that, perhaps more traditional online payment services (such as PayPal) will become more popular among landlords and renters.  Until then, bounced checks will continue plaguing landlords.

Landlords, would you accept virtual currency from your tenants?  Has a tenant ever asked to pay with bitcoins for example?

Related Reading:

Accepting Electronic Rent Payments

How Solo Landlords & Managers Can Automate Like Larger Management Firms

The Changing Face of America’s Renters – and What It Means for Landlords

]]> https://www.ezlandlordforms.com/articles/educational/4/574/what-s-the-difference-between-an-eviction-notice-violation-notice-and-non-renewal-notice/ https://www.ezlandlordforms.com/articles/educational/4/574/what-s-the-difference-between-an-eviction-notice-violation-notice-and-non-renewal-notice/ Mon, 01 Jun 2015 15:21:33 GMT

Landlords are bound to face difficult situations and tenants periodically, no matter how well they screen rental applications.  Perhaps a tenant didn’t pay their rent this month, or maybe they just brought a pair of pit bulls into your building that doesn’t allow pets.  Now you need to take action and deal with the problem.

It’s never easy to confront tenants and try to shape their behavior, and you need to keep a paper trail.  So what is the right paperwork to use?  Do you need to use an eviction notice?  Should a lease non-renewal notice be used instead?  What about just giving a tenant a warning? 

With so many terms and legal implications, it’s easy to get lost in the lingo.  To help you keep them straight, let’s see the difference between an eviction notice, a lease violation notice and a non-renewal notice.

Eviction Notice

An eviction notice is an official document that must contain certain legal language, in accordance with state laws.  It is required by law when informing your tenants of an impending eviction.  Legal requirements vary from one state to another, so it’s important to check what your obligations are.  Most eviction notices must include the tenant’s name, address, reason for eviction and timeline for corrective action if applicable.  The landlord must also sign and date the eviction notice and serve it according to strict state regulations, to make it official.   

In most situations, the landlord must give the tenant the opportunity to remedy the situation.  For example, the tenant may be given a specific number of days to pay their rent in full or vacate the unit.  Those details must be included in the notice.

Landlords must have a lawful reason to send their tenants an eviction notice.  Depending on your state, they might include not paying the rent, violations to other terms in the lease agreement, illegal activity or damaging the property. 

Serving an eviction notice is the first step in the eviction process.  If the tenant fails to correct the violation within the specified time frame, the next step is filing in court for an eviction hearing.  Following the eviction procedure carefully is the best way for landlords to protect their rights as well as their investment.

Violation Notice

A lease violation notice is different from an eviction notice as it’s not considered a legal document.  It can’t be used to remove a tenant from a property.  It can be used as a warning however, to let a tenant know they are violating the terms of their lease agreement.

Common reasons for sending this type of letter include noisy tenants, loud music, unauthorized pets, unauthorized occupants, even landscape violations.  If a tenant is supposed to mow their lawn and isn’t doing it, a violation notice might be a wise move.

Why use a violation notice?  For lesser violations, it may be worth sending a “warning” violation notice as a first step in addressing the problem with their tenant.  Landlords can describe the issue and ask the tenant nicely to remedy the situation.  Secondly, sending a letter creates a paper trail.  If the tenant won’t fix the problem, the landlord may decide to move forward with the more formal eviction process.

Non-Renewal Notice

Sometimes, things just don’t work out.  Maybe the landlord needs the unit to be vacant, wants to renovate or simply wishes to find a better tenant.  When a landlord decides to end a lease, they may send a lease non-renewal notice to their tenant.

Non-renewals shouldn’t be used for situations that require eviction notices.  They also shouldn’t be used to change the terms of a lease or increase the rent.  The purpose of this notice is simply to inform the tenants that they need to move out at the end of their current lease term as it is not being renewed.

A non-renewal notice is sent towards the end of a lease’s term (how much notice is required varies by state).  Each state has very specific requirements for issuing a non-renewal notice and ending a lease; there are strict laws for the number of days’ notice landlords must give their tenants.  While non-renewal notices must be given in writing, the landlord does not have to provide a reason for not renewing the lease. 

Following the guidelines carefully is essential if you don’t want to end up in court.  If a tenant isn’t given enough notice or feels the lease is being ended illegally, they can file a complaint.  No landlord wants to be sued because they miscalculated or missed a deadline!

Final Thoughts

Although somewhat time consuming, it’s better to send a written notice when dealing with a serious issue.  Tenants get a clear explanation of the problem and how to fix it.  They also tend to take a written notice more seriously.

Regardless of the type of notice, it’s a good idea to send all notices by certified mail.  This gives the landlord a receipt, which can later be used as proof of having sent the letter.

Related Reading:

Eviction Notice Has Been Served… Now What?

Can Tenants Be Evicted For Being Too Loud? Landlord-Tenant Attorneys Weigh In

]]> https://www.ezlandlordforms.com/articles/news/573/are-birth-tourist-renters-a-risk-for-landlords/ https://www.ezlandlordforms.com/articles/news/573/are-birth-tourist-renters-a-risk-for-landlords/ Thu, 28 May 2015 10:28:13 GMT

Is the growing trend of “birth tourists” in the US a problem? 

Under the United States’ 14th Amendment, almost any child born in the United States has birthright citizenship, regardless of their parents’ nationality or country of residence.  This allows these babies to become American citizens, complete with an American passport, birth certificate and Social Security card.  Chinese parents see birth tourism as a way to give their children more options, and potentially a better future.

Birth tourism is touted in China as the extra edge that wealthier parents can provide their children.  A new industry of travel agencies charge Chinese women tens of thousands of dollars to facilitate their visit to the United States to give birth.  Once here, the soon-to-be moms are well cared for; the agencies provide them with a rented apartment, food and supplies, both before and after the baby’s arrival. 

The complication in this issue is that birth tourism is neither explicitly legal nor illegal.  “Some people say these families are taking advantage of a loophole,” says immigration attorney Emily Callan.  “If it was a loophole you could close it, but changing the 14th Amendment would be drastic.  This isn’t a loophole or a technicality.  It’s an unintended consequence.”

While in the United States, these women live in apartments usually rented out to the agency that organized the birth tourism.  Since the practice is currently being investigated and not seen as completely legal, that puts some vacation property owners in a sticky situation.  Should they decline birth tourist renters?  Can they legally do so?

On the one hand, the Fair Housing Act prohibits landlords from discriminating “based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and disability.”

In certain states like California, it’s illegal to even ask applicants about nationality, immigration status and medical issues including pregnancy.  If applicants meet your guidelines, you legally have to rent to them, or risk running afoul of the Fair Housing Act.

On the other hand, landlords have the right to establish certain criteria for their rental units.  Landlords can set strict standards based on credit history, background checks and rental history.  They can also require tenants to provide proper identification and proof of income or ability to pay. 

If an applicant cannot meet the rental criteria, the landlord is not required to rent them the unit.  The decision needs to be based on objective factors, like clearly defined rental criteria, and not on a gut feeling or personal opinion on the issue. 

Currently, the IRS and Homeland Security are investigating the birth tourism industry and the companies that promote it.  Dozens of Chinese parents have been deported, and many have lodged complaints against the travel companies.  There is also talk of changing the law regarding birthright citizenship.  But for the moment, landlords are expected to continue to follow the Fair Housing Act and rent to qualified applicants.  It’s important for landlords to do their due diligence, but it’s best to leave the investigating to the professionals.

]]> https://www.ezlandlordforms.com/articles/educational/2/572/screening-realtors-how-to-find-the-best-real-estate-agent-for-your-needs/ https://www.ezlandlordforms.com/articles/educational/2/572/screening-realtors-how-to-find-the-best-real-estate-agent-for-your-needs/ Fri, 22 May 2015 11:48:35 GMT

If you’ve browsed through those glossy real estate guides or online realtor sites, you know there are thousands of choices out there, and you may have to try a few on to find the perfect fit.  Like a good pair of shoes, a qualified, capable agent can help you along your journey… or they can leave you blistered and miserable. 

Realtors are often notoriously unprofessional, since they operate independently and largely without supervision.  Finding a responsive real estate agent who is an expert on your target market, and who truly has your best interests at heart, is a rare and wonderful thing.

Get Recommendations

A recommendation from someone you know and trust is a good place to start.  However, just because a friend of yours was happy with his or her agent doesn’t necessarily mean the agent will be the best choice for you.  Consider the type of property your friend had, as well as the price range and neighborhood.  Some agents specialize in certain types of properties, such as commercial or condos, so you’ll want someone who is knowledgeable about what you’re specifically trying to buy or sell.

You should also ask any agent you’re vetting for client recommendations.  If you’re selling a home, you’ll especially want to know what type of property each client had, the listing and selling price and location.  You want to make sure that the property the agent was handling was as similar to yours as possible.

You might already know a friend or family member who is an agent.  While using someone you know can offer a certain degree of comfort, it can also strain relationships, especially because buying or selling a home can be a tension-filled proposition.  If you go this route, make sure your friend or family member meets the same qualifications as any other agent to head off potential problems. 

Look for Qualifications

Every state has licensing requirements for real estate agents, and you should verify that your chosen agent has met them.  The name of the agency that governs real estate agents and their licensing varies, but starting with your state’s website should point you in the right direction.  While you’re there, check if any disciplinary actions have been taken against the agent.

The qualifications don’t stop there, however.  Agents often have a veritable alphabet listed after their names.  What do all of those letters mean?  If the agent is a Realtor with a capital “R,” he or she is a member of the National Association of Realtors, which (technically) requires its members to uphold a code of ethics. 

The association also offers several designations and certifications, which indicate an agent’s expertise in certain areas.  You might want to use an ALC, or Accredited Land Consultant, if you’re purchasing a new home and need land.  An MRP, or Military Relocation Professional, is familiar with the real estate needs particular to those in the military.  Many other designations exist, so explore which ones will benefit you and make sure the agent you choose has them.

Consider Technology

Real estate is as dependent upon the Internet as any other business, and the agent you choose should be familiar with how it applies to today’s market.  According to a 2015 generational trends study by the National Association of Realtors, 88 percent of all home buyers use the Internet in their searches.  Also consider that the millennial generation is buying more homes than any other age group.  If you’re selling, you want to make sure your agent is able and willing to appeal to these tech-savvy buyers.

This doesn’t mean that the Internet is the only tool homebuyers are using - 87 percent of all homebuyers – and 90 percent of millennials - are still enlisting the services of a real estate agent.  The study found that most homebuyers are shopping online and then using an agent to physically walk through homes, review neighborhood trends, prepare and review legal contracts and make the home purchase. 

The takeaway for you?  Make sure your agent knows how to use the Web to your advantage regardless of whether you’re selling or buying.  Web-based marketing approaches such as Twitter, YouTube and Facebook should be a part of the agent’s total marketing picture.  And if an agent isn’t up to speed on tech basics such as email or digital cameras, that may be a sign that he or she isn’t knowledgeable about current market trends, either.

Conduct an Interview

It’s a good idea to interview a few prospective agents.  Be prepared to ask how long they’ve been in the business, if they live in the area and for how long and if real estate is a full- or part-time job.  Have a discussion about how the market is faring in your area.  If you’re a seller, be sure to ask what the list price on your home should be.  Any particularly high and low numbers could be red flags – a high number may be quoted to reel you in and a low number could make you miss out on a greater profit.

Regardless of the agent you choose, make sure it’s someone with whom you feel comfortable.  Prefer a phone call rather than an email?  Your agent should be willing to accommodate.  Have a question and need a response?  Your agent should explain how he or she will be available to you.  Doing your homework ahead of time will help you find an agent who will work to sell or buy your home.

Lastly, take what real estate agents say with a grain of salt.  Realtors are quick to say things like “In two years this neighborhood will be worth 20% more!” and “Everyone who passed up an opportunity to buy here a few years ago are kicking themselves now…”.  Remember that real estate agents are salespeople, and they aren’t the ones stuck with a decision that can potentially cost hundreds of thousands of dollars.  If you hear the kinds of hackneyed catchphrases above dribbling out of a Realtor’s mouth, keep looking and find a better agent.

Related Reading:

7 Ways Millennials Are Changing the Leasing (and Homebuying) Process

Six Ways to Find Great Real Estate Deals

How to Win a Real Estate Bidding War

]]> https://www.ezlandlordforms.com/articles/educational/2/571/how-to-invest-in-unfamiliar-rental-markets/ https://www.ezlandlordforms.com/articles/educational/2/571/how-to-invest-in-unfamiliar-rental-markets/ Wed, 20 May 2015 12:23:19 GMT

When I started hunting for my first income property, I quickly became disheartened.  Property prices in my city were just too high and rents too low.  I didn’t understand how local investors were making any money.

After chatting with a few local landlords, I learned that my math wasn’t off – properties didn’t cash flow for those of us just entering the market.  New and eager landlords were forking over some of their own hard-earned cash each month, hoping their new income properties would increase in value in the long run.

Since I’m not the gambling type, I knew that wasn’t for me.  I just about gave up on the idea of real estate investing until I had an “Aha moment”.  It dawned on me that rents in my childhood town were almost the same, but properties cost one-third to one-half of the purchase price.  Could I find a way to make that work?

Looking outside of my area allowed me to start investing in income properties that were cash flow positive.  To do the same, you might need to leave your comfort zone and invest in and unfamiliar rental market.

Finding a promising city takes a bit of sleuthing.

Before anything else, you need to decide where to buy.  If you have decided to look outside of your immediate area, the task can seem quite daunting.  Where to start?

First, you need to find a city that has a strong economic outlook.  If you’re looking to reduce your risks, you’ll want to avoid any city that has a declining population, a high unemployment rate or a floundering economy. 

One helpful tool to get you started with your research is a city’s Comprehensive Annual Financial Report or CAFR.  Once you’ve narrowed down your list to a few cities or states, a quick google search can pull up the CAFRs, which are available online.

A CAFR is essentially a city’s financial statement.  Just like a business, each city prepares a yearly financial report.  A CAFR lets you take a peek at the municipality’s balance sheet, employment statistics, property tax information and more.  To ensure accuracy and credibility, CAFRs must be reviewed by external accounting firms.

By studying a city’s CAFR, you can get a feel for its future and its overall economic outlook.  Is the population growing?  Are there many employers to provide good jobs?  Is the economy based mostly on one sector, for example oil, which can mean trouble if it declines?  Is the city thriving or having trouble staying afloat?

Choose a market that lets you best meet your goals.

Once you’ve found a city that seems economically sound, you need to decide if it matches with your goals.  What type of real estate investing would be most profitable in that area?  Renovations?  Buy and hold?  Wholesaling flips?  Student housing?  What type of real estate are you interested in?

A market that has lots of potential for flips might not be great for buy and hold rentals.  For example, buying a single family home for $350,000 and renting it out for $1,300 per month makes for a pretty terrible buy and hold rental investment.  However, buying the same house, spending $25,000 on renovations and flipping it for $475,000 within three months sounds like a promising opportunity.

Investigate the local real estate market.

If your research seems promising so far, it’s time to look more carefully at different neighborhood markets, including demographics, rental rates, real estate prices, employment, etc. 

Start online before spending the time and money to travel in person.  Check out Trulia or Zillow for information.  These websites provide an overview of the market, with stats on resale prices, foreclosures, neighborhoods and average rents.  They even calculate if the current market is hot or cold.

If the online research still looks promising, the best way to truly scope neighborhoods out is in person.  A drive (or better yet walk) through the various parts of town is the quickest way to learn about the style of homes, their condition and the differences between neighborhoods.  You can also check out the area’s amenities – look for coffee shops, restaurants, grocery stores, green space and cultural institutions.

For the best chance at success, it’s time to make connections.

You now have a new market to invest in.  You’ve done your research and you think the area has great potential.  You’ve run the numbers, which also look good.  Now what?

Now, it’s time to build a team of experts.  Since you won’t be managing your property’s daily operations, you’ll likely need a good property manager and real estate agent. 

A good property manager knows their market.  They can tell you what to watch out for and which local laws you need to be aware of.  They will know which types of rental properties have the best money making potential in their area, and which ones to avoid.  They should also be able to recommend specific neighborhoods for properties that match up with your goals.

As for real estate agents, look for someone that understands income properties, or flips if that’s what you are interested in.  You’ll want to find an agent who can scour the listings on a regular basis and send you the ones that fit your criteria.  Many agents who specialize in rental properties will provide their investors with details such as potential rent, monthly and yearly expenses and ROI. 

Take the time to get references and speak to other local investors.  Building the right team is especially important when you’re not there to oversee your investments.  You need to find the right people; ones you can count on to make good decisions on your behalf.  Attend a local real estate investing club, talk to other landlords, investors, contractors and property managers.

Buying your first property in an unfamiliar rental market can seem a little unnerving.  It takes more research and planning then buying in your own hometown.  It also takes a leap of faith to put your trust in others.  But in the end, buying income properties is all about making money.  If buying in your area just doesn’t add up, it’s worth going elsewhere to get the biggest return on your investment.

Related Reading:

Should You Buy a Rental Property to Lease to Your Adult Children?

The Lowdown on Gayborhoods: Fascinating Stats for the Investor's Eye

Reurbanization and the Growing Trend Towards "Walkability"

]]> https://www.ezlandlordforms.com/articles/news/570/are-renters-losing-the-wages-vs-rents-battle/ https://www.ezlandlordforms.com/articles/news/570/are-renters-losing-the-wages-vs-rents-battle/ Mon, 18 May 2015 17:29:13 GMT

Time was when you rented because you couldn’t afford to buy.  So you got a small apartment – or found a buddy or two to share a bigger place – watched your pennies and saved up for a home of your own. 

Now, one Great Recession and a housing crisis later, many people are finding it harder and harder to pay the rent.

Climbing Rents

Once an affordable option for those who hadn’t yet stepped on the path to home ownership, renting has outpaced both wages and housing prices.  In fact, according to Zillow’s January 2015 Real Estate Market Report, growth in rents should outpace growth in home values by the end of the year.  And the Zillow Rent Index shows that 72 percent of 859 cities in January 2015 showed increased rental prices from over a year ago.  In 56 percent of those areas, rents have increased on a monthly basis.

Those increases aren’t just found in historically high-rent areas such as San Francisco and Seattle.  The Zillow report indicates that cities like Charlotte and Nashville are experiencing higher-than-average appreciation in rent.  The report also cites a recent Zillow survey of economists and real estate experts indicating that rental prices should continue to increase over the next two years.

High rental prices are economically crippling to renters in two ways:  1) They make housing less affordable for those who must rent and 2) Because rent is increasingly taking a bigger chunk of take-home pay, it’s more difficult for renters to save up enough to make a down payment on a home.

Increasing Number of Renters

What’s behind the rising prices?  In short, demand.  Although the recent economic crisis has fed the demand for rentals, the number of renters has, in fact, been on the upward climb since before the collapse of the real estate market.  Since reaching a low in 2004 of 30.8 percent, the renter rate is now the highest it’s been in over 25 years at 36.3 percent. 

Foreclosures, unemployment and tighter lending practices all played a part in the increased demand.  However, the fact that Americans are more aware of the risks involved with homeownership is also fueling the trend.  Plummeting housing prices alerted current – and potential – homeowners to the fact that real estate was not a guaranteed fast-track to financial solvency.  Renting also allows for greater mobility if relocation is necessary to pursue an employment opportunity, and it frees up capital that may be needed to stay afloat in case of a job loss.  Recent studies even link a high homeownership rate with high unemployment rates, since homeownership restricts relocation to follow job availability.

Stagnant Wages

What’s making increasing rental prices harder to swallow is the fact that wages haven’t kept up.  Although there have been recent small gains in earnings (January 2015 saw a 0.5 percent monthly increase, the largest since 2008), wages have, according to the Economic Policy Institute, been basically stagnant since as far back as 1979.  Furthermore, the slowly strengthening economy hasn’t resulted in any real gains in wages for the majority of workers.

With wages remaining largely unchanged, the standard advice to spend about 30 percent of take-home pay on housing has become difficult, if not impossible, for many renters to follow.  A 2013 Harvard report found that fully half of US renters pay more than 30 percent of their household income on rent.

Even efforts to raise the minimum wage may simply translate to higher rents, since they expand demand without expanding housing supply.

Who’s Renting Now

If rents have changed, then so has the profile of the average renter.  The Joint Center for Housing Studies, tabulating information from the 2013 Current Population Survey, shares that, although four out of ten renters are age 35 and under, more than a third are between the ages of 35 and 54.

And as baby boomers age, if current rates continue, they will increase the number of renters over age 65 to 2.2 million by 2023, which would equal about half of the projected overall renter growth.

Families with children are almost as likely to rent as individuals are.  In fact, families with children represent a bigger chunk of total renters than they do total homeowners.  The takeaway?  Today’s renter isn’t necessarily the stereotypical single young adult.

One characteristic of the typical renter, however, remains true to the stereotype – renters overall are apt to have lower incomes.

The Bottom Line for Landlords

Of course high rental prices aren’t bad news for everyone.  For those with property to rent or looking to add a rental property to their real estate portfolio, the current rental market is a bonanza.

However, the savviest landlords will consider appealing to renters beyond young singles.  Although the Harvard report predicts that individuals will continue to make up a significant portion of renters, offering properties with features that appeal to families as well as to an aging population will stand landlords in good stead.

Families, for example, will be interested in renting homes within good school districts.  Older adults might prefer single-level living.  The diversity of renters means that landlords can earn a solid return on investment on many different types of properties, perhaps making them the biggest winners in the rental market battle.

Related Reading:

Rent Affordability: How Do Incomes Stack up to Rents, Since 2000?

The Changing Face of America’s Renters – and What It Means for Landlords

]]> https://www.ezlandlordforms.com/articles/educational/1/568/the-changing-face-of-america-s-renters-and-what-it-means-for-landlords/ https://www.ezlandlordforms.com/articles/educational/1/568/the-changing-face-of-america-s-renters-and-what-it-means-for-landlords/ Wed, 13 May 2015 16:52:29 GMT

If there’s a silver lining in the dark cloud created by the Great Recession, landlords have found it.

The real estate crash, consumer debt, joblessness and tighter lending policies have all helped to create a perfect rental storm.  With rates of renting the highest they’ve been since the mid-1990s, savvy landlords are finding that appealing to this ever-changing and growing group can mean more than just pennies from heaven.

Who’s Renting Now

While the average renter fits the traditional stereotype – young and single with low-to-moderate income – there is more diversity among those renting than ever before.

Harvard’s Joint Center for Housing Studies shares that although four out of ten renters are age 35 and under, more than a third are between the ages of 35 and 54.  In fact, the number of renters over the age of 65 will increase by 2.2 million by 2023, if current rates continue.  That figure would represent about half of the projected overall renter growth during that time.

Another demographic shift in the next eight years will be growth in Hispanic renters, whose numbers are expected to increase by over 2 million.  The center also reports that although 35 percent of renters are single persons, nearly as many – 32 percent – are married couples with children or single parents. 

What does all of this mean for landlords?  Although a property can’t necessarily be all things to all people, there are some things that landlords should keep in mind when trying to appeal to these different groups of renters, whether it’s how they market their properties, what features those properties include and even how renters prefer to communicate.

Millennials Delaying Home Ownership

Saddled with student debt and coming of age in the worst economic crisis since the Great Depression, millennials are pushing off home ownership longer than previous generations of the same age and represent the largest chunk of total renters, making reaching out to them crucial for landlords.

Another recent Harvard study found that the housing recovery will certainly slow unless more millennials start buying real estate and becoming homeowners, as first-time homebuyers are the driving force behind demand and price appreciation.  Still, millennial reticence to buy means more demand for leasing, which is good news for landlords.

Not surprisingly, a survey of renters by J Turner Research (who conducts marketing research for the apartment industry) found that marketing to this group should begin with the Internet.  Millennials are apt to start their rental property search by visiting apartment listing and social marketing sites such Facebook and Twitter.  They’re also much more likely to turn to Craigslist than older generations.

Attract Millennials with Technology

Millennials’ use of technology extends beyond their rental search.  The survey revealed that they prefer to receive communications from the landlord via emails.  They’re also significantly more interested in mobile communications, whether that means receiving a text notifications or paying rent with a mobile app like PayPal.

They also want technology available where they live.  Central Wi-Fi for apartment buildings, for example, is high on their list of wants.  However, millennials are also looking for amenities that take them beyond their computer screens.  Fitness centers, pools and access to walking and biking paths are also important. 

While not every rental property can offer a pool or fitness center, landlords can still highlight other features that will interest millennials such as access to green space (even a porch or balcony that will offer a place to grown some potted tomatoes or herbs), energy-efficient appliances or places to recycle.

Baby Boomer Renters on the Rise

While landlords might be accustomed to catering to younger generations, they may have less experience with older renters, who are making up an increasingly larger part of the renter pool.

Interestingly, reaching these renters is no longer dramatically different from reaching younger cohorts.  They still start their search online and half will use apartment listing sites.  They’re also likely to want to receive email communication from their landlords.

Amenities for Aging Renters

As with most renters, location tops the list of baby boomers’ preferences, according to J Turner Research.  A quiet place to live and maintenance-free living are not far behind.  However, a study on housing older adults by the Joint Center for Housing Studies reveals that the feature most needed by older generations is single-floor living.  Other desirables include no-step entries, wide hallways and doors and easily reachable electrical switches and outlets. 

Offering these may be too expensive for the average landlord if they aren’t already part of the rental property, but there are some other relatively easy fixes that will appeal to older renters without turning off younger ones, such as grab bars and lever-style handles and faucets.  These are easy enough to install that you can do it on a by-request basis.

Housing Challenges Faced by the Hispanic Population

Representing 17 percent of the US population, Hispanics are the country’s largest ethnic group and an economic force with which to be reckoned.  Although they are making gains in homeownership, Hispanics’ share of renter growth from 2013-2023 is projected to be at least as great as baby boomers’.

Although more Hispanics own homes than ever before, many still face difficulties when it comes to obtaining financing.  According to the Department of Housing and Urban Development’s report on housing discrimination, denial rates for mortgages among Hispanics are 25 percent – nearly twice what they are for white Americans.  Furthermore, the average yearly net cost that Hispanics who rent pay is, on average, about $100 more than what whites pay.  

Marketing to Hispanics

These statistics mean it’s especially important for landlords to approach this ethnic group from a level of respect, which is what Mike Valdes-Fauli, president and CEO of cross-cultural marketing firm Pinta, suggests in an interview with Fried on Business.

Valdes-Fauli adds that it’s crucial not to presume anything about prospective renters or condescend.  He advises that if a conflict arises, it may be best to find someone who is already respected within the Hispanic community to speak on your behalf – an important point for landlords to remember. 

But don’t discount Hispanics’ familiarity with technology.  Landlords may want to explore using websites such as ParaRentar.com, a fully Spanish translated version of ForRent.com.  Apartments.com has an exclusive agreement with Univision.com, the most visited Spanish-language website among Hispanics.

Guidelines for Renting to Families

You probably already know what families are looking for in a rental property – a safe neighborhood near good schools and other families, a place for children to play and enough room to accommodate everyone. 

However, landlords need to keep in mind that there are laws designed to protect renting families.  The Federal Fair Housing Act prohibits landlords from discriminating against families with children.  For example, landlords can’t charge families more, limit the number or ages of children or try to make families rent in a certain area of a building.

Landlords should take care to make sure that the same rules apply to everyone.  For example if a landlord wants to limit the number of people living in a property, then that limit must apply regardless of whether the tenants are children.

Opportunities for Landlords

Embracing the diversity of today’s renters can mean greater opportunities for landlords.  That doesn’t mean, however, that landlords have to change their rental properties. 

Rather, landlords should perhaps change the way they perceive potential tenants and market their properties accordingly.  Doing so can mean clearer skies – and deeper pockets – ahead for everyone.

Related Reading:

7 Ways Millennials Are Changing the Leasing (and Homebuying) Process

Tomorrow's Trends in Housing - What Amenities Will the Next Tenant Look for When Renting?

How to Effectively Market and Rent to Millennials

]]> https://www.ezlandlordforms.com/articles/educational/3/567/should-landlords-allow-subleasing/ https://www.ezlandlordforms.com/articles/educational/3/567/should-landlords-allow-subleasing/ Tue, 12 May 2015 15:30:42 GMT

As a landlord, you’re sometimes asked to make tough decisions.  


Your tenant may approach you one day, and ask if they can sublet the rental property.  Maybe they want to move out early, or maybe they want to offer short-term use of the property as a vacation rental on VRBO or Airbnb.  It may sound reasonable when they explain it and ask your permission, but should you allow them to sublease the property to strangers?  


First, make sure you fully understand what it means.  What exactly is a sublease agreement?  The tenant leases the property to a third party, effectively becoming a middle-man, who is simultaneously your tenant and the subtenant’s landlord.  They are responsible to you for the rent and property care, and they are responsible to the subtenant for the landlord’s responsibilities.


It’s important to note that allowing subleases is up to the landlord in most – but not all – states.  As a landlord, you are not usually obligated to allow tenants the option of subletting their apartment without your written approval.  Nonetheless, be sure to check with your state landlord-tenant laws, as some states do restrict landlords on sublease provisions.  If you choose to allow it, take steps to protect your rights and your investment.  Have the terms clearly indicated in writing, as part of your signed lease agreement.


Here are some pros and cons to consider.


Pros
More attractive to tenants.  Allowing subleasing may make your apartment more appealing than one that doesn’t.  If a tenant isn’t sure how long they need to rent for, they may look for apartments that specifically allow subleases.

 

Easier to rent.  If your unit is near a college or university, it may be much easier to rent if you allow tenants to sublet during the summer months.  It may also be easier to rent to those who hope to study abroad, or even to snowbirds who head south for the winter.  Being flexible with your tenants may result in lower vacancy numbers for you.


May offer some protection.  Empty apartments are more susceptible to break-ins.  Having an occupied apartment also means problems such as water leaks or frozen pipes won’t go unnoticed.


Cons
No proper screening.  When tenants are allowed to sublease their apartments, it can be difficult to control who the sublessee will be.  You can’t usually screen applicants, as the new lease arrangement is between your current tenant and the new tenant.  If the new tenant doesn’t meet your (hopefully strict) requirements, there isn’t much you can do about it.
 

You don’t deal directly with the new tenant.  In a sublease situation, you don’t go to the new tenant for rent payments, property damage or other important matters.  The sub-tenant has no legal obligation to you, even though you are the landlord.  Your legal lease agreement is only with your original tenant.  If you run into issues, your only recourse is with the tenant who signed the lease, not the current person on the premises.
 

Can complicate an eviction.  If an eviction is necessary, regardless of the reason, you must now evict both the tenant and sub-tenant.  Even though your lease agreement is only with your original tenant, you have someone else on the premises.  If they choose not to leave, you could be in a messy situation.


Theft or property damage.  Allowing subleases can make you more vulnerable to damage or theft.  Sub-tenants may not treat your unit with care, as they know they aren’t the ones on the lease agreement.  As the landlord, you’ll have trouble taking direct legal action against the current occupants as you have no written agreement with them.
Late, or non-payment of rent.   If your tenant has trouble collecting rent from their sublessees, they may be late with their rent.  They may also stop paying altogether, as they can’t afford to cover for their sub-tenant who isn’t paying.  If the current occupant is responsible for paying utilities and doesn’t do so, it creates an even bigger legal mess that is best avoided.


Should landlords allow subleasing?
Many landlords refuse to allow their tenants to sublet their units.  When it comes to subleasing, there are few benefits to the landlord.  It mostly helps the tenants, not you.   It also complicates the landlord-tenant situation.  As the landlord, you would have little power over the current occupant of your property which isn’t ideal.


A better option to subleasing is to allow an assignment.  This essentially allows a new tenant to substitute for the original one.  The original tenant can show the property and collect rental applications, then pass them along to you to run screening reports and background checks, and select among the applications.  An assignment lets you therefore terminate the existing lease and start a lease agreement with this new tenant.  Choosing an assignment instead of a sublease allows you to retain all of your legal rights as the landlord.


Related Reading

The Sublet Process for Dummies – Roommates, Landlords, Screening & Sublease Agreements

Landlords and Regulators Crack Down on Subleasing Through Airbnb & Others

]]> https://www.ezlandlordforms.com/articles/news/566/when-airbnb-goes-terribly-wrong-family-s-calgary-home-ruined-by-vacation-renters/ https://www.ezlandlordforms.com/articles/news/566/when-airbnb-goes-terribly-wrong-family-s-calgary-home-ruined-by-vacation-renters/ Mon, 11 May 2015 15:43:51 GMT

Thinking they were renting out their home to a few people attending a wedding, a Calgary family got much more than they bargained for.

Star and Mark King used the popular short-term leasing service Airbnb to advertise their home as a vacation rental.  They agreed to rent to a group of four adults for one weekend.  The group was supposedly travelling to Calgary to attend a wedding.

The Kings met the renters on a Friday evening to give them the keys.  Within a few hours, Star says she started receiving texts from concerned neighbors.  The police was dealing with a seemingly out-of-control party.  A bus was reported to have brought over 100 partygoers to the family’s home, for what could only be described as a “drug-induced orgy.”

The Kings returned to beg partygoers to leave their home.  They couldn’t believe what they saw; people were everywhere, the house completely trashed. 

"We came and wished the home was burnt down to ashes.  It would have felt way better," said King.

The destruction was extensive.  Broken bottles and garbage littered the floors, furniture broken throughout the home, urine and vomit painted the walls.  "Our hardwood floors are all popping because there are pools of liquor.  There's glass shards, there's dent in our walls, toilets flooded and plugged with condoms," said one of the homeowners.

While police first estimated damage to be around $75,000, investigators are now valuing it in the $150,000 range.   "In the 27 years of policing that I've done, I've never seen a home so badly damaged from a weekend party, and of course, with this kind of rental situation," said Staff Sgt.  Jim Leung.

Meanwhile, the Kings can’t live in their home.  Repairs may take up to three months to complete.  “They’re going to have to take everything out of the house, treat it on site to kill the bio hazardous substances, before they can put it in the landfill,” said King. 

The good news is Airbnb is stepping in and helping out.  They are currently paying for the Kings’ lodging and meals while repairs are taking place.   More importantly, they will cover the cost of all repairs.

Airbnb gives homeowners a Host Guarantee to cover such incidents.  The policy provides coverage up to 1 million dollars "to eligible properties in the rare event of guest damages which are not resolved directly with the guest." Airbnb states that this policy is not intended to replace traditional insurance coverage.  All property owners should have their own homeowners’ or landlords’ insurance policies, which can (but don’t always) cover damage from riots and tenants’ guests.

How common is it for renters to damage a vacation property?  Fortunately, it does not happen often.  "Over 35 million guests have stayed on Airbnb, and property damage is extremely rare," says Jakob Kerr, spokesman for Airbnb.

However, precautions should still be taken by all homeowners and landlords, regardless of how they market and lease out their properties.  Owners should always use some form of tenant screening and vacation lease agreements.  These services are sometimes offered by vacation rental providers.  Still, homeowners may consider drafting their own policies for additional peace of mind. 

For those who don’t use vacation sites, a vacation lease agreement is essential.  If anything goes wrong, the signed agreement can be used as proof in legal proceedings.

It’s also important to collect a security deposit in case of damage.  All security deposit requirements should be clearly indicated and explained in the rental listing.  Check with state or province landlord-tenant acts to see if there are any laws to be aware of concerning the legalities of security deposits.

In case of an incident, homeowners and landlords should know what steps they need to take and what their options are.  In case of emergency or criminal act, such as in the case with the Kings, police should be called.  Then, homeowners need to contact their insurance providers and the customer service department of their rental website like Airbnb or VRBO if applicable.

Before cleaning it up or trying to repair it themselves, homeowners need to document the damage.  They should take several pictures and find out if a police report will need to be submitted with a claim.  Before and after pictures are also helpful.  Owners who haven’t taken pictures of their vacation rental space in a while should take a few minutes to do so – current pictures could protect them later on.

If property damage is minimal, most vacation rental sites suggest contacting the guests first.  Sometimes, it’s possible to negotiate a solution directly with them.  In many cases, the security deposit is enough to cover minor damages.

So what about the Kings’ high-flying renters?  The man who rented the Calgary home through Airbnb has been identified by local police, and an arrest may be made in the next few days.  Possible charges include mischief and property damage over $5,000, a charge which can lead to fines and possible jail time.

Related Reading:

Common Mistakes of New Vacation Rental Owners

Airbnb Nightmare: Short-Term Vacationer Refuses to Leave, Months-Long Eviction Process Required

The Ultimate Guide to Managing Vacation Home Rentals... Profitably

]]> https://www.ezlandlordforms.com/articles/educational/10/563/how-useful-are-delaware-series-llcs-for-tax-and-asset-protection/ https://www.ezlandlordforms.com/articles/educational/10/563/how-useful-are-delaware-series-llcs-for-tax-and-asset-protection/ Fri, 08 May 2015 09:17:18 GMT

Every serious real estate investor reaches a point where they start to worry about being sued and having all of their hard-earned investments taken away by an ambulance chasing attorney and scheming tenant. 

The first step many take is creating a limited liability company (LLC), which are easy and cheap to create, and which once upon a time may have actually, you know, limited someone’s liability in a lawsuit.  The theory went that you created an LLC, and owned a rental property or two under its name, so that if the worst happened and you were sued, only the LLC’s assets could be taken.  So, your other LLCs’ assets were safe from the lawsuit, as were your personal assets (your house, your car, your engagement ring, etc).  If you owned five rental properties, and each rental property was owned by a different LLC, then you had supposedly isolated each property’s liability so that the most a plaintiff could take was that rental property, not your other investments and certainly not your personal assets.

Most asset protection attorneys agree that those days have passed.  When a tenant sues you today, they simply name both your LLC and you personally in the lawsuit.  It’s known in attorney-speak as “piercing the corporate veil”, and it’s appallingly easy to do and allowed by the courts.  (Aside: legislators and courts don’t like the practice of “asset protection”, because civil law only works if plaintiffs can actually win assets, if the court rules in their favor.) 

So what’s the point of using LLCs, and why do many asset protection experts still sometimes recommend them? 

Some people contend that there are tax and accounting benefits to using LLCs.  This can be true, depending on how you organize and file your taxes.    

A common line of reasoning is that good asset protection is about layering as many barriers between yourself and your assets as possible, to make it difficult for bottom-feeders to sue you and take your assets.  Is it easier to sue Margaret, whose name is on the deed of her rental property, or ABC Rental Holdings LLC, which is owned by a Nevada corporation, which is in turn held by a Delaware company, which is in turn owned by an overseas subsidiary of an anonymous legal entity?  Digging through all that to find Margaret’s identity might be difficult, and finding her other (similarly obscured) assets would be even harder.

But here’s the rub: all of that spy-thriller stuff above is awfully expensive, and a giant pain in the rear to set up and manage.  Just paying the annual renewal fee of one LLC costs $150-400/year, not to mention all the other companies listed above.  And what about the setup costs for all those companies, some of which are out of state, and maybe even international?  Lastly, think about the colossal attorney fees that the slick mastermind attorney will charge you, and you quickly realize that it sounds awfully impractical for the average rental property.

Enter: the Delaware Series LLC. 

If Margaret owns five rental properties, then instead of creating an LLC for each of them, and having to pay the hefty renewal fees each year, she can set up one Delaware Series LLC, and just create a separate “series” or “cell” for owning each property.  Each cell serves as its own separate legal entity, and is theoretically distinct from the other cells, and from the owner.  For accounting and tax purposes, this will achieve similar results as setting up and maintaining five different LLCs, but at a fifth of the cost.

Of course, this suffers from similar risks as just using an LLC however, with the possibility that a litigious tenant and their attorney will simply pierce the corporate veil and sue you personally alongside your LLC cell.  But there is another advantage to Delaware Series LLCs over other states’ LLCs: Delaware does not require your personal name to appear on the paperwork when you create the LLC.  Thus, your name does not have to appear on any public records of the LLC itself, providing some anonymity. 

You do need to maintain a “registered agent” in Delaware, a person designated as an in-state representative of the LLC, who can be served with lawsuit paperwork.  They also must by law keep records of your identity, so they can be subpoenaed to reveal your name and address, but this is still a second layer in between your identity and the property ownership.

From there, you can potentially add more layers, or get fancy with irrevocable living trusts and other legal maneuvers, depending on your net worth and perceived risk of being sued.  But for $300/year in renewal fees, and $50/year in registered agent fees, you can put the first two layers in place between yourself and all of your rental properties – no matter how many that is. 

Before running off and filing a series LLC however, understand that they are untested in many states’ courts.  There are even less guarantees with series LLCs than with more typical approaches to asset protection, which are already mercurial and never certain to work. 

One last word on asset protection for rental properties: the simplest (albeit still costly) approach is to just take out the largest possible mortgage on your rental properties upon purchasing them.  What’s the point of suing someone who’s so leveraged that there is no equity to take?  The plaintiff could force the sale of your property to try and collect on their judgment, but the mortgage would be paid first, making the plaintiff's lien worthless if there is no equity in the property.  This won’t stop them from taking other personal assets of yours, such as your stock portfolio, but they may think twice before suing you if they look up the property’s public records and find a massive mortgage.

Related Reading:

Asset Protection for Rental Investing: Legal Entities, Lawsuit Protection, & Taxation

Why P.O. Boxes Are a Landlord’s Best Friend

Do Umbrella Insurance Policies Actually Protect Landlords’ Assets in Lawsuits?

 

]]> https://www.ezlandlordforms.com/articles/educational/5/565/do-umbrella-insurance-policies-actually-protect-landlords-assets-in-lawsuits/ https://www.ezlandlordforms.com/articles/educational/5/565/do-umbrella-insurance-policies-actually-protect-landlords-assets-in-lawsuits/ Wed, 06 May 2015 11:41:42 GMT

It makes the news almost daily: tenants suing their landlords.  Sometimes it’s because the apartment is allegedly unfit for habitation.  Other times it’s for injuries.  Sometimes, landlords are sued for discrimination, like in this Robert Durst case in Texas.

Can you afford to pay a tenant $200,000 if they take you to court?  What about $500,000?  One million?  Most of us don’t exactly have that kind of cash stuffed under our mattress.  So how can you protect yourself, and all of your assets, as a landlord?

As lawsuits are somewhat prevalent in the United States, it’s important to take steps to properly insure yourself.  One way to do so is with an umbrella liability insurance policy.

What is umbrella liability insurance?

As defined by Investopedia, an umbrella insurance policy is “Extra liability insurance coverage that goes beyond the limits of the insured's home, auto or watercraft insurance.  It provides an additional layer of security to those who are at risk for being sued for damages to other people's property or injuries caused to others in an accident.” In other words, an umbrella policy is additional insurance against liability – you must first have a basic policy. 

Umbrella insurance kicks in when your basic policy has reached its limits.  For example, let’s say a tenant files a lawsuit against you for an injury that occurred on your rental property.  You now must pay your tenant $1 million in damages.  Your basic liability insurance policy is for $250,000, which isn’t enough.  If you had a large umbrella liability policy, it would then take effect and cover the outstanding balance of $750,000.

What exactly does it protect?

As a landlord, you could face a number of situations that may unfortunately end up in a lawsuit.  For example, one of your tenants could fall down the stairs in your rental property and hold you responsible for their injuries.  Or the lawsuit could be personal in nature.  A tenant could sue you for slander if they feel you told someone lies about them, or libel if they believe you wrote untrue statements about them and passed on the information to a third party.  Other possibilities include false arrest, detention or imprisonment, “mental anguish”, discrimination and more.

An umbrella insurance policy protects against liabilities landlords may face in lawsuits.  It therefore protects a landlord’s assets, as any damages will be paid from the insurance policy, not from the landlord’s pocket.  Without insurance, a large award against you could be financially devastating, forcing you to sell your assets, lose all of your money and even lead to bankruptcy. 

Most umbrella insurance policies cover your legal expenses if you’re ever sued.  Some insurers will even provide you with their own team of lawyers and experts, as they have a vested interest in protecting you.

What isn’t covered under an umbrella policy?

Umbrella insurance policies cannot be used as health insurance – you should also keep a comprehensive health insurance policy.

This type of insurance policy generally won’t cover damage to your personal home or vehicle, as it would be covered under your own homeowner or automobile insurance policies.  If you commit a crime or negligently fail to do something you are legally obliged to, your liability insurance won’t cover you.  The resulting award for damages would be your responsibility.

Finally, there are always exceptions and coverage exclusions.  Herein lies the rub: some insurance providers may intentionally leave loopholes big enough to wriggle out of covering you against the worst risks.  Carefully read the details of your umbrella policy to make sure your coverage is appropriate and complete for your situation.  If there is a particular liability you’re worried about, grill your insurance agent to cover every angle of the coverage, and try to get their answers in writing (email works as a written record).

How much does it cost?

Umbrella insurance is often cheaper if purchased from the same insurance company as the original policy.   It doesn’t replace traditional coverage – it’s an additional insurance.  In most cases, your original policy must meet a minimum base coverage; $300,000 is typical. 

Costs vary greatly depending on location, potential natural disasters and coverage amounts.  Rates start around $250 per year for $1 million of coverage.  The insurance expense is tax deductible for landlords.

How much coverage do I need?

Umbrella policies of $1 million and $2 million are common.  Some landlords own several rental properties and insist on $5 million in coverage.  Speak to an insurance professional to see what your risks are, and how much coverage would be appropriate for your situation.   The general rule of thumb is to insure yourself up to your net worth… but a little extra insurance might help you sleep better at night.

Related Reading:

How Useful Are Delaware Series LLCs for Tax- & Asset Protection?

Why P.O. Boxes Are a Landlord’s Best Friend

Rental Property Insurance: Coverage, Claims, & What to Look for in Rental Insurance

]]> https://www.ezlandlordforms.com/articles/educational/3/562/should-i-charge-per-diem-late-fees-on-rent/ https://www.ezlandlordforms.com/articles/educational/3/562/should-i-charge-per-diem-late-fees-on-rent/ Wed, 29 Apr 2015 10:25:38 GMT

Libraries use them.  So do banks and credit card companies. As a landlord, you probably charge late fees too, to encourage timely rent payments.  But did you know that some states allow per diem (daily) late fees, until the rent is paid in full?  That means for every day a tenant is late with his or her rent, the fee increases.

Late fees can be a strong incentive. Tenants don’t want to waste money, and most will be careful to avoid large late fees, thereby paying you on time every month.  It creates a win-win situation.

But are there downsides to charging per diem late fees?  What are you legally allowed to charge?  Let’s take a closer look at the pros and cons of charging daily late fees on rent.

The Proverbial Stick

By charging late fees, you’re essentially creating a punishment which gives tenants an incentive to pay on time. It’s like the mule that pulls the cart because it moves away from the punishment: the stick. This method works well with certain tenants. Others may not be particularly bothered by the penalty. Some may even see it as permission to pay their rent late.

Is It Legal?

Yes, in most states, it’s legal to charge late fees, including daily amounts.

Most landlord-tenant acts don’t specify how much landlords may charge.  However, the fee should be “reasonable”, and reflect costs incurred by the late rent.  It must also be clearly written in the lease agreement.

Some states, like Delaware, Iowa and Maine, limit how much a landlord may charge. A few states, including Oklahoma, don’t allow late fees on rent. Check your state’s laws to see if you have any restrictions.

How Much Is “Reasonable”?

What’s reasonable to you and I as landlords may not be considered reasonable to a tenant or a judge.  How much to charge can be tricky, because if it’s deemed “unreasonable”, your tenants might choose not to pay it.  If it goes to court, the judge may rule that the charge is too high and rule against you.  This can happen even if your tenant previously agreed to the high charge by signing the lease agreement.

Some landlords choose to charge a one-time late fee of 3-10 percent of rents due, plus an additional fee of $5 to $15 per additional day.

What Are The Downsides?

There are a few downsides to charging higher late fees.  Larger late fees aren’t always enforceable.  Since laws regarding late fees are often ambiguous, they can easily be dismissed in court.

Another problem is that fees can become overwhelming for tenants who are significantly late with their rent.  Tenants may feel like they can’t catch up and won’t bother trying to do so, instead opting to simply stay in the rental property for free as long as possible and drawing out the eviction process.

How Do I Set It Up?

In order to start charging a daily late fee, it must be written in your lease agreement.  With new tenants, or at the time of renewal, consider adding a per diem late fee clause (if permitted in your state – our State Assist information will let you know in the lease wizard).  If late fees aren’t specified in your lease agreement, you can’t charge them.

Once written into the lease agreement, consistently issue notices as soon as they occur. To help you stay organized, have a late fee document ready to go.  If a tenant’s rent is late, you can simply fill in the details and send it off.  If rent comes in late but the tenant doesn’t pay the late fee, also issue a reminder.  (EzLandlordForms offers both a Late Rent Notice and a Late Fee Due Notice on our website.)   

By being consistent with all aspects of your rentals, including daily late fees, tenants will quickly learn that you run your business as a professional.  Be sure to keep late fees reasonable, closely follow your state’s laws, and send notices and charge fees like clockwork to send the message that you will not be trampled on by your tenants.

Related Reading:

Rent Collection 101

Eviction Notice Has Been Served… Now What?

Overview of the Eviction Process: A Step-by-Step Guide to Eviction

]]> https://www.ezlandlordforms.com/articles/educational/2/558/should-you-buy-a-rental-property-to-lease-to-your-adult-children/ https://www.ezlandlordforms.com/articles/educational/2/558/should-you-buy-a-rental-property-to-lease-to-your-adult-children/ Mon, 27 Apr 2015 16:03:14 GMT

Imagine you’re fortunate enough to have a 23 year-old daughter who just settled into medical school (or any other multi-year commitment).  Let’s call her Med-Student Mary, and she’s a responsible gal devoted to her calling in medicine.  She’ll be in the same city for the next few years at least… should you buy a rental property for her to live in and pay you rent?

The Advantages

If Mary will be living there for the next 5-8 years through her internship and residency, that’s a great head start on paying down your mortgage.  She gets below-average rent and a caring landlord, you get a responsible, trustworthy tenant who you are reasonably sure will remain in the rental unit for years to come.  Since turnovers are the costliest event most landlords have to worry about, you can actually make more money on the rental property than the neighboring landlords who are charging more rent.

You could make Mary responsible for paying for repairs and upgrades, or perhaps you agree to split the cost of repairs with her.  This way, she (hopefully) won’t ignore a growing problem in the property in order to avoid paying for it.

By the time she moves on, you may have accrued some serious equity in the property.  Maybe part of the agreement you have with Mary is that she finds responsible successor tenants (likely other medical students a few years behind her), thus removing the pain of vacancy and turnovers.

You also now potentially own investment real estate in a different state or country, diversifying your investment portfolio and exposing you to a new market.

The Risks

…are many.  Maybe Mary has a sudden change of heart, and decides six months after you buy the rental property that medicine is not for her?  You would be stuck with a distant property that you now must find a way to lease out and manage indefinitely.

What happens if Mary fails to pay the rent?  Will you evict your daughter?  Legally, eviction is the only tool available to landlords of irresponsible tenants, so your options are limited. 

If Mary damages the property, how will you ensure that she repairs the damages?  Just like with the non-payment problem, your enforcement options are limited if Mary turns out not to be so responsible after all.

If the property has multiple bedrooms, will Mary have roommates?  Who will choose and screen the roommates?  What if Mary pays her portion of the rent but the roommate doesn’t?  What if the roommate throws a huge keg party, and a drunken guest falls off the balcony and smashes the roof of the foyer, causing $40,000 in damages and requiring another $50,000 in medical bills?  Before shelling out tens of thousands of dollars to invest in a rental property, you need to think through these kinds of eventualities.

Then there’s the local market itself, which you presumably know nothing about.  Sure, Mary says “I have to live in Federal Village, it’s where all the young professionals live!”  But the chic neighborhood where all the young professionals show off how rich they are is usually not a recipe for buying low and renting/selling high; you would have needed to buy ten years ago, before it was all the rage.  Maybe the best neighborhood for your investment is the still-slightly-dodgy neighborhood that the artists and hipsters are just discovering and slowly starting to gentrify.  But as a parent, you may not want your daughter to live there.

The point is that what is best for your wallet is often not what’s best for your personal relationships, which is where making an investment as large as a rental property is tricky when family is involved.  As the investor and landlord, you have a lot more to lose than your child does. You will be taking on a huge range of risks by investing in a distant market you know nothing about, and entrusting that investment to your child.

How It Can Still Succeed

Despite the challenges outlined above, there are still ways you can mitigate these risks.  One approach is making your child a minority partner in the venture: they contribute a portion of the down payment, and co-sign the mortgage note, and own a percentage of the property.  This way, they have some skin in the game.

You should also do just as much due diligence in your property hunt as you would do for any other investment property.  That means spending plenty of time in the neighborhoods you’re investigating, getting to know them intimately.  It means understanding the local rental market, the local demographics, the local forecasts for housing and other construction. 

Hard as it may sound, you should be prepared to file eviction on your children just like any other tenants if they fail to pay the rent.  You should also consider building additional deterrents into the lease agreement, that may turn the personal relationship to your advantage.  If Mary fails to pay the rent, maybe there are consequences that have nothing to do with the property, such as you ceasing to store her belongings at home, or selling her car stored in your garage, to cover the lost rent.  Or perhaps she loses her ownership interest if she fails to pay the rent or collect the roommates’ portion of the rent. 

The more skin your child has in the game, the more accountable you can hold them, and the more likely they are to treat the property with respect.  Adult children can make perfect long-term tenants and investment partners, creating value and equity for both of you… but only if you spend some forethought on ways to avoid potential disputes and risks.

Related Reading:

Real Estate Investors: Raise Your Kids to Be Good Entrepreneurs, Not Good Employees

9 Reasons to Buy & Hold Rental Properties

Should Real Estate Investors Ever Borrow Funds from Friends & Family?

]]> https://www.ezlandlordforms.com/articles/news/550/8-wild-real-estate-facts-that-must-be-proven-to-be-believed/ https://www.ezlandlordforms.com/articles/news/550/8-wild-real-estate-facts-that-must-be-proven-to-be-believed/ Fri, 24 Apr 2015 11:28:11 GMT

1. Sweden and Denmark Heat Homes with Dead Bodies

Why waste perfectly good heat, when winters reach -50 degrees?  Crematoriums burn at 2,000 degrees, which some Scandinavian countries figured was perfectly good heat and might as well be used for, well, heating nearby homes!  Keep your morbid jokes to yourself though; they are probably not welcome among neighbors of the recently deceased.

2. Brass Doorknobs Self-Disinfect

Brass is actually anti-microbial, and naturally kills bacteria.  While it is the strongest antimicrobial metal, it is not the only one, and silver, lead, copper, iron and aluminum also kill germs.  (It doesn't seem likely that silver will suddenly become a popular doorknob material for anyone outside the top .1% however.) 

3. Horror House of Spiders

Remember “Arachnophobia”?  Homebuyers Brian and Susan Trost bought a $450,000 house on a golf course and moved in, only to find that they had 4,500-6,000 roommates: a massive infestation of deadly brown recluse spiders.  The ensuing legal nightmare is still unresolved, as the Trosts have sued the sellers, filed insurance claims and stopped paying the mortgage, which led to Fannie Mae recovering possession of the property.  The horror stories range from Susan Trost having spiders fall on her while in the shower, to the couple hearing their four-year old son screaming downstairs and finding spiders crawling all around him.

4. Unlucky Number 4 Costs Sellers $8,000 in Vancouver

In Chinese, the word “death” is pronounced almost identically to the number “four”, resulting in many Chinese regarding the number four as unlucky.  There is a substantial Chinese population in Vancouver, and in Chinese neighborhoods homes with the number four in their addresses sell for $8,000 less on average than their neighbors. 

5. Tallest Building in the World Provides Two Full Sunsets 3 Minutes Apart

The Burj Khalifa, the tallest building in the world, is so tall that one can watch a full sunset at its base, then hop in the elevator to the top and watch another full sunset.  It is over a half-mile tall at 2,722 feet, a full 163 floors... and of course it's in Dubai, the poster child du jour of extravagance and one-upmanship.

6. Ghosts Must Be Legally Disclosed in Home Sales

Some states are so heavily regulated that lawmakers require sellers to disclose the existence of ghosts (New York is one example) and deaths that occurred inside the property.  In California, sellers must disclose all deaths in the property over the last three years… except those caused by AIDS, because apparently that would be “discriminatory”.  (These laws fortunately don’t require landlords to disclose deaths to new tenants before signing a lease agreement however.)

7. 100,000 People Live in 6x2 “Cage Homes” & “Coffin Homes” in Hong Kong

Real estate is so expensive in Hong Kong that reportedly 100,000 residents live in lockers (think body lockers at the morgue) that are only six feet by two feet.  Showers, toilets and kitchens are at best communal, and at worst non-existent.  Regulators and landlords of such establishments are increasingly under fire in Hong Kong, as the wealth disparity continues to grow at an unsustainable pace.

8. One Answer to Earthquakes: Levitating Houses

In Japan, one engineering firm has invented a levitation system that uses heavily compressed air to lift homes off of their foundations, by up to three centimeters.  When the earthquake ends, the air slowly releases, gently setting the home back down on its foundation.  If you have to ask the price tag for installing such a system, you probably can’t afford it.

Have any outrageous real estate tales that the rest of us need to hear about? 

Related Reading:

Ohio Landlord Spanks Tenant Over Unpaid Rent

The World's Strangest Eviction Cases

]]> https://www.ezlandlordforms.com/articles/educational/5/560/the-ultimate-guide-to-managing-vacation-home-rentals-profitably/ https://www.ezlandlordforms.com/articles/educational/5/560/the-ultimate-guide-to-managing-vacation-home-rentals-profitably/ Mon, 20 Apr 2015 17:37:47 GMT

Do you dream of stepping out your front door and being right on the beach?  Or maybe spending your day lounging at the poolside bar?  Love the idea of owning a second home and making money from it?

When it comes to vacation homes, sometimes you can have your cake and eat it too.

Investing in a vacation property lets you enjoy it when you’re there, and lease it out when you’re not.  But to turn your property into a money-maker, good management is essential.  To help you make the most of your investment, here’s our ultimate guide to managing vacation home rentals profitably.

Option 1: Self-Management

If you own a second home, you can choose to manage it yourself.  It will take more time and effort than hiring a property manager, but you’ll get to keep more of your money.  Here’s what to keep in mind if you decide to manage your vacation home rental.

It can be a big commitment.  Renting out a vacation property is far more time consuming than leasing out units for residential purposes.  Obviously you have much more tenant turnover, as guests may stay anywhere from a few days to a few months at a time.  To successfully manage your unit by yourself, you should live nearby and have the time to handle bookings, collect payments, hand out keys (or change the key codes), respond to maintenance issues and clean.

It lowers your expenses.  Hiring a property manager can get expensive.  Taking over the day-to-day tasks can lower your overall costs, letting you keep more of your own money.  If you decide to manage your rentals yourself, it’s important to pay yourself an hourly rate for your time spent managing the property, to keep a clear eye on your actual profits from the property and to constantly reinforce the idea that spent time is spent money.  It’s also critical that you make sure you’re not sacrificing quality.  A well-appointed, clean unit can rent for more than one that isn’t as well maintained.  Also, skimping on marketing can mean higher vacancy rates, and less money inbound. 

You can use online tools to do some of the work for you.  With the help of websites like Airbnb and HomeAway, it’s getting easier to manage your vacation home rentals on your own.  Using these online marketplaces can get you great exposure and easy access to hundreds, even thousands of guests looking to rent vacation homes.  They also simplify your deposit and payment process.  These sites charge fees, but they are usually much less than those of professional property managers.

You can hire some outside help.  If you decide to manage your own vacation home rentals, you don’t have to do it all.  You might decide to hire a weekly cleaning service for example, or use a property management company simply for emergency services.  You need to decide what you can handle, what you want to take care of, and what should be outsourced.

What do I need to do?  The first step to self-management is learning the ropes.  Find out what tools are available to help you successfully set up your marketing, accounting and payment processing.  Remember to stay focused on minimizing vacancies, because they are what kill the profitability of vacation rental properties.  Once you have a strategy in place, you can evaluate what is working well and what needs improvement. 

Option 2: Professional Property Management

Although the monthly cost can seem expensive at first glance, don’t dismiss the option of professional property management too quickly.  There are many advantages to hiring a property manager that specializes in vacation rentals.

Ease of use with on-site management.  Many condominium complexes offer on-site management services to their owners.  If you own a unit, you simply let them know which weeks your condo is available and they do the rest.  If you don’t live nearby, some kind of local management is essential.

What services are included?  Since many vacation home rentals are owned by long-distance landlords, property managers offer a wide range of services.  They may include marketing your unit, screening tenants, managing your bookings, collecting payments and providing accounting summaries.  They can issue keys or keycards, as well as handle check-ins and check-outs.  Many include housekeeping services, and a full cleaning between guests.  A good property management company will do a walk through between visitors and check for damage, missing items and maintenance issues.

How much does it cost?  Costs vary widely depending on the location and services offered.  Some companies charge a flat monthly fee; others work on a percentage of money collected.  Rates can be as high as 15 to 50 percent of rent, so make sure you understand the costs before signing a property management agreement.

How to find a property manager?  You can use the on-site management company if there is one, or you may bring in your own.  Start by finding property managers in your area.  A quick online search will let you know where to start.   Before making a decision, approach a few neighboring property owners and find out who they use for management.  Landlords won’t hesitate to tell you if they are happy with their property managers.

What do I need to do?  If you’re thinking a property manager is the way to go, book an appointment with your top two or three choices.  Ask them which services they offer and get a breakdown of their costs.  Find out if they require exclusivity, or if you may take care of certain aspects, like maintenance or private bookings.  If they manage a specific condo complex, also request a listing of the going rates for weekly and monthly rentals (high and low seasons), so you can make an informed decision.

Don’t Decide on Fees Alone

Don’t base your property management decisions solely on costs.  Location, amenities, potential rent and total expenses all need to factor into your decision.  So does your ability and availability to take care of your vacation property.  It takes serious number crunching to decide on the profitability of any rental, even more so for vacation homes.  Once again, stay focused on minimizing vacancies, these are the big bad profit killers. 

Whether you self-manage, hire a property manager or go with a hybrid of the two, what matters is that you maximize your returns, and keep your vacancies as low as possible.  That could mean managing it yourself, if you have the skill to do so.  It could also mean hiring someone to do it for you, to allow you to focus on growing your real estate portfolio.

Related Reading:

4 Clever Ways to Cut Vacation Rental Cancellations in Half

Considering Converting a Residence into a Vacation Rental?

Common Mistakes of New Vacation Rental Owners

]]> https://www.ezlandlordforms.com/articles/educational/4/557/how-to-evict-a-tenant-without-going-broke/ https://www.ezlandlordforms.com/articles/educational/4/557/how-to-evict-a-tenant-without-going-broke/ Wed, 15 Apr 2015 15:03:59 GMT

You’re stuck with bad tenants.  They abuse your property, and now they’ve stopped paying their rent.  You’ve already lost your rent money, and now you have to pay more to get them out?

Even experienced landlords will end up with rotten apple tenants occasionally.  You aggressively screened the tenants by verifying their employment and income, running credit and criminal background checks and verifying their rental history.  Nonetheless, they ended up defaulting, and now you’re stuck trying to clean up the mess. 

Landlords need to treat their rental business as a business, which means collecting the rent, in full, every month, and immediately taking their customers – tenants – to court if they fail to pay for the provided service. 

Here are some tips on how to evict a tenant without going broke.

First, What Not To Do

Remember, it’s just business.  Don’t take an eviction personally, and react out of frustration or anger.  Don’t take matters into your own hands.  In the United States and Canada, it’s illegal to change the locks, shut-off utilities, remove the tenants’ belongings or physically remove the tenants.

There are plenty of stories about landlords acting badly, and many of them revolve around evictions.  Don’t end up on the six o’clock news. 

Next, What You Should Do

Before the grace period expires, try contacting the tenant.  If you have always been on good terms, call them or choose to meet in a public area.  Carefully and calmly, remind them they haven’t paid their rent.  Sometimes, it really can just be an oversight.  In other cases, the tenant may choose to leave on their own, avoiding the entire eviction process.  If they do ask to leave, get it in writing, with a move-out date.

Landlords should understand how to evict a tenant legally before they actually need to do so.  Each state and province has its own set of rules, requirements and timelines.  Follow them closely in order to avoid legal problems down the road. 

On the day the grace period expires, serve your tenant with the proper eviction notice.  It should be sent by certified mail or served in another manner allowed by local law.  Make sure to keep your receipt in case you need to file the eviction with the courts.  You don’t need a lawyer to draw up a legal notice, but there are legal requirements in each state and province; you can find state-specific eviction notices online without spending and arm and a leg.

If the required waiting period passes and your tenant fails to pay or leave, you’ll need to move onto the next step: filing the eviction with the courts.  You will be charged a fee, but you can do it yourself, no attorney needed.  The hearing date will be set, and your tenant will receive a summons directly from the courts. 

At this point it may be worth considering a “cash for keys” offer, where you offer the tenant a few hundred dollars if they vacate the property by a certain day and leave it clean and in excellent shape.  It may stick in your craw to make such an offer, but in many tenant-friendly jurisdictions where the eviction process takes months, this can be a much cheaper and easier option.  You should not cancel or postpone the eviction hearing date for any reason however: this is your leverage over the tenant.

Once the date of the hearing arrives, you can represent yourself, or send a legal representative.  Many landlords do it themselves, as the proceedings are simple.  The courts will want to see all of your documents, such as the lease agreement and eviction notice and with proof of service.  If your reason for evicting the tenant is non-payment of rent, bring any documentation you can to support this claim, such as a bounced check. 

Finally, if all goes smoothly, the courts will allow you to schedule an eviction date.  Tenants may plead, cajole, threaten and offer plausible-sounding reasons why you should extend the deadline, but never cancel or postpone the eviction date, it takes too long to repeat the process.  If they are still there on the day of eviction, you can have a sheriff escort them off the premises, and then you can legally remove their belongings and change the locks.

Once they are gone, you will finally be able to relist your property and find a new tenant.  You may also have the chance to collect unpaid rent from the evicted tenant by taking them to small claims court or by hiring a collections agency.  You may never see that lost money, but it’s worthwhile to try.

Related Reading:

Overview of the Eviction Process: A Step-by-Step Guide to Eviction

What Happens When Your Tenant Declares Bankruptcy?

Abandoned Rental Property? How to Tell if Your Rental Has Been Abandoned & What to Do with Abandoned Real Estate

]]> https://www.ezlandlordforms.com/articles/news/556/how-does-raising-the-minimum-wage-affect-rents/ https://www.ezlandlordforms.com/articles/news/556/how-does-raising-the-minimum-wage-affect-rents/ Tue, 14 Apr 2015 16:35:40 GMT

As Seattle starts phasing in a $15/hour minimum wage, it’s worth pausing to consider exactly how higher minimum wages affect local housing values and rents.  The minimum wage question is very, very complicated, when you peel away all the hotheaded political rhetoric and start looking at the underlying economics. 

Want a simple example to illustrate this complexity?  In February 2014, the Congressional Budget Office released an extensive economic report, sifting with a fine-tooth comb through two scenarios: a minimum wage hike to either $9.00 or $10.10.  At $9.00/hour, economists modeled that 7.6 million US workers would see a substantial increase in weekly earnings, but 100,000 workers would lose their jobs.  At $10.10/hour, those figures were both higher, with 16.5 million workers seeing higher earnings, but at a cost of 500,000 jobs.

Which is better, leaving the minimum wage as-is, raising it to $9.00, or raising it to $10.10 under those projections?  If many will benefit but a minority will be dramatically hurt, what is the ethical choice?  While everyone might have an opinion, there is no “right answer” – there are merely tradeoffs.

The questions just become hairier from there.  Employers don’t just roll over and accept thinner margins of course, and they don’t just reflexively go on firing sprees either.  Businesses use a combination of strategies when labor costs rise: they raise prices, they rely more heavily on salaried (no overtime) and part-time employees (no benefits) rather than hourly employees with benefits, they try to raise productivity by getting more work per hour out of hourly employees.  They may pull back on benefits, or move some jobs from full-time to part-time.  Where the math makes sense, they automate jobs that used to be filled by low-wage, low-skill employees.  They may be able to reduce employee turnover and save costs there.

Rather than a simple matter of “let’s just give everyone a raise,” it is actually quite a complex dilemma.  Tradeoffs are required, which will mean some people lose, through cut jobs and benefits, higher prices, and more burden placed on salaried and part-time workers.  Other people will win, with higher incomes, potentially lower public spending on welfare programs, and higher housing values. 

In Seattle, housing values and rents will likely go up, a mixed blessing.  The news is great for everyone who already owns real estate, and not so great for renters and prospective buyers.  People generally spend between a quarter and a third of their income on housing (in the mortgage industry, for example, the general standard of affordability is 28%).  So changing a person's income merely changes how much they think they can afford to spend on housing.

Consider a simplified illustration of how raising spending power without raising supply will affect prices: Peggy and Sue are roommates, each earns $1,800/month, then they both suddenly start earning $2,300.  They decide they no longer need to live together, and Peggy starts looking for her own apartment in the same building.  But if all of the building’s tenants get the same raise, then Peggy is not the only renter with the same idea.  What started as an $800/month rent might jump to an $1,100 rent if everyone suddenly has more money to offer for the same limited supply of rental units. 

That is the crux of the matter: housing supply is unaffected by simply raising wages, only demand changes, as large swaths of people (who suddenly have more spending power from higher incomes) start thinking about moving.  In the example above, Peggy and Sue unbundled their household; the creation of new households is known as the household formation rate and is a critical factor in determining housing prices (including rents).

Demand grows even more as low-wage workers from surrounding counties are drawn to the city to find work, if a job pays twice as much there as the town thirty minutes away.  On the supply side, local housing supply might catch up eventually, if there is viable land to build on, and if zoning and construction permits allow sufficient new construction. 

“Residents in rent-controlled buildings may see more money in their pockets every month, but tenants paying market rents will just see those rents go up,” explains Lucas Hall, founder of Landlordology.com.  “Raising the minimum wage causes a temporary spike in spending power, but the market quickly balances itself out.  Landlords raise rents as tenants are willing and able to pay more.”

In 2003, San Francisco raised its minimum wage to $8.50/hour, and has been raising it consistently since then (last year, San Francisco voted to raise its minimum wage to $15 over the next two years).  Rents have also skyrocketed in the last ten years, although there are additional factors at work here, most visibly the influx of high-skill, high-wage workers in the tech industry.  Still, even adjusting for the rise in median income in San Francisco, anyone expecting to see a higher minimum wage lead to a lower percentage of income spent on rents will be sorely disappointed: the percentage of income spent on rents has actually risen in the last ten years. 

Nor will renters suddenly become homeowners overnight.  Aside from the higher fiscal responsibility needed to be a homeowner (sometimes furnaces break and need $3,000 in repairs overnight), housing prices are subject to the same market forces as rents.  More low-wage earners bidding for the same entry-level homes will, of course, just drive up prices.

Raising the minimum wage, like any significant economic shift, will create winners and losers.  It is neither the panacea that its champions assert, nor the economic death knell that its critic argue, but merely a boon to some at the expense of others.  Some low-wage earners will come out ahead, and it may just be the economic injection they needed to turn their lives around.  Others will lose their jobs, or perhaps their benefits, or maybe they’ll just have to pay $4 instead of $3 for a hamburger at the local fast food joint.  One thing is certain: homeowners and landlords will be among the winners.

Related Reading:

How Would a Sustained California Drought Affect Housing Prices & Rents?

Think Tinder’s Age Penalty Stings? Study Finds Virtually No Income Growth After 35

Report: Average Workers Can't Afford to Buy Median Homes in Most US Cities

]]> https://www.ezlandlordforms.com/articles/educational/2/554/9-reasons-to-buy-and-hold-rental-properties/ https://www.ezlandlordforms.com/articles/educational/2/554/9-reasons-to-buy-and-hold-rental-properties/ Mon, 13 Apr 2015 10:30:15 GMT

Making money through real estate investing can take time and patience, to grow signficant wealth.  While many investors try to make a quick profit through flipping (and many succeed), others build a portfolio of rental properties, buying and holding them long-term.  Eventually this creates a monthly stream of income large enough to retire on comfortably, often by the age of 55, 45 or even 35!
Want to learn why you should follow this strategy?  Here is our countdown to the top nine reasons to buy and hold rental properties.
9.  Mortgage Amortization
If you buy rental properties by borrowing money, your tenants will, over time, pay off your mortgage.  Every year, more and more money will go towards paying down the remaining principal, reducing your debt (and increasing your net worth).  If and when you decide to sell, your profit will be higher.
8.  Tax Breaks
Being a landlord has some great tax advantages.  You can write off your expenses, including repairs, insurance, mortgage interest, utilities, accounting and bookkeeping, travel, management fees; essentially any cost related to your real estate business.  In the United States, you also get to depreciate your property on your income taxes.  There are many tax breaks at your disposal, make sure to use them!
7.  Inflation Hedge
Would you jump at the chance to buy your home today as it was priced 15 years ago?  What about 30 years ago?   When you buy and hold property, you can lock in the same monthly mortgage payment for thirty years, but rents can be raised to keep up with inflation.  What a deal!  Real estate is a great hedge against inflation.  Real estate values also usually appreciate with inflation or more, keeping your net worth strong.
6.  Rent Increases
Along with inflation, you can expect to raise your rental rates on a regular basis.  The unit you currently lease out for $1,000 per month may rent for $1,500 in five years’ time as the neighborhood improves.  There are no guarantees rates will always go up, but if your property is cash flow positive from day one, future rent hikes are gravy.
5.  Leverage
As defined by Investopedia, “Leverage is an investment strategy of using borrowed money to generate outsized investment returns.” In other words, by borrowing money for your investments, in this case rental properties, you could make more money than you would otherwise.  

As an example, let’s say properties are $100K each.  If you have $100K to invest, you could buy one property in cash (1 x $100K purchase price) or five leveraged properties with a 20 percent down payment (5 x $20K down payment).  The end result is either one property worth $100K, or five properties worth a total of $500K.  When done right, which scenario do you think will generate the most income?
Just remember, leverage amplifies both gains and losses – it is more risky than cash alone.  If you don’t make sound investments, you risk losing what you invested and what you borrowed.  Ouch.
4.  Appreciation
Before buying, you should make sure each rental property is a good investment and is cash flow positive.  But there’s also money to be made with appreciation.  If your real estate value goes up, you will make more money down the road, when you’re ready to sell.  Appreciation takes time – you often need to buy and hold for years – or decades – before your property appreciates beyond what you paid in closing costs to buy it.
3.  Passive Income
Income properties can generate a steady stream of passive income.  Although it’s a lot of work at first when scouting potential investment properties and making offers, income properties become less time-consuming once they are leased and managed efficiently.
Many landlords manage their properties in just a few hours per month.  Others need even less time, as they hire a property management company to make repairs, pay bills and collect rent.
2.  Compounding
Linked to both appreciation and rent increases, rental properties take advantage of compounding.  For example, let’s go back to the unit which rents for $1000 per month.  If you increase your rent by just 3 percent each year, your yearly rental income would be:
Year 1 -    $12,000
Year 2 -    $12,360
Year 3 -    $12,730.80
Year 4 -    $13,112.73
Year 5 -    $ 13,506.11

Each year, you make more money since the 3 percent applies to the previous year’s higher rent.  Smart investors take the higher rents each year and put it towards paying down their mortgage balances, which then shrink faster and faster.  Another way to compound your rental cash flow is to use the extra income from your rental properties to fund the purchase of new rental properties, creating a virtuous cycle of income growth.
There’s a reason the great Albert Einstein is said to have called compound interest "the greatest mathematical discovery of all time."
1.  Cash Flow for Financial Independence
Investments that create a steady cash flow create peace of mind, independence and wealth.  A portfolio of cash flowing properties is a great retirement strategy.  Let your tenants pay for your living expenses so you don’t have to work anymore.  The trick is to make sure you buy properties with such good cash flow that even after "unexpected" expenses like property repairs and vacancies are factored in, you still make substantial profits every month, on every property.

Related Reading:

The Starting Point: Real Estate Investing Advice for Beginners

The 25X Rule for Retiring Early (…and How Rental Properties Change the Math)

Considering Apartment Building Investing? Consider Both the Risks and the Returns

]]> https://www.ezlandlordforms.com/articles/educational/2/555/the-life-cycle-of-a-boomtown-from-jobs-boom-to-vices-to-housing-spikes-to-normalcy/ https://www.ezlandlordforms.com/articles/educational/2/555/the-life-cycle-of-a-boomtown-from-jobs-boom-to-vices-to-housing-spikes-to-normalcy/ Fri, 10 Apr 2015 11:11:41 GMT

“Formula for Success – Rise Early, Work Hard, Strike Oil” – J.  Paul Getty

Finding deposits of a valuable mineral resource often triggers a boomtown.  North America has a long history of boomtowns, from gold rush towns to oil discoveries to natural gas deposits, all following the same patterns.  Fortunately, it is not just oil companies or gold prospectors who become rich nearly overnight, but also savvy real estate investors and developers who can spot the birth of a boomtown. 

We'll examine a modern boomtown case study of Fort McMurray in Alberta, Canada. 

The Start of a Boomtown

Often called Fort Mac by locals, this community got its start as a trading-post for explorers and trappers in the fur trade.  For much of the 20th century, its economy revolved around lumber, fishing and salt mines.  The region’s aboriginals always knew about the presence of oil-like matter in the soil, as they used it to waterproof their canoes, but energy companies were not able to extract it in large volumes until the late 1960s. 

Unexpected Job Explosion

Fort McMurray saw its first explosion of jobs in the 1970s.   As the Great Canadian Oil Sands company (now Suncor) built oil plants, more skilled workers were needed.  The work was tough, dirty and dangerous.  Oil companies were ready to shell out big salaries to attract qualified workers.  Fort Mac became a great example of “if you built it, they will come.”

Flood of Single Men

Most of the jobs in the oil sands are extremely grueling.  They are also located in an isolated part of the country, so companies have to offer huge paychecks to incentivize workers to move to Fort Mac, leaving everything else behind.  This lifestyle tends to attract young, unattached men in their twenties and thirties. 

…Then an Influx of Bars, Prostitutes & Other Vice                                                         

When money starts flowing, so do vices.  In early boomtowns, we see an influx of wine, women and song.  At first, the population is largely transient and male dominated.  Most men are there to make big money for a year or two, and then leave.  Lonely with lots of money, many choose to party it up.  Spending money at the local bar, on gambling, on drugs or on pleasurable company is status quo in early boomtowns.

Booms and Crashes

The boom in Fort McMurray wasn’t without a hitch.  The collapse of the world’s oil prices in the 1980s brought the community’s economy to a grinding halt.  Oil extraction from the Sands is expensive, so a fall in oil prices meant local companies fell on hard times.  Population stagnated, and then dropped, taking housing prices and rents with it. 

Of course, energy costs go in cycles.  Oil prices started going up significantly in 2003.  Fort McMurray has seen a second, even more significant boom in the last decade.  The population doubled, as people from all over Canada flocked to the Oil Sands for high paying jobs. 

Oil Boom Brings High Wages

Working in the oil industry means big salaries and big spending.  With many players in the energy sector like Suncor, Shell and Esso nearby, the growing need for skilled workers drives up wages.  Many employees regularly travel to and from Fort Mac for work, some flying in from other provinces on a weekly or monthly basis.

Housing Boom

With Fort McMurray’s job booms came huge hikes in housing prices.  With its population skyrocketing, there just wasn’t enough available housing.  As demand increased, so did property values.  Dirt-cheap real estate suddenly became an expensive, competitive market. 

Today, a typical, single-family home can easily cost upwards of $700,000, or a condo close to $400,000.  With so many transient workers, rental properties are in high demand.  The average rental rate for a two bedroom apartment is over $2,000 per month.   

Because boomtowns tend to be based on some limited natural resource, which often fluctuates dramatically in price, housing will shoot up quickly, but then often collapse within a decade.

The Economy Evolves                                                                                                              

Today, Fort McMurray is starting to settle into its new normal.  Population numbers are still growing, but it’s no longer a Wild West town of gritty oil workers, barkeeps and ladies of the night.  More families are settling down in Fort Mac, which is creating a more diverse economy.  Schools, retail and more diverse services such as accounting and legal firms are popping up on a regular basis.  Entertainment is no longer limited to bars.  Parks and nature trails are becoming popular for hiking, biking and skiing.  Attractions are thriving, and the arts community is starting to blossom with festivals and live music.

Another Crash on the Horizon?

In late 2014, oil prices were, once again, sent crashing downwards.  In Fort McMurray, job cuts started in January 2015, and expansion plans were placed on hold.  New home construction halted.  Locals fear a housing crash if oil prices don’t recover quickly.  As an oil town, Fort Mac will always be at the mercy of the boom-and-bust of the energy sector.

The Future of Boomtowns?

The first North American boomtowns revolved around gold, modern day ones around energy resources like oil and natural gas.  What will create the boomtowns of the future?  Whatever the cause, they will likely progress like all seem to: from jobs boom, to vices, to housing spikes, to normalcy.

There is a phenomenal amount of money to be made in boomtown real estate... for those who get in early, and sell within the first few years of the spike.  It is a niche, which requires an intimate understanding of commodities cycles and the specific industry in question, real estate development and subdivision, and the rhythm of boomtowns.  But precisely because so few people understand all of these industries, those who do are able to time their investments well and make colossal amounts of money in under five years.

Related Reading:

Highbrow Investors Snatch Up Trailer Parks in Surprising - and Profitable - Trend

Are Landlords “Normal” People? How Real Estate Investors Think Differently

Want to Join the Top 20%? Invest in Retirement Accounts & Rental Properties

]]> https://www.ezlandlordforms.com/articles/news/553/how-would-a-sustained-california-drought-affect-housing-prices-and-rents/ https://www.ezlandlordforms.com/articles/news/553/how-would-a-sustained-california-drought-affect-housing-prices-and-rents/ Wed, 08 Apr 2015 14:41:07 GMT

Aerial view of South Lake Reservoir in California, depleted to dangerous level

 

California has long had a glamorous draw to people all over the world, from the glitz of Hollywood to the cutting edge of Silicon Valley.  People have been flooding into California since the gold rush of the mid-1800s, but it’s entirely possible that California simply can’t support 40 million human lives and the country’s largest agricultural output.

Now in the fourth year of drought, California lost over a million acres of farmland last year.  As a short-term emergency measure, the state has been pumping water from ancient underground lakes and aquifers – roughly half of California’s water came from these reserves last year.  But the reserves are from water that fell 15,000-20,000 years ago, and are at record lows already.  It takes centuries to refill water at the depth where it’s currently being pumped. 

The problem is not abstract; wells that historically worked at 500 feet must now be drilled to 2,000 feet in many parts of the state, which is not only pulling the last reserves of water from the ground but are also prohibitively expensive to install. 

The state's largest agricultural water authority organization, the Central Valley Project, has already reversed promises to provide water for one million acres of farmland, and statewide California is expected to be able to deliver only 20% of the water it had originally promised farmers.

With arable farmland shrinking, there are fewer crops grown and sold, and less demand for farm labor.  That means fewer farmers and fewer farm jobs.

Governor Brown's current policy of scaling back water usage by 25% does not yet apply to farmers, but the overwhelming majority (80%) of the state's water usage is in agriculture.  Raising water prices would help dampen personal water use (for example watering lawns), but in order to have any real impact California will have to either slash availability or raise water prices for farmers, who may not be able to stay in business.

The Dust Bowl of the 1930s offers an eerie reminder of what happens in agricultural economies that suffer prolonged drought.  Farmers and laborers fled the countryside to cities, only to find that there was no surplus jobs for them there either.  Crops failed, and food prices spiked.  There is growing evidence that drought will cause the next round of inflation, not the Federal Reserve.

What does all this mean for housing demand and prices?

More rural areas will see demand drop first, as there are simply fewer opportunities for making a living in the agricultural sector.  Very literally, the ground is sinking in parts of the Central Valley, as water reserves are pumped from underground.  The Central Valley has already been suffering economically for several years now, with cities like Stockton, Modesto, Bakersfield and Madera trudging along at double-digit unemployment. 

But high-cost, limited-availability water will hurt coastal cities too.  A family subsisting in Los Angeles may not be able to afford expensive water bills on top of their high rents.  If previous employees of the agricultural sector arrive in cities like San Diego and Los Angeles looking for low-pay work, that will drive wages lower for low-skill workers, causing double pressure from both lower wages and higher utility costs.  Rents in these cities presumably don’t decline despite the spike in evictions, because of the influx of demand for cheap housing.

Still, housing supply may be affected.  Stanford history professor Richard White ponders “It’s going to be harder and harder to build new housing without an adequate water supply.  How many developments can you afford if you don’t have water?”

Farming is not the only industry that requires plenty of water, either.  Manufacturing plants, golf courses, car washes, water parks and other types of tourism and a hundred other industries rely heavily on water availability and affordability.  How many businesses will need to cut back on employees or even fold when water rationing and price spikes become a necessity?  How many jobs lost?

There are still options available for increasing water supply in California, ranging from desalination plants to building out canal infrastructure to take water from neighboring states.  But these are expensive options, requiring massive investments of public money, and California already charges among the highest tax rates in the country.  These infrastructure projects also take years (if not decades) to fully build out, and will provide no immediate relief to residents and farmers.

When the proverbial dust settles, it is entirely possible that the drought will have a normalizing impact on housing.  Perhaps California’s population growth will slow (or reverse in some areas) to more stable levels, as water becomes increasingly scarce and expensive, and demand finds more equilibrium with housing supply.   But even if the end result is stabilization, it will be an excruciatingly painful road there for many Californians.

Related Reading:

Report: Average Workers Can't Afford to Buy Median Homes in Most US Cities

First-Time Homebuyers Struggling, Near 30 Year Low in US

How Surprising Neighborhood Factors Like Trees & Trash Impact Crime Rates

]]> https://www.ezlandlordforms.com/articles/educational/1/552/how-to-screen-foreign-nationals-applying-for-a-lease/ https://www.ezlandlordforms.com/articles/educational/1/552/how-to-screen-foreign-nationals-applying-for-a-lease/ Mon, 06 Apr 2015 15:08:15 GMT

You have a vacant apartment and found a seemingly good rental application… but not from a US citizen.

In the United States, there are millions of residents who are not US citizens.  Known as foreign nationals, these people can be on temporary work visas, international students, even legal permanent residents.  Any individual with foreign citizenship while living in the United States is considered a foreign national.

Whether in larger cities or rural agrarian belts, you’re likely to receive rental applications from foreign nationals sooner or later.  How can you properly screen these applicants?  What do you need to know?

What’s the Law?

As a landlord, it may be more difficult to properly screen someone who has not been in the United-States for very long.  However, you must accept all applications, and process them in the same manner.

According to the Fair Housing Act, a landlord cannot refuse to rent to someone based on national origin.  They also cannot set different rental terms or conditions for someone due to their nationality. 

To avoid getting into a legal mess, you must allow non-US citizens to apply to your rental units.  All potential tenants, foreign nationals or not, should receive the same rental application.  You should demand the same information from all applicants, and verify the details they provide.  If you charge an application fee, all applicants should be charged the same amount.

As a landlord, you do have rights.  You are allowed to ask applicants for information such as identification, driver’s license number, proof of employment and income, credit history and past landlord references.  You may also ask for written permission to run a credit check as well as a criminal background check.  In most states, landlords are allowed to ask about applicants’ eligibility to work in the United States and confirm their right to be in the country (check your state’s Landlord-Tenant Act).  Just make sure you ask all applicants the same questions, whether you think they apply or not.

I Have Application Forms… Now What?

Once you receive a completed rental application form, you must see if the prospective tenant qualifies for your unit.  To do so, it’s best to establish in advance a detailed screening policy.  Your policy should be able to be applied equally to all tenants, from retirees to those moving into their first apartment, citizens to foreign nationals.  A good policy focuses on the qualifications of an applicant.

A qualified tenant is one who can:

• Afford to pay the rent.  As a landlord, you should set, in writing, how you will make this decision.  As a guideline, many landlords use a 1 to 3 ratio – a tenant’s rent should not be more than one-third of their income.
• Prove good rental history.  This can mean no past evictions, missed rent payments or property damage.
• Prove good credit history.  This can include meeting all of their financial obligations, paying their bills on time, etc. 
• Prove they don’t have a dangerous or criminal background.  Landlords are responsible for ensuring the safety of all of their tenants.

While some of the above can be done for foreign nationals the same way as US citizens, such as verifying their income, employment and rental history, credit reports and criminal background checks is another story.  If the applicant does not have a social security number, you generally can’t run a credit report or nationwide criminal check. 

It may be extra work, but you can still get a sense for the applicant’s credit history.  Ask to see the last twelve months’ bank statements, and look at how frequently they pay their bills, and whether they pay them on time.  If they pay their cell phone bill regularly, and their credit card balance off each month for example, they are displaying the habits of financially responsible people.  If they haphazardly pay their bills every few months whenever they have a windfall, find another tenant.

Though it’s difficult (or impossible) for a civilian to run an effective nationwide criminal check on someone with no social security number, you can still run the applicant through the surrounding counties’ criminal records databases (which are overwhelmingly online and publicly available).  Cross check for the applicant’s address history, which you should by now have verified by speaking with former landlords.

It’s important to note that different states have different rules.  Although they all follow the Fair Housing Act, there can be additional rules which apply to your situation.  Always double-check your rights and obligations before preparing your rental application form and background checks.

Rejecting Applications

As a landlord, you can reject an application if it doesn’t meet your criteria.  However, rejecting applications must be based on factors such as income, credit history or housing history, not on age, race, color, sex, religion, family status, handicap or national origin.  You are also allowed to pass on an application with false information; if you find out your potential tenant lied about their income, for example, you can legally reject the application.

Being consistent with your screening policy is the best way to pick the perfect tenant, regardless of their citizenship.  It’s also the best way to protect yourself against discrimination charges, which can be expensive to defend against and fight in court. 

Related Reading:

Renting to Immigrants: The Laws Affecting Landlords and Illegal Immigrants

The Savvy Landlord's Guide to Catching Application Lies & Red Flags

 

Related Resources:

Tenant Credit Reports & Criminal Background Checks

Rental Application Forms

]]> https://www.ezlandlordforms.com/articles/educational/5/551/how-surprising-neighborhood-factors-like-trees-and-trash-impact-crime-rates/ https://www.ezlandlordforms.com/articles/educational/5/551/how-surprising-neighborhood-factors-like-trees-and-trash-impact-crime-rates/ Fri, 03 Apr 2015 10:59:21 GMT

If someone told you planting a tree could prevent muggings, would you believe them?  What if they said picking up litter would reduce break-ins?

Surprisingly, these details do appear to make a difference.  Neighborhoods that are greener and cleaner are often safer, and some researchers have even used Google Street View to correlate and predict crime patterns.  

Let’s examine how surprising neighborhood factors like trees and trash affect crime rates.

Perception Matters

In many neighborhoods across the United States, perception makes a difference.  If the area feels safe, it likely has a lower crime rate.  But what exactly contributes to that safe feeling?  Cleanliness seems to matter; broken bottles, garbage and neglected properties can all create a sense of jeopardy, and a sense that laws are not heavily enforced.  Other factors like good lighting and welcoming public spaces can make a neighborhood feel safer.

Broken Window Theory

One theory is that the little things actually make a huge impact on crime rates.  Thus, logic suggests aggressively pursuing smaller infractions can prevent bigger ones.  When explaining their theory, Professors George L. Kelling and James Q. Wilson said: “If a window in a building is broken and is left unrepaired, all the rest of the windows will soon be broken.”  They believe maintaining public order is essential to reduce crime.

Studies show people are more likely to break the rules when there’s litter on the ground or graffiti on buildings.  The rate of theft, vandalism and other crimes all go up.  An Environmental Quality Survey in England found a link between the presence of garbage and more serious crimes.  “We can see that on streets where litter, graffiti and fly-posting exist, there is also a higher risk of crime when compared with places where they are not present.”

When people witness small problems, like litter or broken windows, they can perceive that it’s okay to bend or break the rules; other people are obviously doing it, and nothing is being done about it. 

By sweating the small stuff, society can possibly reduce bigger, more dangerous problems. 

The Right Kind of Greenery

According to one study by the University of Vermont, tall trees that create an overhead canopy were correlated to lower crime levels.  Researchers from the University of Vermont compared crime rates to tree cover in various parts of Baltimore, Maryland to see if one can really influence the other.

After studying the relationship between trees and crime rates, the study’s authors said: “we found that there is a strong inverse relationship between tree canopy and our index of robbery, burglary, theft and shooting.  The more conservative spatially adjusted model indicated that a 10% increase in tree canopy was associated with a roughly 12% decrease in crime.”

They published their findings in an issue of Landscape and Urban Planning, concluding in part that “tree planting prioritizations should incorporate public safety concerns.”

But when it comes to crime, not all trees are equal.  Areas with neglected trees or bushes, like those found near industrial areas, are often linked to higher crime rates.  This hike in vandalism, damage and illegal activity is likely due to the lack of monitoring and security in the area.

In urban and suburban areas, low-lying shrubs seem to have a negative effect on safety.  Hedges can provide privacy and cover for hiding.  It’s much easier for burglars to break into a home when they can’t be spotted from the street. 

Can You Really Reduce Your Neighborhood’s Crime Rate?

Although not everyone is convinced trees or litter make a difference, the data is starting to add up.  Neighborhoods with lower rates of theft and break-ins are often better maintained, cleaner and greener.  A neighborhood that looks well taken care of seems to discourage would-be crime. 

So what can you do with this new-found knowledge?  First of all, set the example.  Start by making sure your properties are clean and well maintained.  Mow the grounds regularly, trim back hedges and get rid of clutter.  Hide ugly garbage cans out of sight.  Urge renters to keep the sidewalks clean and pick up litter when they see it, and do whatever you can to instill pride in the tenants and neighbors.  You want to show renters, neighbors and potential criminals alike that you keep a close eye on your property.  Consider planting more trees around the property.  None of these changes cost a lot of money – it’s all in creating the feeling of a safe, clean space. 

But you can’t change your neighborhood’s crime rate alone.  If break-ins or other crimes are a problem in your area, talk to the neighbors.  Odds are they would like a nicer, safer neighborhood as well.  If property management, renters and neighboring homeowners all coordinate to start making these small changes, it may very well change the perception, and consequently the safety, of your area.

Related Reading:

How the Crime-Free Association Helps Property Managers Lower On-Site Crimes by 75%

Reurbanization and the Growing Trend Towards "Walkability"

Hoarder Tenants: Risks, Prevention and Avoiding Fair Housing Trip-Ups

]]> https://www.ezlandlordforms.com/articles/news/549/a-tale-of-three-cities-real-estate-volatility-in-largest-canadian-cities/ https://www.ezlandlordforms.com/articles/news/549/a-tale-of-three-cities-real-estate-volatility-in-largest-canadian-cities/ Fri, 27 Mar 2015 14:23:35 GMT

The Bank of Canada surprised the country with a rate cut back in January. Earlier this month, they decided to maintain the low rate of 0.75 percent.

Canadians with variable rate mortgages are celebrating, as most of the big banks have lowered their prime rate. And now, just in time for the spring real estate market, banks are competing for Canadians’ mortgage dollars. Lenders are offering fixed rate mortgages at incredibly low rates. Currently, the 5 year fixed rate at Toronto-Dominion Bank (TD) is set at 2.79 percent. The same rate is offered by another of the Big Five, Bank of Montreal (BMO). While the other three big banks haven’t yet followed suit, Canadian Imperial Bank of Commerce (CIBC) is offering a special 1.99 percent interest rate for the first 9 months of qualifying mortgages.

Canada’s real estate market has gone a little crazy over the past few years. Property values are at an all-time high. Some experts predict an upcoming housing bubble; others think the market can sustain the growth and higher prices.

How are the new rate cuts affecting the already-heated real estate market? Here’s what’s going on in Canada’s largest cities.

Vancouver

Still one of the hottest markets in the country, Vancouver shows no signs of slowing down. The latest numbers confirm listings and home sales are both up, and well above the month’s ten-year average.

“It’s an active and competitive marketplace today,” says Ray Harris, president of the Real Estate Board of Greater Vancouver. “Buyers are motivated and homes that are priced competitively are selling at a brisk pace right now.”

Real estate prices are through the roof. The MLS® Home Price Index for detached properties was calculated at $1,026,300 – yes, over one million dollars for a typical single family home – up 9.7 percent from a year ago. The index price for all properties came in at $649,700, up 6.4 percent since last year.

Some worry a hike in interest rates may create too much supply and not enough demand. With prices already extremely high, new buyers may get priced right out of the market when interest rates go back up. If demand for housing drops, property values may collapse.

Toronto

Toronto is also showing strong year-over-year growth. The latest numbers published by the Toronto Real Estate Board (TREB) show an average selling price of $620,106, an increase of 10.6 percent since this time last year. Average sale price for detached homes was $806,784, an increase of 14 percent year-over-year.

TREB’s president, Paul Etherington, commented on the trend: “Strong year-over-year growth in home sales continued during the first half of March for most home types in the GTA, both in the City of Toronto and the surrounding regions. This suggests that households continue to view the purchase of a home as a quality long-term investment. But for a lack of low-rise listings in some neighbourhoods, it is quite possible that the number of sales could have been higher.”

Calgary

The status of Calgary’s housing market is a different story. Oil prices have taken a hit and the local economy is grinding to a halt, making many Calgarians nervous.

The Calgary market is showing signs of a price correction. According to the Calgary Real Estate Board (CREB), total home sales were down significantly for the month of February, with a drop of 34.22 percent. The low number of sales led to higher than usual inventory levels, with a spike of 107.27 percent year-over-year. Calgarians seem to be waiting to see what the market will do.

"Everyone has different reasons for making a move and so it’s difficult to predict how buyers will react to this market,” said CREB president Corinne Lyall. “Buyers who have been waiting for more inventory to come on the market may find what they are looking for today. If they are in a position to make a buying decision, they certainly can take advantage of the lower interest rates.”

However, fewer sales have not led to a big slide in prices yet. The average home price for February 2015 was down to $462,294, which represents a dip of 4.24 percent year-over-year from February 2014.

Falling real estate prices may help first-time buyers in Calgary, as long as interest rates don’t jump up too quickly. For those planning to pay off their mortgages quickly, lower prices combined with lower interest rates will mean lots of savings.

Related Reading:

Canadian Real Estate Buyers Spending More Money for Less House

Canadian Landlords Grapple with How (and Whether) to Lease to Immigrant Tenants

Canada’s New Real Estate Bubble: Realtors

]]> https://www.ezlandlordforms.com/articles/educational/3/548/ever-consider-leasing-furnished-units-pros-cons-and-quirks-of-furnished-rental-units/ https://www.ezlandlordforms.com/articles/educational/3/548/ever-consider-leasing-furnished-units-pros-cons-and-quirks-of-furnished-rental-units/ Thu, 26 Mar 2015 15:50:48 GMT

Have you ever thought about furnishing your rental units and leasing them at higher rents?  There are some unexpected pros and cons to furnishing your rental property, so let’s dig deeper into the world of furnished rental properties.

First, what’s included in a furnished unit?  At a bare minimum, “furnished” means:

• Couch(es), coffee table and/or chairs in the living room
• Bed, dresser and nightstand in the bedrooms
• A dining room table and chairs
• A shower curtain in the bathroom

Many furnished rental units go well beyond this minimum however, and can include:

• Televisions
• Entertainment centers
• End tables
• Bookshelves
• Lamps
• Desks and chairs for office work
• Bath mats
• Trash cans
• Microwave
• Toaster
• Silverware, dishes, glasses, pots and pans
• Grill (OK, the grill is probably gratuitous, but who doesn’t like a grill?)

All of the above can cost quite a bit of money, representing a potentially huge up-front investment.  Obviously this can slimmed by buying second-hand, but furnishing an apartment or house is still no small feat.  Is it worth it?

Higher Rents & Investment Recovery

Do furnished units lease for significantly higher rents in your neighborhood?  How much more?  After how long would you recover your up-front investment?  If you could recover your initial investment in less than a year (a typical lease term), then you should consider furnishing your unit.  Imagine a scenario where you could furnish the unit for $750, and charge an extra $100/month for the unit; the success would hinge on your turnover rate, and the cost of repairing/replacing furniture during turnovers.

Risk of Damage

Renters will damage your furniture, the question is how quickly and how badly they will damage it.  Pets are an added risk, and should be avoided in furnished units (damage aside, pets’ dander will seep into furniture, creating an allergen risk for future occupants).  But there is good news to accompany the extra risk of damage…

Higher Security Deposit

You can charge a higher security deposit, given that there is more property that the tenant can damage.  Consider collecting at least two months’ rent for furnished rental units.  Be sure to use a Furnished Rental Unit Addendum to track furniture condition at move-in and move-out.

Permanent Furniture Means Less Damage to Floors & Walls

Have hardwood floors in your unit?  A furnished unit means you can put felt pads on the bottoms of all the furniture, to prevent the floors being scratched to shreds.  Likewise the walls won’t get banged and scraped as careless movers haul new beds, dressers, tables and couches in and out of the property at each turnover.

Furnished Units Appeal to Specific Renters

Most people own furniture already.  The people who don’t are typically students, recent graduates, new families or short-term renters (e.g. professionals temporarily in town for a finite project).  Does your neighborhood interest these types of renters?  Are you interested in these renters?  The high turnover of short-term renters may not appeal to you, or perhaps you don’t like the extra damage that young tenants can inflict on properties and furniture, but consider carefully the type of renter you would attract with a furnished unit.

Storage Costs

You will likely need to have a storage unit, for whatever furniture the tenant doesn’t want.  For example, the tenant has their own bed and mattress – you will need to store the bed and mattress already in the unit.  The costs don’t end at the storage fees, either: someone will have to move the bed and mattress in and out of the unit on either end of the tenancy.

Tax Benefits

The cost of furnishings may be tax deductible, and furniture may be depreciated over the course of five years as depreciable assets.  Talk to an accountant before making any assumptions on your tax return.

Parting Thoughts

In both your up-front costs and in repairing/replacing furniture during turnovers, always buy second-hand unless the unit is extremely upscale.  Buy tasteful and gently-used furniture, that does not show much wear.  Coordinate colors – this can be as easy as buying a sofa and loveseat that are both black faux-leather, with a black entertainment center.  Remember that every penny you spend pushes your investment recovery time further back, so spend with care. 

There are neighborhoods where furnished units can bring in significantly higher rents, particularly those that appeal to younger renters.  Consider the costs and potential return on investment, and if you proceed be prepared for having to repair and replace some furniture in between tenancies, in addition to the usual painting, carpet and other repair costs.

Related Reading:

Secrets of Investing in College Towns & Leasing to Students

Where Young Adults Are Migrating... and Why It Matters to Real Estate Investors

The Rise of Solo Households - And the Implications for Real Estate Investors

]]> https://www.ezlandlordforms.com/articles/news/546/7-ways-millennials-are-changing-the-leasing-and-homebuying-process/ https://www.ezlandlordforms.com/articles/news/546/7-ways-millennials-are-changing-the-leasing-and-homebuying-process/ Tue, 17 Mar 2015 15:42:00 GMT

You’d be surprised how old the average realtor is.  According to a survey by the National Association of Realtors, a whopping 81% are over 45 years old, with a median age of 56, while only 3% are under 30. 

But their clientele, at least on the consumption side, are far younger: this year, millennials are expected to overtake baby boomers as the largest cohort buying real estate.  Among renters, millennials have been the dominant generation for nearly a decade.

So what do realtors and property managers need to understand about the changing demands of their much-younger customers?  Here are seven ways millennials are changing the leasing industry, and the larger real estate industry as a whole.

1. They do extensive research... on their smartphones.  Over half of millennials use their smartphones to browse and research home listings, and that number is only growing.  Landlords and property managers should use mobile-friendly sites to list their properties for rent, and be aware that Generation Y is also researching online reviews of realtors and apartment complexes on their phones, too.

2. They don’t use smartphones for calling.  Many millennials prefer texting or emailing, once initial contact has been made.  Realtors, property managers and landlords need to become very comfortable wit h emails and texts, and quickly.  The good news is that it creates a paper trail for you, so you have a record of what your potential renters or clients have said and want.

3. They expect responsiveness and good customer service.  Millennials move at a faster pace than their parents while doing business, having grown up accustomed to instant answers at their fingertips from Yahoo and Google.  Be sure to return phone calls, texts and emails within a few hours of receiving them, and you’ll keep your Generation Y clients happy.

4. They are more data-oriented and organized.  It’s no surprise that a generation that has used computers since being toddlerhood is organized and data-oriented.  They like to see housing figures, local trends, graphs.  They like checklists and charts.  Most of all, they like to know what’s coming, what to expect, and don’t like surprises.

5. They don’t balk at sharing personal data.  Need bank statements, credit reports or tax returns?  Millennials came of age in an era where privacy was an illusion harbored only by the old folks.  They already share everything on social media, and know full well that they have no real privacy, so they will likely not react as badly as their parents do when asked for personal information.

6. They have trouble seeing beyond skin-deep in real estate.  Chic detailing and modern stainless steel appliances will call to them, but they seldom think to test how thin the walls are, or try the shower pressure, or double check how old the furnace and hot water heater are.  As a realtor, it is your job to help protect them on these fronts, and as a landlord, pay extra attention to the gloss and “sexy” factor of your properties.

7. They’re willing to share, sublet or do what it takes to afford a dream location.  Millennials like glamorous urban neighborhoods, and are willing to make sacrifices to live there.  If that means signing a sublease agreement with a roommate, so be it.  If it means renting out the apartment on Airbnb sometimes, they’ll make it work.  This can mean risks for landlords though, with more wear and tear on their rental properties than they expected.  Be sure to have a clear sublease policy, and screen applicants to make sure their income really is sufficient. 

Millennials will increasingly shape the economy in unexpected ways, much as their baby boomer parents did and still continue to do.  In some ways, America already has a bi-modal economy, with the strong gravitational pull of baby boomers and millennials eclipsing other generations’ influence.

Related Reading:

How to Effectively Market and Rent to Millennials

Where Young Adults Are Migrating... and Why It Matters to Real Estate Investors

Is There a “Great Senior Sell-Off” Looming over the Next Decade?

]]> https://www.ezlandlordforms.com/articles/educational/1/545/5-real-estate-scams-to-avoid-as-a-landlord/ https://www.ezlandlordforms.com/articles/educational/1/545/5-real-estate-scams-to-avoid-as-a-landlord/ Mon, 16 Mar 2015 10:09:19 GMT

You’re smart.  You’re an experienced landlord.  You always do your research.  So you’d never fall for a real estate scam, right?

Think again.

Real estate fraud happens to even the most experienced landlords.  Con artists come up with new ways to swindle unsuspecting property-owners on a regular basis.  They might scour the internet looking for victims.  They might advertise false services hoping to rip-off a trusting person.  Professional scammers can be very sophisticated and creative – they do this for a living.  They want your money and will work hard to get it.

If you don’t want to be a victim, here are five tips to avoid real estate scams as a landlord.

Tip 1: Beware Of the Too-Good-To-Be-True Tenant

One common real estate scam is the too-good-to-be-true tenant. 

She has a well-paying job, is polite and well dressed.  She always seems to have the right answer to your questions.  She’s willing to move in right away.  She’s ready to give you a large deposit with her application.  She even offers to pay more than you’re asking for rent to make sure she gets the unit.

Sounds too good to be true?  It’s probably tenant fraud.

Some con artists operate as professional renters.  They know how to abuse the system, in order to live rent-free while landlords are stuck trying to get them out.  After paying their initial deposit, you’ll likely never see another payment.  Professional renters may even damage your property themselves and claim the unit isn’t in good livable condition, extending their free stay while they fight you in court.

Your best defense against these problem tenants is to do your due diligence.  Never lease to a tenant without verifying their identity.  Carefully screen every adult who will be living in your property.  Do a credit check and a criminal background check.  Call applicants’ former landlords and employers. 

Scammers posing as good tenants tend to prey on landlords who seem unexperienced, trusting or don’t use professional property managers, hoping for an easier target. 

Tip 2: Be Aware Of the Fake Landlord Scam

A second serious tenant fraud is when a renter poses as the unit’s landlord.  These impostors often rent a unit using a stolen identity and pretend to move in.  What they really do is advertise the apartment online, posing as the landlord.  They show the unit to as many people as possible, “renting” it out to everyone who is willing to leave a deposit and pay first and last month’s rent.  The scam artist then vanishes with the money, leaving the real landlord with quite the nightmare.

To not get caught with this scam, take your time when screening all potential tenants.  Carefully compare all background checks, IDs and application forms and look for details that don’t match up.  Don’t ignore something that seems off – taking the time to investigate beforehand can save you lots of time, headaches and money later on.

Tip 3: Never Pay Contractors Upfront In Full

Another common real estate scam happens when a crooked contractor asks to be paid in advance, and then disappears without doing the work.  Contractor fraud happens so often that many states now have regulations specifically to avoid these scams.  You shouldn’t pay more than 10 percent or $1,000 up front to a contractor, which is now law in many states.

Luckily, there are many reputable, professional contractors out there.  To help you choose a contractor with a good reputation, talk to neighbors and other landlord to see who they work with.  Double-check that the contractor is licensed and insured.  Contact the Better Business Bureau to see if any former customers have filed a complaint, and check prior client reviews on AngiesList.com.

Tip 4: Be Wary Of the “Unforeseen Problem” Contractor

Yes, once a renovation starts, there’s bound to be some unforeseen issues.  However, beware of fraudulent contractors who may tear apart your rental property, only to stop due to huge “unforeseen problems”.  Giving him more money, of course, will solve those problems.

Before forking over your money, get a second opinion.  Make an effort to be present during the renovation whenever possible to deter dishonesty.  Construction fraud is more difficult to carry out when the landlord is onsite regularly.

Tip 5: Always Report Fraud

Hopefully you’ll never get caught in a real estate scam.  If you do, always take the time to report the fraud.  By notifying the authorities, you may one day get your money back.  You may also help stop the scam artist from stealing from other unsuspecting homeowners and landlords. 

Have you ever been victim of a real estate scam?  Please share your best tips to avoid fraud.

Related Reading:

The Savvy Landlord's Guide to Catching Application Lies & Red Flags

Common Craigslist Scams Targeting Landlords... and How to Avoid Them

Spotting a Trouble Tenant: Safeguarding Your Rental Property

]]> https://www.ezlandlordforms.com/articles/educational/10/544/understanding-rental-property-depreciation-before-you-invest/ https://www.ezlandlordforms.com/articles/educational/10/544/understanding-rental-property-depreciation-before-you-invest/ Thu, 12 Mar 2015 16:04:03 GMT

One of the most touted benefits of owning rental property is a reduced income tax bill.  But how exactly does that work?  One great way to pay less in taxes is to depreciate your rental property.   

Properties, without any repairs, have a limited lifespan.  As they deteriorate under wear and tear, the theoretical value of the building and its components gradually decreases.  To offset this (again, theoretical) decrease in value and the initial purchase price of your rental property, the IRS allows you to claim depreciation.  In the real world, of course, property owners make regular repairs and updates (the costs of which are also tax-deductible), but landlords can still claim depreciation on their tax returns – what’s known as a “paper expense” rather than a “real expense”.

Here are the basics in order to improve your understanding of rental property depreciation before you invest.

Is My Property Eligible?

In order to depreciate a property, it must meet specific eligibility requirements.  They include:

• You must own the property.
• You must use the property to produce income, such as rent.
• The property must have a determinable useful life (meaning it must be something that eventually wears out such as a building – the land itself does not qualify).
• The property must be expected to last more than one year (temporary shelters don’t qualify).

What Does Rental Property Depreciation Do?

Once you have determined your property is eligible, it’s important to understand what depreciation does. 

Depreciation lets you deduct your capital costs – the original cost of the rental property itself, along with other specific expenses – from your income taxes.  The IRS does not allow you to claim the entire purchase price the year you buy.  They do, however, allow you to claim a percentage of the purchase price every year.  This can represent thousands of dollars per year in tax savings. 

How To Calculate Depreciation?

In the United States, the amount of depreciation you can claim is established by the IRS.  Most residential rental property owners must use the MACRS (Modified Accelerated Cost Recovery System) to calculate depreciation.  With this system, you choose your property’s class, which then determined your depreciation period.  For residential rental investments, depreciation is usually over 27.5 years.

Let’s look at an example to see how to calculate the rental property depreciation. 

In May, you bought an income property for $120,000 and put it up for rent the same month.  The land is evaluated at $20,000 and the building at $100,000.  Since land doesn’t get used-up, you may only depreciate the cost of the building.

The next step is to find the correct percentage in the IRS’ Residential Rental Property Table.  For year one, you must use the rate for the month your rental was placed into service (in our example, it was in May as you listed the property for rent right away).  This gives you a partial depreciation amount for the first year, since you did not own it for the entire year.  The IRS table is available here.

The formula to calculate depreciation is: 

Building Cost x Rate = Depreciation Amount

Year One Calculation (using the May rate of 2.273%)

$100,000 x 2.273% = $2,273

For year two and beyond, the rate is always the same, at 3.636%.  The depreciation for our property would therefore be:

$100,000 x 3.636% = $3,636

For the following years, you would be able to reduce your taxes owing by $3,636, as long as you still own the property and use it to create income.  Rental property depreciation can get quite complex.  Your original purchase price may need to be adjusted to include qualifying costs, credits or real estate taxes.  As you renovate your property or replace appliances, you may need to adjust your formula to include the changes, therefore depreciating the new costs.  It’s wise to seek professional advice when dealing with depreciation.

What’s the Catch?

There’s always a catch.  In the United States, rental property depreciation lowers your original purchase price – often called your tax basis – for tax purposes.  When you sell, the depreciation is recaptured and taxed at a higher rate than capital gains.  Even if you never claim depreciation, you’ll still owe the taxes on the recapture amount upon selling, so always claim the depreciation amount every year.

What Happens When I Sell My Rental?

If you sell your rental property, you must stop claiming depreciation, even if you have not fully recovered your purchase cost.  Once you sell, you will need to pay taxes on your capital gains (the difference between the purchase price and selling price) as well as your depreciation recapture.

Where Can I Get More Information On Depreciation?

Since every situation is different, it’s best to consult a professional for advice.  A tax accountant or CPA can guide you through the complex system of rental property depreciation and real estate tax deductions.

For more information, please see the IRS article A Brief Overview of Depreciation as well as the more detailed publication Depreciation of Rental Property.

Related Reading:

The Ultimate Landlord's Guide to Rental Property Deductions

Want to Join the Top 20%? Invest in Retirement Accounts & Rental Properties

An Overview of 1031 Exchanges & How They Defer Taxes on Real Estate Profits

]]> https://www.ezlandlordforms.com/articles/educational/2/543/why-are-credit-reports-from-the-three-credit-bureaus-different/ https://www.ezlandlordforms.com/articles/educational/2/543/why-are-credit-reports-from-the-three-credit-bureaus-different/ Wed, 11 Mar 2015 10:52:23 GMT

For years you’ve been doing everything right.  You scored a good job.  You bought a house.  You pay your bills on time every month.  You have two credit cards, which you pay off monthly.  You even request a credit report from Transunion every year to check your credit score, which is very, very good.

You go to the bank and apply for a mortgage on what is to become your first rental property.  But your application gets rejected, because the bank saw something you haven’t seen, on your credit report. 

What’s going on? 

When it comes to credit bureaus, there are three heavyweights in the United States: Transunion, Equifax and Experian.  While all three collect and store consumers’ credit history, these bureaus are in direct competition with each other.  Competition means different information is being collected, which can change your credit score from one bureau to another.  It can also mean mistakes can slip onto one of your reports but not the others.  Depending on which bureau(s) your bank uses, your credit score may not be what you were expecting.

Credit reports vary somewhat from one bureau to another, which is normal.  But why are credit reports from the three bureaus different?

Different Names or Spelling

Do you usually go by Mike, Mikey, Mitch or Michael?  If you often use a nickname or shorter form of your first name, it’s bound to appear on some of your paperwork.  Maybe your landlord has you listed as Mike, while at work they use Michael John, your first and middle name, on your paycheck.  When your name appears differently, it’s difficult for credit bureaus to match-up all of your documents.

Another issue arises from having a different or unusual spelling to your name.  If you’re a Marc instead of a Mark, your name has likely been misspelled at some point. 

Report Created on Different Dates

Another common cause for discrepancies is reports being created on different dates.  Credit bureaus receive new information on a daily basis.  If Transunion pulled your report one week and Equifax the next, there could be new information on the second report, which can change your credit score.

Processing Time for New Information

New data may be processed more quickly depending on time of year, staff availability and method of data entry.  One bureau may simply process your information faster than the others.  Furthermore, lenders may not send out data to bureaus at the same time, making processing time appear longer or shorter.

Information Can Be Weighted Differently

Each credit bureau uses its own formula to calculate your credit score.  Your available credit may be more heavily weighted for one bureau’s calculation, while your mortgage may be more important in another.  By weighting your data differently, it’s normal for your final score to be different from the three bureaus.

Credit Bureaus Don’t Share Information

Each bureau operates independently and doesn’t share its information with the competition.  Since bureaus don’t share, it’s normal for one bureau to have more information about you than the others.

Different Ways of Retrieving Information

Credit bureaus receive their information in different ways.  Some lenders have agreed to deal exclusively with one credit bureau, and therefore can’t release any information to the other two.   

Not All Creditors Report to All Three Credit Bureaus

It’s frustrating to receive incomplete credit reports, but in some cases, there may be little you can do about it.  Creditors are not required by law to report to all three credit bureaus.  If your credit card company doesn’t have an association with Experian, for example, it won’t show up on your report.  You can ask the credit bureau to add the information to your file.  They aren’t required to do so but may do it for a fee.

What Should You Do About It?

If your reports are different, do you need to address it?  What should you do about it?

If any information is missing from your report, or if you find a mistake, contact the credit bureau and let them know.  Check your statements for any name changes, misspellings or out of date personal information.  It’s not normal to have really different results from one bureau to another.  If there’s a mistake, it could cost you that loan you want, or that low interest rate.

Requesting your credit report from Transunion, Equifax and Experian can help you identify any potential problems.  But don’t forget that it’s normal to have a slightly different credit score from each bureau, and don’t panic as long as the information on your reports is accurate.

Related Reading:

The Real Estate Investor's Guide to Improving Credit Scores

New Credit Scoring Models Offer Better Payment Predictions, But Will Anyone Use Them?

10 Things You Need to Know About Tenant Background Screening

]]> https://www.ezlandlordforms.com/articles/educational/5/542/flood-damage-what-landlords-should-know-from-waterproofing-to-flood-insurance/ https://www.ezlandlordforms.com/articles/educational/5/542/flood-damage-what-landlords-should-know-from-waterproofing-to-flood-insurance/ Mon, 09 Mar 2015 11:08:52 GMT

Worried about flood damage?  If not, you should be.

While you may be able to postpone installing new appliances or curtains, the cardinal responsibility for all landlords is providing a livable home to your tenants.  Habitability is legally enforceable in most states, with civil and even criminal penalties in place to add teeth to those statutes.  Running water, electricity, a solid structure and safety measures are required for a unit to be considered livable.

Among the worst habitability disasters for rental properties is flooding.  From burst pipes to weather-related floodwaters, flooding will wreak havoc on your property.  Utilities may be damaged or dangerous to use, floors and cabinets may need to be replaced and the building’s structure may be compromised.  Mold can consume the entire house, requiring full demolition.  Tenants won’t be required to pay rent, and in some cases, may need to be relocated.  In short, the costs of flooding can quickly skyrocket for landlords.

Here’s what landlords should know, from waterproofing to flood insurance.

Basement Waterproofing:  Your foundation should be properly waterproofed to prevent leaks and floods.  Check your foundation for cracks or signs of moisture.  If you suspect there’s a problem, have an inspection done.  Although costly, an anti-flood barrier can be added.  Sometimes, a waterproofing compound can be painted onto the foundation walls to seal them.  The basement should also be inspected to check for appropriate drainage.

Storm Doors and Windows:  Installing storm doors and windows can help prevent flood damage caused by bad weather.  They can protect your rental property from strong winds and rain.  As a bonus, they mean lower energy bills for tenants, which means higher rents, and sometimes even energy efficiency tax credits.

Proper Drainage:  If water accumulates near your foundation when it rains, you need to look into your yard’s elevation and drainage.  The ground should be graded to help water drain away from your building, so it doesn’t end up in your basement.

Rain Gutters:  By directing water away from your building, you reduce the risk of a flooded basement.  A well-installed rain gutter should have a slight pitch to keep the water flowing towards the downspouts.  The downspouts should drain away from your home, and extend at least five feet from your foundation.  Rain gutters need to be in good condition and clear of debris to give effective flood prevention.  

Sump Pump:  A sump pump can help keep a basement dry.  The pump is installed in the lowest part of a building’s basement in a sump pump pit.   When it detects water underneath the building, it activates and pumps the water away from the structure.  Make sure your sump pump is in good working order and has a source of backup power.

Emergency Power:  If your rental property is in an area prone to flooding and power outages, consider investing in an emergency power source.  A generator, for example, can be used for emergency backup power for the sump pump or heat system.  For a few hundred dollars, your emergency power source can help prevent flood damage from a water backup or frozen pipes.

Warning System:  You can have a water warning system installed in your rental properties.  Some home alarm systems include basement flooding alerts, or a stand-alone alarm can be purchased and installed.  These alarms alert you right away if there is any flooding, hopefully minimizing the damage.  As this technology improves (and drops in price), they are becoming integrated with smart home systems that communicate with your smartphone.

Plumbing:  Inspect all pipes, sinks, toilets, baths and showers for signs of damage or leakage.  Don’t forget to check the water lines for washing machines or dishwashers.  Consider installing automatic washing machine shutoff valves to prevent flooding from a broken valve or hose.  Specialty floor trays can also be placed underneath appliances to catch leaks.

Elevate:  If you are in a flood-prone area, you can have your furnace, hot water tank and electrical panel elevated above potential flooding levels.  This can reduce flood damage if water gets in.

Flood Insurance:  If water does get in, flood insurance can help minimize your costs.  Even though flooding is one of the most common natural disasters in the United States, most insurance companies don’t automatically cover flood damage.  It’s a good idea to review your current insurance policy to see if flood insurance is included.  If not, call your agent for a quote.  If flood insurance isn’t offered by your insurance company, the Federal Emergency Management Agency (FEMA) can provide you with the names of local agencies that can provide appropriate coverage.

Staying above water is the best way to prevent costly flood damage.  Flood prevention and proper flood insurance coverage are key to protect yourself and keep your tenants happy.

Have you ever had a flood in one of your rental properties?  What do you do to protect yourself from the cost of flooding?

Related Reading:

Changes to Flood Insurance May Leave U.S. Real Estate Owners Underwater

Why Is It So Hard to Buy Flood Insurance in Canada?

Disaster Preparedness: Does Your Property Managment or Rental Investing Business Pass or Fail?

Can Landlords Still Collect Rent When the Power Is Down After a Disaster?

]]> https://www.ezlandlordforms.com/articles/news/541/think-tinder-s-age-penalty-stings-study-finds-virtually-no-income-growth-after-35/ https://www.ezlandlordforms.com/articles/news/541/think-tinder-s-age-penalty-stings-study-finds-virtually-no-income-growth-after-35/ Fri, 06 Mar 2015 10:26:29 GMT

Turning 30 sucks.  You don’t bounce back as quickly after injuries or hangovers, wrinkles start setting in, Tinder charges you double just to find a date, health insurance costs more, and you only have five more years before your earnings level off and stall permanently.

Wait, what?

A new study by the Federal Reserve of New York found that nearly all of American men’s income growth occurs before age 35.  Women were not included in the study, but given the number of women who leave the workforce (whether temporarily or permanently) in their late 20s and early 30s to care for children, logic would suggest that this trend applies to the ladies as well. 

Perhaps predictably, the pattern held true for the bottom 90% of the population, but the top 10% of earners buck this trend and their incomes continue to rise after age 35, rather than flatten or fall.  But even most of the wealthy see their edge disappear with age.  By age 45, only the top 2% of earners can expect to ever make more money than they do currently, and the rest of us actually see a slight decline in earning power over the next ten years.

At the bottom of the income spectrum, the news is even worse: the bottom 20% of earners actually see their incomes decline between the ages of 25-55.  When they retire, they are earning less money than they did in their mid-20s.

Is there any hope?

If you want to get rich, here are a few ideas.

First, if you’re young, you can make significant strides in your investments, by skipping the fancy car and instead investing a huge percentage of your income.  With 30-40 years to compound and grow, investments in stocks and real estate will pay massive returns.  Between dividends from stocks and rents from real estate, investment income will increase on its own over the course of your career, virtually guaranteeing higher income even if your salary stays constant.  Consider that mortgages on your home and investment properties will also be paid off after 15-30 years, which will also boost your cash flow and therefore your income (assuming you can resist the urge to refinance).

Being young, you can also position yourself as a mover and shaker in your career, and work your way to higher incomes faster.  Between negotiating aggressive pay increases and leapfrogging employers to maximize your income, do what you can to position yourself in a higher income bracket sooner rather than later.  Later may be too late.

Over 35?  All is not lost, although time is no longer an ally.  Aside from the obvious career maneuvering to boost your income, it is more important than ever that you let go of the flashy “keeping up with the Joneses” mentality that plagued you in your 20s.  If you want to boost both your income and your wealth, you need to create a virtuous cycle in your own finances, which is difficult at first, but is self-reinforcing and gets easier over time.

Income from dividends, bonds and rental properties can go towards buying more investments, or paying down debts (for example mortgages).  To use an easy example, let’s say over the course of a few years you acquire five rental properties, each with a mortgage and a monthly cash flow of $200.  Congratulations, you’ve given yourself a $12,000 raise, and you can never be fired.  With that extra $1,000/month, you could buy new gadgets for your kitchen… or you could put it all towards paying off one of your mortgages.  When that mortgage is paid off, you suddenly have $1,500 in cash flow each month, which you can use to pay down the next mortgage even faster.  Then it will be $2,000/month in cash flow, and so on, as a virtuous cycle of income growth that has nothing to do with your career.

There are also tax advantages that you can use for any of these investments, which lower your tax bill and effectively creates a raise.  Between IRAs, 401(k)s and the myriad tax advantages to real estate investments, you can cut your tax bill in half, all while increasing your future income.

As a final word for those looking to grow rich at any age, remember that the wealthiest people in America are entrepreneurs, not doctors or lawyers.  Starting a business (including a real estate investment business) is how anyone, at any age, can go from being dependent on an employer to being fulfilled and financially independent.

Don’t want to be in the trend of flat incomes after age 35?  Then make sure you become an outlier, by going about becoming wealthy by thinking, acting and prioritizing your finances differently than the rest of the pack.

Related Reading:

Want to Join the Top 20%? Invest in Retirement Accounts & Rental Properties

Are Landlords “Normal” People? How Real Estate Investors Think Differently

Who Is “Wealthy”? The 5-Step Ladder Between Middle Class and Wealthy

]]> https://www.ezlandlordforms.com/articles/educational/10/540/want-better-cash-flow-slash-your-property-tax-assessment/ https://www.ezlandlordforms.com/articles/educational/10/540/want-better-cash-flow-slash-your-property-tax-assessment/ Thu, 05 Mar 2015 09:51:26 GMT

If your latest property tax bill has left you reeling – or at least scratching your head – consider that the asking price, to be negotiated downward.

Swings in the real estate market may mean that the current taxable value on your property is inaccurate.  In fact, according to the National Tax Payers Union, up to 60 percent of homes are overvalued.  The more startling statistic?  Fewer than 5 percent of taxpayers appeal. 

While there’s nothing you can do about the tax rate – which is set by local governments – you can appeal the taxable assessment of your property.  If you think that the taxes you’re currently paying on your property are no longer in line with how much the property is worth, there are a few steps you can take.

Verify the Information

The first step is to review your tax bill for errors.  The worksheet for the property, also known as the property record card or working papers, contains specific information about your home, such as square footage, number of bedrooms, etc.  Verify that all of the information on the sheet is correct. 

If you spot an error, a phone call or quick visit to your assessor’s office may be all that is required.  If the bill seems accurate (aside from the assessed value), you may need to do more digging. 

Assessors usually rely on external views of the home to make their assessments, so it may be worthwhile to double-check the numbers and do the math yourself.  You may also choose to enlist the services of a state-licensed real estate appraiser to do an inspection of the property, usually for around $300 to $400.

You might also be entitled to certain tax deductions.  Homestead exemptions, for example, may provide some relief from property taxes.  The exemptions vary from state to state, so check with yours to make sure you qualify and, if so, if the exemptions have been applied to your property.

Know the Process

If you’re unable to find any errors that might result in a higher tax bill, you may want to consider initiating the appeal process.  Before you begin, however, make sure you understand how the process itself works.  The rules are different for every taxing jurisdiction, so you’ll need to check the requirements for your area.

Localities often only accept appeals within a narrow timeframe each year, often in a specific amount of time after property tax bills or reassessment notices are released.  You may also have a window to appeal upon purchase of a property.  If you’ve already missed the deadline for the year, you can use the time to prepare for the following year.

If you’re feeling particularly ambitious, you can also attend an appeals board meeting so you know exactly what to expect should you decide to proceed with an appeal.

Compare Properties

You will of course want to research the values of comparable properties in your area (the National Tax Payers Union suggests looking at a minimum of five).  Still, that information may not paint the entire picture of what your home is worth. 

Remember that whoever assessed your property may not be aware of what lies inside, but you do.  This is the time to be deeply critical of your property.  Anything that may reduce or detract from its value should be noted.  (Warning: be careful to never alert the local government of any code violations, or repairs made without a permit.)

Also consider factors outside of your property that might bring the value down, such as living on a busy street or near a railroad track.  They might also help you make your case in an appeal. 

Make your Case

Before you take the step to appear before an appeals board, you may want to request an informal meeting with a representative from the tax assessor’s office.  You may also be requested to make your informal appeal in writing.  This would be a good time to share any discrepancies you have found with the assessment worksheet for your property, as well as the other information you’ve been able to gather about your property’s value. 

If an informal appeal doesn’t yield the results you were hoping for, you can take your case to your local appeals board.  Again, the guidelines governing the process will vary depending upon locality, but this will be your opportunity to present any evidence that supports lowering the value of your home. 

If you haven’t yet attended an appeals board meeting, you should do so before you’re scheduled to appear.  Bring all supporting documentation you can think of, including recently sold comparable home listings, market data and photographs to help support your claim.

If your appeal is rejected, you may be able to take your case to your state appeals board.  Or you can consider hiring legal help.  However, consider how much you’ll spend on legal representation and how much you stand to gain from reducing your property taxes – you may find that fighting any further simply doesn’t pay.

Related Reading:

Tips and Tricks to Lower Real Estate Property Taxes

The Growing Specter of State “Exit Taxes” as Residents Abandon High-Tax States

The Best & Worst States for Real Estate Taxes

]]> https://www.ezlandlordforms.com/articles/educational/5/538/4-clever-ways-to-cut-vacation-rental-cancellations-in-half/ https://www.ezlandlordforms.com/articles/educational/5/538/4-clever-ways-to-cut-vacation-rental-cancellations-in-half/ Fri, 20 Feb 2015 17:47:31 GMT

One of the drawbacks of owning vacation rentals is the constant need to find new guests.  Since turnover is high and stays are short-term, it’s easy to end up with an empty property.

Cancellations are one of the most frustrating and costly issues for owners of vacation properties.  To help you avoid cancellations, here are four clever ways to cut vacation rental cancellations in half.

1. Be Well Informed of Your Market

How well do you know your rental market?  Every once in a while, take the time to check out the competition.  What do they charge during low season?  High season?  What amenities do they offer?

Setting a competitive rate not only helps you attract bookings, but can also help you keep them.  The Internet has made shopping around for deals easy.  Many people will book a vacation rental, but may keep browsing in case they find a better rate.  If you have priced your rental appropriately, you’re less likely to have last-minute cancellations.

2. Focus on Repeat Guests

The hardest part of running a vacation rental is convincing guests to choose your property instead of your competitors’ (including hotels). 

Luckily, people are creatures of habit.  If they enjoyed staying at your property, they are more likely to come back year after year, or perhaps tell their friends about the amazing condo where they stayed and encourage them to visit.  Renting from you can be the path of least resistance – they don’t need to spend hours online hunting for a place to stay, and they already know what they are going to get.

To focus on increasing your number of repeat guests, ask if you can add them to your mailing list.  This allows you to remind them, every once in a while, about your great property.  You can also use this marketing tool to offer discounts and incentives during the off-season. 

Make it easy for returning guests to book another stay.  Provide a short form they can fill out to save their spot for next year.  A follow-up phone call or email also works well.

Another great way to encourage repeat guests is to always include a little something extra.  Consider welcoming them with a small gift or surprise, such as a bottle of wine and a thank you card.  Other possibilities include a few snacks, cold drinks, or a small gift basket filled with local treats.  Even a local guidebook, restaurant coupons or a map of the area shows you put thought and effort in their stay.

Encouraging repeat guests is a great way to cut booking cancellations.  Since these guests have already stayed there once, they are less likely to cancel if they book with you again. 

3. Make Your Listing POP

The better your listing looks, the more your guests will want to stay there.  If your listing looks ho-hum, they might just jump ship if they find a gorgeous-looking ad elsewhere. 

Cut vacation rental cancellations by making sure your listing looks fabulous.  Post professional photos of your space.  Include indoor and outdoor shots.  If you have a great view, access to a pool, or other great amenities, include a few pictures to draw attention to them.

Always include a detailed description of your space.  List all relevant features, services and information.  Encourage potential guests to reach out if they have a question or would like more information, and be responsive when they do. 

Be careful to never over embellish though, as guests may feel cheated if your space isn’t what they were expecting.  Focus on making your listing professional and attractive, while showcasing your property as genuinely as possible.

4. Have a Clear Cancellation Policy

It’s important to treat your vacation rental like a business, which means having the proper policies and plans in place.  Most hotels and resorts have a detailed cancellation policy, and you should too.  Your policy should explain what happens if guests need to cancel their vacation.  List any fees they will incur, when they must cancel by, and how they must inform you.

Most owners require a non-refundable deposit.  When guests book your property, make it clear that their reservation will only be official once you receive their deposit.  During high-season, consider asking for a higher deposit amount to discourage last-minute cancellations.

Booking cancellations, especially last-minute ones, can be a big loss in revenue.  Although impossible to eliminate altogether, you can work on a plan to reduce them.  Less cancelations also means less stress, less waste of time, and more money in your pocket.

Vacation rental owners, do you have any tips to share?  How do you reduce vacation rental cancellations?

Related Reading:

Vacation Rentals as a Second Home: Tips for Actually Making Money

Common Mistakes of New Vacation Rental Owners

Considering Converting a Residence into a Vacation Rental?

]]> https://www.ezlandlordforms.com/articles/educational/2/537/the-five-worst-mortgage-mistakes-landlords-can-make/ https://www.ezlandlordforms.com/articles/educational/2/537/the-five-worst-mortgage-mistakes-landlords-can-make/ Thu, 19 Feb 2015 10:51:13 GMT

Landlords and real estate investors need to be intimately familiar with how mortgages work, because mortgages are in many ways a tool of the trade.  Like all powerful tools, they can also be extremely dangerous, as 18 million homeowners and landlords who were foreclosed on between 2008-2013 can attest.  

A shocking number of homeowners and real estate investors alike make appalling mistakes when considering a mortgage, so here’s a review of the most common – and most costly – mistakes made by real estate investors.

1. Failing to Know Your Credit and Options

Before you even start shopping mortgages, you need to know what’s on your credit report.  Fortunately, you can pull it once each year for free from AnnualCreditReport.com, as a “soft” pull that does not hurt your credit by appearing as a credit request. 

With your credit report in hand, you can then shop around different mortgage brokers, without having each of them pull your credit report separately.  Once you choose the best lending option, that lender (or broker) will need to pull your credit report on their own to verify it, but before committing you can shop around for the best rates and options with your “informal” credit report.

2. Failing to Understand Mortgage Fees

Mortgages cost an absurdly large amount of money, both in up-front fees and in amortized interest (more on that later). 

If you go through a mortgage broker, rather than a direct lender, you may incur two sets of fees, one for the broker who sold you the loan, and one for the lender who’s actually ponying up the money.  Further, keep in mind the word “sets” of fees, because brokers and lenders often charge a whole range of fees.

The fee most people are familiar with is the “loan origination fee”, which is calculated in “points”, with one point equalling one percent of the mortgage loan.  But fees don’t stop at points, they start; “administration fee”, “document preparation fee”, “underwriting fee”, “processing fee”… it’s telling that in the industry, lenders call them “junk fees”.  When shopping mortgages, get a copy of the Good Faith Estimate (GFE) form for the proposed loan, for a full accounting of these junk fees up front.  While one broker or lender might exclaim “We charge no points!” and hit you with $1,500 in junk fees, their more honest competitor might have quoted you a fee of one point, but not slap you with all the junk fees.

Lastly, beware of PMI (private mortgage insurance), which is simply lost money to the borrower and should be avoided by making a larger down payment, if possible.

3. Failing to Understand How “Simple Interest” Amortization Works

“Simple interest” is a misnomer if there ever was one.  As a brief summary with minimal math, it works like this: in the beginning of your loan, almost all of each monthly payment goes towards paying interest.  But over the life of the loan, more and more of each monthly payment goes towards paying down the principal balance of your loan.  For example, imagine a 30-year mortgage for $100,000, at 8% interest – the borrower will pay nearly $8,000 in interest in the first year alone, while only paying $835 toward their principal balance.  In fact, it would take 22.5 years just to pay off the first half of the loan ($50,000).

It’s the perfect system for banks: they lend money, knowing that for most of your loan term, you’ll mostly be paying them interest, and only really paying down your loan in the last few years.  Before they let you get to that point, they’ll tempt you with a series of “too-good-to-be-true” refinance offers, or will force you to refinance through a balloon note (more on this below).  This way, they can continue to keep a huge asset on their balance sheets, and just keep collecting interest without letting you actually pay off the loan.

4. Refinancing

Understanding how simple interest amortization works, you should now see that refinancing should be avoided if it all possible.  Sure, it can occasionally make sense in some uncommon situations to refinance, but generally speaking you want to keep your old loan, so you can eventually reach a point where more of your payment is actually paying down your principal balance.

But even beyond the problem of amortization, refinancing costs a massive amount of money in closing costs, which is all downside for the borrower.

5. Being Sold on Balloons or ARMs

Lenders love to tempt you with balloons and ARMs (adjustable rate mortgages), because the math works so well in their favor.  A balloon note is a mortgage that forces you to refinance after a certain length of time (usually three to five years).  As discussed above, this is prime interest-earning time for banks, at the very beginning of the loan term, so your balance will be only slightly lower at the end of five years than the day you borrowed it.  Then they get to charge those junk fees all over again when you’re forced to refinance.

An adjustable rate mortgage usually starts with a temptingly low interest rate… for a brief period.  Then the interest rate jumps up, and becomes tied to the US Treasury rate (even when the Treasury rate is low, the balloon interest rate will be substantially higher).  The strategy is similar to a balloon note, just subtler: the lender makes it so expensive to keep your current loan that you will jump at their offer to refinance it, at which time they can charge more junk fees and reset the amortization back to being mostly interest on each payment. 

Take it from someone who used to be a mortgage account executive: shop until you find a low-interest, low-fee mortgage at a fixed rate for a 15-30 year term, and never refinance. 

Related Reading:

Pay Down the Mortgages Faster or Buy New Rental Investments?

Should You Ever Refinance Your Rental Property?

Securing Low-Interest Real Estate Loans - Part I - Interest, Fees & Diligent Shopping

Securing Low-Interest Real Estate Loans - Part II - Credit, Down Payments & Financial History

]]> https://www.ezlandlordforms.com/articles/educational/1/536/how-to-secure-military-renters-in-your-vacant-rental-properties-and-fast/ https://www.ezlandlordforms.com/articles/educational/1/536/how-to-secure-military-renters-in-your-vacant-rental-properties-and-fast/ Mon, 16 Feb 2015 16:59:49 GMT

Marketing your rental property involves more than just appealing advertising – it should work to attract your ideal tenant. Property managers with access to a military community can tap into a deep pool of qualified applicants which refreshes itself annually.

Why Military Tenants

For our service members and their families, the choice of where to live with each move is vital. Managers of property within 60 miles of a military installation can reach out to this desirable population who relocate frequently and are actively looking for a local resource in a new area. They have steady employment and are typically experienced renters (approximately 70% live off base). A bonus for property managers with multiple properties is the connected nature of the military community. A positive rental experience encourages the military tenant to spread the word among their word-of-mouth-dependent peers who are always moving into the area.

Fast Vacancy Turnaround

There are a number of online tools used by the military community to ease the effort involved in frequent moves. One of the most trusted is AHRN.com, which for over 10 years has served as an integral part of the PCS (Permanent Change of Station, or move) process for thousands of military members. With an email series based on the service member’s projected move date, AHRN.com is able to place well-matched rental properties directly into the inbox of a moving service member as they are making housing decisions. This process has contributed to an outstanding 65% of listings being rented in 3 weeks!

The PCS Timeline and Tips

For military families, PCSing is an extensive and time consuming process. Many may not have time to learn about their new area before moving in – and could be moving from across the country or around the globe.

Service members are notified of their impending change of station when they receive orders. While most orders provide 3-6 months notice, the military will occasionally expect service members to move in as little as 3 or 4 weeks. Most military families will begin researching new housing options once orders are received.

Service members, especially those with children, often prefer to locate housing before they arrive at the new duty station to expedite getting settled.  Others opt to locate housing after they arrive by spending a short time in temporary housing. These potential tenants are looking for opportunities to move in immediately, and have usually done considerable research on neighborhoods online beforehand.

Within a few days of arriving, service members will begin in processing to the installation and their unit. This means that many service members will have very little free time to explore their new community before starting back to work, which makes move-in packets that highlight area resources and shopping like utilities, grocery stores and local fun very appreciated.  

Military Tenants and Pets

Offering an attractive and effective pet policy is one way to reduce turnover, increase your pool of applicants and make your listing more visible. Listings with a pet policy (even if it’s individually approved) show up dramatically more in listing searches. With a significant number of military families either owning pets or wanting that option, a responsible pet policy is a smart tenant retention tool.

Although there is a degree of risk in allowing pets into a rental property, the benefits outweigh the risks when mitigated by a thorough vetting of applicants, clear and reasonable tenant expectations, established documentation and pet fees. Looking for more information on military-friendly pet policies? Consider encouraging tenants to create a Pet Resume.

Building Relationships

The transient nature of military life means that your new tenants are constantly having to look for new grocery stores, the best pizza delivery, and favorite parks. Establishing yourself as a helpful local resource can be a powerful marketing tool in this community that frequently uses social media and word of mouth to make decisions regarding which businesses to work with. A simple way to build relationships with home searching service members is to offer a “Welcome Kit” in your rental listing. Even those service members who do not rent from you are left with a positive impression that could lead to recommendations to other potential tenants!

If steady income, tight knit community ties, and regular influx of new potential tenants sounds like an attractive applicant pool, try leasing to a military family for your next vacancy!

About the Author: With a passion for community, military spouse Kristen Smith evolved a professional start in traditional marketing into a career in social media development and management.  For disclosure, Kristen Smith works with AHRN.com. 

Related Reading:

Understanding Military Tenants, the PCS Process & How to Minimize Military Rental Vacancies

Using Psychology to Hook Prospective Renters & Fill Vacancies Faster

How to Effectively Market and Rent to Millennials

]]> https://www.ezlandlordforms.com/articles/educational/2/529/real-estate-investors-raise-your-kids-to-be-good-entrepreneurs-not-good-employees/ https://www.ezlandlordforms.com/articles/educational/2/529/real-estate-investors-raise-your-kids-to-be-good-entrepreneurs-not-good-employees/ Thu, 12 Feb 2015 17:46:52 GMT

Good employees work one job for a long time, stay late, work weekends, toe the company line… all at the expense of time with their family and their income potential.  While there are plenty of moments in life when it’s worthwhile to get a job and work hard for an employer, those periods should all be rooted in the right reasons: passion, experience, education, long-term career positioning.

Consider carefully for a moment though: do you really want your son to grow up to be a yes man?  Do you want your daughter growing up to be downsized out of a job and having to take several part-time jobs to make ends meet?  Or would you rather they grow up with their own visions, launching companies that push boundaries and challenge conventions? 

The days of long-term job security are gone.  No one works for the same company their entire career anymore, with a fat pension and a cake party when they retire.  The world just changes faster today than it did fifty years ago; technology erases old jobs and creates new ones, global economics make it easier than ever to move jobs around geographically and even retirement is now funded as an investment account owned by you, rather than a pension tied to a specific job.

To sit around debating whether these changes make the world better or worse is pointless.  Will the world be a better or worse place when self-driving trucks make truckers obsolete?  Neither, it just means that there will be more jobs for computer specialists at mechanic shops, and there will be fewer jobs for truck drivers.  Raising your children to think critically, to recognize and capitalize on market opportunities, to take calculated risks, to see the larger picture… this will prepare them for success in a rapidly-changing world.  Raising them to think in terms of picking a job will only prepare them for becoming victims of ever-changing economies and technologies.

Real estate investing is a great way to teach kids entrepreneurship and a way to think about their money and careers differently.  

When your teenager earns money babysitting or working at the local Starbucks, what if you instilled a savings ethic in them, to save 50% of their income for investing?  What if you and she scouted potential rental properties together on weekends, and together you bought and fixed up a property?  The lessons here are endless.  Evaluating risk, raising capital from others, the power of return on capital investments and the compounding effect of returns over time.  Your children will start to learn about tax advantages from investments, about how passive income can change their life by earning money even when they aren’t working.

Teaching your children these skills and lessons is teaching them the rules to the game of success, in a capitalist economy.  Instead of telling teenagers “you can’t afford that,” you can ask them “what could you do to afford that?”  Instead of asking children what they want to do when they grow up, ask them how they want to change the world.  The cleverest of the wealthy truly understand how money should work for you, not vice versa, and they educate their children about money from an early age.  These children grow up thinking fundamentally differently about their finances and careers than their peers.

Gallup found recently that the average full-time employee in America works 47 hours/week – almost six full work days every week.  When parsed down further, the numbers grew even scarier: 21% of Americans work 50-59 hours/week, and a full 18% work more than 60 hours/week.  Nearly four in ten workers work more than 50 hours every week, longer than almost any other developed nation.  Hard work is no sin of course, but it is both more lucrative and more personally meaningful if that hard work is put toward your own dream, your own company.

Whether your children grow up to invest in real estate is irrelevant (although it is a rewarding career and/or a lucrative way to generate wealth alongside other work).  What matters is that they grow up with the mindset of creating and realizing their own visions.  Sure, doctors and lawyers make a lot of money for the long hours they work, but entrepreneurs’ success potential is limitless.  They can be successful in any economy, any market conditions, because they fundamentally think differently about the world and see opportunities that others can’t.   

Prepare your children for success in tomorrow’s world by rethinking the way you talk to them about money, careers and investments (real estate or otherwise).  Better yet, be a good entrepreneur yourself, and teach your children by example. 

Related Reading:

Are Landlords “Normal” People? How Real Estate Investors Think Differently

Want to Join the Top 20%? Invest in Retirement Accounts & Rental Properties

Who Is “Wealthy”? The 5-Step Ladder Between Middle Class and Wealthy

]]> https://www.ezlandlordforms.com/articles/educational/5/535/pest-control-and-prevention-for-rental-properties/ https://www.ezlandlordforms.com/articles/educational/5/535/pest-control-and-prevention-for-rental-properties/ Mon, 09 Feb 2015 17:59:41 GMT

If you’re a landlord long enough, you will eventually get a phone call from a tenant about a pest problem.  Dealing with bed bugs or rodents isn’t the most glamorous part of the job, but it certainly comes with the territory.  Like taking care of your own home, a bit of prevention can slash the odds of a pest infestation.

Here is our how-to for pest control and prevention for rental properties.

Know What to Look For

Which bugs are problematic in your area?  Are mice a problem?  Termites?  What about animals looking for a warm place to nest for the winter?  Know which pests are most common in your region.  Learn what signs to look for.  Each pest will leave behind different signs, such as droppings, rotten wood or other damage.  By being informed of the warning signs, you can catch problems more quickly, reducing the scope – and cost – of the damage and infestation.

Be Proactive

Taking a few steps now can greatly reduce the chances of a pest problem.  Don’t wait until it’s too late.  Animal-proof and bug-proof your rental property today.  Time today can save money later.

Some landlords specify in their lease agreement that the tenant is responsible for the cost of pest control services.  Renters will take better care to be clean and prevent infestations, and will be proactive in setting out traps and addressing mild infestations.  Problems can arise though if the tenants fail to report serious infestations, to avoid paying for extermination.

Prevention Tips

Here are a few quick tips to help prevent pest infestations.

• Check door and window screens.  Repair or replace any damaged screens to keeps bugs out.
• Avoid standing water.  Many insects breed in water, so backfill any low areas where water pools and sits.  Get rid of old planters, cans or anything that tends to collects water.
• Prune back all trees and bushes near your building.  Roots can damage the foundation, giving pests a way in. 
• Get rid of old wood piles.  Insects like old, damp wood, so don’t attract them.
• Animal-proof your rental property.  Install screens over all possible entry points, such as vents, pipes, chimneys and air returns. 
• Caulk around doors and windows to keep ants and other insects out.
• Have a spot where your tenants can store their garbage away from the building.  Keeps bins covered to discourage animals.
• Ask tenants to report bugs and pests right away.  The faster you start dealing with the problem, the better your chance of solving it quickly and economically.

Deal With a Problem Quickly

If you learn of a pest infestation in a rental unit, deal with it quickly.  Your tenants will likely be distraught – quick action on your part will show them you are taking the matter seriously.  Acting swiftly can also prevent the infestation from spreading to other units and taking root there.  Some pests can be eliminated DIY-style, others may require a professional. 

If the infestation is mild, such as a few ants, see if you can locate their entry point.  Sealing it well, applying some ant powder and setting a few traps may be all that is needed.  If using any kind of bug spray or powder, make sure to read the label carefully and follow the manufacturer’s instructions.

For more serious infestations, such as bed bugs or termites, an expert may be needed.  Most exterminators offer same day service.  A good exterminator will take the time to properly investigate and assess the problem, explain what needs to be done, and carry out the work.  They will also explain how to monitor the situation, or do so themselves depending on the nature of the pest problem. 

If rodents or animals have gained entry into your rental property, a pest control or wildlife removal company can help.  They will seal off entry points and set traps if needed.  Look for a company that will also clean up or remove any contaminated materials, repair any damage and animal-proof your property to prevent future animal problems.

Schedule Routine Inspections

Schedule a yearly inspection of all of your rental properties.  To make sure you don’t miss anything, create a list of things to look for, and areas to inspect.  During your inspection, ask the tenants if they had any problems they didn’t report.  Encourage them to report pest problems right away.

If your property is in an area prone to bug infestations, it may be worthwhile to have an exterminator accompany you on your inspections and complete preventative maintenance.  They can create a barrier system which will help avoid infestations from happening in the first place, usually for $100-250.  It’s easier, more efficient and less expensive to be proactive rather than reactive when it comes to pest control.

With a little planning, you can help prevent most pest infestations.  If and when pests do get in, tackling the problem quickly can minimize costs and appease you tenants.

Have pests even become a problem in one of your rental properties?  How did you deal with the issue?

Related Reading:

Bed Bugs, Property Management, & Landlord Liability

Maryland Tenant Awarded $800,000 for Bedbug Infestation

Common Property Issues & Repairs Landlords Should Know (Infographic)

]]> https://www.ezlandlordforms.com/articles/educational/2/533/the-ultimate-home-inspection-checklist/ https://www.ezlandlordforms.com/articles/educational/2/533/the-ultimate-home-inspection-checklist/ Thu, 05 Feb 2015 17:17:10 GMT

Hiring a professional home inspector before buying real estate is never a wasted cost.  Home inspectors focus on a building’s structural elements, while as buyers, we tend to notice the design and finishes. 

During an inspection, every nook and cranny of the home is carefully examined.  A professional home inspector will visually survey everything from your roof to your foundation.  They examine the exterior of the building, including the roof, gutters, wall claddings, stairs and decks.  They inspect other exterior aspects as well, such as proper grading, signs of pests and any additional structures on the property. 

Once inside, a home inspector will poke through the attic, looking for proper insulation and a sound structure.  They inspect for signs of moisture or other potential problems.  Systematically, they will work their way through the home, testing every system.  They will also inspect the basement for leaks or cracks in the foundation.  It’s important to note that inspectors are not allowed to cut open walls or remove flooring to check for potential problems.  They must leave the property in the same condition as when they arrived.

A total home inspection often takes anywhere from two to four hours.  The then generally follows up within a day or two with a detailed written report.  Many home inspectors now insert photos of problem areas directly in the report, making it easier for homeowners to see what repairs need to be done.

When to Complete a Home Inspection

Most often, home inspections are requested (and paid for) by the buyer, before the purchase offer has been finalized.  Real estate professionals recommend that all home purchase offers be conditional on a satisfactory home inspection.  By adding this condition, only the buyer has the right to decide if a home inspection was satisfactory or not. 

Sometimes, when preparing your home for sale, you may choose to have your own home inspection done.  Once you receive your inspector’s report, you can pinpoint which repairs need to be completed before listing.  The inspection can also give you a better understanding of your home’s current value.  Having an inspection done will help you be better informed, making it harder for buyers to lower your price based on inflated repair costs.

The Importance of a Home Inspection

Having a home inspection can help you make an informed decision.  You will gain a better understanding of the property’s potential problem areas.  If any major deficiencies are discovered during the home inspection, you can then decide how to proceed.  You may ask to have the issues fixed, or to have the purchase price reduced to offset the cost of repairs.  If the problem is structural or too costly, you may even decide to walk away.  By finding major issues before an offer is finalized, you can help protect yourself from unexpected surprises and expenses.

Choosing a Home Inspector

When it comes to choosing your home inspector, it’s important to note that there are different requirements by state.  Regulations and licensing can vary from one state to another, so check with The National Association of Home Inspectors for more information.  Your local real estate agent may also be a great resource for finding a reliable home inspector.

Before even placing an offer, it’s important to have a clear understanding of potential repair costs.  With a bit of time and a good eye, you can carry out your own initial inspection when first walking through a property.  If you like what you see, you can then make a professional inspection a condition of purchase.  Below is a sample home inspection checklist to get you started.

Home Inspection Checklist

Indicate if each item is in good condition (g), damaged (d), or missing (m)

Exterior

___ Roof

___ Shingles

___ Flashing

___ Fascia

___ Soffits

___ Gutters

___ Chimney

 

___ Doors

___ Windows

___ Screens

___ Bricks and masonry

___ Siding

___ Paint

 

___ Exterior lights

___ Mailbox

___ Doorbell

___ Decks, patios and railings

___ Stairs

 

___ Grading

___ Driveway

___ Walkways

___ Garage

___ Sheds

___ Signs of pests

___ Problematic trees or landscaping

 

Systems

 

___ Heating

___ Air conditioning

___ Electrical systems

___ Fireplace, wood stove

___ Hot water tank

___ Plumbing

 

Interior

 

___ Cabinets (kitchen, bathrooms)

___ Countertops (kitchen, bathrooms)

­___ Flooring

___ Walls

___ Ceilings

___ Windows

___ Doors

___ Trims, baseboards

___ Light fixtures

___ Stairs

___ Railings

___ Heating/cooling source in every room

___ Attic (structure, insulation)

___ Basement (moisture, insulation, foundation)

___ Appliances if applicable

___ Smoke and carbon monoxide detectors

 

Related Reading:

How to Screen Contractors, from Humble Handymen to Pricey Pros

Should You Use a 203(k) Rehab Loan for Your Next Investment?

Planning to Buy a Fixer-Upper? Proceed with Caution

]]> https://www.ezlandlordforms.com/articles/news/532/real-estate-sales-softer-but-rental-markets-stronger-in-early-2015/ https://www.ezlandlordforms.com/articles/news/532/real-estate-sales-softer-but-rental-markets-stronger-in-early-2015/ Mon, 02 Feb 2015 11:33:13 GMT

The trend away from homeownership and towards renting is still kicking, as the December 2014 data is released and analyzed.

Homeownership in the U.S. hit a 20-year low in the fourth quarter of 2014, at 63.9% (down from an all-time high in 2004 of 69.4%).  While this may appear bad news on the surface, many economists beg to differ, as renting is actually a better fit for many Americans (remember that research on the correlation between high homeownership rates and high unemployment rates?). 

Illustrating that drop in homeownership, the National Association of Realtors reported that pending sales of existing homes dipped 3.7% in December, the largest decline in a year (pending sales are signed contracts of sale, that have not yet closed).  This drop in contracts may also reflect smaller inventory of homes listed for sale, according to NAR Chief Economist Lawrence Yun. 

While pending contracts dipped, actual sales were still strong in December, up 8.8% year over year.  Real estate values are up 4.3% year over year, indicating that homes are still appreciating but slower than the last few years (for context, values are still down 16% from their 2006 peak, but are up 29% from their 2012 low).

The most promising news for landlords and sellers is that the household formation rate quadrupled year over year, from only 356,000 in the fourth quarter of 2013 to nearly 1.7 million in the fourth quarter of 2014.  This is largely due to household “unbundling”, as millennials move out of their parents’ homes and roommates split to live on their own.  More demand for housing means more competition for housing, driving up pricing and signalling a good year ahead for sellers, landlords and the construction industry. 

Stronger household formation rates are also evidence that the labor market has improved enough for young adults to feel confidence in moving out on their own.  It is a tangible effect of lower unemployment rates and wages that are finally beginning to rise, as the labor market continues settling toward normal.

As households continue unbundling and young adults move out on their own, it is no surprise that their first step is leasing rather than buying.  While there are valid concerns about the decline in first-time homebuyers, after a few years in the rental market millennials will likely start considering homeownership more seriously, particularly as they marry and start having children.

In the meantime, landlords are continuing to see strong returns, as the rental vacancy rate continues to drop.  The fourth quarter of 2014 saw rental vacancy rates at 7.0%, the lowest since 1993.  The explosion in demand for rental housing is certainly outpacing construction of new apartments, so landlords should continue seeing low vacancy rates and strong rents for several years at least. 

Related Reading:

Are Millennials Finally Ready to Enter the Real Estate Market?

Where Young Adults Are Migrating... and Why It Matters to Real Estate Investors

]]> https://www.ezlandlordforms.com/articles/educational/5/531/the-best-property-repairs-for-return-on-investment/ https://www.ezlandlordforms.com/articles/educational/5/531/the-best-property-repairs-for-return-on-investment/ Wed, 28 Jan 2015 18:01:18 GMT

Whether leasing a property, living in it or repairing it to sell, some repairs will make a much deeper impact on what you can ask in rent or sales price.  With the right repairs, you can increase the value of your property by thousands, or boost the rent by hundreds.  By making it more attractive to potential buyers, you can also lease or sell it faster. 

So which are the best property repairs for return on investment?

Focus on repairs that will bring you the biggest bang for your buck.  A full renovation isn’t usually necessary; most homes simply need a bit of updating and decluttering.  Most people already know that kitchens and bathrooms should be updated before anything else, but keep that in mind if you're considering a full remodel of one or two rooms.

A Fresh Coat of Paint

Giving your home a fresh, clean and updated feeling should be your goal.  Luckily, this can easily be done with a bit of elbow grease and a few buckets of paint.  Choose a neutral or light shade and use it throughout your home.  To add some interest, vary the strength of the color slightly.  Use one shade lighter in your hallways to add brightness, and one shade darker in the dining room for extra drama.  Beige is still a popular choice, as are gray and “greige” – a grayish beige.  If you feel a bit of color is best, choose a neutral shade of blue or green, or a warm neutral with yellow, red or orange, and be sparing (perhaps use an accent wall, rather than painting the whole room “coral”).

If you have any wallpaper, consider taking it down and painting your walls instead.  And don’t forget to give the ceiling a fresh coat of matte white paint to brighten it up, and the trim a fresh coat of glossy white.

New Flooring

Old, dirty carpets are a definite turn-off for renters and buyers.  If your carpets are dingy, replace them before putting your home up for sale.  New carpet offers a great return on investment since they give a great first impression for little money.  Your home will instantly appear well cared for if your floors are clean and new.

If you have hardwood floors underneath your old carpet, consider showing them off.  Hardwood floors have become a status symbol, invoking history and decadence.  Take advantage of the trend and save the cost of new carpeting.  Your hardwood may need to be refinished, but that is a cost efficient alternative to new flooring.

New Caulk and Grout

Is your kitchen or bathroom looking a little grungy?  For the cost of a few tubes of caulk, you could give these two important rooms a refresh.  Make sure to remove all of the old caulking before carefully applying the new. 

If your tile grout is damaged or mildewing, a fix may also be in order.  Removing old grout is inexpensive but labor intensive, and if your current grout is gross, the new look will be worth the effort.  If your grout is dirty but still in good condition, an easier option may be to use grout paint.  You can simply clean and paint your grout lines to restore them, making them look new again.  Grout paint is available in a pen format, making it easy to apply.

New Front Door

Your front door gives buyers their first impression of your home.  Make it a good one.  A new steel front door gives homeowners a great return on investment.  Choose a classic design that will appeal to a wide range of buyers and look great for years.  Paint it a dark shade to give your home some drama, or add some personality with a pop of color.

New Garage Door

Do your kids play hockey against your garage door?  If your garage door is looking tired, dated or dented, have a new one installed.  It’s an easy fix that will increase the curb appeal and value of your home.  Choose a color that coordinates with your brick or siding, as you goal is to make it look clean and sleek. 

Curb Appeal

Another inexpensive project is to improve your grounds.  A bit of landscaping can be a great return on investment.  Your home will look well maintained and more inviting to potential buyers.  Another worthwhile property repair is updating your mailbox, exterior lighting fixtures and hardware.  For only a few dollars, you can make your home look modern and stylish.

A New Roof

If your roof is in poor condition, buyers will worry about leaks.  They will also worry your home was not properly maintained over the years.  Many buyers will shy away from buying a home that needs a new roof.  Although a more expensive project, you will likely recoup the full cost when selling your home. 

Which projects do you think are the best investments?  Share your ideas!

Related Reading:

Renovation Investing Tips, Tricks & Cautionary Tales

Common Property Issues & Repairs Landlords Should Know (Infographic)

Planning to Buy a Fixer-Upper? Proceed with Caution

]]> https://www.ezlandlordforms.com/articles/educational/3/530/selling-a-rental-property-with-a-tenant/ https://www.ezlandlordforms.com/articles/educational/3/530/selling-a-rental-property-with-a-tenant/ Thu, 22 Jan 2015 17:13:37 GMT

Thinking of selling an income property this year?  What happens if it is tenant occupied?  What are your options?

Selling a rental property with a tenant is a little different than selling your own home.  Updating your property, making repairs and preparing for showings can all be tricky when you have tenants.  There are also differences between selling a leased house and a fully rented apartment building. 

Selling an occupied rental property has its advantages and disadvantages.  In your specific situation, will the tenants make your property more valuable to potential buyers?  Or would it sell more easily, and for more money, if it were vacant?  Take the time to evaluate your options and decide which scenario is best for you, and discuss it with a real estate agent who knows the local market well.

Sell to Your Tenant

Are your tenants looking to buy a home in the near future?  Selling to a tenant can be a great solution to selling your rental property.  They are already familiar with the building, and know how it has been maintained.  They may love the location or the neighborhood, and prefer to stay.

Before listing your property, approach your current tenants to see if there is any interest.  In most states and provinces, the tenant has the right of first refusal, so you actually must offer them the chance to buy the property before you list it on the open market. 

If your tenant is interested, they could buy the property with a traditional bank mortgage, or you can explore other options.  Owner-financing or lease-to-own are options than can give you a higher sale price.  They can also offer other benefits like tax breaks, since you don’t get the sale money as a lump sum, but rather in interest and steady cash flow.  Be careful and do your research before taking on any kind of creative financing deal.  There are even obscure legal ways of structuring the deal so that you do not have to foreclose if the tenant buyer defaults, but rather go through the eviction process (which is substantially shorter and less expensive). 

List the House as Tenant Occupied

Selling a single-family house that is tenant-occupied can be done.  However, since the new owners will need to uphold the lease agreement and follow landlord-tenant laws, it can greatly reduce your prospective buyers. 

Buyers stay away from tenant-occupied homes for many reasons.  Some are looking for a home for their family, and can’t wait six months to a year for the current lease to expire.  Most buyers have never been landlords, so won’t even look at leased homes – they don’t know what to do in this situation.  Other buyers may worry the property has not been well maintained or cared for, since it is not owner occupied.

Sell to Another Investor

If your rental property is a duplex, triplex or apartment building, chances are your target market is other real estate investors.  A fully-rented building may be a great selling point if you have quality tenants and good rental rates.  Selling to another investor can be quick and easy, since you don’t have to worry about evicting or buying-out tenants.  Your rental would generate cash flow immediately for the new owners, which is appealing to investors.  Generally the price is lower however, since you’re selling “wholesale” to an investor rather than “retail” to a homeowner.

Wait Until the Lease Agreement Expires

Depending on the type of rental, it may be best to wait until your tenant’s current lease agreement expires before trying to sell.  Consider who will be your potential buyers.  If you are selling a house, for example, your potential buyers will mostly be families looking to buy their own home.  They likely won’t be interested in buying a rental property with a current tenant.

Before your lease term expires, you must give your tenants the appropriate non-renewal notice to vacate the property.  Check your area’s landlord-tenant laws to see how much time you must allow for tenants to vacate.  Once your property is empty, it will be much easier to make repairs, paint and clean.  Your property will always be ready for showings – potential buyers won’t have to try and look past any furniture and clutter.  You will also have the freedom to show your property as needed, without worrying about giving tenants the appropriate notice.

Buy Out the Lease

Another option is to buy-out the remaining lease from your tenants.  In this situation, a lease buy-out means the landlord would offer a sum of money to their tenant in order to terminate the lease early.  Landlord and tenant can negotiate the final sum, based on moving costs, monthly rental rate and remaining term of the lease.  Once both parties agree to the lease buy-out amount and time-frame, they would sign a new agreement.

Tenants don’t have to agree to a buy-out, but they often will.  Although there is a cost to buying-out your tenant, selling your empty property will likely be easier and quicker.  Once your property is empty, you can make the necessary updates and list it for sale.

 

Related Reading:

The Lease Option Agreement: Pros, Cons, and a Creative Approach to Real Estate

Move-Out and Eviction Articles

]]> https://www.ezlandlordforms.com/articles/educational/2/518/are-landlords-normal-people-how-real-estate-investors-think-differently/ https://www.ezlandlordforms.com/articles/educational/2/518/are-landlords-normal-people-how-real-estate-investors-think-differently/ Tue, 20 Jan 2015 17:39:40 GMT

Most mom-and-pop landlords are normal people who happened to lease out their old home rather than sell it, after moving.  Which is fine, although every eighth grader knows you don't get rich by being passive.

Still, even passive landlords and everyday homeowners are financially far ahead of the average renter.  Consider that last year, the average American homeowner had a median net worth of $195,400, compared to only $5,400 for the average renter, according to a report released by the Federal Reserve.  That’s a wealth difference of 36 times, based on a single variable.  Likewise, the average income among renters was $40,100, while the average income among real estate owners was $112,400.

And for all that homeowners and passive landlords are getting ahead faster than renters, active real estate investors are a different breed entirely. 

Active real estate investors are not normal, and they are far from average.  Last year, only 13.2% of Americans owned residential investment properties.  For those who did however, it added an average of $316,300 to their net worth (see the Federal Reserve report above).  The investor who saves up $25,000 for a down payment on a rental property knows something that most people don’t: there are dozens of ways real estate can make you rich.

Real estate investors know that they can passively earn money on appreciation.  They can also make money on monthly rents and cash flow.  They save money on taxes, through depreciation, mortgage interest deductions, travel and deducting every other conceivable expense related to their investment property.  They can avoid paying taxes on their proceeds from selling, using a 1031 exchange.  They can live for free by buying a multi-unit property and leasing out the other units.  They know that they can use other people’s money to build their own net worth, and that mortgage payments are a simple way to automatically save money every month, as each payment pays down their principal balance. 

Most of all, real estate investors know that there is an asymmetry between the risks and the rewards of real estate as an asset class. 

Real estate investors are not “normal” people.  Normal Americans don’t even save 5% of their income each month, but real estate investors are excited to save money for investing, because they know that every new rental property adds hundreds (or thousands) of dollars to their monthly income. 

Normal people make $51,939/year, working full-time for someone else, and they don’t like it.  Consider a recent Gallup poll finding that 70% of Americans felt disengaged from their job. 

Career real estate investors work for themselves, and work the hours they want, to create the lifestyle they want.  There is even a term for this: lifestyle design.  It means exactly what it sounds like: actively thinking through every aspect of your life, and shaping each to meet your desires.  Annual income, weekly hours worked, when you work, where you work, the amount of time spent with family, vacation time taken... these are all designable for self-employed real estate investors.  Normal people work the hours their boss asks them to, and are paid whatever their employer is willing to pay them.

And while we're talking money, is it any surprise that the overwhelming majority of millionaires (77%) have invested in real estate? 

Of course, breaking out of the "normal" mold is not easy.  Learning the discipline to save 20-50% of your paycheck is not easy.  Spending your nights and weekends studying under a mentor is not easy.  Once your mentoring is complete, making the emotional leap of faith to quit your full-time job is not easy.  Being self-employed requires tremendous discipline, which is not (you guessed it) easy.  But if designing your dream life were easy, everyone would be doing it.

Normal is great when you’re talking about your health.  Normal is not so great when talking about your wealth, your income, your spending habits.  There are plenty of normal landlords out there, working (and hopefully enjoying) their 9-5 jobs, but if they are clever, they are also active real estate investors constantly finding new opportunities.  Because ultimately, the point of all investments is to one day cease being normal, and start being rich.

Related Reading:

Want to Join the Top 20%? Invest in Retirement Accounts & Rental Properties

Case Study: How I Earned a 29% ROI on a Deal I Found on the MLS

The 25X Rule for Retiring Early (…and How Rental Properties Change the Math)

]]> https://www.ezlandlordforms.com/articles/educational/2/527/the-starting-point-real-estate-investing-advice-for-beginners/ https://www.ezlandlordforms.com/articles/educational/2/527/the-starting-point-real-estate-investing-advice-for-beginners/ Wed, 14 Jan 2015 11:11:35 GMT

When done right, real estate is a great investment.  It’s an excellent hedge against inflation.  Your money is secured in a tangible asset.  It can appreciate in value.  Rental properties create a steady income stream, with relatively passive work.  There are phenomenal tax benefits.  In good economic times and in bad ones, people will always need a place to live.

But like any investment type, in order to be a successful real estate investor you need the knowledge and the resources to do it right.  Let’s look at the starting point: real estate investing advice for beginners.

Start With the Basics

Before jumping in, start by learning the basics.  Familiarize yourself with the lingo.  Read a book or two on the subject, or take a real estate investing course.  Beware of gurus and get-rich-quick seminars and their unrealistic promises.  These schemes often lead to other, more expensive seminars with unlikely results and are designed to make the guru money, not you.

Speak To a Local Expert or Two

You need to start somewhere.  Get the ball rolling by speaking to someone who is knowledgeable in real estate investing.  This person could be a property manager, a successful landlord or a real estate agent who specializes in income properties. 

Offer to buy them a cup of coffee and take advantage of their experience.  Ask for tips for a beginner real estate investor.  Most people will be happy to share their insight and tell you what they did to become successful, and of course property managers and real estate agents have a vested interest in your successful acquisition of new rental properties.

Learn the Laws

Not exactly the fun part of becoming a landlord, but having basic understanding of local landlord-tenant laws is still important.  Learn about landlord rights, tenant rights and how to manage your real estate investments legally.

Be Curious and Explore

Spend time on the MLS (or Zillow or Trulia) to familiarize yourself with your target market.  Walk the neighborhoods that interest you, both in daylight and at night.  Pose as a renter and walk through local properties listed for rent to get a sense of the local rental market.  The more curious you are about different types of real estate investments, the better decision you will make.

Budget and Financing

What’s your budget look like?  How much do you have saved for a down payment?  Do you qualify for financing from a traditional lender like a bank?  Sit down and work out the details.  Make sure to set aside enough money for closing costs, carrying costs and any maintenance that may need to be done. 

Location, Location, Location

This classic real estate rule is still true today.  Location is one of the most important factors to successful real estate investing.  If your area doesn’t offer good opportunities, look elsewhere. 

Cash Flow Is King

When it comes to real estate investing for beginners, remember that positive cash flow is key.  Only buy properties that generate positive cash flow in today’s market; don’t assume appreciation or rising rents when making your calculations.  Costs include more than just your mortgage payments: from expected vacancy rates (5-20%), property management fees (8-10%, and even if you will manage it yourself still calculate this as the cost of your time), expected maintenance and repairs ($500-2,000 annually), property taxes, insurance and more.  To build a large real estate portfolio, properties need to pay for themselves plus substantial monthly profits, or else you will quickly collapse under the expenses of a large repair bill or vacancy. 

Flesh-Out Your Strategy

Do you want to start with a single family home?  A duplex?  An apartment building?  What area has the potential for good return on investment?  What formulas will you use to decide if the investment is a good one?  Once you build a strategy, you’ll have a great tool for evaluating potential income properties.  Good deals are out there, but they don’t come along ever day, so if you haven’t looked at dozens of properties in a neighborhood, be extra skeptical that a deal is as good as it looks.

Create a Plan

In real estate investing, a plan can keep you on the right track.  Your real estate plan doesn’t have to be complicated.  Jot down a few basic guidelines, and follow them.  Decide how much you are willing to spend and which type of investment you will buy.  Decide on the minimum return on investment you are willing to accept.  Also try to set a goal, such as one property this year, and a second within three years.

Along with the good, also jot down which investments are not for you, at least for time being.  For example, you may decide to stay away from development deals, high-risk areas or properties further than a half hour away.  Once you start building your real estate portfolio, you can revisit your plan and see where it can be improved.

A good plan will keep you from buying a property for the wrong reasons or chasing deals that just aren’t sound investments.

Keep it Simple and Go for It

For beginners, real estate investing can feel overwhelming.  The learning curve may seem a little steep, but you’ll get up to speed pretty quickly.  Don’t get stuck at the planning stage, or analysis paralysis.  Keep it simple, and go for it.  Focus on finding one property and see where it leads.  With a little time, patience and motivation, you can become the proud owner of your first rental property.

Related Reading:

New Landlord Guide

Top Ten Reading List for Landlords and Property Managers

]]> https://www.ezlandlordforms.com/articles/educational/10/526/oft-overlooked-rental-tax-deductions-and-2014-2015-benefit-extensions/ https://www.ezlandlordforms.com/articles/educational/10/526/oft-overlooked-rental-tax-deductions-and-2014-2015-benefit-extensions/ Tue, 13 Jan 2015 16:20:48 GMT

Tax time is fast approaching, and owning rental properties means more prep work… but also deeper deductions.  The required bookkeeping can seem overwhelming at first, but for the average landlord it doesn’t have to keep you up all night.  In essence, it just comes down to declaring all of your rental income and claiming every deduction.  You can hire an accountant to file your taxes, or do it yourself by completing Schedules C and E (Form 1040).

But which rental property expenses can you claim?  According to the IRS: “In most cases, the expenses of renting your property, such as maintenance, insurance, taxes, and interest, can be deducted from your rental income.” (Publication 527, Residential Rental Property) These can include expenses incurred for managing your rental, such as legal forms and tenant credit reports and background checks (ahem!).  Certain driving and transportation expenses may be deductible. 

In many ways, these tax deductions are like the ones you have when running any business.  Claiming all of your eligible expenses will minimize your tax bill.  Here are some rental property expenses that are commonly overlooked as tax deductions.

Accountant and Lawyer Fees

Many accounting and legal fees are eligible tax deductions.  If a lawyer prepares a lease or other legal document related to your rental property, you may claim the cost.  Paying an accountant to prepare your tax return is also tax deductible.

Interest

Most landlords won’t overlook their mortgage interest, but what about interest paid out on other loans or credit cards?  If the loan was used to buy, maintain or repair your rental property, the interest paid is likely tax deductible.  Interest from a line of credit may also qualify if the money was used solely for your rentals.

Computers, Phones & Tablets

If you’re a gadget lover, this takes some of the sting out of buying your new toys.  Just remember to actually use them to invest in and manage rental properties!

Home Office

Home office expenses are a bit of a grey area.  If you meet certain requirements, and your income property qualifies as a business for tax purposes, you might be able to claim your home office expenses.  Items such as supplies or office furniture may be fully deductible.  A portion of other expenses, such as rent, utilities and home maintenance may also be claimed.  If you would like to start claiming your home office expenses, it’s a good idea to seek professional guidance from an accountant.

Travel Expenses

Certain travel costs can be claimed as rental property expenses.  Trips to maintain your property or to collect rent usually qualify.  Careful record keeping is important; track your mileage and keep all of your receipts.  Like home office expenses though, these can be an audit trigger, so tread lightly and talk to your accountant before claiming too many travel or home office expenses.

Losses from Theft or Casualty

Anything your insurance company didn’t cover here is tax deductible, so don’t break down in tears if someone steals your rental property’s shrubbery.

Rental Property Depreciation

Claiming depreciation on your rental property is a complex tax matter.  Some landlords do it, others don’t.  When it comes to rental properties, depreciation “is the mechanism for recovering your cost in an income producing property and must be taken over the expected life of the property.” (Publication 527, Residential Rental Property)

By depreciating your property, you are essentially recuperating some of the initial purchase price with yearly tax deductions.  This can significantly lower your tax bill.  The disadvantage is that depreciation will be recaptured when you sell your property.  In other words, you’ll pay less tax now, but much more in the year you sell.  Consult with an accountant to see if rental property depreciation makes sense for you.

Tax Changes for 2014, 2015

In the last few weeks, there have been many government rulings that affect income taxes.  As of mid-December, certain tax benefits were extended to include all of 2014.  Tax credits for energy-efficient home improvements as well as energy-efficient new home construction will be valid for your 2014 tax return.  Other eligible deductions include those for mortgage insurance premiums and mortgage debt forgiveness. 

These changes can mean important tax savings for landlords who have qualifying expenses.  Currently, these provisions have not been extended to include expenses incurred in 2015.  This leaves landlords and homeowners unsure of the best course of action for new updates and repairs, which can be frustrating.

For the full list of extended tax provisions, see the U.S. Congress website.

The Importance of Tax Deductions

Deductions are an important tool for landlords.  Tracking all of your rental property expenses and claiming them on your taxes helps to offset your rental income and lower your taxes.  Keep good records and all receipts, as the IRS may ask you to back up your claim.

By taking advantage of every tax deduction, you get to keep more of your own money.  The refund can then be used however you wish – reducing your investment debts, buying another property, paying for your living expenses or even going on vacation.

Related Reading:

The Real Estate Pro's Guide to Avoiding Audits

8 Ways to (Legally) Beat Capital Gains Taxes

An Overview of 1031 Exchanges & How They Defer Taxes on Real Estate Profits

]]> https://www.ezlandlordforms.com/articles/educational/2/525/top-10-us-cities-to-invest-in-vacation-home-rentals-in-2015/ https://www.ezlandlordforms.com/articles/educational/2/525/top-10-us-cities-to-invest-in-vacation-home-rentals-in-2015/ Mon, 12 Jan 2015 18:26:21 GMT

If you’re in the market for a vacation home, where is the best place to buy? 

First, consider your goals.  Is this property strictly for investment purposes, or will your family also enjoy staying there regularly?  How far away are you willing to buy?  Who is your target market?  Do you want a nightly, weekly or monthly rental, or do you prefer longer-term tenants?  Do you want beachfront property?  How important are nearby attractions like skiing, golf, fishing to you?

When considering a vacation home rental, look for a popular vacation spot, with high demand, numerous nearby amenities, good rental rates and a strong return on investment (ROI).

To get you started, here’s a list of our top ten cities to invest in vacation home rentals, based on Zillow's most recent research on the best places to buy a vacation property. 

 

Kissimmee, Florida

Median home value: $120,600

Median monthly rent: $1,150

Minutes from Disney World and Universal Studios, Kissimmee is a hot market for vacation rentals.  Orlando-Kissimmee is a popular destination year-round, making it a great place for a first-time investor.  Short term rental are common.  Many condo buildings offer onsite property management, weekly rental bookings and cleaning services, making it a great investment for long-distance landlords.  Weekly rental rates vary anywhere from $500 to $2000 and more, depending on location and amenities. 

 

Port Salerno, Florida

Median home value: $136,000

Median monthly rent: $1,472

Port Salerno caters to both golfers and beach lovers.  Properties on the coast offer gorgeous waterfront views.  A vacation home here gives you easy access to miles of beautiful sand including the Hutchinson Island Beach and Jensen Beach.  For those who love to golf, there are dozens of nearby courses.

 

Rio, Florida

Median home value: $128,200

Median monthly rent: $1,264

Rio is presently small but ideally situated near golf courses and beaches.  Located on the St-Lucie river near the Atlantic Ocean, vacation properties here have an island feel.  Rental homes are ideal weekly or monthly rentals for snowbirds and tourists.

 

Cape Cod, Massachusetts

Median home value: $362,400

Median monthly rent: not available

Definitely a higher cost of living area, Cape Cod is still a great place to own a vacation rental.  Home prices are higher, but so are expected rents.  During the summer, an oceanfront property can rent from $1,500 to $4,000 per week depending on its size.

 

Thousand Palms, California

Median home value: $158,600

Median monthly rent: $1,393

A 20 minute drive from Palm Springs, the city of Thousand Palms is small but affordable.  Located in the Coachella Valley, tourists can explore the nearby mountains or desert.  Area attractions include the Canyons of the San Andreas Fault, the Joshua Tree National Park and the Indian Canyons.

 

Haines City, Florida

Median home value: $110,700

Median monthly rent: $1,029

Centrally located in Florida, Haines City is a haven for golfers.  It is also near Kissimmee and Orlando, so nearby attractions include LEGOLAND, SeaWorld, Disney World and Universal Studios.  A vacation home in Haines City can easily rent for $1,000 per week during peak season. 

 

Daytona Beach, Florida

Median home value: $94,400

Median monthly rent: $961

Daytona Beach is a popular destination for those looking to escape winter.  Known as “the world’s most famous beach”, vacationers enjoy over 23 miles of sandy beaches.  Fishing, boating, golf, strolling on the boardwalk – there is plenty to do in Daytona Beach.  The nightlife attracts many tourists, as does the Daytona International Speedway.  If you’re looking to buy a vacation rental in an exciting place, Daytona Beach is for you.  Both weekly and monthly rentals book up fast.  Expect to get your highest returns with weekly rentals during February and March, due to the Daytona 500 and the perennial flock of students during spring break. 

 

Myrtle Beach, South Carolina

Median home value: not available

Median monthly rent: $858

Myrtle Beach’s vacation rentals are popular year round thanks to its gorgeous beach and many golf courses.  Beachfront condos are common, and get their highest rents during July and August.  For example, a modern two-bedroom condo directly on the beach can easily rent for $1,500 weekly throughout the summer.

 

Stroudsburg, Pennsylvania

Median home value: $126,200

Median monthly rent: $1,000

Located in the heart of the Poconos, Stroudsburg, Pennsylvania is a popular destination for skiers, hikers and ATV enthusiasts.  Home values in this area took a heavy hit during the housing crash of 2007, but the local real estate market is finally starting to show signs of recovery.  Peak season for vacation rentals is from December to March.  An updated 3 bedroom chalet can easy rent for $2,000 weekly or more during peak seasons.

 

Tucson, Arizona

Median home value: $135,800

Median monthly rent: $900

Another popular haven for snowbirds, Tucson is a great location for vacation rentals.  During the peak winter months, rates can range from $800 to $2,500 per week, given its warm winters and golf courses. 

 

Related Reading:

Vacation Rentals as a Second Home: Tips for Actually Making Money

Common Mistakes of New Vacation Rental Owners

How to Legally Lease Using Airbnb in NY, When 72% of Rentals Are Illegal

]]> https://www.ezlandlordforms.com/articles/news/524/first-time-homebuyers-struggling-near-30-year-low-in-us/ https://www.ezlandlordforms.com/articles/news/524/first-time-homebuyers-struggling-near-30-year-low-in-us/ Thu, 08 Jan 2015 10:09:04 GMT

Since 1981, the National Association of Realtors (NAR) has conducted an annual survey of homebuyers, and historically 4 in 10 are first-time buyers.  But last year, less than a third of buyers are first-time homebuyers, which is the lowest percentage in nearly 30 years.  It also represents a substantial drop since 2013, when 38% of homebuyers were purchasing their first property. 

Should this come as a surprise?  Perhaps not.  Inflation-adjusted incomes are actually lower today than they were when the Great Recession ended in 2009, and still lower than they were in 2000.  The unemployment rate is also sharply higher among young adults, at 10.5% for 20-24 year olds and 6.2% for 25-34 year olds.  By contrast, all older age brackets have unemployment rates in the 4-4.4% range.

Nor do the challenges for first-time homebuyers end there.  If lower real incomes and high unemployment rates creates one pincer squeezing young adults, rising home prices add another pincer.  US home prices are up more than 16% since 2012, according to Zillow’s Home Value Index.  And while home values may be rising less slowly in many cities, asking prices actually accelerated in 40 out of the top 100 metro areas toward the end of 2014, defying expectations that price growth would slow.  It’s not so easy to save enough money for a down payment, when the target keeps shifting upward and incomes remain flat or decline.       

In fact, The Wall Street Journal’s Marketwatch recently published a disturbing article on how long it would take the average American to save enough money for a down payment on the average home.  The math turned out to be extremely troubling, finding that it would take them until 2027, given the average annual savings rate of 5.6%.  While prior homeowners who buy a home can use the proceeds of their sold home to fund the purchase of their new one, first-time homebuyers have to save up their down payment over time. 

Even once a prospective buyer has saved the requisite down payment, they must still navigate the treacherous waters of actually obtaining a mortgage.  Credit markets remain tight; the NAR survey found that nearly half of first-time homebuyers reported that the process of obtaining a mortgage was either much more difficult or somewhat more difficult than they believed it would be. 

And while interest rates have remained low in the last few years, they won’t stay that way for long.  One of the few things that nearly all economists can agree on is that interest rates will rise in 2015, as the Federal Reserve has openly stated it plans to raise rates this year.  Rising interest rates mean lower affordability for homebuyers, who will need to pay more every month for the same loan amount.

Why do first-time homebuyers matter for housing markets?  Current homeowners who are selling and buying a new house have a net-neutral impact on housing demand; they add one house to total housing inventory, and subtract another when they purchase.  But first-time homebuyers only add to the demand side of the equation, not the supply side, as they are consuming inventory but not adding to it. 

There are also a variety of economic benefits to homeownership, from tax benefits to appreciation, for the individual homeowner.  Real estate is the average American’s largest asset and comprises the largest proportion of their net worth. 

Still, perhaps it is not such a terrible thing that market forces are rebalancing the ratio of homeowners to renters.  After all, the Department of Housing and Urban Development’s “National Homeownership Strategy” was the driving force behind creating cheap subprime mortgages in the first place, which evolved gradually into a full-blown economic disaster as millions of people who should not have been lent a mortgage were granted them regardless.  There is also surprising evidence that higher homeownership rates correlate with higher unemployment rates as well, by tying citizens both geographically and financially. 

It may be time for a fresh national discussion about what proportion of American homeowners is healthy for an advanced economy, and just how much – or how little – the government should prop up housing markets.  But national conversations about macroeconomics are little reassurance to Ms. Aspiring Homeowner, who is having an increasingly difficult time buying her first piece of real estate.

Related Reading:

Report: Average Workers Can't Afford to Buy Median Homes in Most US Cities

Why Most People Have Trouble Saving for a Down Payment – 3 Common Blunders

Are Renters or Homeowners Happier?

]]> https://www.ezlandlordforms.com/articles/educational/5/523/7-tips-for-buying-a-home-warranty-for-a-rental-property/ https://www.ezlandlordforms.com/articles/educational/5/523/7-tips-for-buying-a-home-warranty-for-a-rental-property/ Fri, 02 Jan 2015 11:19:31 GMT

What is a home warranty plan?  In the Unites States, a home warranty is a service contract to repair and maintain various systems found in your home.  It can include appliances and important home mechanicals such as heating and cooling, electrical and plumbing.  Contracts are usually renewed on a yearly basis.

As a landlord, home warranty plans have their advantages.  When something breaks down, you no longer have to worry about finding and scheduling a repairman, electrician or plumber.  One call to your home warranty company, and they take care of it for you.  Home warranties can also be an easy way to avoid surprise expenses.  You need to budget for the annual premium and set some money aside for service calls, but major repairs will be covered.  Home warranties can be customized to suit your needs.  Landlords who choose to buy home warranties often do so for peace of mind and easy budgeting of home repair costs.

Home warranty plans do have some disadvantages.  Like an insurance policy, you pay for the plan whether you use it or not.  Policies cost at least a few hundred dollars per year, meaning it could be more cost efficient to pay-as-you-go for appliance repairs or replacements.  Another common complaint is that claims can be denied.  Home warranty companies can refuse to cover the cost of a repair if they deem there was neglect, improper maintenance or faulty installation.  If a tenant breaks an appliance due to carelessness, for example, the cost may not be covered.

If you are considering a plan, here are our top seven tips for buying a home warranty for a rental. 

1. Know What Is Covered

Not all home warranties are the same.  Each will have their own list of inclusions, limitations and exclusions.  Some contracts, for example, do not cover washing machines and clothes dryers, even when opting for appliance coverage.  Most policies won’t cover outdoor repairs, garage door openers, permit fees or the disposal fee for old appliances.  Take the time to read the fine print and fully understand what is covered… and what isn’t.

2. Have Proper Coverage for Each Rental Property

You will need to purchase a home warranty policy for each property you wish to have covered.  You can choose various degrees of coverage.  Many landlords buy policies that cover their rental property’s major systems (electrical, plumbing and HVAC).  Others prefer to also include appliances such as refrigerators, stoves and dishwashers.  It’s up to you to decide which coverage makes the most sense for your specific situation.

3. Price

 When purchasing a home warranty, there is an annual cost which can range from $300 to $600 or more, depending on the package and coverage you choose.  Be aware you will also be charged a fee for every service call.  These fees can cost from $30 to $125 depending on the company and nature of the repair.  Ask for a breakdown of all possible costs before signing up.

4. Shop Around

Take the time to get a few quotes before choosing your home warranty plan.  But don’t forget that price isn’t everything; as grandparents the world over say, “you get what you pay for”.  Using a great, reliable company can save you many headaches down the road.  Ask friends, family and other landlords for recommendations.

5. Calculate Your Break-Even Point

Once you have a few quotes, take the time to calculate your break-even point.  How many appliances could you replace for that amount of money?  Is it likely your property will need enough repairs to make the plan worthwhile?  Does is make sense financially to purchase a warranty plan?  Buying a home warranty is a decision that should be done based on facts, not fear.

6. Consider Home Warranties When Buying Property

Some landlords choose to buy a one-year home warranty when buying a new income property.  They then don’t have to worry about any major expenses during those first few months of ownership.  It also helps keep the budget more predictable.  Once they have a better feel for the condition of all appliances and systems, they can decide if they wish to continue their coverage.

7. Remember to Deduct the Cost When Filing Tax Returns

As a landlord, the cost of a home warranty on a rental property is tax deductible.  Both the annual premium and any service fees are considered operating expenses and can be claimed to reduce your income taxes.  Don’t forget to save your receipts!

Landlords, do you buy a home warranty for your rentals?  Have they saved you money and given you peace of mind? 

]]> https://www.ezlandlordforms.com/articles/educational/3/522/secrets-of-investing-in-college-towns-and-leasing-to-students/ https://www.ezlandlordforms.com/articles/educational/3/522/secrets-of-investing-in-college-towns-and-leasing-to-students/ Tue, 30 Dec 2014 16:01:07 GMT

Investing in real estate has always been a popular way to increase wealth, and everyone knows the three keys to real estate investing are location, location, location.  Buying in the right location can mean better market growth, higher property appreciation and greater demand for rental units.

One specialized area in income properties is investing in student rental housing.  In college towns, there are higher numbers of rental units due to the constant flow of students.  Student rentals are a niche market, with its own quirks and rules.

Let’s explore the secrets to investing in college town properties.

Types of Properties

When it comes to student housing, many different properties can fit the bill.  Apartments near campus can easily be rented out to students.  Duplexes or triplexes are also popular choices.  Sometimes local families even choose to lease out their guest bedroom or basement to a student for extra income.  Look for properties that offer easy access to campus by walking or biking, or on public transit lines.

Simple family dwellings can also be converted into student housing.  Some real estate investors focus on buying three and four bedroom homes to renovate into student rooming houses.  Often, extra bedrooms are created by finishing the basement or converting the dining room, living room or any other extra living space.  Then, the landlord can either sign a traditional lease agreement on the house or lease out each bedroom individually.  Students share the common spaces such as the bathrooms and kitchen.  Rooming houses are usually regulated more strictly however; check your local bylaws for specific occupancy rules and other regulations.

Lease Agreements

When leasing to students, always require that their parents/guardians sign as guarantors on the lease contract.  This helps secure rent payments as the parents will be held responsible for the rent if their child doesn’t pay.  You should always run tenant background checks on the cosigners, either instead of or in addition to the student tenants – if the cosigner has terrible credit, it defeats the purpose of having them cosign. 

Clearly specify the term of the lease – to avoid summer vacancies, you can require one year leases, and these can start in June to force students to pay the summer months before the school year starts.  Alternatively, you could differentiate yourself by offering August-May lease terms… and simply mark up the rents to cover the vacant summer months.  You can always lease the unit at a lower rate in the summer to graduate researchers.

To keep things simple, some landlords choose to include utilities in their rental rates.  This ensures the heat or electricity won’t get turned off because the student responsible for that utility didn’t pay the bill. 

Clauses in Lease Agreements

Protect yourself and your property by including specific clauses in your lease agreements in regards to noise, guests and parties.  Address whom will be responsible if any damage occurs.  State your expectations and the consequences for breaking the rental agreement.  Consider charging a higher security deposit as well – students are brutal on housing, and will cause significantly more damage than, say, a nice elderly couple.

Lastly, make sure your lease agreement includes a clause making each student and cosigner liable both jointly and individually, so that you can collect the entire amount owed from any individual, in the event of an outstanding balance.

Are Students Good Tenants?

This may be surprising to some, but students can be some of your best tenants.  They generally aren’t as demanding, since they are just venturing out for the first time.  Their priorities often consist of location and safety.  Smaller bathrooms or dated kitchens aren’t usually a deal-breaker. 

Many students are serious about their studies and are looking for a quiet place to live.  Those that are only there to party don’t usually last long.  Careful background screening, that includes requiring an official transcript including a grade point average (GPA), can help you chose student tenants that are there to learn, not party.

Renting to students can also mean higher rental rates.  When you lease each room individually, you can usually make more money than if you had an entire house for rent.  If you create a space for four, five or even six students, each paying their own rent, you should be able to charge more in total than you could otherwise. 

Not Sure About Taking On Student Housing?

Even in college towns, you aren’t limited to student housing.  If being a landlord to a bunch of college kids doesn’t appeal to you, looks for units that aren’t as student friendly.  Properties further away from campus, for example, won’t attract as many students.  Single homes in the suburbs usually attract families, not students.  More expensive or upscale units, such as condos or lofts, are great for young professionals and college faculty. 

Remember that universities generate hundreds or thousands of jobs.  Study your town and see which areas are more popular with your preferred group of renters. 

Final Thoughts

Students can be excellent short-term tenants.  Many landlords choose to rent exclusively to students and focus on purchasing properties in college towns.  By being close to a college, your rental property will always have a steady demand for rental units.  And with a built-in, ongoing demand for apartments and rooms, college towns offer a great opportunity to the right real estate investor.

Leasing to students does require additional vigilance.  Tenant background checks are still important, with cosigners as well as tenants.  Screening all applicants carefully can help ensure quality tenants.  Most students are simply looking for a clean and safe place to live while going to school.  By meeting their needs, you can also achieve your goals of having successful real estate investments.

Related Reading:

Renting to College Students 101

Where Young Adults Are Migrating... and Why It Matters to Real Estate Investors

Is Rising Demand for Affordable Housing an Opportunity for Investors?

]]> https://www.ezlandlordforms.com/articles/news/521/6-signs-that-spring-2015-won-t-leave-us-real-estate-markets-too-chilled/ https://www.ezlandlordforms.com/articles/news/521/6-signs-that-spring-2015-won-t-leave-us-real-estate-markets-too-chilled/ Mon, 29 Dec 2014 11:46:07 GMT

It’s impossible to know exactly what the real estate market will do in 2015.  However, what are the gurus forecasting?  How hot, or not, will the spring market be?

So far, most are predicting a positive outlook for early 2015.  With much of the housing hangover from the late ‘00s bubble behind us, the real estate market is still showing signs of recovery and growth.  Here are 6 signs that spring 2015 won’t leave the US real estate markets too chilled.

1.  Consumers Are Optimistic

According to a recent Trulia article on Housing in 2015, US consumers are more optimistic about the US housing market. 

The market has not completely recovered yet, but it’s getting there.  The article explains: “None of the five measures we track in our Housing Barometer is back to normal yet, though three are getting close.” The real estate market is no longer as undervalued, after substantial rebound from its collapse after the housing bubble.

Consumers are more confident than they have been since the financial meltdown of 2008.  A full 74 percent of those polled stated that owning a home was still an important part of their American dream and a whopping 93 percent of young Americans who are currently renting reported they plan to buy a home in the future.

2.  Housing Rebound is Slowing Down but Still Exists

For the last two years, investors have been buying up undervalued real estate.  As prices normalize, the rebound is slowing down.  This may mean less action on the housing market for 2015.  However, the good news is there are still deals to be had.  Appreciation speed may be slowing, but prices continue to rise. 

According to another Trulia article, some markets buck the trend.  Real estate appreciation is still going strong in 40 metro areas in the US.  Many markets in the Midwest and the South are still hopping. 

3.  Signs of a Healthier Market

According to a MSN Money article, the market is showing signs of being healthier.  Prices are now being influenced by fundamentals and homeowners, rather than government interventions and foreclosures. 

Prices are stabilizing and returning to more expected levels of growth.  Homeowners will have less competition when looking to buy a house in certain markets, since investors are no longer driving up prices.

Another sign of a healthier real estate market is that homeowners are generally back to having positive-equity in their current homes.  This will allow owners much more flexibility when it comes to housing.  Some may finally be in a position to sell or relocate.  Others will take the opportunity to upgrade to a larger home.

4.  Foreclosures are Down

Another positive sign for the US real estate market is that the foreclosure rate is down by one third from last year.  According to MSN Money, September foreclosures are down by 33 percent nationally, and down 60 percent since 2010.

The forecast for foreclosures is optimistic for 2015.  Many predict the rate will continue to decline, which makes for a stronger, less volatile real estate market for the spring and beyond.

5.  Mortgage Interest Rates Remain Low

According to a Bankrate.com article, US mortgage interest rates have actually fallen for the last few weeks.  Possible explanations include the fall of the Russian ruble and other international instability as well as dropping oil prices.  The higher than usual market volatility has many Americans turning to safer investments such as Treasury bonds, which tends to lower interest and mortgage rates.

Many in the industry were expecting mortgage interest rates to already be on the rise.  With talk and predictions of rates going up, current renters may try to get into the market and lock-in low interest rates before it’s too late.  And since spring is traditionally the busiest time of year for home sales, we could see a hot real estate market in the coming months. 

6.  Rent Rates Are on the Rise

In many big cities, market rental rates are on the rise.  This is good news for those interested in purchasing income properties.  It’s also a sign of increased demand in the rental market.

These rent increases may push many current renters into entering the housing market for the first time.  Since the doom-and-gloom of the housing bubble is over and confidence in the market is on the rise, renters may feel convinced it’s the right time take the plunge. 

What are you seeing in your local real estate market?  Are you seeing signs of a hot market for spring 2015?

Related Reading:

10 Real Estate Investment Tips for 2015

Where Young Adults Are Migrating... and Why It Matters to Real Estate Investors

Six Ways to Find Great Real Estate Deals

]]> https://www.ezlandlordforms.com/articles/educational/2/520/10-real-estate-investment-tips-for-2015/ https://www.ezlandlordforms.com/articles/educational/2/520/10-real-estate-investment-tips-for-2015/ Mon, 22 Dec 2014 17:14:55 GMT

As 2014 comes to end, it’s that time again to look ahead to the new year.  When it comes to real estate investments, making good decisions can make the difference between profit and losing money.  Currently, interest rates are still low, so are housing prices in many markets.  And let’s face it, people will always need a place to live.  These opportunities make the upcoming year a good time to become a landlord.

What are our top 10 real estate investment tips for 2015?

1.  Set a Learning Goal
Give yourself a specific learning goal for the new year.  Read a new real estate book each month, or take a real estate investing course, or join a real estate investing association.  Knowledge is power, so learn all you can about your investments.

2.  Research, Research, Research
Finding good deals takes time, especially if you are not yet an expert on the specific neighborhood in question.  Browse the MLS, walk the neighborhoods that interest you and ask local experts questions to learn about potentially profitable real estate markets in your area.  You can also work with a realtor that specializes in income properties.  Spending time on research can keep you informed and ready for lucrative investment opportunities.

3.  Don’t Be Afraid To Negotiate
Negotiating is a skill that doesn’t come naturally to everyone.  Don’t be afraid to negotiate aggressively with sellers in order to get the best deal possible.  Look for opportunities to give the sellers something they want while also scoring a better deal for yourself.  And most importantly, don’t be afraid to walk away if the negotiations are not going well; there will always be another property.

4.  Focus on Positive Cash Flow
Appreciation is great, but you can’t rely on it.  Remember the housing crash of 2007-2009?  Millions of homeowners and landlords are still underwater on their mortgages.  To avoid losing your savings in a housing downturn, focus on buying properties that will provide strong monthly cash flow… without relying on rents or values to rise.  Don’t try to force positive cash flow with a large down payment, either – the deal needs to make sense without mathematical contortions.  If the property doesn’t cash flow, your money would be better invested somewhere else.

5.  Be Selective
Buy quality over quantity, especially when you’re starting out.  A dilapidated property in the tough part of town might be cheaper upfront, but it comes with higher risk, higher maintenance expenses and difficult – and sometimes dangerous – tenants.  Initial purchase price is just one of many factors to consider.

6.  Set Rules – and Follow Them
What’s your budget?  How much money are you comfortable borrowing?  What is the minimum cash flow you require?  Create your own personal set of real estate investing rules and follow them.  Make them specific and measurable.  Having an established investing strategy can help you avoid making decisions based on emotions.  If a potential property doesn’t meet you pre-established rules, walk away. 

7.  Start Small
If investing in real estate is new to you, start small.  Primary residences with an income suite, Duplexes and triplexes are all great beginner real estate investments.  Don’t get stuck in analysis paralysis, where you search forever without putting a single offer on the table.  Start small, but start.

8.  If Starting Out, Pick One Type of Real Estate Investment
If you plan to invest in real estate for the first time in 2015, start with one type of investment.  Are you interested in flipping houses?  Do you want to renovate a property and rent it out?  Do you want to buy a turnkey property that’s ready to lease out?  If you’re just starting out, pick one area to focus on.  Each type of real estate investment requires different skill sets and different specialists to help you.  The financing and cash flow calculations are also different.  Once you have mastered one area, you can expand into new projects.

9.  Get Out Of Your Comfort Zone
If you already own real estate, get out of your comfort zone.  Look into new markets or new types of real estate investments.  By branching out, you can further build your real estate portfolio and discover new and profitable areas to invest in.

10.  Go Where There Is Money to Be Made
Are income properties in your local area affordable?  Are they cash flow positive?  When it comes to real estate investments, go where you can make money.  You may need to look out of town or even to another state or province to find great investments.  

Whether you invest in real estate on a small or large scale, having a good action plan can make you a more successful real estate investor.  Finding solid investments can help you build your real estate empire and get you on your way to a comfortable retirement. 

What are some of your best practices when it comes to real estate investments?  Do you have a favorite tip to share?

Related Reading:

New Landlord Guide

Want to Join the Top 20%? Invest in Retirement Accounts & Rental Properties

Six Ways to Find Great Real Estate Deals

]]> https://www.ezlandlordforms.com/articles/educational/1/519/10-things-you-need-to-know-about-tenant-background-screening/ https://www.ezlandlordforms.com/articles/educational/1/519/10-things-you-need-to-know-about-tenant-background-screening/ Wed, 17 Dec 2014 09:41:45 GMT

When you’re a landlord, your income properties are important assets. One way to protect those assets is to carefully choose your tenants.  Background screening is a great tool to determine who meets your requirements for a good tenant. These checks allow you to verify someone’s identity and credit history before you rent to them.
Proper background checks can help you select tenants who have a history of being financially responsible. Quality tenants will take good care of your property, and will pay their rent on time, making your real estate investments profitable.
Here are 10 things you need to know about tenant background screening.  
1.  Do Some Legwork Before Completing Background Checks
Before completing a background check on a potential tenant, do a little legwork. Conduct a short telephone interview. Ask the tenant for his or her contact information, if they have any references, and why they are looking to move. Tell them the monthly rent, security deposit amount, and any rules you have. Ask them to complete a rental application.
Taking the time to chat with potential tenants can narrow down the list of applicants to those who are serious, and who qualify.  
2.  Follow the Rules
When it comes to tenant background screening, there are legal steps landlords must follow. Landlord-tenant laws allow landlords to run background screening on applicants; however, background checks cannot be used to discriminate against tenants based on ethnicity/race, national heritage, religion, disability, gender, and familial status. (Note: familial status is trickier than it sounds; avoid advertising any rental unit as “perfect for a single professional” even if it’s a studio that can only fit one person.) As a landlord, you must apply the same screening guidelines to all applicants.
3.  Not All Background Checks Are the Same
Many organizations offer tenant background screening. They can screen for past evictions, past address history (which is often included in full credit reports), credit reports, criminal records, etc. Decide which screening tool is best for you, and make sure you understand which reports are included.
4.  Run a Full Credit Report
A full credit report includes a FICO score, address history, employment history, public records, and of course all of the applicant's credit account history, giving a landlord a good overview of how applicants manage their financial obligations. Reports will help determine whether applicants pay their bills on time. Can they afford the monthly rent? Have they ever declared bankruptcy? Do they have any judgments against them? By having a complete credit history, you can make a more informed decision.
5.  Running a Criminal Background Check
A standard credit check won’t detail an applicant’s past criminal convictions. To run a criminal background check, first make sure such a check is permitted in your state and city. Before considering an applicant's criminal record, remember that federal laws forbid landlords from rejecting applicants only on the basis of a criminal record. The law states that landlords must consider the "nature, severity, and age of a conviction" among other factors.
6.  Check Nationwide
Some screening tools only cover statewide background information. Opt for a background check that covers the entire country, in order to avoid surprises.
7.  Screen All Occupants (Not Just the Contact Tenant)
On your application form, ask for the names of all occupants and run a background check on each. As a landlord, you want to make sure everyone who will be living in your unit is a qualified tenant. Don’t let a bad tenant sneak through by screening only the main applicant.  
8.  Never Disclose Private Information
Once you’ve run a background check, never disclose the contents to others. The information must be kept private and in a safe place, away from those who should not have access. You can be held liable if you divulge private or sensitive information without permission, including to other landlords. Also, remember not to reveal information about yourself: introduce yourself as the manager (never the landlord), never give out your home phone number or home address, and use a PO box and rerouted phone number.
9.  Look for Misleading or False Information
Use the background checks to look for misleading or false information on tenants’ application forms. By comparing the two documents, you can verify that the application was filled out truthfully. False information is a red flag – what is the applicant trying to hide? With good tenant screening, you can reduce the chance of being defrauded.
10.  Don’t Forget to Contact References
Everything may look good on paper, but don’t forget to contact an applicant’s employers and past landlords. Taking a few minutes to call references could save you a lot of grief. They may have important information that was never officially reported, such as late rent payments or damaged property.
A bad tenant can become an expensive, time-consuming and even dangerous nightmare for a landlord. Bad tenants can do more than just default on rent; they can sue you, they can hurt neighbors or drive other good tenants away, they can ruin your rental property, they can even call the local news station on you to paint you as a slumlord. By setting specific requirements and completing the appropriate background checks, you have a better chance of selecting only responsible, quality tenants.
Information is power. Learning all you can about a tenant’s background lets you hand over the keys with confidence.

Related Reading:

How to Screen Tenants & Reject Applicants – Without Running Afoul of Fair Housing Laws

The Savvy Landlord's Guide to Catching Application Lies & Red Flags

Tenant Screening, Rental Advertising, & The Fair Housing Act

]]> https://www.ezlandlordforms.com/articles/educational/2/517/should-you-use-a-203-k-rehab-loan-for-your-next-investment/ https://www.ezlandlordforms.com/articles/educational/2/517/should-you-use-a-203-k-rehab-loan-for-your-next-investment/ Mon, 15 Dec 2014 11:41:05 GMT

If buyers look hard enough, there’s a lot of money flowing through the housing market that can be used to turn property dogs into real estate diamonds.

Some of this money comes from the Department of Housing and Urban Development's 203(k) construction loan program. These FHA rehab loans are available for 1-4 unit properties through local direct bank lenders and brokers, and can be used to buy an existing property or even pay for improvements to your own home.

In 2012 alone, approximately 21,391 buyers borrowing anywhere from $5000 to more than $500,000.00 borrowed over $1.7 billion in federally guaranteed loans to rehab houses through 203(k) loans.

To some people, the money and possible upside potential of a 203(k) loan sounds too good to be true. You choose a property, hire sensible and fair contractors, and get the federal government to insure the loan. Your completed property should then appraise for far higher than your costs, right?

And if you have a flair for public service, you can congratulate yourself. You’re helping what once was a tired, near-dead house (or even neighborhood) to get back on its feet. You're bringing a property back to life!

But before you race to your local loan officer to find out where to scribble your name, you need to be aware of a variety of pitfalls and setbacks that can befall 203(k) borrowers every day throughout America.

You could pay a lot up front for inspections

The good thing about many decrepit properties is that you can often get them cheap, given the hole in the roof, the non-functioning water system, the moldy attic or the missing furnace.

But the same attractive purchase price that brought you to the property in the first place can turn against you.

During the typical home inspection process for a 203(k) loan, all of the big property condition issues need to be identified so you can find contractors to make the repairs. A home inspector can help identify many of these problems, but some issues are beyond their level of expertise.

Unlike most routine purchases where the seller has to show the buyer that the water, electric and other basic household systems are functioning, 203(k) loan properties are often owned by banks or the US government.

So in most cases, the properties are sold “as is,” leaving the buyer to poke around the property and figure out what’s working and what’s not. Any and all well inspections, septic inspection, rodent or wood destroying insects inspection, mold inspection, roof inspection, plumber, electrician, and any other kind of expert review that is necessary will probably have to be paid for by the Buyer.

A well and septic test can cost $300 or more. Sending a HVAC guy out to do a furnace check can cost another $75-$150. Bringing a structural engineer out to take a look at a suspicious foundation can easily run you another $400. The home inspection alone can be another $250 to $450, depending upon where you live.

So if at any time during this early part of the process the buyer decides to withdraw from the deal (legally), there will be no reimbursement for these inspection costs that can total hundreds or even thousands of dollars. They are simply gone, vanished into the thin air that can be the 203(k) program when people think they’re getting something for nothing.

So the rule of thumb here is that buyers need to have some initial financial flexibility to both start and complete the 203(k) process. You will have to lay out some money early in order to reach your destination.

The process will always take longer than you want

It doesn’t matter how many 203(k) loans your loan officer has completed, every 203(k) is a little different. Each house has its own can of unique flavoring, and each property will have its own hurdles that have to be leapt by your loan officer one-by-one.

Some properties have infestations. Others have hidden mold that only a property inspection reveals. Others have old wiring that is not only old, but dangerous and must be brought up to code. Some homes might only reveal water intrusion issues when a 20-year flood hits the area when you’re half-way through the 203(k) process.

All of these problems take time to address, so expect a loan turnaround time to be at least 45 days. Some full 203(k) loans (over $35,000.00) can take 3-5 months.

So don’t plan on moving into the property in time for a new baby to be born, or line up your purchase perfectly with the end of a lease term. You’ll be disappointed, and left to scramble.

Your loan officer can say he has done 203(k) loans quicker than that, maybe even finished one in under a month. But that’s not the norm, and you should have reasonable expectations. You’re probably just getting the pitch of a confident loan officer who wants your business, regardless of the facts.

Why does the process take longer?

To start, the appraisal takes longer than a typical home purchase appraisal. First, the appraiser has to appraise the property to confirm it is worth what you are paying for it as a “project” house. And then the appraiser has to confirm that, after the repairs are done, the finished property will be worth more the money you are borrowing.

So after 15 contractors have given you estimates and completed your final list of contractors, the appraiser and your lender review the documents to make sure all work is accounted for.

Finding and finalizing contractors

One of the most time-consuming parts of the 203(k) process is screening contractors and keeping them on schedule and within budget. In order to get a 203(k) loan move along, the buyer has to get estimates from and choose contractors to do all of the various work needed.

Each property inspection issue of any consequence has to be line item listed and estimated for repair.

This can be difficult if the buyer has few or no contacts in the construction industry, and the loan officer doesn’t provide trustworthy referrals for general contractors. The contractors that a buyer chooses have to show that they are qualified, and should be able to produce both state and city licenses to do the work, depending upon where the property is located.

The process is a lot smoother if a buyer is a DIY-er with some contacts in the construction business, or keeps in touch with a favorite uncle who happens to be a licensed contractor and will do good work on the cheap.

But problems start to bubble up when the appraiser or loan underwriters look at the contractor bid your uncle provided which says a new furnace will be purchased and installed for $750.00.

That won’t fly with the lender’s underwriters. Back in the bad old days of the real estate bubble (2002-2008), lenders didn’t care so much about contractor credentials and prices. Even if a buyer went belly up, properties were appreciating by 8-20% per year in many areas so lenders they could just sell the property and save their investment.

But not any more. Lenders and underwriters want to make sure that all of the necessary repair work has been accounted for by the buyer, and that contractors have given estimates to complete all of the work.

They don’t want the buyer knee-deep in an unfinished rehab property 10 months after closing, bickering endlessly with a contractor who claims that the job will take an extra $10,000.00 to complete that was not in the budget.

So what is the best way to approach a 203(k) loan?

Most importantly, don’t look at the loan as free money. Like everything that is of value, it takes time, effort and commitment to start and complete the loan. If you choose a good property, work with a loan officer with solid 203(k) experience, take the time to get good contractors who make fair estimates, and have a little money in your pocket to apply  towards the process, you’ve just magnificently improved your chances of success. Then, patience!

Related Reading:

Renovation Investing Tips, Tricks & Cautionary Tales

The Hard Facts about Hard Money Lending

Planning to Buy a Fixer-Upper? Proceed with Caution

]]> https://www.ezlandlordforms.com/articles/educational/5/514/a-landlord-s-guide-to-tenant-s-rights-what-you-need-to-know-to-protect-yourself/ https://www.ezlandlordforms.com/articles/educational/5/514/a-landlord-s-guide-to-tenant-s-rights-what-you-need-to-know-to-protect-yourself/ Thu, 11 Dec 2014 17:31:39 GMT

With most leases, landlords have good experiences with tenants. They reach reasonable rental agreement terms, and the tenants smile and pay on time and remain in the property the entire lease term without damaging the unit.

But not every tenancy ends that way.

If you’re a landlord who intends to be in the property rental business for the long haul, you meet every kind of tenant, good and bad.

Some tenants seem to be looking for the smallest irregularity in your property. Others get into your rental property and seem to become different people, never answering their phones, ignoring emails and seemingly bent on disaster and nonpayment.

And still others seem to magically have a half dozen brothers, sisters and friends who move into a property which you specifically were told would only have two adults and one child.    

Whatever you as a landlord intend to do, it is best to know the array of different paths, ordinances and avenues tenants use to stand up for their own “rights.” You need to know these rights to you can best protect yourself.

The rights of a tenant begin early – as soon as they respond to a For Rent listing.

Tenant Rights Materialize as Early as the Tenant’s Own Property Search

Many tenants are very aware of what criteria a landlord can and cannot use to decide who is an appropriate rental candidate. By law, landlords may not discriminate who they rent to based upon race, sex, religion, family status (whether have children), disability, and a variety of other personal characteristics.

However, the Federal Fair Housing Act of 1968 and the subsequent 1988 Amendments in this area leave many gaps, including owner-occupied properties with 4 or fewer units, certain religious-affiliated housing and properties tailored for senior citizens, among other exceptions. However, some states such as California have passed laws further narrowing these federal exceptions in an effort to reduce discrimination in a way more tailored to their own populations.

So landlords need to be very careful in their written and verbal language they use both in advertisements and in interviews. A word to the wise: don’t blurt out disparaging comments about the number of children who might live in the property or other language that would suggest bias.

Be Careful to Include All Information Required in Leases for Your Area

Some cities require apartment or single family home leases to include an estimate of the average monthly heating bill. This is supposed to prevent unexpectedly high unpaid heating bills that could force a tenant out in the dead of winter.

Other cities require that a tenant complete a walk-through property condition checklist of items to document pre-existing damage to the rental property. This is supposed to prevent later disagreements between the landlord and tenant about the original property condition.

Either way, be aware of the requirements of these lease agreements. If you have a disagreement with your tenant that later ends up in court, good tenant attorneys look for every possible avenue of attack.

Once a Tenant Is in the Unit Lawfully, They Have a Right to Remain

Once you allow tenants to move into a property, they have a right to remain there and you may have to file a forcible entry and detainer (eviction) suit to get them out again.

Sometimes a landlord allows a tenant early entry into a unit expecting to get a security deposit that doesn’t show up. Other times it’s discovered that there was some key misunderstanding between the landlord and tenant that makes it impossible to continue a tenancy.

Either way, if a tenant gets into a unit lawfully, then that tenant has to be taken out lawfully. That can mean either filing suit for forcible entry or giving the tenant proper inducement to leave.

Simply taking the possessions of a tenant and leaving them on the front lawn after changing the locks may get the tenant out in the short run, but you can bet that tenant will scramble to sign up with the first public interest attorney that comes along and file a lawsuit claiming serious damages.

Tenants Have the Right to Live in a Habitable Property

Once your tenants have moved in, they have the right to live in a property that is not falling down around them. Although these laws are enforced with varying zeal around the country, the basic idea is that a landlord must maintain a basic standard of habitability.

Judges in larger, older cities tend to be more sympathetic to a greater number of property condition issues than judges in smaller jurisdictions away from more substantial population centers.

They daily hear about cases of large rats, tubs with no water flow, heating systems that work little if at all during cold winter months, and every other variety of hardship that causes human discomfort.

Also, larger cities often have well-crafted ordinances that create certain steps and procedures for tenants to withhold rent if major life-affecting property elements are in disrepair.

The routine language in these ordinances requires tenants to make a written communication to the landlord about the major property shortcoming. If the repair is not made within 15-30 days, tenants have the right to undertake the repair and offset this by paying less rent.

However, landlords are not responsible for damages that are caused by unreasonable tenant misuse. If a tenant engages in a drunken brawl and puts a person-shaped hole in the wall, the repair costs belong to the tenant.

Most importantly, look carefully at the specific language of the ordinance. Usually, specific written notification of a defect must be made. A few phone calls by a disgruntled tenant are usually not enough to allow rent to be offset.

If You Take Tenants to Court, Judges Will Often Give Them Extra Time

If you need to get tenants out for any reason, and your best negotiations and persuasion have not worked, you may have to resort to the local courts.

In general, the larger the city, the more time judges give tenants at all stages of the process. If you successfully serve a tenant, you might get lucky and get a trial date and resolution on your first court appearance.

But sometimes you show up in court and your tenant appears without an attorney, and asks the court for time. Unless this is the second or third appearance, the judge will usually give some time, typically a week to 14 days. And then there can be a similar delay when a trial date is set.

When the Lease Term Ends, Make Sure You Follow Proper Procedure to Keep or Return the Security Deposit

Some of the biggest headaches for landlords come when they correctly use a tenant’s security deposit to repair damages beyond reasonable wear and tear at the end of the lease term.

The language of most state laws and local ordinances requires that security deposits be held in separate accounts by the landlord (if the owner has more than 5-8 rental units). It also typically requires that security deposits be returned in full or explained within 30-45 days of when a tenant vacates.

So many landlords with good intentions make appropriate repairs, but fail to keep proper documentation, or fail to forward proper notice of this to the tenant.

The problem arises when a savvy tenant or public interest lawyer gets involved. These laws often have provisions that require a landlord to pay double or triple damages, and also pay the tenant’s attorney’s fees.  So take care to document and forward copies of all repairs that lead to a reduced security deposit, so that an ambulance-chasing public interest lawyer doesn’t put you in the crosshairs of a litigation-happy tenant with an axe to grind.

Related Reading:

EZ Landlord Forms’ Ultimate Guide to Landlord Rights

]]> https://www.ezlandlordforms.com/articles/educational/3/515/moving-considered-being-a-landlord-and-converting-your-home-into-a-rental/ https://www.ezlandlordforms.com/articles/educational/3/515/moving-considered-being-a-landlord-and-converting-your-home-into-a-rental/ Tue, 09 Dec 2014 17:34:45 GMT

There are many reasons you may need to sell your current house.  Your family may be outgrowing your starter home, or you may need to move to another city for work, or maybe you’re just ready for a new adventure.  Before you put your home on the market for sale, have you considered being a landlord?

If you’re thinking of converting your home into a rental property, here are some tips to make the transition smoother.

Crunch your Numbers

Before doing anything else, sit down and figure out your numbers.  How much could you sell your home for?  What is the market rate for rent?  How much will your yearly expenses be?  Don’t forget average annual costs for maintenance, vacancy and property management.  Even if you intend to manage the property yourself, still set aside 10% of annual rents as a cost – the cost of your time.  Will the property be cash flow positive?

Keeping your current home as a rental is a great way to ease into becoming a landlord, but it may or may not be the most profitable option.  Sometimes selling your current home and investing the proceeds on a different income property is a better investment, or investing in a tax-deferred retirement account, or in a business you’re launching.  Do the math and base your decision on facts, not emotion.

Build Your Team of Experts

Once you decide to go ahead and rent out your current home, there are many professionals who can help you become a successful landlord.  A real estate agent or property manager can help you screen tenants, establish rent rates and advertise your rental.  Property managers can also take over collecting monthly rent, dealing with tenants and handling emergencies. 

Accountants can help you better understand the tax advantages of becoming a landlord.  They can also advise you on tax planning and preparation.  You will need to report rental income on your yearly income taxes.  Fortunately, you can deduct almost every conceivable expense associated with being a landlord.  You will need to learn about depreciation and the tax implications of converting your property into a rental.  There are forms to fill and pitfalls to avoid, which an accountant can help guide you through.

Learn the Law

All U.S. states and Canadian provinces have their own unique landlord-tenant laws.  Leases, deposits, evictions and tenant rights can vary from one state/province to the other, so be sure to learn your local laws, and our summaries of landlord-tenant laws are a good place to start.

Mortgage Restrictions

Mortgage note agreements often have an occupancy clause, where you likely specified you intended to occupy the home yourself.  If you change the occupancy without informing the bank, you could be in violation of the original note agreement.  The lender could then call the loan and demand it be paid off within 60 days.  This is a risk most aspiring landlords are willing to take, but it is still important to understand it and be prepared.

Also check for any possible restrictions if you are part of a homeowner’s association or live in a condominium.  Some may require the board to approve tenants; others have rules against leasing altogether.

Prepare Your Lease and Application Documents

In order to properly screen potential tenants, you need them to fill out a rental application.  Your form should include applicants’ names, employment and income information.  You should ask for references and permission to do tenant criminal and credit checks.  Also ask about past rental history, such as landlord information, evictions and bankruptcies.

To protect yourself and your property, you need a well-written lease agreement.  Make sure to clearly indicate which expenses your tenants will be responsible for, such as heat, electricity, garbage removal and lawn maintenance.  Lease agreements must include all necessary legal clauses and disclosures, and should always be state-specific/province-specific. 

Prepare the Property

Make any needed repairs before putting your property on the rental market.  Make sure it is in sparkling condition, with a fresh coat of paint and a professional-grade cleaning.  Remove any clutter and make the property as attractive as possible.

Insurance

Notify your insurance broker that you are converting your residence to a rental property.  You will need to change your coverage to landlord coverage, which will no longer cover the belongings and furniture, but do generally include limited lawsuit liability coverage.  Encourage (or perhaps require) your tenants to obtain renters’ insurance for their belongings. 

Network

Reach out to friends, family and coworkers who are landlords.  Ask them what worked for them and what didn’t.  Real estate investors, property managers and other landlords are a great source of information and recommendations.  

When it comes to being a landlord, there’s no need to reinvent the wheel.  Learning from those with experience can help you make good decisions and make your real estate investments successful from the beginning.

Related Reading:

New Landlord Guide

]]> https://www.ezlandlordforms.com/articles/educational/4/513/eviction-notice-has-been-served-now-what/ https://www.ezlandlordforms.com/articles/educational/4/513/eviction-notice-has-been-served-now-what/ Thu, 04 Dec 2014 08:47:45 GMT

Going through the lengthy process to evict a tenant can seem a daunting task.  While eviction notices and mandatory waiting periods to start the eviction process vary by state, after serving notice the eviction process is generally consistent across the US.  Here is an overview of the steps that must be taken after serving the eviction notice.

Filing a complaint or petition in court.  Once the eviction notice is served and the waiting period has ended, a landlord must go to the courthouse to file a complaint or petition (sometimes referred to as filing a non-payment or hold-over proceeding).  In order to file the complaint, landlords are usually required to show proof that they complied with state law requirements for the amount of notice given to the tenant for the eviction.  Landlords must also pay a filing fee, set by the court.  After the eviction complaint is filed the court will often mail a copy of the complaint to the tenant; however some courts require that landlords mail the tenant a copy of the complaint themselves.  It is important for landlords to check the requirements in his or her local court specifically.

The court hearing.  After the complaint is filed, the court will schedule a date for a hearing before a judge where the landlord and tenant will be able to present their case.  Some courts require the landlord and tenant to discuss the case in an effort to settle or require some form of mediation before presenting before the judge.  If the court does not require this type of discussion or if the discussion does not end in agreement, the landlord has the opportunity to explain the basis of the eviction before a judge.  Each party is entitled to bring a landlord-tenant attorney to represent them at the hearing.  Regardless of whether the landlord is represented by legal counsel, the landlord will have to explain why he or she is legally entitled to evict the tenant.  This requires the landlord to bring all the necessary documentation to show that he or she has a valid reason for evicting the tenant under the laws of their state (the lease agreement, records of payment, records of communication between the landlord and tenant, proof the tenant was given proper notice and opportunity to respond, etc.).  If the judge rules in favor of the landlord, the court will sign and issue a writ of possession, also called a judgment of possession, and warrant of eviction.

Scheduling an eviction.  After the judgment is received, the landlord must contact the county sheriff’s office to schedule the eviction.  Landlords may need to provide the sheriff's office with certified copies of the judgment of possession, the eviction notice and/or the warrant of eviction before scheduling, or may need to bring these and other documentation on the actual eviction date.  The landlord may have to pay another filing fee to the sheriff's department.  The sheriff's office may schedule the eviction date on the spot, or may schedule it later and mail the landlord a notice for when it is scheduled.  Most counties have eviction schedules posted online where the landlord can check which day the sheriff’s deputy will be evicting in their district.  Most important however is that landlords confirm with the sheriff’s office what documentation he or she needs to bring to the eviction.

What to do the day of.  On the date of the scheduled eviction, the landlord or the landlord’s representative must meet the deputy at the property (usually with a locksmith as well).  The landlord or the landlord’s representative should bring any documentation required by the sheriff’s office to the actual eviction and the deputy will often have the landlord sign papers authorizing him to gain entry to the property.

Filing a money judgment for unpaid rent.  If the eviction judgment included an award for back-rent, the landlord can enforce this judgment in a few ways; one of which is garnishing the tenant’s wages.  This is done by presenting the judgment to the tenant’s employer in the form of a court order.  If the court did not issue a money judgment, the landlord must then begin a rent collection action against the tenant; many of which go through small claims courts.  This requires the landlord to file a separate action (with yet another filing fee) to obtain any back-rent and potentially other fees associated with the eviction.

While the process for eviction is fairly similar from one jurisdiction to another, it is essential that landlords obtain the requirements for filing an eviction and rent collection action from their local courthouse or small claims court and adhere to what is required in that court specifically.

]]> https://www.ezlandlordforms.com/articles/news/511/report-average-workers-can-t-afford-to-buy-median-homes-in-most-us-cities/ https://www.ezlandlordforms.com/articles/news/511/report-average-workers-can-t-afford-to-buy-median-homes-in-most-us-cities/ Fri, 28 Nov 2014 10:57:51 GMT

There has been a lot of attention paid to the rising culture of renting rather than owning real estate over the last five years, but the darker side of that story is the financial restrictions preventing many renters from buying.

In 15 of the 25 largest cities in America, the local median income is not enough to afford the local median home, according to Interest.com’s annual study of home affordability.  To reach that conclusion, they compiled data not just on incomes and home prices but also on property tax rates, homeowners insurance rates, average consumer debts and mortgage rates.

The implications of low real estate affordability are far-reaching.  To begin with, many average-income workers are pushed out to rural or outer suburban areas and then commute into the city, rather than living in the city's neighborhoods.  Distance commuting introduces a variety of personal and societal problems: additional transportation costs, additional environmental impact, reduced time spent with family, reduced time spent in the community of residence, additional childcare costs. 

The implications don’t end there however.  Many urban workers with mid-range incomes, such as teachers, police officers, firefighters, entry-level professionals, musicians and artists are foundations in the community, adding stability and culture to the neighborhoods they inhabit.  Losing them to bland suburban developments would erode the foundations that made historic urban neighborhoods strong in the first place.

Another problem with unaffordable housing in large metropolitan areas is the risk of greater wealth disparities.  When a handful of cosmopolitan cities become the exclusive domains of the rich, and middle- and lower-income people are shunted aside to the outskirts, it creates a closed-circuit hive of economic activity and opportunity for those on the inside, but what happens to everyone else?  If the rich live, work and play in the same sexy city-center neighborhoods, and push everyone else out, then firmer geographical boundaries take root between the rich and middle/poorer classes.

Further problems crop up from there.  Families struggling to afford to stay in their neighborhoods will often take on sacrifices or risks to do so, ranging from second jobs, debt, deferring savings for retirement or education, inadequate health care, even crime.  In fact, a three-year study completed earlier this year by the John D. and Catherine T. McArthur Foundation found that over half of Americans have made such sacrifices in order to cover their housing payments.

The major cities with the lowest housing costs were Pittsburgh, Detroit, St. Louis, Tampa and Atlanta, with Pittsburgh’s median home price a modest $143,690. On the income side, the cities with the highest median incomes were Washington D.C., San Francisco, Boston, Baltimore and Seattle, with top-ranked Washington D.C. boasting a whopping $90,149 median income from all those federal tax dollars flooding the city.

At the right are the 25 largest metro areas in the country, graded by real estate affordability, with “C” meaning that someone earning the median income can afford to buy the median home.  Note that none of them received a grade of A in 2014.

The Paycheck Power Rating is the percentage difference between the actual median income and the income required to afford a median home.  A rating of -5% means the actual median income is 5% less than the required income to buy an average home in that city.

Still, there is another side to the story of rising real estate values in American cities.  As prices rise, millions of Americans who were previously underwater on their mortgage are breaking the surface.  Further, the economic revitalization of America’s major cities is a cause for celebration, after the second half of the 20th Century saw a flight to the suburbs of America’s middle and upper classes.  Higher real estate values mean higher city government revenues from property taxes, which (if managed well) can mean better local services.  Americans are increasingly placing a value on “walkability”, and trying to live near where they work.  

Perhaps the U.S. will see a shift towards a more European model of cities, where the city is the cultural and economic hub, and the less affluent live in outlying concentric circles and commute in by strong public transportation, while rural towns and villages are bucolic and economically stable.  Or perhaps small cities will see a renaissance as employers, artists and professionals opt out of the San Franciscos and Manhattans of the country and move elsewhere, recalibrating home values in major cities to reintroduce affordable yet safe neighborhoods.

Related Reading:

Rent Affordability: How Do Incomes Stack up to Rents, Since 2000?

The Great American Rent Divide: Why & How Rents Are Diverging Nationwide

Are Micro-Apartments the Next Big Rental Trend in Pricey Cities?

]]> https://www.ezlandlordforms.com/articles/educational/5/510/8-reasons-to-join-a-landlord-association/ https://www.ezlandlordforms.com/articles/educational/5/510/8-reasons-to-join-a-landlord-association/ Mon, 24 Nov 2014 16:04:45 GMT

If making money with an income property is one of your goals, there are many advantages to joining a landlord association (or similarly, real estate investing clubs – see our directory for associations near you).  You may currently be managing your first property yourself or have hired a property manager to oversee your growing rental empire.  Either way, it’s to your advantage to continue learning how to make your rentals as successful as possible.  One of the best sources of information is other landlords and real estate investors.

Here are our top 10 reasons to join a landlord association.

1.  Learn from Other People’s Success

Joining a landlord association gives you the opportunity to meet other landlords.  Some associations have regular meeting, where you can learn about other people’s successful rental investments.  Guest speakers may share what works for them, giving you the chance to learn from their experience.  You may also be introduced to other types of investments you had not yet considered, such as commercial rentals or multiplex buildings.

2.  Learn from Other People’s Mistakes

As said by Eleanor Roosevelt: “Learn from the mistakes of others.  You can’t live long enough to make them all yourself.” By taking the time to listen to what didn’t work for another landlord, you could avoid making similar mistakes – and losing money in the process.

3.  Access to Services

While many services are available online, such as landlord forums, credit/criminal background checks and rental forms, some services can only be performed in the flesh, such as rent court representatives and eviction specialists. 

4.  Member-Only Discounts

Along with the services they offer, most associations offer member-only discounts from third party businesses.  Landlords may enjoy lower prices on a variety of goods and services, such as eviction, clean-out or legal services. 

5.  Networking & Connections

Attending a landlord association meeting is a great opportunity to network.  There is often a casual meet-and-greet time built into the meeting’s agenda, an opportunity to chat with like-minded investors.  You can approach more experienced landlords to get feedback on your plans or ask for advice.  Nor are there only landlords; property managers, real estate agents, home inspectors, even contractors may become members.  It’s a great way for them to network and promote themselves, but it also gives you, as a landlord, the chance to learn more about them.  You can then better decide who you would like to have as part of your team of experts. 

6.  Education

Landlord associations are a great educational resource.  Many bring in guest speakers who will talk about a wide variety of topics that concern landlording, managing properties and tenant issues.  Associations also keep their members updated on policy changes that affect province- or state landlord-tenant laws.  Some publish a monthly or quarterly newsletter filled with tips and useful information.  Others also publish books and resources only available to members.

7.   Low Cost

Membership costs for most landlord associations are quite affordable.  Fees vary from one area to another, but most are well under $100 per year.  Membership fees are also tax deductible.

8.  Promote and Protect Landlords

Most likely the most important reason to join a landlord association is for their promotion and protection of landlords.  These associations do have a voice with various local and regional governments.  They work to improve landlord-tenant laws and policies.  They speak up for landlords by bringing attention to inequalities and working on policy changes that protect landlords. 

Final Thoughts

Joining your local landlord association can be both helpful and enjoyable.  By taking the time to meet other like-minded landlords, you can learn how to improve your business practices.  By participating in the association’s social events, you have the chance to meet new people, possibly making new business or personal connections. 

Consider get involved and having your voice heard.  Gain a competitive or professional edge over your competition.  The deeper you immerse yourself in the local real estate investing world, the more opportunities you will learn about, and the more successful you can become as a landlord. 

]]> https://www.ezlandlordforms.com/articles/educational/10/509/want-to-join-the-top-20-invest-in-retirement-accounts-and-rental-properties/ https://www.ezlandlordforms.com/articles/educational/10/509/want-to-join-the-top-20-invest-in-retirement-accounts-and-rental-properties/ Fri, 21 Nov 2014 12:58:26 GMT

While most of us will never join the elusive “1%” (minimum net worth: $8.4 million), gaining entry into the top 20% (top quintile) of Americans is attainable by just about anyone with the discipline to save and invest a large chunk of their paycheck. 

When pundits talk about the economic recovery over the last five years helping the wealthy and not the middle class, they are largely referencing the explosion in the stock market.  The top quintile own 91.4% of the nation’s stocks, and U.S. stocks' value has nearly tripled since 2009. 

Stocks matter, and the wealthiest quintile know it: 87.3% of the top quintile own stocks, and 93% of the top 10% own stocks.  Compare that to just 11.4% of the bottom 20% (see the graph below).

Equally important is how these stocks are owned.  The majority of Americans in the top quintile have tax-protected retirement accounts, yet only 5.2% of the bottom quintile have retirement accounts.  A 2013 study found that a shocking 57% of Americans had less than $25,000 saved for retirement, a disturbing trend as Americans live longer and will need more money for their later years. 

Nor do the differences between the rich and poorer classes stop at stock-filled 401(k) accounts.  Among the top quintile, 84.5% own their own home, compared to only 43.1% of the lowest quintile.  The numbers grow starker when looking at real estate investments rather than owner-occupied homes: the top 10% of Americans own nearly 4/5 of the non-home real estate in America (79.1%). 

While the top 20% of Americans are maxing out their retirement accounts and investing in real estate, most Americans use their money to buy the fanciest possible cars, 80-inch LED TVs and couches with Italian silk upholstery.  The sad fact is most Americans don’t bother saving at all – the average U.S. household’s savings rate is only 4.9%, and you can be sure that average is heavily skewed and lifted by the top quintile.  

So why are retirement accounts and rental properties the ladder to the top 20%? 

Tax Savings

Is it possible to consistently win a game without understanding its rules?  Of course not.  Becoming wealthy is no different; when you earn $75,000 in W-2 income, your federal income tax rate is 25%, plus 7.65% in FICA taxes, plus state and local taxes (for example in Baltimore where this writer lives, that means 5% state and 3% local income taxes).  For the non-math-nerds out there, that’s 40.65% of your income ($30,488) gone before you touch a cent, leaving you with only $44,512.  Not pretty.

Now, imagine that you invest $23,000 of your $75,000 in retirement accounts ($17,500 to a 401(k), $5,500 to an IRA).  You still have to pay FICA taxes on the full $75,000, but you only need to pay federal, state and local income taxes on $52,000 – this means you only lose $21,138 to the taxman.  Congratulations!  You had an instant savings of $9,350, plus you earn the returns from the invested money.

If you max out your 401(k) and IRA to build wealth in the stock market tax-free, next consider rental investments.  Nearly every conceivable rental expense (and some paper expenses that you don’t actually have to pay) are tax-deductible.  If you spend $10,000 on a rental property’s repairs, mortgage interest, taxes, insurance, etc, you save $4,065 on taxes you no longer have to pay, which means that you got $10,000 worth of services for only $5,935.  Paper depreciation is extra money you can deduct, to offset taxes on your profits from rents.  All the while, your real estate earns you a return as it appreciates, building your net worth. 

Returns

Stocks, bonds and real estate have historically earned a far higher return than any other investment vehicles.  From 1928 through 2013, the S&P 500 had an average return of 11.5%, not accounting for inflation.  If you go back even further and examine the Dow Jones Industrial Average and real estate appreciation from 1900 through 2012, the Dow had a return of 9.2%, while U.S. real estate appreciated at an average pace of 7.2%.  If that 7.2% annual growth rate seems unimpressive, remember that doesn't count income from rents.

Meanwhile, your Italian silk-upholstered couch is worth only a small fraction of what you paid for it.  Sure, stocks and real estate can go down in value in a given year, but on average they rise, while personal possessions inevitably lose most of their value in the first year you own them, and soon you get bored of them and buy new things (which you also pay sales tax on, to make matters worse).

Passive Income

As Robert Kiyosaki is fond of saying, the rich don’t work for their money, their money works for them.  While you’re slaving away in your cubicle, that one-percenter who’s out on the golf course is still making more money than you are this hour.  Their securities portfolio and investment properties are bringing in money every hour of every day, without them having to type out TPS reports or wait tables.

Passive income is what paves the way for retirement, financial security in the face of disaster, a better lifestyle.  Most of all, passive income means more money to invest, which in turn creates more passive income: a virtuous cycle.



Compounding Returns & Virtuous Cycles

The power of compounding means that over time, your income increases exponentially as you keep re-investing your returns.

A simple illustration: this year you invest some money and buy a rental property that gives you $500/month cash flow ($6,000/year extra income).  Next year, you save some more money plus you use that extra $6,000 towards another rental property, for another $500/month.  The following year you have an extra $12,000 plus your cash from employment, so you can buy two rental properties, which puts you at an extra $24,000/year to invest.  Ad infinitum.

The same logic applies to stocks: a $100,000 investment that pays 5% in dividends becomes $105,000, before you even bother to include the capital gains.

Last year, only 47% of Americans owned any stock at all – a significant drop since 2007, when 65% of Americans owned stocks.  But the middle class was spooked by the 2008 crash, and pulled their money out, leaving their richer and more financially-savvy counterparts to reap the rewards of the five year bull market that more than doubled.

If you want to join the ranks of the top 20%, you need to learn the rules of the game and fast, because you better believe that the top quintile knows them.  Every penny that can be saved should be, and put in an investment that has both strong tax advantages and high returns.  You can splurge on that fancy car once your bank account becomes equally fancy, but for now save, invest and learn how to shift money away from tax bills and toward wealth creation.

Related Reading:

7 Bank Accounts: Budgeting to Become a Wealthy Real Estate Investor

Case Study: How I Earned a 29% ROI on a Deal I Found on the MLS

Who Is “Wealthy”? The 5-Step Ladder Between Middle Class and Wealthy

]]> https://www.ezlandlordforms.com/articles/educational/2/508/reality-tv-myths-what-flipping-and-home-improvement-shows-don-t-tell-you/ https://www.ezlandlordforms.com/articles/educational/2/508/reality-tv-myths-what-flipping-and-home-improvement-shows-don-t-tell-you/ Tue, 18 Nov 2014 17:53:35 GMT

How real are house flipping and home improvement reality TV shows?  Although a great source of entertainment and inspiration, DIY television shows should be just that.  There’s a lot going on behind the scenes, and a lot that isn’t said.  Let’s debunk a few myths and pinpoint what flipping and home improvement shows don’t tell you about the real deal.

Their Budgets Are Unrealistic

With the help of the show’s expert, a lovely couple buys a large fixer-upper for next to nothing.  It needs an extensive demo and to be remodeled from top to bottom.  Projected renovation budget?  About $35,000.  Where do I sign?

Budgets from DIY television shows are not realistic.  Some costs are heavily discounted or not accounted for at all.  Some renovation shows don’t charge the homeowners for labor, even though we see a large crew hard at work.  Other times, contractors agree to work at a discounted rate since they are getting advertising and television exposure. 

When it comes to materials used for renovations, prices are also not as they seem.  Some supplies are donated in return for on-air promotion.  In the final reveal, homes are often staged, with the furniture, window treatments, fixtures and accessories not being included in the budget.

Before undertaking a major renovation, take the time to create a comprehensive budget.  Include all material, labor and carrying costs.  Most experts recommend adding at least 20% to your overall projected costs to cover unexpected expenses.

It Always Takes Longer Than You Expect

Flipping a house takes time.  From beginning to end, the entire process takes much longer than shown on TV.  Finding an appropriate house can take months, as can bidding and closing on a property.  It’s quite common to have a closing date of 30 to 60 days out, since it takes time to process the title work and secure a mortgage. 

DIY shows skim over the preparation that must be done before a renovation can start.  Building permits are often needed and building plans must be approved, which can be a lengthy (and costly) process.  Site visits are generally required by the municipality.  Structural engineers, electricians and other specialists may need to make inspections or complete preliminary work before the renovation can even start.

On television, producers fast-track the work, like a training montage in a sports movie.  Off camera, large teams of 30 or more contractors may be working 24 hours per day in order to prepare the big reveal.  Some work may have been done in advance, contributing to the wonderful new kitchen built in only three days.

In real life, expect a renovation to take weeks or months, not days.  If flipping a house, it may take many months to complete the work. 

You Can Over-Renovate

Yes, you can over-renovate a home.  A television show may feature a couple who buys a home for $80,000 and spend $40,000 flipping it, hoping to now resell it for $160,000.  But if houses in that neighborhood sell for about $100,000, they have grossly over-renovated their home. 

Similar scenarios routinely happen when renovating rental properties.  What they don’t tell you is that the apartment may have been renting for about the same amount before the costly renovation.  Each neighborhood attracts a certain clientele, which expects prices to be aligned with other properties on the market.  You never want to have the most luxurious house on the street since you’ll have trouble selling it for the price you need.  If you have the most expensive rental unit in the neighborhood, it will be very difficult to lease.

Making Money Isn’t Fast or Easy

It’s difficult to make money flipping properties.  It takes time and hard work to renovate or flip an entire house.  It also requires money upfront for the house purchase, materials and labor.  Carrying costs, such as mortgage payments, insurance, taxes and utilities are another consideration.  How much will it cost you to complete the work?  How long will it take to market the property to a buyer or renter?  How much will you pay in real estate fees?

It’s getting harder to find suitable houses for flipping, as foreclosures have ebbed and home appreciation has slowed.  Profits are shrinking, leaving little margin for error.  It can be done successfully with the right property, but crunch your numbers first. 

Don’t Forget It Was Made for TV

Home renovation shows use a liberal dose of creative licensing in order to make their shows TV-worthy.  Scenarios are exaggerated, and storylines are created to hold the viewers’ attention.  Conflict and tension is often staged.  Don’t forget it was made for TV – when it comes to flipping and home improvement shows, learn from real-life mentors who have achieved success, not TV producers looking for ratings.

Related Reading:

Renovation Investing Tips, Tricks & Cautionary Tales

Case Study: How I Earned a 29% ROI on a Deal I Found on the MLS

Planning to Buy a Fixer-Upper? Proceed with Caution

]]> https://www.ezlandlordforms.com/articles/educational/2/507/vacation-rentals-as-a-second-home-tips-for-actually-making-money/ https://www.ezlandlordforms.com/articles/educational/2/507/vacation-rentals-as-a-second-home-tips-for-actually-making-money/ Mon, 17 Nov 2014 10:49:07 GMT

When considering a vacation property as a rental investment, the equation for determining a successful investment is blurred by your own personal use of the property.  But making a list of what your ideal vacation home will include, and what you hope to gain from it as a rental, can help you decide when it can be worth the plunge.  Follow these tips to help you make the right choice in a vacation rental investment.

Determine what you are looking for as an investment

First, do take a good look at the location and rental history in the area.  You may want a farm-style house in the country, but how attractive will this be to renters? If the mountain cabin you desire is too far from the ski resort and other local attractions, will it draw enough vacationers?

Even if you select a very popular area that you think will attract plenty of renters, research the history and vacation rental market of the surrounding area.  What kind of nightly/weekly/monthly rent can you expect, in each season?  What is the vacancy rate like?  What kind of new construction and additional supply is scheduled to go up in the area?  High vacancy rates may force reduced rental pricing under the current rates, to avoid facing many weeks or months of vacancies.

This may not rule the property out for you.  Much will depend on how much of a return you require to make the investment work.  If you already have several successful vacation rental properties, you may be able to afford a larger risk for something that meets your unique desires for your own use.

A rental property will also come with tax implications.  The money you receive from the rental is income.  This is an area where you will need to consult with a tax professional to understand exactly how the income affects your financial situation.

Unless your vacation property is very close to your current residence, you will need to hire maintenance and cleaning personnel to handle your rental.  You will have to factor this into your overall costs.  If you currently live in or near an attractive vacation area, look at properties near you.

Choose a home that you will enjoy and meets your needs

Part of the potential return on investment is the use of the property as a vacation home for yourself and your family.  Consider your family’s vacation desires; if you want to spend your time boating or fishing, obviously you want to be near water.  If you love winter sports, Florida is not where you want to look. 

You will want a vacation rental home in a location that you can get to easily.  If you have to fly to reach the property, it will significantly reduce the amount of time you can realistically spend there.  Likewise with long drives – you want a property that you can visit without any additional stresses of getting there. 

The first rule of thumb is renting a similar property to see how it works with your vacation ideals.  Think about how much time you will spend enjoying the home, and consider your future use.  You may currently want a property that allows your entire family to enjoy vacations together.  However, several years from now, your children may not be vacationing with you.

Look at what you can realistically expect in the size and accommodations to make sure your investment meets both your current and future needs.  However, if you choose a property with a solid return, you can use it only for rental income if your personal needs change.

Stay within your budget and understand what the full budget involves

Investments present risks and vacation rental properties are no different than any other investment.  You also want some personal benefits from your property.  Vacationing should be an enjoyable experience, not one that instills financial fear.  Do not overextend your budget no matter how great the opportunity appears to be.

Beware of overestimating how much rental income you will receive.  This is a critical mistake that many novice buyers will make.  Just because one property rents at full price and is always occupied does not mean that your property will.  Again, look at the history for the area and make sure you compare identical properties.

In addition to your monthly costs of owning the property, be sure to calculate in:

• cleaning costs
• ongoing maintenance costs
• a cushion for property damage and normal wear and tear
• costs for property management and advertising
• vacancy rates
• Do not forget property taxes and insurance, which also must cover additional liabilities

Once you have considered the costs, add up what you can save by using the property yourself for vacations.  Draw a realistic conclusion about what the property is likely to cost you or earn for you each year, and make an informed and rational decision about whether that bottom line is acceptable every year for years to come.

Take your time to investigate the opportunity completely

Is someone trying to sell you a “golden opportunity”?  The words “scam” and “rip-off” are often synonymous.  If an investment company is offering the property, take a serious look into the company’s reputation and history.  If the opportunity sounds too good to be true, red flags should be waving.

Finally, when you are considering a vacation home, think about it like you would any investment.  This means that you could benefit from discussing your situation with a financial advisor.  You are not looking at buying a playhouse for your backyard; you are looking at investing a significant amount of money in an additional home.

Related Reading:

Common Mistakes of New Vacation Rental Owners

The Skinny on Micro-Cottages: Rental Income, Mobility & Minimalism

Considering Converting a Residence into a Vacation Rental?

]]> https://www.ezlandlordforms.com/articles/educational/2/505/should-real-estate-investors-ever-borrow-funds-from-friends-and-family/ https://www.ezlandlordforms.com/articles/educational/2/505/should-real-estate-investors-ever-borrow-funds-from-friends-and-family/ Wed, 12 Nov 2014 09:34:43 GMT

Real estate investors are in constant need of additional funds, and in today’s market there are more sources than ever, between crowdfunding websites, hard money lenders, conventional mortgages, personal loans, even credit cards.  But what about the original “crowdfunding” source: your own friends and family?  How viable is it to borrow money from them to invest in your next rental property or flip?

Here are five points to consider, before deciding whether to make the plunge with your loved ones’ money.

1. Never Use Friends & Family Money to Fund Your First Deal

Inexperienced real estate investors make too many mistakes for them to be a good bet for investors.  Cut your teeth on a few deals with more experienced partners, and learn how they normally fund their real estate deals.  When the inevitable hiccups come, you can learn your lessons and then move on, without risking your father-in-law's wrath.

2. Only Use Friends & Family Money for Short Term Loans

So you have 4-5 property investments behind you, and you’re feeling more confident, but want to avoid the expense and hassle of taking out a mortgage, hard money or otherwise.  If buying a property and renovating it, what is your plan for recovering your investment?  If selling the property, fine, but if you intend to hold the property as a rental unit, what is your plan for paying back your family members?  Taking out a permanent mortgage once the renovations are finished is a viable option, but whatever your plan, make sure you have an exit strategy for paying back your friends and family.

For long term financing, it’s easier (and usually cheaper) to take out a mortgage.

3. Plan for the Worst Case Scenario

Before making the leap and accepting your friends’ and family’s money for your next purchase, consider all of the things that could go wrong with the deal, and account for them.  What if the renovation goes over budget?  What if it takes three months longer than the contractor projected?  What if the property does not rent for what you expected?  What if it does not sell for what you expected?  What if the contractor takes your deposit money and runs to Mexico? 

You should think through these and other potential risks, and account for them both with proper planning and adequate capitalization.

4. Be Prepared to Pay People Back Even if You Lose Money

The worst case scenario happened, and you’ve lost money (perhaps even a lot of money) on the deal.  You have a choice: you can ask your friends and family to eat the loss, or you can pay them back all of their principal, or you can pay them back their principal plus the interest you promised them.  Whatever you decide to do, be completely open and honest with them, and explain what happened.  Most of us are willing to do whatever it takes to make our friends and family whole on the deal, even if that means that the interest you pay them comes in the form of helping them paint their house for the next three weekends. 

5. Remember Other Forms of Funding

Assume a common pitfall occurs: the renovation goes over budget and takes several months longer than expected.  You run out of money, and don’t want to lose your creditors’ faith by going back to them and asking for more money.  There are plenty of places where you can raise extra funds, albeit at a cost.  The cheapest of these is likely borrowing funds from your 401(k) or IRA, which can be effectively free, especially if paid back quickly.

You can borrow cash from your credit card (but it will generally cost 4 points and 18-24% interest)… or you could just put every expense possible on your credit card for the next two months while you finish renovations and execute your exit strategy for paying back your friends and family creditors.

Mortgages are an option, and hard money lenders can often close in 10 days.  Similarly, personal loans or lines of credit may be practical, and if you have plenty of equity in your home, perhaps a HELOC.

Even the shadow banking industry, payday- and tax return lenders, are an option, if a generally bad one.  The point is that there are always places to turn, if your best laid plans fall short and you need a temporary source of funds. 

There are tangible benefits of borrowing from friends and family, which include lower costs and faster availability, which are valuable and shouldn’t be ignored.  And while there are legitimate emotional reasons why investors are reluctant to borrow from their friends and family, remember that even if you have to pay them back late, they will still love you, and will respect you all the more for going through difficulty in order to honor your debt to them. 

For all that, you may well pay them back in full, on time, with generous interest, because the deal was successful and earned a profit.  You might just find yourself flooded with offers to invest with you, if your deals continue to earn a profitable return.

Related Reading:

Why Most People Have Trouble Saving for a Down Payment – 3 Common Blunders

Should You Refinance Your Rental Property If It Would Lower Payments?

The 25X Rule for Retiring Early (…and How Rental Properties Change the Math)

]]> https://www.ezlandlordforms.com/articles/educational/5/504/ez-landlord-forms-ultimate-guide-to-landlord-rights/ https://www.ezlandlordforms.com/articles/educational/5/504/ez-landlord-forms-ultimate-guide-to-landlord-rights/ Fri, 07 Nov 2014 15:02:37 GMT

In the United States, there are strict and often complex laws that address residential rental properties.  Each state has its own set of laws called acts, and some states now use the shared Uniform Residential Landlord and Tenant Act. 

The act regulates the relationship between a property’s owner (landlord) and a property’s occupants (tenants).  In the act, landlord tenant rights are described in detail, specifying what is legal and what is not.

Here are specific landlord rights to be aware of and their importance.

Screening Tenants

Landlords have the right to screen potential tenants, including running credit reports, criminal background checks, income and employment verification, housing history verification and other relevant checks that provide insight on an applicant’s likelihood of being a safe and reliable tenant.  It’s important to use the same screening tools and procedures for all tenants, and abide by tenancy discrimination laws.

Rental Rate

Setting the monthly rental rates for your units is within your rights as a landlord.  However, once a rental agreement has been signed, you must respect the agreed upon rental rate for the duration of the lease term.  Some cities now have rent control measures in place, meaning once a tenant is living in a rental unit, rent can only be increased up to a pre-set amount.

Security Deposit

As a landlord in the United States, you have the right to ask for a security deposit.  Some states set a maximum limit on how much can be required, generally in the range of one to three months’ rent.  Other states have no set limits other than what is “reasonable”; the security deposit amount is to the discretion of the landlord. 

Landlords are often required to set the money aside in a dedicated bank account, separate from other rental income.  They may also be required to state in their lease agreement if interest will be paid, and at what rate, when the deposit is returned. 

Your state’s act will outline which expenses a landlord may deduct from a tenant’s security deposit.  Repairing damage caused by tenants or unpaid bills are allowed, but all deductions must be itemized, and landlords cannot withhold money for repairing “normal wear and tear”. 

Abide by Lease Agreement

You have the right to hold tenants to the terms of the lease agreement, and enforce it in civil court.  Tenants must follow the restrictions, rules and terms as described in their contract.  Lease agreements should outline terms for pets, roommates and subletting, for example, in order to have legal recourse if tenants do not follow the rules.

Enter Premises

Once a tenant moves into your rental, you are no longer able enter the premises as you wish.  As a landlord, you do have the right of entry under certain circumstances. 

First, reasonable notice of entry must be given to your tenants.  Generally, notice can be done verbally or in writing, from 24 to 48 hours before entering.  The reason for entering must also be stated.  Acceptable reasons include showing the rental property to a potential tenant or entering to complete repairs.

In an emergency, landlords have the right to enter a rental property without giving advanced notice to tenants.  Examples of emergencies include signs of smoke, fire or a serious water leak.  In those situations, the landlord may access the premises immediately, and may call emergency services for help. 

Property Maintenance

Another landlord right is to request your rental property be kept in good condition.  Tenants may not damage or vandalize your property.  They cannot remove items from the premises that do not belong to them, such as appliances, furniture or fixtures.  Landlords can oblige tenants to dispose their garbage properly and keep the yard and common areas free of debris or clutter.

Collect Rent

Landlords have the right to be paid, in full and on time.  Tenants have the obligation of paying their rent, every month, as agreed upon in their lease agreement.   Most lease agreements specify that rent is due on the first of the month.  If the first falls on the weekend, your individual state may require allowing until the next business day.  Most states do require a minimum grace period before late fees may be charged, and there are often restrictions on allowable late fees (for example 5-10% of the rent).  Review our state landlord-tenant law summaries to check restrictions on late fees when rent is not paid on time.

Evictions

Landlord eviction rights are a key tool for rental property owners.  Still, eviction is a lengthy legal process, with many steps to be followed.  Landlords must have just cause, which may include reasons such as non-payment of rent or rental agreement violations, but they still must spend several months going through the eviction process.  For more information on evictions, please see our article Overview of the Eviction Process.

Importance of Landlord Tenant Laws

It’s important to be informed of the landlord-tenant act for your individual state.  Always double check that a law is applicable in your jurisdiction, and that your information is accurate and up to date.  By knowing your landlord rights, you can better protect yourself, your investment property and your return on investment.

]]> https://www.ezlandlordforms.com/articles/educational/1/503/understanding-military-tenants-the-pcs-process-and-how-to-minimize-military-rental-vacancies/ https://www.ezlandlordforms.com/articles/educational/1/503/understanding-military-tenants-the-pcs-process-and-how-to-minimize-military-rental-vacancies/ Fri, 31 Oct 2014 15:20:33 GMT

For military families, the permanent change of station (PCS) process is time consuming and often jarring.  They might not have time to learn about their new area before moving, often a move across the country or perhaps the world.  As a result, their knowledge of the new duty station, the city and the neighborhood may be very limited.  Aside from providing a much needed home for military families, landlords/property managers can ease the moving pains by understanding a potential tenant’s PCS timeline.  Start your relationship on the right foot by knowing what military families go through and offering your expertise on the local area you know so well. 

Orders

Military members can receive orders for a PCS at any time.  From six months to just a few short weeks, orders can come down for a family at a moment’s notice.  Service members and their families will often begin searching for homes before receiving official orders if they are given indications of their next assignment.  However, they will be unable to schedule their move or commit to a move in until orders are in hand.  Property managers and landlords are well advised to start showing the property immediately upon receiving word that current tenants must move, to secure new tenants with a minimal vacancy.  All lease agreements should include a clause that tenants must keep the property in exceptionally clean showing condition when the landlord is showing the property to new prospective renters. 

Move

Once official orders are issued, the dates for pack out and loading are set using a computer system that assigns moves to the various companies contracted by the Department of Defense.  It can take 48 hours or more for that date to be confirmed and can be changed with little notice to the service member.  Some families opt to coordinate their move themselves to maintain more control over the timing, which requires more out of pocket investment. 

Home Search

Service members usually begin their home search long distance via the Internet: exploring neighborhoods, schools and local amenities.  Some will decide to finalize a lease agreement before arriving at their new duty station to hit the ground running when they arrive.  Others will use their pre-move research to make a short list of preferred homes to visit in person on arrival.  With either option, it is essential that your properties are available to review online with thorough, informational listings on a military-focused rental listing service like AHRN.com.  Extensive photos are a great way to make long-distance prospects feel more confident about your rental unit, especially when combined with links or information about the high quality of the neighborhood, schools, local amenities, etc.  Lastly, responsiveness is a must, given the quick time horizons that military families operate within.

Arrival

Because military members have very little time allotted before they have to report for their new duty, they need to finish the home search and move in as promptly as possible.  They may choose to live in temporary lodging before they move into a more permanent home, which can easily range from a few days to one month.  Service members will be busy in-processing to their new duty station and integrating into their new job, and anything the property manager can do to help make their rental unit an easy option will lead to fast filling of the unit.   

Getting Around

While making their housing decisions and getting settled, the primary challenge facing service members and their families is discovering the network of services needed to make a home.  From utilities to grocery stores and restaurants, traffic patterns and nearby attractions, military families could use your insight into the local area.  By providing this kind of information at some point during the rental marketing and application process, you help to ease the pain of transition and become a trusted advisor for the military community. 

At each stage, clear and effective communication lays a foundation for a productive, positive working relationship.  A relationship with the more permanent officers of the base will mean instant referrals to inbound personnel, which in turn can mean minimal or no vacancies for your rental unit.

Related Reading:

Case Study: Accidental Military Landlord to DIY Military Rental Expert

8 Ways to Reduce Rental Vacancy Rates for Better ROI

]]> https://www.ezlandlordforms.com/articles/educational/2/502/why-most-people-have-trouble-saving-for-a-down-payment-3-common-blunders/ https://www.ezlandlordforms.com/articles/educational/2/502/why-most-people-have-trouble-saving-for-a-down-payment-3-common-blunders/ Thu, 30 Oct 2014 10:00:00 GMT

Five years ago you probably told yourself that five years from now, you would be substantially wealthier.  Are you?  For those of you who are, congratulations, you are probably more disciplined than most.  For the rest of us… well, we are human, and we err.

It actually turns out that most of us err in very similar ways though, which means there are just a handful of roadblocks that are getting in the way of most Americans’ and Canadians’ financial goals.  Here are the three most common missteps that North Americans make on the road to financial independence, and they all reinforce each other for either a downward plunge or fast ascent.

1. We Spend Too Much

Over half (52%) of Americans reported in a recent survey by Country Financial that they spent more than they earned at least a few months out of the year, yet only 10% admitted their lifestyle overspent their means.  A “normal” savings rate is 10% of after-tax earnings, but normal will not get you anywhere fast, so consider 25% instead.  The average U.S. savings rate?  Currently it sits at a disheartening 4.9%, down from 14.6% in 1975. 

If possible, have savings automatically pulled from your paycheck before it even gets to your checking account, to remove even the option of spending it.  If that is not possible, set up automatic transfers of money from your checking account on the day you get paid every pay cycle, so the money instantly goes to a difficult-to-access savings account before you can spend it.  Another possibility is having money automatically invested in retirement accounts, which brings us to…

2. We Pass Up Free Money & Discounts

Americans can pay up to $17,500 into retirement savings every year tax-free, through a 401(k), and can even invest in rental properties and other real estate with their 401(k).  Assuming a 30% tax rate, that represents $5,250 that you may be paying in unnecessary taxes every year.  But the greater loss is the missed savings and lost returns on that money.

Further, some employers offer optional benefits, such as health care and retirement contributions, but only if the employee also contributes a certain amount themselves.  This is free money left on the table by many Americans and Canadians.

And then there are the unused credit card rewards, the other tax breaks we fail to take advantage of, the things we buy new that we could buy used for half the price, and so on.  A pattern should be emerging by now: because we spend too much, we have less money for investing, less money for capitalizing on employer- and tax incentives, and…

3. We Owe Too Much in Debts (and Interest Payments)

Credit cards and personal loans are the big offenders here – according to Nerdwallet.com, the average U.S. household carries $7,281 in credit card debt alone (the number jumps to $15,607 if you exclude households with no credit card debt).  Credit cards have notoriously high interest rates, often in the 18-24% range, which can become crippling quickly.  Credit card companies encourage you to maintain high balances by making the minimum payments very low, so that it would literally take nearly three decades to pay off that average credit card of $7,281 if only the minimum payment were made. 

Before you consider investing in anything, be it real estate, stocks, bonds or anything else, start by paying off your credit card balance and any other personal unsecured debts.  Carrying debt at 20%, while investing money in stocks or rental properties at a return of 7%, you still lose a net 13% on the money in question.  Pay the debts first, then continue saving at the same rate you had been paying down debt, and suddenly you could go from losing 20% in interest to gaining 7-10% (or more) in returns.

The keystone to most of our finances is spending.  If you spend less, you can avoid personal debts like credit card balances and personal loans.  You can take advantage of employer- and tax incentives to invest more money in retirement while spending less in taxes, health care, etc.  You can invest more in income-producing assets, such as dividend-paying stocks, high-yield bonds and rental real estate.  With the income from these, you can invest even more, and the snowball builds wealth, rather than tumbling on a downward spiral of debt.

Related Reading:

Is It Ever Worth Borrowing from Your 401(k) or IRA to Buy Real Estate?

Case Study: How I Earned a 29% ROI on a Deal I Found on the MLS

The 25X Rule for Retiring Early (…and How Rental Properties Change the Math)

]]> https://www.ezlandlordforms.com/articles/educational/5/501/can-going-green-also-reduce-expenses-and-boost-rental-properties-roi/ https://www.ezlandlordforms.com/articles/educational/5/501/can-going-green-also-reduce-expenses-and-boost-rental-properties-roi/ Wed, 29 Oct 2014 17:05:59 GMT

When it comes to new construction, today’s building codes require a level of energy efficiency, making them greener than older buildings.  But what about your existing rental properties?

Going green is trendy; it has been for several decades, and likely will be for decades to come.  Sure, it’s good for the environment, but there are also more tangible benefits to going green.  It makes your property more attractive from an investment point of view, adding to resale value.  A green property also costs less to run – by reducing your monthly operating costs, you can improve your cash flow.

Another financial advantage to going green is the effect it has on tenancies.  Green buildings attract tenants more quickly, reducing vacancy rates.  There are also less tenant turnovers.  Since green apartments tend to be more comfortable in both summer and winter (while costing less in utilities), tenants are happy.  In the end, many tenants are willing to pay a higher rent if it means demonstrably lower monthly energy bills and reducing their carbon footprint.

Let’s look at a few green tips to reduce your rental property expenses.  Don’t forget to keep your receipts as most costs are tax deductible.

Appliances

Start with the biggest energy hogs to maximize your returns.  Old dryers and refrigerators often use the most power, so consider changing those first.  Washers and ovens can always be updated later on.  Energy Star appliances will reduce your monthly electricity bill and pay for themselves over time.

Look into switching from electric to natural gas for your hot water tanks and heating systems.  Natural gas is more efficient and less expensive, allowing you to recoup the purchase price quickly (although the case can also be made that natural gas is a fossil fuel, while electricity can be obtained through renewable sources).

Lighting

Switching from incandescent bulbs to compact fluorescents or LEDs can significantly reduce your electric bill.  Motion detecting lights can also reduce energy costs, since lights only turn on when needed.  They could be used to replace some of the light fixtures in common areas such as hallways, stairwells and outside, reducing the number of lights that are always on.

Water

Low flow toilets, shower heads and faucet aerators can reduce water use.  Some green buildings are incorporating rain water systems to irrigate or water lawns and plants.  Using native plants can also reduce the need for watering, as they are more tolerant to your area’s climate.

Heating and Cooling

Having tenants pay for their own heating and cooling costs is the best way to reduce your expenses; it also encourages them to conserve energy.  If you must pay for tenants’ utilities, you can offer them tools to help reduce your costs.  Individual programmable thermostats, for example, can lower heating costs if used properly.  Double glazed windows and weather stripping reduce heat loss.

If you have old boilers, calculate the cost of updating them versus the return on investment.  If you plan to keep the property for many years, you may come out ahead in the long run.

Planting trees around your building can also help to reduce heating and cooling costs.  Shade your heat pump and air conditioning units to help them run efficiently.  Plant leafy or deciduous trees on the west and south sides of buildings; this will block the summer sun and keep the building cooler.  Once the leaves fall, the bare trees allow the sun to warm the building for the winter months.

Managing Expenses

Going green doesn’t have to be done all at once.  It may make sense financially to spread major expenses over several years.  Your accountant can help you decide how to maximize your savings for tax purposes.

Watch for current and upcoming government incentives.  Rebates, grants and tax credits are sometimes offered to help offset the initial expense of upgrades like low flow toilets or energy efficient appliances.  With a little research, these programs can greatly reduce your out-of-pocket expenses.

Leading by example and promoting an environment-friendly philosophy helps to save the planet while improving your cash flow.  Going green can be a win-win.  What’s your favorite green tip for income properties?

Related Reading:

Where Young Adults Are Migrating... and Why It Matters to Real Estate Investors

The Skinny on Micro-Cottages: Rental Income, Mobility & Minimalism

A Smoke-Free Rental Property: Is It Possible to Prohibit Smoking in Your Rental Property?

]]> https://www.ezlandlordforms.com/articles/educational/2/500/financing-your-first-canadian-rental-property/ https://www.ezlandlordforms.com/articles/educational/2/500/financing-your-first-canadian-rental-property/ Thu, 23 Oct 2014 10:37:28 GMT

Being approved for a mortgage used to be a breeze.  There was a time when banks were handing out mortgages hand over fist, happy to lock just about anyone into 35 year amortizations, whether they could afford it or not.
Mortgage rules have become stricter in the past few years.  The Canadian government recently imposed several rounds of new rules and regulations, forcing buyers to jump through hoops to qualify for mortgages.
When it comes to income properties, the rules have also changed.  To many buyers’ frustration, it has become more difficult to finance rental properties.  Luckily, with strong credit and the right investment property, it is still possible to launch your own small rental empire.  


How to Qualify for a Mortgage
If you need to finance an income property, you first need to qualify for a mortgage.  Note that each bank will have its own criteria; it’s important to sit down individually with your lender to learn what their rules are.  The following information is a general idea of what is common practice today.
There are two major factors to qualify for a mortgage: income and total debt-service ratio.


Income
The first thing your lender will do is to establish if you can make the required monthly mortgage payments on your rental property.  That will be based on your total income.
The first consideration is the income from your primary job.  For example, if you and your spouse plan to be co-owners of the rental, the bank will need pay stubs or income statements for both of you.  If one or both are self-employed, additional documentation may be required, such as business financial statements or Notice of Assessments from the CRA.  
If you have any other sources of income, it may be added into the calculations.  Income sources from pensions, investments, second jobs and maternity leave are generally accepted.  
Finally, your lender will add some rental income to their calculations.  Most Canadian banks now use only 50 percent of projected rental income for this purpose.  For example, if you plan to purchase a triplex with a total monthly rent of $2,000, your lender would only apply $1,000 of that rental income into their calculations.  That said, it is still possible to find lenders who will apply up to 80 percent of projected rent, so ask potential lenders about their guidelines.
 

Total Debt-Service Ratio
This calculation is made to determine if you are within the bank’s acceptable limit of debt and financial obligations.  The formulas are quite complex, but to oversimplify slightly, it’s the ratio of all financial obligations divided by gross income.  For this calculation, lenders add up your personal monthly expenses as well as the expenses for your rental properties.  Personal expenses will include your primary residence mortgage (or rent), property taxes, utility costs, car loans, student loans, credit card payments and any other recurring obligations.  Rental property expenses include all ownership costs such as mortgage, utilities, taxes and insurance.
Different lenders have different acceptable limits when it comes to debt-service ratios.  Some may accept only 40 percent, some more.  
 

The Down Payment    
In Canada, lenders generally require a 20 percent down payment on investment properties.  If one unit is to be owner-occupied, some banks may allow a smaller down payment.  
Where can you get the cash for this large down payment? Luckily, the rules still allow some flexibility here.  The down payment can be cash from your savings.  It can also come from a personal line of credit, such as a HELOC backed against your primary residence.  This does come with some risk, since you are now essentially using your own home as part of the collateral for your income property.  To buy subsequent income properties, it’s possible to open a line of credit secured against your first rental if enough equity has been built.  You may even be able to pull money from your retirement accounts inexpensively, although this also means drawing on your nest egg, which is not a decision to make lightly.
 

The Mortgage
Once you have qualified for a mortgage and taken care of the down payment, you can finally take out a mortgage for your income property.  Most Canadian lenders will allow 25 to 30 year amortizations since income properties require such large down payments.  As an investor, one critical requirement is to make sure your mortgage payment will allow a substantial monthly cash flow (ideally your mortgage payment should be no more than half of the market rent).  This often requires longer amortizations.

 

Other Financing Options
There are other, less traditional financing options available.   Some real estate investors finance their entire purchase with a line of credit.  Others get financing from a private lender, through an individual or group of investors (this is also known as hard money lending – see our directory of hard money lenders for local listings).  Vendor take-back mortgages can also be used.  This means the property’s seller is the one who finances the purchase.
These options are generally more risky than traditional financing methods.  They may require using your own home as collateral, and often mean paying a higher interest rate.
 

Tips

• Shop around.  Each bank will have its own policies when it comes to income properties.  
• Don’t forget mortgage brokers.  Some have more relaxed rules when it comes to debt-ratios and income.
• Do your homework.  Learn what makes a good rental property investment.
• Don’t over extend yourself financially.  You never know when your circumstances may change.
• Build in a buffer.  An experienced landlord will tell you it’s never as simple or straightforward as it first seems.  Vacancies, evictions and broken furnaces happen.  Allow for surprises in your budget.
• Set up a separate bank account for your rental income and expenses.  It’s important to keep your rental income separate from your personal money for tax purposes – it also makes an audit from the CRA more manageable.

 

Related Reading:

Pay Down the Mortgages Faster or Buy New Rental Investments?

Securing Low-Interest Real Estate Loans - Part I - Interest, Fees & Diligent Shopping

Securing Low-Interest Real Estate Loans - Part II - Credit, Down Payments & Financial History

]]> https://www.ezlandlordforms.com/articles/educational/3/499/how-to-legally-lease-using-airbnb-in-ny-when-72-of-rentals-are-illegal/ https://www.ezlandlordforms.com/articles/educational/3/499/how-to-legally-lease-using-airbnb-in-ny-when-72-of-rentals-are-illegal/ Tue, 21 Oct 2014 15:28:54 GMT

Leasing out your home on Airbnb may seem like a great way to bring in some extra cash while you're on your next vacation, but if your property is in New York you could quickly run into trouble.  According to New York Attorney General Eric Schneiderman, 72 percent of Airbnb rentals in New York are actually illegal, either by violating zoning laws or failing to pay hotel and sales taxes to the city and state when collecting payment for the rentals.

New York Zoning Laws Are the Heart of the Matter

Among the (many) zoning laws in New York City is an ordnance that it is not legal to rent to anyone for less than a period of 30 days at a time, unless the owner is also present.  And while laws in New York generally protect renters' rights to sublease their apartments, tenants are not exempt from the 30 day rule, and may have additional subletting restrictions in place in their lease agreement as well.  Each landlord or management company that rents out apartments in NY has its own rules and regulations that often go beyond basic city zoning codes.

However, there are legal Airbnb rentals in New York, for prospective vacationers looking to rent a space for a few days in the Big Apple.  It's not necessary to become an authority on every zoning law, or ask the lister from for their lease to verify that subletting or guests are allowed.  Leases that don't allow for any overnight guests would be very difficult to enforce, and unlikely to be agreed to by a tenant, so vacationers shouldn't worry about breaking a law simply by staying in someone's home for a few days.

Taxes, Taxes, Taxes and... More Taxes

Zoning infractions by individual homeowners and tenants seem like a pretty, well, petty thing for the Attorney General of New York to grow so obsessed with, no?  But there have been hundreds of millions of dollars in revenue collected by people who leased out their properties with Airbnb over the last few years, and Airbnb rental listers are not paying the state and city hotel taxes and fees, or sales taxes, on collected short-term rents. For anyone doubting that New York loves its taxes, consider that hotels must collect 4% state sales tax, 4.5% city sales tax, 5.875% city hotel tax (plus $2.00/transaction), and $1.50/night state hotel fee, on top of the regular room rate.  Is it any wonder that Airbnb is often much more affordable for renters than traditional hotels?

Still, of all the complaints that New York has about Airbnb, this seems to be the easiest to solve.  Airbnb has already publicly stated that it is willing to start collecting taxes from property listers in New York, as it does already in San Francisco.



Angry Hotels, Upset Neighbors

Many hotels in the NY area want to see Airbnb banned because the company is taking a portion of their market share and revenue away from them.  Not surprisingly, the overwhelming majority of Airbnb activity is in the upscale hotel districts in Manhattan and Brooklyn, where visitors would otherwise be paying primo hotel rates (and taxes).  They aren't the only ones up in arms either; a number of residents throughout the city are complaining about noise and other concerns that come from neighbors leasing out their properties to strangers.  With people coming and going so frequently, there is a potential for more noise as well as more mess and trash.  Residents also don’t like the extra traffic in strangers in their buildings, and have increasingly been reporting neighbors to authorities.

How to Lease Your Property Legally

If you plan to lease with Airbnb, beware that the Office of the Attorney General is keeping a watchful eye.  You have to be present during the guests'; you can't rent out your whole home through Airbnb while you're on vacation elsewhere.  You can rent out your extra rooms though, as long as you're still sleeping at the property while the guests are there.  Coloring within the lines here will protect you from liability, and can also help you keep the peace with your neighbors. 

If leasing for less than 30 days, you have to pay proper taxes on the money you collect.  There are forms that can be filled out to rent legally, and those will help ensure you're collecting the right fees and taxes.  Many people skip this step, but you'll technically be operating an illegal rental if you aren't collecting and paying taxes on the travelers who come through your property.

Finding a Legal Airbnb Rental

If you want to rent through Airbnb during your vacation, keep in mind that many NY listings will not be legal.  Look for one that is posted by the legal owner of the property, and where the owner is going to be present during the time you're staying there.  Don't be afraid to ask questions, especially if you're not sure about something in the listing.  The person who has the listing should collect taxes on the amount you're charged for the rental, as well.  If they don't collect taxes they aren't operating a legal vacation rental, and if this bothers you, you'd be better off looking for a different place to stay during your travels.

Related Reading:

Airbnb Nightmare: Short-Term Vacationer Refuses to Leave, Months-Long Eviction Process Required

Landlords and Regulators Crack Down on Subleasing Through Airbnb & Others

Considering Converting a Residence into a Vacation Rental?

]]> https://www.ezlandlordforms.com/articles/educational/5/498/fall-maintenance-checklist-for-landlords-and-property-managers/ https://www.ezlandlordforms.com/articles/educational/5/498/fall-maintenance-checklist-for-landlords-and-property-managers/ Thu, 16 Oct 2014 16:18:51 GMT

Protecting your investment is good business, and autumn is the perfect time to complete those odd jobs you’ve been meaning to get to… but haven’t.  A little preventative maintenance now will help protect your rental property from harsh winters, tenant wrath and potentially even renters relocating. 

It’s important (and cost-effective) to uncover any issues before the snow arrives.  Since the cold weather is fast approaching, here’s a fall checklist for landlords. 

Exterior

Gutters/Eavestrough: Used to channel water away from your foundation, eavestroughs or gutters help protect your building.  Blocked gutters can’t direct water properly, so it’s important to have them cleaned out.  If possible, wait until nearby trees have finished dropping their leaves.

Animal-Proofing: Squirrels, raccoons and skunks are looking for warm hiding places for the winter months.  Discourage them from nesting in your building’s attic or basement by animal-proofing your rental property.  Animal control experts or contractors can install metal screening over possible entry points.  Having animals removed from your property after the fact is expensive (and can cause emotional reactions from renters); a little prevention can avoid many problems.  Let the raccoons set up shop elsewhere, so your tenants don’t freak out thinking their children have been infected with rabies.

Roof: The roof is your building’s first protection from the elements, and once it’s breached, the cost of damage can exponentially rise.  A leaky roof can ruin your attic, insulation, drywall, and your electrical system, and once wet, mold can set into the walls and even the framing.  Have a roofing expert check for loose or missing shingles.  Any signs of wear or damage should be fixed before snow and ice has the chance to cause further problems.  Clean any debris off your roof.

Paint: If you have wood window frames, siding or trim on the exterior of your rental property, check for peeling paint.  The paint acts as a weatherproofing layer, preventing rot and moisture.  Repainting problem areas now is less expensive than having them replaced later.

Caulking and Mortar: Peeling caulk around vents and windows can lead to water damage.  Also look for foundation cracks that could be caulked to keep your basement dry.  Check for missing or broken mortar between bricks.  If water gets into the bricks then freezes, the ice will expand and cause further damage.  A stonemason can remove damaged areas and repoint, keeping water out.

Trees: Are any tree branches touching your roof or siding? Over time, this can damage the exterior of your building.  Any branches that are interfering with electrical lines should be trimmed by a professional.  If a tree has become a hazard, have it cut down before it falls and damages your property.
Stairs, Railings and Decking: Any loose or rotten pieces should be fixed as soon as possible.  Once the snow arrives, you may no longer have access to the area.

Air Conditioning Units: Clean and cover your outside units to protect them from the elements.  Double check that your renters have removed window units for the winter.

Water Faucets, Sprinkler Systems: Outside water faucets need to be flushed out and turned off.  Follow manufacturer’s instructions for winterizing sprinkler and irrigation systems.

Pools: It’s time to have your pool company come to drain and winterize any swimming pools.  Also inspect the cover for rips or damage.

Interior

Smoke and CO Alarms: To protect your tenants and your property, test your smoke and carbon monoxide detectors at least once per year.  For units that require batteries, change them every fall and spring.

Furnace: Have your heating system inspected, serviced and cleaned once a year.  Proper maintenance can extend the life of your furnace, postponing an expensive replacement.  Don’t let renters forget to change the filters, either – this is inexpensive maintenance that can prevent major HVAC problems.

Sump Pump: Test your sump pump to make sure it’s working properly.  Some may need to be cleaned and lubricated on a yearly basis.

Attic: If it’s cold outside, it’s supposed to be cold in your attic as well.  A properly insulated attic prevents ice damming on your roof, which can lead to damage and expensive repairs. 

Insulation: Insulating the basement and outside walls not only keeps the building warmer in winter, it protects your water pipes.  Frozen pipes can burst and leak in your walls, causing quite the expensive mess.  If necessary, add insulation to get the recommended R-value for your area. 

Crawl Space: If you have pipes in an unheated crawlspace, make sure they are well wrapped and insulated.  Check that windows and doors to the crawlspace close and lock properly to avoid animals nesting there.

Windows: Broken windows and frames can let in cold air and moisture.  To avoid damaged drywall and mold, check all windows once per year. 

Ducts: For forced-air heating systems, it’s a good time to have the ducts cleaned.  You can also inspect exposed ductwork for heat loss due to leaks.

Although a long checklist, most items can be done quickly, without spending much money.  With a yearly inspection and a little preventative maintenance, you can help keep your rental property in good working order.  You can also make expensive items like your roof or furnace last much longer, which means more money in your pocket. 

Remember to stay safe when working on your properties.  Some jobs are best left to a professional.  Others are great for DIYers, but first check that your equipment is in good condition, and ideally work with a partner.  Have a sturdy ladder, wear safety glasses and follow instructions.

What’s your best tip for preparing your rental property for winter? Is there a job you tend to forget to do?

Related Reading:

Winterizing Rental Properties & Homes – Protection Against Damage, Lawsuits & Tenant Attrition

How to Screen Contractors

Snow & Ice Removal: When Is the Landlord Liable?

]]> https://www.ezlandlordforms.com/articles/educational/1/489/5-safety-tips-for-property-managers-and-landlords-when-showing-properties/ https://www.ezlandlordforms.com/articles/educational/1/489/5-safety-tips-for-property-managers-and-landlords-when-showing-properties/ Wed, 15 Oct 2014 08:46:02 GMT

Property managers and landlords can learn something from realtors when it comes to showing properties.  One of the first things realtors learn before ever showing a property to a prospect is how to be safe when doing so, remembering the old adage that “It’s better to be safe than sorry.”

1.  Do your due diligence and pre-screen prospective residents by asking a series of questions which will help in identifying them, their likelihood of being a good fit, and possibly their intent.  Be sure to ask the same questions of every prospect.  Such questions as their name, e-mail address, telephone number, approximate credit history, monthly income, employer and employer phone number are key and should be the first of a series of questions you ask.  Be sure to ask if the call back number is their cell, home, or office.  You can then visit one of the mobile phone reverse lookup sites to ascertain who the number belongs to.  If the number doesn’t match the name given, be on alert that this person could be up to something.  You should also be aware that people will often have mobile or home phones in a relative or spouse’s name, so don’t be too alarmed by this information alone.  

Beyond simple safety, calling them the day before the appointment or the morning of to confirm the appointment can save you wasted time for no-shows, and verifies that they gave you an accurate phone number.

Asking other questions such as how soon they are looking to rent, the status of their current living situation, questions about any criminal history and more will help in determining how serious they are.  Prospects who either aren’t that serious or who have something to hide will likely be annoyed with your questions and could even decide against viewing the property altogether.   In those cases, mission accomplished; you’ve saved yourself the hassle of showing the property to an undesirable tenant.  Criminals don’t like answering lots of questions, but be careful here of the smooth career criminal who is often prepared for just about anything.

2.  Always let someone know when you’re planning to show your property.  Ideal people are those who you are planning to see immediately after the showing, so that they will know right away that something is amiss if you don’t arrive on time.  Spouses and coworkers are ideal for this, and don’t forget about the neighbors; having a neighbor or two on the lookout for you and your property makes for great security.  Smartphone app Pinnum can make for a good safety protocol, by letting your colleagues or family members track your phone's movement in real time.  If you have an uneasy feeling about a particular prospect, you can even ask that your neighbor pop in during the showing to answer any questions the prospect may have about the neighborhood.  Let the prospect know, “I asked the neighbor Bob to stop in just in case you have any questions he can help answer.”  

3.  Perhaps the most obvious, landlords should avoid showing property after sundown.  Whenever possible during the fall and winter, schedule showing appointments during daylight hours, even if means only showing on weekends.

If you’ve been in the business for more than a week, you’re already aware you will encounter no-shows.  Scheduling a couple of hours on the weekend to show properties can help you feel less frustrated when a prospect doesn’t show for an appt.  It’s what professionals in the business refer to as ‘capturing two prospects (or more) with one appointment.  Of course, the trick is to have each prospect believe it is his/her own unique appointment.  A smart way of handling this is to do what many physicians and hair stylists do- schedule appointments every 20 minutes.

An added safety bonus to scheduling back-to-back appointments is the knowledge that there will always be someone on the way soon, just in case a prospect has less than good intentions.  Be sure to inform all prospects of this.  You never want to rush your prospects, but planting the seed that another prospect is scheduled to show up soon may not only ward off any ill intentions, but could also serve as a reminder to act quickly if they’re interested in applying.

4.  Show up for the appointment early and take a walk around the entire property to ensure there have not been any broken windows or doors kicked in since your last visit.  In rougher areas, or areas frequented by bored teenagers, it is not unusual to find broken windows and doors where they have let themselves in.  

Also invest a little time to get to know your neighbors, if you don’t already.  Most neighbors tend to have their own neighborhood watchdogs even when there is no formal group designated.  Neighbors are often willing to report any strange happenings to you and can be on the lookout when they know you’re showing property.

5.  Always enter after your prospects and stay behind them while they are viewing the home.  A smart technique realtors often use when showing property is to allow prospects to browse upstairs alone, for vacant rental units (if the prior tenant is still living in the home you should accompany all prospects to protect tenants' belongings and privacy).  But if vacant, you can say, “I’ll wait down here and return a call quickly while you take your time looking around upstairs.”  This works like a charm and the prospect is not offended.

These safety tips are in no way an exhaustive lists of things you can do to ensure your safety when showing your rental properties; and while it is likely you will never encounter truly dangerous situations, remember an old piece of folk wisdom: It is better to have and not need, than to need and not have.

What safety measures do you have in place when showing your properties?  What would you add to the list?

Related Reading:

Should Landlords Impose Gun Restrictions on their Tenants? Can They?

Why P.O. Boxes Are a Landlord’s Best Friend

Advertising for Tenants & Showing the Rental Unit

]]> https://www.ezlandlordforms.com/articles/educational/2/497/is-it-ever-worth-borrowing-from-your-401-k-or-ira-to-buy-real-estate/ https://www.ezlandlordforms.com/articles/educational/2/497/is-it-ever-worth-borrowing-from-your-401-k-or-ira-to-buy-real-estate/ Tue, 14 Oct 2014 15:04:44 GMT

For the average American, the answer is usually “no”, since retirement accounts are a safety net in a world where most people don’t have enough money stored away.  Retirement accounts represent a largely tax-free way that Americans can build wealth on auto-pilot, and have their money work for them without Uncle Sam taking half of it away.  In most cases, Americans should only withdraw from their retirement accounts in truly desperate situations.

But are there exceptions?  You betcha. 

First-time homebuyers may have trouble qualifying for a mortgage without additional funds or collateral.  If they have good cause to believe that they will be able to quickly repay the money into their retirement funds, borrowing here in order to secure their first piece of real estate may make sense.  Later in life, it is generally easier for mortgage borrowers to qualify, between stronger income, more established credit and more assets (often including other real estate). 

Another consideration is mortgage insurance, which is generally required when borrowers make a down payment of less than 20% of the purchase price.  Mortgage insurance is not cheap, and can easily run $150/month for a $200,000 loan.  Nor does it go away quickly; mortgage insurance usually must be paid for at least five years, and the onus is on the borrower to prove that the loan amount is lower than 80% of the current value of the collateral real estate.  Mortgage insurance is lost money down the drain – it adds no value whatsoever to the borrower and only protects the bank.  If you can tap into your retirement account to avoid paying mortgage insurance, it is often worth it.

Buyers with 401(k) accounts can borrow money from them relatively easily and cheaply, and for up to five years.  There are some stipulations that 401(k) borrowers should understand however, that are outside the scope of this article, but in bear markets it can actually benefit 401(k) borrowers to pull money out temporarily.

For very short-term needs, IRA account holders can borrow penalty-free from their IRA accounts for up to 60 days at a time, and will not suffer any tax consequences.  If you need an extra few thousand dollars in order to close your real estate investment deal, and are extremely confident that you can pay it back within a month, this can be a quick and easy way to bridge the gap.

But beware: if you fail to pay your IRA back within 60 days, the IRS will treat it like a distribution and will charge you income tax on that money, along with some potentially nasty penalties to boot.

Likewise, when a worker borrows against their 401(k) and then loses their job, they often must repay the borrowed money within a few weeks, or face similar treatment from the IRS.  That is a bad place to be – suddenly out of work and faced with immediately repaying borrowed money.

People considering tapping into their retirement accounts to buy real estate should also consider that real estate comes with unpredictable expenses.  That gleaming home might have a furnace just waiting to start coughing smoke, or that rental property you’re eyeing up might need more repairs than you had expected, and stretching yourself too thin by pulling money from your retirement account might leave you in dire straits when an inevitable hiccup comes your way.

Retirement accounts should only be considered a viable option for financing your real estate purchase if you have other places you can turn if the unthinkable happens.  Jobs can disappear overnight, homes can suddenly need $5,000 in unexpected repairs, tenants can skip out on rental properties without paying the rent.  The world is full of surprises that can throw your finances in a tailspin, so be very careful when drawing on your retirement funds early, and be sure to have a backup plan for ugly contingencies.

Related Reading:

Can Real Estate Investors Use 401(k)s to Lower Their Taxes? Oh Yes

The 25X Rule for Retiring Early (…and How Rental Properties Change the Math)

The Hard Facts about Hard Money Lending

]]> https://www.ezlandlordforms.com/articles/educational/2/496/where-young-adults-are-migrating-and-why-it-matters-to-real-estate-investors/ https://www.ezlandlordforms.com/articles/educational/2/496/where-young-adults-are-migrating-and-why-it-matters-to-real-estate-investors/ Mon, 13 Oct 2014 10:47:06 GMT

Obvious statement of the week: Real estate investors and managers need to stay up-to-date on evolving housing needs. One critical demographic to watch as a harbinger for shifting housing momentum is young adults, particularly where they migrate to in larger concentrations. Young adults tend to migrate once they have finished school, and where they move, they tend to start familes and companies, they spend money, they increase the population and economic activity. They often head to where they can find work, along with cultural stimulation like social, arts and entertainment hubs. As a rental investor or manager, you can stay a step ahead and provide the housing if you know the trending hot spots.

Forbes is one solid source for finding information on trends for the millennial generation. The site even breaks information down into neighborhoods, further helping investors. If you can catch the market before it explodes and prices rise, you will realize a solid return on any property investment you make. Some of today's (and perhaps tomorrow's) hot neighborhoods for millennials include:

South River City, Austin (pictured above)

Texas offers better weather than many northeastern cities and young adults can enjoy the outdoors all year. South River City is close to Lady Bird Lake and plenty of recreational opportunities. Another major draw for the area is a lower than average crime rate.

Oak Lawn, Dallas-Fort Worth

If you are considering investing in property in Texas, this neighborhood is also on the hot list for millennial migration. Oak Lawn is attracting young adults with lower than average rental costs and a below average crime rate. Millennials still get all the benefits of living near a large metro area for work and entertainment.

Brooklyn & Greater New York City

According to Forbes, the Greenpoint neighborhood of Brooklyn ranks in the top for residential selections for millennials. The city itself is likely out of the financial reach of recent college graduates, but the draw to the area is large. This area keeps recent graduates due to the location of New York University. It attracts new adults with a reasonable ratio of housing costs to income average.

Arlington, Washington, D.C.

The Clarendon neighborhood is valued for a higher median income range while still offering affordable housing rates. With Georgetown University nearby, many graduates will remain in the area. The area has a strong Metro service, which attracts an eco-friendly generation.

Cow Hollow Neighborhood, San Francisco

The San Francisco area is diverse and offer millennials all the entertainment and social opportunities they could possibly want. Cow Hollow gives young adults more affordable housing opportunities while still boasting a reasonable median income. The crime rate is considered average. This allows migrating young adults to have a city-like experience in a neighborhood setting. According to Bizjournals, the area is seeing rapid housing growth in the condo market.

Little Italy, San Diego

Another option for investments in California includes this neighborhood of San Diego. While living costs are high in Southern California, the benefits to residents make up for the increase. Little Italy boasts a low crime rate and gives residents proximity to numerous job markets.

Spring Hill, Boston

The Spring Hill neighborhood appears to be a strong one in attracting millennials. Plus points for the area include many diverse neighborhoods, lots of colleges and solid technical opportunities. The crime rate for Spring Hill is below average and living costs and median income are well balanced.

Morrisville, Raleigh

The town of Morrisville is included in the top list for good reason. The average rental costs and crime rate are low. The median income is similar to that of areas that are more expensive. Much of the Carolina region is booming with new industry, this coupled with a reasonable climate and vibrant social atmosphere, are drawing in migrating young adults.

A total of 25 neighborhoods are included on a list produced by Niche.com. This list is based on surveys of current students and recent college graduates. Factors for migrating include affordable rent, solid employment and lower crime rates. Millennials are also looking for areas that offer them shopping, attractions and nightlife.

The millennial generation is defined as young adults currently between the ages of 18-34. This group has been impacted by changing economic conditions. This brings them to searching for more than just high-paying employment, which is harder to find. Areas that provide a balance of work and life opportunities are where you will find this generation.

Another method to try when determining trends is looking at current college and university enrollments, and the major fields of study. As this generation can be inclined to stay put, if you notice an increase in majors in one college area, look at the potential work opportunities nearby. Focus on a neighborhood that will attract young adults and you can create your own market boom.

What other methods are good for figuring out where young adults are heading next? Do you look at areas with large industrial and commercial construction growth? Let us know what you think!

 
Related Reading:
How to Effectively Market and Rent to Millennials
Reurbanization and the Growing Trend Towards "Walkability"
Is There a “Great Senior Sell-Off” Looming over the Next Decade?
]]> https://www.ezlandlordforms.com/articles/news/495/canadian-real-estate-buyers-spending-more-money-for-less-house/ https://www.ezlandlordforms.com/articles/news/495/canadian-real-estate-buyers-spending-more-money-for-less-house/ Wed, 08 Oct 2014 16:32:16 GMT

Hunting for real estate? Expect to dig deeper into your pocketbook to end up with a smaller house. According to a recent Bank of Montreal survey, Canadians are realizing they will need to spend more to buy their next home. The recently released BMO Fall Home-Buying Report summarizes the results of their latest poll. The September survey polled Canadians who are likely to buy a home within the next five years.

Many potential home buyers are getting quite the reality check as they discover their expectations don’t quite align with the market. Housing prices have risen significantly in Canada over the last several years: "As prices rise, house-hunters need to ensure their savings are keeping pace, especially first time buyers who don't have the leverage of a current house in the market,” explained Martin Nel, Vice President of Personal Banking Products at BMO Bank of Montreal. 

Of prospective real estate buyers surveyed, 43 percent now anticipate spending more on a house than when they first started looking. Their new budgets are 21 percent higher, which represents an average increase of $83,556. Those in Toronto expect to spend more than anywhere else in Canada, and foresee paying an extra $106,883 over their original target price. Montrealers now expect to spend $48,883 more, Calgarians increased their budget by an average $89,389, and Vancouverites plan to spend $81,095 more than they originally intended.

When asked why they increased their budget, 85 percent said prices are higher than when they started looking. A solid 81 percent also feel they now have a better understanding of current market prices. That said, one positive reason offered by 56 percent of prospective buyers is they now have a bigger down payment saved up than previously estimated.

Of those surveyed, only 5 percent of Canadians now expect to spend less on their next home than when they first started house hunting.

But the reality check darkens from there – 55 percent of those polled also believe they will need to buy a smaller house than originally planned, even though they increased their budget. For this group, gleaming condos and expansive detached homes were the most popular choices when first looking to buy. Many are now shifting to smaller or less expensive choices such as townhouses and semi-detached homes.

Sal Guatieri, Senior Economist at BMO Capital Markets, commented on this trend: "By shifting toward semis and townhomes and away from detached and condos, buyers appear to want their cake and eat it too - a backyard for the kids to play in, but also something that won't break the budget, notably in Vancouver and Toronto."

Potential buyers listed different reasons for changing what type of home they were looking to buy. Factors such as price and availability played a role in many buyers expanding their search criteria. After exploring their top choice and viewing what was currently on the market, 61 percent were forced to see what other option may meet their housing needs.

The majority would now choose a freehold home over a condo if they found one within their budget.  With so many new and planned condo projects, 76 percent of buyers are concerned this market is overdeveloped and won’t be able to maintain its value as well as other housing options.

It’s not surprising that the gap between buyers’ expectations and the reality of the current market is largest in the country’s major cities. With more and more detached homes selling for over $1 million in large urban centres and Canada’s continued real estate market boom, many buyers are being priced right out of the market. More current homeowners are choosing to stay put, which means less homes for sale. This creates an increase in demand, which means frenzied buyers, multiple bids and higher sale prices.

Were you unfortunately given a reality check when it came to housing prices in your city? Did you spend more than planned for your current home? Share your experience with us below!

Related Reading:

Rent Affordability: How Do Incomes Stack up to Rents, Since 2000?

New Harvard Study Shows Housing Recovery Will Slow Without Millennials

The Great American Rent Divide: Why & How Rents Are Diverging Nationwide

]]> https://www.ezlandlordforms.com/articles/educational/5/494/avoiding-halloween-mischief-how-apartment-managers-can-minimize-vandalism-and-liability/ https://www.ezlandlordforms.com/articles/educational/5/494/avoiding-halloween-mischief-how-apartment-managers-can-minimize-vandalism-and-liability/ Mon, 06 Oct 2014 11:28:30 GMT

Ghosts, goblins and witches, oh my! Halloween is a fun-filled night for kids, complete with costumes, excitement and too much candy. Unfortunately, it’s also a night with more accidents and mischief. Due to the higher number of people circulating through apartment buildings on this holiday, there is more potential for problems than usual. What can you do as an apartment building manager to keep the night fun and safe for everyone?
Liability is a scary word on any night of the year. With Halloween fast approaching, it’s time to plan ahead. Take a few moments today to ensure your apartment complex is safe and ready for trick-or-treaters. Here are our favorite Halloween tips for apartment building managers.
Do a Walk-Through
Schedule a complete walk-through of your apartment building and grounds a few days before Halloween. Inside, inspect every hallway, stairwell and common area. Look for potential problems such as loose railings, burnt light bulbs, garbage or loose carpets. If your building has security cameras, make sure they are in good working order.
Outside, look for tripping hazards such as loose pathway stones or hoses left out on the lawn. Ensure sidewalks are well lit. Pick up and dispose of anything that could be thrown at the building, such as rocks or debris. Check that all entrance doors shut and lock properly.
Have a Trick-or-Treating Policy
Are trick-or-treaters allowed to go door-to-door? Will candy only be handed-out in the lobby? Establish in advance how Halloween will be celebrated in your apartment building and inform your tenants. Post signs in the lobby and on entrance doors stating where kids may trick-or-treat. Include a start and end time so everyone knows what to expect.
Consider having tenants sign-up if they wish to hand out candy and encourage them to decorate their apartment door. A list of participating apartments can then be handed out to trick-or-treaters.
As an alternative, encourage residents to dress up and bring their candy to a common area for a community Halloween party. Volunteers can hand out chocolates while oohing and aahing over all the cute costumes, perhaps with contests, drinks for the adults, etc to add a community-building element.
Have Extra Staff On Hand
Consider having extra staff on the premises Halloween night. To limit visitors, managers could place a security guard in the lobby handing out treats on behalf of the building residents, rather than allowing entry. This allows neighbors to feel welcome while keeping the building secure.
If trick-or-treating is allowed in the building, have staff circulate the hallways and stairwells throughout the evening. Also have them check all common areas, such as laundry rooms, storage rooms and garbage chutes. Having a visible staff presence in the building can discourage mischief such as graffiti and toilet-papered trees.
Remind Tenants of Halloween Safety Tips
To keep everyone safe, remind tenants of some basic safety tips, such as:

• Glow stick or Halloween lights are best in jack-o-lanterns. If your lease agreement prohibits burning candles, it’s a good time to remind residents of this rule.
• Pets and Halloween don’t mix well. Costumes and loud noises can scare dogs, making them more likely to bite. Pets should be secured inside apartments, away from trick-or-treaters.
• If away on Halloween night, keep all apartment doors and windows locked and lights off.
• Don’t let children trick-or-treat alone. Have them go out in a group if they are old enough or have an adult accompany them.
• Make sure all costumes are safe. Use masks that allow clear breathing and vision, or better yet use make-up instead. Avoid costumes that drag on the ground since they could get caught in elevator doors and escalators.
• All candy should be inspected before eating.  Never allow children to eat opened candy or unsealed items (such as apples) from strangers.
• Don’t allow strangers inside rental units, even on Halloween.

Halloween night can be quite hectic. By being proactive, you could avoid many would-be problems. As Benjamin Franklin once said, “An ounce of prevention is better than a pound of cure.” Although he surely wasn’t referring to Halloween-proofing an apartment building, it still rings true here.
How is Halloween celebrated in your apartment complex? Is trick-or-treating allowed? Do you have a great tip to share for a safe, spooktacular Halloween?

Related Reading:

Is It Legal for Landlords to Install Video Surveillance Around Rental Properties?

How the Crime-Free Association Helps Property Managers Lower On-Site Crimes by 75%

]]> https://www.ezlandlordforms.com/articles/educational/2/492/case-study-how-i-earned-a-29-roi-on-a-deal-i-found-on-the-mls/ https://www.ezlandlordforms.com/articles/educational/2/492/case-study-how-i-earned-a-29-roi-on-a-deal-i-found-on-the-mls/ Wed, 01 Oct 2014 10:52:02 GMT

How do you achieve a 29% return on investment on a rental property?  Before I tell you how I went about it for my last real estate purchase, here’s a disclaimer, albeit probably not the one you’re anticipating: this is a no-fluff account, so don’t expect a story about how I installed gleaming cherry wood floors all over the house and bought everyone on the block a puppy.  I’m not trying to win glamour points at cocktail parties, but neither am I some parasitic mobster; I went into this deal looking to make money, and I don’t think there’s anything wrong with that.  If you disagree, go read Salon.com while sipping a soy latte brewed with fair-trade espresso beans.

I buy houses in blue collar neighborhoods, for a very simple reason: they mostly sell wholesale, to investors, instead of retail to homeowners.  That means a huge discount on the purchase price right off the bat.  I have to put up with jokes from my friends that I’m a slumlord, because white collar people with advanced degrees don’t understand why anyone in their world would get their hands dirty by dealing with blue collar people in blue collar neighborhoods with blue collar problems. 

But it’s a lot easier to find deals that will offer 29% returns in blue collar neighborhoods, rather than manicured picket-fenced suburbs or trendy yuppie districts.

Here’s the thing: you don’t want awful neighborhoods, with high crime rates and more welfare recipients than workers.  You want stable, old working class neighborhoods, the kind of place where Big Jim works the docks and grew up two blocks away, raised by a dad who worked the same docks.  There should be a stable source of decent-paying, working-class jobs nearby.

Some properties in the neighborhood should be updated and renovated, but many should still be old-school properties occupied by the same couple who’s lived there for forty years. 

Have several neighborhoods in mind, in your neck of the woods? 

After looking through a handful of prospective neighborhoods in my home city of Baltimore, I picked one.  I looked at all the properties sold in the neighborhood in the last six months, on both the local MLS and on Zillow.  I looked at every property’s description, every property’s photos, every property’s square footage.  I got a good sense of what an average-sized house in good condition goes for in the neighborhood... and what constituted a good deal on a property that needs repairs.  Then, I did the exact same thing for all the properties rented or available for rent in the neighborhood.  I walked around the neighborhood, looking at the properties that sold or were listed for rent, and refined my sense of prices and rents.



I saw that there were some good deals sold in the last six months, even if they were snatched up quickly.  Not a lot, but a solid half dozen.  If I had only seen one or two, that wouldn’t be enough to make me confident that good deals do come along in this neighborhood.  I saw that I would need to move quite quickly to land a good deal here, though.

Moving quickly means buying with either cash or hard money.  I used cash, and I strongly recommend cash for many reasons, but I’ve used hard money lenders in the past.  They’re expensive, but the good ones will make it worth your while by moving at lightning speed.



I signed up for email alerts whenever new properties in the neighborhood within a certain price range come onto the market.  Whenever a promising new property came on the market, I called my realtors and scheduled an appointment for that day or the next day.  I use a husband-wife team of realtors, so they are far more flexible and can meet me quickly to show me properties.  Seeing properties within 24 hours is not easy, it’s not convenient, it’s a giant pain and involves rescheduling other appointments sometimes or cancelling on a dinner date.  It requires commitment. 



After a few months of seeing properties,  an intriguing property that had been taken back by Fannie Mae came on the market for $17,500.  When my realtor and I met there, we could not get in, because the listing agent was so inept that she gave us the wrong lockbox code.  We left in disgust.

Eventually my realtor reached the listing agent by phone, and she gave him a different code.  We went back over there, and this code didn’t work either. 

My realtor was ready to call it quits on this property, but I pushed him because the property looked so promising, and clearly no other buyers could get inside the property either, since the listing agent was so incompetent that she herself did not know how to get in. 

The third time, I went by myself, after agreeing to call my realtor if the third code worked so he could meet me there to walk through.  The third code did open the lockbox… but the key inside didn’t work in the rusted, busted lock.  I was not happy.

I called my realtor, explained that after a close inspection of the door, it appeared to be secured by screws or nails rather than the lock, and we got permission from the listing agent to enter the property by de-securing it, as long as we re-secured it afterward.  I called my contractor and he met me there, and we got in eventually, and I asked him for a rough quote on a minimalistic renovation, just doing the necessary things: new kitchen, new doors, new windows, new HVAC, new flooring, minor plumbing repairs and updating the bathroom to make it functional.  He quoted me $12,000, I bumped that to an assumed $15,000 in my mind, told my realtor to put in an offer that afternoon for $10,000 on the house. 

We left the house as secured as we found it: no one else was getting in.  After an extended negotiation with Fannie Mae, we agreed on a $12,000 purchase price. 

With closing costs and repairs, I have about $31,000 in the property.  It rents for $1,150.  When accounting for all the expenses, from expected vacancies to property taxes to property management fees to expected annual repairs, I will earn an expected 29.37% annual yield on my investment.  

A reasonable person might argue that I should include the cost of my time, in finding this deal and managing the property.  After all, I could have put that money in stocks for example, and it would have only cost me five minutes instead of 100 hours of work.  A fair critique, but even if I paid myself $20/hour for the 100 or so hours of work, the extra $2,000 cost would still put me at 27.19% annual yield.  The yield includes the cost of property management fees, so the only time invested by me is the up-front time in finding the property, buying it and overseeing the initial repairs. 

So how did I earn a nearly 30% return on my real estate investment?  Not by doing anything brilliant or sexy, nothing that makes for good dinner party conversations.  I did a lot of research, I spent a lot of time in a dingy neighborhood, I saved up $30,000 in cash, I was unrelenting in seeing promising properties within 24 hours of them being listed, I made immediate, as-is offers to settle within ten days. 

I don’t win glamour points for doing deals like this, I’m no big shot developer planning skyscraper projects and cutting ribbons with giant scissors.  But if I did one deal like this every year for 5-7 years, I could retire and go surf in Costa Rica for the rest of my days, which sounds more glamorous to me than working 60 hour weeks trying to be some big shot real estate developer.

 

Related Reading:

How to Screen Contractors, from Humble Handymen to Pricey Pros

Who Is “Wealthy”? The 5-Step Ladder Between Middle Class and Wealthy

]]> https://www.ezlandlordforms.com/articles/news/491/the-skinny-on-micro-cottages-rental-income-mobility-and-minimalism/ https://www.ezlandlordforms.com/articles/news/491/the-skinny-on-micro-cottages-rental-income-mobility-and-minimalism/ Thu, 25 Sep 2014 17:06:00 GMT

Micro-cottages need little introduction in the way of concept, but their uses, designs and purpose vary as much as the imaginations of those who create them.

Some people sell their sprawling suburban homes and live in them.  Others build them on their properties, as guest lodging, or an in-law apartment or extra rental income.  Others hitch them to their car and travel across the continent with them.  Others minimize their environmental footprint with them.  Some combine these functions in ingenious ways.

Consider a micro-cottage that can be rented out to chic-minded travelers through sites like Airbnb for half of each month, bringing in an extra $450/month, ten months out of the year.  Then you slip it onto a trailer and go on a two-month tour of the American Southwest, setting it down wherever the desert vista calls to you. 

Or perhaps imagine living with a zero carbon footprint, with a micro-cottage that features rainwater reclamation, composting toilets and a garden roof.  If that sounds too extreme, maybe it merely serves as guest lodging, putting some extra separation between you and your kooky spinster aunt when she comes and visits.  Eco-friendly tourists are also suckers for this sort of thing, and love to rent these imaginative dwellings for a night or three in the course of their travels.

We could go on, of course, but we know you really just want to check out a bunch of pictures of these, so enjoy the following photo essay!

Related Reading: Are Micro-Apartments the Next Big Rental Trend in Pricey Cities?





 

 

 



 

 







 

 



 

 

 







]]> https://www.ezlandlordforms.com/articles/educational/5/490/how-solo-landlords-and-managers-can-automate-like-larger-management-firms/ https://www.ezlandlordforms.com/articles/educational/5/490/how-solo-landlords-and-managers-can-automate-like-larger-management-firms/ Tue, 23 Sep 2014 11:46:33 GMT

One of the biggest complaints solo landlords report is the never-ending work week, the difficulty in taking a vacation from the madness of managing residential rentals.  If you are one of those landlords who hasn’t had a vacation since taking on rental properties, this article is for you.

Thanks to the Internet and a few trusted contractors, your mom-and-pop home rental business can be run much like a large corporation in no time with some careful planning and a few practice runs.

Unfortunately, most landlords spend their time showing properties, responding to maintenance requests and tracking down rental payments unnecessarily.  Most of the daily operations of maintaining rental properties can and should be automated the same way the big boys do it.  Here are four ways solo landlords can leverage their resources to make it feel like they’ve switched management over to a large company.

Use centralized contact numbers.  Rather than have tenants use your direct home or cell number as their only point of contact, consider utilizing a centralized (800) or local number for that purpose.  There are plenty of choices around for free or low cost service for either (800) or local numbers.  Google Voice provides one such free service for local numbers.  These numbers can be placed on all of your correspondence with tenants as well as any or all of your ads.  The calls to those numbers can then be forwarded to any phone you’d like.  Whenever you need to be away, no more worries about your tenants blowing up your phone, simply have the number transferred to a trusted friend, relative or one of your best contractors.  Your residents will never feel your absence, but you won’t get their phone calls - during your vacation, that is.

There are several call forwarding merchants who offer multiple extensions.  RingCentral has an excellent and affordable service, but is just one of the many companies offering such a service.

You can have an extension for each of your contractors and others who assist you. For instance, if tenants are calling for an electrical emergency, they would press extension 1.  All calls for plumbing would press extension 2, and so on.  Of course, you would have an upfront agreement with your contractors that they would take these calls  directly in your absence.    You would also need to provide them with a pre-approved service amount limit as well as your definition of what constitutes an emergency.  This agreement should be in writing and signed by both parties before utilizing it.  It should go without saying that the contractor should also be one who has been carefully vetted by you.

Another option would be to have another central person identified who would take all calls as you would and then field the calls to the appropriate contractor(s).  Either way, the tenants have one central number to call and never have to know you’re on vacation.  More importantly, tenants will never be able to complain that their service calls went unanswered while you were away funning in the sun.

This contact number can be introduced at any point so don’t worry that you started out using your cell or home phone number.  The introduction of this new system should be communicated to your tenants in writing as soon as you decide to utilize it.  The tenants should be made aware of its effective date in that communication as well.

Delegate Tasks.  Some states have no licensing requirement for property management which means you can have someone other than yourself or a licensed real estate agent show your home(s) for you.  A great resource for this task is trusted relatives and/or friends who are already familiar with the layout and amenities of your home(s).  Another good resource is college students (preferably seniors or graduate students) who are always eager to make extra money for college.  A quick tour of the home to help familiarize them with the home’s best features and small details is all that is needed here.  One precautionary measure would be to have an inexpensive camera installed, like a nanny-cam setup that can be easily monitored.  Make everyone aware there are cameras in the house as well, just in case.  An inexpensive combination lockbox can be left on the door for easy access.  It is also a good idea to have a backup person on standby to change the code during your vacation if necessary, as a safety precaution.

Automate everything.  If you haven’t already learned the lesson of not showing up at your property to pick up the tenant’s rent, you need to learn it now.  This should never be a part of your practice; it’s unprofessional, not to mention potentially dangerous.  From PayPal to ACH bank account withdrawals to automated rent deductions from tenants' payrolls, landlords and property managers have many options available to collect rent electronically.  Not only will this automated system be convenient for everyone involved, experts say it could easily increase your compliance rate with most or all of your tenants paying in a timely fashion.

Hire an eviction service.  Did you know that you can hire someone to handle your evictions for you without costing you the farm?  All you need is excellent documentation, the fees charged by the court to process your eviction, and a nominal fee for a representative to actually present your case in court.  This service is provided in most U.S. states for landlords and property managers, and the good news is its affordable.  Whenever you’re unavailable for an eviction hearing or would just prefer not to go, you have services available to do it for you.  A few options include Nationwide Evictions and ClickNotices.com; check to see if they service your area. 

Now that you know you don’t have to always be present for your rental business to run smoothly, get your paperwork in order, line up all of your resources, and start packing for that much needed vacation you’ve been avoiding for years.  

What’s in your automation plan that’s not included here?

]]> https://www.ezlandlordforms.com/articles/educational/5/488/can-condo-associations-ban-marijuana-use-even-where-legal/ https://www.ezlandlordforms.com/articles/educational/5/488/can-condo-associations-ban-marijuana-use-even-where-legal/ Tue, 16 Sep 2014 11:06:31 GMT

When condiminium and homeowners associations (HOA’s) around the country tell residents (homeowners and renters alike) to “Put that in your pipe and smoke it,” they most assuredly are not referring to marijuana, no matter what the new laws say.

A Brighton, Colorado homeowner found out the hard way when he tried growing hemp, a non-intoxicating derivative of marijuana, in his yard.  Despite his attempt at educating his homeowner’s association on the facts about hemp and its dissimilarities to marijuana, the board still enforced an existing rule, reportedly commenting, “We’re not going to let anyone grow marijuana here.” 

Banning the growth of marijuana or hemp is one thing, but others around the country aren’t so certain HOA’s have the right to tell people whether or not they can smoke marijuana in the privacy of their own homes, especially in states where marijuana use is legal.  Despite the fact that HOA’s have been regulating every other aspect of homeownership from what colors owners can paint their houses to where they park their vehicles, attorneys around the country are uncertain whether this issue will fall in line with all the other HOA regulations.

Since the legalization of recreational marijuana in Colorado and Washington state, and the medical use in several other states (23 others as of this writing), residents may think they are free to use in the privacy of their own homes and communities.  Not necessarily, according to attorney Bob Gaglione with the Gaglione Law Group.  “"Homeowners associations can obviously enact restrictions banning illegal marijuana use or any other criminal conduct, but in jurisdictions where medical or recreational marijuana is legal, the answer is less clear."  He added that in California where medical marijuana is legal, HOA’s can still limit marijuana use.  “It’s especially true if the odors are not confined and disturb the quiet enjoyment of the use of the property by neighbors, thereby creating a nuisance.”  Even so, consideration still has to be given to those citizens who now have the right to use marijuana recreationally and medically.  Gaglione suggests “...HOAs must be mindful of both the need to make reasonable accommodations for qualified individuals and the right to regulate the community for the overall good of the citizens.”

Richard Thompson of Portland Oregon, and owner of a management consulting company specializing in condominiums and homeowner associations, disagrees. "The fact that people may be legally entitled to smoke doesn't mean they can do it wherever they want, any more than they could walk into a restaurant and light up a cigarette."

Still, professionals working with HOA’s and the new marijuana laws say it is mostly becoming a matter of regulating common areas.  Inevitably there will be those residents who want to exercise their rights and those who want nothing to do with pot smoking, legal or otherwise.

This issue became clear when the Carrillo Ranch homeowner’s association in Chandler, Arizona withdrew a proposal to ban residents from smoking medical marijuana on their front and back porches.  According to one resident there, “"This is a personal-freedom issue where people were going to dictate how other people should live."

A Boulder, Colorado attorney summed up the smokers' rights position with, “[HOA’s] can’t themselves impose something contradictory to state law.  It’s legal privately.  They wouldn’t survive legal challenges.” 

What do you think?  Should HOA’s have the final say over whether or not residents can use marijuana in their own homes where it is legal to do so? Have you run into this issue on your properties?

 

Related Reading:

Washington Landlord Tries to Ban Marijuana - And Kicks a Hornets' Nest of Legal Questions

A Sticky Situation (Pt. I): Can Landlords Ban Legal Marijuana Usage & Growth on Leased Premises?

The Rise of Grow-Ops: How They Work, Property Damage Caused & How to Avoid Them

]]> https://www.ezlandlordforms.com/articles/educational/1/487/case-study-accidental-military-landlord-to-diy-military-rental-expert/ https://www.ezlandlordforms.com/articles/educational/1/487/case-study-accidental-military-landlord-to-diy-military-rental-expert/ Mon, 15 Sep 2014 12:29:56 GMT

Five years ago, my husband and I got married and moved into a larger home. That left us with one home that we had to decide to sell or rent. The real estate market was still soft in 2009 and our home is situated just 10 minutes from one of the largest military bases in the United States: Joint Base Lewis McChord (JBLM), WA. It boasts an active duty military population of 40,000 and a population three times that of civilian support!

The military moves on average every two to three years.  With a robust turnover, we decided our beautiful 3 bedroom, 2.5 home with 2,400 square feet would be a perfect rental home for a military family. The big question we faced was “how do we get in front of those in the military community who are inbound from other areas?”

Connecting With Military Renters

The local housing office at the Joint Base Lewis McChord was very helpful. They advised us of a website called AHRN.com (Automated Housing Referral Network) that was very popular, which had all U.S. military bases and people could find housing from all over the world.

Our first couple of renters were referrals from AHRN.com. Both rented the house from out of state, sight unseen. One of them had a local friend come over to check out the place to ensure it looked like the pictures. The next renter we had was a drive-by. We never experienced a transition where the house was empty for even one day, until this year!

The Changing Military Rental Environment

This year was a different story. We began marketing our rental three weeks before it was going to be vacant without any bites until (of course) we went on vacation. We were feverishly responding to phone calls between vacation activities and having our daughter show the rental. Despite the challenges, my husband and I felt confident that the home would rent before the current tenants vacated. In the past, we would start panicking as the vacancy date approached (too soon) and then the perfect military tenant would come along just in time.

We came back from our vacation believing we had a renter secured… but it fell through. Soon, our tenants were on their way and we were one week into an empty house! There were “For Rent” signs everywhere in our neighborhood. We improved the curb appeal, made the house sparkle inside and out, held 3 open houses and decided it was time to look at other marketing options.

Our rental marketing research led to the following sources: Craigslist.org, Postlets.com and another military real estate advertising option. After posting on the other sources, we received some inquiries, but all were flakey and no-showed to appointments.

Two weeks into the house being empty and with no real viable candidates in sight, we were starting to panic. We had done everything right. We were starting to believe that the changing military environment was impacting our ability to rent our home to a wonderful military family. That’s when we received an inquiry on AHRN.com from a military family moving from Hawaii who ended up signing a three year lease agreement! We later found out that orders had been delivered late and that was the reason for the delay in relocation for many military families.

Why I Recommend Renting to the Military

I’ve owned and managed a previous rental in Sacramento, California. I have a close friend who is a 30-year Army veteran who is now a property manager with 90 rentals under management. We both agree that in our experience renting to the military is the best option. With a steady job, frequently higher standards and the ability to pay their rent through what is called allotment, the military community is a wonderful pool of tenants! The allotment option means that you get paid on time, every month, through direct deposit straight from their paycheck. Can’t beat that! Lastly, I come from a long line of those that served our great country and by leasing to those who currently serve, I feel in some small way I am saying “thanks” and giving back.

Lessons Learned

• Start planning early for repairs and marketing.
• Get curb appeal going as quickly as possible.
• Take high quality and up-to-date photos and videos.
• It’s never too early to start marketing (post listings and sign in front of yard as soon as you get notice). Many in military community are searching 60-120 days before they relocate.
• Post rental marketing listings on all websites as you never know which one will produce the right tenant at the right time.
• Don’t be afraid to spend a little money on marketing. You’ll reap the ROI by filling the property faster.
• Be very responsive. Military folks are making decisions quickly because they don’t have a lot of time. Don’t miss an opportunity because you missed an email or didn’t reply to a call quick enough.
• Be willing to negotiate for on-time rent via allotment, reduced security for great credit, etc.

 

About Lisa Klinkhammer

Lisa Klinkhammer owns her own marketing agency Red Door Group out of Tacoma, WA where she lives with her beloved husband, three kids and furbaby. She has a passion for helping companies grow by enhancing, engaging and expanding their brands and products in the digital market space. (Her company Red Door Group has also worked with AHRN.com, in addition to her personal use of it.) When she’s not helping companies or kids grow, she loves hanging out and capturing life via the camera lens.

 

Related Reading:

Beyond the Basics: Mistakes by Intermediate Landlords & Property Managers

Editorial: Why Real Estate Professionals (& All Business Owners) Should Offer Military Discounts

]]> https://www.ezlandlordforms.com/articles/educational/5/471/screening-contractors-and-vendors-to-avoid-crooks-criminals-and-crackpots/ https://www.ezlandlordforms.com/articles/educational/5/471/screening-contractors-and-vendors-to-avoid-crooks-criminals-and-crackpots/ Fri, 12 Sep 2014 16:08:38 GMT

Tenant screening is routine in the rental business, and for good reason, but too often landlords and property managers overlook the necessary background checks for contractors and vendors.  While you might consider checking for proper licensing and bonding information doing your due diligence, your duty to provide a safe environment requires a little more.  Consider, for example, that the painter you just hired has a criminal history you know nothing about.  A thorough background check could save your tenants’ laptop from being boosted, and you from an expensive lawsuit.

For some, it may be obvious to complete a criminal background check on an individual contractor or handyman, but your responsibility may not be as clear when dealing with larger commercial companies who have their own employees or subcontractors.  It is still a good idea to assume nothing; asking what measures a company takes to ensure their employees and contractors are devoid of any criminal history is the smartest way to protect both your tenants and yourself.  

While workplace violence is uncommon, it is far better to be prepared than to not.  Workplace theft is unfortunately quite common, and more common still is tenant unhappiness with the quality of work.

Here are some ways you can protect your tenants and yourself from vendors or contractors who may have serious criminal histories:

Checking online customer review platforms, such as the Better Business Bureau and AngiesList.com, is an easy and inexpensive way to start.  As always, look for providers with more than just one or two reviews, and look at the critical reviews as well as the positive ones.

Every contractor/vendor with whom you do regular business should sign a contractor agreement which includes their consent to a criminal background check.  Any vendor or contractor who is opposed to this practice begs the question of "Why?"  Use your best judgement here.

If you do not already have a vendor management and compliance policy in place, now is the time for you to consider implementing one.  Your policy should clearly state that all vendors are subject to criminal background checks.  It should also indicate that larger commercial companies have to provide a copy of their screening policies for their employees and contractors.  Having a copy of that policy on file for these vendors should aptly cover you in the event of any legal action.  Of course, all of your employees must have criminal background checks on file as well.

If your company is large enough to have someone designated to oversee vendor management and compliance, all the better.  If not, you can manage this task on your own with a simple spreadsheet which lists all of your vendors, the date and type of screening tool used (either the same resource used for screening tenants or a more thorough vendor screening service).  Your spreadsheet should also include the results of the criminal background check.  Of course, the criminal background reports should be maintained in the vendor’s file.

Naturally there are costs associated with criminal background screenings.  The costs of these screenings should be passed on to the vendors and contractors.  If you choose to use a vendor screening service, the service may be a bit pricier than the usual criminal background checks, however many of these services provide thorough histories which are well worth the price.  Be aware that a vendor/contractor’s refusal may be an unwillingness to pay and not necessarily an indication that they are hiding something.  Nevertheless, ultimately it’s your reputation and business on the line if something were to happen to one of your tenants or the work performed is shoddy and must be redone.

Remember the old truth: “An ounce of prevention is worth a pound of cure.”

Do you have a vendor management and compliance policy in place?  How do you screen your vendors/contractors?

Related Reading:

How to Screen Contractors

Preparing Vacant Properties for New Tenants

Maintenance Tips for Property Managers

]]> https://www.ezlandlordforms.com/articles/news/486/coming-soon-listings-smart-marketing-strategy-or-harmful-gimmick/ https://www.ezlandlordforms.com/articles/news/486/coming-soon-listings-smart-marketing-strategy-or-harmful-gimmick/ Wed, 10 Sep 2014 11:08:32 GMT

It’s the end of the month when you receive notice that your tenant will be moving out in 30 to 60 days (as your lease contract requires). Do you begin advertising immediately or do you wait?

While realtors and landlords puzzle this, Zillow has answered by turning to the movie-industry for inspiration, with "Coming Soon" listings.  In Summer 2014, Zillow announced in a press release that it will be adding "Coming Soon" listings to its repertoire of homes for sale.  The new feature allows Zillow Premier Agents and local multiple-listing services (MLS's) to market their listings up to 30 days prior to inputting them into the MLS.  Many realtors are in an uproar over this new marketing strategy and some say it will hurt sellers in the long run.  Zillow disagrees.  Jeremy Wacksman, Zillow’s Vice President of Marketing and Product Management, says, “Zillow is committed to giving buyers access to inventory that was previously hard to find, so they can make better decisions. By offering a glimpse into a market's future housing inventory, home shoppers can rest assured they have the broadest possible view of the local market to find the right home, and sellers can feel confident their home is being marketed as widely as possible." 

"Coming soon" is certainly not a new phenomenon as scores of investors and realtors have practiced this for years, albeit in the more traditional way.  Investors are accustomed to putting the word out in their local communities and to other investors about a home they just purchased and were preparing to sell or rent.  Realtors would often get the word out to their colleagues and inner circle about a new listing that was pending seller’s signature or awaiting final touches by the seller.  So what’s the hype all about now?

Primarily the concern is that Zillow is once again sticking its nose where realtors feel it doesn’t belong and interrupting the way they do business.  Some agents feel these listings will limit the sheer numbers of potential buyers who will be exposed to them, and increase the chances for listing agents to "double dip" (act as dual agents by representing both seller and buyer).  Another realtor concern is that these prelistings could also inadvertently encourage more FSBO (For Sale By Owner) listings, and generally lower the standards realtors claim they work so hard to maintain.

Some MLS's have gone so far as to ban premarket listings, in an effort to protect their hold on the home sales market.  As often happens with disruptive innovation though, the entrenched players trying to protect the status quo may end up merely alienating consumers, who want what is best for themselves, not what puts the most money in agents' pockets or protects the National Association of Realtors.

According to a recent Inman report, Zillow’s Chief Revenue officer, Greg Schwartz had this to say about pre-MLS listings, “the feature allows listings to land on the MLS with a ton of velocity with buyers dreaming home-specific dreams and ready with pre-approval letters from lenders.”  Schwartz reportedly added, “[we] frequently see listings posted to [our] site before they hit the MLS, and this feature puts a framework around [that practice].” 

The question then remains will sellers, landlords and property managers actually benefit from this pre-exposure or will it somehow hurt their potential sales when it finally does hit the market?  Another concern floating around is the fear that this practice will attract deal-hunting professional investors and open up the floodgates for early low-ball offers.

Most believe Zillow will be offering this service to owners, landlords and property managers for their rentals as well, after an initial period when it is only available to Zillow Premier Agents.  Tell us what you think about the practice; will it help or harm your listings to have them publicized up to 30 days before they’re actually available?

]]> https://www.ezlandlordforms.com/articles/educational/1/485/science-fiction-virtual-reality-poised-to-reinvent-real-estate-and-rental-listings/ https://www.ezlandlordforms.com/articles/educational/1/485/science-fiction-virtual-reality-poised-to-reinvent-real-estate-and-rental-listings/ Tue, 02 Sep 2014 09:51:31 GMT

There has been plenty of buzz in the last several months about Oculus Rift, the virtual reality company bought by Facebook for $2 billion (to give that its fair weight in zeroes: $2,000,000,000).  Some laud Facebook’s decision as prescient, while others criticize it as folly, but the potential uses of virtual reality in everyday life are both plentiful and powerful, when and if it becomes affordable and widely adopted.

Consider touring a prospective rental property or real estate listing, from the comfort of your living room.  The landlord or listing agent has walked through the property and done extensive image mapping, which renders a virtual, 3D “environment” that is available for prospective renters/buyers to walk through at their leisure.  If done properly, they can even open cabinets to view inside, open closets and otherwise inspect the nooks and crannies of the house just like a diligent inspection of the physical property. 

Mapping technology could even record audio data, such as creaks upon stepping on stairs, ambient noise, etc., although landlords and listing agents will probably choose not to share these unflattering sounds.

The experience would be interactive, in high definition, and very real seeming.  That said, early adoption will probably be limited to high-end properties, leasing for a cool $6,500/month, or perhaps available for sale for seven digits.

Nor do the real estate implications of virtual reality end with simply seeing homes the way they look now.  Theoretically, tenants could impose 3D renders of their own furniture in the space to see how it would look, or swap in that elegant couch they’ve been eying up at Pottery Barn.  Prospective renters or buyers could change the color of the paint on the walls of various rooms to see how they might look, or different color carpeting, or hardwood versus bamboo flooring.

Potential buyers or tenants could even see the way sunlight moves through a room over the course of a day, or at different times of year.  Sound like science fiction?  The software would know the exact location of the house, and its orientation, based on simple map data – easily imaginable even with today's technology. 

There are limitations to what virtual reality could provide, of course.  A virtual reality tour would not capture bad odors, for example the smell of mold.  It would also be based on a single snapshot moment in time, and would convey the condition of the property as it was in that moment.  Perhaps a roof leak has sprung up since the mapping was done, ruining a bedroom ceiling and creating the aforementioned smelly mold?  Of course, today’s photographs of listed properties suffer these same drawbacks.

There are also a variety of technical challenges still facing virtual reality, including resolution, latency, field of view and the sheer processing power needed to render 3D graphics realistically.  These, combined with the economy of scale required to bring prices down to widespread consumer adoptions levels, will prove critical hurdles for VR companies in the next seven to ten years.

Still, virtual reality interactive tours could offer a much deeper impression of a property before buyers or renters have to physically visit the property, which would certainly make realtors’, landlords’ and property managers’ lives easier by filtering out all but the most interested parties before they made a physical appointment.  People relocating to another town would also have access to far more detailed information about prospective new homes, and may feel more comfortable signing a lease agreement long distance, without physically seeing the rental property first. 

While today’s virtual reality remains largely the realm of gamers and techies, ten years from now virtual reality will undoubtedly have far greater uses and implications, particularly in the real estate industry.  And it has already started, to an extent: U.K. startup company Virtual View has raised over half a million dollars to create an app offering 3D rendered tours of high-end properties. 

Where do you think virtual reality is headed, in the world of real estate?

Related Reading:

Tomorrow's Trends in Housing - What Amenities Will the Next Tenant Look for When Renting?

Using Psychology to Hook Prospective Renters & Fill Vacancies Faster

]]> https://www.ezlandlordforms.com/articles/educational/1/484/using-psychology-to-hook-prospective-renters-and-fill-vacancies-faster/ https://www.ezlandlordforms.com/articles/educational/1/484/using-psychology-to-hook-prospective-renters-and-fill-vacancies-faster/ Wed, 27 Aug 2014 18:21:42 GMT

The French poet and philosopher Paul Valery once stated, “The purpose of psychology is to give us a completely different idea of the things we know best.”  And because there’s nothing landlords know better than renting homes, perhaps its time for some different ideas when it comes to getting out in front of the competition.  Can psychology be used to provide landlords with the competitive edge?  Some experts believe when it comes to pricing and enticing certain emotions from residents the answer is YES.

Let’s first take a look at how the psychology of pricing can aid landlords and property managers in setting the perfect price to get their homes rented faster than their competitors.  

Experts say there is a psychology to numbers and pricing and many professionals have relied on this psychology for centuries when it comes to consumer pricing and marketing products.  There is a concept known as ‘left digit anchoring’ which retailers use to market their goods and get the best perceived pricing.  For example, an item priced at $3.99 is perceived to be far cheaper than the same item priced at $4.00.  In reality, the difference is of course a mere penny, but researchers say that in the minds of the consumer, the perception is of real savings.  Of course, the primary factor driving this concept of ‘left digit anchoring’ has to do with the first digit being lower and causing the consumer to initially perceive a lower price, but same or similar value.  The same can be said when pricing rental homes.  Pricing a home at $1200 is perceived by the average renter as a higher price than that same rental priced at $1199.  Perception rather than reality is the key and could be the difference that landlords need to rake in an advantage over the competition.  

There are other intuitive - but not obvious - factors that affect perceived pricing.  Shorter numbers appear smaller; for example, $1199 is subtly perceived as lower than $1,199, and similarly $1,199 is perceived as lower than $1,199.00.  Landlords interested in knowing more about how this and other psychological pricing tactics work can click here to read more. 

What happens once you’ve gotten the price just right based on your ‘left digit anchoring’ tactics?  Hopefully, you have now amassed enough of a crowd to begin your home tours.  But after those incredibly skillful jedi mind tricks, you’ll need something more to seal the deal than the usual builder-beige colored walls to entice them to sign on the dotted line.  While the competition is drowning in the drabness of the once popular ‘neutral’ colors, you may want to take advantage of color psychology to help entice potential prospects to sign with you instead of the competition.  

Color can cultivate certain emotions.  Each room has its own personality and can, with the right colors, elicit certain emotions from the people spending time in those rooms.  For instance, muted shades of green, blue and lavender are known to create a calming effect.  When done right, using one of these colors in a bathroom can present a spa-like atmosphere.  Who wouldn’t want to have that spa experience in their own home?

Brighter colors such as reds, oranges and yellows are believed to be more inviting and are generally recommended for rooms where people tend to gather such as family rooms and kitchens.  Also, color experts say choose room colors according to square footage in the room as well.  Lighter colors can make a smaller room appear larger and darker colors can bring a sense of coziness to a larger room.

There are also inexpensive but ornate personal touches that can be added to any home to give it personality and make it stand out in prospective renters’ minds.  Whether using distinctive knobs and handles on doors, cabinets and drawers, or 1950s-aesthetic appliances, or Cuban-inspired leaf-shaped fan blades, there are countless ways to add personality and fun quirks by choosing everyday objects with care.

Use your knowledge about renters in your area along with your newfound knowledge of pricing and color psychology to give your prospects what they want long before they or your competitors know what hit them.  In this highly competitive rental market, psyching out the competition sounds like a good idea.

What tricks and techniques have you borrowed from other professions to gain the advantage over your competitors?  Have you tried these pricing and use of color techniques in your homes?

Related Reading:

5 (Relatively) Cheap Upgrades to Boost Market Rents & Property Values

How to Effectively Market and Rent to Millennials

]]> https://www.ezlandlordforms.com/articles/educational/4/483/taking-the-next-step-an-overview-of-the-landlord-tenant-appeals-process/ https://www.ezlandlordforms.com/articles/educational/4/483/taking-the-next-step-an-overview-of-the-landlord-tenant-appeals-process/ Tue, 26 Aug 2014 14:35:23 GMT

While many landlords have been in court once or twice to go through the eviction process, most have never been through the appeals process.  Once a landlord-tenant case is decided it may be appealed to try to overturn the decision.  While each municipality has its own (very specific) set of rules and procedures regarding appeals, here is a basic overview of the appellate process.

Who can file an appeal? 

Both landlords and tenants can appeal a decision by filing for an appeal within the time period designated by that state or municipality.  Each court has different filing deadlines so it is essential to review the rules for the court that heard the case and adhere to those guidelines.  However, it generally involves filing a form for appeal and paying a filing fee which is set by each individual court.

Do you need representation? 

Neither landlords nor tenants are required to hire an attorney to represent them for a landlord-tenant court appeal.  When one is representing themselves, this is referred to as “pro se”.  It is important to understand that when appealing a case, you cannot be represented by someone other than yourself, unless it is by an attorney.  Usually, local and state court jurisdictions do not permit representation of a non-attorney on behalf of the appellant (plaintiff) or the respondent (defendant). That said, depending on the jurisdiction and the rules set by that specific court, appellants may be limited to only raising legal issues from the original case and may not be allowed to address issues of fact or new issues not raised in the original case.  Further, depending on the court and the circumstances surrounding the appeal, the appeal may be heard by a special review board or a new judge may rehear the case altogether.  To maximize their chances of success, a landlord may want to consult an attorney or hire an attorney to represent them.  If deciding to consult an attorney, landlords should look for an attorney that has experience with landlord-tenant appeals specifically and aim to find an attorney that has experience in the court jurisdiction where the appeal will be held.  There are several resources available to assist landlords find an attorney if they decide to do so, including a landlord-tenant attorney directory on this website.

What costs are usually involved?

Legal fees vary by state and sometimes county/jurisdiction, and even district to district. When choosing to be represented by an attorney, make sure that all cost are clear and concise ahead of time to prevent any surprises.  Attorney’s may charge flat fees, or by the hour and may require a large amount upfront to hold and use towards fees and court costs.  Each court has their own set of fees and it is important to check with the local courthouse for the precise costs associated with eviction appeals.  An appeal bond is required in some states, such as Tennessee.  These bonds are set up to be sure that the court costs related to the appeal will be paid by the appellant; no matter how that case is decided.  Often, this can be done through the purchasing of a surety bond or a cash bond.  It is important to check with the appellate court to get specific information on appeal bond requirements.  Understanding the costs associated with an appeal may be helpful in determining if it is wise to file the appeal.  Sometimes, the cost may outweigh the benefit.

Does the tenant remain in possession of the property during an eviction appeal process? 

In most U.S. states and local municipalities, yes.  Generally tenants are required by law to pay rent during the appeals process; however, how rent is paid varies by jurisdiction.  In some states, tenants must pay rent directly to the court by sending payments to the County Clerk’s Office.  In others, tenants may be required to pay rent through the use of an escrow agent or directly to the landlord.  Because the rules vary so widely, it is imperative that landlords and property managers be aware of the rules in the jurisdiction where the proceeding is taking place.

While the nitty-gritty details of the appeals process is determined by the court that will hear the appeal, and appellants must adhere to the court’s requirements, the appeals process is another opportunity to be heard and should be taken advantage of if possible.

]]> https://www.ezlandlordforms.com/articles/news/481/rent-affordability-how-do-incomes-stack-up-to-rents-since-2000/ https://www.ezlandlordforms.com/articles/news/481/rent-affordability-how-do-incomes-stack-up-to-rents-since-2000/ Tue, 26 Aug 2014 09:37:47 GMT

(graph courtesy of The New York Times)

 

There has been a lot of attention paid to rising rents in the last few years, but how do incomes stack up?  Are rents outpacing incomes in America?

First, a note on inflation: to compare rents and incomes from different years, we have adjusted all dollars to 2014 dollars, so that inflation does not impact either income or rent numbers at all.  The numbers below reflect current dollar values.

Adjusted median incomes have actually decreased 3.1% since the Great Recession ended in 2009 (you read that correctly – since the economy started improving). For economists who have been flabbergasted as to why half of Americans still think the U.S. is in a recession, when the recession ended five years ago, inflation-adjusted incomes should provide a straightforward explanation.  (In a recent poll co-conducted by NBC and The Wall Street Journal, 49% of respondents stated that they believe the United States is currently in a recession, a troublingly high number considering that the recession ended in June 2009.  As a refresher from ECON 101, the technical definition of a recession is a period of decline in gross domestic product [GDP] lasting at least two consecutive quarters.)

The news unfortunately worsens from there.  Not only are median incomes lower today than they were five years ago, but they are also lower than they were ten years ago, and lower still than they were at the start of the millennium in 2000 (see the graph above).

The good news is that, after reaching a millennium low in late 2011, inflation-adjusted incomes have been on the rise over the last two and a half years.

As for rents, the news for renters is better than they might expect, and not so impressive as landlords may have thought.  While inflation-adjusted rents are up 13.9% since 2000, that growth occurred almost entirely in just the first two years.  Rents have been fluctuating around $750 (in 2014 dollars) since 2002, and in the second quarter of 2014 sat at $756, almost exactly the same as 2002 (when the median asking rent was $750). 

Looking at inflation-adjusted rents since the Great Recession ended in 2009, rents are actually 3.9% lower today at $756 than they were in 2009 ($786).

So why the perception that rents are increasing so dramatically?

One obvious answer is that if inflation-adjusted incomes are down, then even rents that only rise to match inflation will seem to be increasing, as rents are making up a higher percentage of Americans’ incomes.  Many pundits refer to this as the “affordability gap”: incomes stagnating or declining, while rents and inflation rise.

To delve slightly deeper into this affordability gap, consider that most personal finance experts recommend that renters do not take on a lease agreement with rent comprising more than 30% of their household income.  In 2000, 38% of U.S. renters were paying more than 30% of their household income towards the rent, whereas a recent Harvard study found that in 2013 a full half of renting households were spending over 30% of their income on rent.

The second reason there is a perception of skyrocketing rents is a little more subtle.  In major cities, rents have grown much faster than overall rents in the U.S., while rural rents have remained flat or declined.  Rents in major cities are far more publicized, and are more commonly tabulated by research firms.  Consider all the publicity over rents in San Francisco, which have risen a shocking 19.1% from $3,023 in June 2013 to $3,600 in June 2014, according to Priceonomics.  But no one talks much about the rents in rural Kansas.

Research firms often only track larger cities' rent data, ignoring rural areas, towns and most small- to mid-size cities.  The biggest company that tracks residential rents, Reis Inc., compiles data for the top 79 metropolitan areas in the country, and even then they only track apartment rents, not all rents, so their numbers end up being far higher than Census Bureau numbers.  This creates a perception that nationwide rents are skyrocketing, which is simply not true – at least not when looking at all Americans, and not just those living in major metro areas.

So where is rent affordability headed?  Among economists, there is cautious optimism that the U.S. economy has reached an inflection point in income and employment growth.  In July, employers added 209,000 jobs to payrolls, which marked the sixth straight month that employers added more than 200,000 jobs/month (for context, the last time there was a six month streak of 200,000+ jobs added per month was in 1997).  The long-term unemployed (defined as Americans looking for a job for 27 or more weeks) fell to 3.16 million last month, down a dramatic 25.6% from 4.25 million in July 2013.  But 3.16 million is still a disturbingly high figure (in December 2007, the number of long-term unemployed was only 1.32 million).

Jobs have grown by over 1.09 million this year, strengthening the U.S. economy, but the nation's 6.3% unemployment rate remains higher than a healthy economy's unemployment rate of 4.5-5%.  The next step will be income growth, which will allow for further economic growth, lower rental vacancy rates and perhaps higher asking rents for landlords (beyond merely keeping pace with inflation, as they have for the last twelve years).

What's your perception of rents versus incomes over the last decade?  Where do you think the U.S. is headed, economically?

]]> https://www.ezlandlordforms.com/articles/educational/10/480/accidental-landlords-receive-tax-gift-from-uncle-sam/ https://www.ezlandlordforms.com/articles/educational/10/480/accidental-landlords-receive-tax-gift-from-uncle-sam/ Thu, 21 Aug 2014 11:39:25 GMT

If you’re one of the so-called “accidental landlords” who is leasing out your prior primary residence because you couldn’t sell over the past few years, you may be in luck when it comes time to sell.  A recent change to the Taxpayer Relief Act has expanded tax exemptions on capital gains from selling real estate… with a few provisions, of course.

You might recall that in 1997, the Taxpayer Relief Act was born and provided millions of Americans a way to avoid paying taxes on the profits from selling their homes.  Specifically, single homeowners were allowed to profit up to $250,000, while married couples were allowed up to $500,000 in profits from the sale of their primary home. Well, a lot has changed in the American tax laws since then, but the capital gains provision is one which maintained its advantages for many homeowners.  In fact, there are even a few added bonuses since its inception.  Before recent changes to the Taxpayer Relief Act, the tax-free gains on the sale could only be used to purchase another home.  But now Uncle Sam is allowing homeowners to do whatever they’d like with the profits from a primary home sale.

Now that home prices have begun to rise again, albeit slowly in some areas, homeowners are now selling their homes and taking advantage of pocketing what would otherwise have to be forked over to Uncle Sam.  But, before you contact your local real estate agent, there are a few things you need to consider; after all we are talking about taxes here.  While Uncle Sam is being extremely generous with this rule, there are certain criteria which have to be met.

First, and foremost this law applies only to a primary home in which you have lived for at least two years prior to selling.  Don’t panic if your home is rented now because there’s also a stipulation which allows a homeowner to have rented for a couple of years as well, as long as the home has been owner occupied at least two years within a five year period prior to selling.  In other words, if you lived in your home for at least two years then rented it out around 2011 or afterwards, you are eligible to sell your home and keep any and all profits up to $250,000 (if single) and $500,000(if married) all to yourself.  The even better news is that you do not have to be residing in the home when you sell it.

Lenient as Uncle Sam may be with homeowners, he is not so generous with investors.  Unfortunately, investors who purchased properties for the sole purpose of renting them out are not allowed this same tax break.  In fact, even when investors have made similar moves and occupied a previously rented home within the same time frame (two of the last five years), there is still no allowance for the break on capital gains.  The sole purpose of the home purchase must have been for owner occupancy in order to qualify.

This is good news for any homeowner, but especially for those living in areas that have either fully recovered or are well on their way such as Miami, Denver, Dallas and a few other cities in Texas, and more where homeowners are likely to see some real profits.

For homeowners in other areas on the rise, it’s time to start watching the clock and remember this formula, 2:5 (two years of occupancy within a five year period before selling).

Conceivably, for those accidental landlords who found themselves praying for a break over the past few years from tenant tantrums and plumbing problems, your prayers may have been answered.  

Are you an accidental landlord poised to take advantage of this change in tax law?  

]]> https://www.ezlandlordforms.com/articles/educational/2/462/the-hard-facts-about-hard-money-lending/ https://www.ezlandlordforms.com/articles/educational/2/462/the-hard-facts-about-hard-money-lending/ Thu, 21 Aug 2014 11:05:47 GMT

Private lenders have been around for, well, ever: as the saying goes, lending money is the second-oldest profession.  In advanced economies today, private or “hard money” loans are used by real estate investors ranging from professional renovation investors with excellent performance records to desperate last-resort borrowers with terrible credit histories.

While there remain some back-alley loan sharks around doing shady deals with desperate investors who aren’t responsible enough to borrow from anyone else, most hard money lenders are open, ethical businessmen and women with real estate acumen and extra cash to invest.  There are even some formal banking institutions who engage in hard money lending.

Here are some cold, hard facts about the hard money industry to help you determine if  hard money is the right money for you.

Fact #1:  Hard money deals are often sought after for their quick turnaround (usually within 7-14 days to process).  Any investor interested in flipping a property knows that time is of the essence and needs to have funding available sooner rather than later.

Fact #2:  One way in which hard money lenders differ from more conventional lenders is in the fact that many hard money lenders tend to be local and more hands on in terms of wanting to view the property before lending money on the deals.   Hard money lenders want to get that up-close-and-personal look and feel for a property before making a decision to lend on a property.  

Fact #3:  Hard money loans are generally much more expensive overall than conventional loans for both the interest required on them as well as points the buyer is expected to pay on them.  Generally speaking, investors seeking hard money can expect to pay anywhere from 10 to 20 percent interest and get hit with as much as eight points with some lenders in some states.

Fact #4:  Hard money loans are most often sought by investors doing short term deals rather longer term deals.  Most hard money lenders will lend from periods of six months up to a few years.

Fact #5: While the red tape is certainly less and the turnaround time is much faster, more hard money lenders are taking a closer look at borrowers' experience and credit history.  After the real estate crash of the late '00s, many lenders were triply burned, as borrowers defaulted, but foreclosures were slowed to a crawl for political reasons, and values had crashed.  So while ten years ago lenders were more open to lending money as long as there was sufficient equity, today they tend to be more conservative and screen out rotten-apple borrowers more thoroughly. 

Fact #6:  Most private lenders require borrowers to use a specific appraiser who the lender knows and trusts, who will not be swayed by the investor's pleas for padding the value. 

Fact #7:  Most hard money loans are structured very similarly to balloon payments with due dates usually spread over no more than one to two years after the loan is issued. 

If you are interested in seeking a hard money loan for your projects, here is a directory of hard money lenders.

Have you ever used a hard money lender for any of your deals?  If not, would you ever consider it in the future?  What are some other unconventional ways have you used to finance your deals?

]]> https://www.ezlandlordforms.com/articles/news/479/the-great-american-rent-divide-why-and-how-rents-are-diverging-nationwide/ https://www.ezlandlordforms.com/articles/news/479/the-great-american-rent-divide-why-and-how-rents-are-diverging-nationwide/ Mon, 18 Aug 2014 14:06:46 GMT

Why does the American rent divide exist?

Imagine two apartments: both are modest in size, with two bedrooms and similar fixtures and fittings. Yet one costs $1,640 a month to rent, the other $653.

What makes one 2 and ½ times more expensive than the other? Location.

The $1,640 apartment is in Hawaii, America’s most expensive state to rent a property, while the $653 apartment is in Arkansas, the most affordable state.

These aren’t anomalies either. There is a Grand Canyon-sized gap between America’s most costly and economical states for tenants, with the rents in the most expensive five states more than double that of the five least expensive states.

To find out which states are most expensive and why, we looked at National Low Income Housing Coalition (NLIHC) data on rent levels and income across the nation.

 

Which states have the highest rents?

These are the states with the most wallet-busting rents, based on basic two bedroom properties:

1. Hawaii: $1,640
2. California: $1,354
3. Maryland: $1,297
4. New Jersey: $1,296
5. New York: $1,293

What is it that pushes these rents so high? One of the simplest reasons is that residents in these states can afford it – or at least some of them can. These states have some of the highest median wages in the country; New Jersey enjoys the fourth highest median wages in the country, New York 16th.

This isn’t the whole story however. Population density and availability of land and housing are another significant factor. The highest rents are consistently in the top 25% most densely populated states.

Housing developments are particularly restricted in Hawaii and California. In the Aloha state there is a natural scarcity of developable land. Residential real estate needs to compete with farm land and commercial real estate for what little there is, and residents in desirable areas often vocally oppose new developments.

California’s restrictive planning laws protect its landscape at the cost of compressing residents into tightly defined urban areas. The scarcity of property, combined with high wages for some, creates five of the top ten least-affordable housing markets countrywide.

Los Angeles, San Francisco, New York City and Washington DC are some of the country’s biggest job hubs. This doesn’t just inflate rents in these states, but in neighboring commuter states like Maryland and New Jersey.

 

Which states have the lowest rents?

Rent checks go furthest in these five states:

1. Arkansas: $653
2. Kentucky:$660
3. West Virginia: $665
4. South Dakota:$680
5. Alabama:$683

What makes these states so much more affordable? Low median income explain part of it: Arkansas, Kentucky, West Virginia and Alabama.  But this isn’t the whole story.

South Dakota’s median monthly income is a $5,354, yet average rents are much lower than Wisconsin, Maine or Utah, who all show similar income levels.

If you’ve driven through South Dakota’s rolling landscapes or the Badlands you have some idea why rents are so low: it has one of the country’s lowest population densities. Only one city, Sioux Falls, has a population of over 100,000 compared to four cities in Utah.

 

How much do people need to earn to rent?

As anyone who’s ever worked a minimum wage or entry level job knows, housing affordability isn’t just about the cost of rent. It’s also about how much you need to earn to make rent.

The NLIHC measures this using their Housing Wage figures, which calculate how much you would need to make an hour in order to afford the Fair Market Rent (FMR) for a two bedroom apartment. In Hawaii a minimum wage worker earns less than a quarter of the state’s Housing Wage:

Comparison of Housing Wage and Actual Wages and Income by State
State	Housing Wage	Minimum Wage	Median Household Hourly Income*
Hawaii	$31.54	$7.25	$40.34
California	$26.04	$9.00	$36.00
Maryland	$24.94	$7.25	$47.20
New Jersey	$24.92	$8.25	$43.96
New York	$24.87	$8.00	$37.57
Arkansas	$12.56	$6.25	$27.13
Kentucky	$12.69	$7.25	$29.35
West Virginia	$12.80	$7.25	$27.43
South Dakota	$13.09	$7.25	$33.46
Alabama	$13.13	None	$29.03

*Median Household Hourly Income calculated by dividing monthly income by 4 and then by 40, based on people working a standard 40 hour work week.

Looking at this data, it’s clear that minimum wage workers are likely to spend more than 30% of their income on housing, making it unaffordable by NLIHC’s standards.

The states in crisis become clear when median earners are examined. In Hawaii and California even households on the median income have less than $10 left an hour, or $80 a day, for all other expenses after paying an FMR rent on a modest property.

In more prosperous Maryland and New Jersey, median earning households are left with $22.26 and $19.00 an hour respectively after paying a FMR, considerably more than in Arkansas or West Virginia, where households are left with $14.57 and $14.63 an hour. Higher rents don’t necessarily translate to households with less money in their pockets after housing costs.

South Dakota is once again the exception: households here have $26.18 left an hour after paying FMR, thanks to the state’s low unemployment rates and resilient economy.

See these differences at a glance with our Rents by State Map.

]]> https://www.ezlandlordforms.com/articles/educational/5/478/hoarder-tenants-risks-prevention-and-avoiding-fair-housing-trip-ups/ https://www.ezlandlordforms.com/articles/educational/5/478/hoarder-tenants-risks-prevention-and-avoiding-fair-housing-trip-ups/ Thu, 14 Aug 2014 11:04:41 GMT

One of the scariest prospects for landlords and property managers is tenants who hoard mountains of junk or animals in their rentals.  Hoarding has been around for as long as people have had mental illness, but a newly televised cable tv show and recent internet trending has brought this issue to the forefront for many who were otherwise in the dark on the topic.

Hoarding is defined by Mayo Clinic as a disorder [characterized by] a persistent difficulty discarding or parting with possessions because of a perceived need to save them.  Further, “a person with hoarding disorder experiences distress at the thought of getting rid of the items.”

According to the National Alliance on Mental Illness in Massachusetts, up to 5% of the world population suffers from hoarding disorder which is considered a mental illness. 

The most important thing for landlords and property managers to glean from this is that having a mental "disorder" renders these individuals disabled and therefore, protected under the Fair Housing laws.  This potentially poses a challenge for landlords and property managers who might be inclined to evict a hoarding tenant (or deny their rental application in the first place).  On the surface eviction may appear to be an immediate resolution to a potentially dangerous and immensely disturbing situation.  

Experts say eviction may be avoided in some cases when certain steps are taken.  Also, there are steps landlords and property managers can take to protect themselves from the start and to observe hoarding behaviors early on in order to stop it in its tracks before the home is destroyed, infested or becomes a fire hazard or nuisance.  

Another little known, but equally important fact for landlords and property managers to consider is that there is an expectation that if a landlord is aware of, or should have been aware of a tenant’s hoarding practices, that landlord/property manager now has a duty to accommodate the tenant.  This means that working with the tenant to remain in the home should be the priority whenever possible.  Not only is eviction a challenge because of Fair Housing laws, but landlords want to avoid eviction at all costs because of the associated costs of having someone remove the mountains of accumulated junk the tenant has hoarded.  Removing a hoarder tenant’s belongings can cost upwards of $10,000 in some cases.

So, exactly what are these steps landlords/property managers can take to protect themselves and their properties for hoarders?  Here are the best ways to deal with hoarders or potential hoarding tenants.

Add Clauses to Your Lease Agreement.  Most definitions of hoarding speak to the hoarder’s tendency to crowd spaces thereby preventing them from using the spaces as they were intended.  Use this definition to your advantage in your lease agreements.  Your rental agreement should have a statement regarding maintaining rooms in the home in a manner in which they were intended.  You can also address prohibiting the use of any rooms in the rental property for storage space other than in closets or along one wall, for example.  Lastly, leases can require that all rooms and hallways allow for unimpeded movement, for safe exiting during an emergency.

Observe All Prospects.  Professionals who work with hoarders believe hoarders leave tell-tale signs of their hoarding in other areas of their lives.  When a tenant comes to view your property make an extra effort to observe their cars whenever possible.  A hoarder is likely to have junk piled in every nook and cranny of their cars.  Once you see someone who is driving around with a car whose seats and floor can’t be seen anywhere except the driving area, you may very well have your first clue that you’re dealing with a hoarder.  

Landlords and property managers should also inspect all applicants' present homes to see how they live, and how they treat their current residence.  If they treat the property poorly by leaving it messy and unsafely cluttered, the landlord will know before having signed a rental contract with them.

Implement Routine Inspections.  All tenants should be informed by up front by way of the lease agreement as well as your verbal communication with them of routine checks by you or your staff (maintenance or other), at least for the first year of their tenancy.  After the first year, you can switch to quarterly or semi-annual inspections.  This is generally a good idea, but is especially important to help avoid issues such as hoarding.  You or your staff will be able to pick up immediately on issues which may cause concern and need urgent attention.  To avoid any pushback from your tenants, you can utilize these inspections to complete HVAC inspections and routine filter and smoke detector inspections.  Most tenants won’t mind preventive maintenance checks made quarterly.  Completely timely checks such as these can definitely go a long way towards preventing any major damage that hoarders can cause.

Document, Document, Document.  This goes along with every other area of your business, but is especially important if you ever have to deal with evicting a hoarder.  Because hoarders are now included as a protected class, the courts will look for proof that you as a landlord/property manager actually made attempts to accommodate the tenant’s disability.  You or your staff members must ensure every conversation and effort made to remedy the situation is clearly documented before taking any action towards evicting these tenants.  Be sure you’re very clear on the laws in your jurisdiction regarding non-economic evictions and follow those procedures to the letter.  It may also be a good idea to speak with an attorney should you ever encounter a tenant who is found to be a hoarder.

Have you ever dealt with a tenant who was a hoarder?  What additional advice can you offer landlords who may run into this problem?

]]> https://www.ezlandlordforms.com/articles/educational/2/477/planning-to-buy-a-fixer-upper-proceed-with-caution/ https://www.ezlandlordforms.com/articles/educational/2/477/planning-to-buy-a-fixer-upper-proceed-with-caution/ Mon, 11 Aug 2014 10:53:51 GMT

Thinking about buying a fixer-upper to add to your rental portfolio?  It’s not always a piece of cake.

First things first, do you have a contractor you know and trust?  Are they licensed and insured?  Get a few quotes before submitting an offer on the property, to get an accurate sense of the renovation costs.  (See our article on how to screen contractors for more information.)

When you do submit an offer, be sure to include an inspection clause in the contract, allowing you to withdraw the offer with no penalty if the home inspection reveals more issues than you want to tackle.  Sure, home inspections cost a few hundred dollars, but it can save you tens of thousands of dollars later, and the education you’ll gain by walking through the property with the home inspector is worth the cost alone.

The home inspector will help you discover what kind of shape the mechanicals and structure of the house are in, and will reveal potentially nasty surprises.  This writer once bought a house that needed all new framing – a fact that came to light only after the property was purchased, and the contractor pulled the plaster away to reveal rotten framing.  It was a bad day.

Mechanical and structural problems are particularly dangerous territory to get into, for several reasons.  In many municipalities, landlords must obtain permits to do any structural work on a property, or to update mechanicals such as HVAC systems, electrical wiring or plumbing.  Aside from the additional expense of the permits, scheduling inspections can delay the project, and inspectors sometimes fail properties simply to show their supervisors that they are doing their jobs.  In larger jurisdictions, it is often a different inspector that comes to the property each time, and will often each find different reasons to fail the property.   Further, when permits are filed, the contractor listed on the permit must be licensed; often with lower-end properties, real estate investors use unlicensed handymen for the repairs, to keep the project profitable.

Beyond the multiple hazards posed by filing for permits, another set of problems comes into play when mechanical updates and structural repairs are needed: return on investment.  If the pipes are out of date in a property, it is often not calculated into the price, as sellers will not want to emphasize these oft-invisible problems, and many buyers will not notice without a home inspection.  It may be six months later, when the pipes fail, that it becomes clear that $12,000 worth of new plumbing is needed. 

Unlike cosmetic repairs or updates to kitchens and bathrooms, which are visibly obvious and will affect the rent and resale price, structural and mechanical repairs often have little to no impact on value.  Real estate investors are wise to account for any needed repairs before buying, and negotiate for a lower acquisition price accordingly. 

Even homes with attractive finishes can often be improved for higher rents, by adding high-tech gadgets, novelties or luxuries.  Sometimes these improvements offer a strong return on investment; check out this review of five smart-home updates, and this consideration of higher-end rental amenities.

Establish a strong working relationship with a home inspector, and multiple strong relationships with contractors of various price points.  You need a cheap handyman for basic repairs, and more expensive specialists for items like HVAC and roof repairs.  These relationships should all be established on smaller jobs first, ideally on homes you already own, or on smaller new purchases.  Your real estate agent should also act as a second set of eyes when you initially walk through the property, with a keen eye for water damage, pipe leaks, basement leaks, age of the furnace and hot water heater, etc. 

There are few real estate investing strategies that are as fundamentally sound as buying homes in need of basic repairs, to create equity quickly, but it is also easy to slip into deep water with unpredicted repair costs.  If you do elect this strategy, use an experienced home inspector, have several contractors at the ready, and always budget 15% more for repairs than you think the job will cost. 

And always, always beware of structural or mechanical problems in a house, and aggressively negotiate the buying price down if these issues are present.

(Read here for further tips about renovation investing as a real estate investing strategy.)

]]> https://www.ezlandlordforms.com/articles/educational/5/476/disaster-preparedness-does-your-property-managment-or-rental-investing-business-pass-or-fail/ https://www.ezlandlordforms.com/articles/educational/5/476/disaster-preparedness-does-your-property-managment-or-rental-investing-business-pass-or-fail/ Tue, 05 Aug 2014 17:14:55 GMT

How prepared is your business to withstand a natural disaster?  According to the U.S. Small Business Administration, an estimated 25 percent of small businesses shut down in the wake of a natural disaster. 

Whether your business is located along the coast or much further inland, it may be vulnerable if you are not prepared.

Many of your daily operations can suffer in the aftermath of a natural disaster.  Tenant files and other paperwork can be damaged rendering pertinent information lost forever.   While it’s likely your insurance will cover the replacement of computers and other electronic equipment, the lost data is irreplaceable.  Perhaps most important is the potential loss of communication with your tenants in the event landlines or cell phone towers are down.

Chances of a natural disaster causing major damage to your business might be greater than you think.  Evidence of that fact can be garnered from any business owner who unwittingly fell victim to one of the many hurricanes, tornados or tropical storms in the last several years, including hurricanes Katrina and Sandy.

Nothing can guarantee 100 percent safety from a natural disaster, but there are some ways in which businesses can better prepare themselves to prevent total loss or a near impossible recovery.

Have a written plan.  It may seem obvious, but too many businesses have no written plan for handling disasters.  Knowing who to call, when and for what is crucial in an emergency situation.  In a panic, people forget things.  Having something for your staff and yourself to refer to can be of tremendous benefit.

Take inventory.  Too often business owners don’t know exactly what they have and how much it would cost to replace everything if something were to happen.  Once a disaster strikes and everything is lost, it will quickly become clear just how expensive it is to replace what you had.  Your insurance company will expect you to have accurate inventory and figures or, at the very least, estimates of what your equipment and other assets were worth.  If you have no idea, you may not have enough insurance to sufficiently cover replacement items, or your insurance may not cover undocumented items that were lost.  This is one of the reasons businesses are unable to rebuild after a disaster.  Take initial inventory and routinely assess value to everything you need to run your business smoothly and efficiently.

Do business in the cloud.  Doing all or most of your business online, and backing up digital files and information online “in the cloud”, is where business owners should start even before preparing for a disaster.  Not only is operating your business in paper-only and/or local hard drive-only records antiquated in the 21st century, but it’s downright irresponsible.  Hard copy files and local hard disk drives are extremely vulnerable to fires, floods, and theft.  Data sent to the cloud is only subjected to possible hackers with sophisticated techniques for obtaining your information.  That data can be protected from hackers in many different ways making it a much safer bet than its hard-copy alternative.  Further, there is no chance of cloud data being destroyed in a fire or flood, given the redundancies in place in cloud backup services.  

There are a number of resources for landlords and property managers who want to take their data to the cloud.  One resource for property management companies and private landlords is RentPost.com where landlords have a resource not only for managing their properties online, but where their tenants can also pay rent and make maintenance requests online.  Google Drive also allows free cloud backup of digital files, and Carbonite is an affordable systemwide backup service.

Doing business in the cloud means data retention even in the worst natural disaster.

Tap into emergency preparedness info.   Having an emergency preparedness manual on site is required for most businesses, but for the business owner who wishes to go above and beyond for the safety of staff and tenants, uploading emergency preparedness information to digital devices is a wise and potentially life-saving decision.  The American Red Cross and the Federal Emergency Management Agency (FEMA) both have information that can be uploaded to smart phones in the form of apps.  The information on these apps include everything from emergency preparedness tips to maps of the nearest emergency shelters.    

Landlords and property managers should encourage tenants to upload these apps as well.  Property managers should also ensure that all staff members upload these apps.

Another app to consider is one provided by Google.  Google Public Alerts will alert you, your staff, and tenants to natural disasters and other local weather alerts.  Staying informed with updated information is key in a disaster and enables you to better prepare.

Back it up.  In severe weather such as hurricanes and tornadoes, power outages are common.  When the power is out, even cell phone service is jeopardized and will require some form of backup.  Smartphones, tablets and other such devices can use backup external battery packs and solar chargers, which can be useful. Explore these alternatives long before a disaster hits.

Often times when power is affected in an area, cell phone towers are affected as well, making it difficult to pick up a signal.  Having a cell phone signal booster or wifi finder could come in handy.  Again, encourage staff and tenants to check out these apps long before the need arises.  At the very least, the apps can be downloaded to smartphones along with the other precautionary apps.

Because communication is key in any crisis, you want to ensure the ability to communicate both with staff (for property managers) and with tenants.

Remember, when it comes to emergency preparedness, the key to maintaining stability for your business and safety for yourself, staff, and tenants requires a carefully thought out plan of which all involved parties are aware; a full-proof way to communicate; and careful and expeditious execution.

Does your emergency plan include something not mentioned here?  Share it with us!

]]> https://www.ezlandlordforms.com/articles/educational/3/475/ten-must-haves-for-residential-lease-agreements/ https://www.ezlandlordforms.com/articles/educational/3/475/ten-must-haves-for-residential-lease-agreements/ Mon, 04 Aug 2014 16:41:38 GMT

Landlords have been warned for years about the importance of using legally-protective, province- or state-specific lease agreement packages that include all locally-required disclosures and addenda, but it is still common for landlords to grab the first lease that they see online that's cheap or free.  There are many reasons why this is not a good idea, but the most important reason has to do with the lack of state-specific information included in many of the generic versions of a lease contract.  Each U.S. state and Canadian province has its own set of unique rules which applies only to that specific jurisdiction.  Furthermore, there are certain components every rental agreement should include, regardless of location, which many of these generic leases often fail to include.  When not included, landlords can find themselves on the wrong side of landlord-tenant laws in their state or without a legally binding agreement at all.

Here are the top ten must haves which should be included in your lease agreements.

Terms and Dates.  Surprisingly some leases aren’t specific about the terms especially when it begins and ends.  The date landlords receive the first rental payment and security deposit may be very different from the beginning of the lease date, this should be clear in your lease agreement.  Also, the ending date should be just as clear and should spell out how much notice is required to terminate the lease agreement, as well as what happens at the end of the lease term.  For example, some landlords might prefer their leases to auto renew while others may want tenants to sign new leases each time.  Landlords should be careful to ensure that this area of the lease coincides with jurisdictional lease laws.  Some states do not allow auto renewals of annual leases.  

Names of All Household Members.  Frequently landlords will name only the adults responsible for the rent, but experts say the names of all occupants in the home should be included in the lease agreement.  Tenants will often move an extra family member or new significant other in the home at some point during their tenancy, but if the need ever arises to get that person out of the home, the landlord has leverage in the fact that the person’s name is not included in the lease agreement as an allowed occupant.  It’s understood by the courts that the person’s name isn’t included because they don’t belong there.  Similarly, the names of all children in the home should be included as well.  Parents sometimes have to prove to school officials that they have custody of their children.  Having a lease with the children’s names included can provide that proof.

Security Deposit Details.  This is another obvious item which is often left out of lease agreements.  All leases should include the amount of the security deposit and should spell out whether the amount was paid in full or in increments.  The date of the security deposit as well as the method of payment is also helpful.  In addition, most states and some Canadian provinces require information regarding where the security deposit will be kept, whether it will accumulate interest, and to whom that interest will be paid, if applicable.

Pet Deposits.  Some leases fail to include whether or not pets are allowed and whether there are any associated fees such as pet deposits and/or pet rent.  Another important element to include would be information about its refundability as well as any restrictions regarding weight, type and number of pets allowed.

Miscellaneous Fees.  Another area where landlords find themselves getting into trouble is in including fees which are not in compliance with state law in their areas.  Certain fees are expected such as late fees, however most jurisdictions have limits on how much tenants can be charged for late fees.   Other common fees such as returned check fees, lost keys and cleaning fees should be clearly spelled out in the lease and should be in compliance with the state laws.  The rule of thumb here is, if you plan to charge it, it should be detailed in the lease.  If not, you will have a difficult time collecting on it, if at all.

Clarify Penalties.   It is inevitable that, at some point in every landlord’s career, at least one tenant will break the lease by moving out before the lease term end date.  When that happens, landlords usually want some kind of compensation for the loss of rent during that time.  Landlords should be knowledgeable about what is allowed in their state when it comes to penalties for early termination.  Some states do not allow any kind of penalties, but will allow compensation for commission to realtors and reimbursement for advertising expenses and other related charges for returning the home to market.  Also, most states allow landlords to collect every month the home is vacant from the breaching tenant as long as the landlord actively pursues a new tenant in the process.

Lead-Based Paint Disclosure and EPA Pamphlet (for Homes Built Before 1978).  These are legally required for all U.S. rental properties built before 1978.  Failing to provide adequate documentation here is a common route tenants take when they want to sue their landlord.

Utilities.  Another area often overlooked is utilities.  It should be detailed in the lease exactly what utilities, if any, are included in the lease, and which utilities the tenant is responsible for paying.   Also, landlords should be specific about the timeline for turning service on and off.  Many disputes have ensued over tenants’ faulty belief that they had a certain number of days in which to switch services over to their name when the landlord expected something very different.  Similarly, language should be included indicating the number of days tenants should allow for utilities to remain on after move-out.    It’s common practice, but not a very smart one, to schedule utility shut-off for the same day the lease ends; however that leaves little time for any cleanup which may be needed once tenant leaves.  This all should be outlined upfront and in the lease agreement so that everyone is on the same page on these key issues.

Landlord Entry.  Another common dispute area among landlords and tenants is in the confusion around when and under what circumstances landlords are allowed to enter the home.  Some landlords believe they should be able to enter the home whenever they’d like.  Not so.  It may still legally be the landlords home, but it becomes the tenant’s home once they begin paying the monthly rent which comes with certain rights.  The lease should include concise language regarding this issue.  Most jurisdictions require at least a 24-hour notice to tenants before landlords can enter, except in emergency situations.

Repairs and Maintenance.   Always include language about who’s responsible for the maintenance and repairs of the home.  In most cases, the tenants will be responsible for the general upkeep and landlords are responsible for major repairs. In cases where landlords expect tenants to pay for repairs, it should be included in the lease.  If tenants are expected to pay up to a certain amount, that should be specified as well.  Landlords must also remember to be specific about any preference for professional work versus amateur repairs as well.

Lease agreements are complex legal contracts, and millions of landlords end up in court every year trying to enforce their rental contracts, so landlords are wise to take them seriously and remember that the first thing the judge will ask to see in court is the lease agreement.

What must-have is included in your lease agreements not seen here?

 

]]> https://www.ezlandlordforms.com/articles/news/474/investor-forecast-projected-higher-vacancies-in-the-south-for-2014-2015/ https://www.ezlandlordforms.com/articles/news/474/investor-forecast-projected-higher-vacancies-in-the-south-for-2014-2015/ Thu, 24 Jul 2014 16:05:07 GMT

When it comes to real estate, location has always mattered, and it’s making a significant difference for investors who have rental properties in some southern states.  According to a study done on the occupancy rates around the US, some southern markets have begun to show decreases in occupancy rates.  While rents have risen in most regions, the numbers of prospects compared to the numbers of available units don’t match.  Investors have begun to see their rental homes on the market a little longer than they would like and the projection is that the market will get a lot worse before it gets better.

For the last four to five years, bankrupt homeowners and skeptical would-be buyers flooded rental markets across the US.  As a result, new rental housing construction projects took flight over the past few years and continue to go up.  According to an article by MultifamilyExecutive.com, “Sweeping changes over the next two years are going to cause fundamentals in the [rental] market to weaken for the first time since 2009.”

The belief is that in areas where large construction projects continue (mostly the South), many more apartments and other residential units will be released that cannot be filled. 

The article continues to note that the homeownership rates for adults under 35 fell during the first quarter of 2014, signaling an even bigger wave of potential renters into the market.  The rental market will still have to make way for these millenials, who at roughly 75 million represent a very large portion of the population (apparently 22 is the most common age in the U.S. presently).  But even with this high demand, it is anticipated that it won’t be enough to match up to the sheer overstock of homes.  Reportedly, the bulk of the increases will be seen around the end of 2015, but some property managers say they are beginning to see signs of it now.

Interestingly, among those areas with anticipated increases in vacancies, cities like Charlotte, Austin, Dallas, Houston, San Antonio and Orlando, are some of the fastest growing areas in the US.  They are expected to show tremendous growth in other areas such as employment, population, and household formation.  

Moreover, not only is there concern over increased supply, but the type of supply presents an issue.  Most of what is being built in these areas are considered Class A properties (top of the line, luxury properties) which adds considerable constraints and further exacerbates the problem.  If potential renters find themselves unable to afford the higher rents that come with these properties, investors will still find themselves scrambling to fill these expensive units.      

On the brighter side, rent amounts are expected to remain stable, but could level out in 2015 when supply is projected to reach its peak.

Investors should take a close look at demand and the pace of supply growth in their market, to determine whether now is the right time to plan their exit strategies.  All of this information could signal a stronger buyer market and the time for investors to sell those buy and holds.  

Are you seeing rental units on the market longer in your area?  Do you agree or disagree with the projections?

]]> https://www.ezlandlordforms.com/articles/news/473/airbnb-nightmare-short-term-vacationer-refuses-to-leave-months-long-eviction-process-required/ https://www.ezlandlordforms.com/articles/news/473/airbnb-nightmare-short-term-vacationer-refuses-to-leave-months-long-eviction-process-required/ Tue, 22 Jul 2014 10:02:10 GMT

When Cory Tshogl was priced out of buying a home in San Francisco, she instead bought a second home in Palm Springs, and rents it out to vacationers through Airbnb to help cover her high Bay Area rent.  Everything was going fine... until along came a squatter.

A man with the Airbnb handle "Maksym" contacted her about an extended stay, longer than 30 days, for "an extended business trip."  They agreed on a rental period from May 25 through July 8, and Airbnb collected the first 30 days' worth of payment from Maksym. 

Within two days, Maksym was already issuing complaints, about "cloudiness" in the tap water, and about the community being gated.  He asked for a full refund, and Tshogl agreed, as she had a growing bad gut feeling about the renter.  She contacted Airbnb, who did not respond for several days, but when they did they told Tshogl she was entitled to keep the pro-rated rent for the period that Maksym had stayed, and they contacted Maksym, asking him to leave.  Except he didn't leave, so Airbnb did not refund him any money.

Trouble continued shortly thereafter when Airbnb went to collect the money from Maksym for the remainder of his stay... and was unable to collect the money from his preset payment method.  Airbnb and Tshogl both contacted him demanding he immediately vacate the vacation rental property, but he refused, saying he was "legally occuping the domicile", and claiming that his brother (who was now apparently occupying the property too) had developed an ulcer from the "cloudy tap water". 

Then the real kicker came: after Tshogl hired an attorney, she discovered that, under California law, any renter who occupies a property (even a vacation rental property) for 30 days is considered a tenant on a month-to-month rental agreement.  California landlord-tenant law is famously tenant-friendly, and Tshogl will now have to go through the court process for eviction:

"To get the tenant out would require the whole eviction shebang, which could take three to six months and $3,000 to $5,000 in legal fees. She couldn't just ask the police to haul the guy out."

To read the full story, along with commentary about how Airbnb might expand their insurance to cover legal expenses and lost housing payments, read Business Insider's full story, and the comments provide some entertaining reader viewpoints as well.

]]> https://www.ezlandlordforms.com/articles/educational/2/472/six-ways-to-find-great-real-estate-deals/ https://www.ezlandlordforms.com/articles/educational/2/472/six-ways-to-find-great-real-estate-deals/ Mon, 21 Jul 2014 15:24:57 GMT

There are many things that frequently change and evolve in real estate markets, from home prices to what buyers find appealing.  Still, there are a few things which remain relatively constant, from location mattering to some tried-and-true ways to find great deals.  While there are nearly as many ways to find deals as there are investors, there are a few proven methods which can work effectively even as markets shift and turn.

Here are the top six methods of finding great deals that seasoned investors say work for newbies as well as the pros.

Partnering with a Realtor.  Some investors might advise against this one, but no other method makes more sense than hiring a local realtor who is intimately familiar with your market.  Realtors have access to the majority of homes on the market including for sale by owners - eventually.  In addition, a realtor has at her fingertips the ability to ferret out exactly what you’re looking for without hassle, leg work, or much time.  One click of a realtor’s mouse brings up an MLS search for fixer uppers, homes differentiated by neighborhood or homes within a certain price range.  Nothing speaks to an investor like saving money and time, and in most cases, a realtor can assist with both.  For those investors concerned about the realtor’s commission getting in the way of the best deal, remember everything’s negotiable... and that the seller generally pays most (if not all) of the realtor's fee.  Most realtors are more than happy to work something out with investors they know will be making multiple or frequent purchases.

Word of Mouth.  Any salesperson worth their salt has a talent they can fall back on - the gift of gab.  Among the first lessons a realtor learns is to tell everyone they know that they are in the real estate business. The wise investor does the same.  You never know where your next deal will come from, so ensuring everyone with whom you come into contact knows that you buy and sell homes will prove to be well worth it in the long run.  Frequently contact your tenants, particularly those in neighborhoods you are targeting, to ask if they know of any troubled properties or sellers looking for a fast settlement.

Direct Mail Flyers/Postcards.  Some investors swear by this method of marketing properties.  Beware, though, that this can be on the expensive side especially depending on the size of the area you farm.  Contrary to popular belief, what matters in a direct mail campaign is not what your flyers or postcards say, rather how consistent they are.  Consistency builds trust among your prospects and trust builds business.

Street Signs.  An age-old, very effective marketing vehicle is the street sign.  The reason for the street signs effectiveness is the sheer number of eyeballs that see it daily.  When placed at the right intersection of busy urban streets or shopping malls for example, thousands of people are exposed to the information at any given time.  An even more powerful reason the street sign is one of the best marketing tools available is the relatively low cost, especially as it relates to its high returns.  Though the jury is still out among many investors regarding the quality vs quantity argument, there are very few marketing tools that can match the call-in volume of the street sign.

Systematized Approach & Attribution.  Professionals in any discipline can attest to the systems approach to running a business in general and marketing specifically.  Every successful business person knows what strategies work in their business and which ones do not.  Investors should follow suit, especially with their marketing campaigns and have a designated way of determining which of their marketing strategies works and how cost-effective each approach is.  In marketing, this is referred to as "attribution": tracking where leads are coming from, when multiple campaigns are operating.  One tactic is for each campaign to have its own telephone extension, or to have its own URL.  That way, it becomes easy to determine which campaign is bringing in the most activity and the highest quality prospects.  Once it has been determined that signs, for example, bring in more quality prospects than flyers, the money previously spent on flyers should quickly be allocated to street signs for maximum ROI.  This does come at a cost however, not only in the extra labor and fees, but in potentially lowering the effectiveness of the campaigns if there is not enough consistency across them.

Multiple Strategies at Once.  Astute business owners know time is of the essence as it relates to the bottom line- making money.  The best approach, whenever possible, is an all-guns-blazing strategy where more than one campaign is implemented at a time.  Maximum results can be obtained in a very short period if executed properly, with consistent messaging. 

Real estate investing is often a world where professionals must open a great many oysters for each pearl they find, but as your network expands, your marketing starts gaining traction and your familiarity with a given market increases, that ratio of oysters to pearls will begin to shrink.

What other means have you found to be effective in finding the best deals?  Do you  employ any of those listed in this article?

]]> https://www.ezlandlordforms.com/articles/news/470/the-forgotten-few-best-rental-investing-markets-overlooked-by-the-big-boys/ https://www.ezlandlordforms.com/articles/news/470/the-forgotten-few-best-rental-investing-markets-overlooked-by-the-big-boys/ Mon, 14 Jul 2014 16:17:28 GMT

You can call off the search for the best areas for rental investing, thanks to a list of the top 25 U.S. rental markets for single family homes compiled by RealtyTrac and RentRange, based on housing data from 2013. 

The top 25 rental markets were found in just 15 U.S. states, none further west than Texas.  The study included only three bedroom, single family homes in counties with populations of 100,000 or more.  Within the top 25 markets, investor purchases made up only 5% or less of residential sales.  While these markets have proven to be lucrative for the single investor, they are largely ignored by institutional investors.

The majority of markets making the list were concentrated throughout the northeast and southeast corridors with some sprinkled throughout the midwest and Texas.  There were none from the west coast, likely due to sky-high home prices in states like California and Washington.  Some contenders on the list will undoubtedly come as a surprise, while others will make perfect sense.  Here are the top 10 from the list.

Texas tops the list with two of its counties (Wichita Falls and Lubbock) taking over the numbers 1 and 2 spots.  It’s no secret Texas has some of the most appealing homes on the map for comparatively low prices.  Texas not only occupies the #1 and #2 spot on the list, but has a county (Williamson County), which made the #4 spot as well.  Wichita and Lubbock county single family home prices came in at $84,000 and $111,000 respectively with respective rents of $938 and $1,089.  

Canadian County, Oklahoma which includes Oklahoma City comes in third with a median home price of $131,000 and median rents of $1,176.

Another Texas county, Williamson which includes Austin-Round Rock ranks 4th on the list with a median home price of $158,000 and median rent of $1403. Williamson county completes the list of Texas homes and is considered slightly on the higher end of the homes expanding the list.

When most people think of New York, they think of the Big Apple with its inflated home prices among other things, but New York has two counties on the list.  Monroe County comes in at number 5 on the list and boasts median home prices of $121,000 with a median price of $1,043 for rents.  Schenectady county which includes Rochester, NY is number 8 on the list with median home prices at $153,000 and median rents of $1,278.

Davidson County, Tennessee makes number 6 on the list with median home prices at $149,000 and median rents at $1,263.  

Florida comes in at number 7 on the list with Alachua County where median home prices are $139,900 and median rents are $1,175.  

Louisiana, not surprisingly made the list, however what might surprise some is the median home prices in Jefferson County of $153,000 and median rents of $1260, almost identical to the median prices found in Rochester, NY.  

Rounding out the top ten counties on the list is Allegheny County, Pennsylvania home to the city of Pittsburgh and other smaller cities.  The median home prices in Allegheny County is $126,000 while median rents were at $1,034.

It should be noted that while many of these home prices remain relatively low in comparison to other areas of the country, the rents are directly in line with the estimated mortgage amounts, in most cases; unless of course the homes are purchased with cash or larger down payments.  This certainly does not not leave much room for mishaps or lengthy vacancies.  Also, the report referenced a 7.5% unemployment rate which is slightly above the national unemployment rate of 7.3%.

What are your thoughts on this list?  Agree or disagree?  Do you know of some great investment areas that aren’t on the list?



]]> https://www.ezlandlordforms.com/articles/educational/2/468/how-to-win-a-real-estate-bidding-war/ https://www.ezlandlordforms.com/articles/educational/2/468/how-to-win-a-real-estate-bidding-war/ Thu, 10 Jul 2014 10:19:04 GMT

Do you recall the days of preparing your offer on a property only to learn there were already several offers on the table?  Well, those days are back in some markets according to a recent Redfin study.

According to Redfins’ 2013 Report on Bidding Wars, the return of the bidding war may have peaked in 2013, but it’s not over by far.  Redfin completed a study of its realtor sales in 19 US markets and found that in April 2014, 37.9% of homes sold above asking price compared to 22% during the previous quarter and 44% just one year prior.  The top three markets with homes selling for more than asking price due to bidding wars were all found in California (San Jose, San Francisco and Los Angeles).  Homes in these three cities saw more than 80% of their sales close over the asking price while other US cities such as Seattle, Baltimore, Boston and Washington made the list with impressive numbers of their own.

Bidding wars can be challenging for buyers especially because there’s no way to be certain your bid will be the chosen one.  Nevertheless, there are some ways in which you can ensure your bid gets the seller’s attention, if not an acceptance.  Here are four of the ways in which Redfin says buyers made their offers stand out among all the rest.

Cash still rules in most markets, most of the time.  Cash offers in all markets were 28% more likely to be accepted over all types of financed offers.  In fact, one seller in the Miami market accepted a cash offer which was $100,000 less than another, financed offer.  Sellers are a little more sophisticated these days and know that a buyer who has to depend on lender financing may never get to the closing table.  Cash deals, with proof of funds, translates to a quick and easy closing for sellers.  It’s very difficult to compete with a sure thing regardless of price.

Pre-Inspection is a great idea and another way buyers were able to seal their deals over others.  It lets the seller know you’re serious even before making an offer.  Also, if the inspection goes well, the seller will know in advance that there won’t be any ridiculous demands for repairs or repair-related concessions.  Any requests the buyer has, if handled gingerly, can be considered before other buyers ever get their first tour, in some cases.  Of course, conducting a pre-inspection requires having immediate access to listings as they are placed on the market.  This is where a relationship with a real estate agent or two comes in very handy.  In a competitive market, you should have your realtor’s number on speed dial.

A very popular (albeit risky) trick among many realtors and savvy real estate buyers is to forego contingencies.  Buyers who opt for the pre-inspection have no need for an inspection contingency, but would be wise to forfeit the finance contingency as well, whenever possible.  Of course, cash buyers don’t have this issue and it is risky for those dependent on lender financing.  Whenever a buyer has to depend on a mortgage loan and cannot waive the financing contingency, consideration should be given to shortening the length of time for the loan commitment period.  Similar to the relationship with a realtor, it is also vital to have a relationship with a great lender who has a reputation for getting deals done efficiently as time is of the essence in these deals.

The power of the so-called love letter might surprise some that it works so well.  Apparently, sellers love to hear about the people who will be living in what they still consider their home.  Additionally, those letters of adoration and praise about how well the home was maintained and the reasons the home is so special to the buyers all effectively pull on the seller’s heart strings in ways that pay off for the buyers.  Experts in this area say buyers should not be shy about why they want the home above all others.  Investors should be careful not to mention their intention to flip or lease the home however, as sometimes sellers are so emotionally attached that having that kind of information could backfire on investors.  Similarly, when the seller is an investor, the love letter is generally less effective, as the investor does not have the same attachment to the home as a homeowner occupant does.

Executing any one of these tactics should get you closer to acceptance in a bidding war, but executing more than one or all of them could seal the deal over all other bidders.

Tell us your bidding war stories.  What strategies have you used effectively besides the ones mentioned here?

]]> https://www.ezlandlordforms.com/articles/educational/2/467/six-common-legal-mistakes-made-by-real-estate-investors/ https://www.ezlandlordforms.com/articles/educational/2/467/six-common-legal-mistakes-made-by-real-estate-investors/ Tue, 08 Jul 2014 16:43:55 GMT

One of the most important responsibilities a real estate investor has is often the most overlooked - keeping their business on the right side of the law.  Dismissing legalities along the way can not only ruin a deal, but could also ruin an investor’s finances and career.  Whether a commercial development or a residential investment, the legal side of a real estate investor’s business is important and should not be ignored.

Here are six of the most common legal mistakes real estate investors make which could land them in serious legal or financial hardship.

Failing to obtain legal advice.  Many investors feel they know enough on their own without the benefit of expert advice.  Nothing could be further from the truth.  Every good business person knows the value of being frugal, but being frugal should be limited to grocery shopping or traveling on a budget.  Frugality has no place when it comes to protecting one’s business and assets.  Deciding to forego expert legal advice could prove to be a costly mistake in the long run.  Budgeting enough for a few consultation fees up front and on a per diem basis might prove to be a wise decision.

Unwittingly Discriminating.  Knowledge is power and ignorance is inexcusable, especially when it comes to discrimination.  Today, more than ever, it’s critical for investors to be aware of Fair Housing and ADA (American with Disabilities Act) laws.  Enforcement of these laws are at an all time high, as agencies have increased their numbers of testers and introduced new digital reporting in the form of an app. 

Discriminating against someone today could result in an investigative officer showing up at your front door within hours.  There are a number of protected classes on the Federal level as well as statewide with which investors should become familiar to avert any kind of discriminatory behaviors in their direct dealings with prospects or in their advertising for them.

Illegal solicitation of money (violating SEC rules).  Securing funding is second nature to some investors and advertising to the masses is commonplace, but should be approached with care and concern for any securities violations.  Experts say those involved in crowd funding should be especially careful to follow the guidelines for this type of funding.  Here is a more in-depth look at what is required when determining whether your funding efforts meet securities guidelines. 

Use of non-compliant or incomplete legal forms.  The number one source for information and documents today is online, but investors should know that not all online sites are created equal.  When it comes to obtaining critical documents such as sales contracts and rental agreement forms, one size does not fit all.  Investors must take the time to scrutinize these sites for what they need.  Every U.S. state has their own requirements and using contracts and lease agreements from another jurisdiction with laws completely different from yours could land you in some serious legal troubles.  The same rules apply to all other sources of inadequate forms such as those from friends, neighbors, and the neighborhood office supply store.  

Violating IRS rules about contractor/employee documentation.  It may be extremely tempting to hire an assistant or someone to show your properties “off the record” or as an independent contractor, but be warned that doing so could lead to a world of complications with the IRS.  The IRS has very strict requirements for reporting employees and documenting contractor relations.  All contractors must be given a 1099 form and all employees must be provided W-2 forms and other paperwork.  So-called contractors who work solely for you may very well be considered your employees.  The IRS is always on the lookout for employers who fail to report accurate information on payments to employees and contractors.  Hire an accountant who’s adept at dealing with these issues to save yourself time and potential headaches in the future.

Failure to include privacy policies on websites and other ad materials.  This item on the list is very much overlooked by most business owners, but experts say anyone collecting consumer information of any kind on the internet should include a privacy statement on their website.  That information should include the reason for data collection, how that information will be used, as well as who will have access to the information.  A quick random review of websites from various industries will provide proof that this is a widely neglected practice, but an important one.  Clients and prospects on your site want reassurance that you will not sell any of their private information and that you have a means of keeping that information secure.

In short, an investor’s job is never done, but is best executed with full legal compliance to ensure peace of mind along with maximum profit.

Can you think of some legal considerations for real estate investors not included here?

]]> https://www.ezlandlordforms.com/articles/news/466/editorial-why-real-estate-professionals-and-all-business-owners-should-offer-military-discounts/ https://www.ezlandlordforms.com/articles/news/466/editorial-why-real-estate-professionals-and-all-business-owners-should-offer-military-discounts/ Fri, 04 Jul 2014 10:07:34 GMT

There are obvious reasons why civilian business owners should give back to military service members, which any citizen would find easy to recite: appreciation for standing as the first line of defense, recognition of the losses suffered in order to protect the rest of our society, acknowledgement of service and frequent hardship.  These are all excellent reasons, but you already know them.

Coined the Military Discount Movement, the idea is simple: businesses offer veterans and active-duty military members a discount, and in return earn their patronage and loyalty. 

There are roughly 21.4 million veterans living in the United States, and approximately 1.4 million active duty military servicemen and –women in the United States (most recent data as of 2013).  A significant consumer base, by any standard, and a cohort of citizens who have already demonstrated a tendency towards loyalty.

The unemployment rate among vets who have served since 2001 is substantially higher than the population at large, with an unemployment rate of 9%.  If anyone appreciates a discount, it is a member of the unemployed.

The Military Discount Movement urges businesses to offer veterans and active-duty military members a discount, no matter how small, as both a symbolic and financial acknowledgement of servicemen and –women’s dedication and sacrifices to protect their country.  The discount can be budgeted as a marketing expense, and of course companies can (and should) broadcast as loudly as possible their military discounts and dedication to giving back to those who have given so much for us.

Consider this parting thought – for right or wrong, better or worse, the wars in Iraq and Afghanistan were designed with a very specific purpose in mind: taking the “War on Terror” overseas and away from American civilians.  By creating targets closer to home for Islamic extremist terrorist organizations, the United States and their allies have largely contained these types of terrorist attacks to the Middle East, but at the cost of military service members.  Our soldiers have, in a very real sense, been placed strategically as targets, much as a matador waves a red flag away from his body.  The ethics and efficacy of such a strategy are open to debate, but one thing is certain: the people who volunteered to be put in harm’s way deserve a “Thank You”, and a simple and effective way that businesses can thank them is a discount.

Please consider joining the Military Discount Movement, and please pass this request along to any business owners you know who might consider offering a military discount.

 

EzLandlordForms offers a military discount of 20% to both active-duty and veteran members of the military. 

]]> https://www.ezlandlordforms.com/articles/educational/5/465/how-to-effectively-market-and-rent-to-millennials/ https://www.ezlandlordforms.com/articles/educational/5/465/how-to-effectively-market-and-rent-to-millennials/ Wed, 02 Jul 2014 11:57:23 GMT

Is your business "Gen Y-proof"?  Chances are if you’re still mostly utilizing paper applications, your business is not yet prepared for this new generation of renters.  Just a few short years ago we were preparing for this new generation of baby boomers' babies AKA Generation Y or millennials, now they are here and entering the rental market faster than ever.  With an estimated 70 to 80 million strong, your business cannot afford to miss the boat they’re sailing in on; indeed, housing markets' continued recovery is dependent on the engagement of millennials, according to a recent Harvard study.  Gen Y renters have some very specific demands which you better be prepared to meet if you want them to hang around. 

Here are a few of the things you will need to earn the business of these 20- and 30-somethings now and in the near future.

Technology.  Technology is key and is the way these Gen Y’ers do everything from communicating to paying for goods and services.  Brace yourself for a faster pace with quick and concise communication via text messages.  Property manager Judy Prince of Silver Spring, MD says, “they text me everything, I have to get used to that.”

Landlords and property managers will indeed need to become accustomed to communicating via text messages as more Gen Y’ers take their communication to their mobile phones and tablets.  Some property managers and landlords may prefer to communicate the old-fashioned way, but may risk losing some of this generation who are accustomed to multitasking on their digital devices.  A quick text to a landlord or property manager is second nature to them, but some old-school landlords and property managers might be concerned with the inability to maintain a record of such communication.  The concern is a valid one, but modern technology has made it possible for Android and iPhone users to print those important texts to keep in your tenant files. 

Offering high-speed wi-fi included with the rent in larger apartment buildings or at a central location like a community lounge is a great perk that managers should consider as well.

Mobile-Friendly Website.  One of the best places for property managers and landlords to begin would be with their websites which is where most Gen Y’ers will begin.  A mobile-friendly website is a must with this crowd and will help to win them over as quickly as any other technology.  Millennials use the Internet as their primary choice for home searches, whether buying or renting.  Having a site they can access from their mobile phones is a must.

Also, many younger renters will want to make maintenance requests and rental payments online as well.  No millennial will want to mail in checks for rent payments to your office or other location.  Fast, electronic payments and convenience are a good way to collect fast rent payments from this generation.

Local Amenities Matter.  It’s a big mistake to believe these new renters only socialize on the Internet.  While they do engage in their share of social media online, there is plenty of socializing happening in the local bars and neighborhood coffee and sandwich shops.  The closer your rentals are to shopping, restaurants, bars and other amenities, the better for your business.  Apartment building managers who are not in close proximity to these amenities might want to consider bringing them on board, if possible.  What's more, millennials are more focused on walkability than any generation previously, and increasingly look for homes within easy walking distance.

Bring on the Bling. You can impress this generation of renters by modernizing your rentals with the newest and the best upgrades to include everything from lighting to kitchen and bathroom fixtures.  Shiny new appliances are a must as well.  This is not the shabby-chic generation and they will quickly let you know by moving on to your competition if your properties don’t make the cut.  Showing them the bling will get them to show you the money according to a study done by J. Turner Research, where 27 percent of younger renters reported quality as the most important selling point for rental units (22% reported price point) in an analysis of renter choice.

Although Gen Y’ers will not be your only renters, they will be the bulk of them.   Don't assume they want the same things you do, and spend time finding out what will appeal to millennials in your target market.

Tell us how you’ve prepared for this new generation of renters?

 

]]> https://www.ezlandlordforms.com/articles/news/464/new-harvard-study-shows-housing-recovery-will-slow-without-millennials/ https://www.ezlandlordforms.com/articles/news/464/new-harvard-study-shows-housing-recovery-will-slow-without-millennials/ Thu, 26 Jun 2014 11:57:05 GMT

The Joint Center for Housing Studies at Harvard University released its annual State of the Nation’s Housing report this morning, and one key finding was that the millennial generation is critical to the ongoing housing recovery, but has largely remained on the sidelines over the last few years.

Millennials (or Generation Y), defined here as Americans between the ages of 18-34, make up an impressive 23.5% of the population, roughly 73.7 million Americans. 

Millennials' reluctance to buy their first home (or worse, to even rent their own home) poses a serious threat to the ongoing real estate market recovery nationwide.  The economics of why the housing market needs first-time homebuyers are relatively simple: first-time buyers add only to the demand side of the market, not to the supply side.  On the contrary, Jack and Jill Homeowner who are looking to upgrade their home will be net-neutral transaction, by adding their current home to the supply side by listing it for sale, and adding to demand by buying a new home.  (Actually, upgrading a home is not technically net-neutral, as there are still transaction services like mortgage lenders, real estate agents and title companies that pay many Americans' incomes, and upsizing homes creates added economic impact in the form of buying new furniture, etc, but that is outside the scope of this article). 

As baby boomers age and downsize their homes, many selling their homes and becoming renters, it will become increasingly important that millennials start buying into the real estate market - literally.

Still, can anyone blame today's young adults for being wary of buying real estate?  High unemployment rates plague millennials, as the economy's recovery continues to advance sluggishly and employers can afford to be choosy and hire only applicants with impressive work experience.  Further, many young adults watched their parents and older siblings struggle during the housing crash in the late '00s, and with over a million U.S. homes still underwater on their mortgages, the catastrophe of falling underwater on real estate is a fresh and vivid memory for many millennials.  Many have yet to move out of mom and dad's basement, much less even consider buying a home.

For a stark reminder of why so many millennials have yet to move out of the nest, click through to view Harvard's interactive version of the map above, which shows renters' housing burden (average rents as a percentage of average income) nationwide.

If you have a spare ninety seconds, listen to NPR's quick overview of the Harvard report as it concerns millennials... and everyone else who owns real estate in America.

]]> https://www.ezlandlordforms.com/articles/news/463/canada-s-new-real-estate-bubble-realtors/ https://www.ezlandlordforms.com/articles/news/463/canada-s-new-real-estate-bubble-realtors/ Wed, 25 Jun 2014 09:21:44 GMT

Canadian homeowners and investors were warned by economists about the possibility of another real estate bubble after prices rose by 60% more in the first quarter of 2014 than in just one year prior; however this time the focus may be on something a little different.  The largest group of victims of any fallout from this real estate boom will likely be realtors.  A number  of the 108,706 (and counting) realtors may find themselves in need of a life preserver in the next several years when the bubble bursts.  With that number of realtors, that’s an approximate 1 realtor for every 245 Canadians over the age of 19.

In a labor force survey, Statistics Canada reported there are almost as many people representing the sale of homes as there are people building them.  The number of carpenters was reported at 131,000. 

Realtor growth in Canada has been countrywide, but Toronto has seen a particular housing boom and may be the hottest real estate market in Canada next to Vancouver right now.  Toronto’s average home price is at $1 million for a single-family home (exact figure reported at $1,012,072).  Many experts in Canada’s real estate market say Toronto’s market has played a large part in the rise in realtor numbers. 

The allure of a flexible schedule and the promise of "quick and easy money" from the commissions made on home sales continues to draw droves of people to the industry.  For the average wage earner, the sale of just two homes could earn a commission equal to one year’s salary.  According to Shelly Koral, director of OREA College, "We see a very diverse mix in our [real estate] classes.  They’re made of a combination of high school graduates, folks at university doing it on the side, retirees, and a diverse mix in terms of cultural backgrounds.”

According to a Financial Post report in May, 2014, the Toronto Real Estate Board suggested it had more than 39,000 realtors up from 35,000 just one year prior, and from 31,000 the year prior to that.  Ten years ago the number of realtors was reported at approximately 20,000.

Phil Soper, Chief Executive of Royal LePage Real Estate Services, has a slightly cynical take on the matter, "This is a real regional story. If you look at Quebec, where they took a different approach to licensing and professionalism by increasing the length of time and difficulty to get your licence, their ranks have shrunk. You’ve got speculative agents who get their licence on the chance they might be able to sell a home."

Soper also says so-called license warehouses have been created where salespersons are housed, but not trained nor managed in any meaningful way, “They are really only brokerages in name only.”

The U.S. experienced a similar occurrence back in the late 1990’s and early 2000’s when realtors saturated the market in search of  fast money and freedom from cubicles.  Some say the U.S. market continues to be saturated with agents and that similar problems exist where the average real estate agent is poorly trained and largely unprofessional, and often viewed as nothing more than a commission-seeking robot.

Nevertheless, the numbers of realtors in Canada’s current market will undoubtedly correct itself in the aftermath of this bubble just as it has throughout the industry’s history.

Have you seen an oversaturation of realtors in your market?  If so, has the competition impacted commissions in your area?

]]> https://www.ezlandlordforms.com/articles/news/461/u-s-real-estate-market-gains-continue-into-summer-but-slower/ https://www.ezlandlordforms.com/articles/news/461/u-s-real-estate-market-gains-continue-into-summer-but-slower/ Fri, 20 Jun 2014 10:56:51 GMT

The news is largely upbeat for homeowners and landlords throughout the U.S., from CoreLogic’s Negative Equity analysis and Trulia’s Price Monitor and Rent Monitor reports for 2014. 

First, a look at home sales trends indicated in a quarterly and year to year analysis.  The steady price gains homeowners have witnessed over the last two years have begun to slow down, showing signs of a calmer increase rate of 8% (though still higher than the historical norm).  For approximately 3.5 million homeowners, that steady increase meant their homes were finally pulled out from underwater for the first time since the late ‘00s crash.  Great news for them, but another 1.2 million homeowners will still find themselves reaching up for a life preserver, which Trulia Chief Economist Jed Kolko says will eventually arrive, but at a slower rate than it has in the past two years.  According to Kolko, prices are expected to continue to rise at about a 5% increase compared to the previous two years’ increases which in some cases soared to well over 20%.

The report further reveals that since May of this year, no U.S. market has seen a 20% or higher year-over-year price increase (as had been seen in many markets during the previous two years).  Some markets reportedly experienced as much as 30 to 40% during the early recovery stage.

Some of the hardest hit markets such as those in the west, California (Oakland and Sacramento) and Nevada (Las Vegas) in particular will be most affected by the slow turn-around.  Las Vegas, Sacramento and Oakland will now find themselves on the long-term recovery plan. as they have suffered the highest negative equity.

Many experts believe the stalled price increases are ultimately a good sign.  Once again Trulia’s Jed Kolko: “Extreme price increases create unrealistic expectations, encourage flipping, and might discourage some owners from selling if they expect big increases to continue; at the same time, price declines push people into negative equity, raising the risk of default and foreclosure.”

In relation to home price declines, only four areas in the country were reportedly still seeing prices on the decline (El Paso, Hartford, Albany and Little Rock), which means that the national price slowdown has not had a significant impact overall.

Property managers and landlords will be delighted to know that rent prices, on the other hand, continue to be on the rise and are up 5.1% nationally year-over-year.  Equally good news is that rents rose the highest in at least one of the same markets where home sale prices slowed (San  Francisco, San Diego and Oakland).  

California’s rental market is, of course, seeing the biggest rises with much-discussed San Francisco reaching the highest charted rent across the board at $3350 per month for a two bedroom.  New York’s rent comes in immediately behind San Francisco.

Overall, rents in the U.S. have been on the rise for the past several years and are expected to remain high for some time - excellent news for property managers and landlords.

Have you seen rents and real estate values steadily rising in your market?  

]]> https://www.ezlandlordforms.com/articles/educational/2/460/the-lowdown-on-gayborhoods-fascinating-stats-for-the-investor-s-eye/ https://www.ezlandlordforms.com/articles/educational/2/460/the-lowdown-on-gayborhoods-fascinating-stats-for-the-investor-s-eye/ Thu, 19 Jun 2014 11:42:41 GMT

You’ve likely never heard the term, but it’s a safe bet you’re familiar with what gayborhoods represent if you live in or have ever visited any of the larger metropolitan cities such as San Francisco, Washington, DC or the gayborhood mecca-Philadelphia.

A gayborhood is defined as a neighborhood heavily concentrated by the LGBT community and where gay-friendly businesses, restaurants and nightclubs are commonly found.  Gayborhoods are usually located in large metropolitan cities and can be found across the U.S. from San Francisco to Massachusetts. The term was coined in Philadelphia in reference to the city’s heavy gay population in Center City.

Trulia released a thought-provoking report one year ago that may provide some insight as to why a property or two in a gayborhood might be well worth considering.  According to Trulia’s Price Monitor report, along with information from Case-Shiller (Standard and Poor’s Case-Shiller home price index) and other home price indices, while prices were on the increase for nearly every large metropolitan area, there were some differences in the numbers for urban areas and suburban areas in the same city.  It should be noted that Trulia defined urban as areas having mostly townhomes, condos and apartments while suburban areas were considered those within a metropolitan area having mostly single-family, detached homes.  To determine which area (urban or suburban) had the most substantial recovery, Trulia pulled data on median prices per square footage.on all non-foreclosure homes, and examined population growth based on postal zip codes.  The report covers twenty of the major metropolitan U.S. cities and represents a year to year comparison through May and June, 2013 respectively. 

The Price Monitor report revealed that urban areas had median prices which were 11.3% higher than the previous year while prices in the suburbs had increased 10.2%.  Contrastingly, suburban areas increased in population at a higher rate (0.56%) than did urban areas (0.31%).   Could the explanation for the difference lie in sheer supply and demand theory?  More demand in suburban areas is met with more development (supply) since there is plenty of building space for more homes.  More demand for urban living equals an increase in price since there is often little option to build more because of the limited space (low supply).  Perhaps, but let’s look a little further.

Gaps in urban price increases were found in 16 of the 20 cities studied.  Of those, Miami, Phoenix, and Detroit had increases of five percent or more over suburban areas.  Higher suburban price increases were found in only Seattle, Dallas, Minneapolis, and San Francisco.

The report further found that urban areas with high rise buildings housing more than 50 units experienced an even higher overall price increase (11.9%) than both its urban counterparts and suburban neighbors.

So, now that we know urban areas have a tendency towards higher price increases over suburban areas, what about the gay factor?  

Well, we’ve saved the best for last.  The largest gains were observed in gay and racially diverse neighborhoods.  Racially diverse neighborhoods reportedly enjoyed a 14.3% increase in price.  Neighborhoods with households where same-sex male couples were more than 1% of the population saw a 13.8% price increase, while neighborhoods with a higher than 1% same-sex female household experienced the highest overall increase of 16.5% compared to the national increase of 10.5% and the urban increase of 11.3%.

Further, another Trulia report noted it is a common pattern for gay men to live in more expensive areas.  The typical same-sex male couple tend to live in a zip code with a median price per square foot of $208; same-sex female couples tend to live in zip codes that are $139/ square foot; while general households have a median of $127/square foot. 

These reports provide a pretty compelling argument for investors to take a closer look into the so-called gayborhoods.  If these numbers are accurate, historical and sustainable, investors would be remiss in not adding properties from these neighborhoods to their portfolios.

Some of the more well-known gayborhoods can be found in:

• Detroit, MI (Pleasant Ridge)
• Dallas, TX (Oaklawn)
• Philadelphia, PA (Center City/Gayborhood/Midtown Village)
• San Francisco, CA (Castro)
• Manhattan, NY (Greenwich Village, Chelsea and Hell’s Kitchen)
• Washington, DC (Dupont Circle)
• Chicago, IL (Boystown)
• Baltimore, MD (Mount Vernon)
• Cape Cod, MA (Provincetown)
• Fort Lauderdale, FL (Wilton Manors)
• Rehoboth Beach, DE
• West Hollywood, CA
• Palm Springs, CA  

What do you think about Trulia’s report?  Would you invest in a gayborhood?  Why or why not?

]]> https://www.ezlandlordforms.com/articles/educational/2/459/considering-apartment-building-investing-consider-both-the-risks-and-the-returns/ https://www.ezlandlordforms.com/articles/educational/2/459/considering-apartment-building-investing-consider-both-the-risks-and-the-returns/ Tue, 17 Jun 2014 09:09:56 GMT

Apartment buildings are largely considered one of the best commercial investments around.  With that said, there are still some pitfalls to consider or avoid when determining whether apartment investing is for you.

Investing for the first time is exciting, and whether you are a real estate virgin or just new to commercial investing, the excitement lingers in the air like a cheap aerosol spray.  Commercial property veterans warn newbies that approaching the purchase of an apartment building without much thought and preparation will inevitably end in disaster.  When you become the owner of a commercial property such as an apartment building, you essentially become the owner of the apartment business.  Few people will start a business without a business plan, yet thousands of newbie investors will invest in commercial buildings without one, to their peril.  Having a proper business plan in place can not only help in securing a loan for your apartment building, but will often negatively impact your bottom line profits.

Another area requiring investor’s due diligence is possessing knowledge of the local area where you choose to purchase.  In some cases, it may be impossible to have first-hand knowledge, especially if the property is purchased out of state.  The wise choice here would be to purchase only in an area where you have a trusted person who knows the area and can provide a thorough analysis of the area and the neighborhood in which you’re buying.

Timing really is everything when making real estate purchases.  Purchasing that ‘great deal’ is only truly a great deal if it will produce a great profit, and consistently.  It may be that you were able to purchase that property at a low price because the neighborhood is on a downswing and is, therefore, undesirable and will be difficult to lease or resell.   A perfect example of this is a small two bedroom condo on a beautiful man-made lake in Charlotte, NC which sold for $25,000 with a monthly rent amount of $650.  On paper the numbers looked incredible, and well, too good to be true.  Turns out the condominium association was falling apart, management changed every eight or nine months, and the apartment was vacant far more than it was rented.   The neighborhood was on the decline and had developed a reputation for being drug-infested and reminiscent of the ‘wild, wild west.’

Working with an expert in the area will help to combat this.  Similarly, a higher-priced property may not be such a bad deal if you know the area is up-and-coming.  Paying a slightly higher price now may mean a big payoff later.

A good deal is defined in many ways depending on the investor’s goals, but the numbers should never be ignored when evaluating whether the deal is workable or not.  Never assume that the value will appreciate; if the numbers don’t work today, it’s a bad deal, period.

Buying real estate of any kind is a serious up-front expense that should not be entered into lightly.  Investing time in due diligence can pay off in many ways and should be a mandatory step in every investing decisions.  Due diligence requires digging a little further than the obvious tax records and the information derived from the listing agent and perhaps the seller.  Ask the seller for the previous three years’ profit and loss statements, talk to the neighbors about the neighborhood and inquire about the property as well.  You might be surprised to learn what the neighbors know about the history of the property.

Who manages the apartment building matters as well.  Bad management can cost you a lot of wasted time and, of course, money.  Be smart and interview several management companies, if you don't already have a strong relationship with one.  Ask the right questions and pay attention to small things like the amount of time they take to return your call and how they communicate.  If you have difficulty getting in touch with them, it’s likely your tenants will also.  Also, you want to know whether they have their own maintenance team or rely on contractors.

Lastly, not enough emphasis can be placed on the importance of planning.  Long before you set out to find your first apartment building, have a plan in place.  Inevitably you will make some changes to the plan, but failing to plan is indeed planning to fail.

Do you currently own any apartment buildings?  If not, is apartment building ownership a part of your future plans?  What is the biggest reason why you would or would not consider owning an apartment building?

]]> https://www.ezlandlordforms.com/articles/news/457/international-real-estate-investing-the-top-ten-places-to-invest-in-2014/ https://www.ezlandlordforms.com/articles/news/457/international-real-estate-investing-the-top-ten-places-to-invest-in-2014/ Tue, 10 Jun 2014 10:25:50 GMT

The United States and Canada have long been destinations of choice for many international investors, but the numbers of investors coming to North America to purchase homes and other real estate increased significantly in the aftermath of the U.S. housing crisis from 2008 and beyond.  From as far away as China and as close as Mexico, foreign investors bought homes by the dozens with the hopes of buying low now to sell high later.

A survey of members of the Association of Foreign Investors in Real Estate reported that while London was the number one city for foreign investments, the U.S. remains a 'stable and secure’ place for real estate investing by a ‘wide margin’, and that it tops the market in the areas of ‘capital appreciation’ and future investment potential. 

That being said, there are still a growing number of U.S. investors who prefer investing on international soil for reasons ranging from dreams of retiring in a tropical paradise to chasing high returns to returning home to native lands.

If you fancy profits from across the seas, here are ten of the top twenty locations for international real estate investing:

1. Barcelona

Topping the list is beautiful Barcelona, Spain.  The Spanish government is said to be courting overseas investors with its so-called ‘Golden Visa’ system introduced in October, 2013.  The new visa allows foreign investors who purchase at least 500,000 euros' worth of property anywhere in Spain to travel freely throughout Spain without the hassle often associated with Visa application. The 500,000 euros purchase can include more than one property.  Reportedly, the Spanish government is trying to sell off some of its homes still suffering from the housing crash a few years back.

2. French Riviera

Another dream destination coming in second on the list, the French Riviera.  It’s hard to imagine that this breathtaking location would need any more incentive than its sheer beauty to entice real estate investors, but experts say some foreign investors are especially attracted to the recent 25 percent reduction in capital gains taxes.  After all, beauty is seldom a match for dollar signs in the eyes of the astute investor.

3. Grenada

Grenada or the 'Isle of Spice' as it is otherwise known, is reportedly introducing a ‘Citizenship by Investment’ program to lure foreign investors to its’ magical island.  Any investor who purchases real estate on the island of Grenada will automatically be granted citizenship.  Grenada remains focused on its attraction to tourist and has recently begun focusing on attracting wealthy investors from other lands.  

4. Tuscany

The leasing market in Tuscany makes it the number four contender and a particularly enticing buy for foreigners along with its beauty and reported favorable amendments to the real estate tax system.  According to local Tuscany real estate agents, there are many cheap areas in Italy where foreign investors are purchasing and holding for vacation homes and buying farmland to turn into bed and breakfast inns. 

5. Istanbul

Overseas purchases rose in Turkey by 78 percent in the first half of 2013 with the city of Istanbul leading the way.  Most of the new investors have been from the Middle Eastern countries.  A one-bedroom apartment in the Bahcesehir area of Istanbul can be purchased for about $85,000 – a real steal for any foreign investor.

6. Panama

Funny hats aside, Panama has a lot to boast for foreign real estate investors.  The government is stable, GDP grew at a faster rate than China's last year, and there is even a tax-free zone of Colón, all in addition to its breathtaking views and pleasant climate.  Homes here are still affordable, but that won't last forever.

7. Liguria

Experts say current prices in Liguria are the lowest since 2008 and is one of the places where foreigners can invest for less than $200,000.  This seaside region of northwest Italy is stunning, and boasts Genoa as its capital.

8. Montenegro

According to the World Travel and Tourism Council, Montenegro is expected to be the fastest growing tourist destination in the world and may just be the place for international investors looking for the ideal buy and hold investment.  Prices are reportedly continuing to rise, yet still remain less than neighboring Italy and Croatia.

9. Zell Am See

Coming in at number nine is Zell Am See, Austria with its real estate gems scattered throughout the country.  While prices continue to rise, this country still has some good buys and investors are cautioned about its strict leasing (letting) laws which makes older properties with letting permissions already in place a hot commodity.  Although prices continue to rise, experts believe this may be a perfect location for investors who are interested in longer-term investments and resort properties.

10. Mauritus

Last, but certainly not least is our number ten on the list, Mauritius.  With its strong rental market, Mauritius rounds out our top ten list of international investor treasures.  The wonderful news about  this enchanted island is that buyers qualify instantly for residency as well as tax benefits.

Here is a more extensive list of places where U.S. dollars can buy a slice of paradise on foreign soil. 

Are you investing abroad or ever considered it?  Do any of the countries listed appeal to you or somehow fit in with your investment goals?

 

]]> https://www.ezlandlordforms.com/articles/educational/2/456/the-pro-real-estate-investor-s-guide-to-expert-negotiation/ https://www.ezlandlordforms.com/articles/educational/2/456/the-pro-real-estate-investor-s-guide-to-expert-negotiation/ Tue, 03 Jun 2014 15:13:02 GMT

As home prices, rise sellers have gained more confidence in the market and are less willing to take the first offer that comes their way.  New investors will need to sharpen their negotiating skills to quickly snatch up the best deals while mortgage interest rates remain low.

Knowing how to negotiate excellent bargains is a skill that requires much practice to perfect.  The more practice one gets negotiating, the better (and often bigger) the portfolio.  When most new investors think of negotiating, they automatically think of price, but investors who think only in terms of price are only seeing one angle of the negotiation.  Expert negotiators say that everything is negotiable and everything counts in the negotiations.  For instance, a seller, who is steadfast on price, may be willing to change his mind if you can offer a ten-day closing, or cash, or no contingencies.

The following are some tried-and-true principles for effective negotiating.  Once you’ve mastered these principles, your portfolio will contain nothing but pick-of-the-litter deals.

Begin with the end in mind.  Knowing your bottom line is crucial when negotiating to win.  You should always know your numbers and what constitutes a good deal for you.  Keeping that in mind, have a range that you’re willing to work within.  If you’ve worked the numbers, you will know the maximum amount you can spend without sacrificing your minimal profit.   Don’t be afraid to ask for exactly what you want in terms of price as well as other aspects of the deal, and don’t go beyond your maximum unless some other compensation makes up for it.  For example, an investor in Buffalo, NY paid a little more than his bottom line for a duplex he had been eyeing for some time.  After some hardball negotiating, he was able to get the property complete with two long-term tenants.  Even after paying a slightly higher price than originally planned, he was still several hundred dollars ahead of the mortgage payment and the neighborhood was on an upswing.

Leave your emotions at the front door.  An emotional negotiator is a losing negotiator.  Never allow your emotions to take over the negotiations.  Go into the negotiations prepared for a fight, but one based on the facts and the numbers, not emotions.  Practice keeping your cool and anticipating what some of the sellers’ objections to your offer might be ahead of time.  Avoid taking things personally and expect that the seller might get emotional, but never allow yourself to lose complete composure, even if it means walking away from the deal temporarily.

Identify all negotiating parties.  Establish up front all parties with whom you will be negotiating.  This will quickly eliminate the age old ‘I-have-to-check-with-so-and-so’ routine.  If there are other parties involved who will be making decisions, they should be identified before the negotiations begin, not afterwards.  Likewise, whenever possible, they should be present during all negotiations.  This is also referred to as the ‘higher authority’ tactic.

Always think win-win.  This may seem counterintuitive, but keeping the seller’s interests in mind can help you get what you want more often than not.  A seller who clearly sees that you are not ‘out to get him’ may be willing to give you more of what you want simply because he sees you as a reasonable human being.  His guard is now down and he is ready to listen rather than be on the defensive and prepared for the fight of his life.  A classic example in real estate transactions is the cash offer, with a fast (10-14 day) settlement: the buyer shows they're serious and ready to move immediately, and in return can often negotiate a far lower price.  Unless you’re planning a hostile takeover of the property, a more charismatic, win-win approach is best.

Keep your options open.  Great negotiators know to keep their options open.  Knowing that a particular property would be great to have but having a backup property in mind can help an investor maintain his cool when negotiations get heated.  Desperate people will always do desperate things and an investor with no options will frequently find himself paying too much for a property or purchasing a property he shouldn’t be considering in the first place.

Never show all of your cards.  Never let the other side know just how much you know.  You may be an expert real estate investor in reality, but at the negotiating table, you’re a student willing to listen and learn.  As the saying goes, ‘We’ve been given two ears and one mouth for a reason’.  Take heed; sellers are often on the defensive when dealing with a ‘know-it-all’.  On the contrary, when sellers deal with someone who they feel knows less than they do, they tend to let their guard down and become a bit more agreeable.  Leave your ego on a shelf at home.  You can always pick it back up when the deal is done and you’re laughing all the way to the bank.

Employ creative math.  Roger Dawson, author of Secrets of Power Negotiating, says “Power negotiators think in real money terms, but talk in funny money terms.”   Investors who breakdown the numbers to mere pennies might just win.  Hearing the numbers for large ticket items broken down in terms of cents per day makes it seem ‘ridiculous’ not to consider purchasing it.  Salespeople use this tactic all of the time.  An unsuspecting seller could definitely be caught off guard.  For example, if you are the seller, consider explaining just how much lower the buyer’s principal and interest payments will be than the rent payments, even though seasoned investors know that landlords should keep in mind far more figures than this simple calculus.

Practice silence.  There is an old saying among negotiators that the side more comfortable with silence always wins a negotiation.  Always pause at least three to five seconds, while looking directly into your opponent’s eyes, before responding in the conversation; this achieves several goals:

1. It breaks the “amygdala loop”, by which your reptilian brain merely reacts emotionally,

2. It gives you a chance to think and consider all the implications of what the other party has said, and

3. It makes the other person subtly uncomfortable and establishes your utter composure and confidence.

Silence is uncomfortable because it is unnatural in our everyday conversations, and it does require literal practice.  Practice this pause on your friends and family first, you’ll be surprised how difficult it is to implement, but it is incredibly effective.

Walk away.  After you’ve expertly employed all of these tried-and-true negotiating principles and still have no deal, the only thing left to do is walk away.  Remember that you can always come back at a later time when circumstances change for either you or your opposite.  If you’ve followed all of the rules, especially in remaining unemotional and attempting the win-win deal, the other party will often welcome you back with open arms.

How practiced are you at negotiating?   Do you have additional tactics you’ve used or have seen used that others may benefit from?

]]> https://www.ezlandlordforms.com/articles/educational/5/455/why-p-o-boxes-are-a-landlord-s-best-friend/ https://www.ezlandlordforms.com/articles/educational/5/455/why-p-o-boxes-are-a-landlord-s-best-friend/ Wed, 28 May 2014 15:42:29 GMT

Post office boxes and private mailboxes won’t prevent every problem that landlords have, but they can certainly prevent a lot of them.

As every mother on the planet is fond of saying, safety first.  Tenants who don’t know where you live or work can’t show up at your home or office, wielding an axe and generally disrupting your personal or professional life.  Every landlord-tenant relationship may start friendly, but a quick glance at the overloaded rent court dockets in this country show that many relationships go sour, and often in spectacularly vehement ways.

Tenants who can’t physically find you will also have a much harder time serving you with lawsuit papers.  While determined attorneys can eventually track down your physical address by filing paperwork with the Postal Service, every seasoned asset protection attorney will tell you that no one’s impossible to sue, they are merely less or more difficult to sue.  Asset protection is about making it as difficult and unpalatable to sue you as possible, and every barrier you can place between you and would-be litigating parasites, the better.  

At a certain level of difficulty, it is simply not worth the effort of finding a landlord and their assets, especially since most landlord-tenant suits take place in small claims court.

There is also an element of anonymity that can be achieved with a P.O. box.  If you give tenants your home address, and you own your own home (as the overwhelming majority of landlords do), your name is attached to the public real estate records.  But perhaps your PO box is owned by a company (ideally the same company that owns the property itself)?  Maybe your name is not found on the company charter that’s filed with the state or province?  Perhaps your tenant knows you only by your middle name, or your nickname?  You can make it difficult for tenants to figure out who and where you are.

And who’s to say that you are the owner of the company that owns the property in the first place?  For all the tenant knows, you’re merely the manager of the property.  (Word to the wise: smart landlords do not share with tenants that they own the property, they rather introduce themselves only as the manager.)

Some private mail services, often catering to the RV crowd, even allow you to use the private mailbox address as your legal residence.  There can be restrictions in place, but for landlords who travel and want a permanent, anonymous address, perhaps in an income tax-free state such as Texas or Florida, this can be an attractive option.  Mobile landlords with out-of-state mailing addresses are much, much harder to sue than stationary, visible local landlords, and can save money on taxes to boot.  

With all that being said, some states (such as California and Hawaii) can be touchy about physical addresses.  California law states "The owner/agent of the rental unit MUST disclose the 1. name, 2.  telephone number, and 3. usual street address of whomever is accepting rental payments, repair requests, and all notices required."  Whether mailboxes with usual street addresses (which are offered by both the USPS and private mail services), that sign on your behalf for packages, are in compliance with CA and HI law is a question for attorneys to battle over in court, but landlords and managers can write out their mailbox address as "123 Sample St, #456"; a usual street address. 

As with all rental-related expenses, much of the decision comes down to cost.  Fortunately, P.O. boxes tend to be cheap ($60-100/year), and even private mailbox services (with mail forwarding) are often only a few hundred dollars annually.  If you travel and want a residence address in a tax-free state, the mail service often costs less money than it saves in income taxes each year. 

Read our further tips on why and how landlords should remain anonymous, and start with the U.S. Postal Service’s P.O. Box program before looking into more advanced private mailbox services.  Canadian residents can find Canadian P.O. Box information here.

Related Reading:

The Growing Specter of State “Exit Taxes” as Residents Abandon High-Tax States

Asset Protection for Rental Investing: Legal Entities, Lawsuit Protection, & Taxation

]]> https://www.ezlandlordforms.com/articles/educational/2/454/making-the-transition-from-investor-to-developer/ https://www.ezlandlordforms.com/articles/educational/2/454/making-the-transition-from-investor-to-developer/ Tue, 27 May 2014 15:28:49 GMT

At some point in every real estate investor’s career, she finds herself looking to move to the next level.  For some, that next level is the acquisition of more rental homes, or a change in strategy from buy-and-holds to flips, while for others that next level is developing raw land into something of their dreams.  If you’ve been flirting with the idea of becoming a real estate developer, there are some key things you should know before you ever break ground.

Some would-be developers might surmise the first place to begin would be with locating the perfect parcel of land, but nothing could be further from the truth.  While location matters of course, it should not be the first item on the list.

So where does one begin?

Take Personal Inventory.  The very first step for a potential developer is to ask the question, “Do I have what it takes?”  Common attributes among developers include a solid real estate knowledge base; experience in property management or real estate investing; excellent time management skills; a flexible schedule; enough capital to complete the project or access to enough capital to bring the project to completion; and last but certainly not least, determination.  Even if you don’t have all of these traits, bringing in a partner or partners who do will make all the difference in the success or failure of the project.

Think Like a Developer.  Developers begin a project by focusing on the economic feasibility of it.  What should I build that will bring the most profit in the least amount of time?  How much will it cost?  How much land will I need to accomplish my goal and where should this land be purchased?  How large do I want to make this project?  Do I build residential or commercial?  What areas will accommodate what I want to build?

Developers begin with the end in mind and they visualize the finished project as well as the profit made from it.  Having the end in mind also includes having an exit strategy.

Experts warn that first-timers may want to start with a small development project before trying their hand at larger projects.  Taking on small projects as an investor often allows for on-the-job training, whereas there’s no room for mistakes on larger development projects which can cost millions, depending on the project.  Investors taking on larger projects will need to be fully prepared to do so.

Another word to the wise is to begin with residential properties as commercial properties tend to be more complex and more difficult to obtain financing.

Assemble a Dynamite Team.  Your team is critical to the success of your project.  The team should include an architect, engineer, appraiser, realtor and trustworthy, reliable contractors.  Work with professionals with whom you are already familiar or with contractors who have been referred to you by someone you trust.  The wrong team could cost you more than anticipated and even ruin your project altogether.

Survey the Land.  Developers want to locate a property and actually walk the land.  Sometimes what is on paper can be very different from reality.  When investing in another state or country, plan a trip or have someone you trust walk the land to determine whether the lay of the land is right for your project (that said, new developers should not be investing in unfamiliar markets).  It is also important to have the experts on hand during this process as well.   Engineers and surveyors can determine if your plans will work on the property once they’ve been able to actually see it in real time.  Viewing the land also provides the opportunity to discover any defaults or obstacles as well as an opportunity to explore neighboring businesses and any competition in close proximity.

This is also the time to establish a relationship with your city council or city planning department as they will be instrumental in the near future when you’re trying to obtain various permits and approvals for your project.  Speak with the local permit office extensively, both to start building a relationship with them and to fully comprehend exactly what permits will be required and what the process of obtaining them will entail.

Doing as much due diligence as possible up front can make the difference between a failed project and an incredibly successful one.

Secure Financing Early.   Visiting with a lender early on is a good idea to determine the likelihood that a bank or other lending institution will consider you and your project loan worthy.  Experienced developers say this is where an expert should be utilized to help determine how much capital is needed to fully fund the project to completion.  Developers should also have a contingency for additional funds, in the event that they go over-budget; many viable projects have failed because they were undercapitalized.

Investors should be prepared with a comprehensive business plan and feasibility study in hand when the time does come to actually apply for the loan.  Also, they will need to be mindful of the various stages during the process where payments will be required.  Loan officers who specialize in development loans are often a good resource for "free" advice on what they often see go wrong during projects - you're paying for their service anyway, so get as much information and expertise out of them as you can.

Of course, most lenders will require that developers be prepared to bring at least 20 percent of the total cost of the project to the table, and sometimes as much as 50 percent.

Developing raw land into something the masses can enjoy, such as a shopping mall, small townhouse community or apartment complex is a huge undertaking that shouldn’t be taken lightly.  Being prepared is key, although there are bound to be surprises along the way.  For a reader-friendly, step-by-step beginner's guide to real estate development, visit http://propertyupdate.com.au/how-to-get-started-in-property-development-article/.

Have you considered becoming or are you currently a developer?  If so, what types of projects are you interested in or have developed?

]]> https://www.ezlandlordforms.com/articles/educational/2/453/the-competitive-and-profitable-world-of-self-storage-property-investing/ https://www.ezlandlordforms.com/articles/educational/2/453/the-competitive-and-profitable-world-of-self-storage-property-investing/ Tue, 20 May 2014 12:18:04 GMT

On less glamorous corners throughout most cities in the US, self-storage units are affordable and convenient, albeit dust-ridden 5x5 cells which have quietly gained popularity with more than just hoarders.  At first glance, investors might be inclined to turn up their noses at these mundane spaces as having minimal profitability at best, but the numbers tell a very different story.

Currently, there are four publicly traded self-storage companies in the US that are doing quite well and have been for the past several years.  They are Public Storage (Ticker: PSA), ExtraSpace Storage Inc (Ticker: EXR), CubeSmart (Ticker: CUBE), and Sovran Self Storage Inc (Ticker: SSS).  All four have had five year returns in the triple digits, and the strongest (EXR) has seen a roughly 650% growth in share price over the last five years.  Not only has the U.S. seen tremendous growth in this industry, but so have other countries like England where Big Yellow posts strong returns and strong retention rates with 37 percent of units being occupied for three years or more.

What’s driving the popularity and subsequent profitability?  First, would have to be the crossover appeal of self-storage units.  Everyone from college students to veteran business owners utilize self-storage units.  The growing needs of small to medium businesses continue to demand more storage space for supplies, records and inventory.  Also, short-term rental agreements, convenient hours, climate control and extra security found in many of today’s storage facilities make them especially attractive to those who need them.  Lastly, factor in the numbers of families downsizing for various reasons and it’s understandable how these units maintain their appeal.

Industry professionals who have been following this investment trend say those considering entering the self-storage investment business now are coming very late and have to be prepared for possible bidding wars.  They need to know that self-storage facilities don’t come cheap, either; one expert says ‘Expect to just pay more.’  While the majority of self-storage facilities are owned and operated as mom-and-pop businesses, some larger corporations have entered the arena as well.  The competition has become fierce because the supply is low while demand remains high.  Most of the self-storage units were built during the 1970s and ‘80s (and show every bit of their age) with surprisingly few being constructed today, perhaps because of tighter zoning restrictions.  Even some of the large corporations with plenty of money to buy their way in are finding it difficult to do so because owners are hanging on to what is being referred to as “one of the best commercial investments around”. 

For those investors who want a piece of the 5x5 action, there is still a chance.  Self-storage REITs (Real Estate Investment Trusts) offer an alternative to investors who are either too late to become owners of actual brick and mortar self-storage facilities, or who would rather not have physical ownership of them.  (Further reading: side-by-side comparison of the pros and cons of REITs versus brick and mortar real estate investments.)

Self-storage REITs provide an alternative for investors to still profit from the self-storage facilities without the hassle of day-to-day management.  Jennifer Robinson of FTMDaily.com provides an in-depth investigation and chart of self-storage REITs’ performance over the past few years.

Professionals in the self-storage arena say that because competition is so stiff, owners of self-storage units will need to set themselves apart through customer service efforts, perfect climate control, better locations near retail and residential areas and more aesthetic harmony with its’ surroundings.  Also, technology will soon play a large role as some facilities have already adapted high-tech cameras for security of both their customers and staff.

Tell us how you feel about investing in self-storage?  Is it for you or not?  Would you purchase self-storage REITs as an alternative?

]]> https://www.ezlandlordforms.com/articles/educational/5/452/what-commercial-property-owners-should-know-to-avoid-falling-prey-to-ada-lawsuits/ https://www.ezlandlordforms.com/articles/educational/5/452/what-commercial-property-owners-should-know-to-avoid-falling-prey-to-ada-lawsuits/ Mon, 19 May 2014 10:06:54 GMT

Today nearly 1 out of every 5 Americans reports some sort of disability.  By 2030, an additional projected 71.5 million baby boomers will be over 65 years old and will require age-appropriate products, services and accommodations.  Now is a good time for small business owners and commercial property owners to shore up their ADA compliance, because Department of Justice enforcement sweeps and ADA lawsuits (some legitimate and many predatory) are on the rise.

While you may or may not have given much thought to whether or not your business is compliant with the Americans with Disabilities Act (ADA), being prepared to accommodate the numbers of Americans who have some sort of disability in the future will be increasingly paramount to small businesses' survival in the future.  

Perhaps there is no better place to look than California to demonstrate the impact that non-compliance can have on one’s business.  Experts report that nearly 40 percent of all ADA accessibility lawsuits are filed in California – far more than any other state.

There are thousands of small business owners with nightmare stories to tell about losing their businesses to career plaintiffs and ambulance-chasing attorneys.  Restaurant owners like Barbara Rubin of Folsom, California says that she had to close her restaurant after 30 years of doing business in the same spot.  Her tenure there was brought to a screeching halt by ‘would be’ patron Robert Kalani, who had filed at least 27 other lawsuits against fast food restaurants, pharmacies and grocery stores.  According to Kalani, he couldn’t enter Rubin’s restaurant because of violations he immediately observed.  Rubin admitted there were violations and commented to reporters that, “I could see the writing on the wall once we went into litigation.  I knew there was no way I could turn it around.  I do not have the financial ability to stay.”

To understand why California courts are so littered with plaintiffs filing lawsuits for ADA violations, one has only to look at the litigation-friendly laws on the books.  California law awards monetary damages and attorney fees to plaintiffs for ADA violations.  Plaintiffs can be awarded triple damages with minimum statutory damages of $4,000 along with punitive damages. 

In one infamous California case, plaintiff Jaref Molski, who is also an attorney, claimed to have received a total of $800,000 (his only income) from settlements he’d won against a large number of plaintiffs over a few years span.  He indicated that 95 percent of his income was derived from investigations he conducted for these cases.  Molski also admitted to having filed at least 374 additional lawsuits against various plaintiffs.  He describes himself as a civil rights activist who uses litigation to force business owners to comply with the ADA rules and regulations.

California has recently passed laws in an attempt to abate the excessive ADA claims, but some fear it still won’t prove to be enough to curb the scavenging nature of these litigations.  For more information on the revisions to California law SB1186, click here. 

Small business owners throughout the U.S. should be aware of the potential consequences of non-compliance if they don't want to end up another casualty of litigation.  Business owners everywhere must be aware of what the new revisions to the laws are and be diligent about addressing them before complaints are filed.  They should also know that the Department of Justice conducts investigations across the country and often have imposed weighty fines for non-compliance.

According to one hotel expert, the D.O.J. is known for their ‘geographical sweeps’ which can be initiated by a single complaint.  Sweeps can be done on hotels, apartment complexes and any business openly serving the public.

In 2010, the D.O.J. made several adjustments to the law which regulates general practice, proper communication, and policies and procedures. Generally speaking, business owners were always required to make reasonable accommodations for persons with disabilities and that remains the same, however here are some of the additional revisions with which business owners are expected to comply:

• The revised definition of service animal is now ‘any dog trained to perform a certain duty or task for a disabled person’.  The ADA does not recognize dogs or other animals used for therapeutic or ‘comfort’ as a service animal.  Of course, the new revision requires all places of business to include such a description in their policy and procedures and to accommodate service animals whenever possible without placing undue pressure on the business.
• Business owners must allow customers using wheelchairs, Segway and all other mobility devices on the premises where other customers are allowed.  Reasonable modifications must be made where feasible.
• Business owners are expected to make every effort to reasonably communicate with customers who have hearing, sight, or speech disabilities including the use of new technology in the form of VRI (Video Remote Interpreting).  
• Businesses whose building/structural elements were in compliance with the 1991 standards are considered in compliance with new standards unless or until alterations or changes made such as moving or remodeling in some way (this is referred to as the Safe Harbor).
• Business owners must remove barriers under the ‘readily achievable’ standard which means when it can easily be rectified to accommodate disabled persons (i.e. adding a ramp to an entrance where a stair or set of stairs was once in place).  Business owners should make necessary accommodations whenever barrier removal is not reasonably possible.
• Businesses must make parking spaces available according to new standards and signage, in most cases (i.e. 1 designated handicapped space per every 25 regular spaces).

Further reading on the revised ADA standards can be found here. 

The bottom line for commercial business owners is an ounce of prevention is worth a pound of cure, as career litigators look for easy targets that have overlooked something obvious and easily demonstrated in court.

]]> https://www.ezlandlordforms.com/articles/educational/10/451/tips-and-tricks-to-lower-real-estate-property-taxes/ https://www.ezlandlordforms.com/articles/educational/10/451/tips-and-tricks-to-lower-real-estate-property-taxes/ Tue, 13 May 2014 16:38:28 GMT

The National Taxpayers Union estimates that 60 percent of real estate in the US is assessed too high.  

There are many ways homeowners can go about lowering their real estate assessment themselves, but for those who would rather leave this sort of thing to the experts, the first step should be in locating and hiring a professional appraiser.  The best way to find an appraiser is to ask around among friends, family or your real estate investing contacts for a referral, or perhaps ask the realtor who sold you the home if you still have contact with that person.  Another option would be to contact the association for appraisers in your area.

If DIY is the best approach or the most feasible for you, here are some tips on the best way to gain maximum results.

First, know your window of opportunity.  The time allotted for challenging assessments is different based on jurisdiction.  Make it a point to learn all the rules including timelines before you begin your journey to the county assessor’s office. 

Always know your status as someone who might be eligible for any exemptions.  Are you a senior citizen, a veteran or are otherwise entitled to an exemption from property taxes or a portion of them?

Tax records are notoriously erroneous.  Be sure to check your tax records thoroughly for any blatant, or perhaps even subtle, mistakes which could make all the difference in your assessment.  An assessment on a home with completely different square footage, for example, will render an incorrect assessment amount.  Some tax errors will be blaringly obvious, but checking and re-checking all of the facts is always a good place to start.

Assess your neighborhood yourself to determine if your numbers are up to par with the rest of the homes.  There are times when entire neighborhoods have been assessed incorrectly, though a rarity.  

Be sure an assessment of your home reflects its true market value.  The true market value of your home can only be determined by taking inventory.  How does your home really stack up to your neighbors is a difficult but critical task you must perform to help determine an accurate assessment.  If you’ve improved your home a great deal more than your neighbors, then you’ll have to accept that the numbers don’t lie.  Similarly, if your home has issues that would turn buyers off, you’ll want to point those out to an assessor in hopes of some leniency.

Prepare, prepare, prepare.  Preparing for a property tax assessment should be approached the same way one would prepare for court- with full documentation of all necessary facts, numbers and other evidence to prove your case.  An assessor will need to have some proof of why you shouldn’t be charged the amount of taxes assessed, and it is your job to provide that proof.

Know what improvements have been made and how its value impacts your taxes.  Knowing what improvements to your home will cost you such as adding on decks, pools or other improvements before building them will help a great deal in determining how much more value has been added to your home.  Improvements, of course, not only increase the price you will eventually get for your home, but potentially the amount of taxes you will pay as well. 

Always make yourself and your entire home accessible to the assessor.  Failure to comply in most jurisdictions will resort in the highest assessment allowed.  Being as cooperative as possible, as well as pleasant, can help.

Consider functional obsolescence.  According to Steven Housman, President of Property Tax Experts, Inc, a property tax consulting firm in Hollywood, Florida, any design flaws in your home could make it functionally unappealing or otherwise less than marketable.  For example, are any "bedrooms" walk-through rooms?  Is the basement too short to be useful for anything but storing a few boxes?  Be sure to point those flaws out to the assessor who might not have considered it otherwise.

Highlight external obsolescence.  Similar to functional obsolescence, external obsolescence accounts for any external flaws related to the home itself or even the neighborhood or community.  Information such as active train tracks that run through the back of the home or homes directly in a flight path close to an airport would likely make the home less appealing and therefore negatively impact the home’s value.  Local environmental hazards may be referenced, or the local crime statistics, or perhaps a high prevalence of sex offenders on a nearby street... anything that might convince the ranking local bureaucrat that your property is not as valuable as they have supposed. 

Timing is indeed everything.  Know when your last assessment was done and what the market was doing at that time.  If your assessment was completed during the boom but hasn’t been assessed since that time, a reassessment is definitely in order.  If that is the case, chances are you are paying too much in taxes and having them reduced will be a cinch.

Remember that your property tax burden is often in your control, when you act expeditiously and knowledgeably.

Additional tips, resources and ideas may be found here:

http://www.investopedia.com/articles/pf/07/property_tax_tips.asp

http://www.kiplinger.com/slideshow/real-estate/T055-S001-7-steps-to-lower-your-property-tax-bill/index.html

]]> https://www.ezlandlordforms.com/articles/educational/2/450/highbrow-investors-snatch-up-trailer-parks-in-surprising-and-profitable-trend/ https://www.ezlandlordforms.com/articles/educational/2/450/highbrow-investors-snatch-up-trailer-parks-in-surprising-and-profitable-trend/ Mon, 12 May 2014 10:25:40 GMT

It would seem the once-seedy trailer parks have gone green over the last few years.  Not the clean air, recycle your plastics kind of green, rather the U.S. currency kind of green.  Even former Wall Street profiteers have been dipping their pens in trailer park ink; in a bizarre twist of tales, some of the richest entrepreneurs and investors in the U.S. are looking to the nation’s trailer parks for their latest riches-to-more-riches investing strategy.

According to a 2013 Census Bureau report, there are rouhgly 8.6 million mobile homes in the U.S., with approximately 12 million Americans living in them.  Reportedly new trailer park supply is are not likely to grow much (if at all) in the coming years, due to increased restrictions on zoning laws in most states, and due to the exorbitant costs of building new ones.  So supply remains a constant while demand for inexpensive and independent housing continues to rise, as rural Americans continue to seek cheap and affordable housing.

The trailer park industry’s so-called ‘sweet spot’ is a lot rental of approximately $495 according to former Ivy Leaguer Frank Rolfe, of one of the largest trailer park investors in the U.S.  Certainly doesn’t sound like much when investors can demand at least $650 in rent every month in even the cheapest cities, for a traditional residential single family home or apartment.

So just how lucrative is the trailer park business?  The answer is lucrative enough for two of the richest and savviest investors in the country to be two of the largest owners of trailer parks in the country.  Warren Buffett purchased Clayton Homes, one of the largest manufacturers of mobile homes, for $1.7 billion more than a decade ago just before its appeal broadened.  Buffett’s focus, however, was on senior parks for the 55 and over population.  Since that time, private investment firms and other wealthy moguls like Sam Zell, who’s known for owning more office spaces and apartment buildings than any other entrepreneur in the country, have tried their hand at mobile home park investing and have made big profits.

Aforementioned Frank Rolfe and his partner Dave Reynolds have taken investing in trailer parks and mobile homes a step further by starting their very own boot camp of sorts for newbie trailer park investors.  The idea was born after they both attended a similar course conducted by someone who they apparently felt did a less-than-adequate job.  They’ve named the course Mobile Home University, and have a typical enrollment of 30-40 students or more; larger crowds tend to fill classes in the California area.  The classes are not cheap though, costing a steep $2,000 per student (for a fascinating glimpse into the innards of their underbelly-real-estate-investing strategy, see The New York Times Magazine's piece on Rolfe and Reynolds' Mobile Home University). 

Rolfe is a former billboard’s company owner, and sold his billboard company for $5.8 million before deciding to enter the trailer park business, when he was introduced to it accidentally by a client who needed a favor.  He purchased his first mobile home park for $400,000 and later sold it for over a $1 million.

Rolfe and Reynolds pride themselves in being ‘decent’ landlords rather than slumlords.  They reportedly spend hundreds of thousands of dollars on fixing up the parks to make them more livable.  But they have three golden rules every trailer park investor should live by: raise the rent often, no coin laundry, and don’t be a slumlord.  The pair now own 100 parks in 16 different states.

One of the greatest appeals of these trailer parks for investors is the low turnover rate.  Typically, once a trailer owner hooks up to electricity and sewage, he’s there for a while and has no desire to move mostly due to the cost of doing so which can be upwards of $5,000.

Trailer park investors should, of course, diligently examine the math on returns, as with any other investment.  For example, a park with 200 mobile homes which rent for $650/lot will gross the investor $130,000 per month when full.  That’s an annual net of $1,560,000.  Even after allowing for expenses (reportedly water is the biggest expense, and can be passed on to the renters), trailer park investors just may be on to something, especially considering the low vacancy rates associated with them.  Of course, when actually considering purchasing mobile home parks for investments, due diligence is required and the numbers must be considered carefully.  Rolfe and Reynolds say they have achieved average returns of roughly 25% annually using the strategy they teach.

Tell us what you think about trailer park investing.  Is it for you?  Do you have a different take on it now knowing Warren Buffett partly blazed the trail?

]]> https://www.ezlandlordforms.com/articles/educational/2/449/beyond-the-basics-mid-level-real-estate-investing-terminology-and-concepts/ https://www.ezlandlordforms.com/articles/educational/2/449/beyond-the-basics-mid-level-real-estate-investing-terminology-and-concepts/ Fri, 09 May 2014 10:02:25 GMT

Being a successful real estate investor requires having the right tools and knowledge.  One of those often overlooked tools is understanding the proper language and terminology of the industry.  Many investors go about their daily routine without knowing some of the key terminology and concepts used in the industry on a regular basis, but that lack of knowledge can cost ignorant investors thousands of dollars in missed opportunities and errors.

Here is a short list of some helpful terms every expert real estate investor needs to know.

Absorption Rate – This is a measure of how many months' worth of real estate inventory is available in a given market.  The formula for determining absorption rate is as follows: number of homes currently available in the market (for example 120), divided by the historical number of homes sold in that market per month (let us say 20).  Using our example, that would mean the absorption rate for this market is six (6) months.  A healthy absorption rate is generally considered between 5-7 months, and investors should consider whether an abnormal absorption rate is a product of abnormal inventory on the market, unusual demand from buyers or both.  Investors will especially want to examine absorption rates when flipping properties or deciding where to develop in new areas.

Quitclaim Deed – A quitlcaim deed is a "quick and dirty" transfer of real estate ownership, where the owner transfers their ownership interest in the deed and title to a new owner without guaranteeing that the title history is clean or unencumbered.  The transferer is literally "quitting any claim" they have to the ownership of the property and walking away, leaving the responsibility of verifying any liens, liabilities or clouds on the title to the transferee.  These are often used in family situations (e.g. two siblings inherit a few acres of raw land, one transfers their half of the ownership interest to the other) or other less formal real estate ownership transactions.

Lis Pendens – Latin for "suit pending", indicating that a piece of real estate is currently subject to a pending lawsuit.  The outcome of the litigation may affect the title of the property.

Sandwich Lease – While you may have never heard of the term, you’re likely familiar with the concept of a sandwich lease which is simply a sublet situation in which the owner leases to a tenant who subsequently leases to another tenant while the initial lease is still active.  In a number of states, landlords must have a reasonable explanation for disallowing subleases.

Wraparound Mortgage – A wraparound mortgage is a form of seller financing which offers buyers the opportunity to purchase property they might otherwise be unable to purchase.  The wraparound mortgage combines an existing mortgage (seller’s balance) with the difference in the amount of the new loan for the total wrap-around mortgage amount.

Wrap-around mortgages have advantages and disadvantages for both buyer and seller and should be considered carefully only after seeking the advice of a professional before entering into one of these deals.  They can, however, be an inexpensive way for investors to acquire properties while maintaining the seller's inexpensive loan.  Wraparound mortgages are generally only offered by private/hard money lenders.

Leasehold Estate – A leasehold estate refers to a way of holding the title to a property, in which the property or land which is not technically owned outright.  For example, in Baltimore, MD, many homes are sold with a ground rent, where the buyer owns the house and for all intents and purposes the land, but must pay a ground rent of $90/year to the ground rent owner. 

Right of First Refusal – The right of first refusal gives a designated party such as a tenant or some other interested party the right to purchase a property before anyone else.  Once a prospective buyer ‘refuses’ to purchase the home, the offer may be opened to other prospects or the general public.  Landlords may offer the right of first refusal to anyone they wish, i.e. relative, former tenant, etc, but in most states tenants have the right of first refusal for buying a leased property.

Now that you’re familiar with these terms, making a commitment to familiarize yourself with industry jargon can go a long way in helping you better understand the tools that can be helpful or hurtful to your future deals.  Knowledge truly is power.

What are some other terms you feel should be in every investor’s vocabulary?  What do you do to keep up with industry terminology?

 

]]> https://www.ezlandlordforms.com/articles/news/448/is-flipping-real-estate-still-viable-in-2014/ https://www.ezlandlordforms.com/articles/news/448/is-flipping-real-estate-still-viable-in-2014/ Tue, 06 May 2014 15:23:58 GMT

Flipping houses is still a very popular phenomenon on reality television, but what about in real life?  Is flipping still a viable investment strategy or has it fallen by the wayside?

To clarify, a flip is defined as a home bought and re-sold within 6 months.  Based on numbers from Realtytrac, flipping continues to hold its appeal evidenced by the 156,862 home flips in 2013.  Those numbers are up 16% from 2012 and 114% from 2011.  Reportedly only 21% of all flips in 2013 were from foreclosures; the majority of flips came from the higher end market of $400,000 or more, with the average profit coming in at $58,081.

Experts say flipping is alive and well, but would-be flippers may face challenges in finding good deals because of low inventory.  Also, strict financing requirements may pose some obstacles to investors obtaining traditional financing at a reasonable cost.

Flipping as a strategy is, of course, better suited to some areas than others, and places like Virginia Beach has done extremely well with flipped properties which have leapt 141% since 2011.  Also, locations such as Jacksonville (92%); Baltimore (88%); and Atlanta (79%) have all experienced impressive jumps in flip transactions since 2011.

USA Today reported the six best states to flip residential properties in 2014 are California, Washington, New Jersey, New York, Maryland, and Massachusetts.  For those wondering what those states have in common, here’s a hint: politics.  Heavy regulation has dramatically slowed the foreclosure process in these states, extending the life of the foreclosure wave which has already crashed and passed by elsewhere.

Massachusetts reportedly topped the list with the most profit on average as a result of flipped homes, while California tops the list for the last three years of most flipped homes among all of the states.  California’s numbers increased from 14,480 to 21,152 in a three year span.  California also tops the list for most profitable metro areas for home flipping with seven cities making the list for most profitable.  California’s high numbers are believed to be attributed to high foreclosure numbers during that same period.

Maryland investors flipped 3,522 homes in 2013 (largely due to their fourth highest foreclosure ranking in the country).  The average profit for investors in Maryland was between $100,000 and $112,000 in 2013.

New York and New Jersey ranked fourth and fifth on the list of best places to flip for their high profit appeal as well as notable numbers of homes flipped.  New York had a reported $92,000 in profits while New Jersey investors profited more than $100,000 on average per flip.

Washington State rounded out the list of six states with the highest profits from flips and the highest number of flips per homes sold.  Washington investors made an average profit of $100,000.

Investors interested in flipping are warned to be aware of the many potential pitfalls; after all, the fundamentals of real estate investing still apply. 

For example, financing for a flip often means high interest rates which could quickly eat away at profit or make a deal otherwise unworthy of the time and effort put into it.

Investors should be vigilant in looking for that ‘magic’ number to pay for a deal which makes it all come together smoothly and with minimal effort.  Never try to force the numbers to work here (or really anywhere – it will usually end in tears).

Perhaps just as important as the purchase price an investor pays for the property is the contractors she chooses to provide the actual repair or remodel.  Even when all else is next to perfect, the wrong contractor could make one mistake (or intentional underestimate) and end up costing the investor several thousand more than planned, even with a contingency.  As time is money with flips, contractors can often take longer than planned causing delay after delay while the dollars continue to add up.

Experienced flippers know that the last piece of the puzzle, the final sales price, is the first thing they should know before buying the property in the first place.  Establishing a close relationship with a Realtor who is local market expert will help investors avoid costly missteps, and will help shorten the investor’s time horizon for carrying the home and its liabilities.

Do you have experience flipping houses?  Is your local market flip-friendly or not?  Tell us about your best and worst house flipping experience.

]]> https://www.ezlandlordforms.com/articles/news/447/new-gallup-poll-reveals-which-states-residents-want-to-leave/ https://www.ezlandlordforms.com/articles/news/447/new-gallup-poll-reveals-which-states-residents-want-to-leave/ Thu, 01 May 2014 10:03:23 GMT

A fascinating new poll by Gallup shows that a shockingly high percentage of residents in some states (half of all residents in Illinois and Connecticut!) say they want to move away from their state. 

Conversely, only 23% of Montanans and Hawaiians expressed a desire to migrate to another state.

Before delving into the reasons behind residents’ discontent in certain states versus others, here are the bottom and top ten lists, listing states where residents are least and most looking to leave for another state:



Before you go buying stock in companies that lease moving vans or sell bubble wrap, consider that most of these disgruntled residents won’t actually migrate to a new state.  Only 6% of respondents said they were either very likely or extremely likely to move within the next year, and many of those won’t actually pull the trigger and act.  As of July 2013 (the most recent data available), only around 1.5% of Americans were living in a different state from where they were a year earlier.

Still, more people are moving out of the “undesirable” states than moving in, showing that this disgruntlement data does matter.  United Van Lines, a major moving van rental company, recently released data on 2013 migration patterns within the United States, and their list of the top five states for outbound migration looks awfully familiar:

1. New Jersey
2. Illinois
3. New York
4. West Virginia
5. Connecticut

So what is the impetus behind the exodus?

The easiest – and most reported – answer is jobs, and the business-friendliness of the state.  Among the Gallup respondents who wanted to leave their state, 31% reported that the reason was because of either work or the unfriendly business climate in their state.  States who are not business-friendly should take heed, if they want to stop the bleeding.

Related to business climate is another reason reported by would-be movers: high taxes.  This should come at no surprise, taking a quick glance at the list of states people are clamoring to leave.  According to Kiplinger, Connecticut has the second highest total taxes in the country, with high income taxes (top rate of 6.7%), high sales tax (topping out at 7%) and high property tax rates and gasoline tax rates.  Also high on the list of top-taxed states are New Jersey (#3), New York (#4), Rhode Island (#6) and Illinois (#10)… is it any surprise that four of these five are on the top five outbound moving list, and all of these are on the top ten list for residents' desire to leave?

Some higher-tax states have responded by trying force or scare their residents from trying to leave, a tactic not likely to endear them to their residents and encourage loyalty.  From Massachusetts using E-ZPass data to trigger audits of outbound residents, to Maryland requiring extra withholding tax collections from out-of-state home sellers, to Minnesota trying to change residency requirement to only 60 days/year, high-tax states are not letting residents leave quietly.

While strong private sector job growth and low tax rates certainly help, and are clearly correlated to growth, they cannot tell the whole story.  Climate matters; Hawaii has high taxes (fifth highest in the country in fact), but it is so naturally gorgeous that no one wants to leave (which also helps their unemployment rate, which sits at a healthy 4.4%). 

The culture of a state obviously matters too, despite being more difficult to quantify and compare.  Look at Maine; most citizens are content to stay, despite the state’s high tax rates (seventh highest nationwide), troubling unemployment at 6.7%, and a cold, harsh climate eight months of the year.

Still, states like Texas are clearly making out well.  The climate is pleasantly warm, the government is business-friendly and boasts a lower-than-average unemployment rate and booming economies in cities like Austin.  Texas charges no income tax, and only 24% of residents are interested in leaving.  Texas is doing something right, and other states may want to pause and pay attention if they want to retain their residents.

]]> https://www.ezlandlordforms.com/articles/educational/5/446/mindset-shift-moving-past-accidental-landlord-to-real-estate-investor/ https://www.ezlandlordforms.com/articles/educational/5/446/mindset-shift-moving-past-accidental-landlord-to-real-estate-investor/ Tue, 29 Apr 2014 17:35:29 GMT

Even with home prices on the rise in some areas many homeowners continue to be plagued by the aftermath of the market crash.  Last year it was estimated that 13 million homeowners across the United States were still underwater, and another 9 million had little or no equity resulting in the need for some major adjustments.  As a result, many homeowners found themselves leasing out their old homes when it came time to move, in the role of "reluctant" or "accidental" landlords.  Undoubtedly, many predicted that by 2014 there would be no need to continue in that role as the housing market was sure to continue grow.  Unfortunately for would-be sellers, home value growth appears to be slowing, and average U.S. home values nationwide remain about 20% below their 2006 zenith.

Landlords like Maria Wells, who never had any interest in becoming a landlord, found herself managing not one but two rental properties when both she and her son experienced life events which required them to move on from their homes.  While she has gotten by, she cites one tenant who cost her fifty thousand dollars in repairs.  She has anxiously awaited the opportunity to sell: “When I get enough equity, I will definitely sell.”  At the time of this report, she had not yet done so.

Likewise, Arati Patel experienced similar circumstances when she was forced to move to Washington, DC for employment.  She left behind a home in Greenville, SC, which she had purchased for bubble pricing in 2007.  Knowing she would be unable to sell for the amount she wanted, she decided to become a landlord as well.  Patel stated "It was a bit of a nightmare because I don't live in Greenville...I have no desire to go back to Greenville because my life is in DC.  It was a lot of coordination and I am still trying to collect over $2,000 from my tenants."  Patel was reportedly able to sell her home sometime last year, but did take a significant loss - a dreaded outcome for many.

Stories like Well’s and Patel’s exist around the country, but all is not lost as many veteran landlords know.  Experts say accidental landlords could benefit from a shift in their thinking about their circumstances.  According to licensed realtor Ronald LaBeet of North Carolina, “Most homeowners who are upside down think of themselves as ‘unfortunate’ or ‘unlucky’ because they don’t have equity in their homes, and have no real idea of when that will change.  But, another way to think of it is getting help paying the mortgage while you build equity.   Investors do it all the time.  Homeowners who can do that are already ahead of the game.”

Kelly Joyner, another North Carolina realtor, believes accidental landlords should change their entire focus: “I don’t see homeowners who are upside down on their mortgages as accidental landlords; I see them as accidental investors.  If you think about it, they already have many big advantages over the average investor:  (1) they know the neighborhood, (2) they know the home inside out and what it would take to improve it both aesthetically and mechanically speaking, (3) they probably have some idea of what the vacancy rates would be like and, perhaps most important, (4) they already have the financing in place.  Joyner adds, “…now they no longer have a problem, they have the greatest of opportunities.”

Do you agree that a mindset change for accidental landlords could potentially change the game?  What other considerations should there be for accidental landlords?  What prompted you to become a landlord, necessity or desire?

]]> https://www.ezlandlordforms.com/articles/educational/2/444/considering-converting-a-residence-into-a-vacation-rental/ https://www.ezlandlordforms.com/articles/educational/2/444/considering-converting-a-residence-into-a-vacation-rental/ Fri, 25 Apr 2014 15:51:17 GMT

With the explosion in popularity of services like Airbnb, enabling anyone to become a vacation rental provider, increasing numbers of landlords are starting to wonder “Should I convert my investment property into a vacation rental?”  In tourist-friendly areas, the temptation of sharply higher per diem (per nocti?) rental income is hard to ignore.

What would it take to try?

Well, a lot actually, in terms of up-front costs.  First the property must be furnished, no small expense in itself, although landlords with sharp eyes for style and a little imagination can certainly work wonders with well-selected secondhand furniture.  Even secondhand furniture adds up however, when furnishing an entire living space attractively and cohesively.

Furnishing a vacation property does not end with furniture, however.  Art and decorations, linens, silverware, dishes, cookware, basic kitchen appliances (toaster, blender, microwave, etc) are a good start.  And what about a television or two?  Additionally, there are countless small details needed for everyday living, such as trash cans in the kitchen and bathrooms, door mats to minimize the dirt tracked into the unit, hangers in the closets and so on.  Guests will also expect personal amenities, like hair dryers, clothes irons and ironing boards.

Beyond the up-front costs, there are ongoing expenses.  Consider consumer disposables, such as toilet paper, paper towels, dish soap and the like, and cleaning supplies, from Windex to Swiffer pads to brooms and dustpans.  Next, remember that utilities will come out of the bottom line, from electric and gas bills, water bills, cable televion, internet and any other expenses necessary.  Outdoor maintenance will also fall on the landlord, including cutting the grass, trimming hedges, etc.

By now the financial cost should be starting to crystallize, in an imposing way.  The next set of costs is equally daunting: the time commitment in managing a unit that potentially turns over every day or two.  Linens must be washed between each tenancy, and the unit must be cleaned from top to bottom.  And then there is the glaring fact that these short tenancies mean a lot of work to constantly find new tenants, book reservations, keep a calendar of availability and generally be in communication with tenants.  Vacation lease agreements must be signed, deposits collected (and usually reimbursed), rent payments must be collected, sometimes in several installments.  If the tenants are dissatisfied with the accommodations, they will be calling, and sometimes at odd hours of the day.  Don’t forget the extra accounting work, the potential for having to charge and pay local sales and/or occupancy taxes.  A professional and intriguing rental listing, with professional-looking photographs, must be created and posted permanently online, ideally on several websites.  Check-in and check-out procedures must be invented, then followed, for a smooth transition.  The tenants will need to be given the keys, and must return them.

If that sounds like a lot of work, it is.  This work can of course be outsourced to a manager, but then some of the profits will be outsourced, too.

So what will determine profitability?  In a word, the vacancy rate (all right, two words).  If the unit can be filled 75% of the time, at twice the per diem amount of rent, that still means a 50% increase in revenue, which may be enough to justify the start-up costs, extra work and extra ongoing expenses. 

A last word of caution: if there is one group of occupants who can be even less mindful to take care of a rental property than long-term tenants, it is transient vacation tenants, who will never come back and are only passing through town for two days.  Having twenty people stay at a rental property in a month can cause more wear and tear on the property than a few people who continually live there.

For an amusing case study of one landlord who is trying this experiment herself, see Paula Pant’s blog post “The AirBnb Experiment: How I Impulsively Started a Vacation Rental Business.”

]]> https://www.ezlandlordforms.com/articles/educational/5/443/swimming-with-sharks-a-glimpse-at-the-underworld-of-professional-tenants/ https://www.ezlandlordforms.com/articles/educational/5/443/swimming-with-sharks-a-glimpse-at-the-underworld-of-professional-tenants/ Thu, 24 Apr 2014 11:53:36 GMT

What does a landlord do with a nightmare tenant?

Many unsuspecting landlords have done just what owner and landlord, Barbara Wilt did when tenant Gwen Smith applied for a garage apartment Wilt rented back in 2008.  Barbara Wilt says she identified with Smith, who she describes as articulate, bright and a single mom.  “I liked her because she was raising a son on her own.”

She asked for references which Smith provided in the form of her attorney and an architect.  According to Wilt, she regretted renting to Smith almost immediately after Smith moved in.  Not only did Smith stop paying rent the very next month, but she also changed the locks and caused disturbances for other tenants. 

Wilt’s attorney, Lisa Gygax, later learned that Smith has a history of duping landlords, especially female landlords who she apparently viewed as vulnerable and kind.  By the time of the judge’s rendering on Wilt’s case, it was revealed Smith had another case with her next landlord.  Attorney Gygax stated in a brief filed with the Sonoma County Superior Court, “She seeks a kind landlord, moves in and never intends to pay anything but the first month's rent.”

A tenant’s failure to pay rent is bad enough, but causing disturbances and interfering with other tenant’s enjoyment is unacceptable.  Perhaps most egregious of all is filing civil lawsuit complaints against their landlords.

In this case, almost immediately after receiving an eviction notice for non-payment of rent, Smith filed a countersuit against Wilt, complaining that Wilt’s home had several code violations (technical code violations are extremely common in older homes, and easy for tenants to use as pretexts to stall evictions).  According to Wilt, the violations were acknowledged and remedied immediately.  Unfortunately, Smith still refused to pay rent and was able to lawfully remain in the home for months until finally losing the battle in a Sonoma County Superior Court where she was ordered to pay $42,500 in damages.

Not surprisingly, shortly thereafter, Smith became involved in a battle with a subsequent landlord, Connie Cook.  Cook lost everything including the home she was renting to Smith ultimately due to Smith’s refusal to move and repeated appeals.  After four long years, Cook finally won a judgment for $49,635, $33,090 of which was awarded in punitive damages.  Cook may have won the battle, but ultimately lost the war.

Sadly, Wilt and Cook are not alone in their experiences with a nightmare tenant.  Rent rosters across the US and Canada are filled with them.

So how can landlords win the war against scammers like Smith?  The best way is to not engage these types of tenants in the first place.  “Prevention has to be the name of the game,” says James Wright, a veteran landlord from upstate NY.

According to Wright, Wilt made a cardinal mistake in relying solely only references for a tenant.  “There is no such thing as a good reference in a landlord-tenant situation.  The only reference that matters is that of a previous, and in most cases, current landlord.”  (Even current landlords’ word must be taken with a grain of salt, as they have a vested interest in escaping or keeping the tenant.)  He also says landlords should be aware that really shrewd tenants may have someone posing as a previous landlord who can provide a stellar history.  He warns landlords to be prepared to do some “real digging.”

Credit reports and criminal background checks are a good place to start.  Landlords and managers should also verify employment, income and workplace attitude, through both phone calls with supervisors and pay stubs.  

Veteran property manager, Sonya De’Amaro of Silver Spring, MD advises landlords to always “treat landlording as the business it is.”  She says, “A walk through inspection signed by the tenant can prevent most of these situations.”

Nevertheless, when a landlord is up against an experienced scam artist like Smith who is willing to go the way of the appellate courts as she did with Cook and perhaps others, the situation becomes a little more difficult and costly.  

There is still some hope even in those situations according to Loebsack & Brownlee Associate Attorney Jared Schmidt who says, “In limited situations an appeal can be dismissed by filing a motion with the court.  Likewise, if a tenant doesn’t pay the appeal fee on time the clerk will dismiss the appeal on their own.  Last, if a tenant appeals but doesn’t pay his or her rent bond on time as required by the court, you can proceed with the writ process despite the pending appeal.  This doesn’t end the appeal process, but in a lot of cases it significantly lessens the likelihood that the tenant will follow through at trial, as they will have already been removed from the premises.”

Of course, when all else fails, landlords can simply offer to pay the tenant to quietly walk away as one Pennsylvania landlord decided to do.  “I ended up handling it by negotiating this woman out of the apartment.  It saved us money in the long-run to give her a ‘payment’ to leave,” says former landlord Denise Supplee.

Tell us about your experience(s) with a nightmare tenant(s).  How did you handle it?  What preventive measures do you now have in place, if any?

]]> https://www.ezlandlordforms.com/articles/news/442/san-francisco-landlords-under-fire-from-protesters/ https://www.ezlandlordforms.com/articles/news/442/san-francisco-landlords-under-fire-from-protesters/ Wed, 23 Apr 2014 08:45:00 GMT

If you own property in San Francisco, particularly the Mission District, it’s quite possible you could be the target of a local protest group.

Recently, in a desperate move to be heard, protesters turned their frustrations and signs in the direction of individual landlords who own property in the skyrocketing Mission District of San Francisco.

Reuters reported recently that protesters staged a blockade in front of Google shuttle buses in an effort to target Google attorney, Jack Halprin.  Halprin is one of many building owners in the Mission District who have been accused by the protestors of tearing at the fabric of San Francisco’s poor community with eviction notices to long time tenants.  The protesters believe old tenants will be replaced with Google, Yahoo, and Facebook’s high tech employees and admitted to Reuters that they will continue to target individuals as part of a strategy to draw attention to the growing divide between the “haves” and “have nots” in San Francisco.  Demonstrators reportedly demanded that Google ask Halprin to rescind his decision to evict tenants in his buildings. 

Halprin isn’t the first target of the protesters who have apparently been very busy since late last year blockading shuttle buses, staging marches, and storming neighborhoods of alleged offenders.  In January of this year, protesters, known as Counterforce, passed out flyers in the neighborhood of Google’s engineer Anthony Levandowski which read, “Anthony Levandowski is building an unconscionable world of surveillance, control and automation. He is also your neighbor.”  The flyer also informed neighbors that Levandowski owns the land where a mixed use housing development is planned for downtown Berkeley.

In early April protesters targeted Kevin Rose, partner at Google Ventures.  Flyers were passed out to his neighbors informing them of his address and that he was a “parasite”.  The flyer read, “As a partner venture capitalist at Google Ventures, Kevin directs the flow of capital from Google into the tech startup bubble that is destroying San Francisco.”

"When you put a face on it, it suddenly becomes more real," Erin McElroy, an organizer at Eviction-Free San Francisco, said of what she views as a technology-driven housing crunch.  But tech workers contend they are being unfairly punished and say it should be strictly the landlords who are held accountable for rising rents and evictions.  Protestors and advocates believe there is a definite link between the two.

Some say landlords are largely benefiting from the Ellis Act, a California law that enables landlords to evict tenants when the plan is to sell rental apartments as condominiums to homeowners.  San Francisco’s budget analyst report a 25 percent increase in Ellis Act evictions in the past year.

San Franciscans are keenly aware of the increased numbers and salaries of high tech sector jobs, and some lower-wage residents are griping about the influx of high-paid jobs and the booming economy.  “We’re encouraging hundreds of new people to move to San Francisco who are dripping with money and we’re also encouraging an industry where millionaires are created overnight who are already in the city,” said Sara Shortt, executive director of the Housing Rights Committee of San Francisco, a non-profit tenants’ rights organization. “With a limited housing stock and limited land to build on, that means they have to push others out in order to live here.” 

Landlords are certainly easy to villify, since they are the ones charging more for rent, but is it expecting too much of the citizenry of San Francisco to look past the simplistic and understand that San Francisco has a housing supply problem, the true cause of the escalating rents?  Renters want cheap rents, but they also want to vote down taller building construction with more rental units, and they want to vote down micro-housing buildings.  They want good jobs to drive economic development and high employment, but don't want the higher cost of living that comes with a booming economy. 

Tell us what you think; how much of a problem is the rising rent in San Francisco?  What should be done to solve it?  Do you own rental property in San Francisco now?  Would you purchase rental property now based on what you know about San Francisco’s class separation or would you shy away from it?

]]> https://www.ezlandlordforms.com/articles/educational/2/441/2014-trends-best-markets-for-rental-property-roi/ https://www.ezlandlordforms.com/articles/educational/2/441/2014-trends-best-markets-for-rental-property-roi/ Tue, 22 Apr 2014 17:07:39 GMT

There’s good news and bad news for residential real estate investors in 2014.  The good news is that nationwide home prices are steadily on the rise and since last year prices have risen in some areas up to 22 percent.  For example, homes in Riverside, California have seen a roughly 22 percent increase in price above last year’s prices.  Similarly, Atlanta sellers are seeing great results too; home prices in Atlanta have increased on average about 17 percent.  This is, of course, exceptional news if you already own real estate in a neighborhood that is rapidly appreciating, but what about aspiring investors, looking for a bargain? 

While nationwide rents are on the rise as well, in some cases they have not kept up with home prices or otherwise make it difficult for investors to meet or exceed their bottom line.

Still, according to a recent report from RealtyTrac outlining the best and worst markets for rental returns in 2014, there is no need for investors to worry.  Rents in many areas have not kept pace with sales prices, but there are plenty of markets where home prices have remained low enough to make the difference between a good investment and a not so good investment.  To determine rental returns, the fair market rent for a 3-bedroom home was multiplied by 12 months and then divided by the median sales price for a particular county.  Counties were chosen based on a minimum population of 50,000, and a total of 1586 counties were included based on the criteria.

The RealtyTrac report cites Wayne County, MI (Detroit) as the highest market for rental ROI currently.  Detroit’s median price for homes continues to hover below $45,000 while the average rents have risen to $1124 per month, providing investors with a 30% annual gross yield.  National median home sales are reported somewhere around $189,000 leaving little wonder why Detroit has become the mecca for rental properties for investors.  But if Detroit and its structural economic problems hold no interest for you, fear not, as other markets with stronger fundamentals offer plenty of opportunity.  For example, Wyandotte County Kansas which encompasses Kansas City, MO-KS has home sales reported around $62,850 while the average fair market rent is around $1,168 per month.  Similarly, at the somewhat higher home price of $85,000, Baltimore landlords can command as much as $1599 for rent in that area.  The high rents and cheaper home prices make these areas top investor choices for maximum ROI.

Of course, when considering the data in the report, one has to also consider other factors such as days on market and vacancy rates along with the numbers.  Nevertheless, plenty of opportunity still exists for investors to strike while the iron is hot.

Here is a Top 20 list of the counties found to be most lucrative for rental property investment.

As any experienced real estate investor will tell you however, statistical analysis is great for narrowing down possible markets for investing, but it is no substitute for seeing potential investment properties with your own eyes, walking the neighborhood streets and talking face-to-face with neighbors about the area.

How are rental prices in your home county or where you own investment properties?  Would you consider investing in some other state on the list if for better profit margins?

 

]]> https://www.ezlandlordforms.com/articles/educational/1/439/fair-housing-enforcement-expands-and-evolves-what-you-need-to-know/ https://www.ezlandlordforms.com/articles/educational/1/439/fair-housing-enforcement-expands-and-evolves-what-you-need-to-know/ Tue, 15 Apr 2014 17:09:55 GMT

Although you may be able to rattle off the seven federally protected classes like a kindergartner reciting the alphabet, the landscape has shifted and Fair Housing discrimination has evolved to include far more than it once did.  There are probably practices you don’t know you’re doing wrong that could land you in court, or at the very least, at the mercy of a Fair Housing tester.

But, before we explore any potential violations, let’s begin with a bit of history.

Despite the fact that Fair Housing laws were established in 1968, it wasn’t until 1991 that the Department of Housing and Urban Development (HUD) introduced its testing program and began testing in some states in 1992.  Since its inception, the Department of Justice (DOJ) has filed hundreds of pattern and practice testing cases.  According to the DOJ, the majority of testing cases filed in recent years are based on evidence of misrepresentation of availability or the offering of different terms and conditions based on race, national origin or familial status.

The Department of Justice has recovered more than $12.9 million including 3.3 million in civil penalties; proof that housing discrimination is still very much a problem in the US.

Further proof can be found in the 28,519 discrimination complaints that were filed in 2013, according to a 2013 Fair Housing Trends report.  It is noted that the report is only reflective of reported incidents of discrimination and not indicative of the estimated 4 million violations each year which go unreported for various reasons including lack of knowledge and resources, belief that nothing will be done, or fear of retaliation or other consequences.

Housing discrimination today is far more complex than in past decades, when it was illegal to make statements like “We don’t rent to ____” (fill in the blank with the protected class of choice.)  It is inevitable that there will always be a few landlords and property managers who hide behind ‘handshake and smile’ discriminatory practices, finding subtle ways to avoid leasing to unliked classes of people.  But in most cases, landlords and property managers who find themselves responding to complaints of discriminatory practices may very well be violating the law unwittingly.

For example, a fairly common practice that Colorado officials recently cited as discriminatory is that of offering discounts on application fees to married couples only.  Landlords and property managers who engage in this practice are walking a thin line, and in some states, like in Colorado and 21 others and the District of Columbia are actually breaking the law since these states have added marital status as a protected class.

Landlords and property managers are cautioned to research their states for new additions to the protected classes as many states have added gender identity and sexual orientation, among others.

Not surprisingly, weight continues to come up as a potential addition to the list as well.

Another way landlords have been known to inadvertently discriminate against prospects is by placing restrictions on where children sleep.  For example, a parent has one child but wants to rent a one bedroom apartment for self and child.  Landlords who refuse to rent on this basis alone and who insist parent upgrade to two bedrooms is clearly violating the law.  Unless there are city or local ordinances against such a practice, landlords should stay away from banning this or attempting to discourage the parent from this sort of arrangement.   Similarly, landlords who think they have a say on children of different gender sharing a room has no legal right to interfere with a parent who wants such an arrangement.

Also, professional investigators are always on the lookout for the many subtle ways discrimination rears its ugly head such as in the form of linguistic, name or voice profiling

Linguistic profiling takes place when a prospects’ written or typed communication is judged and perceived to be something other than the landlord’s preference.  For example, a prospect that sends an email with numerous misspellings and broken English is automatically rejected or discouraged from applying for a property based on the assumption he/she is from a different country.

Name profiling is judging a prospect based on their name (could be first or last) and deciding against renting to said person because of their perceived affiliation with a particular protected class.

Voice profiling is very similar to name profiling and is simply discriminating against someone who’s perceived to belong to a certain protected class based on the tone of his/her voice.

No matter the class or the means, discriminating against a housing prospect for any reason is taken very seriously and to that end, Fair Housing investigators have significantly stepped up their enforcement to ensure violators are dealt with immediately.  In February 2013, HUD launched a mobile application for consumers who want to report an incident of housing discrimination or obtain more information via their smartphones.

Share your experiences with us.  Have you ever been investigated for discriminatory practices?  What are your thoughts on the newly added protected classes in some states such as marital status, sexual orientation and others?  What newly protected classes has your state added?

]]> https://www.ezlandlordforms.com/articles/news/438/realtytrac-backpedals-and-reverses-move-to-display-controversial-neighborhood-data/ https://www.ezlandlordforms.com/articles/news/438/realtytrac-backpedals-and-reverses-move-to-display-controversial-neighborhood-data/ Tue, 08 Apr 2014 11:24:42 GMT

In what might be the quickest flip-flop decision since enraged customers forced Bank of America to rethink its ATM fees in 2011, RealtyTrac has rescinded its just-announced decision to include some objectionable community information in its listing data.

In early March 2014, RealtyTrac announced it had begun enhancing its roughly 108 million listings with community information such as the location of hazardous chemical spills, drug lab locations and the whereabouts of sex offenders in neighborhoods, among other unconventional information.  It also had future plans to include more hot-button items such as racial composition of neighborhoods.

Some Realtors and real estate investors vehemently protested the move from the very beginning and worried over the potential backlash and harm to existing and future listings’ days on market.  Some argued the validity of adding such information to listing data on a real estate site, even though most of the information is readily available to the public elsewhere on the internet.  Some other critics of the initial move stated they saw this reversal coming, given how damaging the information could be to real estate sellers.

RealtyTrac acquired the data in 2012 when it purchased Homefacts.com.  At that time, RealtyTrac’s CEO, Jamie Moyle expressed concern for the consumer (homebuyers), citing legal and ethical considerations for the disclosure of information relevant to buyers.  It seems now RealtyTrac executives may be less concerned with consumer protection than it is fearful of the backlash by Multiple Listing Services (MLS's) and other interest groups nationwide.

To explain the quick change of heart, RealtyTrac says they made the decision to remove the data out of sensitivity to MLS’s, some of which have rules prohibiting displaying listings next to non-MLS  data if listings are sourced from an MLS data exchange (IDX feed).  RealtyTrac may have also been in jeopardy of breaching the rules of some of the MLS’s with which it partners.

According to RealtyTrac Vice President Darren Blomquist, “I think we realized that this was important to some of the MLS’s out there — that the [MLS] data be clearly separated from the local, the hyperlocal data,” He added that the decision was  “the most responsible way to handle the data” and “was respectful of all stakeholders.”

Some speculate that the move may have also been prompted by an inquiry from the Northern Nevada Regional MLS (NNRMLS) from which RealtyTrac receives listings through an IDX feed.  Reportedly, the NNRMLS made an inquiry immediately following RealtyTrac’s decision to add the information, but both RealtyTrac’s Vice President Blomquist and the spokesperson for the NNRMLS, CEO Shellie Specchio, says their inquiry was unrelated to the decision.

Nor did RealtyTrac stop with just removing the new data; they have also stopped displaying some of its old information along with the most recently added data.  Information such as school ratings, crime rates and unemployment rates once found on the site are now no longer available.

Although the information has been removed from the site, consumers will still be able to access the information by clicking on an icon which will lead to that same data on another portal.

The public may never learn of RealtyTrac’s real motivation behind the decision to remove the information.   Nevertheless, sellers everywhere can breathe a sigh of relief.

Tell us what you think of RealtyTrac’s new decision.   Are you surprised by the quick reversal?  Were you for or against having the information added to listings?

 

]]> https://www.ezlandlordforms.com/articles/news/437/why-are-mortgage-loans-at-a-14-year-low/ https://www.ezlandlordforms.com/articles/news/437/why-are-mortgage-loans-at-a-14-year-low/ Tue, 08 Apr 2014 11:19:44 GMT

New mortgage originations are at their lowest level since at least 2000, according to a study released yesterday by Black Knight Financial Services, with data going back to the begining of the millennium.  The new data surprised many analysts, who have watched the real estate sector gaining momentum in the last two years.

Part of the explanation is simple: refinances have plummeted, since interest rates started rising about nine months ago.  Hardly surprising, as interest rates have been so low, for so long, that it is hard to imagine any homeowner who has not yet locked in a low long-term interest rate.

But refinances are only a small part of the larger picture.  Purchase mortgages are down precipitously, and for an improving real estate market, that is rare and perhaps troubling.  So what is causing purchase loan originations to falter?

To begin, credit markets remain tighter than many analysts expected after several years of sharp real estate appreciation.  "Credit standards have shown little sign of easing — only about 30 percent of 2013 loans went to borrowers with credit scores below 720," noted Herb Blecher of Black Knight.

About half of potential homebuyers have a credit score below 700, but very few of them are being approved by banks.  Nor is it an even distribution of who those half are: they are overwhelmingly on the lower end of the real estate market, which means the market recovery has been largely one-sided.  The National Association of Realtors reports that home sales between $750,000 and $1,000,000 leapt by 13% in February from one year earlier, while homes priced below $100,000 dropped by 18% percent year-over-year.  

With growth largely restricted to the high end, many low- and middle-income homeowners remain stalled upside-down on their mortgages, since demand and subsequent value appreciation have lagged.  Which raises a related cause of the low loan origination rate: low housing inventory available for sale.

Many areas, like San Francisco, have such restrictive building regulations that there effectively is no low- or middle-income housing, because even small increases in housing demand create significant price leaps, since so little new housing is forthcoming.  And in other parts of the country, developers have been timid in their commitments and projects, still skittish after the housing collapse a few years ago.  "There have not been a great amount of speculative home starts by homebuilders," states Hollis Greenlaw, CEO of United Development Funding, a Dallas-based single-family construction funding firm.  "Homebuilders have been starting homes only where there has been a ready, willing and able home buyer."

The development that has taken place is nearly all on the middle-to-high-end of the spectrum, largely because of the tight credit conditions outlined above but also because the demand for lower-end housing simply has not been very high. 

There is little sign that inventory or credit conditions are about to dramatically open up, either.  Lenders explain that until they receive guarantees from Fannie Mae and Freddie Mac – referred to as “representations and warranties” – on higher-risk borrowers, it does not make sense to lend to them.  Without these guarantees and a relatively simple foreclosure process to collateralize the risk, banks will continue to only lend to high-credit, high-income borrowers.

Still, there is plenty of evidence available that many people are better off as renters (and that the economy as a whole is better off with fewer homeowners), rather than homeowners.  The report also found that cash sales are up, accounting for nearly half of all residential real estate transactions.  In a final piece of good news, non-distressed sales were up almost 15%, even though total transactions were roughly flat year-over-year; perhaps the recent trends towards cash transactions and renting are not all doom and gloom for the economy after all.

]]> https://www.ezlandlordforms.com/articles/educational/2/435/top-ten-reading-list-for-landlords-and-property-managers/ https://www.ezlandlordforms.com/articles/educational/2/435/top-ten-reading-list-for-landlords-and-property-managers/ Tue, 01 Apr 2014 17:14:01 GMT

George Samuel Clason tells us in his book Richest Man in Babylon, “Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those who are skilled in its keep.”  These words serve as a reminder that while there is no formal training required of landlords and (in some jurisdictions) property managers, to oversee rental properties, rental investors looking for a good return are wise to be well prepared before investing money or taking on the task of managing rental properties.

One of the best ways to prepare for, well, anything is by reading as much as possible about the subject at hand.  There are a number of great books about investing in and managing residential rental properties and an equal number of good reads about real estate and business in general.

Here is a list as recommended by some of the best in the business.  Some consistently make the top ten lists, while those that do not are still great reads.

Think and Grow Rich (Napoleon Hill) – One of the most widely read books on this list and for good reason, is given the number one spot for its’ outstanding ability to change the thinking of its readers around the world.  According to Napoleon Hill, “the most powerful instrument we have in our hand is the power of our mind."  In this book, Napoleon Hill studies the lives of 40 millionaires and shares the wisdom and philosophies he extracted.  Whether your goal is to be rich or not, if you have any intentions of being successful in whatever you do, this book is a must read.

The E-Myth: Revisited (Michael E. Gerber) – Slightly less popular than its predecessor, this book remains high on the list of small business owners and entrepreneurs as a reminder of “what not to do” that causes so many small businesses to fail every year.  It also serves as a guide on what steps to take and systems to put into place for the journey to entrepreneurial success.

The 4-Hour Work Week (Tim Ferris) – While Tim’s style and methods are a bit controversial, there is a lot to be said about the paradigm shift this book brings about for many of its readers.  Far too many entrepreneurs become successful at the expense of a healthy and balanced life, but the concepts in The 4-Hour Work Week can help provide that balance for open-minded and ambitious readers.

Landlording: A Handy Manual for Scrupulous Landlords and Landladies Who Do It Themselves (Leigh Robinson) – This book makes the list because of its useful and practical advice for the both the novice as well as the veteran landlord.  It’s been referred to by some as the ‘bible’ for landlords and is one of the only books on the list that is constantly updated.  Beware this book has several editions, each one offering good, solid, relevant advice about how to manage your tenants and your money.

Buy It, Rent It, Profit (Brian Chavis) – In some circles this book is touted "the guide" for multiple unit investors, and may be to property managers what Leigh Robinson’s book is to landlords.  It provides very good, practical insight into the ‘how to’s of managing rental properties.  Be warned there is some self-promoting in this one and some of the websites and resources mentioned are no longer relevant.

The Landlord's Handbook (Daniel Goodwin and Richard Rusdorf) – This book provides some great real life scenarios for beginning and intermediate landlords to consider along with some practical advice on handling disputes, what to include in your leases and more.  This book is considered an easy and enjoyable read.

Landlording on Auto-Pilot: A Simple, No-Brainer System for Higher Profits and Fewer Headaches (Mike Butler) – If you wish to place your landlording business on autopilot, this is the book for you.  This book is said to be beneficial to both the newbie landlord as well as the veteran.  It contains such great tidbits as “add a clause in the lease that rent automatically increases 2.9% annually”, and much more.

Streetwise Landlording & Property Management: Insider's Advice on How to Own Real Estate and Manage It Profitably (Mark B. Weiss and Dan Baldwin) – Mostly geared towards the property manager rather than the landlord, this book is said to be one of the most comprehensive and informative books around for multi-dwelling property managers.

A Fool's Guide to Landlording (Tony and Sandra Midea) – This guide is a witty and comical account of the life of a landlord at its worse.  These real life landlords warn newbies to stay away at all costs, but provide lots of practical, useful advice for the bravest of the bunch.  The comic relief provided in this guide is much appreciated.

Property Management Kit for Dummies (Robert S. Griswold) – This book provides everything landlords and property managers need to get started from lease agreements to tips on where and how to advertise.  For many, this is the ‘must have’ guide not only for beginners, but as a refresher for veterans as well.

This is by no means an exhaustive list, but should be viewed as a starting point on your journey to wise investments and highly effective management of your rental properties.

What are you reading, or have read in the past that has impacted your business?

]]> https://www.ezlandlordforms.com/articles/educational/5/434/common-mistakes-of-new-vacation-rental-owners/ https://www.ezlandlordforms.com/articles/educational/5/434/common-mistakes-of-new-vacation-rental-owners/ Sat, 22 Mar 2014 19:14:26 GMT

Vacation rentals are a great way to bring in income and are often the route many new landlords take to become better acquainted with investment properties.  Unfortunately, there are several common mistakes new vacation rental owners make.  Whether it is not listing the rental on the right websites or hiring the wrong consultants, these landlord landmines can make the vacation rental process much more difficult. 

1. Setting Unrealistic Rental Rates

The more competition there is in a specified rental market the more important it is for vacation rental owners to know their numbers.  What are the rates of competing rentals in the area?  What are the occupancy rates like year round?  Being unaware of these crucial factors may be an issue in pricing the vacation rental.  When potential guests have a multitude of property options to choose from they will compare listings to get the best bargain for their buck.  Setting rental rates that are unrealistic is an easy way to get overlooked by prospective guests.

2. Taking Too Long to Respond to Inquiries

This seems like a simple notion but being unresponsive to inquiries, or just taking too long to respond to inquiries, is a fast way to turn off potential guests.  It is likely that the guest contacted multiple vacation rental owners at the same time and will be most receptive to those that get back to them quickly.  Make a point to respond to potential renters in a timely fashion. If an email is received this evening, make sure to get back to them the following morning at the latest.  Travel planning is a lot of work, so guests will often book with the owners they hear from first.

3. Making Common Listing Mistakes

There are tons of websites that list vacation rentals which can be incredibly helpful to vacation rental owners, but it can be difficult to make the rental stand out amongst dozens or even hundreds of listings.  Some of the most common mistakes owners make when listing their vacation rental are:

• Using all caps to grab the reader’s attention.  All caps tend to grab the reader’s attention in the wrong way tends to make them feel as though they are being yelled at, which no one likes.  Believe it or not, “BEAUTIFUL OCEANFRONT CONDO!! MUST BOOK NOW”  is not inviting.
• Giving a lackluster description of the property. The headline should be approximately 70 characters and should clearly state the property type (i.e. villa, condo, cabin), highlight special amenities or features (i.e. hot tub, deck, BBQ grill, WiFi, etc.), and specifiy the distance to a nearby attraction (i.e. beach access, theme parks, ski slopes).
• Posting amateur-looking photos or not enough photos.  If an owner is going to post pictures of a vacation rental (and they absolutely should), do not use amateur photos. The pictures posted will be the guests' first impression of the rental property and the professionalism of its management.  Stunning, professional-looking photographs will distinguish the rental from the next ten the visitor will review.  Another common mistake is not posting enough pictures. Often listing sites will allow owners to post five pictures and charge extra to post more; as irritating as it may be to shell out the extra money, be sure to post the maximum amount of pictures the listing site allows.  Also remember the first picture is often used as a thumbnail so be sure the picture is unique and shows the rental’s best feature.
• Not updating availability calendar. Be sure to stay on top of the calendar and update it as guests book dates.

4. Stop Spending

When things are going well for business it can be easy to get complacent and stop marketing efforts.  It is vital to continue marketing so the owner should figure out what they are comfortable spending each month on marketing and stick with it.

5. Not Updating Listings

When posting the vacation rental on listing sites it is easy to feel like the work is done.  It’s not.  It is crucial to check on the sites where the vacation rental has been posted and make sure it is updated and stands out amongst the sea of rentals on the listing site.

6. Hiring the Wrong Consultants

Many owners have full-time jobs and have a difficult time keeping up with the marketing so they hire consultants or vacation property managers.  Nothing wrong with that!  But it is important to be sure that vacation rental owners are hiring the right help.  There is nothing worse than shelling out money for a marketing consultant and not seeing any results.  Do research on the consultant and be sure that the one selected is reliable.

7. Not Focusing on Long-Term Guests

This is a business and the goal is to build guest loyalty over time.  Keep this in mind when resolving any judgment calls or marketing decisions and the long-term vision is more likely to be realized.

8. Push off the Task of Building a Website

The idea of building a website is less than inviting to many vacation rental owners; however, many potential guests look for things such as websites to assure them of the quality of the property they will be renting.  Unfortunately, this is a time sensitive issue.  A website’s age contributes to its Google ranking and each day a rental owner puts off building a website they are losing potential guests.

]]> https://www.ezlandlordforms.com/articles/educational/5/433/survey-results-in-what-incentives-would-persuade-renters-to-renew/ https://www.ezlandlordforms.com/articles/educational/5/433/survey-results-in-what-incentives-would-persuade-renters-to-renew/ Fri, 21 Mar 2014 11:07:08 GMT

Veteran landlords and property managers know all too well the hefty costs imposed by vacancies, and know that sometimes it is worth incurring a small cost to retain good tenants for another year or two.  Tenants who consistently pay rent and take care of the property are an asset worth keeping, especially if the only incentive needed is an upgrade that will boost future rents anyway.

A recent study conducted by SoftwareAdvice.com surveyed 4,600 tenants on which incentives would entice them to renew their lease when the term expired.  The results, while not surprising, reveal easy, inexpensive ways to retain the good tenants you currently have.

More than half the tenants surveyed (52 percent) indicated they would be motivated by monetary rewards, particularly in the form of discounted rent (58 percent).  Only 27 percent preferred interior upgrades like new carpeting or paint (this is actually good news, since paint and carpets often need to be replaced between tenancies anyway, and therefore would not prove a long-term investment in the property).  Free services such as gym memberships and household items including televisions were less attractive to renters (both coming in around 11 percent) in comparison.

Money certainly matters, but the preference for cash vs. cheaper rent varied among the different age groups.  The 25-34 age group ranked highest among those favoring cheaper rents while the 35-44 year olds were more motivated by cash incentives (23 percent).

Property managers should take special care to offer incentives based on the age group they serve. Knowing what your residents want will go a long way in keeping them happy and staying put.

While money was by far the most popular incentive, there are still other items tenants reported would encourage them to renew their rental contract.  One such incentive was household goods, namely televisions and kitchen appliances.  When flat screens were first introduced, property managers were offering them as incentives for new tenants to sign up or for old tenants to renew.  Interestingly, of the household items which tenants considered incentives for lease renewal, kitchen appliances won over televisions, computers and furniture.  Perhaps the reason is the decline in pricing of LED and LCD televisions, or perhaps tenants never considered flat TVs that much of an incentive in the first place.  Nevertheless, 37 percent of tenants surveyed said they preferred kitchen appliances as an incentive.

Property managers might not be surprised by a slight gender gap in those who preferred household items as their reward. Men (64 percent) chose a television, while 59 percent of women chose a tablet computer.

According to the survey, unit upgrades such as new carpeting and washer and dryers are slightly higher on the list than kitchen appliances when tenants are asked to choose between them.  New carpet and flooring (31 percent) came in slightly higher than washer and dryer and kitchen appliances (both at 30 percent).  When considering incentives, landlords are advised to choose permanent additions that will remain in the unit and continue to add value even after the current tenant vacates, for example washers and dryers, or upgraded kitchen appliances such as refrigerators, dishwashers and ovens.  Bathroom upgrades also increase long-term value, such as installing a jacuzzi tub, updated tiling, countertops or sink hardware.

The report is chock full of information that will help property managers retain their current tenants as well as provide incentives for new tenants to sign on; view the entire SoftwareAdvice report here.

The survey was conducted primarily on residents of multi-family dwellings, but landlords of single family homes should take notes as well.

Incentives of all kinds can entice tenants to either sign up or renew with you however, there is no substitute for a great product and excellent customer service.

What incentives do you use to get your tenants to renew?  Do you agree or disagree with the poll?

]]> https://www.ezlandlordforms.com/articles/educational/3/432/what-is-a-triple-net-lease-and-when-is-it-used/ https://www.ezlandlordforms.com/articles/educational/3/432/what-is-a-triple-net-lease-and-when-is-it-used/ Tue, 18 Mar 2014 11:58:23 GMT

At some point in most serious real estate investors’ careers, they start to consider commercial properties for the potentially fewer headaches and more responsible tenants.  When that time comes, experts say a great introduction to commercial leasing is the triple net lease. 

Triple net (or NNN) leases are leases which require the tenant (lessee) to pay for net real estate taxes, net building insurance and net maintenance costs, in addition to the base rent and utilities.  The fact that the lessee pays for these three net expenses is (clearlly) where the name ‘triple net’ is derived. 

Triple net leases are most commonly used in retail and single-tenant buildings, e.g. fast food restaurants, pharmacies and banks.  Generally they are used for commercial buildings, but can occasionally also be found among single-family dwellings, for example in the case of a daycare facility.

To bring this concept to life, let’s flirt with the example of a deli shop.  The First Avenue Deli small business owner signs a triple net commercial lease for 1,000 square feet with Landlord, Inc. for $10 per square foot (per year) over a ten year term.  In this case, the $10 per square foot, or $10,000 per year, is the base rent for the leased space.  It is commonplace that commercial leases incorporate annual increases to account for inflation, especially with a term as long as ten years. Let's say that First Avenue Deli's base rent increases $1 per year.  So the deli's base rent will increase from $10 in the first year to $11 in the second year, $12 in the third year and so on.

With the base rent established, what about the N’s of this triple net lease?  If it costs the landlord $1,000/year for real estate taxes, $500/year for insurance, $500/year for repairs and maintenance, $500/year for security, and $500/year for cleaning, then the total expenses for the property would be $3,000/year.  To conclude, during the first year of the lease, First Avenue Deli will pay Landlord, Inc. $10,000 in base rent plus $3,000 in reimbursements (all the net expenses).

Triple net leases offer investors a number of significant benefits including the obvious freedom to pursue other adventures while tenants carry the burden of physically and financially overseeing the property.  The promise of a long-term lease offers investors stability and security over the long haul as most triple net leases contain terms lasting anywhere from five to ten years or more.  Commercial tenants often can be screened more extensively, by evaluating both the individual owners’ credit and financial statements, and the business’s credit and finances.  For the former residential investor, the transition means no more worries over late night emergency plumbing or lockout calls – perhaps the greatest benefit of all.

So, what’s the catch?  Why haven’t most residential landlords and property managers crossed over already?  The reason is quite simple: large up-front investment and small back-end profits often prevent the new commercial investor from entering the game, especially considering the lower returns associated with triple net leases.

Lower rents and cap rates, the very features that render triple net leases appealing to the commercial tenants, can be the biggest disadvantage for some investors who would prefer larger returns and higher rents, no matter the risks.

Although triple net leases may be considered low-risk investments because they most often attract credit-worthy tenants with long term leases, it does not mean these leases come with no risks at all. 

Investors are warned to be diligent about checking both the personal and business credit of commercial tenants.  Personal credit reports and criminal background checks can be done through this website, while business credit histories can be obtained through servicers such as Standard & Poor’s, Bradstreet & Dun, Business Experian and Business Equifax.  Commercial landlords should also collect a personal financial statement from all tenants and guarantors, which provides the combined benefit of helping to evaluate prospective tenants and also detailing all of the tenants’ assets and income, in the event of a lease default.  Selecting the wrong commercial tenant will have the same repercussions as selecting the wrong residential tenant, and can cost owners dozens of thousands of dollars in unpaid rents as well as unexpected expenses, e.g. property taxes which were supposed to be paid by tenant.

Another consideration for investors interested in triple net leases is unit level economics.  Using our deli example from above, before a landlord would consider doing a triple net lease deal with the deli owner, he would want to have sales data along with revenue and profit history for the deli.  An investor may also want to do a performance comparison with other neighboring delis. 

Investors who are seriously considering triple net leases and want to learn more about what to consider can view more here. 

Share your experiences with us.  Have you heard of triple net leases?  What type of leases are you currently doing or considering? 

]]> https://www.ezlandlordforms.com/articles/news/431/realtytrac-introduces-new-neighborhood-details-with-listings-but-sellers-may-not-thank-them/ https://www.ezlandlordforms.com/articles/news/431/realtytrac-introduces-new-neighborhood-details-with-listings-but-sellers-may-not-thank-them/ Wed, 12 Mar 2014 11:07:24 GMT

RealtyTrac announced last week that it plans to add new environmental and social data to its 108 million real estate listings.  The new data will include items like location and details of storage tanks, hazardous chemical spills, EPA pollutants and other environmental hazards, as well as crime information on former drug lab locations and the neighborhood whereabouts of sex offenders and more.  RealtyTracs’ new plan to “offer full disclosure” may well have a massive impact on which home listings go quickly, and which linger on in light of troubling neighborhood data. 

This new plan to augment RealtyTrac's listings is unprecedented, as no other website has yet compiled so much data to provide alongside active real estate listings.  Previously, consumers could only find such information on non-listing websites including Homefacts.com (which Realty Trac acquired in 2012).  Now RealtyTrac’s CEO, Jamie Moyle says, “RealtyTrac evens the playing field between heart and mind by helping consumers see behind the airbrushed perfection of typical real estate information.”  He adds, “People are aware that disclosure is becoming more important for legal and ethical considerations.”

Consumer access to such information is great for buyers of course, but it could also dramatically damage home values for sellers and listings' days-on-market.  Realtors have demonstrated for decades the impact that a little embellishing or positive spin on certain aspects of a home or neighborhood can have.  The fact that consumers will now have a wealth of information displayed along with the listing will almost certainly change the game negatively for many sellers, as previously unknown hazards will light up in Technicolor on many listings.

Information such as neighborhood crime statistics has been available to the public since 1930 when the FBI administered its Uniformed Crime Reporting Program.  The UCR provides crime statistics from volunteer law enforcement agencies, other civil organizations and colleges and universities around the country.  It includes data from nearly 18,000 agencies.  A number of websites are available to consumers with this information, but none have the information included in real estate listings.

Similarly, some information on the location of sex offenders has been made public under what is known as Megan’s Law since 1996.

While there are scores of individual websites where consumers can access at least some of the information Realtytrac is planning to add, many are concerned that having all of this information attached to listings would send up a number of red flags, i.e. incorrect or misleading data, inconsistent information, and the lack of ‘real time’ reports to name a few.

What’s more, RealtyTrac has future plans to add even more information for consumers.  Information planned for the future includes renter-to-homeowner ratios, percentages of households with families, racial composition of neighborhoods and much more.  It is unclear how many consumers were actually doing their due diligence in researching the many readily available sites to help in their decision making about where to live, but it’s a safe bet the numbers will rise significantly.

Tell us what you think.  Will RealtyTrac's newly added information help, hurt, or have very little impact on home values and days on market?

]]> https://www.ezlandlordforms.com/articles/educational/2/429/as-foreclosures-ebb-bargain-investors-turn-to-the-age-old-practice-of-tax-lien-investing/ https://www.ezlandlordforms.com/articles/educational/2/429/as-foreclosures-ebb-bargain-investors-turn-to-the-age-old-practice-of-tax-lien-investing/ Fri, 07 Mar 2014 11:06:33 GMT As real estate prices rise nationwide and the last remnants of the foreclosure wave ebb into normalcy, many investors have been looking for a new way to make money in real estate and find bargain investments.  Real estate investors nationwide are increasingly capitalizing on the long-time practice of tax lien (and other municipal debt) investing, in which local governments sell debts of homeowners or landlords who fall behind on their taxes or other municipal obligations such as water and sewer payments.

Government officials explain that once a debt is owed, it is of course the government’s obligation to collect from the debtor if possible, to avoid shifting that cost to taxpayers.  Once a bill goes unpaid and unanswered for some time, that debt is then sold to investors who generally collect interest when the debt is redeemed, and in some cases can take ownership of the property if the owner continues to default.  Some states allow up to 18% interest and, in some cases, charges can reach as high as 50%, depending on other allowable fees charged on top of the original debt.

While some consumer advocates claim that tax collection laws are antiquated and should be updated and softened, others contend the government has no other way of ensuring that taxes and other municipal bills are paid.

Investors may purchase tax lien certificates (available in tax lien states), which offer investors the opportunity to profit from the interest charged to delinquent taxpayers.  This is usually the best place for beginners to focus as there are usually small amounts required to invest – an average tax certificate might range from a few hundred to a few thousand dollars depending on the type of debt, location and size of the home, etc.  Investors who purchase tax lien certificates do not automatically attain ownership but may foreclose on the property if an owner fails to pay the obligations.  It should be noted that owners are given a “right of redemption,” which is a designated period allowing them time to pay what is owed and keep ownership of the property.  

Another option for investors seeking returns through tax liens is the purchase of tax deeds.  Tax deeds are allowed in some states and offer outright ownership of the property.  In tax deed states, the actual deed (also known as title in some states) is purchased at an auction-style sale.  These purchases are not for the new investor who is just getting his/her feet wet because of the many risks and complications involved.  One major risk to consider is that of additional liens on the property which any new owner would inherit upon purchase, such as mortgage debt, contractor liens, etc.

All states have a means of collecting on taxes owed.  Only 22 states and the District of Columbia are considered tax lien states; other states are either tax deed states (where the actual deed to the property is sold) or hybrid states (neither tax lien nor tax deed state). 

Wondering just how lucrative purchasing tax liens can be? Consider a report by the National Tax Lien Association, which found that delinquent taxes has increased to an approximate $15 billion each year.  Fifteen billion dollars annually represents a lot of potential profit out there for investors.

But before considering taking on tax liens as your next big investment, investors are cautioned about the many pitfalls involved in purchasing tax liens.  Investing in tax liens requires a great deal of legwork and research before diving in, and the laws governing them can be complex.

In an effort to set the record straight about tax lien investing, Brad Westover, Executive Director of National Tax Lien Association explains “Individual investors typically earn 4% to 7% a year, and 99% of sold liens are redeemed by the property owners.  A big part of my job is dispelling the myths.”

Real estate and tax lien investor Jack Gelin cautions prospective investors: “It’s a part-time job.”

What do you think about tax liens, good potential or not?  Tell us about your experience with tax lien certificates or tax deeds.

]]> https://www.ezlandlordforms.com/articles/educational/5/428/is-it-legal-for-landlords-to-install-video-surveillance-around-rental-properties/ https://www.ezlandlordforms.com/articles/educational/5/428/is-it-legal-for-landlords-to-install-video-surveillance-around-rental-properties/ Wed, 05 Mar 2014 10:52:16 GMT  

Nest Cam Outdoor Security Camera

Video cameras seem to be everywhere from city sidewalks to above ATMs.  Small businesses, large corporations and the government have security measures in place to prevent crime and to protect their customers.  But, seldom do we hear of anyone crying out about their civil liberties being jeopardized because of security cameras at the ATM.  

 

What happens when residents find cameras where they live?  Do landlords/property managers have the same right as other small business owners, corporations and governments to protect their properties and the residents there?  What about landlords/property managers rights to post surveillance cameras for reasons other than protection?

Landlords/property managers may have ample reason for wanting to protect their assets from crime.  However, there may be other reasons landlords and property managers may want their properties under surveillance.  While vacancies are never desired, they are reality and when a property is vacant, there is even more need to maintain it and protect it from vandalism and theft.  Contractors may have to access the home, Realtors may be showing the home, and other foot traffic is possible during a vacancy.   A landlord/property manager may not be available at all times, and may want to have some other way of monitoring the comings and goings on the property.

Property manager Karen Joyner of Siegel-Hahn Property Leasing, LLC recalls “When we would conduct our monthly ‘drive-bys’ of one of our vacant properties, we began to discover evidence of someone parking in the driveway and on the lawn.  When we’d ask neighbors about it, no one knew anything.  One day we decided to install cameras and later learned the neighbors across the street had their guests parking in the driveway of the vacant home.  The neighbors were warned that if their guests continued to park there, the vehicles would be towed.  Needless to say, we didn’t have that problem any longer.”



Some cases of landlords installing security cameras have been less benign, and have resulted in lawsuits where the landlords might not fare so well.  In the case of a vacationing family in the Hamptons, for example, the family reported “feeling completely violated”, and the courts agreed... to the tune of $4.6 million.  The family filed a lawsuit against landlord, Donald Torr, of East Hampton, NY after finding hidden cameras in several places throughout the vacation home they rented from Torr.  Cameras were found in the bedrooms pointing directly at the beds, and hot tub areas.  The unidentified family reportedly had small children in the home who were apparently being filmed as well.  The family’s attorney, Judd Burstein added, “We believe it also violates the child pornography statute.” 

 


Best Vision BV-IR140-HD 1000TVL Bullet Security Camera White - Outdoor - Night/Day

In a similar case, a landlord, James Hill, reportedly placed a hidden camera in the bathroom of his duplex he was renting to three female tenants.  He was arrested and placed on $5,000 bail. 

 

While there are no specific laws in place addressing the use of surveillance cameras on rental properties, there are very clear laws regarding the use of such cameras on private vs. public property.  

According to New York attorney, Lucas A Ferrara, “…the well-established rule is that individuals retain a reasonable expectation of privacy within private areas of living space--not necessarily in public spaces, such as the common areas of residential buildings.  Therefore, high-tech surveillance cameras and other security systems may be lawfully installed in public--or common--areas of residential and commercial buildings.” 

Landlords/property managers may have sufficient reason for wanting to install cameras on the insides of their properties to protect it however; they should refrain from doing so while the property is occupied.  Placing a camera on the outside of the property to monitor driveways, parking lots and other common areas should be sufficient if protection is the true goal.

Are you using or considering surveillance cameras for your properties?  If not, under what circumstances would you want to use surveillance cameras for your properties?

Related Reading:

Ohio Landlord Spanks Tenant Over Unpaid Rent

Landlords Gone Wild: Crazed Conniptions & How to Avoid Expensive Landlord-Tenant Disputes

NYC Landlord Ordered to Charge $1 Rent for $2,100 Apartment

]]> https://www.ezlandlordforms.com/articles/news/427/study-reveals-both-landlords-and-tenants-disturbingly-unaware-of-laws/ https://www.ezlandlordforms.com/articles/news/427/study-reveals-both-landlords-and-tenants-disturbingly-unaware-of-laws/ Fri, 28 Feb 2014 10:29:21 GMT It has been frequently said that tenants often know the law better than their landlords.  A recent study conducted by Zillow has put this theory to the test, and the results just might surprise (and worry) you.

The Zillow survey asked ten true/false questions which covered five basic areas to include knowledge of Fair Housing Laws, lease termination and tenancy periods, repairs and maintenance, security deposits and credit checks, and privacy rights and owner access.

It turns out that tenants don’t know more than their landlords about landlord and tenant laws. In fact, according to the results of the study, if the participants in the study are representative of the estimated 100 million renters in the US, only half of them have knowledge of basic rental laws.  Approximately four out of every five tenants were unsure about security deposits, credits and background checks.  Another three out of every four lacked an understanding of their privacy rights as well as when a landlord is allowed to access the property.  And only three out of every five renters lacked an understanding of early lease termination.

Not surprisingly, renters did show knowledge of who is responsible for repair and maintenance, how to end a month-to-month lease, and what constitutes discriminatory advertising.

Landlords, while showing slightly more knowledge than their renters, did not fare well either.  In general, landlords scored only about 5-10% higher than renters and lacked basic knowledge in the same areas.  On average, only about one in four landlords demonstrated knowledge of security deposits, credit and background checks.  Only half of the landlords surveyed understood issues related to early lease termination.  Shamefully, roughly one of every three had knowledge of privacy and access rights.

The results of the survey represent a sad state of affairs, but testify as to why the landlord-tenant courtrooms often have standing room only.

Landlords did equally as well as tenants on issues related to repairs and maintenance, discriminatory advertising, and month-to-month rental agreements.

What does this all mean?  No landlord wants their tenant to tie them in legal knots by understanding the law better than they do, so landlords need to do a better job educating themselves on all applicable local and state laws through the myriad of free resources available (including the state landlord-tenant law summaries available on this website).  Otherwise, they may be the only one surprised at the court hearing when the judge rules in favor of the tenant and allows them to duck rent payments or late fees.

Want to know how you stack up to the pack?  See how knowledgeable you are about landlord-tenant laws by taking Zillow's rental quiz yourself.

After trying your own hand at the quiz, come back and let us know how you did!

 

]]> https://www.ezlandlordforms.com/articles/educational/2/422/5-ways-to-make-homes-smarter-and-what-landlords-should-consider-before-buying/ https://www.ezlandlordforms.com/articles/educational/2/422/5-ways-to-make-homes-smarter-and-what-landlords-should-consider-before-buying/ Tue, 25 Feb 2014 10:27:55 GMT

There has been plenty of buzz in the last six months about the "internet of things,” which is nerd-speak for connecting physical “things” in your life to the Internet, so they can be operated by smartphone remote controls or automated programming.  For example, when you come within a few blocks of home, your porch light automatically turns on, or when you wake up in the morning, your coffeemaker automatically starts brewing your favorite blend.

Make no mistake, smart-home automation is coming, and soon.  Most of the intuitive ideas (like the two above) are already out there and available for sale.  The problem is that the hubs available for sale are just not smart enough yet to connect everything and make them easily programmable and reliable (for an amusing look at several hubs, see Geoffrey Fowler’s video report on The Wall Street Journal).   

Beyond the current technical challenges and drawbacks, most rental markets in the U.S. favor landlords at the moment, as more Americans are renting rather than buying.  With the nationwide vacancy rate at a low 4.1%, most landlords simply do not need gimmicks to lease out their properties right now.  Besides, most of these smart systems are likely to become less expensive even as they grow smarter over the next few years; smart home devices are still primarily the domain of tech-loving early adopters.

Still, landlords and property managers with vacant higher-end properties might consider adding some smart-home upgrades as a differentiator.  The following is a non-exhaustive list of functions that can currently be performed by mobile apps, and while many landlords may not currently be ready to jump onboard, keep some of these in mind as potential ways to boost rents moving forward.

• Remote Door Locks – Consider the possibilities of mobile app-controlled keyless entry, with temporary control access assignable to other people.  Contractors could be allowed in without giving them a key.  Landlords could give prospective tenants temporary access to enter the property to view it, if they are unavailable to meet them.  These systems cost less than $200, and offer a nice “wow” factor as a first impression as you show your rental property to a prospective tenant for the first time.  Example: Lockitron.
• Remote Thermostat – One of the earliest smart home ideas, a thermostat controllable through mobile apps is widely available and currently the most-adapted smart home feature.  In more recent variations, the thermostat can be programmed to automatically turn on when you get close to home, based on your GPS location.  Examples: Nest, Revolv, Insteon.
• Remote Security, Smoke & CO Detector Alarms – If a house only has someone in it half of the time, what happens if a fire breaks out when no one is home?  It may well burn down, of course.  Or not, if smoke and carbon monoxide alarms are smart enough to alert the landlord, homeowner or tenant on their smartphone, wherever they are.  Likewise, security systems that alert the police are great, but it might be nice to be notified while driving home that someone just broke in through your back door.  Examples: Insteon, Nest.
• Integrated House-wide Sound System – While the price is considerably higher, internet-based speakers can be set up to play different music, at different volumes, in different rooms.  Or the same music in all rooms, for that matter; the speakers and music can all be controlled through a smartphone app, and is a snazzy party trick, but unless the speakers are mounted in a semi-permanent way, they make a tempting target for theft among vacating tenants.  Example: Sonos.
• Lights, Outlets, Wall Switches, Plumbing Leaks – From higher-tech versions of light timers for vacant homes, to detectors of leaking pipes, to remotely turning on anything that plugs into an outlet, programmed and remote access to sending electricity to anything in the house is now possible.  Examples: Insteon, Revolv.

The time may not yet be quite right for adding these updates to the average rental property, but landlords and managers of higher-end properties may consider adding them as a clever marketing strategy.  Given their current rarity, smart-home upgrades are a sexy, chic way to differentiate your rental property from the competition – and collect an extra $50/month in rent.   

]]> https://www.ezlandlordforms.com/articles/educational/5/421/tired-of-dog-waste-in-common-areas-property-managers-turn-to-dna-testing/ https://www.ezlandlordforms.com/articles/educational/5/421/tired-of-dog-waste-in-common-areas-property-managers-turn-to-dna-testing/ Mon, 24 Feb 2014 11:03:57 GMT Beyond ruining lawns and common areas, did you know dog waste is a public health hazard?  According to an EPA study, waste from man’s best friend can cause harm not only to your or your neighbors’ lawn, but can also cause damage to any nearby waterways and spread diseases both to other dogs and to humans. 

The Clear Choices Clean Water (CCCW) organization reports dog waste can transmit bacteria and viruses including tapeworm, roundworm, E. coli, Parvo and more.  Humans who come into contact with dog waste could contract campylobacteriosis, salmonellosis, and toxocariasis, which may cause abdominal cramps, fever, coughing or wheezing, hives and possibly permanent vision damage.  Animal waste can also attract mice and parasites that can get into your house or harm your pets and other animals.  

And, of course, it can make public lawns and grassy areas unusable for just about everything else, from frisbee to picnic lunches to children playing.

Not surprisingly, some condo associations and property managers are turning to CSI-level tactics to protect the surrounding neighbors and the environment from dog waste.  When one condo association manager, Barbara Kansky of Devon Wood community in Braintree, Massachusetts grew tired of maintenance crew complaints and owner denials regarding the piles of doggy doo found in the common areas, she did what any other manager would do and sent letters to the community asking pet owners to clean up after their pets.  According to Kansky, “There were problems even after residents reported seeing others failing to pick up their dog's messes.  We would call or send a letter and that dog owner would say, 'Prove it.’”

With that kind of response, Kansky knew she would have to take drastic measures and looked to the Internet for help.  She found Knoxville, Tenn.-based BioPet Vet Lab.  BioPet Vet Lab specializes in testing DNA from doggie poop to identify the canine culprits.

Kansky sought the advice of an attorney who assured her that the condominium board could enforce the association’s rules by requiring residents to bring in their pooches to have them tested.  Dog owners were charged a one-time fee of $59.95 for the initial DNA testing for the database.  Subsequent lab tests of dog droppings that end up identifying the offending animal result in a $50 testing fee plus a $100 fine.

According to Kansky, only one resident has been fined for an offense since implementation of the new policy.  A resident at Devon Wood reported, "We used to see dog poop almost every other day.  You had to worry about where you walk on the grass because there was dog poop, a lot of different places," Weidner said.  "Now, you don't really have to worry about dog poop.  You can walk where you want, the grass is now ours again, we don't have to worry about it, and that's just a great thing."  

BioPet Vet Lab’s director of business development, Eric Mayer, refers to his pet DNA testing kits as "a booming, growing, new product," and has started distributing throughout the U.S. and into Canada, Israel and Singapore in the past two years.  The service has been branded PooPrints and is a very simple two-step process.

The first step is to register the DNA of all dogs in the community by collecting samples of their cheek cells using a pair of sterile swabs, Mayer said in an email.  The second is to collect a sample of feces and send it to the lab for matching.  Testing reportedly starts around $29.95 per dog for an initial test.

Mayer is apparently correct in his assertion that DNA testing for poop identity is quickly becoming a booming business.  Several communities around the country have taken to the practice of requiring their residents to register their dogs for DNA testing. So far communities in FL, NJ, NY, IL, TX and MA have utilized this brand of testing.

DNA testing for canines has been around for some time, but this is the first time it has been used for this specific purpose.  Previous DNA testing for dogs has been to determine breed.

One Hackensack, NJ attorney jokes, “because dogs can’t consent to a DNA sample this could be the greatest civil liberties issue of our time.”

If serious pet lovers could have their way, you could probably bet the farm that he’s right.

Tell us your thoughts about Doggy DNA testing?  What policies do you have in place to address the issue?  How successful or not are your current policies?

 

]]> https://www.ezlandlordforms.com/articles/news/420/existing-home-sales-tumble-5-1-in-january-reaching-18-month-low/ https://www.ezlandlordforms.com/articles/news/420/existing-home-sales-tumble-5-1-in-january-reaching-18-month-low/ Fri, 21 Feb 2014 11:30:46 GMT The National Association of Realtors reported this morning that existing (used) home sales sold at their lowest rate since July 2012, at an annual rate of 4.62 million.

That represents a substantial 5.1% drop from the 4.87 million annual rate witnessed in December.  And while economists expected a fall in sales in January, this drop was steeper than the 4.68 million rate projected by economists polled by Reuters.

Causes for the drop in sales likely include low inventory, higher prices, rising interest rates and unusually brutal winter weather in much of the U.S.  Inventory in January sat at 1.9 million homes, a 4.9 month inventory at the current sales rate. 

The median sales price for existing homes in January was $188,900, up 10.7% year over year, during a time when average incomes have not grown much.  Meanwhile, interest rates have also substantially risen in the last year: according to Freddie Mac, the average interest rate in January 2014 was 4.43%, up an entire percentage point since January 2013 (3.41%).  The combination of higher prices and higher interest rates, with only marginally higher incomes, means home affordability has fallen steeply, as the average mortgage payment on a newly-purchased home is a whole lot more expensive today than it was a year ago. 

Analysts will be watching closely to see what happens as 2014 enters the spring real estate sales season, a traditionally strong time of the year for real estate sales.

Read the full story and the NAR January existing homes sales report here.

 

 

]]> https://www.ezlandlordforms.com/articles/news/419/real-estate-companies-increasingly-targeted-by-patent-trolls/ https://www.ezlandlordforms.com/articles/news/419/real-estate-companies-increasingly-targeted-by-patent-trolls/ Thu, 20 Feb 2014 16:01:14 GMT  

(Illustration by David Saracino / New York Observer.)

Ever heard of patent trolling?  Patent trolling has traditionally been a parasitical practice in the technology sector, but has now found its way into the wonderful world of real estate.  Patent trolling is the duplicitous practice of seeking out inactive or soon-to-be-expired patents solely to profit from licensing the product or service to others, or just suing legitimate companies who they claim are infringing on their obscure patent.  The patent trolls are not the inventors of the product or service, nor do they have any intent of ever using the product or service themselves.  Most patent trolls are shell companies who seldom reveal their true identity.  Patent trolling is, however, perfectly legal.   

 

In recent years, real estate companies have fallen prey to patent troll lawsuits.  In a widely publicized case, the National Association of Realtors (NAR) paid a cool $7.5 million to Alexandria, Va.-based CIVIX-DDI LLC, a notorious patent troll.  Reportedly, the NAR raised the money to fend off a lawsuit that CIVIX threatened against a number of multiple listing services (MLS's) across the U.S., that used location-based technology which CIVIX claimed to have patented.  The threat came shortly after CIVIX settled a previous lawsuit with two of the largest MLS's in the country, Chicago-based Midwest Real Estate Data LLC (MRED) and Maryland-based Metropolitan Regional Information Systems (MRIS).

CIVIX-DDI has also successfully sued LoopNet, Trulia and a host of other real estate related companies as well as Microsoft for various patent infringements. 

In early 2014 another troll, Property Disclosure Technologies, filed a similar case against thirteen of the most popular real estate companies in the US.  Keller Williams Realty Inc, RE/Max LLC, Weichert Realtors, Zillow Inc, Redfin Corp, BRER Affiliates LLC (part owner of the Prudential Real Estate franchise), JB Goodwin Realtors, Inc, David Winans GMAC TEXASMLS.com LLC, and Realogy subsidiaries Century 21 Real Estate LLC, Coldwell Banker Real Estate LLC, Better Homes and Gardens Real Estate LLC, ERA Franchise Systems LLC and Sotheby’s International Realty Affiliates LLC.  The lawsuit was filed in January.

Property Disclosure Technologies, LLC (PDC), asserts that the named companies have infringed upon two separate patents; both titled "Real Estate Disclosure Reporting Method", issued in 2009 and 2011.

It should be noted that both CIVIX-DDI LLC, and Property Disclosure Technologies consider themselves Non-Practicing Entities (NPE’s), the more formal term for companies who own patents but only license them out to others.

For years, NPE’s made billions targeting small businesses by sending them demand letters to pay or quit using the product or service to which these entities had claim through their (often vague) patents.  These target companies were most often without the knowledge and means to fight back, and therefore paid the licensing fees to continue business as usual.  The fees reportedly range from a couple hundred to a few thousand dollars.  This quickly became a lucrative practice which has now evolved from targeting computer software companies to industries including hotels, coffee houses, and now real estate.  In recent years the practice has spread to include targeting larger corporations such as Microsoft, Google and others.

Congress passed legislation in 2011 and then more legislation was introduced again in 2013 targeting the behaviors of patent trolls after receiving a number of complaints and letters from larger corporations who teamed up in an attempt to obliterate, or at the very least, control the predatory practices of these companies.

 

Official Troll Genus Courtesy of Inc.com

A recent Supreme Court decision was viewed by many as a first step to leveling the playing field for targets of patent trolls.  The Supreme Court refused to hear a case brought by Soverain Software LLC against Newegg.com for an alleged infringement of a patented ecommerce technology (online shopping carts).  Soverain Software LLC’s president, Katherine Wolanyk, allegedly stated, “We're obviously disappointed that the court denied our petition.  It's a really tough time to be a patent owner."

 

Meanwhile, Newegg’s chief legal officer, Lee Cheng, had this to say: “The witch is dead, hurray.  We are very, very pleased that the Supreme Court has recognized... these patents should never have been granted in the first place.  What we have showed in the Soverain case is that fighting back works.”  Back in 2013, Cheng allegedly stated, “We basically took a look at this situation and said this is bullshit. We saw that if we paid off this patent holder, we'd have to pay off every patent holder this same amount.”  After the trial, Cheng concluded, “This is the first case we took all the way to trial.  And now, nobody has to pay Soverain jack squat for these patents."

Small businesses reportedly spent approximately $11 billion defending patent infringement lawsuits in 2011; an increase of 32% above prior years’ numbers.  Similarly, a PriceWaterhouseCooper report in 2013 revealed that the total median awards to trolls are now nearly twice as high as those to legitimate patent holders.

With that kind of money at stake, there’s little wonder how real estate companies found themselves caught in the patent troll trap.

]]> https://www.ezlandlordforms.com/articles/educational/2/415/the-25x-rule-for-retiring-early-and-how-rental-properties-change-the-math/ https://www.ezlandlordforms.com/articles/educational/2/415/the-25x-rule-for-retiring-early-and-how-rental-properties-change-the-math/ Fri, 14 Feb 2014 11:53:08 GMT Financial advisors disagree over how much money the average person needs to retire, but many base their calculations on their client’s annual income, on the assumption that everyone spends most (if not all) of their income.  But there is a growing case being made by personal finance experts that retirement calculations should be based on a person's annual spending, and that the average person can retire and live more-or-less forever with a nest egg of 25 times their annual spending.  For example, if you spend $30,000 per year, you could theoretically retire once you have $750,000 saved and invested, and your investment portfolio would (in most mathematical scenarios) last forever.

How does that work?  Invested money theoretically earns a return for you every year, and as long as you spend less each year than the return on average, the nest egg just grows larger.

Consider an oversimplified example.  Joan invests $750,000 in the stock market, which earns for her a return of 8% annually.  Now, some of that is wiped out by inflation – let us say 2.5% – so her return in actual spending power is 5.5%, or $41,250, which is great, because that is more than she spends!

Real life is of course messier; one year, the stock market may crash by 15%, and in other years (like 2013) it may be up 29%.  Inflation may hover around a low 1% (like it did in 2013), or surge up by 6%.  But long-term averages suggest that a 7-10% return from the stock market is reliable and realistic.  (“But wait,” you say, “long-term averages are all well and good, but what if the stock market crashes the year after I retire?”  Glad you asked – a large-scale economic study known as the Trinity Study actually looked year-by-year at what would happen to a person’s theoretical nest egg, adjusting for inflation, using a 4% withdrawal rate.)

But what if some of that $750,000 starting nest egg is in income-producing investments, like bonds or rental properties?  Imagine Joan puts $100,000 of her nest egg in reasonably safe bonds, with an unimpressive return of 5%; she receives a more-or-less guaranteed income of $5,000 from it each year, without having to withdraw money from her portfolio by selling anything.  The value of her bond is, however, cut each year by inflation, so while she earns 5% income, she also loses 2.5% on inflation, for a real-dollar return of about 2.5%.

Joan, as it happens, is also a landlord, and invested another $150,000 of her nest egg in three rental properties, each of which rents for $1,000/month.  Not all of that is profit, of course – Joan still must pay for real estate taxes, property insurance, the occasional unexpected repair and vacancy.  Of her annual rental income for each property of $12,000, take away $2,000 for taxes and insurance, and another $2,500 for unpredictable expenses like vacancies and repairs, for a net annual income of $7,500 per property ($22,500 total).  Good news here though: rents grow alongside inflation, so there is no need to pull out the 2.5% for inflation.  

 

Something happened to the math just now.  With an investment of only $150,000, Joan covered three-quarters of her yearly expenses of $30,000, receiving a net rental income of $22,500 annually.  It suddenly seems like she actually only needs another $7,500 of income each year – so the 25X rule would indicate that she can actually retire on only $187,500 more, rather than $600,000 more. 

Not everyone would feel comfortable with so much of their portfolio invested in rental properties.  But for experienced real estate investors who know what they are doing, they are low-risk, high-return investments; the experienced rental investor is able to buy at a low price, knows how to properly screen their tenants to avoid rotten apples, and includes liability coverage in their property insurance.  This changes the math for retirement entirely – instead of needing $750,000 to retire, Joan only needs $337,500.  Nor did Joan achieve unusually high ROI on her rental properties, buying each property for $50,000 and renting them for $1,000.  Experienced real estate investors can and do find better deals all the time; consider this amusing tale of one landlord's 29% ROI on his rental investment.

If Joan invested $150,000 in the three rental properties, another $100,000 in stocks, and $87,500 in bonds, her annual return may look something like this:

• $22,500 in rental income
• $2,000 in stock dividends
• $6,000 in capital gains on stock appreciation
• $4,375 in bond payments

For a whopping $28,875 of that income, she does not have to withdraw money by selling any of her positions – her underlying investments retain all value (except inflation, in the case of her bonds’ face value).  She can choose to spend $1,125 less and leave all of her stocks alone and let them continue appreciating, or she can sell a few shares, but even so her stock portfolio would still be worth $4,875 more than when the year started.  Her net worth is higher at the end of the year, and that does not even include the appreciation in value of her three rental properties.

If Joan could manage to stash away only $337,500, she could live forever on her investment income.  Someone earning $60,000/year who spends only $30,000/year could therefore retire in only seven years, if they invest the other $30,000 and reinvest all of the returns during those seven years (try it yourself with this compound interest calculator).

For a more extensive review of the 25X rule of retiring, personal finance blogger Mr. Money Mustache makes a strong (and amusing) case for it on his blog, and goes into deeper depth on safe withdrawal rates.

Related Reading:

Want to Join the Top 20%? Invest in Retirement Accounts & Rental Properties

Who Is “Wealthy”? The 5-Step Ladder Between Middle Class and Wealthy

]]> https://www.ezlandlordforms.com/articles/educational/5/414/are-drones-the-next-competitive-edge-in-real-estate-and-property-management/ https://www.ezlandlordforms.com/articles/educational/5/414/are-drones-the-next-competitive-edge-in-real-estate-and-property-management/ Wed, 12 Feb 2014 09:21:59 GMT One of the economic phenomena witnessed during the Great Recession was the rise of “reluctant landlords” who were unable to sell their middle- to high-end residences, and resorted to leasing them out instead.  High-end properties can be difficult to rent at a profit, since they are generally bought/mortgaged at retail, homebuyer-level prices, leaving many landlords and property managers with higher-end rental properties wondering how to set themselves apart from the competition.

Competing on price and amenities are conventional ways of getting out ahead of the competition, but for those interested in a higher-tech advantage, use of an unmanned aerial vehicle (UAV), or “drone” as they are more widely known, has proven an innovative approach for early adapters.

Some Realtors have been using drones now for a number of years to sell high-end real estate in the U.S. and Canada.  Consider luxury real estate agency Halstead Properties, who turned to a drone after more than a dozen showings of their $6.1 million dollar single-family home failed to produce a buyer.  According to Matthew Leone, the director of web marketing (and “chief drone master”) for Halstead, “We're not selling $150,000 homes with this technology. Multimillion-dollar homes demand Madison Avenue marketing and advertising, not Main Street."

Nor is Halstead alone.  Other Realtors, like Scott Gerami of Naperville, IL, have even begun using drones to get out in front of their competitors with more standard, mid-level listings.  Gerami believes aerial photography is a great way to showcase community features like pools and clubhouses, and highlight the close proximity of amenities like schools and parks, as a strategy to set his listings apart.

Gerami built his own drone for outdoor, exterior views but says he is working on improvements to it for interior views as well.  “I’ve been using still shots of my aerial photography and incorporating them into my MLS listings.  It’s an eye-catcher.  A buyer may be looking at 100 home listings and say ‘Whoa!’ when they see mine. It’s a differentiator.”

Gerami has a point, as both renters and buyers are intrigued and visually stimulated by the pictures they see on the internet listings.  Real estate and rental listings with fewer pictures or no pictures at all get significantly fewer hits than those with lots of pictures.  Listings with video or virtual tours get even more traffic.

Landlords and property managers who engage drones in their efforts to capture the essence of a property could find their homes renting faster and potentially for more money.  High resolution, in-the-moment footage could go a long way towards finding the perfect renter for that hard-to-rent property; pictures can be worth a lot more than a mere thousand words.

And the uses of drones do not stop at listing photos.  Consider the need for a landlord or property manager to routinely check on a vacant property, for example.  It becomes extremely time-consuming to have to physically drive to a property each time a quick inspection is needed to ensure security or to verify that the lawn has indeed been cut.  An even more futuristic possibility is highlighted in an article by Ashley Halligan, who suggests “Imagine a drone flying to a property that has an electronic lockbox and letting a workman in.  If it were solar-powered, it could rest outside and ensure the property was properly locked and return the key to the lockbox.

The possibilities are endless for landlords and property managers to use their creativity with this new technology, as it becomes increasingly popular and affordable.  There will be plenty of time however, to brainstorm ideas while awaiting the highly-anticipated FAA's new guidelines regarding UAV's.

According to the FAA website, “small unmanned aircraft (sUAS) are likely to grow most quickly in civil and commercial operations because of their versatility and relatively low initial cost and operating expenses. The FAA is working on a proposed rule governing the use of a wide range of small civil unmanned aircraft systems.”

If you're wondering how much one of these UAV's will cost you, according to Eric Cheng, an aerial photographer who regularly flies drones and receives weekly calls from Realtors for his service, a camera capable drone can be purchased for roughly $500.

Regardless of your opinion, it appears the small, unmanned aircraft just may be here to stay.

What's your take on using drones to enhance your rental or real estate business?  Do you think using drones will have much of an impact on the residential rental business?

]]> https://www.ezlandlordforms.com/articles/educational/5/413/assembling-the-dream-team-for-new-real-estate-investing-and-property-management-businesses/ https://www.ezlandlordforms.com/articles/educational/5/413/assembling-the-dream-team-for-new-real-estate-investing-and-property-management-businesses/ Tue, 11 Feb 2014 11:02:56 GMT Behind every successful entrepreneur is a dream team of professionals, paraprofessionals and contractors who bring specific expertise and fill in the needed pieces of the business puzzle.

No one person can fill every needed role, so successful entrepreneurs know how to build a winning support team of competent and willing professionals.  The following represents members to consider for a winning team for landlords and property managers.

Accountants – Certain professionals are required for every winning business team, regardless of the industry, and accountants are one such example.  First-time landlords and property managers may have a difficult time justifying the cost of having them on board, especially in the early phases of the business, however not having them at least available on a consultant basis is often costlier in the long run.  One option some entrepreneurs have chosen is hiring interns as bookkeepers on their team.  Graduating and junior-level interns offer many benefits including reduced cost, as well as the added perk of access to their professors (who are often professionals in the industry).  Of course, interns should always be carefully supervised and any entrepreneur choosing this avenue should be sure to establish great rapport with the faculty liaison in charge of the internship.

For those uncomfortable with or unable to access interns, an inexpensive alternative is hiring a certified public accountant on a consultant basis only.  

Landlord-Tenant/Eviction Attorneys – Every entrepreneur is subject to various laws which affect their businesses, but the very nature of the rental business is based heavily on landlord-tenant and other consumer protection laws, on the local, state/provincial and national levels.  Therefore, it bodes well for landlords/property managers when a case against a tenant is presented to the court without a hitch by an experienced attorney rather than the landlord.  Not only does having legal representation ensure the process goes smoothly, judges and magistrates prefer it; and it certainly helps to have the court officials on your side.

A great resource landlords and property managers may want to consider for their evictions is Nationwide Eviction Services which has a network of landlord-tenant attorneys who handle evictions daily.  The service is professional, inexpensive and available in most U.S. states.  Landlords/property managers are encouraged to check with the service to ensure their state is covered.

Most landlord-tenant attorneys can also help with setting up your business entities, creating operating agreements and creating asset protection barriers between you and your rental investment properties.   Business owners should never cut corners here as erroneously creating your business entity could cost a newbie her entire business.  

Handymen and Contractors – Some of the most critical team members for landlords and property managers are the handymen and professional contractors like HVAC technicians, plumbers, electricians and locksmiths.  These professionals and paraprofessionals can make a huge difference in the daily operations of rental properties, not to mention their impact on the bottom line profits.  Additionally, having a competent repair team goes a long way towards gaining tenant confidence – one key to ensuring a great landlord-tenant relationship.

Rent Collectors – Landlords with just a few properties may be inclined to collect their own rent from tenants, but there are many reasons why this may not be the best idea.  For asset protection, it is always better that the tenants do not know who the owner of the property is, and the more layers between them and the owner, the better.  Experienced landlords also know tenants are less likely to offer up excuses to an authority such as a tightly-run business, but will effortlessly pile on the excuses to individual landlords with whom they’ve become more familiar.

Another approach is to automate rental payments through one of the many auto-pay services such as Ramsrent.com and ClearNow.com, two of the online companies which allow landlords with only a few tenants to enroll as well as property managers with thousands of tenants.  Rent can be deducted from the tenants’ paychecks, so that you get paid first, not last.

Business Coaches/Mentors – Most successful people acknowledge that they had a mentor or coach who helped them avoid common missteps and gave them critical advice at turning points in their business.  Achieving success in any business is difficult, but can be made a little easier with some expert guidance.  There is a subtle difference between the two: coaching focuses more on the tasks at hand, while mentoring focuses more on developing the individual.  Landlords/property managers should decide for themselves which one is best for them, or perhaps work with one of each.

Deciding to take on a coach or a mentor does not necessarily equate to spending a great deal of money.  Because of the wealth of information available in the form of books, seminars, webinars, audiobooks and free information on the internet; individuals can practically design their own coaching program by using the myriad resources available.

There are other members such as administrative assistants and marketing consultants, for example, that many entrepreneurs will want on their team, but in the beginning the members listed here will be enough to get you started on the road to success.

Remember the words of Walt Disney: “The way to get started is to quit talking and begin doing.”

Who is on your team?  How did you find the best members of it?

]]> https://www.ezlandlordforms.com/articles/news/412/who-s-buying-real-estate-not-young-people/ https://www.ezlandlordforms.com/articles/news/412/who-s-buying-real-estate-not-young-people/ Wed, 05 Feb 2014 15:55:06 GMT Nearly four years into their post-college careers, 38% of the class of 2010 are working jobs that do not even require a high school diploma, much less a college degree.  Is it any surprise that millennials are the most frugal and fiscally conservative generation since the Great Depression?

A recent survey by the Union Bank of Switzerland (UBS) shows that only 12% of American millennials would invest unexpected income into the market.  Similarly, the majority of millennials report that the best financial advice they ever received was to save money (versus other generations, who valued investment advice much higher in the survey).

Is it a shock to anyone that the homeownership rate among them is dropping?

In the fourth quarter of 2013, the homeownership rate among adults ages 18-34 was 36.8%, down from 41% in the same period in 2007.  And the stats just get gloomier from there: among 35-44 year-olds, the homeownership rate was down to 60.9% at the end of last year, compared to 67.2% in 2007.  The trend is also visible in the shrinking percentage of first-time homebuyers, as younger adults continue to shy away from real estate; first-time homebuyers made up only 27% of all real estate purchases in December according to the National Association of Realtors, whereas the long-term average is 40%.

First-time homebuyers are an important barometer for the real estate market, as they add to the overall pool of demand for on-sale real estate.  Because they are not simultaneously selling a property, only buying, they add only to the demand side without adding to the supply side, so a growing proportion of first-time homebuyers tends to indicate growing prices.  

So what does all this mean for real estate investors?

First, it means the high demand for rental properties is likely to continue.  The rental vacancy rate in the fourth quarter was the lowest since 2001, at 8.2% according to the above Census Bureau’s data.  Young professionals will largely continue to rent homes through their twenties, rather than rushing to buy.

That is good for rents remaining high, but tough for landlords looking to sell their rental properties to first-time homeowners. 

It also means that some homeowners with large suburban homes may have difficulty as well, given that rents in higher-priced areas often fail to cover the ownership and management costs.  Pricing in these neighborhoods is “retail” because nearly everyone there bought as a homeowner, rather than the pricing being “wholesale” in areas where it is mostly investors buying and selling homes to each other with a needed profit margin.  Selling and leasing out vacant properties in these primarily retail-priced areas may continue to be difficult, although prices are expected to rise this year, if not at the same pace they did in 2013.

 

Image courtesy of The Wall Street Journal's Marketwatch

Still, as these millennials grow older, many will look to leave their cool urban digs and seek more traditional suburban homes to raise their children in, and many will still want to lease rather than buy. 

 

The employment landscape also looks different today than it did before the recession: of the estimated 8.7 million jobs recreated since the recession’s darkest days, a full 65% of them are low-wage, low-skill, often part-time jobs.  Contrast that against the jobs that were lost during the recession, of which only 40% were classified this way.

Similarly, the homeownership rate among different professions has changed.  Trulia recently mined Census Bureau data to compare the homeownership rates between different professions, and of the professions examined, only one has increased in their homeownership rate: construction workers.  All other professions, shockingly including real estate agents, legislators and executives, saw their homeownership rates decline.

It will be a long time before America’s love affair with homeownership reaches its pre-recession passion.  In the meantime, real estate investors should keep an eye out for properties that speak well to young professionals and young families in particular, because younger adults are in no rush to sign settlement papers on a new home.

]]> https://www.ezlandlordforms.com/articles/educational/2/411/a-sticky-situation-pt-ii-are-there-opportunities-for-landlords-and-real-estate-investors-in-the-legal-marijuana-boom/ https://www.ezlandlordforms.com/articles/educational/2/411/a-sticky-situation-pt-ii-are-there-opportunities-for-landlords-and-real-estate-investors-in-the-legal-marijuana-boom/ Tue, 04 Feb 2014 15:19:41 GMT Medical marijuana has grown increasingly legal over the last decade (now claiming 20 states plus the District of Columbia), and recreational marijuana usage was passed in Colorado and Washington State last year.  Colorado sold over $5 million in recreational marijuana in the first week of legality, starting January 1, 2014, and the industry is expected to bring in $2.34 billion in 2014 (up from $1.44 billion in 2013).

What does this mean for landlords and real estate investors?  Is there money to be made, or should landlords ban marijuana on their premises?

As mentioned in Part I of this two-part series, there is still some legal question as to how restrictive landlords can be, regarding marijuana usage on their rental properties.  State laws and federal laws currently contradict in many places, and while the Department of Justice has declared that it will not prosecute marijuana usage or cultivation where it complies with state laws, some patients with prescriptions for medical marijuana have objected loudly to efforts to prohibit their prescribed medication.

While the case law remains scant on this subject, ezLandlordForms does offer a Marijuana Addendum for Rental Units which landlords can include in their rental packages, which prohibits the growing and recreational usage of marijuana, and places liability on the tenant if they engage in either.  Whether landlords and property managers wish to include an exception for prescribed marijuana usage is up to them (the addendum is editable).

Being an astute real estate investor, however, requires more than merely reacting defensively to changing conditions.  Sharp rental investors in states where marijuana is legal should consider whether there is an opportunity for them amidst this expanding industry.  One niche opportunity is a 100% cannabis-free apartment complex, to create a family-friendly tenant community and use this policy to attract new tenants. 

Alternatively, if an apartment community is more oriented toward college students or other young adults, perhaps it could brand itself as pot-friendly, through a community cannabis garden, or a semi-annual “space cake social” where tenants get together with their favorite edibles.  The surprise factor alone could generate press for the apartment complex.

Managers of senior communities could brainstorm novel ideas as well.  Imagine a medical marijuana support group or other social activity, for tenant-patients with prescriptions to consume cannabis together for bonding and support.  While it may have been unthinkable ten years ago, as baby boomers (who, once upon a time, were the generation that made marijuana mainstream) reach retirement and their senior years, there may be opportunities here for community-building among older tenants with prescriptions.

For investors considering undeveloped land or commercial space, there may be opportunities to lease to licensed growers.  Given the unique climate needs of the marijuana plant, investors may be able to spot inexpensive buildings that are well-suited to growing the plant, and snatch them up at low prices before other investors catch on.  Abundant electrical outlets and power supply, availability of water pipe access, floor drains, building security and reliable humidity and temperature controls are all critical to successfully growing marijuana.  And, some tenant fittings and improvements to the property may remain even if the tenants move to a larger space. 

Investors should beware however; different states and municipalities have different licensing requirements for different types of marijuana-related activities.

Landlords should also be careful to prevent illegal grow-ops, and understand how damaging they can be to rental properties.  The damage can be catastrophic, and even when a commercial property is licensed legally and outfitted properly, there are security risks given the high value, portability and current cash-only status of the industry (due to federal banking regulations). 

But the federal obstacles are slowly eroding; President Obama famously commented to The New Yorker last year that "I don’t think it is more dangerous than alcohol,”and a few days later on January 23, 2014, Attorney General Eric Holder announced that the Justice Department would not "prioritize" investigations of banks transacting business with marijuana companies.  It remains to be seen whether the IRS will make an exception to allow marijuana-related businesses to deduct expenses (companies cannot deduct as an expense any activity that violates federal law).

The industry, while young, is showing a great deal of promise, and has led some economists to even refer to the currently industry boom as the “green rush”.  There is money to be made, not only by growers and dispensaries, but by auxiliary suppliers who provide necessary equipment, testing products, safety devices, etc.  And, perhaps, by savvy real estate investors and landlords. 

]]> https://www.ezlandlordforms.com/articles/educational/5/410/a-sticky-situation-pt-i-can-landlords-ban-legal-marijuana-usage-and-growth-on-leased-premises/ https://www.ezlandlordforms.com/articles/educational/5/410/a-sticky-situation-pt-i-can-landlords-ban-legal-marijuana-usage-and-growth-on-leased-premises/ Tue, 04 Feb 2014 11:29:45 GMT Whether for or against legalizing marijuana, landlords and property managers need to know the facts about its potential impact on their business.  If a study done by the NAMHSA is accurate, 7.3% of Americans aged 12 and over self-report regularly using marijuana, and the number of Americans who occasionally use it is likely astronomically higher.  At some point during a landlord's tenure, it is likely they will encounter marijuana usage on their rental property.

Here are the facts:

Currently, only four states in the U.S. (Colorado, Washington, Oregon and Alaska) plus the District of Columbia have legalized the recreational use of marijuana, and that use is limited to regulated amounts of private growth and possession, with unlicensed sales and public consumption prohibited (much like alcohol).  In other words, private citizens are legally allowed to possess, grow and smoke marijuana (in regulated quantities) in the privacy of their own homes; but are not allowed to sell any amount or smoke it in public.

In addition, nearly twenty other states and many provinces in Canada have legalized medical marijuana usage in some form.  Interestingly, although legalized at a state/province level for medical purposes, it remains a federal crime in both the U.S. and Canada.  Further, even within states with legalized marijuana, many municipalities have elected to prohibit cannabis dispensaries within their boundaries.

Landlords and property managers need to consider that tenants may want to exercise their new legal right to smoke marijuana (either for casual use in the states where allowed, or with a prescription in one of the twenty remaining states with legalized medical marijuana).  In states/provinces where smoking pot is legal, landlords and property managers may wonder if they have the right to ban the activity from their properties.  Or, will their existing "No Drugs" policy suffice?

The answer is twofold.  Given the contradicting state and federal laws and lack of case law on the subject, all indications are that landlords and property managers can refuse to allow tenants to smoke marijuana on their properties even though it may be legal to do so in their state.  While the states allow for individual use of marijuana in private spaces, it does not require owners to allow this use on their leased properties.  Thus, it is left to the landlord's or property manager's discretion.  Landlords/property managers are cautioned however that this may not remain the case forever.  Consideration must still be given to tenants with prescriptions for medical marijuana; cases in which patients could claim a disability and possibly be protected under the federal Americans with Disabilities Act in the future.

The law, as it stands now, is clear that medical marijuana cases are not protected under the American with Disabilities Act.

There is little doubt that more medical marijuana cases will be brought in the future seeking protection under the ADA.  However, for as long as marijuana remains illegal under federal laws, future cases will likely be met with the same fate as their predecessors.

Another area of consideration for landlords/property managers is how to show respect for physician-prescribed medical marijuana.  One suggestion is to have separate policies for recreational usage, which could be protected under existing "No Drug" policies.  Of course, any existing policies based on state law would have to be amended to include federal law, if landlords wanted to ban recreational use in states where marijuana use is legal.

A second policy could be implemented to address medical usage where residents are allowed to use marijuana but now allowed to grow it on the premises.

For landlords/property managers with multi-family units, who allow smoking marijuana on the premises, careful consideration must also be given to the impact on other residents.  Issues such as selling on the property or resident complaints about marijuana-related odors in common areas could become an issue.

Landlords and property managers need strong and very clear policies on this issue to protect themselves and other residents.  Signing a Marijuana Lease Addendum with the tenants is a great way to address the issue head-on and shift responsibility to the tenant. 

Share your thoughts on this topic.  Are you for or against legalizing marijuana?  Will/do you allow or disallow its' use on your properties?  Will/do you have separate policies for casual and medical use?

Part II of this article explores whether there are opportunities for real estate investors and landlords amidst the state-level push for legalization of marijuana.

]]> https://www.ezlandlordforms.com/articles/news/409/landlords-and-regulators-crack-down-on-subleasing-through-airbnb-and-others/ https://www.ezlandlordforms.com/articles/news/409/landlords-and-regulators-crack-down-on-subleasing-through-airbnb-and-others/ Fri, 31 Jan 2014 11:46:05 GMT What happens when a tenant finds themselves unable to make the rent payment?  Or when they decide to move out early?  Or when they will be traveling for two weeks and see a chance for some quick cash from renting their apartment to a vacationer during that time?

As online services like Airbnb and Craigslist have grown easier and more ubiquitous in recent years, short-term renting has skyrocketed in popularity.  It is no coincidence that these easy outlets for subleasing arose in the context of a more constricted economy, as shifting job availability and lower incomes dictated a need for more creativity and flexibility.

But is subleasing in the landlord's best interest, with unscreened strangers staying in the rental property, possibly with pets, or criminal backgrounds?  Tenants of a posh New York City apartment building were recently admonished by management after taking to popular short-term stay sites like Airbnb, Craigslist and Roomorama to sublet their apartments.

In a memorandum to tenants, management for TF Cornerstone, Inc informed tenants that subletting their apartments was illegal and a direct violation of the lease.  Tenants were informed that such behavior created a security risk and a transient environment.  Management also reiterated to tenants a section from their lease contract detailing the need for landlord’s written permission for any such sublease agreement.

What the management company failed to mention in its memorandum was the fact that individuals who short-term sublet their spaces while absent are subject to fines ranging from $1,000 for a first offense to $20,000 for repeated violations, according to a New York City Council bill passed in October 2011.  This new law applies to buildings with more than four units.

It seems New York City is taking the issue of illegal short-term rentals very seriously; no one knows better than Nigel Warren, a tenant in an East Village apartment who subleased his room for $100 per night while off on a 3-night trip to Colorado.  When he returned, he was hit with multiple fines totaling $40,000 for the illegal act.

When Warren showed up for a scheduled hearing on the matter, he learned his luck had turned and that because of a paperwork error, his case would be dismissed.

Like Warren, most tenants don’t bother with the formalities of seeking the landlord's approval before subletting their apartments. Landlords and property managers routinely address this issue by adding a clause that tenant must obtain written permission, and that the absence of such permission constitutes a violation of the lease agreement. The majority of U.S. states are silent on the issue of subleasing, while others require landlords’ permission.  Currently, there are only a handful of states with regulations expressly requiring landlords to accept "reasonable" subleasing requests.  In New York, landlords who own or manage more than four units must allow reasonable sublet arrangements when requested.

In most Canadian provinces, subleasing is legal and allowed; landlords are not permitted to refuse without just cause.

In cases where landlords do allow subleasing, both in the U.S. and Canada, landlords should consider the following: (1) careful screening of sub-lessees, (2) type of transaction (lease assignment vs. sublease), (3) knowledge of the local and state laws regarding subleasing in the area, (4) terms of the sublet agreement (5) existing alternatives if any, (6) impact on other residents and (7) reasonable refusal if necessary.

Some states, such as New York, are no longer leaving it entirely up to landlords to address this issue.  New York state law says you cannot rent out single-family homes or apartments, or rooms in them, for less than 30 days unless you are living in the home at the same time.

Other cities such as San Francisco and New Orleans have taken similar positions on this issue and are said to have even more stringent laws on short-term subleases.  Short-term, in most cases, refers to 30 days or less and applies to buildings with more than four rental units.

Despite warnings about the illegalities of short-term subleasing, it will likely remain a popular choice among renters for some time to come, especially given its’ recent popularity on sites like Airbnb, Craigslist, Roomsters, and the like.

Landlords should be sure to protect themselves, and perhaps their tenants, with airtight clauses addressing both long and short-term subleases based on their local and state/province laws.

Related Reading:

How to Legally Lease Using Airbnb in NY, When 72% of Rentals Are Illegal

Airbnb Nightmare: Short-Term Vacationer Refuses to Leave, Months-Long Eviction Process Required

The Ultimate Guide to Managing Vacation Home Rentals... Profitably

]]> https://www.ezlandlordforms.com/articles/news/407/two-real-estate-tax-breaks-that-expired-at-the-end-of-2013/ https://www.ezlandlordforms.com/articles/news/407/two-real-estate-tax-breaks-that-expired-at-the-end-of-2013/ Wed, 29 Jan 2014 08:23:02 GMT Congress failed to extend a series of valuable tax credits at the end of 2013, meaning (you guessed it) another set of tax hikes on the horizon.  Among the many tax breaks to go extinct alongside 2013, taxpayers will miss the education tax credit, mass transit tax deductions, the state sales tax deduction and others.  But there are two that specifically affect homeowners and landlords: the residential energy tax credit and mortgage forgiveness relief.

Of the two, the energy efficiency tax credit is the simpler, so let’s start there.

Through tax year 2013, homeowners who made qualifying energy efficiency improvements on their home earned a tax credit of $500.  Contractors were able to claim a tax credit of $2,000 per qualifying home that they built; in tandem, these tax credits were designed to boost both the demand and supply of energy efficiency-boosting upgrades and new construction.  But despite the rhetoric from Washington about the importance of reducing energy usage and curtailing climate change, lawmakers are no longer putting their money where their mouth is, where residential energy usage is concerned.

(A quick pause to review tax terminology: a tax deduction is taken from a person’s taxable income, whereas a tax credit is taken directly off of that person’s income tax bill, so a tax credit is far more valuable than a tax deduction.)

The second tax break to go extinct is the Mortgage Debt Relief Act.  When a homeowner or landlord sells an underwater rental property through a short sale, or loses a rental property to foreclosure, the IRS has a special way of acknowledging the loss.

They charge taxes on the negative equity (the amount they were underwater), as if it were income.

Perhaps this tax on debt forgiveness is best illustrated through an example.  Consider Landlord Larry, who bought a rental property in 2006, in a neighborhood struggling to improve and looking like it might just be on the brink of turning around.  Then the housing market collapses, all of the investment dollars that were starting to enter the neighborhood disappear, and the neighborhood sinks lower than ever.

Landlord Larry borrowed $60,000, but now the property is only worth $35,000.  After years of uneven rent payments, break-ins and all-too-frequent vacancies, Larry cannot take the frustration anymore and finds a buyer for the market value of $35,000.  Miraculously, the bank agrees to a short sale.  The day Larry sells and stops the bleeding is a happy day indeed.

Enter: The Internal Revenue Service.  They tell Larry that he owes taxes on an extra $25,000 of income: the amount of money the bank forgave on the loan balance (in reality, it would be more like $22,583.98, since the loan would have been paid down some over the years, but that is beside the point of this example).  If Larry ordinarily earns a yearly income of $50,000, he will owe taxes on $75,000 of income, even though he did not actually earn $75,000.

The story is similar if Larry’s property were foreclosed upon: if the bank decides not to pursue Larry for the shortage, Larry not only loses the property and ruins his credit, but he also owes a lot of taxes on money he never saw.

Is there a silver lining?  Maybe – homeowners were temporarily exempted from having to pay debt forgiveness taxes from 2007-2013, although landlords were not exempted even before the measure expired.  A bill has been introduced in the Senate to extend the Mortgage Debt Relief Act, and may or may not pass.  Still, the bill only applies to mortgages on owner-occupied properties, so it would only benefit landlords if the mortgage they were trying to reduce is for their primary residence. 

Still, homeowners who split their time between two properties and are considering a short sale on one of the properties may want to watch the progress of the Mortgage Debt Relief Act, and make sure that they maintain the short sale property as their primary residence until settlement.  It is also possible that the residential energy efficiency tax credit will be reintroduced later this year, although that remains less likely.

]]> https://www.ezlandlordforms.com/articles/news/406/home-prices-drop-in-november-for-first-time-in-a-year/ https://www.ezlandlordforms.com/articles/news/406/home-prices-drop-in-november-for-first-time-in-a-year/ Tue, 28 Jan 2014 10:10:03 GMT Data released this morning by Standard & Poor’s indicates that home prices in the 20 largest metropolitan areas in the U.S. declined by 0.1% in November, the first decline in a year. 

Still, it is not only common but considered “normal” market conditions for prices to slip slightly as winter approaches and real estate activity dwindles.  The seasonally-adjusted numbers for the S&P/Case-Shiller composite index for these 20 cities actually show a 0.9% increase in price.  These cities make up roughly half of American households.

Year over year, U.S. home prices for the 20-city index were up 13.7%, an impressive medium-term gain.  America’s third largest city, Chicago, saw its fastest annual home price growth since 1988.

Long-term, average home prices across these cities are still down roughly 20% from their record highs in 2006.  While a few cities, like Dallas, have outpaced their 2006 zeniths, most still have plenty of ground to regain from their heights eight years ago.  Only one of the cities (Detroit) has lower residential home values today than they did in 2000 however.

Home prices have been buoyed in the last two years by low inventory, low interest rates and what many analysts believe to be pent-up demand.  The household “bundling” phenomenon witnessed during the Great Recession is still in the process of slow reversal, fueling the surge in demand for rental properties as adult children leave the nest and roommates go their separate ways. 

Economists largely expect home price gains to extend through 2014, albeit at a slower pace.  Watch for an annual growth in housing prices of 6-8% in 2014, as high rents and normalizing credit conditions drive up home prices further. 

Real estate investors looking for deals are well advised to scour for deals during the winter quiet season, when activity and pricing are at their lowest for the year.  

]]> https://www.ezlandlordforms.com/articles/educational/10/405/the-real-estate-pro-s-guide-to-avoiding-audits/ https://www.ezlandlordforms.com/articles/educational/10/405/the-real-estate-pro-s-guide-to-avoiding-audits/ Mon, 27 Jan 2014 10:25:44 GMT Dear Taxpayer,

Your return has been selected for further review. Please contact us to schedule an appointment within 14 days from receipt of this letter.

Is there anything more dreadful than the notice for an IRS audit?  For most people, only the death of a loved one or loss of employment can top it.

If you’re one of the millions of Americans and Canadians who break out into hives at the mention of tax season, there are a number of ways in which you can reasonably avert the gaze of the dreaded IRS.  In fact, according to tax experts only 1 in every 100 tax returns ever gets a second look.

Given the hundreds of millions of returns filed every year, the IRS must filter by certain “red flags” as they electronically sort the millions of returns.  There are unfortunately some returns audited at random, with no red flag required for an invitation to a private party with the IRS, but in general taxpayers can minimize the number of red flags on their returns.

The bad news?  Landlords and property managers, by the very nature of their work, already have some red flags built into their returns.

Self-employed individuals are usually scrutinized more carefully than W-2 employees or 1099 payees.  So, entrepreneurs (who have not made it big enough to hire expensive accountants and bookkeepers) have to be especially careful when preparing their returns.  Knowing all the rules for what is allowed and what is not is essential here and can mean the difference between having a little extra in your pockets and maintaining your freedom.

Beware of your LLC, corporation and other such legal entities which may send up a red flag to the IRS.  While perfectly legal, the IRS has begun training agents on business-related triggers to look for when filtering returns of small businesses with these legal statuses.

Landlords are warned about claiming losses on rental properties.  Although there are many legitimate deductions for rental real estate, landlords with other income need be especially careful.  Also, landlords and property managers who claim to be full-time investors are placed under the microscope of a special program known as the Real Estate Professional audit project.  The project was implemented several years ago and examines the amount of time actually spent on real estate activities.

Most people know by now not to get carried away when deducting expenses for food, travel and entertainment, however if you don’t know or insist or making excessive claims for meals and such, your audit invitation may be in the mail.

Landlords and property managers may spend a lot of time in their cars going back and forth to visit their rental properties for various reasons.  While it may seem you’re always in your car for business purposes, don’t attempt to make that claim when you file.  Consider yourself warned: claiming 100% use of your vehicle for business is the equivalent of calling up the IRS requesting an invite.

That messy room you’re claiming is an office may or may not be in the eyes of the IRS, but you run the risk of being audited when you make that claim.  The IRS has strict rules which it aggressively enforces when it comes to claims of home office space.  If your home office doubles as any other room in your home (play room for the kids, guest room, etc.), you might need to find something to wear to the party.

Individuals with higher incomes (over $200,000) and taxpayers with special circumstances are also at higher risk.  Special circumstances can include persons with very low incomes who claim earned income credits.  Most people with lower incomes believe they are exempt from IRS audits, but that is simply not true.  Any return that raises a red flag is likely to be pulled for further review or examination, as the IRS refers to it.  The complicated rules associated with claiming earned income tax credit makes taxpayers who claim it especially vulnerable to the watchful eye of the IRS.

Experts advise taxpayers to stick to plain vanilla tax returns when possible, but say they shouldn’t shy away from claiming any legitimate deductions, regardless of how unconventional.

Coming down with a case of amnesia when it comes to reporting all of your income definitely falls under the category of what not to do.  Doing so will almost certainly get you invited to the audit party.  Though it may be tempting to exclude that part-time job or other source of extra income, the IRS can easily track income for which you receive a 1099 or W-2.  Disturbingly, the IRS also has increasing access to individuals' bank account histories for comparison, even when no 1099 or W-2 is issued.

Being too generous with charities may also pose a problem for you with Uncle Sam.  An easy red flag for the IRS to spot is charitable contributions that are not consistent with income levels.  If you report earning $50,000 but claim to give $20,000 away annually, you are probably going to be audited.

Claiming losses on a hobby is a definite Don’t and will land you on the IRS guest list.  You can, however, deduct expenses related to the hobby up to a point (to offset money earned from it), but claiming losses is not allowed.

As with most things, using common sense and following the "what is reasonable" rule will go far and keep you far away from the party.  Also, keep in mind receiving an invitation to an audit doesn’t have to end in fines, penalties or six months in jail, as long as you keep good records and have played by the rules.

Do you know of other audit triggers?  Tell us about any experiences or close calls you have had with the IRS.

More information about the IRS's approach to auditing real estate professionals can be found here.

]]> https://www.ezlandlordforms.com/articles/educational/2/404/reurbanization-and-the-growing-trend-towards-walkability/ https://www.ezlandlordforms.com/articles/educational/2/404/reurbanization-and-the-growing-trend-towards-walkability/ Thu, 23 Jan 2014 11:42:56 GMT Much has been made of the reurbanization trends witnessed over the last decade, as the suburbs have lost some of their cachet and downtown areas have become sexy once more.  There are plenty of reasons, from demographic trends, costs of driving, the Great Recession and deindustrialization, but at the center of most of these reasons is walkability.

WalkScore.com uses an algorithm to determine a (you guessed it) Walk Score for any given address in the U.S. or Canada, based on the proximity of amenities such as grocery stores, restaurants, coffee shops, bars, gyms, museums, art galleries and other cultural resources.  They then rate the address from 1-100, with a score of 90-100 being a “walker’s paradise”, a score of 70-89 being “very walkable” (with most errands accomplishable on foot), and lower scores indicating decreasing walkability.  (A pause for bragging rights: my home neighborhood of Fells Point in Baltimore achieved a walk score of 94.)

So everyone can appreciate the appeal of walkability, but why the increase over the last decade?  What's changed?

To start with the obvious, consider demographics.  Generation X, currently aged roughly 35-49 and in the midst of their child-rearing years (read: most likely to desire suburban living), is not a very large generation.  But the baby boomers (roughly 50-69) and millenials (roughly 18-34) are much larger generations, and both are in phases of life more likely to value walkability and local amenities over acreage and child containability.  Empty-nesters and young professionals want to be able to walk to the local café or sports bar, and simply don’t need the large yard with the white picket fence.

Safety makes a big difference in livability and public perception as well.  Consider that violent crime rates in the U.S. have also been on a downward trend since a peak in 1991, leading to a general feeling of greater security and safety in urban areas.  The violent crime rate in 2012 was the lowest since 1970, at 386.7 violent crimes per 100,000 people.

Cobblestones, cafés and cutter sailboats in Fells Point, Baltimore

Looks count for something too, of course.  As American cities have deindustrialized, the old smoke plumes, factories, soot and tenement buildings have given way to sparkling glass skyscrapers, upscale condominium towers, boutique retail shops and connoisseur craft beer and wine gastropubs catering to foodies.

There is also data from the 2010 Census (and some limited data more recently) that show greater development in urban centers than in suburban areas, showcasing the increased demand for urban real estate.  But suburban centers can also be extremely walkable, and in many cases this appeal is starting to be marketed more aggressively to potential tenants.

The trend and growing appeal of walkability can also be seen in the decline in driving rates.  According to a recent study by the U.S. Public Interest Research Group, the number of households without cars increased in 84 out of 100 metro areas surveyed.  The average per capita miles driven also decreased in 54 out of 74 metro areas examined by the Federal Highway Administration.

Driving is, after all, expensive, between the cost of the car itself, gas, maintenance, insurance, parking, tolls and repairs.  According the PIRG study above, driving has particularly declined among younger Americans aged 16-34 over the last ten years, and the costs associated with car ownership and usage are a likely contributor to young people’s proclivity for walkable urban neighborhoods.  And as older Americans drive less, they begin to value having a grocery store a block away, or their favorite restaurant around the corner.

So what does this mean for real estate investors?

While amenities within walking distance have always improved the value of local real estate, the growing appeal of walkability and shift towards urban and suburban centers can mean higher rents for savvy landlords.  Investors should keep a close finger on the pulse of upcoming property development and amenities opening up, to scoop up properties before the influx of new amenities becomes common knowledge.  Websites like WalkScore and Zillow can be used to compare current home prices, rents and walkability, to spot neighborhoods that may have disproportionately low prices compared to rent and walkability.

Landlords with properties in highly walkable neighborhoods should emphasize the local amenities, and there is no shame in using gimmicks like including a “Walk Score” in the rental listing.

]]> https://www.ezlandlordforms.com/articles/educational/2/403/government-resources-for-struggling-homeowners-and-landlords/ https://www.ezlandlordforms.com/articles/educational/2/403/government-resources-for-struggling-homeowners-and-landlords/ Tue, 14 Jan 2014 11:58:35 GMT

Deciding to become a landlord can be daunting for all who take the plunge, but for those who did so out of necessity when the economy tanked, help may be a click away.

Harvard’s Joint Center for Housing Studies conducted a survey of housing units during the economic downfall and found that from 2007-2011, approximately 2.3 million single-family homes went from being owner-occupied to rental properties.  

For many homeowners, becoming a landlord became a necessity, rather than a method of investment.  Whether leasing out part of their home to help pay the bills, or being forced to move and unable to sell the prior residence, the economic downturn and its aftermath created plenty of accidental landlords.  Many of these reluctant landlord-homeowners were left wondering just how much notice was required to ask intractable tenants to vacate, or just how many violation notices it would take for them to begin abiding by the rules.

Regardless of their specific experience, some of these accidental landlords found themselves wishing for an alternative, despite being unable to sell given the home values in their neighborhood.  In 2011, homeowners in some parts of the country started seeing relief in the form of slowly rising housing prices, enabling them to once again consider placing their homes on the market for sale.  In areas where  housing prices remained low, would-be sellers have had to wait, hoping that better days would come in perhaps just another year or two.

Fortunately, the U.S. government granted homeowner’s wishes in the form of the Making Home Affordable Program.   Originally introduced in 2009, the Making Home Affordable Program provides homeowners with the opportunity to refinance their existing mortgage at today’s incredibly low rates, and offers them more reasonable terms than some of their current loans.  The original program was designed to offer relief to homeowners for a specified period however, since that time the government has extended the application deadline for the program to December 2015, affording millions of homeowners the opportunity to obtain the help they may still need.

The government has made provisions for just about every situation imaginable for homeowners who find themselves unable to pay their current mortgages, even those homeowners who may no longer wish to own their homes at all.  Although most of the programs were initially designed for owner-occupants, the modification program (HAMP) has been revised to include non-occupant owners.  Landlords who rent space in their homes or who live in a multi-unit dwelling and lease out the other unit(s) are able to take advantage of all of the programs.

The following are individual programs designed to address specific homeowner needs under the Making Homes Affordable Program.

Homes Affordable Refinance Program (HARP) –  The HARP program assists homeowners in refinancing their current Freddie Mac or Fannie Mae loans, including homeowners who are upside-down.  The program was originally being offered to those whose existing loan had a loan-to-value ratio (LTV) of  more than 80%.  Since its inception, the program has changed to include owners with an existing LTV up to 125%.  To be eligible however homeowner’s must be current on their mortgage and meet certain other criteria.  More HARP details here.

Home Affordable Modification Program (HAMP) – The HAMP program grants loan modifications to homeowners struggling to pay their mortgages.  The program was initially limited to owner-occupied homes, but has since been revamped to include homes which owners have already or are planning to place on the rental market.  The program’s goal is to lower mortgages to no more than 31%  of gross annual income.  The FHA, VA and USDA all have modification programs to help homeowners. More information on the HAMP program can be found here.

Principal Reduction Alternative Program (PRA) – This program was implemented to help homeowners reduce the amount owed on their existing loan.  The government encourages investors and mortgage servicers to lower the loan amounts for owner-occupants who are upside down and who have loans not secured by Freddie Mac and Fannie Mae.  For details on the PRA program, click here.

Second Lien Modification Program (2MP) – This program is for those owners who may have second mortgages, HELOCS or other secondary liens on the property, that are creating a financial burden.  View more information on this program here.

Home Affordable Unemployment Program (UP)- Designed for those who find themselves unemployed, homeowners may be allowed up to 12 months of completely suspended mortgage payments or significantly reduced payments (up to 31% of their income).

Home Affordable Foreclosure Alternatives (HAFA) –  This program is unique in that it addresses the needs of those homeowners who do not want to save their homes.  It offers an alternative to an outright foreclosure by allowing an owner to sell the home for less than what is owed (short sale), or to return the title of the home back to the bank, also known as a deed in lieu of foreclosure (DIL).

Homeowners and live-in landlords who are less than enthusiastic about renting out their prior homes or space in their current homes as a strategic plan towards their own economic recovery may find these programs helpful.  There are also several other lesser-known programs which can all be found here.

Are you a reluctant landlord ready to bail out?  Have you taken advantage of any of the programs mentioned here?

]]> https://www.ezlandlordforms.com/articles/educational/1/402/how-to-price-your-rental-unit-just-right/ https://www.ezlandlordforms.com/articles/educational/1/402/how-to-price-your-rental-unit-just-right/ Mon, 13 Jan 2014 10:11:15 GMT A recent Harvard study confirmed what everyone already knew: rental units (especially single-family homes) are in high demand and that demand continues to grow. 

As rents increase, so does the number of first-time landlords, as more people find rental investing an attractive way to supplement their income.  But how do new landlords determine the right rent amount? 

Pricing your rent just right is both an art and a science, requiring research, an eye for details and possibly the use of a formula long known to industry pros.  As real estate investors learn their markets better, their eye for both what to charge and what extra touches might be added to boost rents higher.

Traditional Formula – Novice landlords should start here, since they have yet to learn the local rental market inside and out, nor have an eye for what hooks tenants’ hearts and can command higher-than-average rents.  The formula is simple and is based on a percentage of the cost of the home.  The formula is based on a range of approximately .8% - 1.1%; the higher the home price, the smaller the percentage. The formula looks like this:

$65,000 condo = $65,000 x 1.1% = $715

This would be just a starting point as there are other things to consider.  In the example above, if every unit in the apartment complex is renting at $695, unless the landlord has something extraordinary to offer, $715 is too high regardless of the formula.

Know the Market Intimately – No formula can substitute for common sense and research on what the market will bear.  Veteran landlords have a sixth sense for where their rentals should be priced, based on years of experience and market acuity.  Currently, the rental market is booming and rents are on the rise because demand outweighs supply, which veteran landlords would have a good pulse on and will know how to adjust accordingly.

Start with online resources such as Rentmetrics.com and Zillow to get a rough idea of market rent, then start browsing actual rental listings on sites like Craigslist.  But knowing what other landlords in your area are charging is not enough; you need to know exactly how their rental units compare to yours.  A good exercise is walking through 4-5 similar rental properties available for rent, and really putting yourself in the shoes of a prospective tenant – what amenities are important to you?  What safety concerns do you have?  Consider parking, washer-dryers, central air conditioning, layout, bedroom size, closet size, bathroom elegance, appliance modernity and start to grasp the “glamour” factor and how much impact it has on rents in your particular neighborhood. 

What is the most desirable section of the neighborhood, and how quickly do rents drop as you get further away?  

What kind of people do you want in the property?  Without discriminating, you can add or emphasize amenities that particularly appeal to young professionals, or to families, or to empty nesters, etc.

Pricing too high will still result in your property remaining on the market for a long time.  Pricing too low will attract lower quality applicants, but pricing just right will not only guarantee you rent the home quickly, but it will also help secure a longer-term tenant which means a lower vacancy rate (and therefore higher ROI).  

Perform A Test Run – If you think your rent should be higher than market for some reason, do a test run at the price you want for about a week to ten days.  Doing so will help determine how people feel about what you’re offering – the price and the product compared to the competition.  If your phone rings off the hook, then you’ll know your price is probably on the low side.  If you receive no responses, you’ll know your price is too high.  Also, once you receive the phone calls and actually make appointments to show the property, frequent cancellations may mean your competitors are priced better than you, or that your property lacks curb appeal.  Lastly, if you do show to a number of prospects, but receive no applications, consider the interior of the property and what might be done to improve it, or lowering the rent.  

Sometimes people are willing to pay a little more than they have to for a good product, especially if the home is superior to that of the competition.  Remember the old adage that people make decisions based on emotion, then justify them with logic, so hook them with glamorous touches that just begged to be shown off to the envy of friends, and then outline for them all the logical justifications for why the property is a stellar, convenient, cost-effective place to live.

Related Reading:

Can Going Green Also Reduce Expenses & Boost Rental Properties' ROI?

Raising the Rent: The Landlord's Guide to Successfully Raise Rental Income

]]> https://www.ezlandlordforms.com/articles/educational/2/401/what-investors-and-lenders-need-to-know-about-dodd-frank-as-it-goes-into-full-effect/ https://www.ezlandlordforms.com/articles/educational/2/401/what-investors-and-lenders-need-to-know-about-dodd-frank-as-it-goes-into-full-effect/ Wed, 08 Jan 2014 16:19:01 GMT Is it time to hit the panic button?

Some real estate investors and lenders have been sounding the alarm on the upcoming Dodd-Frank changes to seller financing, but most investors will have little to worry over.

As of January 10, 2014, the Dodd-Frank Wall Street Reform and Consumer Protection Act (commonly referred to as Dodd-Frank) will go into full effect.  The bill was actually signed into law by President Obama in 2010, and since then there has been plenty of buzz around investor circles about its impact.  In anticipation of its implementation on Friday, some doomsdayers are taking precautionary measures to avoid the “impending destruction” of their seller financing practices and ultimately their assets.

The nearly nine-hundred page bill was drafted, in part, to try and address the many shortcomings of the financial industry, and relevant here is how it modifies mortgage lending practices (including seller-financiers) to try and protect borrowers in the wake of the last housing and financial collapse.  Here's what you will need to know to be in compliance, if you make any mortgage loans or do any seller-financing.

Residential and Owner Occupied Only – First and foremost, the new law only applies to homebuyers who intend to occupy the home.  If you sell strictly to other investors, the remainder of this article is purely informational and does not apply to you.  Similarly, the new law does not apply to commercial deals.

Category 1 – Dodd-Frank distinguishes between individuals, trusts or estates who sell to only one owner-occupant buyer per 1 year and those who sell to more than one buyer per year.  For purpose of this article, “Category 1” refers to circumstances where the seller (individual, trust, or estate only) finances one property per year to an owner-occupant.  Category 1 does not apply to LLC’s, partnerships, corporations or other legal entities.

Under Category 1, the following applies:

• Balloon payments are allowed
• No proof of ability to pay is required
• Note must be fixed for first (5) years, then may adjust no more than 2 points per year with a cap at no more than 6 points above the original rate (the original rate must be based on prime or an index such as T-bill or something similar).

Category 2 – This category references any individual, trust, or estate who sells to more than one owner-occupant buyer per year, but no more than three (3).  It also refers to any LLC, corporation, partnership or other legal entity that sells to 1-3 owner-occupant buyers.  To be clear, all legal entities are subject to the law in the same way as an individual seller who sells more than 1 property per year.  Sellers in this category must abide by the following:

• No balloon payments allowed
• Must determine and show proof of buyer’s ability to pay
• Allowed to do up to 3 transactions without becoming a MLO (mortgage loan originator) or hiring one (an MLO is the shiny new term for a licensed loan officer).  
• Note must be fixed for first (5) years, then may adjust no more than 2 points per year with a cap at no more than 6 points above the original rate (again, the original rate must be based on the prime rate or a an index like a T-bill or something similar).

Category 3 – For sellers who make more than three home loans (including seller-financed transactions) in one year, the new law requires MLO status or mandates that an MLO be hired to complete all transactions.  Sellers in this category, whether individual or legal entities, follow all of the same rules as Category 2 sellers otherwise.

The law does not apply to commercial, multi-family properties with 5 or more units, or vacant lots/land, even if the buyer intends to occupy it as a residence.

Investors who take the time to understand the new changes know there is no need for panic and may, for the most part, continue to operate as they have been.  The thing to keep in mind, which has always been the case for scrupulous investors, is professional and fair treatment at all times. Dodd-Frank is simply another approach to consumer protection.  Investors can protect themselves and the consumer by simply knowing and following the new rules.

Tell us what you think about the new Dodd-Frank law.  How will the new changes affect your seller financing deals?  What impact do you think it will have on future seller financing deals?

]]> https://www.ezlandlordforms.com/articles/educational/10/400/the-ultimate-landlord-s-guide-to-rental-property-deductions/ https://www.ezlandlordforms.com/articles/educational/10/400/the-ultimate-landlord-s-guide-to-rental-property-deductions/ Tue, 07 Jan 2014 12:56:52 GMT The good news is that almost every expense associated with rental properties is deductible.  The bad news is that it must be documented, and not all of the deductions are simple.

So, the first step in avoiding a tax season nightmare is to have all proverbial ducks in a row.  Every expense should be accounted for, with supporting paperwork saved and organized.

Landlords with four or fewer properties may decide to forego hiring an accountant or tax attorney; however professionals say that is an unwise decision.  Real estate tax laws have many nuances and technicalities which could make or break a landlord.  Having knowledge of the intricate details or access to them is crucial when it comes to getting the full benefit of being a landlord, and there are many benefits of which landlords will want to take advantage.

Most landlords know at least some of the basic deductions.  Here are 14 deductions which landlords can take to ensure their rental properties pay off at tax time, hopefully in addition to paying good cash flow all year long.

1. Depreciation: The IRS allows for the theoretical cost of wear and tear on your rental property(s) to be deducted for a life span of 27.5 yrs.

2. Repairs: All rental properties will require repairs on occasion.  Fortunately, repair expenses are deductible.

3. Home Office: Landlords often work from home and can deduct a portion of their mortgage or rent for the space used to conduct their business (warning: home office deductions are allegedly audit triggers, since they are so often abused).  In a new simplified rule for 2013, the home office deduction is now $5 per square foot, up to 300 square feet (maximum deduction of $1,500).

4. Travel: Whether traveling across town to make repairs or across the country to check up on your rental property(s), car mileage and some travel expenses (for out of town travel) are deductible.  Unfortunately, these expenses are also often abused, making them a likely trigger for an audit when extravagant deductions are claimed.

5. Tenant Screening: The cost of running credit reports, criminal background checks and other background/screening checks on prospective tenants are also deducible.

6. Mortgage Interest: The mortgage interest paid on your rental property(s) is also deductible (but may not be forever, if some Washington lawmakers get their way).

7. Mortgage Insurance: This one actually expired at the end of 2013, and may not be available next year.  But for tax year 2013, mortgage insurance premiums paid out each month as part of the mortgage payment are deductible.

8. Property Insurance: Annual premiums to insure rental properties against theft, fire, flood, etc can be deducted.

9. Losses Due to Theft/Casualty: Landlords who experience theft on their property or other casualty may be able to deduct a portion of any expenses not covered by insurance.

10. Professional Services: Professional services such as legal or tax advice from an attorney or accountant are tax deductible.  The professional services of real estate agents, property managers, home inspectors, appraisers and the like are deductible as well.  This also includes do-it-yourself services (such as, ahem, EZ Landlord Forms accounts).

11. Computers and Cell Phones: It’s next to impossible to manage a rental portfolio without the use of a mobile phone or computer.  These tools of the trade can also be deductible when used for business.

12. Settlement Costs: Settlement costs, such as title searches, settlement agent fees, attorney review fees and the like are deductible.

13. Real Estate Taxes: While intuitive, real estate investors should remember to deduct the cost of local real estate taxes, to avoid paying taxes twice.

14. Segmented Depreciation/Cost Segregation: Many landlords are unaware that the IRS allows non-structural assets such as carpets, appliances, etc. to be depreciated over a shorter term (5-15 years) and separately from the line item depreciation of the property itself.  This is allowed because the government recognizes that these items will not last as long as the property and therefore, will not fully benefit from the line item depreciation of 27.5 years.  Landlords are encouraged to seek the assistance of a professional to utilize segmented depreciation, given the complexities involved.  Segmented depreciation may be ill-advised for new landlords.

Careful tax planning throughout the year with the help of a wizard tax professional will bring joy to landlords this tax season… or will at least save them money, which could be used to buy more rental properties (or maybe a much-needed vacation).

]]> https://www.ezlandlordforms.com/articles/educational/4/399/what-happens-when-a-tenant-dies-in-the-rental-property/ https://www.ezlandlordforms.com/articles/educational/4/399/what-happens-when-a-tenant-dies-in-the-rental-property/ Fri, 03 Jan 2014 12:56:41 GMT Til death do you part?

Not typically words landlords include in their lease agreements, but certainly something to consider for any landlord planning on being in the residential rental business for a while.

Most landlords probably take for granted their tenants will remain in the home for as long as they both agree to do so, what happens when a tenant kicks the bucket with no other tenants on the lease?  Either by natural causes or by some act of violence, the death of a tenant is the one thing neither the tenant nor the landlord has any control over (assuming the landlord is not the cause of death, of course). 

When a tenant dies while under an active lease and leaves no surviving adult tenants, landlords’ will likely incur serious expenses; and if not done correctly, those expenses can add up quickly.

Landlords must consider expenses like cleanup, especially in cases where there was any sort of violence (either by homicide or suicide).  This is not your usual "maid brigade" cleaning job for a move-out or move-in cleaning.  This job will usually require the expertise of a professional restoration company.  Landlords should be careful not to cut corners here as doing so could result in a potential lawsuit later.  Landlords should contact their insurance companies to find out if the damage/cleanup is covered under their insurance policy.  Experts say landlords should consider hiring professionals to clean up after a tenant expires in the home, even when there has been no foul play.

The sudden unexpected death of a tenant can also leave a landlord holding the bag for the rent for months at a time while family members make funeral, probate and other related arrangements to move the tenants’ belongings from the home.  Most tenants and landlords are under the assumption that when a tenant expires, the lease automatically ends, however that is not the case in many states.  In Maryland, for example, when a tenant passes away, that tenant’s estate can be held liable for rent owed throughout the lease.  Of course, landlords can choose to not hold the estate responsible to minimize any potential harm or inconvenience to the family.



There is a good reason why rental applications include emergency contact information for the tenants.  It can also be included directly in the lease agreement, but where this information is collected matters much less than the fact that it is collected and kept in a safe place.  Experts say often a lot of time is lost attempting to contact relatives of the deceased tenant because emergency contact information was not collected at the beginning of the lease.  For liability reasons, only the person(s) named on tenant’s emergency contact information should be allowed to remove tenant’s belongings unless the tenant has an estate executor who is different from the emergency contact person.

On occasion, a tenant will have no known relatives and no executor.  When this situation occurs, landlords are charged with dealing with the courts for a determination on what to do with tenant’s possessions.  Landlords are advised never to remove tenant’s belongings on their own without a court order to do so, and should check their local and state laws on the removal of tenant’s belongings to ensure compliance.  Some states, such as Alabama, require eviction proceedings seven days after tenant’s death if no rent has been paid by an executor.

Inevitably other tenants will hear of the death of a fellow tenant in a multiple dwelling unit.  Before that happens, it would be wise for landlords to have a brief meeting or send a brief letter to tenants informing them of the death and the fact that everything has been handled properly and in accordance with state or province laws.  Landlords should also be open to further tenant questions without compromising the deceased tenants’ privacy.

Surprisingly to some, the death of a prior tenant in the property is not necessarily a “material fact” that must be disclosed to prospective tenants, unless the death was related somehow to the condition of the property.  Even then, if the situation has been remedied, there is no need to disclose unless the landlord so chooses.  Landlords are cautioned, however, that in a multi-dwelling situation, other tenants will be aware and likely to share the information with new tenants.  Having to hear about the death of a prior resident from another tenant rather than from the landlord might not sit well with a new tenant.  Landlords may want to seriously consider simply divulging this information at the onset.  Again, this is an area where landlords will want to learn what their local and state laws require.

It should go without saying that the unit should be kept locked until all of the tenant’s belongings are out and the property has been thoroughly cleaned.

Of course, while last mentioned here, the very first call should be made to the police before anything is touched in the property, removed, etc.  Even when a tenant has died of natural causes, the police should be left to search and secure the area without any potential evidence being compromised by the landlord’s involvement.

Tell us about your experiences.  Have you ever had a tenant pass while living in one of your rentals?  Can you think of some ways to handle a tenant’s death not covered in this article?

]]> https://www.ezlandlordforms.com/articles/news/398/household-energy-usage-in-2013-drops-to-lowest-level-since-2001-but-landlords-given-scant-incentives-to-upgrade/ https://www.ezlandlordforms.com/articles/news/398/household-energy-usage-in-2013-drops-to-lowest-level-since-2001-but-landlords-given-scant-incentives-to-upgrade/ Thu, 02 Jan 2014 11:31:59 GMT Continuing a (perhaps surprising) trend from the last few years, energy usage per home has dropped again in 2013, to the lowest level since 2001. 

At an annual electricity usage rate of 10,819 kilowatt-hours per household, U.S. households have used less energy for each of the last three years, according to the Energy Information Administration.  This trend has occurred despite more widespread electronics usage nationwide. 

Residential homes have grown more energy efficient, due variously to increasingly stringent building regulations, dropping prices of energy-efficient upgrades and of course ever-improving devices that need less power to run.  Where building regulations have had an impact is in areas like insulation, where new homes are simply required to meet stricter standards that allow less leakage. 

But it is not only new homes that have improved.  Cheaper materials, such as double-paned insulated windows, have also enabled more homeowners and landlords to upgrade the efficiency of their existing homes affordably.

Individual appliances and electronics in most U.S. homes have also grown less demanding.  Power-hungry appliances, such as refrigerators, use far less electricity today than they did fifteen years ago.  Window air conditioning units, perhaps the most power-slurping device in residential properties, are being used less frequently, as more efficient (and popular) central air conditioning is found in more homes every year.  Even today’s mammoth televisions use less power than the bulky old cathode ray televisions of the 20th century – most LED televisions use less power in a year than a single incandescent light bulb. 

And we all know how much less power compact fluorescent and LED light bulbs use today, compared to those old incandescent bulbs (or maybe not – it’s 70-80% less).

Gadgets, such as phones, tablets and laptops use a tiny fraction of the power that old desktop computers do.  An iPad literally requires 1/20th of the electricity, in a given year, that a desktop computer does.  Because more of our devices are mobile, they are specifically designed to require as little power as possible to run, to extend battery life as a selling point.

Gadgets don't stop helping there either; many more homes have "smart" thermostats, which are either pre-programmed to save power or are controlled remotely through mobile apps.  As the "internet of things" becomes more of a reality, more parts of our homes are becoming either programmable or remote-accessible, which will allow for greater control and less energy usage. 

So where does the news turn sour?

As expected, Americans use many more electronic devices nowadays than they did in, say, 1995.  But that is not the greatest problem; after all, a poor family in Appalachia might not have been able to afford a window air conditioner in 1995 (and almost certainly could not afford a mobile phone), but perhaps today they can.  It is hard to overstate how much an improvement these technologies can have on families' quality of life.

If Americans want to get serious about using less electricity, there need to be better incentives for landlords to upgrade their rental properties to be more energy efficient.  Why would a landlord spend $1,500 on, say, upgrading the windows, when it is the tenant who pays the electricity bill?  The landlord sees no return on that investment. 

One option is legally requiring electricity bills to be paid by the landlord; the landlord raises the rent to cover the additional cost, and now has an incentive to maximize the efficiency of the unit, but the problem is that only part of energy efficiency is structural, the rest is based on usage.  In apartment buildings where utilities are included in the rent, tenants are twice as likely to leave lights on when they leave a room, more likely to crank up the heat in the winter and blast the air conditioning in the summer, etc.  So while regulators would love to implement this politically-easy policy, it would not actually reduce power usage.

A less politically attractive (but far more effective) option would be to offer generous tax credits to landlords who make energy efficient upgrades to their rental properties.  The tenants still watch their usage, because they are still paying for it, but they end up using less due to the structural upgrades. 

Another option is the gradual implementation of smart grids, that can do fun things like buy back surplus power from homes with solar panels, charge less for power used at off-peak hours, etc.  But this costs money, and with many U.S. cities already struggling to reduce bloated budgets, this is a tough sell.

Ultimately, the combination of lower energy usage and booming U.S. energy production through solar, wind, shale oil and clean natural gas means the U.S. is inching closer to energy independence (in October, the U.S. used less oil than it produced).  And a world in which the U.S. does not rely on unstable or antagonistic nations for its energy means a much safer world for America, and less money lining the pockets of dictators in the Middle East and would-be tsars in Russia.

]]> https://www.ezlandlordforms.com/articles/news/397/multi-generational-housing-a-growing-trend-entering-2014/ https://www.ezlandlordforms.com/articles/news/397/multi-generational-housing-a-growing-trend-entering-2014/ Thu, 02 Jan 2014 09:43:31 GMT “I can’t take it anymore.” “We will not be doing this again next year.”

If you’ve uttered one of these phrases during this past holiday season while feverishly packing your belongings and plotting an early departure from the sheer madness of family gatherings, give yourself a moment before reading this article.

While you may have had your fill of extended family throughout the holidays, apparently not everyone feels the same way.  In fact, according to a 2013 NAR study, it appears the new trend may be towards purchasing larger homes or multi-family dwellings to house multiple generations under one roof. 

As unbelievable as that may seem to some, others are embracing the idea of having mom and dad or their adult children and perhaps even a grandparent or two residing either in a home together,  or in very close proximity to one another - permanently.

Higher-than-normal unemployment and skyrocketing rental prices may be contributing to this new trend.  The study showed many adults are choosing to move back home with parents, or are having older parents move in with them.

The NAR study indicates that 14% of buyers purchased homes large enough to accommodate their adult children’s return home.  Another 25% of home purchases were bought for the purpose of housing elderly parents in need of care.

Economics and necessity play an obvious role in the multi-generational housing trend, but for many U.S. and Canadian households, culture also play a large role.  Both the U.S. and Canada have large multicultural groups whose households customarily included three or four generations.  So for these cultures multi-generational living is not a new phenomenon.

In fact, many believe that North American society is simply coming full circle from the early 1900’s when the practice of several related adults living under one roof was considered the American way.

The many benefits of multi-generational living for its household members may even appeal to those who would otherwise oppose it.  Consider the perks of a built-in babysitter, slimmed cost of senior care, shared expenses enabling maximized savings for all members and the security of always having someone in the home.

Investors in the U.S. and Canada are encouraged to focus their attention in 2014 on multifamily dwellings and single-family homes large enough to accommodate additional family members with designs that accentuate privacy and flexibility (e.g. in-law suites).  Those investors who are able to take advantage of this trend may see long term maximum profits as this may be more than just a trend, but a new normal for middle class living.

Some large builders have already begun building with the multi-generational family in mind. Lennar Homes, one of the largest home builders on the east coast, has begun building homes larger than 3,000 square feet with enough “flex space” for additional family members.  Whether used as an in-law suite, guest quarters or just a bonus bedroom and kitchenette, the appeals of this flex space are easy to appreciate.  Builders are also heavily focused on more spacious kitchens to facilitate larger families. 

Lennar has dubbed its multi-generational home projects Next Gen Homes.  They currently have over 40 plans in 100 communities in 10 different states, and are anticipating building these homes in all of their existing markets in 2014.

Have you seen evidence of multi-generational living in your market?  Tell us how you plan to take advantage of this new trend?

]]> https://www.ezlandlordforms.com/articles/educational/10/396/can-real-estate-investors-use-401-k-s-to-lower-their-taxes-oh-yes/ https://www.ezlandlordforms.com/articles/educational/10/396/can-real-estate-investors-use-401-k-s-to-lower-their-taxes-oh-yes/ Thu, 26 Dec 2013 09:23:28 GMT Taxes, how do I loathe thee?  Let me count the ways.

Fortunately, real estate investors (as self-employed people) can take advantage of 401(k)s just like W-2 employees can, to invest a certain amount of money each year tax-free for retirement.  And the good news does not stop there – they can even invest in real estate as their 401(k) retirement investment!

But there are plenty of details that investors should know before they jump off the diving board.

First, individual (or solo) 401(k) accounts are for self-employed people who own sole proprietorships or partnerships (such as LLCs created for real estate ownership), but have no employees (other than spouses, who are allowed).  Real estate investors with employees can set up normal 401(k) accounts and benefit that way.

There are contribution limits, of course.  For tax year 2013, self-employed people can contribute a total of $17,500 as their “employee” limit, but can also contribute as the employer, up to 25% of their self-employment income (to a maximum total contribution of $51,000). 

Money contributed is an “above the line” tax deduction, meaning it is taken off a taxpayer’s taxable income before calculating their adjusted gross income. 

Solo 401(k)s can be created in about two minutes at most major investment institutions, making it easy for real estate professionals to start one alongside their other investment brokerage accounts.  In many cases, 401(k) accounts are free, and the investment bank simply charges a commission on trades.

For those who are less interested in stocks, bonds and other traditional retirement investment vehicles, they can actually contribute money to their solo 401(k) by investing in real estate.  A solo 401(k) account is set up through a bank, and operates much like a checking account; the investor pays all expenses out of it, and deposits all rents and other property-related income into it.  The property is titled in the name of the 401(k) plan, and the investor simply serves as a trustee (there may be some asset protection value here too, as retirement accounts often remain exempt from lawsuit collections).

Proceeds from the property are thus inherently deposited into the 401(k) account, and are not taxed until they are taken out (presumably years later, after much appreciation and rental income). 

There are also Roth versions available for 401(k) accounts, wherein the investor opts to pay taxes on contributions now, but does not have to pay taxes on any withdrawals in their golden years.  As always, this involves the guesswork of whether they will owe a higher portion of their income in taxes now, or in the future.  One nice feature of Roth retirement accounts, however, is that all returns on the money contributed are also tax-free, when it comes time to pull them out: if the $10,000 contributed today turns into $30,000, then all $30,000 is tax-free when withdrawn, rather than just the $10,000 contributed this year (as is the case with normal retirement accounts).

Investors can create an individual 401(k) any time before the end of the calendar tax year (December 31), but once it is created they can make contributions to it up until they file their taxes (April 15, or later for those who file an extension).

It is worth mentioning that tax law becomes complicated quickly, and the ideas above should simply be a starting point for a conversation with a sharp accountant (ideally one who specializes in real estate investor clients).

]]> https://www.ezlandlordforms.com/articles/educational/3/395/security-deposits-vs-surety-bonds-the-greatest-thing-you-never-heard/ https://www.ezlandlordforms.com/articles/educational/3/395/security-deposits-vs-surety-bonds-the-greatest-thing-you-never-heard/ Tue, 24 Dec 2013 10:32:29 GMT Ever considered not charging a security deposit?

Probably not.  But what if you removed security deposits, as a strategy for securing more prospects for your rental properties, while still having protection against lost rent and property damage?  Imagine how you could potentially blow away the competition by doing so.  Sound crazy?  Landlords in some regions of the U.S. and Canada are increasingly relying on surety bonds in lieu of security deposits.

A surety bond or security bond is a guarantee from a third party company that any unpaid rent and or damages to a rental property will be covered, up to a certain amount.  Some landlords mistakenly think of surety bonds as insurance, but experts explain that it is not insurance.  Surety bonds are purchased by tenants and are non-refundable alternatives to security deposits, which can often be hefty lump sums.  

At a fraction of the cost of security deposits, which can range from 1-3 times the monthly rent, a security bond provides the same protection (up to the amount of the bond).  Surety bonds can cost as little as $87.50 or up to $250 or more depending on the rental amount.  However, surety bonds do not release a tenant from responsibility if a default on rent or property damage occurs.  Representatives from the largest surety bond company in the US, SureDeposit, say if a tenant defaults on the rent or damages a rental property, the bond company pays the landlord but will then pursue the tenant for the payout amount.

Landlords can find many advantages to offering surety bonds as an option:

More Prospects – Sometimes great tenants are driven away from properties with large security deposits because they simply cannot come up with the lump sum often required to sign the lease agreement.  This is especially true of landlords requiring two months or more for security deposit.  Landlords who offer security bonds as an option have essentially eliminated the number one excuse tenants often have for not even applying in the first place.

Guaranteed Payment – The landlord is guaranteed payment for damages or unpaid rent through the company securing the bond, which may have a higher ceiling than a typical security deposit and can therefore be more likely to cover costs caused by wayward tenants.

No Liability – One of the most common reasons tenants take landlords to court is security deposit disputes.  Many states require special escrow accounts be set up to hold tenant security deposits, and that unreasonably high interest be paid to the tenant on the deposit.  Landlords who give tenants the option of having security bonds rid themselves of this liability.

No Accounting – Landlords are not only held liable for holding tenant security deposits in trust accounts, but also for keeping account of what expenses, if any, are taken out at the end of lease term.  Landlords are required to return the deposit or provide an accounting of expenses within a specified period (usually 30-45 days) or face penalties of up to three times the amount of the original deposit.  Landlords often do not want to deal with this accounting for every penny and rigid time constraints, but know they have to do so because it’s the law.  Again, allowing surety bonds is a nice way of alleviating this headache as well.



There are a number of reasons why tenants might enjoy the option of a surety bond as well.  The most obvious reason is the surety bond costs significantly less than the amount usually required for a security deposit.  But the lack of a security deposit also serves as a deterrent for moving out of the rental property: they will likely need to come up with a full security deposit to move into their next property, but will not be receiving any money back from the current landlord.  Further, tenants will be less likely to leave in default and cross a large bond company with an in-house collection agency, compared to Joe Shmoe landlord with little reach or ability to collect debts.  

While security bonds are a viable option to security deposits and can benefit landlords in many ways, it is not for everyone.  Surety bonds are not offered in all states or Canadian provinces, and as usual, smart landlords should perform due diligence by researching the companies offering alternatives to security deposits.  Some companies only service property managers with 100 units or more, while others will work with private landlords with only a few properties.

In some states and provinces, landlords can charge a full or partial security deposit along with the security bond.  There is no U.S. state or Canadian province where landlords can force tenants to purchase security bonds as a condition of the rental agreement.  Landlords are encouraged to research any local restrictions on security bonds as well.

Have you ever known anyone to accept surety bonds as alternatives to security deposits?  Would you consider it?  Share this article with a colleague or friend who may benefit from changing their security deposit policies.

Related Reading:

Security Deposits: Defining Normal Wear and Tear & How to Handle Security Deposit Disputes

A Landlord's Guide to Tenant's Rights: What You Need to Know to Protect Yourself

How to Screen Tenants & Reject Bad Applicants – Without Running Afoul of Fair Housing Laws

]]> https://www.ezlandlordforms.com/articles/educational/5/394/are-landlords-liable-when-tenants-threaten-violence-on-facebook-they-can-be/ https://www.ezlandlordforms.com/articles/educational/5/394/are-landlords-liable-when-tenants-threaten-violence-on-facebook-they-can-be/ Thu, 19 Dec 2013 12:50:32 GMT Can landlords be held liable when online harassment between two tenants escalates to physical violence?  According to a recent decision by an Ohio appellate court, the answer is may be yes.

Lindsay P., a single mother, lived in an apartment operated by Towne Properties Asset Management.  The unit was located above the apartment leased by Rhonda Schmidt, whose boyfriend, Courtney Haynes, also lived in the apartment (but who was not on the lease agreement).  On several occasions Lindsay reported loud music and yelling coming from the downstairs apartment, to both Towne Properties Asset Management and the police.  She also left post-it notes on Schmidt and Haynes’s door, respectfully asking that they quiet down.

In response, Haynes retaliated by banging on Lindsay’s door and yelling at her from outside her apartment.  Late one night, Lindsay began receiving Facebook messages from someone she suspected to be Haynes.  The messages were sexually explicit in nature and Lindsay made several unsuccessful attempts to get the sender to reveal their identity.  However, Haynes made reference to their arguments in the past as well as turned the music in his apartment up loudly and asked Lindsay if she could hear it. 

Lindsay reported the messages to management and stated that she was very fearful of Haynes.  Management printed the messages and told Lindsay to report the incident to the police.  She later asked management to be released from her lease contract because she felt unsafe in her apartment.  Management explained she would be in violation of her lease if she vacated before the end of the term, but they offered to move her to a different apartment several streets away, which was on the first floor and Lindsay expressed her concern about the location and the easy access to the apartment.  After Lindsay moved into the apartment, management told Haynes that she moved and not to have any further contact with her.

Around the same time, the property management firm realized that Haynes was not listed on the lease of Schmidt’s apartment and told Schmidt that Haynes would have to vacate the property.  After a request by Schmidt, management took steps to officially add him to the lease but due to negative credit history, decided against adding Haynes.

In a sad turn of events, shortly after Lindsay moved and while Haynes was still living with Schmidt, he broke into Lindsay’s new apartment and raped her in the apartment while her young daughter was present.  Beyond filing criminal charges against Haynes, Lindsay also filed a civil action against Towne Properties Management for negligence, negligent infliction of emotional distress and breach of contract.  The case was initially granted summary judgment in favor of the defendant Towne Properties Management but was later reversed and remanded for a trial.

So what does this mean for landlords and property managers?  And can they face implications for the online harassment of their tenants?  Attorney and author of The Legal Intelligencer article "Landlord Liability if Online Harassment of Tenant Turns Violent," Jeffrey Rosenthal, offers landlords a few tips.

First, landlords should be diligent in documenting all instances of tenant harassment, including physical and online misconduct.  Documentation is vital in all aspects of landlording and property management, but when dealing with tenant harassment it is especially crucial given the heightened risks of legal action.  Be sure to document all cases of tenant harassment, big or small, to ensure that all issues are properly addressed.

Second, if landlords or property managers have a policy to ban unwelcomed visitors from the property or has a history of doing so, be sure to apply the policy uniformly when complaints escalate or there is a possibility of physical harm.  Jeffrey Rosenthal further explains, “It certainly appears attempting to add Haynes to the lease was a misstep.  Indeed, banned individuals may be considered trespassers if found at the property, which, in turn, may limit the landlord's liability for criminal conduct.  The fact that Towne Properties issued notifications to others who caused trouble at the complex—whereas Haynes never received a similar admonition despite his known dangerous propensities, and instead, was given the opportunity to be added to Schmidt's lease—was of particular significance.”

Third, landlords should be flexible when considering letting a tenant out of their lease contract where extenuating circumstances are present.  In a situation such as the Lindsay case, it seems there was ample reason to consider releasing the tenant from the lease due to the severity and nature of the harassment.  Lastly, if relocating a harassed tenant, the relocation should always be kept confidential.

]]> https://www.ezlandlordforms.com/articles/news/393/housing-starts-leap-22-7-in-november/ https://www.ezlandlordforms.com/articles/news/393/housing-starts-leap-22-7-in-november/ Wed, 18 Dec 2013 10:42:37 GMT Housing starts, or the number of new construction projects that broke ground in November, skyrocketed upward by 22.7% in November, according to the monthly report released by the U.S. Census Bureau.  The seasonally-adjusted annual rate of housing starts was 1.09 million, well exceeding analysts’ expectations of a rate of 963,000. 

Contributing to that leap, apartment buildings with 5 or more units saw a construction spike of 26%, with an annual rate of 354,000, showcasing the strength of the rental market and developers’ anticipation that rents (and demand for rental dwellings) will continue to rise in 2014. 

Single-family homes also saw a jump in housing starts in November, of 20.8%.  The seasonally-adjusted annual rate for single-family home construction was a whopping 727,000 (a level not seen since before the Great Recession, in March 2008).

November’s construction rate represents a powerful 29.6% increase from November 2012, showcasing just how robust the housing recovery has been in the last year.

Still, amidst the buzz surrounding the high-flying housing starts data, there is some negative news and reason for caution.  New construction permits, which show a glimpse into the further future than actual starts on construction projects, were down in November.  Overall building permits dropped by 3.1% in November, fueled particularly by a steep 11.5% drop in apartment buildings with 5 or more units.  Conversely, single family home building permits lifted slightly by 2.1%, offering some insight into large developers’ forecasts of what housing markets will look like in late 2014 and in 2015.  The booming demand for rent cannot last forever, and as rents rise more tenants will look to buying their first home (and potentially saving themselves money each month). 

Given that the homeownership rate in the United States seems to have bottomed out at 65% and started to rise slightly, it only makes sense that the trend back towards homeownership among those sitting on the fence may already have begun.  Household formation rates tumbled during the Great Recession, and the subsequent “unbundling effect” as people moved back out on their own is for many a multi-step process: first rent a place for a year or two, save some money and then buy a home.

Still, cities with strong private-sector job growth (such as Austin and San Francisco) are showing no signs that demand for rentals will drop any time soon.  Most analysts agree 2014 will see continued strong rents, and the migration back to homeownership will be slowed by inevitably rising mortgage interest rates.

]]> https://www.ezlandlordforms.com/articles/news/392/foreign-money-crossing-the-border-into-u-s-real-estate-markets/ https://www.ezlandlordforms.com/articles/news/392/foreign-money-crossing-the-border-into-u-s-real-estate-markets/ Mon, 16 Dec 2013 10:49:37 GMT “No journey is too great when one finds what he seeks.”

One of the more quotable lines in the classic Eddie Murphy comedy “Coming to America” seems a fitting description for what has taken place in the U.S. real estate market over the past few years.  Foreign nationals spent approximately $68.2 billion buying homes in the US between March 2012 and March 2013, according to a recent study conducted by the National Association of Realtors (NAR).

The study showed that 51 percent of international buyers had permanent residence in a foreign country while 49 percent of foreign purchasers had migrated to the U.S. either permanently or on temporary visas for more than six months.  Although the numbers are slightly down from a year ago, experts say foreigners are still very much attracted to the U.S. real estate market.

What are they seeking?  The U.S. has a history of attracting foreigners to its soil mostly for education (especially in previous years), stability and the many civil liberties not afforded elsewhere.  In recent years, foreigners have come to see America as an even greater “land” of opportunity (pun intended).  Foreign investors have the same goal as any other investors and are primarily seeking profit and stability.  Some international investors are purchasing properties for their children to occupy while attending school in the U.S., while others have taken advantage of the recovering housing market and its recent affordability, booming rental markets in some cities, and development opportunities, particularly in the Sunbelt areas like California and Florida.  Large condo developments in major cities are especially attractive to foreign buyers as well.

Buyers from as far as China and as near as Canada have taken advantage of reasonable prices and a slow but steady recovery.  Realtors report many are cash buyers who are purchasing the upper-echelon homes and changing the game for developers eagerly awaiting their large deposits to fund new projects.

Chinese investors are further drawn to real estate in the U.S. because of concerns and excitement in their own markets.  Skyrocketing housing prices in many areas of China have sparked fears of a bubble, as cities like Beijing and Shanghai have seen prices leap 15% in the last year and some areas have seen price hikes of 18%.  Some investors have made money and want to expand outside of China, while others look to U.S. properties as an alternative to potential bubble conditions at home.

Canadians have migrated southward in fairly large numbers and are the largest group of immigrant home buyers in the U.S.  According to the NAR study, Canadians make up the highest percentage of international purchases at 23 percent.  Canadians who migrate to the U.S. may also enjoy warmer weather, lower income taxes and fewer flying bears, but experts say many Canadians leave to escape the high cost of living.  Canadian housing costs in most of its provinces is as much as 62 percent higher than housing costs in most U.S. cities.

While the majority of international home buyers flock to the U.S. from Canada (23%) and China (12%), Mexico (8%), India (5%), and the United Kingdom (5%) round out the top five international countries of origin for non-citizen homebuyers in the U.S.

It seems that even with America’s much-discussed shortcomings, it is still very much the land of opportunity.

]]> https://www.ezlandlordforms.com/articles/news/391/are-renters-or-homeowners-happier/ https://www.ezlandlordforms.com/articles/news/391/are-renters-or-homeowners-happier/ Tue, 10 Dec 2013 17:18:59 GMT Many Americans still see homeownership as a pillar of the American Dream, and buying a home is first on their list of financial priorities.  But renting has plenty of perks, from flexibility to lower risk to lower monthly payments (sometimes).  Without getting too mushy about it, who is happier at the end of the day, homeowners or tenants?  There are ways in which each are better off in the race for contentment, optimism, resilience and general health, so here are how each shake out.

 

What Makes Renters Happier

Mo’ Mortgage Mo’ Problems – Mortgages can be useful ways to leverage buying power, but they are also (rather large) debts that can wreak havoc if the borrower defaults on their loan payments.  Foreclosure is a far more damaging process to credit scores than eviction is, and mortgage lenders can go after defaulting borrowers for a deficiency judgment for all the money the bank lost because the borrower defaulted. 

Further, higher mortgages come with higher stress, according to a Canadian study from 2004.  But the same study found that the least stressed people were owners with no mortgage, so consider mortgage and rent-related stress as being on a kind of a stress spectrum.

Time Spent with Friends – A study done by University of Pennsylvania professor Grace Wong Bucchianeri found that homeowners spent 4-6% less time with friends and neighbors than their renting counterparts.  What is less clear is whether age or housing density may be seeping into the data, as tenants tend to be younger and live in more urban areas with easier access to social outlets.  But the research does challenge the conventional research that homeowners lead more “satisfying” lives.

Similarly, Bucchianeri’s research also showed renters had less “house pain”, as she puts it: less stress and negative emotions stemming from their housing. 

All You Need Is Love – Well, that and a roof overhead, food, etc, but a classic study by the University of Massachusetts found that married couples who rented their home had fewer verbal wrestling matches and more bedroom wrestling than their home-owning counterparts.  But here's a twist: tenant and homeowner husbands alike reported working the same number of hours around the house, suggesting home-owning wives may be picking up the additional work involved in homeownership – and none too pleased about it.

Mobility/Flexibility – At risk of stating the obvious, the flexibility of moving at short notice does matter.  Consider both the tangible needs, such as moving for employment (see this article on the correlation between homeownership and unemployment rates) and intangibles in life such as a feeling of freedom and the fulfillment that comes from living where desired. 

 

What Makes Homeowners Happier

Wealth! – The average homeowner is wealthier than the average tenant (surprised? No? Not at all? Us neither).  But what may stir a little more awe is the degree of difference: homeowners are 34.2 times wealthier, to be exact, having an average net worth of $174,500 compared to $5,100 according to the Federal Reserve.  Granted, there is a chicken-and-egg argument that can be made – who says homeowners are wealthier because they are homeowners, versus it simply be easier to buy a home if you already have more money?  But the fact is real estate ownership creates wealth in several ways.  The average homebuyer only puts down 4% of the purchase price in cash, but the entire value of the property appreciates (usually, at least).  Mortgaged real estate ownership also effectively forces the owner to “save” a certain amount of money each month, by paying down the mortgage balance and therefore increasing their net worth.

Health – Adjusting for age, socioeconomic status, etc, homeowners reported better health than renters did.  The objective data on health was not as clear, but self-perceived health is meaningful in and of itself.  But there is a catch – only homeowners who were current on their mortgage reported being in better health.  

Community Involvement – Long trumpeted by Realtors looking for clients, there is some evidence that homeowners are more involved in religious and non-profit organizations, vote more, and generally participate more in community activities.  This may more reflect homeowners’ tendency to remain in each home longer than renters do, and thus set down deeper roots.

 

Bottom Line: The Feeling of Financial Freedom

People who feel like they can do most of the things they want, whether these are vacations, or eating out at restaurants, or living in the neighborhood they prefer and sending their children to the schools they prefer, are simply happier people.  Whether renting affords someone this sense of financial freedom, or whether homeownership does, depends on the person and their finances.  An old rule of thumb may prove useful here however: people who plan on moving into a home and staying less than seven years should lease, while those who plan to stay seven years or longer should buy, because it takes about seven years for the average home to appreciate enough to handily reimburse the buyer for their closing costs. 

Related Reading:

Are Landlords “Normal” People? How Real Estate Investors Think Differently

Want to Join the Top 20%? Invest in Retirement Accounts & Rental Properties

Think Tinder’s Age Penalty Stings? Study Finds Virtually No Income Growth After 35

]]> https://www.ezlandlordforms.com/articles/news/390/making-sense-of-the-contradictory-recent-housing-data/ https://www.ezlandlordforms.com/articles/news/390/making-sense-of-the-contradictory-recent-housing-data/ Thu, 05 Dec 2013 11:38:12 GMT Pundits were abuzz yesterday with the sudden spike in new home sales in October, up 25.4% from September.  But how does this data reconcile with October’s drop in existing home sales?

Consider first that the October data is still preliminary, and initial reports of new home sales can have a 20% margin of error.  Some analysts believe that the data will be revised downward in the coming weeks, to fall more in line with the falling purchase rate seen in the months leading up to October.

The drop in October existing home sales may partially be due to the 16-day government shutdown, which delayed thousands of home purchases due to lenders being unable to verify borrower income through the IRS.  Low inventory, climbing prices and fewer investor purchases all contributed to the multi-month trend in lower existing home sales, according to Lawrence Yun, chief economist for the National Association of Realtors.

It is also worth considering that more homeowners are taking out home equity lines of credit (HELOCs) and upgrading their current homes, rather than buying new ones.  HELOC originations are expected to rise around 16% percent this year, and U.S. home renovation spending is estimated to reach a record $146.1 billion in 2013, up from $126 billion last year.

With home equity and employment on the rise, more people can qualify for new HELOCs, and may be obtaining new HELOCs to pull out a little more money and pay off HELOCs that are resetting with higher payments for principal.

As interest rates rise, refinances are also down, which may be driving homeowners to pull money out using a HELOC instead of refinancing their primary mortgage.  Higher interest rates are also probably contributing to the 0.6% October drop in existing home sales and 4.6% drop in September; Americans considering buying a new home may have already done so earlier in the year while interest rates were low.  “The numbers that we’re seeing for pending home sales are payback for the stronger numbers earlier this year,” explains Patrick Newport, an economist with Massachusetts-based IHS Global Insight.

Home prices are up, despite the slowing rate of sales, but the rise in prices is also slowing.  In October, U.S. home prices rose only 0.2% from September according to data firm CoreLogic, though this still represents a 12.5% increase year over year.  The easing pace of price growth reflects a more normal market, showing a typical cold-weather slowing in real estate activity.  CoreLogic expects a slower home price growth in 2014, in the 6-8% range instead of 2013’s 10-12% price appreciation.

Driving that real estate appreciation next year will theoretically be stronger employment, continued tight housing inventory and further loosening of lending standards, which have been restrictively tight since 2008.  New private sector jobs data released yesterday looked quite hopeful, at 215,000 new jobs added in November according to ADP, of which a large a gain was made in (ahem) the construction industry.

What does all this mean to the mom-and-pop real estate investor?  For those looking to invest, now may be a good time to pick up a fixer-upper, with prices flat in the winter months but projected to rise in the spring and summer of 2014.  Banks are extending HELOCs more liberally than in the last five years, so that may prove an inexpensive and flexible source of funding for both acquisition and renovation costs.  And with existing home purchases down, there may be deals to be found among anxious sellers.

]]> https://www.ezlandlordforms.com/articles/educational/1/389/the-savvy-landlord-s-guide-to-catching-application-lies-and-red-flags/ https://www.ezlandlordforms.com/articles/educational/1/389/the-savvy-landlord-s-guide-to-catching-application-lies-and-red-flags/ Wed, 04 Dec 2013 10:50:02 GMT Every landlord has experienced that uneasy feeling that something is not quite right about a rental applicant, but cannot put their finger on it.  They have some reservations about a prospect, but everything from their pay stubs to a great reference from the current landlord appears to check out.  Months later, after receiving consistently late payments, they learn why they had that uneasy feeling... too late.

Today’s rental prospects are savvy and know their new landlords will want some reassurance they will pay the rent on time and maintain the rental property in good condition.  Some tenants go to great lengths to provide this assurance, albeit mendaciously.

Landlords who are aware of some tenant tricks can safeguard against bad tenants.  Here are some common tenant application deceptions, and ways to foolproof the tenant screening process.

Human Resources vs. Direct Supervisor:  Tenants will sometimes offer direct supervisors’ contact information for verification of employment and salary.  Never allow this to be the only form of verification.  It is very easy for a co-worker to be given a heads up to answer their phones and pretend to be the supervisor.  Always insist on obtaining this information directly from HR whenever possible.

Research Local Tax Records:  When a tenant provides their current address and landlord information, be sure to check the tax records for that property to verify the landlord’s name matches the name on the property taxes.  In many cases, tenants convince friends or family to pose as their current/prior landlords when they have poor rental histories.  Always ask if they pay rent to a management company or directly to a landlord.  If they pay directly to a landlord but the name on the tax records doesn’t match the name provided as the landlord, it is an alert signal that something is wrong.   Landlords can also do reverse phone lookups which match telephone numbers to names.  If the name provided by prospective tenant does not match the name associated with the phone, this should raise a red flag.  This is more difficult to do when the landlord is a private owner; apartment complexes can be easily verified.

Beware the Spiker:  A tenant who has  previous history of paying $500 per month is suddenly able to afford a $1,500 per month single-family home may very well be forging income somewhere.  Typically, an employee’s income does not spike that much in a short period of time.  In this case, do not just rely on pay stubs, which can be fairly easily manipulated.  Ask to see last two years tax records in addition to pay stubs and check thoroughly for any inconsistencies.  And even if the new income does check out, payment shock can cause the tenant to mismanage their newly-improved income, and still default on rent.

Don’t Be Shy:  When interviewing former landlords, ask the hard questions like were there many complaints about the tenant in question?  Of course, the standard questions about whether rent was paid in full and on time should be asked, but prospective landlords should also ask about tenant’s communication patterns and how the tenant handled any adverse situations which may have come up.  Sometimes the nicest tenants during the application process can turn into nightmare tenants at the first bump in the road.

Another question for the former landlord is whether the tenant followed proper procedures, for everything from placing maintenance requests to following parking restrictions to HOA rules.

General Due Diligence:  Cutting corners during the screening process is simply asking for trouble. Follow up on every reference provided. Tenants already know their chosen references will likely give them a glowing recommendation, however with some unexpected questions, landlords may find out much more than the tenants bargained for.  Charge a rental application fee, to sort the non-serious applicants out before wasting further time on screening.  Obtain credit reports and criminal histories.  Verify the applicant’s identity, income and employment.  Check tax returns. 

Most problem tenants can be filtered out by diligent tenant screening, and when excuses start arising and it seems like a lot of work, repeat the old adage that “an ounce of prevention is worth a pound of cure.”  Landlords who follow these steps can be reasonably secure with their tenant choices and avoid countless future tenant problems.

 

Tell us how you screen your tenants?  Have you tried any of the methods in the article?  If so, what was the outcome?

]]> https://www.ezlandlordforms.com/articles/news/388/rent-control-battle-boiling-in-high-rent-san-francisco/ https://www.ezlandlordforms.com/articles/news/388/rent-control-battle-boiling-in-high-rent-san-francisco/ Tue, 03 Dec 2013 11:04:27 GMT Everyone knows San Francisco's rents and real estate prices have spiked; currently it has the nation’s highest median rents, in the wake of its tech boom and the money flooding in through Silicon Valley.  A perfect storm is created by the city’s tiny geographical area, restrictive development regulations, pleasant climate, influx of money and strong cultural history of arts, creativity and edginess.

To create affordable housing, the City of San Francisco has long implemented rent controls in certain buildings and areas, and new apartment and condominium buildings are subject to the city’s Below Market Rate (“BMR”) Inclusionary Housing Program which requires that at least 12% of units in new buildings are rented/sold at extremely low prices.  Because everyone wants to get a price/rent-controlled apartment, and so many people qualify, it effectively becomes a lottery system.  This has an obvious impact on the other 88% of units: the rents/prices spike upward, to subsidize the losses the developer or landlord incurs on the BMR units.  If the market could not support this subsidization, the developer would not construct the new building in the first place.

But the BMR program alone is not the only reason why market rents are so high in San Francisco.  Housing is expensive because there is a massive demand for a very limited supply of rental units, which is basic economics.  The logical course of action is to construct additional housing units to create more supply, meeting the high demand and driving prices down, but several political barriers stand in the way.

First, there is little “empty” space on which to build new apartment buildings, as San Francisco is a mature city at the head of a small peninsula.  But while there are plenty of landowners happy to raze their one-two story building to construct a larger apartment building, these development proposals are handily shot down by the local politics.   Whenever a tall apartment building is proposed, a height restriction battle ensues in city council meetings.  Whenever a higher-density building is proposed in the notoriously low-density Westside, local activists stall the proposed project indefinitely.  And the battle against allowing micro-unit buildings in San Francisco have been… fierce (although the first micro-unit building is scheduled to open in 2015).

It is a typical not-in-my-backyard phenomenon: San Francisco residents want cheaper housing, but they don’t want tall or dense apartment buildings built anywhere near where they live.  

Which has led to the current BMR program and other rent controls going back decades.  But even if the new corporate landlords simply charge more on the non-BMR units to subsidize the loss, what about mom-and-pop landlords stuck with decades-old rent-controlled buildings?  Are they expected to simply accept that they cannot adjust their rents, while the similar unit across the street rents for twice as much?  These imbalances never last long, and in this case, the exit strategy involves selling the property, by way of the Ellis Act.  The state law asserts that landlords may evict rent-controlled tenants if they are transitioning away from a rental building.  

Unsurprisingly, Ellis Act evictions have skyrocketed by 170% over the last three years, pushing long-time tenants out of both their buildings and, more problematically, out of San Francisco city limits entirely as they simply cannot afford to compete with Silicon Valley techies on rents.  

Working- and even middle-class people just cannot afford to live in San Francisco anymore.  "The struggle to keep people who make between $60,000 and $150,000 a year is what we're facing in San Francisco.  That's who the struggle is for today," exclaims former mayor Art Agnos.  "Frankly, it's all but over for the poor in this city."

And what of the artists, the musicians, the bohemians, the people who gave the city its creative, quirky feel in the first place?  How long do they have in a city that refuses to allow new housing construction?

The phrase “unintended consequences” comes to mind, as is so often the case with attempts to artificially warp market pricing without addressing the core problems of supply and demand.  San Francisco is (of course) petitioning the state for an exception to the Ellis Act to try and prevent landlords from being able to sell their properties and get out from under rent controls.  But if they really want to encourage lower rents, perhaps they should consider building more housing, or if they must practice interventionism to discourage high-earners from moving in, they could always impose a steeply progressive income tax. 

But that would cost the very people trying to manipulate the local economics, which cues the refrain: “Not in my backyard!”

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/387/canadian-landlords-grapple-with-how-and-whether-to-lease-to-immigrant-tenants/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/387/canadian-landlords-grapple-with-how-and-whether-to-lease-to-immigrant-tenants/ Mon, 02 Dec 2013 10:43:07 GMT Canada has a large and growing immigrant population.  In 2011, statistics revealed 1 in every 5 Canadians were foreign born – approximately 20 percent of Canada’s total population of 35,158,300. 

Fifty percent of those immigrants throughout Canada are said to be renters, most of whom do not have easily verifiable employment and credit histories.  This, of course, presents a challenge for landlords’ and property managers’ screening procedures.

Some Canadian landlords are turning this challenge into opportunities for themselves by taking advantage of the newcomers who are in search of rental homes, but unaware of Canadian landlord-tenant laws.  According to the Ontario Human Rights Commission (OHRC), some unscrupulous landlords are providing great examples of what not to do by charging a full year’s rent or more, up front.

In February 2013, prospective tenant Rafiqul Islam, a Bangladeshi immigrant, filed a complaint with the OHRC stating that his future landlord had charged him a total of $8800 in advance for a bachelor apartment.  According to Islam, the landlord told him because he was an immigrant with no credit or employment history in Canada, he would have to pay the full year’s rent up front.  He reported this was the case despite having the security deposit, first month’s rent and a ready, willing and able co-signer – his brother.

The apartment building’s owners, Helrit Investments, Inc and Trevi Construction Limited allegedly had a policy of requiring newcomers to Canada and those without employment to provide a year of rent in advance.

In his complaint, Islam asked for $10,000 in damages, and $142 in legal expenses.  He has also asked for a letter of apology from the landlord and a discontinuation of the discriminatory policies against immigrants.

The case was settled in March 2013 with the OHRC agreeing that Islam’s human rights were violated.  The owners, Helrit Investments Inc. and Trevi Construction Limited said they regretted what happened.

Apparently, Islam’s landlord was not the only one taking advantage of newcomers.  The OHRC reports this is common practice among landlords who either do not know of the law or do not mind breaking it with these practices.  But even more appalling is that this practice is not limited to potentially-ignorant private landlords and small business owners, but large corporate landlords are engaging in this illegal practice as well.

The Ontario Residential Tenancies Act states that landlords can only collect the first and last month’s rent up front upon signing a new lease agreement.  Charging more than that is a clear violation of Ontario landlord-tenant laws, and landlords who do not use the same set of rules for everyone are clearly engaging in discriminatory practices.

Landlords are understandably concerned about properly screening tenants regardless of their citizenship status.  The issue at hand is what is reasonable, legal and practiced consistently for all tenants.

Perhaps a better approach to address the issue of unverifiable income or employment would be to deny such applications outright, require strong co-signers or develop new strategies such as shorter-term leases.

Tell us your thoughts on the matter; how do you handle prospects with no employment or credit history?

]]> https://www.ezlandlordforms.com/articles/news/386/epa-tightens-regulations-on-lead-in-water-pipes-new-laws-reveal-growing-concern/ https://www.ezlandlordforms.com/articles/news/386/epa-tightens-regulations-on-lead-in-water-pipes-new-laws-reveal-growing-concern/ Tue, 26 Nov 2013 16:23:04 GMT “WARNING!  The drinking water in your home may contain dangerous levels of lead and may not be safe.”

This is the advisement many homeowners across the US would have received more than 20 years ago had government agencies and the local utility companies been more concerned about public protection than institutional reputation and financial gain.

The toxic heavy metal lead was quickly and forcibly banned from paint, gasoline and children’s toys decades ago (China’s efforts to slip batches of lead-painted toys by inspectors notwithstanding).  Yet potentially dangerous levels of lead have existed for decades in many Americans’ daily lives, in the form of drinking water.  Government agencies and utility companies chose to keep quiet about it until it became painfully obvious that too many unsuspecting people, mostly children, were being affected by the heavy metal.  Some say authorities and scientists have known since the early 1970’s about the presence of high lead levels in the drinking water, but efforts to eliminate the problem have been sporadic and mostly reactive.

The Problem

Experts say water that comes from a city’s treatment plant is free from lead, but travels through the main water lines underground (large pipes usually made of iron or concrete), then through smaller pipes (made of lead in some cases), and to the taps of individual homes and buildings.  The lead pipes are susceptible to corroding which, in turn, contaminates the drinking water which flows through residential taps.

In an effort to resolve the issue of corroding pipes, the Environmental Protection Agency (EPA) implemented the Lead and Copper Rule (also known as LCR or 1991 Rule) which regulated the amount of copper and lead found in drinking water.  The EPA rule mandated utility companies replace a percentage of all lead pipes every year until all lead piping was defunct.

In 1993, the American Water Works Association (AWWA), the member association for more than 4,000 public and private utility companies, fought back rigorously on behalf of the water utility companies, in the form of a lawsuit.  The lawsuit contended the EPA had not provided enough notice to water companies before enforcing the rule.  Further, the lawsuit charged the EPA with usurping their authority by mandating water companies to replace lead piping leading directly to privately owned property.

After several years of litigation that extended into appellate courts, the EPA lost the fight with the AWWA.  As a result, in 2000 the EPA amended the 1991 rule to allow utility companies to replace only sections of the deteriorating pipes, leaving homeowners responsible for replacing the portion leading from their property line to the tap.  That decision created even more problems as few homeowners were made aware of the new amendment to the rule; subsequently, even the homeowners who were made aware either refused or could not afford to replace the lead piping with safer alternatives.  Thus, the lead-tainted water problem remained and still exists today.

Effects of Lead-Contaminated Water

A number of illnesses, disorders and conditions have been associated with high levels of lead in the drinking water.  Too much lead in the blood system is said to cause damage to the nervous system, brain and blood cells.  The most noted damages have been observed in children and infants.  One study even connects sudden infant death syndrome (SIDS) to high levels of lead in the water used to mix with infant formula.  Adults with high lead levels are often diagnosed with high blood pressure and kidney problems.

New Laws

On January 4, 2014, the EPA (Environmental Protection Agency) will be implementing U.S. Senate Bill No. S. 3874 – The Reduction of Lead in Drinking Water Act.  This new law will require all new plumbing and renovations to wetted surfaces of pipes, pipe fittings, plumbing fittings and fixtures to maintain a lead content of .25 percent or less (the original permitted level was up to 8 percent). 

Relevance to Landlords and Property Managers

Although the new law directly affects only manufacturers and suppliers of plumbing fixtures and contractors, landlords and property managers should be aware of the new changes to (1) ensure compliance with the law in the event of renovations to existing plumbing fixtures and (2) to maintain awareness in anticipation of any future disclosure requirements.

Landlords and property managers who own property built before 1986 can also take pro-active measures to ensure lead safety in the water of their rentals by sharing EPA’s “Actions You Can Take To Reduce Lead In Drinking Water” fact sheet.  Landlords should also consider a cheap solution in their rental properties: on-faucet filters, which the tenant can be made responsible for maintaining in the lease agreement, to proactively avoid future litigation.

It is probably a safe bet to assume we have not heard the last of this lead-contaminated water issue, and this may arise in the future in the form or litigation by tenants suing landlords over older lead piping.

]]> https://www.ezlandlordforms.com/articles/news/385/wall-street-ramping-up-its-foreclosure-to-rental-investments/ https://www.ezlandlordforms.com/articles/news/385/wall-street-ramping-up-its-foreclosure-to-rental-investments/ Mon, 25 Nov 2013 11:22:52 GMT Here we go again.  Can you think of one reason why Wall Street investors would be interested in the residential rental business?  Well, if the words bundle and securities are dancing around in your head, you are certainly on the right track.

Apparently, the Wall Street big wigs did not get the memo about the last mess from bundling and selling bad mortgages several years ago sending many homeowners into a whirlwind of financial turmoil and temporary ruin.

Local landlords and property managers should brace themselves for stiff competition from well-funded private equity firms who have already begun bundling foreclosed rental investments and selling them as securities on Wall Street.

So far, real estate markets in Georgia, North Carolina, Florida and Ohio have seen publicly-traded investment funds come in and purchase millions of dollars in foreclosed and distressed homes.  The strategy is simple: convert foreclosed homes into rental properties, and collect rental income until the local homeowners’ market heats up enough to sell to homebuyers for high returns.

The three largest players in this game have billions of dollars to invest in the market, and have the potential to push "mom and pop" real estate investors out of the running for purchasing bargain investment homes in some markets.  By negotiating bundled purchases (sometimes of hundreds or even thousands) of foreclosed homes, private equity giants Colony American, Invitation Homes (a subsidiary of Blackstone - the largest landlord in the U.S.) and American Homes 4 Rent can corner the market on foreclosure bargains.  Experts say these three investment firms have spent over $12 billion on buying and renovating approximately 75,000 homes to return to the rental market.

These massive equity firms are said to be aggressively focused on foreclosures and distressed homes in areas of the U.S. which have long-term growth potential.  Cities like Las Vegas, Tampa and Atlanta are reportedly some of the prime target areas.

According to Bloomberg news, Wall Street investors purchased over 200,000 homes in the last two years and either have already, or are planning to renovate and return them to the market as quickly as possible.

As with any business plan, not everything has worked accordingly.  American Homes 4 Rent reportedly fired 15 percent of its workforce after the $811 million public offering raised less than projected.  Similarly, Colony Capital North America planned a public offering for summer 2013, but has delayed it indefinitely.

Nevertheless, domestic investors are not the only ones targeting the hot U.S. rental market.  Investors from Canada to Australia have also entered the arena.  The competition is even stiffer from these international investors who can often outspend even the large US corporate investors because of their strong currency.  Australian investors, for example, are profiting even more from the foreign exchange rate.

All of this is reminiscent of the bubble 6-9 years ago when international investors joined the bandwagon to bundle tons of U.S. mortgages and sell them for securities.  There are two things we know about this practice: (1) it was highly profitable (for a time), and (2) it left a lot of bodies in its wake.

Experts say this practice is unprecedented in the rental market and that residential home purchases are one of the hottest investments on Wall Street.

While it may prove a winning strategy for institutional investors, tenants may not be so lucky.  Former employees of some of the big three companies report having witnessed an unusually high number of complaints from tenants about poor communication from management, unanswered phone calls and ignored maintenance requests, among others.

Tenant casualties apparently are of little concern as were homeowner casualties during the first round of this bundling for securities investing.  Many believe that tenants may not be the only casualties.  There is some brewing concern over another market crash resulting from inflated home prices when these investors begin to unload in bulk in a few years from now.

Landlords and property managers may be wondering what effect this will have on their own business.  Although the corporate investors have the financial backing to buy these distressed properties to return to market, they have little chance of competing with the little guy in the existing ‘individually owned’ rental market.  It may however mean landlords and property managers have to compete with a more aesthetically appealing product, as these institutional investors polish up their purchases post-acquisition.  Landlords and property managers should be keenly aware of their own local markets, and whether large private equity firms are actively buying in bulk there.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/384/new-hawaii-law-allows-for-an-additional-pet-deposit/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/384/new-hawaii-law-allows-for-an-additional-pet-deposit/ Fri, 22 Nov 2013 12:40:09 GMT A new law in Hawaii has opened the door for landlords to better protect their properties while allowing pets, addressing the needs of both pet-owning tenants and landlords.  Section 521-44 of the Hawaii Revised Statutes now allows landlords and property managers to collect an additional security deposit to protect against pet damage.

According to U.S. Pet Statistics (a website maintained by the Humane Society), 47% of U.S. households have at least one dog.  On O’ahu, pet ownership is particularly high: the Humane Society estimates that over 60% of households include pets (there is limited data on pet ownership for the other Hawaiian Islands).

Prior to November 1, 2013, a landlord could only collect a maximum of one month’s rent to cover any damage created by a tenant, including damage inflicted by the tenant’s pets.  The only way for landlords to avoid liability for damage caused by pets was to simply ban pets altogether (a difficult proposition, in areas with 60% pet ownership).

In renters' markets, where reliable, credit-worthy tenants are hard to come by, prohibiting pets can mean vacant leasing units sitting on the market for months. 

But Hawaii landlords and pet owners both win with the signing of Senate Bill 328, which allows landlords to collect a pet deposit in addition to the one month's rent security deposit.  A pet security deposit is also capped at one month’s rent and is restricted to damages caused by a tenant’s pet.  This means many more properties available to tenants with pets, as more landlords will feel comfortable accepting them, and less liability for the landlord.  

A word to the wise for pet-friendly landlords however: make sure that the property’s insurance policy includes liability coverage for all breeds.  If there is a breed restriction, and the landlord leases to a tenant with that particular pet breed, the landlord may be liable for any injuries that animal causes.  This can cost infinitely more than a one-month security deposit; landlords who want to accept a tenant with a restricted pet should consider requiring that the tenant obtain renters insurance that includes liability coverage for the pet breed.  

For more information, Hawaiian landlords and property managers can find the full text of the new law here.

 

]]> https://www.ezlandlordforms.com/articles/news/383/new-report-from-uli-projects-real-estate-trends-for-2014/ https://www.ezlandlordforms.com/articles/news/383/new-report-from-uli-projects-real-estate-trends-for-2014/ Wed, 20 Nov 2013 11:40:55 GMT A newly-released report from the Urban Land Institute (ULI) entitled "Emerging Trends in Real Estate" provides some insight into what experts say can be expected in 2014, based on interviews and surveys of more than 1,000 industry professionals including developers, builders, and lenders.  ULI has been providing both domestic and international real estate industries with reliable market condition reports for 35 years.

The following represent the most likely scenarios for 2014:

Rental Markets Lead – The report reveals rentals continue in popularity especially among Generation Y or Millennials, who will be the driving force in the market in 2014.  Renters flooded the market in the last two years and that trend is expected to continue at a stable pace in the coming years.  These Millennials are largely seeking urban digs with high “walkability” and plenty of amenities.  Baby boomers are also expected to make a strong showing in the rental market in 2014 and beyond, and perhaps ironically are looking for many of the same amenities as their younger counterparts.

Congruent Employment and Housing Rates – Real estate demand predictably mirrors employment rates in cities and provinces across the US and Canada.  When employment rates are high, real estate investors and homebuyers appear in abundance.  As the economy continues to gradually stabilize, more municipalities will begin to see significant gains in their housing markets, creating an upward spiral of larger tax bases, more local business revenue and further employment gains.  But in those cities with continued high unemployment numbers, slow growth (or even contraction) can be expected.

Multifamily Apartment Building Development – Demand for apartment buildings surged in the past 3-4 years and developers have hurried to try and to keep pace with the demand for more apartments.  In 2014, developers expect steady growth in the multifamily rental sector, though perhaps at a slower growth rate.

Decrease in Condo Development - Given the slack in the homeownership rate, the multifamily industry has shifted away from condominium development.  Among buildings being built to sell retail to homebuyers, focus has shifted toward single family home development.

Strengthening Seller’s Market – Sellers may soon be holding the upper hand for the first time in years.  This is certainly welcome news to those reluctant landlords who entered the rental market out of necessity.  Sellers are finding that their homes are selling faster and for higher prices than in the years immediately following the Great Recession.  Of course, this is not so good news for real estate investors looking to steal their next deal.  While there are still great deals to be had, investors may have to work a little harder to find them.

Urban emphasis – Developers and investors’ focus has shifted slightly away from projects in the suburbs and towards more urban areas around the country.  Centralized locations with public transportation, attractive amenities, culture and nightlife all undoubtedly attract Millennial and Baby Boom renters, which is who developers think will drive housing demand upward in the coming years.

Secondary Cities Resurface – Cities such as Houston, San Francisco and Seattle are red-hot and attracting developers and investors who once ignored them for larger cities like Washington, DC and New York City.  In DC, the continuing uncertainty surrounding the federal budget has many developers and investors scouting elsewhere for investments, entering 2014.

Shadow Banking – Traditional banks’ stringent regulations and the relatively tight credit conditions in the aftermath of the Recession created a need for more borrowing alternatives. The recent term “shadow banking” refers to borrowing from less institutionalized (and therefore less regulated) lenders, such as private hard money lenders, family members, crowdsourced funding and foreign lending markets, and it is growing in popularity and availability.  This opens even more avenues to capital for individual investors, which makes real estate investing more accessible than ever to general public.

Another democratizing trend, not mentioned in the ULI report, is the increasing amount of real estate data and DIY transaction resources available to the public such as Zillow, Craigslist and Redfin.  Real estate agents may not be irrelevant, but the public certainly has more access than ever before to browsing available real estate without an agent, and for-sale-by-owner listings are more viable than ever before for sellers.

Do you agree with the projected trends?  Have you seen some of your own you would like to add?

]]> https://www.ezlandlordforms.com/articles/news/382/billions-in-helocs-due-to-reset-from-2014-2017-fueling-fears-of-a-coming-storm/ https://www.ezlandlordforms.com/articles/news/382/billions-in-helocs-due-to-reset-from-2014-2017-fueling-fears-of-a-coming-storm/ Wed, 13 Nov 2013 10:03:23 GMT Increasing numbers of economists and housing experts worry that home equity lines of credit (HELOCs) are poised to become the next big financial crisis to hit the housing sector, given a disturbing collision course of sudden principal due, rising interest rates and the exploding number of bubble-era HELOCs about to reset.

HELOCs typically have a ten year period when borrowers can draw on the line of credit and are not required to pay down the principal balance, they are only required to make interest payments each month.  After ten years, the credit line resets, and the borrower must then begin making principal and interest payments each month (like a normal mortgage loan).

These monthly payments that include principal are, of course, substantially higher than prior interest-only payments.

Rewinding to 2004, the real estate bubble was rocketing to new heights, and thousands of homeowners and real estate investors took advantage of these flexible loans to maximize their leverage on real estate.  The Office of the Comptroller of the Currency (OCC) released a report with some troubling forecasts: nearly $30 billion in HELOCs are due for their ten-year reset in 2014, and the outlook only grows worse from there: $53 billion in HELOCs will reset in 2015, and by 2018, a whopping $111 billion in these credit lines will reset.

In fact, the majority of HELOCs in America will reset over the next four years, according to the OCC: "Approximately 58% of all HELOC balances are due to start amortizing between 2014 and 2017."

To make matters worse, most HELOCs have adjustable interest rates, generally tied to the prime rate (which changes based on the Federal Reserve's actions).  While interest rates have been extremely low for the last five years to aid the economic recovery, they have nowhere to go but up over the coming years.  Borrowers will be hit with a one-two punch combination: higher interest rates and the sudden addition of principal payments due.

Nor are borrowers the only ones who will feel the pain.  Lenders will be faced with a difficult decision when borrowers start defaulting – foreclose on the property, make a risky refinance or modify the loan terms at a loss.  And with roughly 23% of America’s homeowners underwater on their home, refinancing will be out of the question for many of these loans.

This comes at a time when credit has finally begun to loosen up, with many first-time homebuyers just now starting to qualify for mortgage programs that have been extremely restrictive since 2008.  If banks face a new round of loan losses, credit markets will tighten up faster than a... well, insert a crass metaphor of choice.  But the result is fewer borrowers able to qualify for mortgage and home equity loans, which is hard on both housing markets and small businesses/entrepreneurs who need additional capital.

Some banks are already bracing themselves for a wave of HELOC defaults, and diverting funds to set aside more reserves to cover upcoming losses.  Citigroup holds roughly $20 billion in home equity lines of credit, and another $10 billion in home equity loans, and announced last month that they plan to increase the $5.7 billion in reserves they current keep as a buffer to protect against losses from defaults on these loans.  But diverting more money for reserves means less money available for lending to homebuyers and small businesses – a sign that credit markets may reverse and start tightening once again.

Homeowners and real estate investors with lines of credit should double check when their credit lines are due to reset, and should be prepared for the payment shock.  Those with substantial equity might consider refinancing at a fixed rate while interest rates remain low, an ideal scenario but one not available to those underwater or with little equity.

Still, many banks are open to loan modifications, and may be willing to discuss this possibility before the loan resets and the borrower collapses into financial crisis. 

]]> https://www.ezlandlordforms.com/articles/educational/1/381/common-craigslist-scams-targeting-landlords-and-how-to-avoid-them/ https://www.ezlandlordforms.com/articles/educational/1/381/common-craigslist-scams-targeting-landlords-and-how-to-avoid-them/ Mon, 11 Nov 2013 15:52:10 GMT Most warnings and media stories about scams on rental listing sites such as Craigslist focus on helping renters avoid scams, but landlords and property managers are often targed as well.  A few popular scams to which landlords and property managers fall include:

False Check Refunds: Impostors pose as renters who agree to pay a security deposit and rent without viewing the properties.  Then the impostors send fraudulent cashier’s checks in excess of the stated amounts and request that landlords to return the overages.  After sending a "partial refund", unsuspecting landlords later learn the up-front payments were counterfeit.

Lawsuit Scams: These scams involve flesh-and-blood tenants actually signing a lease agreement and moving in – only to invent an excuse for a lawsuit.  This could be failure to provide lead paint documentation, or “mold in the ductwork” or really anything that sounds scary and serious to sympathetic listeners.  Even if the tenants eventually lose the lawsuit, they can still often live for free while the landlord is entangled in the suit, as the courts may put a stay on any eviction proceedings until the lawsuit is decided (which can take a long time, with plenty of delaying tactics available to plaintiffs).  While the law technically states the landlord can pursue the tenant for lost rent, how does one collect a judgment from someone with no assets or traceable income?

Smoke-and-Mirrors Scam: Scammers steal pictures and property descriptions from authentic rental listings, and post them elsewhere online to lure unsuspecting renters.  The alternative postings include below market pricing and contain fake e-mail addresses or (800) numbers, which the scammer uses to draw renters into some nefarious scheme.  For the landlord, their legitimate listing is, at best, passed over by tenants clicking on the lower price option, and can create suspicions that the legitimate listing is a scam as well.

Landlords and property managers in larger U.S. and Canadian cities are at higher risk as fraud artists know that larger cities have a more robust pool of renters.  Internet frauds are a numbers game; if .01% of viewers fall for a scam, then larger markets mean more victims, with little additional work required per victim.

Here are some ways in which landlords and property managers can guard against these scams:

Limit Information:  Publish limited information on the internet regarding yourself and your properties.  Post the intersection instead of the full street address.  Serious prospects will call, providing you the opportunity to conduct a phone screening prior to divulging sensitive information.

Alternate Phone Number:  Never use your cell or home phone in your rental ads.  Consider free options such as Google Voice, to still receive calls on your cell phone without giving away your true phone number.  You may also opt to use only a generic email address or utilize Craigslist’s anonymized email function.

Telephone Screening:  Always conduct a preliminary background check via telephone prior to showing the property.  Scammers will be uncomfortable answering many questions, and will resist deeper inquiries.  

When doing a more complete screening after showing the property to an interested tenant, be sure to verify their employment, income, credit history, criminal background and check their civil case history.  If they have ever sued a landlord, keep searching – there are plenty of qualified tenants out there who have not sued their landlord.

Watermark Photos:  Watermarking your pictures is one way to deter, if not prevent, picture theft.  There are a number of watermark software programs and some free online versions.  Do some research to choose the appropriate one for you.

The rental business can be very lucrative and will likely continue to be a prime target of criminals.  Taking the necessary precautions can prevent you from becoming the next victim.

Have you or someone you know been involved in a rental scam?  Share your related experiences with us.

]]> https://www.ezlandlordforms.com/articles/educational/5/378/beyond-the-basics-mistakes-by-intermediate-landlords-and-property-managers/ https://www.ezlandlordforms.com/articles/educational/5/378/beyond-the-basics-mistakes-by-intermediate-landlords-and-property-managers/ Wed, 06 Nov 2013 15:30:19 GMT A trip to the local landlord-tenant court is a great way to gain the knowledge needed for landlords and property managers to stay abreast of the do's and don'ts of landlord-tenant affairs.  Short of that dreaded trip to the courthouse, landlords and property managers can take heed of this list of six things not to do to maintain their sanity and a positive relationship with their residents as well as the court.

You are no longer making newbie mistakes like being undercapitalized, failing to screen tenants properly or failing to file evictions immediately, but sophomore landlords and property managers are especially vulnerable to the mistakes outlined in this article.  The keys to not becoming a victim of these dreaded mistakes is in continual education, managing properties like a professional at all times and being fair in all dealings with residents.

Failure to Communicate Effectively – Landlords and property managers of course are busy; everyone who works full-time and wants to get ahead through investing is busy, it is no excuse for poor communication with residents.  All of your communication with tenants should be in writing, even if you also telephone, text or email.  If it is important enough to communicate, it should be in writing and kept in the resident’s file.  This is never more apparent than when standing before a judge trying to recall a conversation you had with a resident that the resident cannot recall.  When a resident says,“You never told me that,” it is very difficult to prove otherwise when relying solely on memory.

Being a Friend vs. Being Friendly – Landlords, more often than property managers, fall prey to this one and may think that being friends with their residents will ensure things will go smoothly. Not so. This is one of the biggest mistakes landlords make in building relationships with their residents. They often confuse being friendly, which is fine, with being a friend. People typically view a friend as someone who they can count on when they need a shoulder to cry one or when they need a favor. If ever a time should arise where a resident can't pay his/her rent, the tendency might be to look to their “friend” for some leniency that wouldn't be expected in a strictly business relationship.

Charging for “Normal Wear and Tear” – Landlords and property managers get themselves in all kinds of trouble by charging tenants for things considered by most courts to be normal wear and tear.  This is easily one of the most elusive rules on the books as very few jurisdictions have clearly defined “normal wear and tear”. Some jurisdictions do have written rules on this and landlords/property managers should be sure to check whether or not there are written rules in their jurisdictions on this important topic.

One golden rule for landlords/property managers to remember when it comes to what's normal or not regarding the condition of property, is the Move-in/Move-out Inspection form.  This form should always include the date it was conducted as well as the dates any improvements were made or new appliances were purchased, new carpet or paint applied, for example.  It would be very difficult for a tenant living in a home for only one year to claim “normal wear and tear” on a brand new carpet that upon move out has holes and excessive dirt and stains.  That said, that same carpet condition might easily be the result of normal wear and tear after a tenant has lived in the home for five years or more.  When documentation, including specific dates are not provided, the court is left to make a judgment call on who is being truthful and who is not.

Confusion about Tenant Notices – Landlords and property managers need to be clear on what notice to send to tenants when they are in violation of the lease or HOA rules and regulations.  More importantly, there is often confusion about eviction notices and when to send them.  Many residents have been alotted even more time after failing to pay rent for months simply because the landlord or property manager failed to serve them with property notice.  Each jurisdiction has its' own timelines regarding when eviction notices are to be served.  Landlords and property managers who are not aware of those timelines are doing a disservice to themselves and their owners when they don't educate themselves on the proper times for serving notices.  Some jurisdictions, for example, may require 10-day notice be given to a tenant before filing an eviction while another jurisdiction may require only a 3-day notice.

Photocopying Military IDs – Landlords who don't routinely rent to military personnel might not be privy to the fact that military ID cards are not allowed to be photocopied.  Most landlords and property managers require ID and want to keep copies of that ID for their records.  Beware however, of the rules regarding military personnel ID's and be careful not to photocopy them.  Asking for an alternative ID for military personnel is the best practice to keep landlords and property managers out of trouble with this group.  While not deadly, this certainly is a no-no.

Late Responses for Security Deposit Refunds – Landlords and property managers might be inclined to forgo this one especially whenever a tenant leaves a property owing money.  This is a big mistake and could end up costing the landlord three times what they are owed.  The courts take accounting for a tenant's security deposit very seriously and so should landlords/property managers.  All expenses should be accounted for, literally every penny of the security deposit and accurately included in a letter or form to be sent to resident at their last known address.  EzLandlordForms has a Security Deposit Accounting form which makes this task easier for landlords.  Landlords are advised to check with their local jurisdictions for more specific forms for their areas as some have their own designated forms. Under no circumstances should a landlord forgo this task.

Even when sending a quick text or making that phone call is the best communication method at the time, follow-up with an email or a note in the resident's file about the communication. Most importantly, be sure to include the date and time of the communication so there will be no misunderstanding about it later when neither of you can or wants to remember.

Knowing what to do and what not to do can make the difference between having a potentially nightmarish landlord/property manager experience or a relatively routine one.

Share your deadly mistakes with us.  Do you have one or more to add to this list?  How did you learn what to do and what not to do?

 

Related Reading:

Top 5 New Landlord Mistakes to Avoid

Renting to College Students 101

]]> https://www.ezlandlordforms.com/articles/news/377/rents-still-rising-expected-to-rise-another-16-over-5-years/ https://www.ezlandlordforms.com/articles/news/377/rents-still-rising-expected-to-rise-another-16-over-5-years/ Tue, 05 Nov 2013 16:17:35 GMT Five years later, the Great Recession's impact continues to restructure real estate markets and rental markets nationwide.

The homeownership rate has fallen precipitously in recent years, in the wake of the foreclosure crisis and credit crunch.  After reaching an all-time high of 69.2% in 2004, today it sits a more historically-normal 65.3%.  As painful as those crises were for many Americans, structurally the U.S. may be better off in the long-term with a more modest homeownership rate, according to recent research linking high homeownership rates with high unemployment rates. 

But that kind of drop in homeownership means millions of Americans are now renters rather than homeowners, feeding the demand for rental housing.  According to Zillow’s Rent Index, average U.S. rents have risen by 9.6% over the last three years, from $1,184 to $1,298.  Reis Inc reported that the apartment vacancy rate in the U.S. dropped to 4.2% in the third quarter, its lowest level since 2001.  Of the 79 metro areas they track, Reis reported that not one has seen rents fall in the last year, with average rents rising 3% year over year.

The foreclosure crisis of 2006-2011 is an obvious cause of the increased demand for rentals, but it is far from the only one.  Tightened credit markets have made it far harder for homebuyers to obtain a mortgage to purchase, particularly first-time homebuyers.  These have loosened slightly, but credit is not nearly as easy to obtain today as it was a decade ago.

Further, as credit has slowly and tentatively loosened, home prices have risen for the last two years.  This may have pushed homeownership out of reach for a worker who had been scraping by and paying off debts accrued in the Recession – just when she had cleaned up her finances and thought she might qualify for a mortgage, she may have found she could no longer afford to buy in her area.  According to Zillow’s Home Value Index, home prices have risen 10.1% in the last two years. 

A less publicized cause of the rental demand spike is the unbundling of households that joined during the Great Recession.  High unemployment and shrinking incomes during and following the Great Recession caused many Americans to unnaturally “bundle" and shared housing to save money.  For example, two young professionals who ordinarily would live alone may have moved into a shared apartment instead of each having their own, and young adults graduating high school and college who might otherwise move out on their own live at home longer.  Over the last three years, America has seen rents spike upward in part because this pent-up demand is now being released.  This unbundling effect will continue to unleash demand on rental markets nationwide over the next several years; consider that last year, no less than 45% of young adults 18-30 still lived with older family members.

Young adults such as these, who represent the much-discussed (and large) Millennial generation, are ripe for new household formation and feeding demand for rental housing.  Imagine a multi-step process, each causing demand for more housing: first, they move out from their parents’ house, into a three-bedroom townhouse with several friends.  Then, they each move into their own apartment – more demand.  Then they fall in love and marry, and upgrade into larger homes to make room for forthcoming children.

So what does the crystal ball say about future rent growth?

Economists with the National Association of Realtors project rents will rise by 4% in 2014, even faster than it has risen in the last year.  Reis Inc has asserted they believe rents will rise roughly 16% between 2012-2017.

On the supply side, developers had eased away from constructing multi-family rental buildlings in the early-mid 2000’s, because it was so much more lucrative to build condominiums and houses for immediate sale during the bubble, with prices inflated so high.  During the Recession and immediately after, there was a slump in building activity generally, as credit remained largely unavailable and few companies felt confident to start multi-year investment projects.  In recent years, new construction on rental properties has begun to increase, but it will be years before supply catches up with demand.

All of this is good news for landlords, many of whom are stuck with high mortgages from properties bought during the days of the bubble.  Rental properties remain a sound investing strategy, particularly in areas with greater demand for rental properties than home sales.

]]> https://www.ezlandlordforms.com/articles/educational/5/376/common-property-issues-and-repairs-landlords-should-know-infographic/ https://www.ezlandlordforms.com/articles/educational/5/376/common-property-issues-and-repairs-landlords-should-know-infographic/ Mon, 04 Nov 2013 16:23:18 GMT Selling, buying or leasing out property can be serious business.  Whether the property is an older building or new construction, getting the lowdown on your property is of upmost importance.  Code violations and maintenance problems can be quickly identified; however, many of the most common and usually minor problems go unnoticed.  There are a few common problems that landlords and property managers should look out for before the inspection of their current property.  Potential tenants should also be alert of these problems before signing an apartment rental agreement.

Missing, disabled, or improperly installed smoke detectors are the number one problem noticed on most compliance orders.  Be sure to fix smoke detectors to ensure the safety of occupants and to speed up the inspection approval process.  In addition to properly functioning smoke detectors, in case of fire or other disasters, make sure there are adequate escape routes.  This does not mean you must have an emergency staircase by every room, but you must have at least two acceptable means of escape, such as a door or large enough window.

Faulty furnaces or exhaust vents can lead to serious health issues, fires and lawsuits.  Avoid these complications by servicing your furnaces on a yearly basis.  In addition to yearly furnace checks, make sure to inspect rental units frequently to check for cleanliness.  Dirty properties can attract pests, a problem that can quickly and exponentially grow.  If you come across even indirect evidence of a pest problem, immediately call a reputable exterminator to fix the issue.

These are only a few issues that property managers and landlords face during the inspection of a property.  For more information on what to look for during an inspection process, reference our infographic below, and for problems beyond your scope use our guide on How to Screen Contractors and Handymen.



 

 

 

Click below to embed this infographic into your website
 

<img src=https://ezlf-plinersolutionsi.netdna-ssl.com/media/articles/376/CommonPropertyRepairsLandlordsShouldKnow-EZLandlordForms.jpg /> <br><a href=https://www.ezlandlordforms.com/articles/educational/5/376/common-property-issues-and-repairs-landlords-should-know-infographic/ title="Common Repairs and Issues" width="550"> Common Repairs and Issues Landlords and Property Managers Should Know</a>

 

 

 

]]> https://www.ezlandlordforms.com/articles/educational/5/375/are-tenants-and-condo-owners-entitled-to-post-signs-as-a-first-amendment-right/ https://www.ezlandlordforms.com/articles/educational/5/375/are-tenants-and-condo-owners-entitled-to-post-signs-as-a-first-amendment-right/ Mon, 04 Nov 2013 11:38:55 GMT Condominium owners feel they have a right to do whatever they like on their own property, but homeowners associations seldom agree.  Thus, the seemingly unending fights between them continue; but residents are now taking their fights all the way to the Supreme Court – and winning.

In 2005, condominium owner Wasim Khan placed political signs supporting his own candidacy for the Morris County Board of Freeholders in his window and front door.  He was asked by his association, Mazdabrook Commons HOA, to remove the signs, which he did.  Later, in an unrelated lawsuit brought against him by the HOA, Khan filed a countersuit stating the HOA had previously violated his First Amendment rights by insisting he take down the signs during his candidacy.

Initially, the trial court, in a decision based on Committee for a Better Twin Rivers v. Twin Rivers Homeowners’ Association, 192 N.J. 344 (2007) ruled the HOA’s sign prohibition was not a violation of Khan’s First Amendment rights.  After a series of appeals by both Khan and the association, the New Jersey Supreme Court upheld an Appellate Division’s decision that Khan’s First Amendment rights were violated.

The Supreme Court essentially ruled that associations cannot ban an owner’s right to post political signs on their own property even when the property is subject to HOA rules and regulations.  However, HOAs maintain the right to enforce certain restrictions on signs, such as limiting the number, size or location.  In addition, HOAs must have written criteria for sign postings included in their bylaws prior to enforcement.

The New Jersey Supreme Court’s decision did not address the issue of posting signs in common areas.

Similarly, an Orleans, Massachusetts condo owner, Steven Preu, had been fighting with his association board when he decided to place bags of dog feces on the property with the name of the association president, Gerard Ritzinger, on them.  According to Preu, Ritzinger had only allowed his dog to release himself in restricted areas.  In another dispute with the board, Preu took to expressing himself by placing handwritten signs in the trash room – a clear violation of association rules and regulations.  

The condo association sued Preu for violating the rules.  Preu fought back asserting his signs were a form of communication which was protected under the First Amendment.  Both the Massachusetts trial court and Appeals court agreed with Preu that his signs were a form of communication protected by the First Amendment.

In the case of Board of Managers of Old Colony Village Condominium v. Preu, the ruling was not so cut and dry as with the Khan vs. Mazdabrook Commons HOA case.  The Massachusetts Appellate court made it clear that the ruling was not solely based on a freedom of speech issue rather, “We do not hold condominium restrictions on speech and expressive conduct may never be enforceable, nor that expenses incurred in addressing their violation may never be shifted to the unit owner under the statute.  We hold only that when an action is brought claiming the breach of such restrictions amounting to conduct entitling a plaintiff to shift costs under … [state law] … , the restrictions are subject to scrutiny under the First Amendment.”



There is no shortage of cases involving owners battling their associations, particularly in cases claiming freedom of speech issues.  But do renters have the same rights to political free speech via property signs?

The California Association of Realtors, California Apartments Association and other local apartment associations all say no.  According to these groups, only owners and property managers should have the say over what is displayed on the property - in the interest of quiet enjoyment for all.

California lawmakers disagreed, and in 2011 passed a bill (SB 337) introduced by former California State Senator Christine Kehoe, which transferred owner’s freedom of speech rights to tenants, to post non-commercial signs in their own dwellings.

To be clear, the new law provides the same protection to tenants as currently afforded to home owners as it relates to the ability to post political and other non-commercial signs on their rented property.  Tenants are therefore subject to any homeowners- or condominium associations’ rules and regulations regarding time, size and common area placement restrictions.

Despite these high-profile cases however, most states have remained largely silent on this issue.

Tell us what you think:  Do you agree with the decisions of the Appellate and Supreme courts in these decisions about signs being protected by the First Amendment?  As landlords and property managers do you allow signs on your property(s)?

]]> https://www.ezlandlordforms.com/articles/news/374/research-reveals-surprising-link-between-homeownership-and-unemployment-rates/ https://www.ezlandlordforms.com/articles/news/374/research-reveals-surprising-link-between-homeownership-and-unemployment-rates/ Fri, 01 Nov 2013 16:41:50 GMT A look at historical data has unearthed a strong link between an area’s homeownership rate and its unemployment rate, a correlation that seems surprising on the surface and calls a variety of national policies into question.

Dartmouth economist David Blanchflower teamed with Warwick University’s Andrew Oswald to examine data going back to 1950, across the continental United States, and found that as the homeownership rate grew in an area, so did the unemployment rate (albeit with a delay of up to five years).  The data included millions of randomly sampled Americans. 

"I have become convinced that by boosting home ownership we have ruined our labor market," Oswald summarized.

The correlation flies in the face of conventional logic that homeowners make more involved citizens and more stable local economies.  But the researchers contend that it is this very stability and involvement that damages the local job market: homeowners are less mobile than renters, and cannot easily move to follow the jobs.  They may turn down a job offer if the commute is too long, rather than moving.  And when it comes to new factories or corporate buildings sprouting up nearby, homeowners are far more likely to throw a fit to their local representative in government, shouting “Not in my backyard!” 

A look around Europe reveals similar patterns: Switzerland has a homeownership rate of 30% and an unemployment rate of 3%.  Spain has a homeownership rate of 80%, and an unemployment rate of 25%.  Germany has a healthy unemployment rate of 5.3%, and a modest homeownership rate of about 54%.

All of which calls into question homeownership as a fundament of the American Dream; for years, politicians of all stripes have been pushing homeownership as a national goal, and pumping billions of dollars into programs to boost homeownership.  Consider President Carter’s 1977 Community Reinvestment Act, which effectively created subprime mortgage lending to make money available for poorer Americans with weak credit.  Consider President Clinton pushing the Department of Housing and Urban Development (HUD) to make loans even more available to poorer Americans, and the subsequent The National Homeownership Strategy.  Here is an excerpt from their published initiative, The National Homeownership Strategy: Partners in the American Dream:

"For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership."

Read: “Find creative ways to lend to first-time homebuyers with little cash and low income.”  (This strategy initiative, including a foreward by President Clinton, was available on HUD's website until 2008, when it was quietly taken down.)

It continued with even more vigor under President George W. Bush and Alan Greenspan’s too-low interest rates, and Clinton and Bush were successful (kind of): from 1994 to 2004, the homeownership rate rose from 64% to 69.2%.  It worked… until it stopped working, and these creative subprime loans caused a global financial crises and a housing bubble from which real estate markets are still recovering. 

The federal government still subsidizes these loans today; Fannie Mae and Freddie Mac are famously guaranteed by federal taxpayers, leading to occasional grumbles about the risk of massive public losses in bad years.  There are dozens of public programs designed to help subsidize mortgages for first-time homebuyers.  First-time homebuyers often do not even have to pay their share of real estate taxes, at the settlement table.  Just this past summer, President Obama declared his continued commitment to his predecessors’ push: "The most tangible cornerstone that lies at the heart of the American Dream, at the heart of middle-class life, (is) the chance to own your own home."

But the U.S. homeownership rate has dropped over the last five years, as housing markets nationwide correct themselves.  It reached an 18-year low of 65% earlier this year, although third quarter data shows a slight rise to 65.3% according to the Census Bureau. 

Homeownership is wonderful for many Americans, but should the federal government spend billions of dollars each year to push a dream that comes with the nightmare of high unemployment?

]]> https://www.ezlandlordforms.com/articles/news/373/changes-to-flood-insurance-may-leave-u-s-real-estate-owners-underwater/ https://www.ezlandlordforms.com/articles/news/373/changes-to-flood-insurance-may-leave-u-s-real-estate-owners-underwater/ Thu, 31 Oct 2013 16:47:18 GMT In July 2012, three months before calamitous Superstorm Sandy, Congress passed the Biggert-Waters Flood Insurance Reform Act, designed to fix the financial mismanagement of the National Flood Insurance Program (NFIP).  Among the proposed changes included increased rates, flood map re-zoning and mandatory changes in building requirements for high-risk areas (including new height requirements for homes built in high-risk areas).  But these new changes could make many homes in the the NFIP's flood plains unaffordable to current homeowners and renters.

Many New Jersey and New York residents are still struggling to resurrect their homes, businesses and daily lives more than a year after the devastation of Sandy.  But the cleanup is hardly coming cheaply – even those who  have rebuilt their homes and businesses now find themselves wondering how they are going to meet the new regulations mandated by the NFIP.

Homeowners like Eileen Pepel, who learned too late about the requirement to raise her home, do not know how they could possibly come up with the money needed for stilts and other mandated repairs.  To meet the NFIP’s new requirements, she will have to produce an additional $30,000, or resign herself to paying the dramatically higher premiums imposed by the NFIP.  In some cases the new insurance rates will increase more than 2,000 percent.

According to Pepel, “It’s not in the realm of reality.  Before we did any work, I would have raised my house right away, but now, it’s too late.”  Pepel is an unemployed school teacher who was a victim of downsizing after the storm.

Officials now believe the new changes to the NFIP may just have a reverse effect.  If homeowners cannot afford the new hike in premiums, many will forgo purchasing insurance altogether.  Mortgage notes require that homeowners and landlords maintain an active policy, but if the flood insurance premiums are too expensive, borrowers may still neglect to pay them, or default on their mortgage altogether if the flood insurance is escrowed.  Which is, of course, the last thing anyone wants: a "flood" of new foreclosures on the market.

And not only are some real estate owners refusing to pay the high premiums, but some have insisted they will not make the recommended changes to prevent major damage in the future.  Understandably, many affected homeowners feel like victims all over again, subject to the whims of nature and Washington lawmakers alike.

While there are clearly no winners when disasters strike, most analysts agree the solution to rebuilding after particularly devastating disasters should be a coordinated, systemic approach involving homeowners, private insurance companies and the government.  According to Representative Michael Grimm (R-NY), there may be help for homeowners to raise their homes through New York City’s Build it Back program.

Currently on Capitol Hill, Grimm and other lawmakers from both sides of the aisle are looking intently at what can be done to lessen the blow to real estate owners around the country, particularly those in high-risk areas.  A bill has been introduced to delay the inevitably high premiums to new buyers who purchase homes from owners with previously subsidized payments, or for individuals purchasing homes in the newly zoned areas.

The NFIP is managed by the Federal Emergency Management Agency, certainly no stranger to bad press, and, more importantly, bad management practices.  Much of the criticism leveled against the NFIP has been related to its perennially below-cost rates; the program reportedly collects $3.5 billion in premiums each year, leaving another $1.5 billion needed in subsidies to cover its $5 billion cost.  The NFIP is said to have accumulated approximately $25 billion in debt since its’ inception in 1968.

Which, of course, is why the 2012 law was passed in the first place: to bring the NFIP out of the red.  But that does not make the pill of suddenly-skyrocketing insurance premiums any easier to swallow for those with property in flood plains, many of whose homes would suddenly go from barely affordable to unaffordable.

Lawmakers remain hopeful, but uncertain whether the new proposed changes to the 2012 law will be passed and effective.  One selling point of the bill amendment, if passed, is the proposed affordability study on risk-based rates and other alternative solutions to the affordability dilemma.

What are your views of insurance rate increases for high risk areas?  Should everyone carry the burden or should those who bought properties in flood-prone areas carry the entire burden?  Will the new flood map changes affect your properties?

]]> https://www.ezlandlordforms.com/articles/educational/5/372/how-to-screen-contractors-from-humble-handymen-to-pricey-pros/ https://www.ezlandlordforms.com/articles/educational/5/372/how-to-screen-contractors-from-humble-handymen-to-pricey-pros/ Mon, 28 Oct 2013 16:29:13 GMT Contractors are notoriously unreliable, often arriving twenty minutes late, or failing to get over to your rental property on the day they said they would.  They are also infamous for changing the price mid-project, and failing to answer calls once they have collected payment.

So how can landlords and property managers evaluate contractors and handymen, before laying out thousands of dollars for that new roof?  Here are five questions that savvy landlords should ask themselves and contractors before giving the green light to start dismantling the plumbing system.

Question 1: Do I need a permit?

Particularly in cities, larger jobs require a permit from a government bureaucracy.  When in doubt about whether a job requires a permit, you can always call the local housing inspection office to ask.  (While there is occasionally some gray area here, be cautious when crossing government agencies on this – permit fees are a source of income for local governments, and they take their income seriously and will not hesitate to issue fines and other penalties).

Other than paying a permit fee, what does this mean?  Generally the work must be performed by a licensed contractor for the permit to be approved, which means Cousin Vito is not a viable option.  Verify that a contractor is licensed before taking the trip to the local permit office.

Question 2: If I don’t need a permit, do I still want a licensed contractor?

Make no mistake: licensed contractors charge more, because their license is on the line.  They also must meet certain minimum requirements, such as carrying insurance.  For large, complex jobs (even ones not requiring a permit), generally investors are advised to use a licensed contractor with a full team of workers, several trucks and every power tool known to modern science.

But what about leaky faucets?  Clogged drains?  Paint jobs between tenancies?  For simple, smaller jobs, a handyman can be quick, cheap and just as effective.  When you find a good one, be sure to occasionally provide him with an extra case of beer.

Question 3:  What are their recent projects?

Like everyone else, contractors specialize in certain markets and clientele (read: some work in slum neighborhoods, some service the fabulously wealthy and the others are somewhere in the middle).  Property managers and landlords should get a sense for both where the contractor typically works, and what quality of work they do.  This comes by (drum roll please)… actually driving around and looking at their projects!  If you are not handy yourself, bring a friend who is, to look at their work sites and gauge the quality.

And remember: there is a time and place for lower-end contractors, so do not simply dismiss them; when you have lower-end properties that need work, or relatively easy projects, these are often the people to call.

Question 4: How long have they been in the trade?

A shifty contractor will lie or equivocate if asked directly, so take a side angle and ask “So, how did you get into this business?”  If they are vague on dates, just find conversational ways to press them: “How’d you make it through the real estate crash?  Tough time to be a contractor…”  This matters, because someone who apprenticed under a master craftsman and whose entire life is based around their contracting business is a much different case than the guy who lost his job a couple years back and fell into it as a way to make a few quick bucks and make ends meet.

Question 5: What warranty can they provide on their work?

Skilled professionals, whether they are licensed or not, will generally stand by their work: “If for some reason it stops working over the next few days, just call me and I’ll come back over.”  Ask for their warranty in writing, and if they do not have it, ask if they can write it on their written proposal. 

A Few Last Important Points

So where do you find contractors and handymen in the first place?  Ideally, from people you know and trust – ask around among other investors and even among your friends and family.  Swing by a real estate investing club (see our directory of REI clubs for one in your area) meeting and ask the people you meet who they use. 

When a contractor claims to be licensed, get a copy of their license (or at the least their license number, which you can call the labor and licensing department in your state or province to verify).  When they provide a quote, get it in writing, including a breakdown of the work to be performed.  Contractors are far less likely to change the price later if they have given you a written, detailed proposal. 

Lastly, be careful not to pay too much in the form of a materials deposit.  Use common sense when deciding how much to pay them up front, and when in doubt, a third of the total price should be a firm ceiling.

]]> https://www.ezlandlordforms.com/articles/educational/2/371/six-benefits-and-a-few-risks-of-multi-family-investments/ https://www.ezlandlordforms.com/articles/educational/2/371/six-benefits-and-a-few-risks-of-multi-family-investments/ Fri, 25 Oct 2013 12:16:47 GMT Investors are continuously on the prowl for the next big venture, and as real estate markets across the U.S. and Canada have largely returned to pricing consistent with market fundamentals, the next winning real estate investment might just be multi-family properties.  Multi-family properties include apartment buildings, duplexes, quadruplexes and any other building containing more than one rental unit.

Here are six reasons why purchasing and flipping multi-family properties might just be the way to go for investors seeking better returns on investment in today’s real estate market.

Greater Cash Flow – Perhaps the most obvious reason multi-family properties could be more profitable than single family is greater cash flow from several units vs. a single unit.  Also, the risk of vacancies wiping out 100% of rental income is decreased with multiple units each paying rent.

Less Urgency to Sell – Experienced investors know to have an exit strategy, whether flipping or holding onto the property as a rental until the right market to sell.  When a quick turnaround sale fails to happen, holding on to a single-family home often means sacrificing profits when market rents fail to cover expenses.  But with greater cash flow there is a greater chance for profitably holding the building for a year or two as the need arises, with a multi-family unit.  Also, if times grow really tough, an investor could find herself occupying one of the units while still collecting income from the others.

Economies of scale – The owner of a quadruplex has only one roof to replace and one set of mechanical systems to maintain, rather than four... just saying.

Ease of Financing – The underwriting process and loan qualifications for buildings with 2-4 units are often the same as those for single family dwellings, so why buy a SFD when a triplex is just as attainable?  Buildings with more than four units, however, are technically considered commercial properties and are financed by commercial loans.

Increased Marketability – Selling multi-family dwellings opens up the pool of buyers to include owner-occupants as well as investors.  Even savvy homeowners who do not consider themselves investors know it makes perfect sense to have someone else pay part (or even all) of their mortgage.  Nor is it a foreign concept to homeowners; plenty of them have rented out rooms or basements ing their homes to gain extra income, particularly in the aftermath of the Great Recession.  Multi-unit homes can be a low-maintenance investment opportunity even for those who do not think of themselves as real estate investors.

Tax Advantages – Multi-family owners who also occupy the property can take advantage of tax benefits applicable to both an investor and a homeowner.  For example, homeowners have a tax exemption from capital gains taxes on the first $250,000 ($500,000 for married sellers) gained from selling a primary residence occupied for more than a year.  Meanwhile investors have a tax advantage to deduct repairs on their rental properties each year… why not buy real estate that confers both types of tax advantages?  And while earnings from flipping real estate is taxed as normal income, the greater cash flow from multi-family properties makes holding for a year more viable, to either avoid taxes altogether for those occupying the property or to pay the lower capital gains rate for non-owner-occupants.  

But with these benefits come some risks, of course.  Multi-family buildings are inherently more expensive, which means more money wagered in the investment.  And when all of the neighbors have the same landlord, they will take complaints about neighboring residents to the landlord/property manager instead of the police or other authority.  One problem resident can cause a mass exodus of other tenants in the building, leaving the landlord with an expensive mortgage to pay and no rental income.  And an infestation in one unit generally means an infestation in all units.

The number of renters has increased in the last few years, as some of the shine was rubbed off of homeownership after the collapse of real estate markets nationwide from 2007-2011.  Catering to a renter-heavy market may prove to be a winning strategy, for investors able to find affordable multi-unit properties with good cap rates.  Be prepared to make some repairs and renovations however, to buy at an affordable price and create equity faster in order to flip or secure higher rents.

Do you own any multi-family dwellings? Do you flip multi-family dwellings or hold them? In your opinion, which is better residential or commercial?  Why?

]]> https://www.ezlandlordforms.com/articles/educational/2/370/what-do-negative-birth-rates-mean-for-the-future-of-real-estate-markets/ https://www.ezlandlordforms.com/articles/educational/2/370/what-do-negative-birth-rates-mean-for-the-future-of-real-estate-markets/ Wed, 23 Oct 2013 17:30:25 GMT The United States and Canada have negative birth rates. 

Birth rates should not be confused with population growth, which depends on both birth rates and immigration.  Both countries have positive population growth (if barely) last year due to immigration: growth rates were 0.7% in the U.S. and 1.3% in Canada .

The birth rate in the U.S. in 2011 (the last year birth rate data is available from the World Bank) fell to a record low of 12.7 births per 1,000 people, down slightly from the previous record low in 2010 of 13.0.  In Canada, the birth rate was even lower: 11.0 births per 1,000 people in 2011, down from 11.1 in 2010.  Estimates for 2012 are that the birth rate dropped to another low: by one more detailed analysis of births per 1,000 women aged 15-44, this birth rate dropped from 63.2 in 2011 to 63.0 in 2012. 

A country’s total fertility rate, alternatively, measures the average number of children born to each woman over the course of her lifetime; a fertility rate of roughly 2.1 is required to maintain a stable population (2.1 instead of 2 allows for mortalities).  In the United States, the total fertility rate in 2011 was 1.89, and in Canada it was an abysmal 1.61.  Estimates are that this rate dropped to 1.88 in the U.S. in 2012, although early estimates show the Great Recession's negative pressure on birth rates will finally reverse in 2013, to an estimated 1.90.

Among whites in the United States, the birth rate has now fallen below the death rate, a condition referred to by demographers as "natural decline"; more whites are dying than are being born.  The average age of American whites is also older, at 42 compared to 34 for Asian Americans, 32 for African Americans and 28 for Hispanic Americans.

As published earlier this year, over a third of the counties in the United States are experiencing natural decline, as many rural and northern areas of the country are failing to replenish their population. 

These demographic trends do not occur in a vacuum.  Birth rates have particularly declined since 2008, a conspicuous year economically, and history has shown that birth rates suffer during recessions (for example the Great Depression caused a massive drop in birth rates).  But birth rates have been falling on average ever since the baby boom of the 1950s, and while it has particularly suffered during economic crises (such as we saw in the 1970s), the overall trend among developed nations is a downward birth rate as it grows more expensive to raise and educate each child.

Why is this a problem?  Less people means more resources to go around, right?

Wrong.  Advanced economies like the U.S. and Canada are dynamic, based on innovation and productivity, as opposed to relatively static economies based on a fixed amount of resources (such as oil in the ground) creating all the wealth.  Worker productivity is such that the average working citizen creates far more value than they cost society.  But shrinking populations mean less demand for, well, everything.  Less demand means production will slow, which means less jobs, less innovation, less economic impetus. 

But where the collapse in demand really wreaks havoc is on real estate markets and particularly neighborhoods already on the margins of society.

A smaller population has less demand for housing, leaving abandoned properties and all the problems that come with them: blight, crime, infestations and so on.  Less demand also means lower property values.  It means shrinking rents, which means less people buying and maintaining quality rental properties, so quality of rental housing declines.  It means mortgage defaults, foreclosures and evictions in the case of foreclosed rental properties.  It means drastically less new construction, a sector that is a massive source of jobs in the current U.S. and Canadian economies. 

And the jobs picture grows darker from there: young people tend to be behind most innovations and emerging industries, and tend to require younger workers who are flexible enough to learn all the associated new skills.  Working-age people are also the ones feeding tax revenue into social welfare programs like Medicare and Social Security – it does not take a PhD in demography to guess what happens when twice as many retirees are drawing benefits supported by half as many workers. 

There are multiple developed nations that are no stranger to collapsing fertility rates.  Japan has suffered shrinking fertility rates for generations; the last year Japan saw population-sustaining fertility was 1973, with a fertility rate of 2.14.  Is it surprising that their gross domestic product started declining 21 years later, in 1994, as smaller generations of young people began entering the workforce?

Japan has suffered two “lost decades” of economic floundering since then, and young adults today are disillusioned, lonely, poor and pessimistic.  By late 2013, the social science data has become plentiful that shocking numbers of young adults in Japan have quite literally lost all interest in having sex or relationships.  Survey data shows that 45% of young women aged 16-24 "were not interested in or despised sexual contact", and a full 25% of young men felt likewise.  A third of Japanese men under 30 have never dated a woman.  Ever.

A cyclical pattern begins to emerge: as it grows too expensive to raise multiple children in developed countries, young people choose to have fewer offspring.  The economy contracts as smaller generations of young people emerge into adulthood while larger, older generations live longer and disproportionately consume resources in the form of social welfare programs and health care costs subsidized by the healthy.  Fertility rates continue to falter alongside the stagnating economy, as young people struggle economically.

What can be done to combat shrinking birth rates and population growth? 

One option is to do nothing.  There are some advocates who do not object to a world with zero population growth, and would happily trade the economic concerns for the environmental benefits of zero population growth. 

Another possibility is to encourage population growth through immigration.  Canada has seen some success in courting immigrants, with its more open immigration policies than the United States (remember, the fertility rate in Canada is lower than the U.S., but their population growth last year was higher).

Other options include promoting higher birth rates through legislation, regulation and tax benefits.  China, for example, could further peel back its infamous one-child policies, to attack its falling fertility rates.  France has created an extensive (and expensive) system of benefits for families with more than two children.  The United States could consider greater tax benefits for families with more children (such as a sliding scale of dependent deductions – the deduction for each child growing higher the more children in the household).   Regulatory changes might include mandatory minimums for maternity/paternity leave (which, if equal, may also boost workplace equality), and caps on state university tuition increases.

But if shrinking fertility rates in the U.S. and Canada do one day lead to negative population growth, the inevitable results are a pinched workforce as larger generations retire, and the contraction of demand leading to crashes in real estate markets and the economy generally.



]]> https://www.ezlandlordforms.com/articles/news/369/why-is-it-so-hard-to-buy-flood-insurance-in-canada/ https://www.ezlandlordforms.com/articles/news/369/why-is-it-so-hard-to-buy-flood-insurance-in-canada/ Tue, 22 Oct 2013 12:36:40 GMT Flooding is the most frequent natural disaster in Canada, yet millions of Canadian homeowners find themselves unprotected from flood damage.

Incredibly, most Canadian homeowners are not even aware they are not covered in the event of such a deluge.  Homeowner policies in Canada cover only flood waters from sewage backups, broken pipes, or other minor flood damage, in most cases.  “Overland flooding”, defined as water flowing over land and seeping in through windows, doors and cracks, is not included.

As the population and development in Canada increases, more areas become susceptible to massive storms and other natural disasters causing flood waters.  Concrete banks along waterways cannot absorb water, leaving less tolerance for overflow during heavy rains.  After disastrous flooding in the last twenty years have resulted in massive evacuations and substantial home and property damage, Canadians have good reason to be concerned.  Floods are an especially common occurrence during springtime in Canada.

In a recent Calgary storm, thousands of families were evacuated, resulting in $1 billion recovery efforts from the Alberta government. 

The Canadian government has long contemplated what to do to better protect homeowners in these cases.  Officials have spent the last several years researching other countries’ solutions, including the U.S. and Europe, to determine what existing approaches could benefit Canadians.  According to some, it is not the government’s responsibility, and should be provided by private insurers competing for customers' business.  Still others believe there should be a joint solution to the increasing problem, whether through government insurance options or through regulation.

Why not include it in homeowners' and landlords' rental dwelling insurance policies, that every real estate owner with a mortgage must purchase anyway?  Insurance companies could simply price the risk into premiums in high-risk areas, right?

The Insurance Bureau of Canada (IBC) maintains the reason overland flood insurance is not included in Canadian homeowners insurance and landlords insurance policies is because the high risk of a few would be so heavily subsidized by everyone else.  The following statement was issued by the IBC on their website: “Since most homeowners are not exposed to the risk, and should not share in the cost, providing flood insurance would be unaffordable for the homeowners who might need it.” 

In other words, pricing the insurance properly for the few in high-risk areas would be so expensive that it would be crippling to the owners, so companies would respond by spreading the expense around to low-risk policyholders.  But Canadians with low-risk homes have already been subsidizing those with high-risk homes, as the Canadian government has provided financial relief in nearly every flooding disaster in recent decades. 

And even with today's minimal coverage of flood damage, insurance companies are still losing money.  Professors Blair Feltmate and Jason Thistlethwaite at the University of Waterloo, Ontario have demonstrated that from 2003 to 2012, insurance company losses due to flooded basements exceeded premiums for seven of the nine years, costing the industry $11 billion.  Insurance companies cannot possibly continue these losses, and will inevitably raise premiums which will eventually "become cost prohibitive for homeowners, which in turn will impact home sales and the mortgage market."  Read: high-risk homes will drop in value if owners have to pay $10,000/year for insurance.

Something will have to give, because right now no one is winning.  Property owners in high-risk areas cannot obtain proper insurance coverage for floods, insurance companies have been losing too much money in recent years on what little flood coverage they do offer, and low-risk Canadian taxpayers have been subsidizing flooding losses in the form of disaster relief.

Feltmate and Thistlethwaite recommend Canadian provinces and municipalities consider the following:

• Towns and cities should produce up-to-date maps of floodplains, which should be used "to provide guidance" on where developers should avoid building new homes
• Infrastructure should be made more permeable, cutting down on concrete surfaces
• Building codes should be modified to require flood failsafes in flood-prone areas (for example, new homes could include backwater valves installed in basement drains to prevent sewer back-up)
• Homeowners must do a better job preparing their homes for extreme weather, by making sure water is directed away from foundations and keeping eavestroughs and downspouts clear.

Canadian landlords and property managers interested in protecting real estate assets should also consider proactive measures against destructive flood waters, such as installing flood failsafes as described above.

]]> https://www.ezlandlordforms.com/articles/news/364/the-growing-problem-of-canadian-grow-ops-and-why-they-are-a-problem/ https://www.ezlandlordforms.com/articles/news/364/the-growing-problem-of-canadian-grow-ops-and-why-they-are-a-problem/ Fri, 18 Oct 2013 10:55:24 GMT The illicit marijuana industry has a long history in Canada, but in the last decade the number of houses, farms and makeshift laboratories where marijuana is grown (known as grow-ops) has doubled.  There are now believed to be more than 50,000 grow-ops throughout Canada.  In British Columbia alone, marijuana growth generates an estimated $7 billion annually.

Often thought to be a trivial (or at least low-priority) and isolated problem in dilapidated sections of town, grow-ops are just as often found in suburbia, often causing a host of property damage to rented properties owned by unsuspecting landlords, and to neighboring homes.  Law enforcement agents say $500,000 homes are as likely to be targeted as inner-city tear-downs.

The problem is a rural one as well affecting farms and unattended acreage.  Farmers have found large sections of their crops cleared, marijuana plants growing there instead.  People unwittingly stumbling onto these marijuana crops are at risk of being injured by booby traps set up by the growers to protect their crops. 

Canadian homeowners have a number of reasons to be concerned about the increased development of these grow-ops.  First, because grow-ops are often large operations, they are commonly backed by organized crime as a source of high profits at relatively low risks.  Generally speaking, where organized crime is found, so is systemic corruption and crimes symptomatic of these organizations: theft, violence and sometimes homicide.

Secondly, grow-ops require an excessive amount of electrical power (up to 10 times normal household usage) for special lighting and ventilation to cultivate the plants.  To avoid detection, growers drill holes in the foundation of these homes to illegally tap into the main power source.  Of course, this causes a major fire hazard and puts unsuspecting neighbors in jeopardy.

A third reason for concern is the inherent health risk and extensive damage caused by mold which tends to grow during the process. The temperature and humidity in grow-ops often cause toxic mold and moisture damage to walls, flooring and framing.  Repairing damage caused by grow-op practices can be extremely expensive.

A related problem is the failure to disclose information to new buyers that the home was previously a grow-op. Buyers who think they are getting a perfectly sound home may, in fact, be purchasing a house of hidden horrors from undetected toxic mold to damaged sub-flooring to high neighborhood crime.  According to law enforcement officers, sometimes criminals, unaware of the new buyers, return to the home to steal the plants or commit other, often retaliatory, crimes.

Finally, growers will go to dangerous lengths to guard plants said to net $1,000 each.  Police officers have reportedly seen everything from elaborate booby traps to "guard bears" (no, really – bears serving as guards to the grow-op).

Canadian landlords can protect their properties from the devastation of grow-ops by being vigilant and knowing the signs that a grow-up might be in operation.  If a grow-op is suspected, neighbors are warned to call police immediately.  Here are common signs to look for:

•     All windows are covered, often with dark plastic or newspaper

•     Condensation forms on windows due to high humidity levels inside

•     Residents may only be in the home occasionally and for short periods of time

•     Unusual visitor behavior – no visitors or frequent visitors for short periods

•     Bright interior lights left on all day and night

•     People access the home only through the garage

•     Strange skunk-like odors

•     Unusual garbage – little or no garbage or unusual items such as pots, soil and wiring

•     Sounds of electrical humming or fans

•     Unusual wiring on the outside or signs the hydro meter has been tampered with

•     Little snow (or steam) on the roof in winter

•     Many "Beware of dog" or "Guard dog on duty" signs and excessive security

•     Localized power surges or brown-outs

•     Guard bears (apparently).

Canadian landlords and property managers should be aware of the signs and be prepared for swift action to avoid any potential damage to their properties.

]]> https://www.ezlandlordforms.com/articles/educational/2/363/should-you-refinance-your-rental-property-if-it-would-lower-payments/ https://www.ezlandlordforms.com/articles/educational/2/363/should-you-refinance-your-rental-property-if-it-would-lower-payments/ Thu, 17 Oct 2013 09:45:34 GMT Mortgage loan officers would lead you to believe the answer is an unambiguous “YES!”, but the answer is, as usual, more complicated than the slick bank salesmen will tell you.

There are sometimes good reasons to refinance, of course.  If rates drop far and fast, then in the early years of a mortgage it may make sense to refinance.  For example, if in the second year of a 30-year loan, you can refinance to drop an 8% interest rate to 4%, it probably makes sense to do so, assuming the closing costs are low and you intend to hold the mortgage for many years to come.  But the longer a mortgage a held, the lower the effective interest rate, as more of the monthly payment goes to pay down the principal balance – this is called simple interest amortization, and is something of a misnomer that requires explanation.

Simple Interest Amortization

Far from simple, this mathematical equation determines the monthly payment and the percentage of it that pays interest versus principal each month.  At the beginning of the loan, nearly all of the monthly payment is interest, and almost none of it pays down your actual loan balance (your “principal” balance).  But as time goes by, more and more of the monthly payment goes towards principal – paying off the loan balance – and less goes to the bank in the form of interest payments. 

See on the graph how the percentage of the monthly payment that pays down the principal balance changes over time?  In the first year, it’s a small fraction; by 20 years in, about half your payment is going towards paying down the principal balance, and by the last year almost all of the payment is going towards paying off the loan balance.

Thus, the longer you have been paying the same mortgage, the lower the effective interest rate on that mortgage.

Resetting the Beginning & End of the Loan

Lower payments are attractive to consumers of course, especially when the payoff date seems so far away (to most of us 2038 versus 2043 are both just "far away").  But refinancing pushes the entire payoff process back; in four years from now when you go to sell the property, the balance of the loan will be that much higher, because you both borrowed more money to pay for closing costs, and because more of your monthly payments are going towards interest rather than principal. 

But What About the Money I Save Each Month from Lower Payments?

How long do you intend to keep the property?  If you want to sell the property within the next few years, refinancing for lower payments almost never makes sense.  If you want to hold it for 10-20 years, refinancing may make sense, depending on how much lower the payments are each month, how far along you were in the original loan and how much closing costs would be on the new loan. 

If there is any doubt whatsoever, don’t refinance.  Lenders will always try to convince you to refinance, because they make all of their money in closing costs and in all the interest paid in the first half of the loan term.  They will offer all kinds of incentives, from lower interest rates to folding closing costs into the loan to tempting you with cash for remodeling the kitchen, but understanding how their business model works by front-loading all of their profits will help you make a more educated decision about whether to refinance.

]]> https://www.ezlandlordforms.com/articles/educational/3/362/should-landlords-impose-gun-restrictions-on-their-tenants-can-they/ https://www.ezlandlordforms.com/articles/educational/3/362/should-landlords-impose-gun-restrictions-on-their-tenants-can-they/ Tue, 15 Oct 2013 09:02:54 GMT No one can agree where the government should draw the line on gun control while still observing Second Amendment rights.  But can landlords draw their own line, banning guns in their rental properties and apartment communities?

On the surface it would appear obvious that tenants do have the right to firearms, as afforded to them and every other citizen by the Second Amendment to the Constitution.  Advocates argue that all citizens, whether tenants or homeowners, have a right to possess firearms and keep them in their home. 

But opponents contend that the Second Amendment does no such thing; instead, it speaks only to what the government can and cannot restrict regarding private citizen’s rights to bear arms.  Landlords, as owners of private property, would therefore be entitled to decide what types of hazardous items they allow into their properties (after all, 150-lb. bombs are "arms", but no landlord would knowingly allow one into their properties).

This is one area seldom addressed in lease agreements, and doing so does require an understanding of state laws.   For landlords who dare address gun restrictions at all, doing so could violate state laws - currently Virginia, California and Minnesota prohibit "NO GUNS" clauses in lease agreements.  Some other states have limited restrictions on landlords, and other states do not address it at all.

Consider the case of tenant Aaron Alexis, who “accidentally” shot through the ceiling of the apartment below him.  Fortunately, no one was injured, but the story could have been a very different one.  Aaron Alexis was later identified as the perpetrator of the recent Navy Yard shooting where 13 people were murdered.

As a hypothetical example, who would be liable had Mr. Alexis gone on a shooting spree at his apartment building rather than the Navy Yard?  Clearly, Mr. Alexis would have been incarcerated if captured alive, but could the landlord or property manager have had any liability (particularly if the shooter had not been captured alive, and the public still thirsted for vengeance)?  

Personal gun control views aside, landlords and property managers do have a certain amount of responsibility to ensure the safety of their tenants and neighbors.  Fortunately, they have options, beyond simply banning firearms on-premises.  Landlords might consider the option of requiring tenants with firearms to obtain gun liability insurance, to protect themselves against lawsuits and legal liability in the event an accident or other tragedy takes place.

But every landlord or property manager, regardless of their opinion of guns, should run criminal background checks on all rental applicants.  From gun charges to sex offenses to violent behavior such aggravated assaults, a comprehensive criminal history report will help prevent dangerous tenants from moving into the community.  

Landlords should also ask rental applicants whether they own a gun, and if so, what model(s).  They can then require insurance, or look even more closely into past transgressions appearing on the applicant’s criminal record.

What are your views on whether firearms should be allowed in rentals?  Are guns/firearms addressed in your lease agreements at all?  What do you think of requiring gun owners to obtain insurance?

]]> https://www.ezlandlordforms.com/articles/educational/5/361/landlords-privacy-guide-for-safety-lawsuit-avoidance-and-anonymity/ https://www.ezlandlordforms.com/articles/educational/5/361/landlords-privacy-guide-for-safety-lawsuit-avoidance-and-anonymity/ Thu, 10 Oct 2013 10:44:47 GMT In today’s highly-connected (and litigious) society, landlords need anonymity more than ever, to avoid both lawsuits and personal attacks by bitter tenants.  When you evict a tenant for committing a crime on the leased premises, or even for failing to pay the rent, do you really want them to know where you live or work? 

Here are six tips to remain relatively anonymous, so it won’t be obvious to vindictive tenants and greedy attorneys where they can track you down to sue you or throw a brick through your family’s living room window.

1. Own All Rental Properties Through an LLC (or Other Legal Entity)

Limited liability companies or LLCs are inexpensive ways of separating your business from your personal finances, the original concept being that when someone sues the business, they can’t also seize your personal assets like your home, car, baby’s crib, etc.  There is some minor setup work involved, which can be done without an attorney by simply looking up an Articles of Organization form for your state (most states provide them for free), filling it out and filing it with your state’s department of assessments and taxation (which may have variations on that name).  There is usually a small fee from the state (usually $100-200), and most states require annual fees to keep the LLC active.

You will have to name a managing member; ideally you don’t want to list your own name as the managing member, as this name can be easily found by attorneys looking into the LLC.  A spouse (perhaps under their maiden name) is one option, or better yet someone else entirely, using an address other than your home.

2. Receive All Rents & Correspondence at a PO Box

Post office boxes are quite cheap, usually in the $75/year range, and the USPS now allows you to list the physical address instead of listing the address as a post office box (e.g. “101 S. Main St, #493” instead of “PO Box 493”).  For a small extra fee, they can even forward your mail from your PO box to your home or office.  This prevents tenants from knowing your home or work address, so they can’t simply show up with a service of lawsuit notice (or a chainsaw).  For even more privacy, there are private mailing boxes as well, which generally cost more but often offer additional services.  (For more information, read our article on Why PO Boxes Are a Landlord's Best Friend.)

3. Use an Anonymous Phone Number that Reroutes Calls to Your Cell

There are free services out there like Google Voice that let you create a free local number that simply reroutes calls to your cell phone.  Many services also allow you to use this number for outgoing calls, or you can always use *67 to block your number from appearing on caller ID.

4. Always Refer to Yourself as the Manager, Not the Owner/Landlord

After going through all this work to hide the identity of the owner/landlord, it would be pretty bone-headed to tell the tenant that you’re the owner, wouldn’t it? 

5. Never Connect with Tenants on Social Media

While property managers of large apartment complexes should be doing everything they can to connect with tenants, owners need to be careful to keep barriers in place between themselves and their tenants (those very property managers are, themselves, a buffer).  After all, your social media has a lot of information about you, your work, your family, your home and perhaps even a few ill-conceived complaints about how your tenants are driving you crazy. 

6. Never Let Tenants Visit You at Home or Work

First, you should be visiting your tenants at the property, to check up on its condition, instead of lazily letting the tenants come to you.  But if a time comes when it is impossible for you to go to the property and the tenant must come to you, always meet in a public place, like a coffee shop or café.

While a dogged attorney will be able to “pierce the corporate veil” and figure out who actually owns the property eventually, the idea is to make it hard enough that tenants and lawyers either don’t bother pursuing you or give up relatively quickly.  Make it more trouble than it is worth to come after you, and suddenly a lot less trouble will come a-knocking. 

Related Reading:

Asset Protection for Rental Investing: Legal Entities, Lawsuit Protection, & Taxation

How Solo Landlords & Managers Can Automate Like Larger Management Firms

]]> https://www.ezlandlordforms.com/articles/news/360/the-growing-specter-of-state-exit-taxes-as-residents-abandon-high-tax-states/ https://www.ezlandlordforms.com/articles/news/360/the-growing-specter-of-state-exit-taxes-as-residents-abandon-high-tax-states/ Tue, 08 Oct 2013 12:06:10 GMT To be clear, it is not legal for states to charge a true exit tax on citizens changing their residency from one state to another (this is not the case for the federal government, which does charge a large exit tax to some people abandoning their U.S. citizenship for a tax-friendlier one). 

So what do high-tax states do, to try and prevent their residents from moving their legal residence to low- or no-tax states?  In a word, they audit them.

Every year, some state or another raises taxes (last year it was California and Maryland), and these taxes are not just on the wealthy.  A barista and aspiring real estate investor in San Francisco earning $47,500/year (a well-below average income in Frisco) is in California's 9.3% income tax bracket (which does not include the 1.5% payroll tax collected by the City of San Francisco), on top of federal income taxes, FICA taxes, capital gains, etc.  Compare that to equally-hip Austin's 0% income tax, and that means thousands of dollars relinquished each year even for modest earners like our nascent real estate investor. 

As this tax differential rises, more people consider changing their legal residence elsewhere, whether by moving, having a second residence or simply changing their mailing address to their parents' house in Florida.  (In some cases, expats andnomadic RVers and boarters can even use private mailbox services to establish residency in the state of their choice, such as income tax-free Florida or Nevada.)  But high-tax states won’t let you go quietly, especially if you earn more than average.

Minnesota raised income taxes in 2013, but what was especially telling was Governor Mark Dayton’s push for a “snowbird tax” on anyone spending at least 60 days each year in Minnesota (rather than simply spending more than half the year there).  The idea was that anyone visiting Minnesota for more than two months in the year would have to file and pay income taxes as if they were a resident, on top of their home state's income taxes.  Governor Scott Walker of neighboring Wisconsin offered a friendly wink to Minnesotans, tweeting “Come to Wisconsin (it’s beautiful and less taxing than Minnesota).” 

David Scott Sloan, a partner at Boston law firm Holland & Knight LLP who advises clients on tax strategies, says that families filing a change in residency or a partial-year return often trigger the state initiating one of these exit tax audits: “That typically puts the first red flag up.”  The audit and appeal process often take years of battling with state tax collectors.

States have discovered that they can use automated programs to track citizens’ locations and spot people who spend long periods in their borders, utilizing data from credit card transactions, E-ZPass (electronic toll collection) records and IRS records.  If that sounds like George Orwell's Big Brother, watching citizens' comings and goings, well… the privacy nerds may be onto something when they say “Just because you’re paranoid doesn’t mean they’re not out to get you.”

Massachusetts has used these automated tracking programs to more than double its audits last year, to 45,887 total audits. 

Nor are audits the only weapon available to these higher-tax states.  States such as Maryland are withholding a portion of real estate proceeds from out-of-state residents, to ensure sellers pay capital gains tax to Maryland on top of the seller's home state and the federal government.  If the non-resident seller files a Maryland tax return, and if they owe less than the 7-8.25% collected (in Maryland's case), and if they file a specific form with the Maryland Department of Assessments and Taxation, then the seller may receive some of the money back.  Aside from deterring out-of-state real estate investors, Maryland perhaps hopes this hard-line stance will deter residents from leaving, as any unsold real estate will suddenly create a higher tax burden.

So are taxpayers actually migrating from high-tax states to low- or no-tax states?  A recent study published by a non-partisan research organization, the Tax Foundation, shows a map of state income changes between 2000-2010.  In stark relief it demonstrates taxpayers fleeing high-tax states for lower tax states, with states like California and New York dramatically losing taxpayers to states like Florida and Texas.

So what does this mean for high-tax states?  In short, it leaves them two options: they can either lower tax rates to stop the bleeding and more competitively court migrating workers and entrepreneurs, or they can scare up more revenue, through higher tax rates and more aggressive exit tax audits, fees and fines.

Thus far, it seems these states are opting for more aggressive tax collection, which means real estate investors considering a strategic move may want to act sooner rather than later.  The more desperate states grow for revenue, and the more an individual earns, the greater the chances of an audit become.  (See a checklist for minimizing audit probability when changing state residence here).

Related Reading:

Should Real Estate Investors Avoid "Death Spiral" States?

New Gallup Poll Reveals Which States Residents Want to Leave

Where Young Adults Are Migrating... and Why It Matters to Real Estate Investors

]]> https://www.ezlandlordforms.com/articles/news/356/do-looks-matter-in-real-estate-transactions-apparently-yes-by-a-lot/ https://www.ezlandlordforms.com/articles/news/356/do-looks-matter-in-real-estate-transactions-apparently-yes-by-a-lot/ Thu, 03 Oct 2013 11:57:21 GMT Everyone knows good looks offer a leg up in life, but in real estate that advantage can be quantified with a dollar amount. 

A recent study co-authored by researchers from three American universities found that physically-attractive real estate agents listed homes that were on average $20,275 more expensive than listings secured by their average-looking counterparts, all else being equal.  And not only did they list for higher prices, they also sold homes for an average of $15,622 more than average-looking listing agents could. 

In an interesting twist, these “beautiful” Realtors actually made less money, because they worked fewer listings.  Researchers theorized that some of these good-looking real estate agents relied too heavily on their looks and charisma, and failed to back them up with hard work and intelligence.

According to Dr. Gordon Patzer, author of Looks: Why They Matter More than You Think, “human beings are hard-wired to respond more favorably to attractive people.  Good-looking men and women are generally regarded to be more talented, kind, honest and intelligent than their less attractive counterparts.”  He further asserts, “Controlled studies show people go out of their way to help attractive people—of the same sex and opposite sex—because they want to be liked and accepted by good-looking people.  Even studies of babies show they will look more intently and longer at attractive faces.”

But isn’t beauty in the eye of the beholder?  Well, kind of: according to Dr. Daniel Hamermesh, author of Beauty Pays: Why Attractive People Are More Successful, “Beauty is in the eye of the beholder, but most beholders view beauty similarly.”  Across cultures and races, facial symmetry is consistently a determinant in who is considered beautiful, and studies have even shown that all aspects of bodily symmetry contribute to beauty, down to the lengths of corresponding fingers.

In a series of surveys Dr. Hamermesh helped conduct in the United States and Canada, the conclusion was when all other things are taken into account, ugly people earn less than average incomes, while beautiful people earn more than the average.  The “ugliness penalty” for men was -9% below the average, while the beauty premium was +5% over the average (a 14% differential between ends of the spectrum).  For women the effect was less pronounced, contrary to common social myths: the ugliness penalty was -6% while the beauty premium was +4% (a 10% differential).  Nor were the U.S. and Canada shallow exceptions: when the survey was repeated in other countries, similar results were found.

Still skeptical?  This set of informal street experiments performed by NBC is shocking (or perhaps not), as they put a male and female model and two pleasant-but-normal employees of the station through a series of situations where they needed help from strangers, and secretly filmed the results.  Strangers of both genders went far out of their way to help the pair of models, but largely ignored the average-looking pair.

So, should landlords go out and hire stunningly gorgeous property managers and leasing agents?  It couldn’t hurt, all else being equal – but landlords should be sure that all else really is equal.  Remember that study about smokin' hot real estate agents getting higher prices for listings, but not doing as many deals?  All people you do business with should be evaluated on their actual experience and results, before taking more trivial advantages into account.  

Could landlords’ decisions about which prospective tenants to lease to be tainted by a “beauty bias”?  Beware, because this should be one area where beauty should absolutely not rank.  Be sure to run tenant credit reports and criminal background checks, and always verify income, employment and rental histories.  

But the next time you visit rental properties or meet with a lender or property manager, it might not hurt to look your best.

 

Reader Poll: Do you think studies on beauty/attractiveness have any merit?  Have any real life stories of how beauty/attractiveness has affected you/your work in some way?

]]> https://www.ezlandlordforms.com/articles/educational/2/355/should-real-estate-investors-avoid-death-spiral-states/ https://www.ezlandlordforms.com/articles/educational/2/355/should-real-estate-investors-avoid-death-spiral-states/ Wed, 02 Oct 2013 09:36:33 GMT The financial fall of Greece and closer-to-home Detroit have raised some unpleasant questions for Americans in many states, largely around the theme of “Is my state/city next?” (or an even more chilling “Is the U.S. next?”).  While it’s easy to spot booming cities like Austin versus troubled cities such as Detroit, states are not quite as easy to evaluate at a glance. 

At the end of last year, Forbes ran a disturbing report on what they called “death spiral” states, which they identified based on two measures: the “taker-to-maker” ratio, and an audit of each state’s credit-worthiness done by Conning & Co.  The “taker-to-maker” ratio compares the number of private-sector earners who net money into the state treasury's coffers (makers), to the number of people who pull money out of the state budget – public employees and recipients of social welfare payments and pensions (takers).  Federal employees were not counted as takers, since they do not drain funds from state coffers.

The purpose is not to make a value judgment (society obviously needs public employees, such as judges, bridge-builders, etc), nor is the list political, as it contains its fair share of both red and blue states.  But the ratio does help measure the economic health of a state; just imagine how quickly a state would lose money if for every private worker paying money into the treasury, there were three people expecting to take money out of it each month.  What would this state do?  They would probably raise taxes, leading employers and more successful citizens to move away, and then there would be even fewer jobs and private employees paying into the state’s coffers, creating a downward “death” spiral.

Currently the worst taker-to-maker ratio in the nation is New Mexico’s 1.53, meaning that for every 100 private-sector employees, there are 153 people dependent on state revenue.  There are eleven death spiral states, with a ratio of 1.0 or higher; see Forbes’ full list here.

For Conning & Company’s annual State of the States audit, they take a wide range of factors into consideration, ranging from lofty state debt to weak housing numbers to high unemployment to unfriendly business climates.  Conning & Co. are known for their risk analysis of insurance companies’ portfolios, and their audit is made to determine how credit-worthy each state is as a borrower, if you were to lend them money in the form of a bond.

Which returns us to Square One: should you invest in these states?  Whether buying state bonds or buying real estate in these states, the effect is the same: you are investing in the state itself, and will either lose or make money alongside that state.  This begs the question: “Why should I invest money in a poorly-managed state when there are well-managed, more successful states I could be investing in?”

If you live in a death spiral state, consider looking elsewhere to invest, or perhaps even moving.  As states grow hungrier for revenue, they may increasingly resort to exit taxes and audits of those who try to change their residence elsewhere.  Many higher-tax states (such as Massachusetts) have already begun implementing unofficial exit taxes, in the form of audits and reduced periods of time spent in-state allowed without filing a return there (for example Minnesota’s “snowbird tax”). 

It’s hard to get excited about investing in a state that won’t let you leave without an audit.

]]> https://www.ezlandlordforms.com/articles/news/354/are-micro-apartments-the-next-big-rental-trend-in-pricey-cities/ https://www.ezlandlordforms.com/articles/news/354/are-micro-apartments-the-next-big-rental-trend-in-pricey-cities/ Tue, 01 Oct 2013 11:25:28 GMT It seems good things really do come in small packages, as evidenced by the latest housing trend towards micro-apartments.  The latest to join the micro-living craze introduced in Seattle in 2006 are reportedly Boston, San Francisco, Portland, Providence, North Jersey and New York City.

Seattle-based Calhoun Properties addressed Seattle's affordable housing problem by launching "aPodments", offering pint-sized apartments short on space but long on affordability.  None are as large as an average efficiency, typically ranging from 150-300 square feet, and some are estimated to have actual living areas the size of a parking space.  Some offer additional amenities like kitchenettes and Wi-Fi, and range in price from $350-$800/month with utilities included.  The price is considerably less than their full-sized counterparts in downtown Seattle and they come completely furnished.

One critic of micro-apartments referred to them as "boarding houses on steroids"; an exaggerated but sometimes accurate description in that they often share communal kitchens, bathrooms and open living and/or outdoor spaces.  While appearing on the outside like normal apartment buildings, apodments are more closely akin to dorm rooms and boarding houses, and were originally believed to only attract a younger tenant base with no appeal to older, more established tenants.  But residents are disproving this theory as many middle-aged professionals as well as seniors have found themselves enjoying the ease, convenience and, of course, low rents associated with micro-apartment living.

Developer Jim Potter, chair of Kauri Investments, says, “Nobody else is producing something at this moderately priced range.  You get a brand new building with a new bathroom.  You get Internet access and it's fully furnished.  In general, our buildings are on major bus lines and/or light rail.”  Potter has worked with other developers to build six micro apartment complexes in Seattle, with several more planned.  He also is working on projects in Portland, Oregon; San Francisco and in New Jersey.  "This product has legs on it," Potter asserts.  "It is a national phenomenon and Seattle is ahead of the pack.”

In Providence, Rhode Island, "There's a substantial waiting list," says Evan Granoff, who has redeveloped the historic 1828 Arcade building in Providence to include 48 micro-lofts as small as 225 square feet.  He reports the units, which will open this summer, are modeled after efficient boat interiors and include build-ins such as a futon that converts into a table for four. "It doesn't feel cramped at all," he insists.

According to one report, Mayor Bloomberg of New York held a contest for the best micro-housing design for a New York City development project.

Tiny living spaces are not a new phenomenon but seem to have caught on quickly because of lingering unemployment and wage stagnation, in the wake of the economic downturn, and urban lifestyles which require more affordability, simplicity and convenience.  Renters are not alone in their inclination towards tiny spaces; many homeowners are opting for smaller homes as well.  There is an entire society dedicated to "tiny houses" for owners and investors who foresee a future in this alternative living style.

Unfortunately, size isn’t the only shortcoming for micro-units.  Neighbors and city administrators have been vocal in their criticism of the density and quality of tenants who will likely be drawn to these micro living spaces.  Thus far, the quality of tenants has not proven a problem for the landlords of these micro-apartment buildings; Jim Potter states “We’re more and more of a singles society. Typical renters are in their early 30s and earn between $2,000 and $3,000 a month.  Some tenants have a single-family home outside the city, and rent to avoid a daily commute.  He describes his customers as "busy and active’ and in need of a place to sleep and shower.”

As with any shift in housing trends, micro-apartments are the subject of much discussion among city officials, looking into potential code changes which may be useful (whether to city residents or to city tax revenue), and among lenders who are unfamiliar with how to structure loans on these projects.  Developers in Seattle say they were able to obtain funding under existing lending guidelines and built the miniscule living spaces utilizing a loophole in Seattle’s existing housing code (which may not remain open if officials decide not to support this micro-housing trend).

At an average of one-third the costs of normal sized apartments and homes, micro-housing is indeed a more affordable option, but affordable is a relative term.  For example, micro-apartments in San Francisco and Boston lease for approximately $1,600/month – certainly no drop in the bucket, but significantly cheaper than the average rent of $2,741 in San Francisco.

For investors looking to capitalize on multi-unit dwellings, there may be an opportunity to take advantage of this new wave of affordable housing.  While not all investors can afford to develop a new apartment complex, they may be able to invest in companies specializing in micro-apartments, or join other investors for a cooperative investment venture.

What do you think about micro-living?  Would you invest in this type of project?

]]> https://www.ezlandlordforms.com/articles/educational/10/353/8-ways-to-legally-beat-capital-gains-taxes/ https://www.ezlandlordforms.com/articles/educational/10/353/8-ways-to-legally-beat-capital-gains-taxes/ Fri, 27 Sep 2013 09:32:11 GMT Real estate investors are hit much harder than most by capital gains taxes, as they must pay them on any profits from selling real estate held longer than one year. 

Capital gains taxes are on long-term profits from investments, such as sales of real estate and stocks, and dividends.  “Long-term” is defined by Uncle Sam as being held for at least 366 days; gains from assets owned for less than a year are taxed at the normal income rate, the maximum rate of which rose in 2013 from 35% to 39.6%. 

Capital gains tax follows a bracket system, where people earning different amounts of money pay different tax rates on capital gains.  The thresholds vary year to year, but on the federal level there is a 0% capital gains bracket for low income earners, a 15% for middle income earners, and a 20% bracket for high income earners.  States often impose their own capital gains taxes on top of the federal taxes.

Wait though, it gets more complicated.  Real estate holdings in which the owner claimed depreciation (which is pretty much every real estate investor holding property for longer than a year) are partially taxed at a higher capital gains rate.  The amount depreciated is subject to a 25% depreciation-recapture capital gains tax rate, then the rest of the proceeds are subject to the normal capital gains tax rate.  That’s convoluted enough to warrant an example: when Investor Ivan sells his rental property, which he bought last year and deducted $3,000 depreciation for, he makes a $10,000 profit and pays the 25% tax rate on $3,000 of that profit, and pays his normal capital gains rate (let’s say for him that’s 15%) on the other $7,000.

And recently, the Obamacare tax on capital gains and other net investment income now takes another 3.8% for higher-income earners.

All right enough math, how do I reduce my capital gains tax liability?

1. IRAs

Money invested in a traditional IRA is tax-deferred until you take it out years from now when you retire (note: Roth IRAs are the opposite – you pay taxes on it now, but not later when you draw on the money).  It can be deducted from your taxable income, and left alone for the next few decades to earn massive returns for you to spend in your golden years.  Warning: there are limits on how much the IRS lets you invest tax-free – in 2013 this limit is $5,500 for those under 50, and $6,500 for older adults.

2. Own Your Own Home

There is a special exemption for primary residences, when it comes time to sell: the first $250,000 of profit for singles ($500,000 for married couples) is tax-exempt, and you can deduct any money you put into the property over the years from this profit, so save all those Home Depot receipts and contractor invoices.

3. Tax-Exempt 529 College Savings Accounts

While contributions to 529 college savings accounts are included in your taxable income, the earnings over the years are not.  So, no capital gains tax is owed, as long as the earnings are spent on college costs.  In some states, contributions may also be tax-deductible, making for a double tax discount.

4. 1031 Exchanges

The simplified explanation is that real estate investors can take their profits from the sale of one property and invest them in a new property purchase, and defer their capital gains taxes until they sell the new property (if ever).  See our overview of 1031 exchanges.

5. Charitable Remainder Trusts

These can get a little complicated, but the short version is you can create a trust and donate assets to it tax-free, and then the trust pays you a certain amount each month (or year) for the rest of your life from those assets and their earnings.  Upon your death, the balance of the trust’s assets goes to a charity of your choosing.

6. Move to a Tax-Friendlier State

Many states have capital gains taxes on top of the hefty slice that the federal government takes; for example, California takes an additional 13.3%, which for higher-income families means a total capital gains tax rate of 37.1% (never mind all the other types of taxes).  

7. Gifts to Family

You can give up to $14,000 in assets to each family member tax-free, every year.  If the family member sells the asset, they will owe capital gains on it however (unless of course they are in the 0% capital gains tax bracket).

8. Charitable Donations

An oldie but goodie – instead of throwing your old belongings away, donate them to charities, and deduct their value from your taxable income!  Be careful not to deduct too much for this however – the IRS often uses high donations as an audit trigger (bringing to mind the old aphorism that "no good deed goes unpunished").

Related Reading:

Understanding Rental Property Depreciation Before You Invest

The Real Estate Pro's Guide to Avoiding Audits

The Growing Specter of State “Exit Taxes” as Residents Abandon High-Tax States

]]> https://www.ezlandlordforms.com/articles/educational/2/352/is-rising-demand-for-affordable-housing-an-opportunity-for-investors/ https://www.ezlandlordforms.com/articles/educational/2/352/is-rising-demand-for-affordable-housing-an-opportunity-for-investors/ Thu, 26 Sep 2013 10:06:19 GMT In how many states across the U.S. can a minimum wage earner comfortably afford a two-bedroom apartment?

While you’re pondering the answer, here’s a hint: according to a 2013 study done by the National Low Income Housing Coalition (NLIHC) entitled “Out of Reach: 2013”, the average renter earns $14.32 per hour ($7.05 more than minimum wage) and cannot comfortably afford rental housing in the majority of states in America.  

The NLIHC’s “Out of Reach” report is an annual analysis of housing affordability in the US.  Each year average hourly wages are examined across the US along with average rents to determine the “housing wage”.  The housing wage is defined as the gap between wages and rents across the country, and is the estimate of the full-time hourly wage that a household must earn to afford an apartment meeting certain standards, at the HUD-estimated Fair Market Rent (FMR), while spending no more than 30% of income on housing costs. The ‘housing wage’ for 2013 is $18.79.  A difference of $4.47 above what the average renter makes; and slightly more than 2 ½ times what the minimum wage earner makes.

Think you have the answer now?  The answer is zero.  There are no states in the United States where a single person earning minimum wage can afford the average two-bedroom apartment on their own.   

Furthermore, remember the numbers from our definition of ‘housing wage’?  The average renter makes $14.32, that’s $4 less than what is required to comfortably afford the average two-bedroom apartment in the US.  According to the Bureau of Labor Statistics, an estimated 3.6 million people in the US earn at or below the Federal minimum wage amount of $7.25.  Additionally, several million more (exact statistics were not readily available) earn less than the housing wage of $18.79.  That means there are more than 3.6 million people currently unable to rent a home of their own in the US.

The NLIHC estimates an additional 4.5 million units are needed to meet the current demand for affordable housing.  “That’s because affordable housing is increasingly difficult to find”, one NLIHC rep says.

In the past, affordable housing and public assistance were synonymous.  Today one might be surprised to learn who is actually in need of affordable housing.  The 2012 Bureau of Labor Statistics report the following are some of the occupations earning less than the 2013 ‘housing wage’: police, fire and ambulance dispatchers; hospital record clerks; bank tellers; supermarket cashiers; travel agents; floral designers; school bus drivers; substitute teachers and pre-school teachers (excluding Special Education); small engine mechanics, dry cleaner workers, electronic equipment installers and repairers; home appliance repairers; and some religious workers.  All of these occupations represent respectable, hard-working citizens and not the lazy, entitled individuals often associated with those in need of affordable housing.  Of course, disabled veterans and the elderly are still included among the numbers of Americans in need of affordable housing.

What does this mean for real estate investors?  Where there is an unmet market demand, there is always opportunity.  

Consider Low Income Housing Tax Credits.  Based on Section 42 of the Internal Revenue Code, LIHTCs were enacted by Congress in 1986 to provide the private market with an incentive to invest in affordable rental housing.  Federal housing tax credits are awarded to developers of qualified projects.  Developers then sell these credits to investors to raise capital for their projects, which reduces the debt that the developer would otherwise incur.  Because the debt is lower, a tax credit property can in turn offer lower, more affordable rents.  Tax credits are subtracted directly from one's tax liability, making them far more attractive than deductions.  Credits reduce tax liability dollar-for-dollar: a $1,000 credit in a 15% tax bracket reduces tax liability by $1,000.  

Provided the property maintains compliance with the program requirements, investors receive a dollar-for-dollar credit against their Federal tax liability each year over a period of 10 years.  The amount of the annual credit is based on the amount invested in the affordable housing.

A December 2012 report from the accounting firm CohnReznick, LLP, found that real estate investors who buy federal low-income housing tax credits have fared well with their investments in the recovery from the financial crisis. Affordable housing properties maintained high occupancies and strong operating incomes in most housing markets.

While some LIHTC opportunities for the individual investor are no longer considered profitable because of changes in the tax codes, there are still many opportunities for investors to partner on these projects and still turn a profit.  Known as syndications where private investors looking for high return on investments are connected to developers looking for cash for their LIHTCs.  

Investors who are skeptical about the profitability of LIHTCs should look to Google and Verizon, two of the many corporations recently entering the affordable housing arena.

Other advantages of lower-end rental investments include lower acquisition costs and easier diversification: an investor with $50,000 in cash may be able to buy five different low-end rental properties, instead of one or two higher-end properties.

But lower-end rental units do come with their own risks.  Lower-end tenants tend to be less reliable, with lower average credit scores, more frequent moves and housing turnover, and less stable incomes.  They also tend to pack more occupants into the same size rental unit, which means more wear and tear on the property and a higher likelihood of property damage.  More damage and turnovers means more repairs, vacancies and eviction filings, all of which cost money and time.

Another potentially profitable affordable housing solution is a new trend in “apodments”, which will be discussed at length in an upcoming article.

]]> https://www.ezlandlordforms.com/articles/news/350/more-states-and-municipalities-requiring-landlords-to-accept-section-8-tenants/ https://www.ezlandlordforms.com/articles/news/350/more-states-and-municipalities-requiring-landlords-to-accept-section-8-tenants/ Fri, 20 Sep 2013 11:15:51 GMT Hidden tears and suppressed emotions are probably not expressions often associated with landlords... unless describing efforts to remain calm after seeing their once-pristine, one-year-old property destroyed.

In an online debate about whether renting to Section 8 tenants is a good idea, a first-time landlord offered up video footage to support his emphatic vote against it.  During the video, he explains why he will not show the viewing audience his face amidst the rubbish: “…because I don’t want you to see a grown man cry,” he says as he walks from room to room panning the damages in each.

Dozens of other landlords and property managers weighed in with fervent opinions on both sides.

This debate is not a new one, of course.  Perhaps, in the very near future, it won’t even be relevant if the federal government follows the lead of municipalities like Cook County, Illinois, where Section 8 voucher holders were recently made a “protected class” in anti-discrimination laws.

Classifying Section 8 tenants under the Fair Housing Act’s “protected class” umbrella makes it illegal for landlords and property managers to refuse to rent their properties to Section 8 voucher holders solely on a source of rent/income basis.  Landlords who own four or fewer properties are exempt, however.

Currently there are 17 states in which landlords are legally mandated to rent to prospective tenants with Section 8 vouchers.  In the past, landlords had the luxury of turning away tenants with Section 8 housing vouchers without much explanation.  But that is no longer the case in many areas, and some believe that federal inclusion of Section 8 voucher holders as a protected class will arrive in the not-too-distant future.

Some landlords passionately disagree with a legal mandate to accept Section 8 tenants, largely due to fear of major damage done in the rental property.  But concerns about Section 8 go beyond property damage: the initial approval process can be grueling and fraught with inspections and red tape, and there are required annual property inspections.  When asked about his past interactions with Section 8, ezLandlordForms’ Brian Davis (no relation) expressed frustration with his experience, in which inspectors consistently required about $2,000 worth of repairs for each property, each year, as a simple and effective way of proving that they had visited each property on their rounds.  That’s an expensive price for landlords to pay for timely rent payments.

A common maneuver among real estate flippers is doing the bare minimum property repairs to pass the initial Section 8 inspection, signing a quick lease with the first voucher holder that comes along, and then quickly selling the property to an unsuspecting novice rental investor.  The flipper touts the high rent and guaranteed on-time payment, knowing the tenant was not screened and the property is in poor shape under the new carpet and fresh coat of paint.

Still, there are plenty of landlords who court Section 8 tenants because of the guaranteed on-time payments, and in some cases, higher rents paid by the government.  The appeal is easy to understand, and makes for easily-digested soundbytes, especially for novice landlords.

To ease the minds of some landlords, Section 8 officials have said the inspection process is being streamlined to shorten the length of time it takes to have a property inspected.  They also have provided assurance that landlords are still able to maintain their current credit and background checks.  A Section 8 tenant who does not meet the credit and background check guidelines may still be rejected (under most circumstances).

Nevertheless, landlords and property managers should keep an eye out for local Section 8 mandates, as more jurisdictions adopt the mandate around the country.

]]> https://www.ezlandlordforms.com/articles/educational/5/349/the-return-of-rooming-houses-what-landlords-should-know-about-21st-century-boarding-houses/ https://www.ezlandlordforms.com/articles/educational/5/349/the-return-of-rooming-houses-what-landlords-should-know-about-21st-century-boarding-houses/ Wed, 18 Sep 2013 15:39:50 GMT What images does the term “boarding house” conjure up for you?

Perhaps you’re imagining a dilapidated building in center city occupied by the less-privileged or under-employed; or a single family home where seven students share rooms.  If you’re more familiar with the history of boarding and rooming houses, you may have in mind a working-class home where mostly single, migrant men settled in for a period of time while pursuing a better way of life.  Any one or all of these images would be correct.

American rooming houses date back to the early 19th century where larger cities from Manhattan to Chicago were rife with multi-room houses filled with strangers who shared common areas and sometimes home-cooked meals while pursuing the American Dream.  For many people, this dream was made possible in large part by the affordability of the rooming houses, as the expense oftheir own home or apartment would have meant delaying, or perhaps even foregoing, the American Dream.

The popularity of the rooming houses began to wane after mass industrialization in America, particularly dropping off after World War II.  More Americans were gainfully employed and able to afford their own apartments and homes.  At around the same time, local governments began scrutinizing the accommodations and banning them in many areas.  Rooming houses were said to contribute to the spread of diseases and an increase in urbanized crime.  Bans on rooming houses often came after one too many complaints from neighbors about the overcrowded conditions and the subsequent code violations.

A recent return to the use of rooming houses as a means of surviving in this economic climate has been met head-on with opposition from neighbors and city officials.  For many leaders across the U.S. and Canada, rooming houses are largely considered non-compliant buildings filled with code violations and potential hellions.

Officials in some US cities are planning to raise the bar for landlords insistent on profiting from illegal rooming houses.  For example, Brookhaven, NY boarding house landlords will soon be facing fines rising from $2,000 to $5,000 for first offenses, and from $3,000 to $10,000 for second offenses, in an effort to crack down on what town supervisor Ed Romaine calls "unscrupulous landlords."

In Fairfax, VA city leaders are planning to impose a fine on the renters for the very first time.  In the past, only the landlords of rooming houses were fined for violations.

In Scarborough, Canada, rooming houses for students are a common source of complaints.  According to the licensing department in Scarborough, there are 120 active files stemming from complaints over suspected illegal boarding houses.  Many are believed to be homes converted to accommodate students.  Scarborough City Councilor, Ron Moeser, reports seeing the number of rooming houses for students rising.

What makes rooming houses illegal in most cities and provinces across the US and Canada is not the shared living concept itself, but the many code violations and safety hazards often associated with it.  Additionally, only a small number of landlords actually register their properties with their jurisdictions and provinces as required.

Officials in both the U.S. and Canada say they recognize the benefits rooming houses offer to those in need of more affordable housing… but not as much as they recognize the complaints from neighbors and the political value of “looking tough on opportunistic landlords.”

There remains a need for affordable, communal living however, and landlords can meet that need through boarding houses if they are willing to observe public safety concerns and local laws regulating zoning and landlord-tenant issues.

Register – A landlord’s obligation begins here. Registering with the local enforcement agency will guarantee compliance with housing codes governing rooming houses, and possibly engender cooperation from the neighbors).  Landlords should also be certain to apply for any permits necessary for structural changes to the home.

Document – Everything should be in writing from rental agreements with tenants (room leases) to daily operations and emergency procedures.  Every tenant’s room should have a copy of a tenant handbook outlining the rules of the house and contact names and numbers for emergencies.  Every tenant should have their own copy of the room lease agreement.

Inspect and Service – Once you’ve registered, it is likely the premises will need to be inspected.  Budget for additional inspection-related repairs, as the inspectors demonstrate to their bosses they actually showed up at each property by documenting problems at each property.  Once occupied, perform preventative maintenance and inspections, and insist that tenants report any repair requests.

Lay Groundwork for Mediation – Inevitably there will be conflicts among the housemates periodically.  You can minimize this by outlining to each tenant at the beginning of their lease agreement that there will be a neutral party assigned whenever there is conflict that is not resolved between parties.  Have someone other than yourself mediate between residents (idea: have this be a rotating obligation among residents, much like jury duty).  This will be helpful in maintaining your neutrality, and ensuring that you are not drawn into the dispute.

]]> https://www.ezlandlordforms.com/articles/educational/2/348/an-overview-of-1031-exchanges-and-how-they-defer-taxes-on-real-estate-profits/ https://www.ezlandlordforms.com/articles/educational/2/348/an-overview-of-1031-exchanges-and-how-they-defer-taxes-on-real-estate-profits/ Tue, 17 Sep 2013 16:37:47 GMT Heard of 1031 exchanges, but not entirely sure how they work?  Mystery may be intriguing, but it never saved anyone money on their taxes; 1031 exchanges refer to Section 1031 of the IRS tax code, which allows real estate investors to defer paying taxes on capital gains from real estate sales, if they invest their profits in a "like-kind" investment.

Before going further, here's a concrete example to work with: Kelly has owned a rental property for several years, and sells it this year for a profit of $50,000.  The IRS 1031 exchange rule allows her to use that $50,000 to buy another investment property, and defer the taxes she would owe on that $50,000 capital gain.

A few definitions are in order, as tax lingo grows esoteric quickly.  To “defer” one’s tax liability is to postpone it to an indefinite later date; in this case, instead of owing taxes on her $50,000 profit from the property sold this year, Kelly will owe taxes on her profits later when she sells the new property (in tax lingo, it changes the “basis” in her new property purchase). 

Another necessary definition is “like-kind”: 1031 exchanges only allow like-kind property to be exchanged, and in real estate this means investment or business-use properties (e.g. rental properties, office space, retail space, etc).  Primary residences, second homes and international properties cannot be 1031 exchanged.  Also allowed to be exchanged is personal property (e.g. cars used for business purposes), but again they must be like-kind and not exchanged for a different type of asset (for example, proceeds from the sale of an rental property cannot be exchanged to buy a business-use car – only proceeds from the sale of a business-use car can be exchanged to buy a new business-use car).  Paper assets (e.g. stocks, bonds, etc) are specifically excluded and cannot be used in 1031 exchanges.

Unfortunately, executing a 1031 exchange is not as easy as Kelly simply jotting a note on her tax return saying “By the way I 1031-exchanged these two properties, don’t charge me for taxes.”  First, Kelly must go through an intermediary or “exchange facilitator” who holds funds and keeps written records of both transactions.  Kelly cannot act as her own intermediary, nor can an employee of hers, or her real estate agent, accountant or attorney.  When she sells the old property, she must notify her intermediary in writing of her intent to purchase the new property within 45 days, and must complete the transaction (settle on the new property) within 180 days.  

Upon filing her tax return, Kelly must also fill out IRS Form 8824 and include it in her return.

So why is this useful, if it adds complexity and Kelly will still owe taxes eventually?  Because that tax bill may never come due, and because Kelly can use the money to continue investing and growing in the meantime.  Kelly may decide never to sell the new property, in which case she will never have to pay capital gains on the original $50,000 profit.  Or perhaps when she does decide to sell it three years later, she simply does another 1031 exchange to purchase an even larger property at that time (e.g. a large multi-unit building with strong monthly cashflow), and further defers her tax bill indefinitely.  And even a worst-case scenario in which she does end up paying the full tax amount a few years from now, she has effectively borrowed money from the government at 0% interest – a win-win scenario for her.

This ability to roll over her profits without paying taxes is an incredible advantage for Kelly to continue expanding her rental portfolio: if she lives in California and pays the highest tax bracket, she would owe 37.1% of that $50,000 in capital gains taxes ($18,550).  If Kelly wants to invest in a new rental building, she would have $31,450 to invest, instead of $50,000 – say her financing is at 75% LTV and she must come up with the other 25% as a down payment, she could only afford to buy a $125,800 property instead of a $200,000 property. 

That’s a very real difference in buying power, the difference between a savvy investor and a novice.

]]> https://www.ezlandlordforms.com/articles/news/346/what-impact-will-new-obamacare-taxes-have-on-real-estate-investors-and-landlords/ https://www.ezlandlordforms.com/articles/news/346/what-impact-will-new-obamacare-taxes-have-on-real-estate-investors-and-landlords/ Mon, 16 Sep 2013 11:16:01 GMT There are a variety of new taxes implemented by the Affordable Care Act (also known as Obamacare) that will affect 2013 tax returns, and the one most real estate professionals are asking about is the new 3.8% investment income tax.  How much impact will it have on real estate investors?

The short answer: the 3.8% tax created by the Affordable Care Act will only affect more successful real estate investors, as the tax is only applied to investment income over $200,000 for individuals and $250,000 for married couples.  Still, there are some complexities that deserve a closer look, and other Obamacare tax changes that will affect real estate investors and landlords as well.

First and foremost, the new 3.8% tax is not a real estate tax.  It is a tax on a class of income referred to as “unearned” income, or more accurately as net investment income, which includes capital gains, net rental income, dividends and interest on savings or money market accounts.  The tax is applied to the net investment income portion of adjusted gross income, over the first $200,000/$250,000 earned.

For a simplified example, Investor Ingrid is single and makes $150,000/year taxable income from her day-to-day work.  This year she also decides to sell one of her investment properties for $200,000, and after paying off the mortgage and closing costs she walks away from the settlement table with net proceeds of $100,000.  Ignoring the various deductions she has hopefully capitalized on, she has an adjusted gross income of $250,000, the last $50,000 of which she will owe the 3.8% new Obamacare tax on (3.8% of $50,000 = $1,900). 

The new investment income tax is not the only new tax that will affect real estate investors.  Last year, the Medicare tax (part of the FICA taxes) was 2.9% total (half paid by employers, half paid by employees, or all paid by self-employed individuals), and it has now risen to 3.8% for income over $200,000 for individuals and $250,000 for married couples.  As most real estate investors are self-employed, they will be looking at paying the full rate themselves (a rise in FICA taxes from 15.3% to 16.2%).

A third tax change that will affect many real estate investors is the floor raise for medical expenses to be tax-deductible.  Previously medical expenses had to be at least 7.5% of a filer’s income to be deductible, but for 2013 tax returns they must be at least 10% of income to be deductible as an expense. 

Some unsolicited advice: make sure your accountant can competently discuss these new Obamacare tax changes with you, because the three above are only a few of the many tax changes taking effect this year.  If they can’t answer questions about these, it’s time for a new accountant.

]]> https://www.ezlandlordforms.com/articles/educational/4/345/federal-court-ruling-against-landlord-law-firm-may-spook-attorneys-raise-rates-and-paperwork/ https://www.ezlandlordforms.com/articles/educational/4/345/federal-court-ruling-against-landlord-law-firm-may-spook-attorneys-raise-rates-and-paperwork/ Thu, 12 Sep 2013 17:21:37 GMT In an effort to send a resounding message of accountability, a U.S. District judge recently decided in favor of a long-time tenant of a New York apartment who sued not the landlord, nor the property management firm, but the law firm representing the property management company.  The case was settled for $22,000 and $108,000 for legal expenses, leaving landlord attorneys in New York and around the country shaken.

The 82 year-old tenant Rafael Lee had been renting an apartment in Manhattan for the past 48 years and paying a partially-subsidized rent to a property management company.  According to Mr. Lee, he received an eviction notice after an employee of the property management firm missed the fact that his rent was subsidized by the government and he was only responsible for a portion of the rent, and thought his rent was behind.  The property management firm turned his case over to their eviction attorneys, Kucker & Bruh LLP, who filed eviction paperwork.

Despite the fact the attorneys stopped the eviction process immediately upon notification of the error, Mr. Lee filed suit against the law firm stating, “I just needed to release all of this anxiety I have against my landlord.”

The judge in the case, Judge Lorna Schofield, decided the error was that of the attorneys at Kucker & Bruh LLP who represented the property management firm, for not confirming the accuracy of the information given them by the property management company.  Her decision was based on the federal Fair Debt Collection Practices Act, a law designed to stop abuses by debt collection agencies and which holds them strictly accountable for errors except those which occur despite procedures in place to avoid them.

Since the recent foreclosure crisis of 2006, there have been a number of similar cases where sensitive housing issues are being carefully scrutinized.  Attorneys are being held to a higher standard to ensure their paperwork is in order so that homeowners and tenants are not displaced from their homes in error.

Mr. Lee's attorney, James Fishman, a tenant and consumer lawyer, said the case was a "paradigm shift for the landlord bar" where some law firms have routinely made "mass filings of nonpayment proceedings without having to do any kind of checking.”  He added, “Hopefully there will be fewer mistakes in Housing Court eviction proceedings.”

Landlord lawyers around the country have weighed in on this issue.  David Skaller, a partner at Belkin Burden Wenig & Goldman, an uninvolved firm which represents many landlords, asked “Are we supposed to be the attorneys for the landlord and the accountants?" He also stated the case “has a potential chilling effect."

Adam Leitman Bailey, who represents many landlords and isn't connected with the Lee case, said it was a "very dangerous decision for lawyers" by a federal judge "who could not possibly understand the halls of housing court and the landlord-tenant industry."

He noted that the same printouts of rent records that the judge found inadequate were routinely accepted as evidence in housing court. "We would be unable to practice law in any field, unless we rely on information from our clients," he said.

Routine or not, relying on third party information can apparently be risky business.

]]> https://www.ezlandlordforms.com/articles/educational/2/344/who-is-wealthy-the-5-step-ladder-between-middle-class-and-wealthy/ https://www.ezlandlordforms.com/articles/educational/2/344/who-is-wealthy-the-5-step-ladder-between-middle-class-and-wealthy/ Wed, 11 Sep 2013 09:20:23 GMT How is “wealthy” defined?  Amusingly, most people answer this question in surveys with incomes and asset levels roughly twice what they have.  Even the better-off, with $1-5 million in investable assets, overwhelmingly responded in a recent UBS survey that they do not consider themselves wealthy. 

This does, of course, depend on where you live, and it changes over time.  While those indignant protesters at Occupy Wall Street a few years back loved to rail against the top 1% of earners, the average income in America (about $52,000 currently) puts the average American in the top 1% of earners worldwide. 

People love to think of themselves as middle class, and that those greedy rich people are hoarding all the precious resources, but the average American is “The 1%” from a broader perspective, so let’s forget the thresholds and wealth minimums and talk frankly about what being wealthy is really about. 

Level 1: Financially Protected (Entry Level)

Calculate a firm monthly sum of mandatory expenses (food, housing, utilities, taxes, insurance, transportation).  This is the minimum monthly expense rate; people who can cover these most basic living expenses for 3-24 months if the worst were to happen are protected by a buffer of liquidity.  Also required is disability insurance in case working becomes impossible, and life insurance for those with dependents.

Level 2: Financially Secure                                   

When a person has sufficient passive income from their investments to cover that minimum monthly expense rate, they are financially secure because even if they lose their job or business tomorrow, they could survive indefinitely.  This is a great feeling, because a job is no longer a survival need, it’s a want – a financially secure person does not work to put food on the table and a roof over their head, they work to maintain the lifestyle they want. 

The most common types of investments that offer recurring passive income are stocks that pay dividends, rental properties and owning a business (not to be confused with self-employment).  Dividend-paying stocks are a good place to start, since there is a smaller minimum investment required.

Level 3: Financially Content

Sure, being able to pay minimum monthly expenses is all well and good for basic physical needs, but what about the things that provide texture and meaning in life, such as travel, higher education for one’s children, hobbies, new clothes?  Having financial contentment means that some (let's say half) of one’s additional costs beyond basic needs are covered by income from passive investments alone. 

If they haven't already done so, investors should consider adding rental properties to their portfolios at this point, as a source of cash flow and diversification from the stock market.

Level 4: Financially Independent

If contentment is being able to cover half of one’s wants, being truly independent financially means being able to cover all of one’s “normal” wants with income from investments alone.  These are the kinds of expenses that were previously only affordable while working full-time, but now the person can walk out of their job today and live exactly the same quality of life as before. 

Entrepreneurs should now be hiring and training managers to handle all aspects of their business, so that they as the owner can be only as involved as they want and are no longer required for day-to-day management.  If additional rental properties remain part of the investment plan, they should be diversified to other cities and regions to reduce risk.  

Level 5: Financially Free (Wealthy)

When a person's investment income alone is so great that it imposes few (or no) constraints on their spending, they are wealthy.  For some people, this may not require a massive amount of money, if their wants are not extravagant.  Others may not be happy until they have a hotel-sized home on every continent and a private jet to travel between them on a whim.  Both of these people are wealthy, if their income from investments is sufficient for them live however they like.

One way to think of this five-step climb is the ladder from middle class to wealthy – the middle class must still work for their money, so someone who is financially secure is still middle class (albeit in better shape than most).  But the upper classes do not need to work in order to live comfortably, and therein lies the true distinction between the middle class and the wealthy.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/343/landlord-liability-and-lawsuits-what-landlords-should-know-about-implied-warranty-of-habitability/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/343/landlord-liability-and-lawsuits-what-landlords-should-know-about-implied-warranty-of-habitability/ Tue, 10 Sep 2013 11:37:26 GMT Landlord-tenant laws vary from state to state and province to province, but there is one law with some degree of uniformity - the implied warranty of habitability.  Under the implied warranty of habitability law, landlords have an obligation to make all repairs and do whatever is necessary to put and keep the premises in a fit and habitable condition, and to keep all communal areas of the premises in a clean and safe condition.

A Bergen, New Jersey landlord was held responsible for injuries to his tenant who slipped and fell on ice at the bottom of her apartment building’s front steps in March 2010.  The tenant broke her shoulder and hip, leaving one leg shorter than the other, and the landlord was sued for $1 million.

The jury recently rendered a decision to compensate the 59 year-old unidentified plaintiff for pain and suffering, loss of wages, medical expenses, and permanent injuries.

The landlord reportedly knew about the icy conditions outside of the apartment building.  The plaintiffs’ attorney, Lewis Greenberg, argued that the landlord allowed a downspout from a roof gutter to pool water from melting snow during the day that froze at night on the ground.

Greenberg, stated, “It’s a message to landlords that you really need to be careful with your tenants because they are relying on that.”  He also argued that “landlords have a duty to keep the premises safe on an ongoing basis.”

Undoubtedly, Greenberg’s argument was based on precedent cases including several in New Jersey involving ‘implied warranty of habitability’.

The concept of implied warranty of habitability was at one time slightly controversial and not accepted by every state in the US.  Over the past several decades all US states except Arkansas and Oklahoma have incorporated it into their landlord-tenant laws.

In 2009, an Oklahoma Supreme Court decision abandoned the common law practice of caveat emptor and joined the rest of the states in holding landlords liable for certain conditions of habitability.  Tenants in Arkansas retain some liability for their actions.

Prior to the implied warranty of habitability, caveat emptor was the presiding principle related to housing disputes.  More commonly referred to as “buyers beware” or, in this case, “renters beware”, meant the renter was responsible for their own safety and accidents on the property.

Presently all landlords (except those in Arkansas) are expected to meet the following conditions when renting properties:

1. Comply with the requirements of applicable building and housing codes materially affecting health and safety;
2. Make all repairs and do whatever is necessary to put and keep the premises in a fit and habitable condition;
3. Keep all common areas of the premises in a clean and safe condition.

While every state except Arkansas operates under the implied warranty of habitability rule, there is still wide variation among the states as to how tenants may remedy these situations.  In some states for instance tenants are legally allowed to terminate the lease if landlord does not meet the requirements of maintaining a habitable residence.  In other states, tenants have the right to withhold the rent (within limits).  And across the U.S. and Canada tenants can (and often do) exercise their rights to sue their landlord in civil court.  In Alabama, Arizona and Colorado, for example, tenants are allowed to terminate the lease and sue.  California is the only state which allows the tenant to choose among all three remedies.

Regardless of the degree of legal remedies available to the tenant, landlords across the U.S. and Canda need to remain vigilant about keeping their rental properties safe and habitable, or face the wrath of hostile tenants and less-than-friendly juries.

Related Reading:

Do Umbrella Insurance Policies Actually Protect Landlords’ Assets in Lawsuits?

Landlords' Privacy Guide for Safety, Lawsuit Avoidance & Anonymity

Asset Protection for Rental Investing: Legal Entities, Lawsuit Protection, & Taxation

]]> https://www.ezlandlordforms.com/articles/educational/2/342/7-signs-a-seller-is-not-so-savvy-and-may-sell-low/ https://www.ezlandlordforms.com/articles/educational/2/342/7-signs-a-seller-is-not-so-savvy-and-may-sell-low/ Fri, 06 Sep 2013 09:13:27 GMT The housing market is rebounding, with prices on the rise in most metro areas, and inventory is noticeably tight as buyers scramble to enter the market before prices rise further and many would-be sellers sit and wait for higher prices.  But there are still deals to be found out there, for savvy buyers who know what to look for when making a real estate investment.  Not all sellers are brimming with intellect or experience, and spotting them from a distance means knowing who’s likely to accept those hard, fast, lowball offers.  Here are seven signs to look for, to spot those not-so-savvy sellers and score a low price.

1. Frequent Price Drops

A sharp seller will make a substantial cut in pricing, after a reasonably long period on the market; they give it a fair chance to sell at an optimistic price, then cut it enough to draw considerable and renewed interest in the property.  A nervous, anxious seller may snip the price down a little bit every few weeks, or may otherwise make multiple price cuts and tip their hand that they are desperate to sell.  Lowball them and see what happens – the worst thing that can happen is they say no.

2. Odor Problems

All experienced real estate investors have walked into a home only to be hit by wall of stench.  Savvy investors know that smells are only as bad as the cost of new carpeting and a paintjob, or perhaps as little as a steam cleaning and a few candles or plug-in deodorizers.  But Prissy Ms. Homebuyer will be completely turned off, and will spin on her spike heels and walk right out the front door, creating a wonderful opportunity for those willing to invest in a little redressing.

3. No (or Unappealing) Photos

The Internet changed many things about homebuying, and do-it-yourself shopping online for real estate is one of them.  People want to sit in their pajamas, browse listings, and email a few promising links to their Realtor for a showing tomorrow.  A listing with no photos will not catch Mr. Pajama Homeshopper’s eye, but it catches the eye of good investors, who know enough to have their real estate agent call the listing agent to ask about the property’s condition and layout.

4. Sellers in a Hurry

Always ask why the sellers are selling; the listing agent may not offer a straight answer, but surprisingly often they will.  Are the sellers skedaddling out of town for a new job?  Perhaps a couple is going through a spite-filled divorce and have let their anger and indignation erode their judgment?  Keep an eye out for sellers in a rush, because they may accept a super low offer just to move on.

5. Priced Too High, Too Long

Homes often sit on the market for a long time.  Sometimes it simply means the seller is not in a rush and won’t sell for less than a perfect price, but sometimes the seller grows fatigued and will resign herself to a much lower price.  If a home sits for a long time at one price, then drops, it is a good time to take a closer look at the property, and perhaps toss out a lowball offer.

6. Shoddy Upkeep

If the house and/or exterior grounds are not well kept, it will often turn potential buyers away.  Look past the superficial layer of bad ‘70s shag carpeting and tacky pink bathrooms, and remember that beauty is both skin-deep and inexpensive to remedy in real estate.

7. Half-Hearted Heirs

Inheritors often don’t know, don’t care and don’t want to be bothered with the details of inherited properties, they just want a quick extra dollar in their pocket.  Look for magic words like “estate sale”, or “owners lived here for 30 years,” or "needs a little updating/TCL," and of course when asking about why the sellers are selling, the listing agent will almost always offer freely the information that the property is inherited.  These heirs often have no emotional attachment to the property, and can sometimes be seduced by the promise a very quick sale.  Consider lowball cash or hard money-financed offers with a promise to settle extremely quickly.

]]> https://www.ezlandlordforms.com/articles/educational/5/341/what-landlords-need-to-know-about-renters-insurance-and-why-they-should-require-it/ https://www.ezlandlordforms.com/articles/educational/5/341/what-landlords-need-to-know-about-renters-insurance-and-why-they-should-require-it/ Thu, 05 Sep 2013 11:00:45 GMT Tenants have plenty on their mind when moving into a new home, from coming up with security deposit and first (and possibly last) month’s rent to switching over utilities to the actual chore of moving all their wordly belongings.  With no bank hovering over their heads requiring renters insurance, it’s no wonder many tenants forget about it entirely.  But renters insurance is easy and cheap – according to the National Association of Insurance Commissioners it cost around seventeen dollars a month, or less than two hundred dollars a year! 

During the Great Recession and the collapse of the housing market, many homeowners who could not sell opted to lease out their homes instead.  The rental market boomed, but a full 65% of tenants neglected to buy renters insurance. 

When disaster strikes, tenants and landlords alike are up the proverbial creek if they don’t each have insurance, but the landlord is also affected if the tenant does not have renters insurance.  Tenants strapped for money and forced to buy all new furniture are likely to default on their rent, which is the last thing the landlord needs while handling the aftermath of a disaster at the property.  Further, without insurance covering liability for accidents, injuries and break-ins, the landlord may find themselves the target of a lawsuit that would have otherwise been covered by the tenants’ renters insurance.   

Renters insurance covers a wide range of personal property despite its tiny price tag, because the landlord’s policy covers the physical building.  Like homeowners’ insurance, renters insurance covers damages caused by fire, smoke or water damage even if it is an internal plumbing issue.  Vandalism and acts of nature or theft also falls into claimable categories.  Flood damage however is not covered, and must be purchased separately (for more information see the National Flood Insurance Program). 

Most personal property and furniture can be itemized and replaced or matched monetarily in value, including electronics and rare collections (e.g. coins, stamps, records and other collections of rare, valuable possessions).  It also would include liability protection to cover injuries suffered by visitors, occupants and pets (legal fees are covered in addition to awarded damages).  Renters insurance can be altered or added on to cover living expenses that can occur in the event that a tenant must use temporary housing like hotel rooms, food receipts or other costs that would be paid out by the renter while waiting for the rental property to be repaired.

Renters insurance (and homeowners insurance, for that matter) pays out in two possible ways: actual cash value, and replacement cost value.  Under actual cash value coverage, the insurer will pay to replace items up to the dollar amount purchased in the insurance plan, with a reduced price due to depreciation.  For a higher premium, renters can opt for replacement cost coverage, which entitles the insured to the cost of replacing the covered property with new goods, which generally costs around 10% more.  There are additional options when purchasing replacement cost coverage that helps to cover high cost items and home based businesses may demand a higher tier protection plan.

Renters insurances is often ignored because it is not required by banks or other institutions – only the landlord is in a position to require that tenants purchase renters insurance.  And require it they should: renters insurance can prevent landlord lawsuits, prevent tenant defaults and generally provide stability to the tenancy. 

Some states prohibit the landlord from requiring renters insurance however, so be sure to check your state’s laws first!

]]> https://www.ezlandlordforms.com/articles/news/340/landlords-gone-wild-crazed-conniptions-and-how-to-avoid-expensive-landlord-tenant-disputes/ https://www.ezlandlordforms.com/articles/news/340/landlords-gone-wild-crazed-conniptions-and-how-to-avoid-expensive-landlord-tenant-disputes/ Wed, 04 Sep 2013 10:16:22 GMT It is no secret landlords and tenants don’t always see eye to eye, often with good reason.  Disputes over unpaid rent or ignored maintenance requests are just a few reasons why landlords and tenants butt heads, and sometimes these arguments turn violent.

One such story is that of a 50 year-old Wilson County, NC landlord, Mendy Morris Faires, who was recently arrested for pushing her 49 year-old tenant down the stairs in November 2012, resulting in the tenant’s death nine months later.  There are many unknowns in this particular story such as why the initial police report indicated no serious injuries were sustained, or what caused the landlord to push the tenant in the first place.  The landlord also reportedly had a history of DWI’s and other substance-related misdemeanor charges.  Charges are pending in this case.

The Connecticut Post reported a 41 year-old Connecticut landlord, James Cunningham, was astounded by the ‘guilty’ verdict he received in late August 2013 for the shooting death of his 38 year-old tenant one year prior.  He was charged with murder and unlawful disposal of a body.  He is facing 65 years in prison.

In March of this year the NY Daily News reported that landlord Philippe Estevez shot and killed a male tenant.  The tenant reportedly came to the defense of a female tenant with whom Estevez had been involved in a dispute.  After fatally shooting the male tenant, Estevez allegedly attempted to shoot the female tenant too but his gun jammed.  Estevez is facing a murder charge and perhaps attempted murder.

According to the US Department of Labor, nearly 2 million American workers report violence in the workplace every year, and it is presumed many more incidents go unreported.  In 2012, the U.S. Bureau of Labor Statistics (BLS) Census of Fatal Occupational Injuries reported an overall 767 workers were killed as a result of violence and other injuries by persons or animals, including 463 homicides and 225 suicides. Shootings were the most frequent manner of death in both homicides (81 percent) and suicides (48 percent).  Female workers were less likely to be involved, and of the 338 fatal work injuries involving female workers, most (71%) were suicides.

The Department of Labor also reports research which identifies factors that may increase the risk of violence for some workers.  Such factors include exchanging money (particularly cash) with the public and working with volatile, unstable people.  Working alone or in isolated areas may also contribute to the potential for violence.  Additionally, time of day and location of work, such as working late at night or in areas with high crime rates, are also risk factors that should be considered when addressing issues of workplace violence.

Landlords meet not one but all of these extra danger criteria, when making trips to their rental properties.  In addition, landlords often have properties in high crime areas where return-on-investment may be perceived to be higher.

So what can be done to prevent landlord-tenant issues from reaching the point of violence and prison sentences?

Recognize Renting Property Is a Business – Landlords must learn to treat being a landlord as a business and not a hobby, side-gig, or a temporary fix to a financial problem, if they are to be successful.  It is mandatory to have the proper tools in place which would include solid knowledge of the industry, appropriate paperwork (read: ezLandlordForms!), effective safety measures (such as carrying pepper spray and using smartphone apps so others know where you are), effective communication with colleagues and a responsive and knowledgeable contractor/handyman for maintenance issues.

Discontinue the Personal Pickup & Delivery Services to Tenants – Landlords may be setting themselves up for adversity when personally visiting the rental property to demand rent and delivering delinquency notices.  It may be smarter and certainly less provocative to hire a courier service to deliver notices, and have tenants mail the rent or better yet transfer it electronically through PayPal or another free online money transfer service.

Automated Eviction – If rent is due on the 1st and is officially late after a 5 day grace period, then on the 6th of every month the landlord should serve eviction notices, without exception - it is simply built into each month’s calendar.  If you are not up to that regularity, then pay an assistant $10/hour to do it for you on the 6th, and to file in court for eviction after the mandatory waiting period for the eviction notice.  When tenants know that the process is automated and not subject to the landlord’s whims or emotions, they will know what to expect and will be less likely to be late with rent.  There will also be no surprise when the eviction notice arrives, it is simply the consequence of late payments and emotion is removed for the tenant as well.

Insure Against Loss & Damage – A little-used option that can be extremely useful is surety bonds.  For a non-refundable fee, an insurance company will guarantee against the tenant causing loss or damage to the rental unit.  Read more about tenant surety bonds here.

]]> https://www.ezlandlordforms.com/articles/educational/4/339/what-happens-when-your-tenant-declares-bankruptcy/ https://www.ezlandlordforms.com/articles/educational/4/339/what-happens-when-your-tenant-declares-bankruptcy/ Tue, 03 Sep 2013 11:12:11 GMT Weeks have passed and you have not gotten around to filing that eviction - but you are planning to any day now.  The tenant has provided as many excuses as there are days in the week and you have patiently listened to every one of them.  Finally, when you reach your breaking point and have all of your documents in order, you march down to the courthouse to file the eviction.

What you are unaware of is that while you were patiently waiting for the tenant to stop making excuses and pay the delinquent rent, the tenant had other ideas, and filed bankruptcy.  What do you do now?  You’ve already filed for eviction so it’s just a matter of time before the tenant is out of the home, right?

Wrong.  Filing bankruptcy creates what is known as a ‘stay’ which means all payments to all creditors are immediately halted.

But wait, wasn’t that the rule under the old laws?  Haven’t bankruptcy laws changed in the past few years?

The answer is yes and no.  Under the old bankruptcy laws, tenants who filed bankruptcy after being served an eviction notice, or even immediately after a judgment was rendered, could remain in the property for months under the protection of the ‘stay’.

The Bankruptcy Abuse Prevention and Consumer Protection Act (119 Statute 23, 2005) was enacted in October, 2005 to provide some protection to creditors.  Landlords are especially protected in some areas under the new law.  After October 2005, any landlord who receives an order of eviction or ‘judgment’ before the tenant files for bankruptcy is exempt from the automatic stay and is allowed to proceed with evicting the tenant (under ordinary circumstances).  Tenants are no longer fully protected from eviction, but even with the new rules in place there are still some exceptions.  Landlords should seek the advice of an attorney for all of the specifics of the new rules.

When a tenant files bankruptcy prior to the landlord obtaining a judgment order for eviction, the old bankruptcy rules apply and the stay remains effective.  The landlord is stopped in her tracks and cannot move forward with eviction.  Furthermore, the landlord is prevented from contacting tenant in any way regarding monies owed before the bankruptcy filing.  Dealing with a tenant who has filed bankruptcy is a delicate matter that should only be handled by a skilled attorney experienced in bankruptcy and collections.  While general bankruptcy law is established by federal laws, there are certain nuances which are state-specific.

In addition to the creation of an automatic stay, filing bankruptcy affords tenants several additional options which include the decision to accept or reject the existing lease agreement.  Accepting a lease means that a tenant decides to continue renting the property and agrees to pay all monies due post-bankruptcy filing.  Because the automatic stay allows the tenant to remain in the home, the tenant can remain only if they can prove future rent payments will be made in accordance with the lease agreement.

Alternatively, a tenant may reject the prior lease which means giving up all rights to it and deciding to move out or allow someone else to assume it (assumption will not be covered in detail here).

The most crucial information for landlords and property managers to know when a tenant files bankruptcy is what not to do.  Knowing what not to do keeps the landlord or property manager from losing a great deal more than just a few months’ rent.

Three Actions Landlords Should Avoid:

Avoid Pursuing Eviction – Pursuit of the eviction should cease once a landlord becomes aware the tenant has filed for bankruptcy.  Of course, this information should first be verified by making contact with the tenant’s bankruptcy attorney.  Landlords should also discontinue requesting delinquent rent and inquiring about when to expect it.  Bankruptcy attorneys advise against this practice which could ultimately result in the landlord having to pay the tenant.

Refrain from using the tenant’s security deposit – Using a tenant’s security deposit is considered ‘being paid before all other creditors’ which is not allowed under a bankruptcy.  Landlords must obtain permission to use the security deposit to cover delinquent rent.  Landlords should immediately contact the bankruptcy court for permission to use the tenant’s security deposit.

Abstain from applying new rents to pre-bankruptcy rents – Landlords must resist the urge to use subsequent rental payments towards delinquent rents.  In the event a tenant decides to accept the lease and remain in the property, they must immediately resume paying the rent.  Applying that rent towards the delinquent payments is considered a violation of the stay and could result in hefty fines for the landlord.

So what should landlords do upon learning their delinquent tenant declared bankruptcy?

Immediately seek the advice of a bankruptcy attorney – This is an added expense many landlords feel they cannot afford, but not doing so could result in costly court fines for violations.

Landlords can also buy (or in some cases require tenants to buy) tenant surety bonds, which insure against the risk of tenants defaulting entirely.  And landlords who file for eviction immediately upon rent default may be able to avoid bankruptcy entanglements altogether, by obtaining the judgment order for eviction before the tenant files for bankruptcy.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/338/calculating-eviction-notice-periods-for-termination-dates-case-study-ontario/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/338/calculating-eviction-notice-periods-for-termination-dates-case-study-ontario/ Wed, 28 Aug 2013 17:43:52 GMT There is nothing more frustrating then going through the eviction application process with the Landlord and Tenant Board only to find the case dismissed due to a minor technicality. Making matters worse, if a case is dismissed the landlord must start the process over, as if it had never begun in the first place. Waste of time, waste of money and much aggravation.

A common mistake among landlords is the miscalculation of notice periods. While there many types of lease violation and subsequent landlord-tenant cases, the most common case is the non-payment of rent by the tenant. By way of example to illustrate how to calculate notice periods, below are step-by-step directions for a non-payment of rent case.

The tenant is late in paying the rent, so the landlord then serves a “Notice of Termination for Non-Payment of Rent” (in Ontario also known as Form N4) on the tenant. This particular eviction notice mandates a notice period of 14 days, after which is the termination date. Calculating the termination date correctly is essential, and not as intuitive as it may sound.

On Form N4, there is a place in the center of the first page where the termination date is entered. All eviction notices for tenancy termination contain this date. (NOTE: In Ontario there are Forms N4, N5, N6, N7, N8 and N12, for other tenant violation scenarios. Each of these forms have specific requirements for how many days are to be entered. Much depends on whether it is a first or second notification.)

Hand Delivery: The rule of thumb for calculating the termination date is to count to the 15th day from that the day you deliver the notice to the tenant. In our example in Ontario, if you give your tenant the Form N4 notice on October 11th, add 14 days to arrive at the 15th day being October 25th. You are permitted to give more days’ notice, but no fewer.

Mailing Notices: If you mail the notice, an extra 5 days must be added, for a total notice period of 19 days. Using the example above, the notice is mailed on October 11th, making the termination date October 30th or later.

Courier Service: Alternatively, if a courier is used to deliver the notice, you must add 2 days, for a total notice period of 16 days. This is the case regardless of whether the courier serves it to the tenant on the same day you provide it to the courier. Thus, in our example above, if the eviction notice is sent by courier on October 11th, the termination date is October 27th.

Notice periods must be precisely correct. While the specific example above uses Ontario non-payment of rent notice periods, every province in Canada enforces varying notice periods that must be calculated similarly and strictly observed. Miscalculating even one day can cost not only the repayment of a filing fee but loss of rent as well. When in doubt, err on the side of caution by including additional days.

Or better yet, ask an attorney or someone at the Board to assist you with filing notices if you are at all unfamiliar with the eviction process.

]]> https://www.ezlandlordforms.com/articles/news/337/nyc-landlord-ordered-to-charge-1-rent-for-2-100-apartment/ https://www.ezlandlordforms.com/articles/news/337/nyc-landlord-ordered-to-charge-1-rent-for-2-100-apartment/ Tue, 27 Aug 2013 18:18:42 GMT It has been said that experience is the best teacher, but for savvy landlords and property managers, vicarious learning is certainly less painful.  Consider New York City property owner Baruch Singer a master professor from whom a very expensive lesson can be learned.

In 2002, Singer (under his company 98 Morningside Inc.) had been leasing his Harlem apartment building to a couple for $436 a month, restricted under New York City’s rent stabilization program.  While in the apartment, the couple experienced a fire which resulted in the need for massive renovations and the couple’s temporary relocation.  Singer estimated renovations to take approximately one year and the City made arrangements for the former tenants to pay a $1/month holding fee while renovations were underway.  Holding fees are customary in situations such as fires and other natural disasters which render residents homeless and in need of temporary shelter during renovations, especially in rent stabilized residences.

Apparently it took Singer approximately four years to complete the renovations.  In 2006, instead of alerting the former tenants they were able to move back in at their previously stabilized $436 a month rent, Singer advertised the apartment on the open market for $2,100/month by way of Craigslist.  The ad was answered by David Lieberman, who did not know he was about to become the luckiest renter in the world.  Lieberman moved into the apartment in 2006 paying the market rent of $2,100 on a two-year lease term.  Shortly after moving in he received notice of a lawsuit filed against him by the previous tenants who were seeking a return to the residence.

Lieberman reacted by withholding his $2,100 rental payments and filing a lawsuit of his own against Singer.  In his lawsuit, he admitted knowledge of the previously stabilized rent of $436, but says he was led to believe the rent was no longer stabilized.  The case settled in 2011 with Singer (98 Morningside Inc.) agreeing to pay Lieberman $104,000 in overcharges and legal fees and continuing the $1 monthly rent.

The lawsuit filed by the couple was subsequently dropped.

Singer reportedly has approached the Division of Housing and Community Renewal (New York’s governing agency for rent control) on at least two occasions requesting the apartment be returned to either the original stabilized rent of $436 or to its’ market rental price of $2,100.  To date, DHCR has yet to approve this request.

It should also be noted that Singer has a history of violations and fines related to his various properties.

The lesson?

While only a few states in the US have rent stabilization programs, there are a number of other programs and regulations of which to be aware and prepared.

Learn to navigate bureaucracy – It is unknown why the DHCR allegedly refused to return the $436 stabilized rental amount to the unit, or to allow the owner to charge market rent.  What is known is that bureaucracies can be a nightmare to navigate, often leaving behind frustrated and disillusioned citizens in their wake.  It is not unusual for landlords and property managers to have similar experiences with government voucher programs, for example.

Do your due diligence and research the organization via their website and perhaps even a telephone call.  Map out a follow-up schedule to execute weekly until a resolution has been reached.  Find out if there are special forms required to accomplish your goal.  Get a contact person’s name, if possible.  If all else fails, solicit the help of your local congressperson.  There is often congressional staff or interns who can help you navigate through the bureaucracy.

Know the laws regulating landlord-tenant affairs – Mr. Singer may or may not have been fully aware of his obligations and the tenant’s rights under the rent stabilization program, however some landlords and property managers fail to educate themselves on all the rules and regulations in their states, cities and neighborhoods (research local rent control information here).  Further, landlords and property managers should ensure their residential leases effectively address fires and natural disasters.  While all states and municipalities address the landlords’ responsibility to provide fit and habitable premises, very few spell out the landlord-tenant process following disasters.

Require renters’ insurance – At no time is the need for renters’ insurance more obvious to both landlord and tenant than in the aftermath of a disaster.  Why wait until it is too late?  Make renter’s insurance mandatory for all of your residents.  This should be done at lease signing with a provision that the landlord or property manager are also named on the policy as an additional insured, whenever allowed.  Doing so will ensure you are made aware of any policy changes like cancellations.

Always operate ethically – Being properly equipped with the “how to” knowledge should be paired with the willingness to always do the right thing for the right reason.  Just as ignorance is no excuse for not operating properly, neither is immorality – a lesson Baruch Singer should have learned as a child but which ended up costing him hundreds of thousands of dollars as an adult.

Let the experience (and mistakes) of others teach you to be the best in the business.

]]> https://www.ezlandlordforms.com/articles/news/336/what-s-really-going-on-with-housing-markets-right-now/ https://www.ezlandlordforms.com/articles/news/336/what-s-really-going-on-with-housing-markets-right-now/ Fri, 23 Aug 2013 16:38:10 GMT The housing news has sounded awfully schizophrenic recently – it’s up, it’s down, it’s a cause for concern, it’s fueling the economy recovery… what’s really going on?

Economists and journalists are paying more attention than usual to housing markets right now, because the real estate sector had been lagging behind the overall economy's recovery and its strengthening over the last year has led to hope that it will re-energize the anemic overall recovery.  With all the discussion about the Federal Reserve tapering its $85 billion/month Treasury note-buying stimulus as soon as next month, analysts have been looking to news in the housing sector as a potential bellwether for whether the Fed will feel comfortable enough to ease off the stimulus throttle. 

A study released today actually found that the Fed would have a more powerful impact stimulating the economy by buying mortgage-backed assets, rather than Treasury notes.  The premise is that buying mortgage-backed assets would tighten the supply of them on the market, causing their value to rise.  In turn, mortgage lenders would be more willing to make loans, because they will be able to sell them off for higher prices.  The Fed has considered buying more mortgage-backed assets, but the minutes of their July meeting (released to the public this week) reveal that they decided against this course of action.

So how are actual home sales doing nationwide?  Data released today shows that new home sales dropped sharply last month, down to an annual rate of 394,000 in July, compared June’s rate of 497,000.  Supply of new homes on the market is up to 5.2 months, up from 4.3 months in June, and correspondingly new home prices fell to their lowest level since January as there was more inventory available and fewer buyers competing for it.

But wait, there’s more!  Existing home sales “increased 6.5 percent to a seasonally adjusted annual rate of 5.39 million in July from a downwardly revised 5.06 million in June, and are 17.2 percent above the 4.60 million-unit pace in July 2012,” according to a National Association of Realtors report released on Wednesday. 

What gives?

Real estate markets, like the economy in general, is improving slowly and unevenly.  Lowe’s and Home Depot, the two largest retailers for home improvement products, both reported strong growth on earnings, which is an excellent sign for housing markets.  But the more important news to most of us is that homebuilders are adding on substantial jobs again, which will address the biggest weakness in the U.S. economy: the unemployment rate.

The unemployment rate remains a painfully high 7.4%, which causes countless problems for an economy still struggling to find its footing.  People who are not earning money are not buying companies’ goods and services, depriving local businesses of likely customers.  Tenants don’t pay their rent, landlords and homeowners don’t pay their mortgages, evictions and foreclosures ensue.  Governments are simultaneously denied taxable income and must shell out for unemployment and other support benefits.  And none of this takes into account the personal suffering and lasting career damage caused by long-term unemployment.

Nor is everything hunky-dory for people with jobs, either; a study released Wednesday by several former Census Bureau officials reveals that median household income in America remained a troubling 6.1% lower in June 2013 ($52,100) than it was in December 2007 ($55,500), adjusted for inflation. 

In short, Americans are still feeling a lot of financial pain, and many are looking to the housing sector to buoy the economy as a whole.  The news may be mixed, but housing is strengthening, and though it will take years, the gains made by the real estate sector will continue to slowly, unevenly chip away at the unemployment rate and boost economic activity as a whole.

]]> https://www.ezlandlordforms.com/articles/news/335/president-obama-goes-online-with-zillow-to-tackle-questions-housing-agenda/ https://www.ezlandlordforms.com/articles/news/335/president-obama-goes-online-with-zillow-to-tackle-questions-housing-agenda/ Thu, 22 Aug 2013 10:09:59 GMT Earlier this month, Zillow CEO Spencer Rascoff hosted a public forum on the housing market with President Barack Obama, entitled "A Better Bargain for Responsible Homeowners".  The question-and-answer session was presented live online and provided interactive participation through social media, with questions submitted by video recordings, Twitter and emails.  Though the event lasted a mere thirty minutes, it sparked a lingering and spirited discussion on the web that kept the topic surging with traffic well into this week (hashtag: #askobamahousing).

At the start, the President asserted that housing is an issue less shaded by politics and chosen parties, and rather a topic on which all of America wants to agree.  He highlighted proposals to downsize the role of GSEs’ (Government-Sponsored Enterprises’) involvement in hopes of making way for homebuyers and private lenders to lead the market.  He went on to specify "we've got a bipartisan bill -- Senators Warner of Virginia and Corker of Tennessee are working together.  The principles that they have announced are ones that are pretty consistent with me:  Let's have the market get in there.  Let's make sure you don't have a 'heads I win, tails you lose' formula for Fannie and Freddie, so that taxpayers aren't left on the hook."

This proposal gives rise to several questions.  What happens to mortgage interest rates?  What if they drastically increase to where they were before Freddie Mac and Fannie Mae where established?

While some argue that the government should regulate and place restrictions on mortgage interest rates, rising interest rates are typically a sign that the economy is strengthening, provided these rates do not outpace other fundamentals of the economy, such as the unemployment rate.

A question came in from a listener by video about high student loan debt: "I’m wondering, with massive student loan debt, will I ever be able to move into a house of my own?"  The President strayed from the subject of real estate for a moment to make a point about affordable education and its impact on the real estate market; explaining how lowering the interest on student loans may help stimulate the housing market.  President Obama further explained that this may enable first-time homebuyers to purchase real estate thus causing a positive stimulus in the market.  Renting is a great option as well as a viable one for real estate growth.  “We must offer more affordable and quality” rental options, said the President, who went on to express his hope that private investors will take risks and invest in neighborhoods that have become dilapidated.

The President also fielded questions about underwater homes and some homeowners’ difficult in refinancing their mortgages, and used the opportunity to promote his HARP 3 (Home Affordable Refinance Program 3) initiative.  Proposed by the Obama Administration to congress, and allegedly backed by the likes of “Mitt Romney’s chief economic officer”, HARP 3 is designed to allow more homeowners to refinance, even if their mortgages are not backed by Freddie Mac or Fannie Mae.  But if the private sector is not prepared to underwrite these mortgages, who will?  Fannie Mae and Freddie Mac would be called upon to underwrite these mortgages, which stood in apparent contradiction to Mr. Obama's prior goals of scaling back the roles of these GSEs.

There was an overall push for a new mortgage-backed security market, though the MBS market remains unstable for long-term investors.  The President argued that, while risky, the creation of the Consumer Finance Protection Bureau can help with initiating and educating consumers on good practices and acquiring loans and home mortgages.

The forum lasted only 30 minutes and there was scant opportunity to press the President for details on his answers to the wide-ranging questions, but the President’s consistent message was simple: keep fueling the housing recovery, because we need it for sustained economic growth.

Watch the full Q&A forum below:

]]> https://www.ezlandlordforms.com/articles/news/334/are-millennials-finally-ready-to-enter-the-real-estate-market/ https://www.ezlandlordforms.com/articles/news/334/are-millennials-finally-ready-to-enter-the-real-estate-market/ Tue, 20 Aug 2013 10:29:45 GMT Millennials, also known as Generation Y or Echo Boomers, are today’s young adult generation of roughly 18-33 years old, and rival their parents’ Baby Boom generation in size.  But do they have the same appetite for buying real estate that their parents had?

Millennials are borrowing more money in student debt, moving out on their own later, marrying later and are generally less rushed to check line items off their Major Life Event To-Do lists.  So where does this leave them when it comes to homeownership?  Their attitudes were chilly a few short years ago, but appear to be defrosting quickly.

A little context is useful to understand Millennials – these are young adults who came of age in the midst of the Great Recession, and watched their parents bite off more than they could chew and lose their homes to foreclosure.  The older ones remember the dot-com crash of the late 1990s, and understand all too well the 2000’s “lost decade” of investment returns and explosive U.S. debt growth.  Many Millennials also graduated college to find no entry-level jobs available.  Some moved back home with mom and dad, and many decided to postpone the working world in favor of borrowing more money and going to graduate school.

America’s student loan debt has grown truly monstrous, at over $1 trillion dollars ($1,000,000,000,000!), according to the Federal Reserve Bank of New York.  The number of Americans with outstanding student loans is almost 40 million – for a snapshot of how that looks, 43% of American 25-year-olds carry student debt, with their average debt being $25,000.

While consumer credit markets have been oh-so-gradually loosening over the last three years, the high debt levels that many Millennials face are a challenge to qualifying for a mortgage.  Once upon 2005, roughly 9% of 25-30 year-olds who carried student loans were able to obtain a mortgage, but the Federal Reserve Bank of New York reports that last year only 4% of the same group were granted mortgages.  And though interest rates have been low, that means little for those who cannot qualify for a mortgage, or those who can only qualify for a mortgage with a hefty down payment.

Which raises another challenge: savings.  While there is some promising evidence that Millennials are saving a greater chunk of their income than their parents did, it is still extremely challenging for young adults with entry-level paychecks to save enough money for a down payment, especially when the down payment required is 20% instead of 3% (as it was a decade ago).  They also do not have the benefit of selling a home to help finance the new one – they are starting from scratch.

So is Generation Y buying real estate?  Well, yes, albeit with some key differences.  The average age of first-time homebuyers has remained surprisingly stable at 31 years old, but nearly a third of them need a gift or loan to help with the down payment.  They also desire different amenities and layouts from a home than their parents did, eschewing traditional living rooms and dining rooms in favor or home offices or entertainment rooms/home theaters.

“I really want to utilize every room,” sums up Cristin Morton, a single 30 year old and recent first-time homebuyer.  "My parents have a traditional living room. Nobody ever sits there."  Other common wishes Millennials report are not surprising either: open floor plans, outdoor space, up-to-date tech capabilities and abundant storage space.

Millennials are finally entering the housing market, and it isn't a moment too soon.

]]> https://www.ezlandlordforms.com/articles/educational/2/333/rental-properties-as-retirement-income-golden-rules-for-the-golden-years/ https://www.ezlandlordforms.com/articles/educational/2/333/rental-properties-as-retirement-income-golden-rules-for-the-golden-years/ Thu, 15 Aug 2013 11:38:56 GMT Retirement is on the minds of many Americans – and for good reason. The Baby Boom generation (the largest age demographic in America) is beginning to reach retirement age, and a full 57% of Americans have less than $25,000 saved for retirement.  Planning for retirement can be a daunting task, but the best planning is done early and often.  The sooner a concrete written strategy is in place, the better off a retiree will be when it counts.

Many investment advisors recommend their clients diversify their retirement investments to include rental real estate.  The benefits of rental properties as retirement investments include passive rental income each month, a hedge against inflation, and assets that increase in value and cash flow over time instead of drawing down and diminishing.

Rental investing is not for everyone however, and comes with some challenges that should be considered before making the leap.  Here are some golden rules to follow:

Devise a Concrete Written Strategy – The rule here is if it isn’t written, it doesn’t exist.  Very few people stick to plans which are not in writing.  Devising a plan on paper not only ensures compliance, but can serve as a motivator when things become difficult.  How much cash flow are you aiming for?  How many rental properties will it take to achieve this target?  How long will it take to purchase this many rental properties at your current savings rate?  Establish in writing how much money you will be devoting to a retirement account (or account for funding rental investing) each month, and stick with it no matter what.

Time Is of the Essence – The old adage about the early bird catching the worm has never been truer than in retirement planning.  Utilizing rental income to fund your golden years can work well when time is allotted for proper planning.  Do you have enough time to add to your portfolio? Is there enough time to diversify?  And if you start early enough, you can even pay off the mortgage on your rental properties before

Stay Capitalized – Rental properties require both a large up-front investment of capital ($10,000 at the minimum), to cover the down payment and closing costs.  Even after the up-front purchase, repairs, vacancies and lawsuits can create large and immediate bills – sometimes in the four-digit range.  Rental investors must be willing to keep a reserve fund for rental emergencies, and not draw from it for other expenses.

Plan for Non-Liquidity – Real estate is one of the least liquid investment vehicles, and can take anywhere from a month to a year or longer to sell.  It is an investment for the long haul, and cannot be easily divested.

Location, Location, Location – Where you purchase will determine in part how much time you have before you will see a profit.  How stable is the neighborhood?  Is there a different part of town/country better suited to rental investing?  How old is the property, and when was the last time the systems were replaced?  Will you continue managing on your own during retirement?  If not, will you be able to afford to hire a property manager?  Should you consider investing closer to home?

Have a Plan B – Some people believe having a Plan B means you are planning to fail.  In retirement planning, having a Plan B simply means diversifying your retirement portfolio to include other investments like mutual funds, ETFs, REITS, stocks, bonds and other means to supplement your retirement income and provide security and peace of mind.

Landlords looking to utilize rents as a means of retirement income are ahead of many in the retirement race, but would be wise to plan early, diversify and follow the golden rules.

]]> https://www.ezlandlordforms.com/articles/educational/5/332/sticks-and-stones-may-break-your-bones-but-bad-reviews-can-ruin-your-business/ https://www.ezlandlordforms.com/articles/educational/5/332/sticks-and-stones-may-break-your-bones-but-bad-reviews-can-ruin-your-business/ Tue, 13 Aug 2013 16:22:18 GMT Savvy business owners know the value of customer satisfaction and firmly believe a business is only as good as its reputation.  And make no mistake – landlords and property managers are business owners, and would do well to take note of the following data on consumer satisfaction surveys and recent industry trends.

A Consumer Complaint Survey Report (2012) conducted by Consumer Federation of America found customer complaints about housing and home improvement ranked eighth in the top ten consumer complaint categories. In the previous year, these issues were ranked seventh.  In a 2011 survey conducted by the same agency, landlord-tenant problems came in second place among five of the fastest growing complaints received.  Complaints ranged from refusal to repair to unfair or illegal evictions.

Landlord and tenant issues are hardly a new phenomenon, nor are issues raised by property owners against property managers.  What is new is the means by which consumers are now choosing to voice those complaints; a method which, by all accounts, has grown by leaps and bounds over the past five years.  Today’s’ consumers aren’t limiting their complaints to telephone calls to managers or reports to the BBB (Better Business Bureau).  Unsatisfied customers are taking their complaints to social media sites, blogs and other public forums to voice their dissatisfaction to the general public.  What was once a private dispute between landlord and tenant, or property owner and manager has recently become a public affair for all to see and analyze.

Consumers have taken to sharing their reviews of company’s products and services on such local review sites as Yelp, Yahoo Local, Google Places, Facebook and Twitter, among others.  The average number of monthly viewers on each of these sites is in the millions.  Many have five star rating systems and they all have open forums where any consumer can leave a review of your business (for better or worse).  Of course, some sites do a better job than others with quality control, such as controlling for spam and fake reviews.

According to a Nielsen Report on Global Trust in Advertising and Brand Messages (April 2012), a whopping 70% of consumers trust the online opinions of other consumers; coming in second only to 92% of consumers who still trust the opinions of people they know.

Should you be worried?  Not if you’re taking notes.

Consider that millions of consumers, who have never even heard of your company, can now read all the (glowing) reviews about your services at the click of their mouse, from your current and past customers.  Voila!  Without spending a dime or an ounce of your energy, you now have a brand spanking new prospect primed and ready to do business with you.

Here are some ways to ensure a five star reputation on- and off-line while leaving your competition trailing far behind:

Resident Retention Plan – If you do not already have one, put a plan in place immediately.  Your plan does not have to be an elaborate one; it just needs to be an incentive the tenants want.  Incentives like having the carpets professionally cleaned at every lease renewal, free lawn care during tenant’s birthday month, or for property owners, a free month on their birthday.  You can have tenants complete a survey indicating what they consider good incentives, which in itself often helps tenants feel heard and understood.

Auto Updates – All relationships thrive on communication; the business relationship is no different.  Owners want to be kept in the loop and will appreciate you having a system in place to do just that.  Set up an automatic e-mail to be sent weekly (whenever there is a vacancy) or monthly (when there is not much to report) providing them with updates on your leasing efforts, the condition of the lawn, or relevant neighborhood news.  They will appreciate the extra effort.  Similarly, with modern technology there is no excuse for being inaccessible for long periods of time.  Your clients want to feel they matter. It is difficult to feel that way when they cannot reach you.

Quarterly or Semi-Annual Checkups – Whether you are a landlord overseeing your own properties or a property manager hired to oversee someone else’s, your job is to ensure the property is being well cared for and to prevent disasters whenever possible.  Owners and good tenants appreciate the landlords and property managers’ visible involvement; it gives them a sense of security.  Include in your lease agreements information regarding routine maintenance follow-ups and adhere to that schedule.

Proactive Approach – Anticipating potential problems and addressing them long before you need to will go a long way in the eyes of your tenants and owners.  No tenant wants to suffer even for a few hours in the sweltering summer heat or biting winters while your maintenance crew or contractor assesses and repairs the problem.  Regularly scheduled and preventive maintenance is the key to averting these potential nightmares.

Under-Promise and Over-Deliver – This is not just a cliché.  This should be your motto and a part of your daily operations.  When done correctly, you will never have to worry about what customers say about you and your services.

State It in Writing – Have everything in writing and follow it closely.  You should go over your leases with your tenants and not leave it up to them to read on their own.  Most tenants will unfortunately not read through their leases when signing, and are often unaware of obligations, rules, regulations, etc covered in them.  It is your job to ensure they are clear on what is expected of them.  Further, the same rule applies for any rental addendums or disclosures.  You should follow the same rules with your property management agreements.

Reserve, Reserve, Reserve – As a landlord, never spend all of your profits.  You will want to put a percentage away each month for those unexpected repairs which may be more expensive than the average.  Property managers should always hold a portion of the owners’ money in reserve for those same reasons.  Delaying a repair will never sit well with a tenant.  Having the funds available to address issues as they come up will always win you favor among your residents and owners.

Did you take notes?  Now you can get busy building that stellar reputation and encourage all of your customers, whether tenants or landlords, to review to their hearts’ content.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/331/delaware-landlord-tenant-law-updates-summer-2013/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/331/delaware-landlord-tenant-law-updates-summer-2013/ Wed, 31 Jul 2013 11:06:56 GMT Governor Jack Markell has signed several landlord-tenant bills that will take effect between June 27th and August 30th 2013; below is a summary of new Delaware landlord-tenant law changes:

Surety Bonds – The first bill effective on June 27th 2013 gives tenants and landlord the option of using surety bonds instead of traditional refundable security deposits.  It permits the tenant, upon landlord approval, to purchase a non-refundable “surety bond” in lieu of paying the landlord a refundable security deposit.   Surety bonds cost a fraction of the typical one-month’s-rent security deposit, cutting down tenants’ moving costs, but surety bonds are non-refundable whereas a security deposit is fully refundable provided the tenant meets his obligations of the lease.

Typically surety bonds cost 10-20% of the security deposit required, and if the landlord makes a claim the bonds only pay out up to the covered security deposit amount.  Coverage generally includes rent defaults and damage caused by the tenant. 

Smoke/Carbon Monoxide Detectors – A bill that specifies the tenant’s responsibility with regards to smoke detectors and carbon monoxide detectors also goes into effect on June 27th 2013.  A tenant may not remove or tamper with a working smoke or carbon monoxide detector that was installed by the landlord.  This includes removing the working batteries.

Display of American Flags – As of July 3rd 2013, the Governor enacted a bill permitting a real property owner or tenant to display an American flag on a pole attached to the exterior of the property’s structure or on a flagpole located within the property’s boundaries.  The flagpole may not exceed 25 feet in height and must conform to any setback requirements.  Any and all community restrictions to the contrary will not be enforceable.

Death of a Tenant – Lastly, the Governor signed into Act a bill that will take place at the end of August 2013.  This bill allows the next of kin or personal representative (with valid documentation by the Register of Wills) to remove the deceased tenant’s personal belongings from the rental unit.  If necessary, the landlord is permitted to file and maintain an action for summary possession.  There are also procedures specified in Title 25 to address how a landlord may regain possession of the rental property and specifying whether or not it is necessary to have a summary proceeding.  This bill also allows a landlord to bring debt action for any monies due while protecting the estate’s interest in the security deposit, as applicable.

]]> https://www.ezlandlordforms.com/articles/news/323/mobile-technology-transforming-the-property-managment-business-maybe/ https://www.ezlandlordforms.com/articles/news/323/mobile-technology-transforming-the-property-managment-business-maybe/ Wed, 31 Jul 2013 09:06:27 GMT Mobile technology is improving quickly, becoming more intuitive, user-friendly and relied-upon every day.  For the real estate industry, it is changing the way landlords and tenants correspond and process transactions.  Whether commercial or residential, a question on many property managers’ minds is “How will evolving mobile technology transform the industry?”

Landlords can run a tenant credit report and criminal background check instantly from their phone or tablet for immediate decision-making.  New tenants can instantly transfer funds directly to a landlord while signing a lease agreement, whether through electronic transfer or by swiping a credit or debit card on the landlord's smartphone plug-in.  With documents saved to an online service like ezLandlordForms and accessible to view from anywhere, these stored legal documents can serve as a quick reference to avoid potential disputes.  Property managers can even use Pinnum to share their location in real time, as a safety feature.

In a word, mobile technology helps landlords and property managers to oil their business machine – to streamline it by making it faster, easier and more flexible. 

This electronic instant gratification can also serve tenants’ interests, by quickening the process of screening, approval and the handing over of their new house keys, helping them settle in as soon as possible.  Going digital for rent payments is also a convenient way to create a “paper” trail, to log proof of payment history.  And many tenants are willing to pay the processing fee in exchange for the convenience of paying their rent by credit or debit card.

But for all the convenience that mobile technology can bring landlords and property managers, it poses its own set of concerns (like most new technologies).  Not everyone has credit/debit cards or access to electronic money transfers (or checking accounts, for that matter), which may lead to marginalization for the elderly, the poor, immigrants and the less technologically-savvy.  Not all tenants have a computer, much less a smartphone, to pay and interact with the landlord electronically.  An “electronic transaction only” policy on the part of the property manager or landlord would restrict the number of people that they can rent to, excluding many (potentially good) applicants. 

Further, the flipside of that easy electronic paper trail is an easily-accessed accounting record that is visible to anyone who wants to look.  For example the IRS, or perhaps an ambulance-chasing attorney looking to collect a judgment, would not need to work hard to find the accounting records of a landlord who accepted electronic rent payments.

Technology is a rapidly evolving beast.  Using it to create a faster, more fluid property management system is good business, provided it is done thoughtfully.  Join the process of constructively pushing the technological boundaries by experimenting with new technologies, products and services, and send service providers (like us) your feedback and ideas!

]]> https://www.ezlandlordforms.com/articles/news/322/blueprint-for-a-real-estate-recovery-infographic/ https://www.ezlandlordforms.com/articles/news/322/blueprint-for-a-real-estate-recovery-infographic/ Mon, 29 Jul 2013 09:59:47 GMT Many of us are all too familiar with housing market crashes, but what about recoveries?  One important aspect to familiarize yourself with in order to better understand the ups and downs of the housing market is the housing cycle.  As demand goes up, prices and interest rates rise as well, making houses less affordable.  The ensuing lack of buyers then forces demand down, and soon following is a dramatic price fall and interest rate decline, making houses affordable once more. This real estate supply and demand cycle makes both a buyer’s market as well as a seller’s market.

A real estate bust is known as a buyer’s market, where falling prices and slower sales yield financing and affordability constraints, short sales, and foreclosures.  A real estate boom, or a seller’s market, is one wherein rising prices and multiple offers equal fast sales, easy financing and a rapid expansion in home building in order to meet demands.  This supply and demand cycle can then turn into what is known as a bubble, when rising prices encourage further demand-up until the bubble bursts, and people scramble to sell.  Prices then plummet downwards, sometimes even well below their value.

If that sounds familiar, it’s because we hit a peak of bubble years between 2005 and 2006, which later contributed to the Great Recession.  The real question is, are we treading along bubble grounds today?  Fortunately, no, even with some increases, home prices are still relatively low compared to fundamental home values, and far below bubble levels.  For more information, refer to our helpful and informative infographic, and click for more information on tenant screenings or residential leases.



 

 

Copy the code below to embed this infographic into your website:
 

<img src="https:/media/articles/322/HousingRecoveryInfographic(small)2.jpg" /> <br /><a href="https://www.ezlandlordforms.com/articles/a/322/blueprint_for_a_real_estate_recovery__infographic_/" title="Helpful Tips In A Real Estate Recovering Market" width="550"> Real Estate Market Recovery Blueprints</a>

 

 

 

]]> https://www.ezlandlordforms.com/articles/news/321/deck-collapses-during-tenant-party-injuring-8-guests-who-s-liable/ https://www.ezlandlordforms.com/articles/news/321/deck-collapses-during-tenant-party-injuring-8-guests-who-s-liable/ Mon, 22 Jul 2013 18:09:28 GMT Image courtesy of News4Jax.com

When someone falls victim at a rental property, who is legally at fault? 

At least eight guests were injured in Neptune Beach, Florida when tenants threw a Fourth of July party and the deck collapsed under the 15-20 people reportedly standing on it.  Fortunately no guests were killed, but the eight injuries begs the question: who is legally liable?

According to the tenants, they previously expressed concerns with the landlord about the condition of the deck, and the landlord failed to reinforce or update it.  But an adjuster will look into many factors when conducting their investigation, from deterioration of the deck materials and the deck's unstable structure to the tenants allowing too many bodies on a deck known to be structurally weak.  This is where the tenant could be held responsible – they were clearly aware of the deck being unsafe, because they were the ones who informed the landlord in the first place.

Tenants often forget to consider how they may have responsibility or liability, and assume that they are absolved because the rental unit “is not their property,” even when the lease agreement clearly states tenant responsibilities like removing ice from sidewalk, checking smoke detectors’ functionality and changing air filters every three months.  While this may seem straightforward, much depends on the circumstances around the given situation.  Legal liability is never as clear as it seems, especially when the responsibility in question is not outlined in writing and the responsible party must be identified by "common sense" or what a "reasonable person" might believe. 

Landlords do not always have knowledge of what is happening with their property once it is rented to a tenant and if an unauthorized person or trespasser happens to enter the property, it may prevent the landlord from being liable.  Often in the law, if there is proof that one of the parties of the lawsuit did in fact have knowledge of a situation but chose to ignore it, it could leave that party the bearer of the liability.

Lawyers use the term “comparative fault” or "comparative negligence" to discuss what proportion of the responsibility falls on each party, and in court the damages are sometimes assessed to each party based on this proption of responsibility.  The upkeep of rental properties is twofold: the tenant must maintain the property on a day-to-day basis and be communicative and action-oriented in order to inform the owner of property deficiencies, and landlords must keep the property in a safe and habitable condition.  Both parties must, of course, honor the responsibilities outlined in the lease contract they signed.   

But landlords should always remember that they are inherently more likely to be sued than tenants, because they have a highly visible, non-portable asset that plaintiffs can try to collect on – the rental property itself.

Landlords’ rental property insurance policies generally include liability coverage, and landlords should require their tenants to hold renters’ insurance and provide proof of the insurance.  Insurance matters; uninsured landlords and tenants can be held personally liable, and legal battles can be lengthy and expensive even for the insured.

Watch the full story about the balcony collapse below:

]]> https://www.ezlandlordforms.com/articles/educational/2/319/the-pros-and-cons-of-reits-vs-owning-brick-and-mortar-real-estate/ https://www.ezlandlordforms.com/articles/educational/2/319/the-pros-and-cons-of-reits-vs-owning-brick-and-mortar-real-estate/ Wed, 17 Jul 2013 10:42:24 GMT Interested in investing in real estate, but unsure whether you should invest directly by buying a property or buy shares of a real estate investment trust (REIT)?  They each have pros and cons (of course); below is the beginner’s comparison between each method of real estate investing.

But first, what is a REIT?  Broadly speaking, REITs are securities, which are traded in financial markets, and represent companies that develop, buy, lease and/or sell either real estate ownership or mortgage notes (or both).  They receive special tax benefits and must meet specific requirements in order to qualify.  Investors can buy shares of a specific REIT company, or can buy into a fund (e.g. an exchange-traded fund or ETF) that holds shares in many REIT companies.  For example, an REIT company might build shopping centers and lease them to retail store, and an investor who likes this industry might buy shares of this company instead of partnering with other like-minded people and building malls on their own. 

Advantages of REITs

1. Smaller Up-Front Cash Requirement

Buying real estate the old-fashioned way generally requires at least $10,000 in cash per property, for down payments, closing costs, inspections, appraisals, etc.  REIT investors can buy shares for, well, whatever the share price is (often as low as $25/share).

2. No Debt Necessary

Few people pay cash when buying brick-and-mortar real estate, but taking on debt has its own drawbacks and complications.  And with debt comes personal liability to repay that debt, come hell or high water (the latter being a very literal risk).

3. Liquidity & Diversity

Real estate is notoriously non-liquid – when an owner wants to sell a property, it might take six months or even a year.  REITs, alternatively, are traded daily and shares can be bought or sold on a moment’s notice.  And because they include many properties, a few rotten apples won’t ruin the whole barrel, whereas a single real estate transaction can be fraught with disaster (e.g. the framing turns out to be rotten and must be replaced for $30,000).

4. Management Outsourced to Professionals

Investors in REITs do not need to worry about the headaches of property management, such as tenant screening, collecting rents, sending late notices and eviction notices, tracking down deadbeat tenants with no permanent phone number, going to rent court to petition for eviction, etc.  Professional property managers handle the headaches, and investors need not concern themselves with these frustrating realities. 

Advantages of Traditional Real Estate Ownership

1. Leverage & Amortization

With a $10,000 down payment, real estate investors can purchase a $100,000 rental property, whereas REIT investors could still only purchase $10,000-worth of shares.  And who pays off that mortgage?  Ideally, the tenants, as they pay down (and eventually off) the investor’s loan while the landlord keeps the surplus cash flow in the meantime. 

2. Opacity & Control

Who’s to say exactly what properties will be bought by a REIT?  REITs are also more difficult to discern price versus true value than a single piece of real estate, and even price-to-earnings ratios of REITs can be misleading.  Investors who control exactly what properties they purchase, and how they are improved, priced and managed, can ensure that all of these tasks are being performed competently and to the greatest benefit to the shareholder – themselves. 

3. Tax Benefits

Rental properties are excellent for providing tax benefits.  Mortgage interest, repairs, property management fees, closing costs, insurance costs, car mileage spent visiting rental properties… every conceivable cost that landlords incur can be deducted and offset the investor’s income (even income from other sources, such as W-2 income, or income from, say, a REIT).

4. Rents Rise, Costs Stay the Same

Remember Matthew McConaughey’s infamous quote from Dazed and Confused?  To modify it, rents grow higher, but monthly mortgage bills stay the same.  Sure, real estate taxes and insurance may occasionally creep up, but the principal and interest mortgage payment does not.  So while the rent may only be $150 higher than the mortgage payment today, in five years from now it may be $350 higher, and so on indefinitely.  Aside from the obvious advantages over time, this doubles as a hedge against inflation: if suddenly the dollar plummets in value, landlords can raise their rents accordingly to maintain the same adjusted value, but mortgage payments stay exactly where they are.

Which is the better way to invest in real estate?  That is for each investor to decide, based on their own circumstances and goals, but most financial analysts agree that diversity is the best hedge against disaster (something about eggs and baskets).  In other words, why not invest in both?

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/318/case-study-ontario-tenant-eviction-appeals-and-the-canadian-appeal-process/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/318/case-study-ontario-tenant-eviction-appeals-and-the-canadian-appeal-process/ Tue, 16 Jul 2013 11:59:11 GMT It doesn’t occur often, but the dreaded eviction appeal does happen.  It creates extra work, usually additional losses and always more stress for the landlord in Ontario (or anywhere, for that matter).  Often, tenants use the appeal process as a ploy for delaying eviction.  This is even more aggravating for the landlord.

The scenario typically unfolds like this in Ontario:

1. The landlord files an application to evict with the Ontario Landlord and Tenant Board.
2. The  case is generally heard within one month of being filed.
3. When a decision is made for the tenancy to terminate, the tenant will then have to move by the date set by the court.
4. The tenant has 30 days to file an appeal to the Divisional Court.
5. The tenant files the appeal and the original decision to “terminate and force the tenant to move” is “stayed” or put on hold until the appeal hearing.

There are critical differences from an appeal court hearing and the filing of an application for termination.  A lawyer is generally not required to file an application to the Ontario Landlord and Tenant Board to force a tenant to move whereas one is generally needed for navigating the appeal process.  Beware of trying to go through the appeal process without the assistance of counsel; it often causes even more wasted time and money.

In many locales within Ontario, the appeal process can take a year and a half just to be heard; in some places longer.  The tenant does have a requirement of many steps for the appeal in order to have it set down for a hearing.  Supposedly this must be filed within 30 days of the initial filing of an appeal BUT there are no penalties in place if a tenant does not do so, and the tenant of course the tenant has a financial incentive to delay the process, not hurry it.

A landlord must push a tenant who is now an appellant to meet the deadlines and the procedures of the Rules of Civil Procedure.  When a tenant fails to meet deadlines, a landlord may file a motion to Divisional Court for dismissal.  This will remove the stay if successful, and the tenant will then be evicted.

An appeal cannot be ignored and one false step can cause long delays in the process.  The appeal procedure is long and complicated, and the typical landlord truly needs the assistance of an attorney to ensure that all requirements are met.

A final word to the wise: Ontario is not alone in its lengthy and difficult appeal process.  All Canadian landlords are encouraged to contact an attorney the moment their tenants file an appeal to stay the eviction process.

]]> https://www.ezlandlordforms.com/articles/news/317/the-rise-of-solo-households-and-the-implications-for-real-estate-investors/ https://www.ezlandlordforms.com/articles/news/317/the-rise-of-solo-households-and-the-implications-for-real-estate-investors/ Mon, 15 Jul 2013 17:50:07 GMT              By Dan Pipito & Brian Davis

Living alone and loving it?  You’re actually not alone – according to the Census Bureau, a full 28% of U.S. households are solo occupants, up from 17% in 1970.  With Americans living longer, marrying later and divorcing often, the increased incidence of solo households only makes sense.  

This trend has particularly accelerated over the last three years, as artificially-joined households in the aftermath of the recession “unbundled.”  Unbundling occurs when households which were joined (or bundled) for financial reasons only – say two single young professionals who would prefer to live alone but who moved in together because they took pay cuts – go their separate ways once more.  Another frequent example is the college graduate who reluctantly moved back in with mom and dad, because she could not find a job, but has now found a job and moved out of the nest once and for all (she hopes).

This rise in solo households has several implications for real estate investors.  First, it means that the household growth rate is faster than would be explained by population growth alone (read: higher demand for housing).  Second, it means that smaller homes have a growing demand, and one-bedroom homes are not as “functionally obsolete” as was once thought.

Nor are they all renters.  Buying real estate alone has been growing in popularity over the past fifteen years, primarily with women.   According to the National Association of Realtors, 25% of real estate buyers last year were solo, and of those, nearly twice as many women bought solo as men.  While having a second person’s income can help borrowers qualify for a mortgage, the flipside is that solo buyers are not held down by another’s spotty credit, loans or debts. 

When the time comes for single people to tie the knot and upgrade to a larger home, they can keep their prior single homes as rental properties, and let tenants pay off the mortgage.  The longer they own the property, the lower their mortgage debt and (theoretically) the higher the property’s value, making these smaller ex-homes perfect long-term assets. 

And who knows?  Perhaps these once-solo occupants will be back one day to live in the old single-pad again, as empty-nesters reliving their (possibly misspent) youth.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/316/florida-residential-landlord-tenant-law-changes-effective-july-1-2013/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/316/florida-residential-landlord-tenant-law-changes-effective-july-1-2013/ Wed, 10 Jul 2013 17:41:17 GMT As of July 1, 2013 many changes were made to Florida’s landlord tenant statutes. On June 7, 2013, Governor Rick Scott signed into law under CS/HB77 for some of the most comprehensive changes to Section 83 Part II of the Florida Residential Landlord-Tenant Act. Below is a summary of many of the changes.

Attorney Fees – Previously, the Act provided that in a lawsuit regarding the enforcement of the lease/ rental agreement provisions or the Landlord Tenant Act that the prevailing party would be entitled to attorney fees. Under the new statute, the text clarifies that in cases where a person is injured on a rental property; attorney fees WILL NOT be awarded. Additionally, for lawsuits that do not involve personal injury, a lease may not permit the landlord to force tenants to waive their rights to attorney fees.

Security Deposits/Advance Rent – There was no clarity in the previous law whether or whether not a landlord had to notify a tenant if the bank (where the tenant’s security deposit was held) had gone through a name change, was sold, or merged with another financial institution. As of July 1, 2013, it is clear that a landlord is NOT required to notify a tenant of these changes.

Disclosure – Landlords under the old statute were required to provide a tenant with the Section 83.49(3) of the Florida Statutes. This explained the specific procedures regarding the security deposit and when and how landlords and tenants made claims against or returned the security deposit.

Under the new laws, a disclosure will be required in all Florida leases starting on January 1, 2014. Until that time, the old statute can remain or landlord may choose to add the disclosure language early. This disclosure will make it clear that a landlord does not have to notify the tenant if that tenant is using any advance rent when it becomes due. It also spells out that the landlord will have 30 days from the time the tenant moves out or vacates the unit to send a “Notice to Impose the Claim on Security Deposit” and it should also provide language encouraging landlord and tenant to do their best to informally settle disputes, but where an agreement cannot be reached, either party has the right to sue the other in a court of law.

Notice of Intention to Impose a Claim on Security Deposit – Previously if a landlord did not send out a “Notice of Intention to Impose a Claim on Security Deposit” on time or correctly, it was not clear as to whether the landlord was required to refund the entire amount of the security deposit or if it could be used against the amount the tenant owed with a refund to the tenant of the remainder. Under the new statute, if a landlord fails to send the “Notice of Intention to Impose a Claim on Security Deposit” on time and correctly, that landlord must return ALL of the security deposit but will be able to bring suit against the tenant in court to get a judgment for the principal claim if the landlord goes to court and prevails.

Security Deposit upon Sale of Property – Under the current law there is nothing that specifies what happens to a tenant’s security deposit when the rental property sells. Unfortunately oftentimes, the prior landlord (owner) ends up keeping it. Under the new law effective July 1, 2013 there is now a refutable presumption that the new landlord (owner) has received the tenant’s security deposit from the prior landlord (owner). It is also presumed that the amount of said deposit is limited to an amount equal to one month’s rent.

Window Screens – Before the new law the landlord was responsible for providing and maintaining screens in good condition. Because screens are often damaged or ruined by the tenant, the tenant’s guests, pets or family; the landlord was making frequent repairs and replacements. This gets expensive. With the new law effective on July 1, 2013, the landlord is responsible to provide screens on the windows that are in reasonably good condition and the landlord is only responsible to make repairs once a year.

Criminal Offenses – Under the prior statutes, the rights and duties of the Landlord –Tenant Act were only enforceable by civil action. Now, as of July 1, 2013, if a crime is committed by either tenant or landlord, there is a clarification of the law that such a crime be enforceable by criminal action as well.

Curable Violations – Prior to July 1, 2013, if a tenant violates a lease or the Landlord – Tenant Act, the tenant was given a 7 Day Notice that provided the tenant either cure (fix the violation) or vacate within 7 days. If that tenant offended the same or similar violation within a 12 month period, the landlord would have to then send another notice and wait the 7 days before filing in court for eviction. Well things just got easier! Under the new law, once a landlord gives a tenant a 7 Day Notice with the option to cure and that tenant re-commits after the 7 days have elapsed, the landlord is not required to provide another notice; instead that landlord may go straight to court and file for eviction.

Partial Rent Payments – Under the previous statute, it was misconstrued and thereby ruled by many judges that if a landlord accepts a partial rent payment, then that landlord could not take any court action against the tenant for that month. With the new law, as of July 1, 2013, the landlord MAY accept a partial payment and still proceed with an eviction in the same month provided that:
1.          Landlord gives the tenant a receipt for the partial rent. OR
2.          Landlord places the amount of the partial rent into the Court Registry, if eviction is filed in court. OR
3.          Provide tenant a new 3 Day notice by posting it. Unfortunately there is no clarity whether a landlord can or cannot hand-deliver the notice. If hand-delivering is the method chosen, to be on the safe side, posting the notice in addition, may provide extra protection.

Subsidized Housing and Crime, Non-Compliances, Evictions – Before July 1, 2013, in some subsidized and/or government housing, if a tenant committed a crime and the landlord failed to file an eviction within 45 days of the time when the crime or non-compliance issue happened then the landlord would be prohibited from filing an eviction. This often put a landlord in a precarious position as many times a landlord did not even find out or know about the offense until after the 45 days had passed. Under the new law, a landlord has 45 days from the time he/she finds out about the crime or offense rather than “when the offense occurred”. This makes things fair for the landlord.

Lease Ending Notices – Prior law states that the landlord could make a tenant give notice prior to the end of the lease stating that the tenant is vacating. As of July 1, 2013 the statutes make it more even and less one-sided. Therefore if a landlord requires a 30 day prior notice from the tenant to vacate, a landlord must also accept a 30 day prior notice from the tenant when tenant chooses to vacate. A notice may be as high as 60 days but remember the requirement must be the same for landlord and tenant.

Evictions – Under the old law, a 3 day notice with a deficiency, no matter how insignificant could result in the tenant or the tenant’s attorney getting the case dismissed. As of July 1, 2013, a judge will not just dismiss a case due to a blemished 3 day notice but instead the tenant will have to place his/her rent money into the Court Registry before that tenant may object to any issues with the 3 day notice. If there is a problem with the notice, the landlord may now legally make the correction, serve a new notice OR file an amended pleading instead of having the case be dismissed altogether.

Writ of Possession – Under the old law, a writ could not be served on a Weekend or a legal holiday, causing these days to be omitted from the calculation of time passing from the service of the writ to the execution. As of July 1, 2013, the writ of possession may be served on a weekend or legal holiday. Typically a sheriff won’t be serving this paperwork on a weekend or holiday BUT the significance comes into play because weekends and holidays are no longer excluded when counting time passing.

Prohibited Landlord Practices – Before July 1, 2013, there were many things a landlord could not do and were against the law. This included shutting down a tenant’s utilities, locking a tenant out without going through the proper eviction channels, discrimination, retaliation against a tenant for organizing a tenant’s group, discrimination against military members along with others. Under the new law, 2 items are added that have to do with retaliation. The first being that a landlord may not retaliate against a tenant if that tenant must pay rent to a condo or homeowners association after a legal rent demand. Second, a landlord MUST not strike back against a tenant who utilizes their rights under fair housing laws, whether local, state or federal.

 

DISCLAIMER: This Update is provided for informational purposes only and ezlandlordforms does not warrant or guarantee its accurateness. It is not intended as legal advice or counsel. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of ezLandlordForms, LLC.

 

]]> https://www.ezlandlordforms.com/articles/news/315/maryland-tenant-awarded-800-000-for-bedbug-infestation/ https://www.ezlandlordforms.com/articles/news/315/maryland-tenant-awarded-800-000-for-bedbug-infestation/ Sat, 06 Jul 2013 19:31:13 GMT                            By Cassandre Juste
Bedbugs have been a growing concern in recent years for property managers, landlords and tenants alike.  These pesky little creatures have an affinity for shacking up in warm homes, specifically inside mattresses and bedding or other sleep areas.  Bedbugs are mainly active at night and removing an infestation is no easy feat.  After almost two years, a Maryland landlord-tenant suit over bedbugs has finally ended with the tenant emerging $800,000 richer.

Sixty-nine year old Faika Shaaban rented an Annapolis apartment in the fall of 2011 and at the time there was an open violation for a bedbug infestation, which the landlord did not disclose to her.  When the tenant moved into the apartment a month later she developed a rash that was later diagnosed as bedbugs.  A neighbor reported the infestation to the landlord, Cornelius Barrett, who did not act and when the city found the landlord in violation and ordered him to hire a licensed, pest-control contractor to rid the infestation Barrett failed to comply with this as well.  In June of 2012, Shaaban was evicted from her apartment and her bedbug-infested belongings were put outside on the street.

A jury in Anne Arundel County deliberated for a mere 45 minutes before ruling in favor of the tenant and awarding her with $800,000, which is twice what she originally sought.
The message is simple: any type of infestation issue reported by tenants should be taken seriously and addressed immediately, even if the response is simply to refer the tenant to the section in their lease requiring tenant responsibility for pest control.  Landlords may not be able to entirely eliminate liability through such a lease clause, but it can certainly help establish in writing the tenant's responsibility.  Still, no landlord can avoid liability when the property is infested before the tenant even moves in, and code violations must be addressed immediately, as the landlord is ultimately more easily collected from than the tenant. 

In this case, it seems the jury succeeded in sending a strong - and expensive - message to landlords nationwide, to the tune of $800,000.

]]> https://www.ezlandlordforms.com/articles/news/313/nyc-landlord-investigated-for-harassing-hispanic-tenants-in-gentrification-scheme/ https://www.ezlandlordforms.com/articles/news/313/nyc-landlord-investigated-for-harassing-hispanic-tenants-in-gentrification-scheme/ Tue, 02 Jul 2013 15:36:23 GMT                                    By Cassandre Juste

Castellan Real Estate Partners/Liberty Place Property Management, a New York landlord and property management firm with roughly 1,700 rent-regulated units under management in 35 buildings, remains under fire for their alleged gentrification scheme.  The plan was simple: evict, intimidate, invent fees and otherwise push out the immigrant tenants in the company's higher-demand buildings, to sign new rental contracts with non-immigrant tenants paying higher rents.  

But after news reports went live accusing the landlord of harassing Spanish-speaking tenants, the Tenant Protection Unit, created by Governor Cuomo, served the landlord with a subpoena to produce past rental papers.  The probe began thirty days after news started airing about the scandal in parts of Harlem and the South Bronx where rents are on the rise.

The accusations include the company charging fake fees and randomly demanding that Spanish-speaking tenants with existing leases prove their immigration status and income.  Some tenants were also threatened with eviction when their immigration status was not conclusively proven by existing tenants.  Cuomo’s team condemns all of these actions as extremely illegal.

While Castellan/Liberty has denied the allegations, Governor Cuomo remains enraged by the situation. “I am disturbed by the allegations that led to the . . . investigation, but hope that it will put bad landlords on notice.”

So far Castellan/Liberty has only sent rent arrears notices to tenants, said Jamie Heiberger, a spokeswoman. She asserts the landlord is fully willing to cooperate with the subpoena and the investigation.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/312/new-arizona-law-requires-landlords-facing-foreclosure-to-notify-tenants/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/312/new-arizona-law-requires-landlords-facing-foreclosure-to-notify-tenants/ Mon, 01 Jul 2013 03:53:44 GMT A new amendment to the Arizona Residential Landlord and Tenant Act is designed to protect tenants from landlord foreclosures, and adds more legal liability to the landlord... again.

Three years ago, in response to the housing market crash and foreclosure wave, an amendment to the Arizona Residential Landlord and Tenant Act required landlords to give their tenants written notice when the property was in a state of “potential foreclosure” at the time the rental agreement contract is signed.  This was intended to protect tenants from moving into properties that were in the process of foreclosure, so that they would not be taken by surprised and forced to move.  Now landlords’ responsibility (and liability) is being expanded by House BIll 2281, which is in the process of being enacted into law by Arizona legislature.  Governor Jan Brewer signed the bill last month after a bustle of new laws were passed at the end of the legislative session ending June 14.

Landlords in Arizona will now be required to provide notice to their tenants of a potential foreclosure on the property within five (5) business days of receiving notice of the trustee's sale.  The addition to House Bill 2281 has very clear intention – to prevent landlords that are in financial distress from entering into contracts with tenants simply to make a quick buck before the property is lost, and warn tenants that the home may soon belong to a new owner.  If the tenants are unable to reach an agreement with the new owner, they may eventually face eviction (after a 3-12 month foreclosure and transfer process, plus another 90 days after a new owner formally attains ownership).

There is already a federal law protecting these tenants, the Protecting Tenants at Foreclosure Act (currently extended through the end of 2014), which Arizona expands upon with its new legislation.

The new law has serious implications for Arizona landlords.  Failure to provide written notice to all tenants within five days of foreclosure action being initiated can result in tenant lawsuits against the landlord for damages, which is the last thing a landlord already in financial straits needs.

]]> https://www.ezlandlordforms.com/articles/educational/2/311/investing-in-boom-and-bust-markets-where-to-put-my-money-in-different-market-cycles/ https://www.ezlandlordforms.com/articles/educational/2/311/investing-in-boom-and-bust-markets-where-to-put-my-money-in-different-market-cycles/ Wed, 26 Jun 2013 10:13:34 GMT                                              By Brian Davis

The economy may be gradually improving, but a quick look at the stock market's skyrocket upward and subsequent slump over the last month certainly looks different from the slow slog in overall U.S. economic growth.  Where is the best place to park money when the economy and various markets are improving?  What about during a recession?  Where are we right now?

Everyone knows the adage “buy low, sell high,” but ascertaining the bottom of the trough and the peak of a bubble is far more difficult.  Still, you don’t have to know the exact bottom or the exact peak, you just need to answer the question “Does the mood seem cavalier in assuming growth in the last few years, without enough healthy skepticism?” Or conversely, “Does it feel like it’s been raining an unnaturally long time in the markets?” 

Let us imagine it is December 2008, and the financial markets – all markets – are in free fall.  You could pull out your money at a loss, but you already know that’s a bad idea, so you leave alone what you already have invested there.  But what about the 10-25% of your paycheck that you set aside for saving and investing each month?  When markets are actively falling, it should go toward paying down debts and boosting liquid savings, until you feel more optimistic about any given market.  If you have no personal debts, then it is a wise time to pay down the mortgages on your rental properties.  The return on paying down mortgage debt is better than investing in government bonds or putting money in a bank CD, and gold already shot up during the crash earlier this fall, so stick with the safe bet for now and simply pay down debts.

Now fast-forward to May 2009.  U.S. stock markets had plummetted for six months, then turned around and have been climbing steadily again for a couple months, but the real estate market is still tumbling downward.  Hopefully you have now put a dent in your rental properties’ mortgage debt, and set aside some savings.  It is now time to invest in stocks, which dropped so far, so fast that you agree with all the analysts saying the market overcorrected downward and is now correcting back upward.  Ph.D in rocket science not required – just buy into a low-fee mutual fund that tracks the Nasdaq or another major index, and use an IRA to cut your tax bill down at the same time. 

It is now August 2011, and real estate markets are still looking awful.  But for all that, the rental market has been strong, and the foreclosure wave is visibly ebbing, which means prices cannot keep falling much longer and have probably overcorrected downward.  Interest rates are extremely low, making mortgages more affordable than ever.  While everyone is still spooked away from real estate, the time is perfect for scooping up as many rental properties as you can afford.  But each should still pass the cash flow test immediately, putting money in your pocket each month and not relying on future appreciation.  A side benefit: rental properties are a good hedge against inflation, and you know that years of the Federal Reserve pumping money into the economy will eventually cause inflation.

And on to June 2013, when the stock market may have overcorrected upward and is now wobbling precariously, as the Fed talks about ending its stimulus and China and Europe appear to be on unsteady footing.  Real estate is still undervalued by 6-7% in most markets, but inventory is now tight, and it is once again hard to find a good deal on rental properties.  Keep an eye out for good deals on rental units, but flips may be easier to find, especially as November and December come around and fewer people are in the market to buy.  With the stock market's skyrocket seemingly slowing at the moment, and real estate inventory tight and bidding wars common once again, I believe it's now a good time to invest indirectly in real estate, through lenders.  Investing in banks is one option for this, and hard money lenders often offer an even better return on investment, often in the 7-10% range. 

The economy may have been trudging slowly upward for four years, but the stock and real estate markets have been doing their own acrobatics during this period.  Knowing what to do with that reserved 10-25% of your paycheck is almost as important as setting it aside in the first place, but fortunately it’s not as hard to do.  Simply ask where each market is in its cycle, and if none of the markets look promising to you, pay down your debts, boost your liquid savings and wait until you like the look of one market or another. 

And if the very idea of trying to time the market evokes sweaty palms and stress, then forget about timing the market altogether.  Just follow a few simple rules to earn a strong return on your money: avoid investment funds with high fees, always maximize tax advantages, and never buy a rental property that does not immediately offer strong cash flow.  The hard part is just setting aside that 10-25% of each paycheck!

]]> https://www.ezlandlordforms.com/articles/news/310/is-there-a-great-senior-sell-off-looming-over-the-next-decade/ https://www.ezlandlordforms.com/articles/news/310/is-there-a-great-senior-sell-off-looming-over-the-next-decade/ Mon, 24 Jun 2013 11:34:58 GMT

Aging populations from the post World War II baby boom and changing demographics will certainly transform real estate markets in the next decade.  Opinions differ on whether North America will see another major real estate crisis, this one caused by a senior sell-off, but there are several trends and fundamentals that simply cannot be ignored.

First, consider that the two decades from 1990-2010 witnessed the peak household size of the baby boomer generation.  Boomer parents were raising their children, and largely doing so in suburbia: according to researcher Arthur C. Nelson, 77% of new residential construction in the U.S. was driven by this trend.  Consider that 80% of new homes constructed in that period were detached single-family homes, and of those, a third were 2,500 square feet or larger.

So if the last two decades’ real estate growth was overwhelmingly driven by suburb-obsessed boomer parents, what happens now that their children have left the nest?  Do they still need a four-bedroom, three-story house with an acre of lawn to maintain?  Many may not yet be ready to put on their sandals and sun hats, but the time will soon come when they are unable or unwilling to walk up and down so many stairs, mow that acre of lawn every week and pay to heat such a large (and largely unoccupied) house.

This leads to several questions.  Where will they go, when the time comes to move?  Will there be any buyers to take up this inventory?  If so, who?

The answers to these questions remain partly cloudy, but there are still probable conclusions to be drawn.  First, baby boomers will likely draw towards more “walkable” neighborhoods: suburban centers and upscale downtown areas.  Driving everywhere becomes less tenable and less desirable for many seniors, so the ability to walk to grocery stores, restaurants, art galleries and other amenities will be attractive to aging boomers.  See WalkScore.com for a more interactive and in-depth perspective into the walkability of neighborhoods around the country.

They will also be downsizing to smaller ranchers, two-story townhomes, or apartments/condominiums with elevators and maintained grounds.  The older seniors become, the more likely they are to switch back to renting their home – 79% of households over age 85 are renters – which will increase demand for rental units over the next decade.

Where do the traditional senior destinations like Florida and Arizona stand in all this?  Some data indicates a resumption of this trend, which slowed in the recession and its aftermath.  And with many young adults moving south and west as well, more seniors may follow to be near their children and grandchildren.

But who will buy their housing inventory?

One group is “Generation Y” or “millennials,” who are just now entering their child-bearing years.  This generation is notoriously less likely to buy real estate however, having witnessed the real estate crash of the last decade and saw their parents’ homes foreclosed on or plummet 25% in value.  Among Americans under 35, 36.8% own homes today, down sharply from 43% in 2006.  This generation is also carrying far more student loan debt than any prior generations, and has far less in liquid savings or investments.

There is also a racial and cultural demographic shift, as Caucasian Americans prepare to become a minority.  The fastest-growing ethnicity is Hispanic Americans, but the education and income rates among Hispanics are currently far lower than that of the aging baby boomers whose houses will be up for sale.  This gap will mean that the fastest growing segment of the population will have trouble affording the large, expensive suburban homes that boomers will be trying to sell, and a pessimistic outlook for these homes’ prices.

And then there is slowing population growth.  The aforementioned Arthur Nelson, director of the Metropolitan Research Center, calculates that there will be around 35 million over-65 households by 2020 in the U.S., and roughly 200,000 more seniors trying to sell and become renters than there will be new households entering the real estate market to buy them.  That figure could balloon to a half million housing units each year by 2030.

This is hard news for baby boomers, and for the rest of us, as it will be our (already strained) social safety nets that catch all of the falling boomers. 

So what can boomers do now to prepare?  First, they should consider buying their easy-to-maintain, highly-walkable condo or townhouse now, and keeping it as a rental property until they are ready to move into it.  Homes are still undervalued compared to fundamentals in most markets, and they will be beating the senior rush that will take place later.  Second, they should plan for the possibility that their home will not be worth what they think it is, and will sell for far less than they hope, when the time comes to move.  Third, they should prepare for the possibility that they will live into their 90s, which may mean working later than they originally planned, and/or saving more of their income now.

]]> https://www.ezlandlordforms.com/articles/news/256/say-sayonara-to-low-mortgage-interest-rates/ https://www.ezlandlordforms.com/articles/news/256/say-sayonara-to-low-mortgage-interest-rates/ Tue, 18 Jun 2013 13:39:59 GMT The combination of record-low mortgage interest rates and low real estate prices created perfect conditions for investing in rental properties, and thousands of U.S. real estate investors took advantage of them.  Unfortunately, all good things must come to an end and it seems the end of the ultra-low mortgage rate era is closer than we thought.  Rates are already on the rise and are set to continue to increase.

In early June, the average fixed rate 30-year mortgage increased another 10 basis points to 3.91%.  This is a dramatic increase from the 3.31% at the beginning of May of this year.  In the meantime, those shopping around for a 15 year mortgage are receiving rates around 3.03%; a significant increase from the all-time low of 2.56%.  According to CNN Money, the time to take advantage of the low mortgage rates has already passed.

Americans have enjoyed such low mortgage rates due to the Federal Reserve artificially holding interest rates down, by purchasing up to $85 billion in mortgage-backed securities and Treasury bonds each month.  This influx of capital to banks has boosted the supply of money available for lending, and with higher supply comes lower prices.  Thus banks have charged lower interest rates for mortgage loans (and other loans, such as small business loans), given the large supply of money available on the market for lending and borrowing.

The recovering economy will allow the Fed to let interest rates to rise.  During the recession, interest rates were lowered to help stimulate lending and growth in the economy, but as the economy continues to improve it creates a tailwind for more private investment.  If the Fed believes that private investors will pick up the slack, it can stop artificially pumping money into the market by buying securities.  So as the job market and the general economy improve, positive employment reports and other economic signals will let the Fed know it can ease off the support, which will drive rates upward.

The fact is that 3.3% mortgage interest rates are an anomaly.  According to Keith Gumbinger, vice president of HSH.com, "The 30-year [mortgage rate] hit a 37-year low in 2003 at 5.23%, that was the previous low-watermark prior to this financial crisis and it's likely we will move closer to that mark as we grind forward."  As we return to better financial conditions, higher interest rates will follow close behind.

But all is not lost for homebuyers and rental investors looking for cheap mortgages.  Even as mortgage interest rates increase by one or two points, they will still be considerably lower than they have been in the past.  Historically, the average mortgage interest rate has been around 5.5% or higher.  Based on the going rates of Treasury bonds, mortgage interest rates (which are usually 1.7 to 2.1 percentage points higher than Treasury bond rates), the mortgage interest rate will soon be between 3.8% and 4.2%.

]]> https://www.ezlandlordforms.com/articles/news/255/new-smartphone-app-pinnum-provides-safety-tool-for-landlords-and-property-managers/ https://www.ezlandlordforms.com/articles/news/255/new-smartphone-app-pinnum-provides-safety-tool-for-landlords-and-property-managers/ Tue, 18 Jun 2013 12:31:20 GMT                                                                               By Brian Davis

Consider the following hypothetical situation: you are a property manager and are meeting a prospective tenant to show a rental property in a rougher part of town, and you want to make sure your business partner knows where you are.  Or perhaps your husband owns rental properties and routinely visits lower-end neighborhoods to pick up cash rent payments, and you worry when he fails to pick up your call one night while on such a trip.  A new smartphone app known as Pinnum is designed for just such a scenario.

Pinnum allows you to connect other phones to your account, so you can see on a map where all of them are at any given moment.  And if that sounds like a flagrant breach in your or your partner’s privacy, you can enter “stealth mode” at any time to prevent your GPS location from appearing to others.

Imagine all of the situations in which it would be nice if you could know where your friends, family or coworkers were; you want to check how close they are so you can start making dinner, or you want to make sure they made it to the airport in time to catch their flight, or you are worried about their safety while showing rental properties after dark. 

Perhaps when buying a new gas stove on Craigslist for a rental property, and driving to an unfamiliar area to meet a stranger and inspect the stove, it would be a comfort to alert someone on your network what your plan is, and when to expect your safe return.  They can check in on you periodically, and call if your stay is longer than expected. 

Old timers and new mothers love to harp that the world is becoming a more dangerous place, which is probably a matter of opinion, but the fact is that today's world certainly allows for closer connectivity over distances.  The simple reassurance that someone who cares about your safety knows your exact location can mean the difference in accepting that new client with the lower-end rental properties, boosting your management portfolio.  It can also mean your spouse or business partner can rest easier, knowing that they can direct the police to your location if you remain in dangerous areas longer than predicted and fail to answer the phone. 

And, for better or worse, you can even tell where your children are 24 hours/day, 7 days/week.

]]> https://www.ezlandlordforms.com/articles/educational/2/247/5-relatively-cheap-upgrades-to-boost-market-rents-and-property-values/ https://www.ezlandlordforms.com/articles/educational/2/247/5-relatively-cheap-upgrades-to-boost-market-rents-and-property-values/ Mon, 17 Jun 2013 11:43:59 GMT What makes a tenant willing to pay $1,500/month for one property, and only $1,150 for another across the street?  Some differences are easy enough to explain: more square footage, more bedrooms and bathrooms, sparkling kitchens, etc, but these are often prohibitively expensive changes to make to a rental property.  Like all investors looking to maximize their return on investment, landlords are always looking for ways to boost their rents with minimal up-front cost.  So what are some affordable property improvements that will catch the eyes of renters, both as they skim rental ads and as they walk through a rental property for the first time, and persuade them to pay more?

Keyless Locks

First impressions can be extremely effective.  Keyless locks may be punchbutton combination-based, or even better, controlled by a mobile phone app (Lockitron costs $179, and others are even more sophisticated and start at $199), to give temporary, remote access to cleaners, contractors, etc.  Like hot tubs and fireplaces, it adds to the chic factor, setting prospective tenants thinking about just how upscale they will appear to their friends when they move into their exciting new home. 

Outdoor Landscaping

Once again, first impressions matter, from both the images in the rental listing to the curb appeal when prospective tenants first approach the property.  Landscaping does not have to be the traditional manicured lawn and perfect garden; if the property is a rowhome, large potted plants along the front of the house make an excellent first impression, and plants in the rear courtyard or deck are a nice touch as well.  Consider groundcover plants, such as ivy and pachysandra, as inexpensive and easy alternatives to well-groomed lawns or gardens, but which add an air of aged elegance.

Bamboo Flooring

Considering upgrading to hardwood floors, but worried about the cost?  Hard bamboo flooring can be installed at a fraction of the price, and looks and feels great.  It is also available in light or dark colors, for a variety of looks (or designs, for that matter).

Hot Tubs

Before writing off this idea as impractical, consider that $5,000 hot tubs routinely sell for $1,500 on Craigslist, used.  If the idea of a used hot tub is bothersome, consider that it will not bother the tenant – any hot tub installed in a rental property will have been used previously, as far as the tenant is concerned.  Hot tubs will pull the emotional heart strings of prospective tenants, and create a glamour factor that many tenants would be willing to pay an extra $50-200/month for, depending on the quality of the hot tub and the property/neighborhood.  This upgrade will pay for itself in 1-2 years, creating additional cash flow and boosting the eventual property sale price (modern hot tubs last indefinitely, with minor maintenance).  The real ongoing cost is in the electricity bill, which the tenant generally pays.

Fireplaces

Gas fireplaces can cost as little as $400, and installation may be only another few hundred dollars, depending on the ease of running a gas line and exhaust line to it.  This is a luxury amenity that can be emphasized in the rental listing, and will add to the glamour of the property, but it will only offer a decent ROI on higher-end rental properties.  Like hot tubs, the only major ongoing cost is in the utility bill, which means installation a one-and-done expense.

It is worth mentioning that all of the property upgrades above will require some care and maintenance by tenants, which means that it will be necessary to include clauses in the rental agreement outlining the tenant’s responsibility, and it is especially critical to find responsible tenants.  For example, overuse of chemicals in the hot tub can ruin the hot tub cover, and covers start at $350.  Likewise, hardwood or bamboo flooring can be easily scratched, so leases should include a requirement that all furniture have felt pads installed on the bottoms of legs. 

There is an old adage in sales: consumers make decisions with their emotions, and then justify them with logic.  Appeal to their secret wish for luxury and to be the envy of their friends, and they will flock to view the rental property – and gladly pay a higher price for it.

Related Reading:

Screening Contractors & Vendors to Avoid Crooks, Criminals & Crackpots

Renovation Investing Tips, Tricks & Cautionary Tales

5 Home Upgrades that Won't Add Any Value to Your Property

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/232/new-brunswick-landlord-tenant-law-summary/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/232/new-brunswick-landlord-tenant-law-summary/ Mon, 03 Jun 2013 09:43:28 GMT What types of leases are permitted in New Brunswick?
The only lease permitted in New Brunswick is the standard form New Brunswick Residential Lease Agreement. This lease is a prescribed form that contains the specific rules and obligations that the landlord and tenant must follow while abiding New Brunswick law. The landlord and tenant must sign two copies, and each must keep a copy.

What are the laws regarding a security deposit?
Security deposits are paid in the beginning of a tenancy. A landlord may only charge an amount equal to one weeks rent for a weekly tenancy. In a month to month, year to year, or fixed term tenancy; the landlord may charge no more than the amount equal to one months rent. All deposits must be paid to the Office of the Rentalsman.

When is the landlord permitted to enter the rented premises?
If there is an emergency, the tenant abandons the property, housekeeping is provided as part of the lease or the tenant agrees to permit the landlord entrance, then no notice is needed. Seven days' notice is needed when the landlord must enter to make (non-emergency) repairs. Twenty-four hours' notice is required when a landlord needs to show the property to prospects, whether a buyer or renter. A landlord may only enter the rental between the hours of 8 AM - 8 PM. The landlord may not enter the premises on a Sunday or a Holiday.

What are the guidelines and laws to increasing the tenant’s rent?
There are no rent controls in New Brunswick. A landlord may increase the rent at any time during the tenancy, but must give proper notice.

• Week to week/month to month tenancy: 2 months advance notice is needed before raising the rent.
• Year to year tenancy: 3 months advance notice is needed to the rent increase.
• Fixed term tenancy: 3 months notice in advance, before increasing the rent. (if box 4(5)(a) in the Residential Lease Standard Form has been checked.)

What is the proper notice for a landlord to end a tenancy?
To end a lease in New Brunswick proper notice is required.

• For a fixed term lease, the lease automatically ends on the end date of the tenancy.
• For a week to week tenancy, the landlord must give the tenant 1 weeks notice from the date of rent due.
• For a month to month tenancy, the landlord must give the tenant 1 months notice in advance, to end the tenancy.
• For a year-to-year tenancy, the landlord must give 3 months advance notice, from the anniversary of the lease.

How can a resident of New Brunswick, Canada contact the Office of Rentalsman?

Bathurst- Executive Tower
161 Main Street
Bathurst, New Brunswick
E2A 1A6
Canada
(506) 547-2522
irent@snb.ca

Campbellton- City Centre Mall
157 Water Street
Campbellton, New Brunswick
E3N 3L4
Canada
(506) 789-2210
irent@snb.ca

Edmundston- Carrefour Assomption
121 de l'Église Street
Edmundston, New Brunswick
E3V 3J9
Canada
(506) 735-2000
irent@snb.ca

Fredericton- City Centre
432 Queen Street
Fredericton, New Brunswick
E3B 1B6
Canada
(506) 453-2557
irent@snb.ca

Moncton- Assumption Place
770 Main Street
Moncton, New Brunswick
E1C 1E7
Canada
(506) 856-2330
irent@snb.ca

Saint John, Fundy Region-
King's Square North
Floor: 2
15 King's Square North
Saint John, New Brunswick
E2L 1E6
Canada
(506) 658-2512
irent@snb.ca

]]> https://www.ezlandlordforms.com/articles/educational/1/231/what-is-the-ofac-terrorism-search-and-why-does-it-matter-to-landlords/ https://www.ezlandlordforms.com/articles/educational/1/231/what-is-the-ofac-terrorism-search-and-why-does-it-matter-to-landlords/ Thu, 23 May 2013 21:20:50 GMT Most landlords understand the importance of screening potential tenants, and selecting the right tenant screening system. However many consider terrorist background checks as unnecessary or do not understand its purpose. The Office of Foreign Asset Control, which is a branch of the United States Department of Treasury’s Office of Terrorism and Financial Intelligence, compiles a list of those the government considers a threat to national security. This can range from regimes and foreign countries (such as those involved with weapons of mass destruction and terrorist groups), to individuals who have had known ties to terrorist organizations. In the context of recent events such as the tragedy in Boston, paying attention to America’s terrorist watch list is becoming more and more essential.

As a landlord or property manager, conducting this search should be a priority when screening tenants. The OFAC “Specially Designated Nationals List” (SDN) lists these individuals and organizations that US citizens are prohibited from conducting business with, and which can lead to fines or incarceration if US citizens ignore this prohibition. However, despite the importance of this list, many do not understand the purpose of the search. A recent poll conducted by LinkedIn showed that 78% of real estate professionals utilized the OFAC search and viewed it as an important tool. About 5% utilized the search but did not understand what it was or what it was used for and 16% did utilize the search when screening tenants or understand what it was. The Specially Designated Nationals list is designed to be extensive but it is still imperative to be diligent. Like any other screening report, you may receive results with names similar to the potential tenant. If you suspect there may be a match there is a hotline that can be called to verify that information. Most OFAC searches will return with  the following information regarding the applicant: name, address, filing state, social security number, birth date, birth country, and a best name, followed by the databases searched.

In light of recent events and the severity of national security, it is very important to select a tenant screening system that includes terrorist database screening. It is also imperative to screen each possible tenant that will inhabit the property, as well as potential employees to ensure the safest possible enviornment for your tenants, neighbors, and yourself.

]]> https://www.ezlandlordforms.com/articles/news/229/landlord-left-with-tenant-s-19-000-water-bill/ https://www.ezlandlordforms.com/articles/news/229/landlord-left-with-tenant-s-19-000-water-bill/ Tue, 21 May 2013 02:23:31 GMT                                    By Cassandre Juste

No landlord likes having to come out of pocket to pay costs incurred by a tenant.  While outlining the specific details of the tenant’s financial responsibilities for the unit is essential, it may not be enough to avoid being stuck with your tenant’s bill.  One Georgia landlord learned this lesson the hard (and very expensive) way.

Landlord Shelly Francis was renting a condo to a long-term tenant in Atlanta, Georgia.  After the tenant moved out, Francis attempted to transfer the water services, along with other utilities, into her name and made a shocking discovery.  The water department clerk told her there was a past due balance of over $19,000 for the property.

Ms. Francis explained that the paperwork for the city water department showed that the account was in the tenant’s name and that the lease agreement signed by the tenant detailed that each utility was not included in the rent.  However; it did not seem to make much of a difference to the water department officials.  The landlord was told that if she did not pay the balance of the water bill the city would place a lien against the property.

Because the water department did not begin becoming more aggressive with shutting off overdue accounts until recently, the balance on the property increased as time went on, resulting in the shockingly high balance.

It is worth remembering that utility companies and municipalities have a far easier time collecting from landlords than tenants, because they can always file a lien against the rental property, but often cannot chase down mobile and difficult-to-find tenants.

]]> https://www.ezlandlordforms.com/articles/educational/2/228/infographic-house-hunting-rental-properties-across-the-nation/ https://www.ezlandlordforms.com/articles/educational/2/228/infographic-house-hunting-rental-properties-across-the-nation/ Mon, 13 May 2013 11:17:51 GMT Whether you’re an investor looking for your next rental property or a tenant looking for a new home, you know how exhausting it can be to find the ideal rental unit. If you’re one of the thousands of people house-hunting in today’s market, we put together House Hunting: Rental Properties Across the Nation with you in mind.

Both landlords and tenants have a lot on their plate when searching for a rental property that’s ideal for leasing, and the many potential problems when on the hunt can be frustrating. Mold, bugs, old paint and flooring, and limited or tight parking spots are just a few of the issues to look out for during your search. Other factors to consider include the average price of homes versus rental rates in the region, the schools available in the area, and convenience and proximity to stores, public transit, and highways. It doesn’t hurt to check out some of the most affordable cities available for renting and investing, either, especially if you’re not tied to one location. As investors know, the best places to invest are those areas where the demand to buy homes hasn’t driven prices up too high yet, but is projected to rise (and may have already started). So before you’re well on your way to investing or renting and signing the residential lease or apartment lease agreement, check out these important tips to make your search less stressful.



Click below to embed this infographic into your website
 

<img src=https://ezlf-plinersolutionsi.netdna-ssl.com/media/articles/228/infographic_ezlandlordforms.com_april_2013_sml.jpg /> <br><a href=https://www.ezlandlordforms.com/articles/a/228/infographic__house_hunting___rental_properties_across_the_nation/ title="Helpful Rental Property Tips" width="550"> House Hunting for Rental Properties</a>

]]> https://www.ezlandlordforms.com/articles/news/227/covington-kentucky-provides-landlords-with-a-new-resource-to-screen-tenants/ https://www.ezlandlordforms.com/articles/news/227/covington-kentucky-provides-landlords-with-a-new-resource-to-screen-tenants/ Fri, 10 May 2013 21:37:34 GMT The city of Covington, Kentucky is providing landlords with a new and simple way to screen tenants.  In the upcoming weeks, the city will offer an alphabetized list of people who have been evicted in Boone, Kenton, and Campbell Counties over the last three years.  The list will be available on the city’s website.

The idea came from meetings held last year between the city of Covington and property owners about the city’s rental inspection regulations.  Mayor Sherry Carran explained “Many of the landlords we spoke with said that some of the problems with rental properties are not necessarily the fault of landlords but from problem tenants.  Having a Northern Kentucky eviction list will hopefully help landlords who want their rental properties to contribute to the well-being of our neighborhoods.”

A similar system is already in practice in Hamilton County which provides landlords with a search-by-name or case link to the clerk of courts.

The Brighton Center, which is an agency located in Northern Kentucky focused on helping under-privileged residents, hopes that landlords will utilize this new tool wisely and consider the circumstances causing people to be faced with eviction.  In the struggling economy, the agency has received numerous first-time service requests from people in the Northern Kentucky area who are having difficulty making ends meet.  The center receives close to 100 requests for help each month.

Charles Tassell, who is the Director of Public Affairs for the Greater Cincinnati and Northern Kentucky Apartment Association, said landlords are most concerned about people who are repeatedly evicted.  “Many of them, as soon as the eviction is filed, they’ll move out and move somewhere two to three miles away.”  The Covington website will help screen for that type of tenant, which is particularly useful as many landlords have neither the time nor resources to travel to several courthouses to check on evictions.

Manager of City Services Mike Yeager explained that an employee has been working on the system since November and hopes to have the site up and running in late spring or early summer.  It will be updated continually, and other useful landlord information, including links to landlord training sessions, will also be available on the site.

]]> https://www.ezlandlordforms.com/articles/educational/2/226/renting-vs-owning-at-what-point-does-a-real-estate-investment-make-sense/ https://www.ezlandlordforms.com/articles/educational/2/226/renting-vs-owning-at-what-point-does-a-real-estate-investment-make-sense/ Tue, 07 May 2013 16:48:51 GMT                                          By Brian Davis

It's a common question: "Should I buy a house or rent?" (or for landlords, "Does real estate investing in this market make sense?").  While the answer varies, there is a way of framing the question for a useful answer.

All real estate purchases require an up-front investment, but then the annual cost of owning is generally lower compared to renting (but how much lower varies dramatically).  After a certain number of years, the annual savings from owning makes up for the up-front investment in cash, but for some homes this "breakeven horizon" is prohibitively long.  The breakeven horizon is the amount of time it takes for a buyer to recover (in lower payments, tax benefits, etc) the up-front costs of the real estate purchase (closing costs, down payment, etc).  To use easy math, if a house requires $6,000 in up-front costs, but will save the buyer $250/month over renting, then the breakeven horizon is two years ($6,000/250 = 24 months).

In reality, the calculation is far more complex, and must account for every additional cost and every additional benefit conferred onto homeowners and landlords.  For example, the average annual cost of repairs, the portion of the mortgage payment going to principal and the value appreciation should be calculated in, some of which must be estimated.

Longer breakeven horizons are ultimately bad news for prospective homebuyers and investors looking to buy new rental properties, but good for existing landlords and tenants.

The breakeven horizon calculation proves more useful than the commonly used price-to-rent ratio for a given city, or the ratio between the average purchase price and one year's average rent payments.  One problem is that the average property for sale is not comparable to the average property for rent, which tends to be smaller and lower quality.  There are ways of correcting for this, such as Zillow's approach of leveraging their data to look at active For Rent listings and compare to their ZEstimate values, but this still fails to take into account the various other costs and benefits involved in owning real estate (repairs, tax benefits, amortization, etc).

Breakeven horizons are useful at both the metropolitan level and the neighborhood level, to help prospective homebuyers and rental investors identify better metro areas for buying properties, and what they can expect in specific cities and neighborhoods.  Even within metro areas, individual cities, suburbs and neighborhoods have a wide variability in breakeven horizons (see the link below).  Anyone moving to a new area can use breakeven horizons to determine whether they should buy or lease, based on how long they intend to live in that neighborhood.

And, of course, landlords and rental investors can get a glimpse into how long it will take for their up-front investment to start offering a return.

For Zillow's complete list of each city's breakeven horizon, click here.

]]> https://www.ezlandlordforms.com/articles/educational/5/225/hud-updates-policy-on-tenant-service-animals/ https://www.ezlandlordforms.com/articles/educational/5/225/hud-updates-policy-on-tenant-service-animals/ Mon, 06 May 2013 12:28:44 GMT                                      By Denise Supplee

The U.S. Department of Housing and Development (HUD) recently updated its regulations regarding pet ownership for the elderly as well as persons with disabilities, who reside in HUD-assisted public housing and multifamily housing projects.  John D. Trasviña, HUD's assistant secretary for Fair Housing and Equal Opportunity, has noted that complaints regarding disability including those involving assistance animals seem to be the most common of discrimination complaints.  On April 25th 2013, HUD published a notice on the issue of assistance animals in an attempt to clarify any confusion.

To better understand these new regulations, one should gain a better insight to the definition of a “disability” and the definition of a “service or assistant animal.”

The Fair Housing Act’s definition of a disability or a handicap is:
“(a) a physical or mental impairment which substantially limits one or more of such person’s life activities; (b) a record of having such impairment; or (c) being regarded as having such an impairment—but such a term does not include the current, illegal use of or addiction to controlled substances.”

On March 15th 2011, the Americans with Disabilities Act defined a “service animal” as:
“A service animal is a dog that is individually trained to do work or perform tasks for a person with a disability.”   This definition pertains only to dogs and it excludes “emotional support animals.”  Section 504 of the FHA’s definition however states “Disabled individuals may request a reasonable accommodation for assistance animals in addition to dogs, including emotional support animals.  Providers of housing are required to follow the FHA definition when deciding as to whether or not to accommodate requests.

The recently released notice explains that a fair determination and consideration must be made for an individual with a disability who uses service or assistance animals, where under normal circumstances a landlord may have a “no-pet policy” in place.

Assistance animals may provide an assortment of functions to aid the disabled person including (but not limited to) guiding a blind or sight-restricted person, alerting the deaf or hard of hearing, pulling or guiding a wheelchair and alerting someone who has seizures of one that may be forthcoming. These are only a few of the many tasks a service animal may provide for a person with disabilities.

Additionally there is now no requirement that the animal be individually certified or trained.  Landlords must consider requests for the use of service animals as a reasonable accommodation in a rental property, therefore using the same principles that apply to all reasonable accommodations.

Under the notice’s guidelines, landlords have an obligation to consider many factors, such as whether the tenant or applicant has a disability and whether that disability requires the use of an assistance animal.  It is worth noting however that when making the consideration, the size or breed of the animal may not be contemplated in making the decision.  A person who qualifies under the guidelines may not be required to pay an additional deposit to have an assistance animal, although any damages caused by the assistance animal is the responsibility of the tenant under these circumstances.

There are a slew of other guidelines under the HUD Notice on Service Animals and Assistance Animals for People with Disabilities in Housing and HUD-Funded Programs, and landlords who accept subsidized renters should do their homework and become familiar with it. A violation of FHA guidelines can lead to landlord fines, lawsuits and any number of other penalties a judge might decide to impose, so step lightly!

Related Reading:

A Quick Landlord’s Guide to Service Animals

Tenant Pet Policies: How Should Landlords Handle Pets in their Rental Properties?

Tired of Dog Waste in Common Areas? Property Managers Turn to DNA Testing

]]> https://www.ezlandlordforms.com/articles/educational/2/224/how-useful-are-peer-to-peer-loans-for-landlords/ https://www.ezlandlordforms.com/articles/educational/2/224/how-useful-are-peer-to-peer-loans-for-landlords/ Fri, 03 May 2013 10:49:33 GMT In the last five years, online peer-to-peer lending services have grown remarkably successful, effectively automating the bank's role in lending and slimming the fees and interest charged.  

The idea is simple: Courtney Consumer has $15,000 in credit card debt that she pays 21.99% interest on, but has a stable job and strong credit, so she goes online to a peer-to-peer (AKA social) lending site and requests a loan.  The site does an automated review of her fundamental risk factors (income, credit scores, debt, etc), then rates her risk as a borrower, and then anyone in the world can lend her the money at an interest rate set higher or lower based on her risk as a borrower.

Iggy Investor has an extra $15,000 sitting and earning 0.1% in his savings account, and he decides to invest it.  He goes to a social lending website and sees her loan request, which offers 7.5%, so he lends her the money.  He earns 7.5% onstead of 0.1% return on his money, and her interest rate drops from 21.99% to 7.5%.

Peer-to-peer loan terms typically range from 3-5 years, and up to a maximum loan amount of $35,000.  The loans are unsecured, and while default rates vary by lending service, a typical range is 1.5 - 10% of loans defaulting, depending on risk score.

So how useful are these social lending services for real estate investors and landlords?

The loan sizes are, of course, small - $35,000 will not pay for much house, if it is the only source of capital.  But $35,000 will go a long way towards a $50,000 rental property, and there is always the possibility of taking multiple loans from multiple lending sites, or combining a social loan with a line of credit from a bank.  It is worth noting that it would be considered fraud to use peer-to-peer loans to cover the down payment when buying a property with a traditional mortgage, as mortgage lenders generally do not allow any part of the down payment to be borrowed (and directly ask on the loan application).

The loan term is also rather short, for a real estate purchase; at 5 years, the monthly payment will be relatively high compared to a 30 year mortgage.  But at lower property prices (where it would be even feasible to consider peer-to-peer loans for purchasing financing), this difference will be less magnified, and will lead to spending a vastly smaller amount of interest over the life of a loan.

Consider the following example: a $35,000 loan at 6.5% interest will cost $79,640.57 total over the course of a 30 year term, with a monthly payment of $221.22 (total interest cost: $44,640.57), versus a $35,000 loan at 6.5% for a 5 year term will cost $41,088.91 over the course of 5 years, with a monthly payment of $684.82 (total interest cost: $6,088.91).  After 5 years the landlord has a free and clear property, and the rent becomes true passive income.

Alternatively, landlords could use social loans (and some of their own cash) to buy a rental property, make payments for a year or two, then refinance to pull cash back out.  This may be viable for landlords who, for whatever reason, do not currently qualify for a traditional purchase mortgage, but may have an easier time refinancing in a year or two.

But landlords have other uses for quick infusions of cash as well.  Perhaps an expensive repair is required (e.g. a roof needs to be replaced for $4,000), and the landlord finds herself undercapitalized.  Or maybe the landlord buys a rental property with a traditional mortgage, and borrows $10,000 from a social lending service to finance updates and improvements that the bank was not willing to roll into the mortgage.

Peer-to-peer loans are not substitutes for mortgages, given their restrictive limits, but they are an extra source for leveraged money.  As one more addition to a landlord's toolbox, they can prove a viable source of funds when landlords need it.  

]]> https://www.ezlandlordforms.com/articles/educational/5/223/how-the-crime-free-association-helps-property-managers-lower-on-site-crimes-by-75/ https://www.ezlandlordforms.com/articles/educational/5/223/how-the-crime-free-association-helps-property-managers-lower-on-site-crimes-by-75/ Tue, 30 Apr 2013 17:42:15 GMT Property managers are no stranger to the police, particularly in lower-income multi-family complexes.  From drug trafficking to domestic violence to vandalism, crime can drive down neighborhood property values and rents, damage rental units and drive away good tenants, leading to costly high vacancy rates.  In other words, crime is one of the worst enemies of property management.

So what can be done to minimize it?

What started as an experiment in Mesa, Arizona has become a promising prevention crime program, developed by the International Crime-Free Association.  Local police departments partner with landlords and property management to train them in a variety of crime-prevention techniques, and certified properties see a drop in police calls of 75% on average, and occasionally as high as 90%.

There is no one silver bullet that magically prevents crime; the program involves a comprehensive approach and three phases of training and certification.  The first phase involves a certified police trainer working with the property manager to train them in prevention techniques, which include:

• Use of a Crime-Free Lease Addendum (which allows the landlord to terminate the lease agreement after the tenant commits their first criminal act)
• Key control and effective master key use
• More effective tenant screening for crime prevention
• Gangs, drug activity and early detection/prevention
• Physical security measures and technological advances.

The second phase is an on-site review of the property's security and environment.  Among other items, police will review the exterior lighting layout, the door, window and gate lock systems, the property management's key-control policies and the landscaping and other environmental factors.

Lastly, police and property management engage in community outreach within the apartment complex.  They host an annual crime prevention and awareness social, and implement ongoing policies that make the community as a whole more vigilant.

The Crime-Free Association also offers a program designed for landlords who own single-family rental properties.  This program asks for commitments from landlords to conduct regular inspections, abide by certain minimum tenant screening requirements, and to introduce themselves to the neighbors and offer their contact information, among other commitments.  The landlord is ultimately the first, last and central line of defense for keeping their rental property out of the hands of criminals.

If that sounds like a lot of work, consider the alternative of increasing crime in the neighborhood, followed by higher vacancies, lower rents and property values, more aggressive police activity and more rampant vandalism.  Improving investment neighborhoods is not just good for the community - it is good business.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/221/nova-scotia-landlord-tenant-laws-summary/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/221/nova-scotia-landlord-tenant-laws-summary/ Mon, 29 Apr 2013 10:42:32 GMT Is there a prescribed lease form for Nova Scotia landlords?

Yes, if a landlord decides to have a written agreement they must use the Nova Scotia Standard Form of Lease. The landlord may not start a tenancy unless a copy of the Nova Scotia Residential Tenancies Act is given to the tenant within 10 days.

 

Must a landlord conduct a walk through inspection of the rental premises?

It is not required to do an inspection, it is optional. A pre-inspection of the rental unit completed with the tenant is an extra added assurance that the property will be returned in good condition. A small amount of time and a little paperwork, can save much aggravation later.

 

What are the restrictions on security deposits?

Landlords may charge a security deposit of no more than ½ months rent. The security deposit must be held in a trust account.

 

What happens if a tenant is late on rent?

The landlord may give the tenant a notice to vacate after 30 days of the rent being late. The tenant must move out of the premises within 15 days. If the tenant fails to pay and vacate the premises, the landlord may take the matter before the Residential Tenancies within the 2-5 weeks following.  From there, a Residential Tenancies Officer may deliver an order stating the tenant must pay rent arrears and vacate the premises.

 

What are the laws on rent increases?

A landlord in Nova Scotia may only raise the rent once every 12 months. There are no rent controls in Nova Scotia. When giving a notice of increase, a landlord must follow the specific rules.

• For a year to year tenancy, the landlord must give four months notice before the anniversary date of the lease.
• For a month to month tenancy, the landlord must give four months notice before the anniversary date of the lease.
• For a week to week tenancy, the landlord must give 8 weeks notice before the anniversary date of the lease.

 

When may a landlord enter the rented premises?

Unless in the case of an emergency, a landlord must give the tenant 24 hours written notice before entering the premises. When entering the rented premises, the landlord must only enter between the hours of 9:00 AM to 9:00 PM. If a notice to quit has been given to a tenant, the landlord may enter the premises at any time without notice,  but during daylight hours.

 

For more information you can contact:

Service Nova Scotia and Municipal Relations — Residential Tenancies

Public Enquiries

Service Nova Scotia & Municipal Relations

Mail Room, 8 South, Maritime Centre

1505 Barrington Street

Halifax, Nova Scotia

B3J 3K5

Tel.: 902-424-5200

Toll-free within Nova Scotia: 1-800-670-4357

Fax: 902-424-0720

Email: askus@gov.ns.ca

https://novascotia.ca/sns/access/contact.asp

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/220/yukon-landlord-tenant-law-summary/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/220/yukon-landlord-tenant-law-summary/ Mon, 29 Apr 2013 10:06:30 GMT Is it mandatory to have a written lease in Yukon?

It is not required to have a written lease, but it is strongly recommended for landlords and tenants alike. Yukon Territory allows oral, written, express, or implied agreements. If the tenancy agreement is written, it must be signed by both parties. A duplicate copy must be delivered to the tenant within 21 days after both the landlord and tenant sign the agreement.

 

Are landlords required to conduct a condition inspection report?

It is not required in Yukon for a landlord to conduct an inspection report. However, unless a statement of condition is signed by both landlord and tenant when a security deposit is collected, damages may not be deducted from the security deposit.

 

Who is responsible for maintaining the rental premises?

It is the landlord's responsibility to keep the rental premises in a good state of repair. The landlord must follow all health, safety, and maintenance laws, regulations, and standards. The tenant is responsible for any damages that may be caused by the tenant, the tenant’s family or invitees.

 

Are rent receipts required?

The landlord must provide the tenant with a rent receipt, upon request.

 

What are the rules for collecting a security deposit in Yukon?

The landlord may charge the tenant a security deposit of no more than the amount equal to the rent paid for the first month of a tenancy. The security deposit may only be used to pay for the last months rent, unless both the landlord and tenant have signed a condition report at the commencement of the tenancy, in which case the landlord can deduct from the deposit for damage caused. Interest must be paid on the security deposit held by the landlord to a tenant in the Yukon territory. It is paid either annually or 15 days after tenancy ends, whichever is sooner.

 

What is a Yukon landlord’s right of entry?

The landlord needs 24 hours written notice to enter the rented premises, and the landlord may only enter the unit between eight in the morning and nine at night. These rules do not apply if the tenant gives consent to permit the landlord at the time of entry or in the case of an emergency.

 

When may a landlord increase the rent?

An increase in rent is not permitted for tenancies less than 1 year or in the first year of a tenancy. When giving a notice of increase, the landlord must serve notice on the tenant at least three months in advance.

 

How can a landlord end a tenancy?

Weekly Tenancy - The landlord must give one week's notice in advance. The landlord must serve the tenant with a notice on or before the last day of the week, prior to the week of termination.

 

Monthly Tenancy- The landlord must give at least one month's advance notice. The landlord must serve the notice to the tenant on or before the last day of the month prior to the month of termination.

 

Yearly Tenancy - The landlord must give at least 90 days notice prior to termination date. The notice must be served 90 days before the last day in the year of the tenancy.

]]> https://www.ezlandlordforms.com/articles/educational/3/219/what-is-waiver-of-notice-and-when-is-it-allowed/ https://www.ezlandlordforms.com/articles/educational/3/219/what-is-waiver-of-notice-and-when-is-it-allowed/ Fri, 26 Apr 2013 11:42:41 GMT                    By Denise Supplee

Some states, but not all, permit a “waiver of notice” clause in the lease or rental agreement, which can save the landlord time and effort if eviction becomes necessary.  A “waiver of notice” in the lease agreement means that if a breach or violation of a lease occurs, that tenant has given up (waived) their right to receive notification of the violation, and allows the landlord to begin the eviction process without providing the tenant without any prior notice or warnings.

For example, in Pennsylvania, where waiver of notice clauses are permitted in lease agreements, the notice period for non-payment of rent is 10 days' notice, which the landlord can skip entirely and simply file for eviction if their lease includes a waiver of notice clause.  But if the landlord sends the prescribed Pennsylvania 10 Day Notice to Pay or Quit, out of kindness or courtesy, they must now wait the full 10 day waiting period.  Just because a landlord has included the waiver of notice clause in their lease does not entitle that landlord to provide a 5 day advance notice, for example, instead of the normal 10 days' notice.  If a landlord still desires to send notice, it must be exactly as spelled out in the state’s statute.

In Florida, notice of waiver clauses are not permitted in lease agreements according to Florida statute § 83.47(1)(a), which states “a provision in a rental agreement is void and unenforceable to the extent that it purports to waive or preclude the rights, remedies, or requirements set forth in this part.”  A Florida landlord who does not send proper notice to a tenant before starting the eviction process risks losing time and money in having to begin the process all over again.

Regardless of whether a “waiver of notice” is included or not in a rental agreement, a landlord may never take matters into their own hands and “self-evict.”  Landlords cannot cut off any utility services such as water or electricity, they cannot change locks, enter a rental unit and remove items, or threaten or abuse a tenant (in the tradition of a New York landlord who entered the rental unit in the middle of the night swinging a chain and dousing several tenants in gasoline).  Every landlord must go through the legal court process to evict and have a tenant removed by law enforcement.

Note: EZ Landlord Forms leases automatically include waiver of notice clauses for those states that allow them.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/218/ontario-court-finds-that-property-management-companies-cannot-represent-landlords-at-ltb/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/218/ontario-court-finds-that-property-management-companies-cannot-represent-landlords-at-ltb/ Wed, 24 Apr 2013 02:13:21 GMT Hiring a property manager or agent can be an excellent way to outsource routine operations such as finding a new tenant, collecting rents and assisting with the maintenance of the property.  But one must tread very carefully to avoid crossing the line into the legal arena. 

Recently the Ontario Superior Court ruled against a property manager citing that this manager provided legal services at the Landlord and Tenant Board violating the Law Society Act.  The act specifically details in Sections 1.5, 1.6 and 1.7 exactly what a property manager may and may not do, including, but not limited to, the representation of the owner in court.

The Ontario Court found that Enzo Vincent Chairelli was “providing legal services” and although he was not prohibited from acting as the property manager, he is not permitted to represent clients at the Board.  Chiarelli’s counsel, Joel Kary did argue that the definition of a landlord according to Ontario’s Residential Tenancies Act includes property managers.  The Court did agree that the language is quite expansive; however there is a clear distinction that a property manager does not have the right to represent the landlord’s interest at the Landlord Tenant Board.  It was found that Mr. Chairelli was in fact providing “legal services.”  Therefore the Court granted the Law Society a permanent injunction against Chiarelli in representing his clients at the board but he may continue to provide property manager services.

Landlords must be cautious about using a property manager for functions that may be seen as legal representation.  A property manager may be useful for numerous tasks such as selecting qualified tenants to maintaining the property, but providing any type of legal service may not be amongst them.  The landlord may represent herself or have professional legal representation when it comes to any legal matter.

]]> https://www.ezlandlordforms.com/articles/educational/2/217/pay-down-the-mortgages-faster-or-buy-new-rental-investments/ https://www.ezlandlordforms.com/articles/educational/2/217/pay-down-the-mortgages-faster-or-buy-new-rental-investments/ Tue, 23 Apr 2013 17:28:29 GMT

If you are a landlord and real estate investor with, say, 4-5 rental properties with mortgages, and you have an extra $1,000/month you want to put to good use, should you pay down your mortgages faster or invest in another rental property?  Like most questions worth asking, the answer is "It depends."

How high are your interest rates, both for your existing mortgages and potential new ones?  At 12%, the cost in interest may outweigh the return on investment (ROI) from another rental property, in which case it would make more sense to pay off the old mortgages and rid yourself of the expense.  At 5% interest the math is more favorable, and a well-chosen new rental investment is often the more profitable use for your cash.  And, of course, if the old interest rate is very high, perhaps a refinance to a much-lower one is in order, potentially with enough cash out to finance the purchase of a new free-and-clear rental investment!

How is the sales market versus the rental market?  If local cap rates are high, and you can buy low and rent high (as conditions were in 2012 and remain in many markets), then use the extra cash to expand your rental portfolio.  When real estate prices are high and/or dropping (as was the case from 2006-2011 in most U.S. markets), it makes far more sense to pay down your mortgages with the extra cash, rather than overspend on a new investment property.

Aside from the more obvious factors above, there are also several hidden costs and benefits associated with both options.

Mortgage interest is a tax-deductible expense, so the real cost is substantially offset by the reduced tax liability.  For every dollar you have to pay in interest to the bank, you might be saving 40 cents in taxes on unearned profits to Uncle Sam.  And using your cash on a down payment on a new property comes with its own set of tax benefits - the new property can be depreciated for paper losses, the new interest payments can be used to offset tax liability, etc.

If your rental properties are in a particularly litigious area, there are asset protection benefits to keeping high mortgages on the properties as well.  Many lawyers earn their living by encouraging tenants to sue their landlord, but before they go through the trouble, they will often first do a cursory check to see whether the landlord has assets worth taking.  The first place they will look is at the rental property itself - if it is worth $90,000 and has an $80,000 mortgage, there is nothing for the lawyer to take, as it would cost more to collect than there is equity in the property.

Paying down mortgages early has its advantages too, however.  Mortgage interest calculation is based on what's known as "simple interest amortization," which is anything but simple.  The important thing to know is that percentage of your monthly payment that goes to principal versus interest changes from month to month, with much more interest being charged in the beginning of the loan than at the end.  As the principal balance shrinks, the percentage of your monthly payment that goes towards interest also shrinks, while the portion going to principal grows.  So the lower your principal balance, the faster your payments pay it down even further, and not linearly but exponentially.

And to come full circle to why one might pay down their mortgages in the first place, the whole point of being a landlord is passive income, right?  The sooner rental properties are paid off, the sooner the landlord starts pocketing most of the rent instead of passing it along to the bank.  The annual ROI will leap upward, and remain high indefinitely.  A landlord with 4-5 free-and-clear rental properties may well be able to quit their day job and exit the rat race entirely.

]]> https://www.ezlandlordforms.com/articles/news/216/10-cities-where-rent-will-rise-the-least-in-2013/ https://www.ezlandlordforms.com/articles/news/216/10-cities-where-rent-will-rise-the-least-in-2013/ Mon, 22 Apr 2013 03:00:40 GMT                                                                    Cassandre Juste

Rental industry professionals had a strong 2012 by and large, and 2013 had a positive outlook as well.  Reis Inc., a real-estate market research firm, anticipate an average 4.1% increase in rents nationwide, with an effective rent of $1,091 per unit by the end of 2013.

But not all markets will be as lucky.

According to Reis, the following 10 cities are the markets where rents will rise the least in the coming year. Stan Humphries, the chief economist for Zillow, of the places on this list haven't seen much recent improvement in home values, which can have a harsh effect on the rental side of the market. "There is a geographic bias here," he said. "In terms of home value appreciation, the hot markets are the Sun Belt or big recession areas. The Midwest and Northeast are not doing as well in terms of home value performance."

Fairfield County, Connecticut:

• Effective rent at end of 2012: $1,819
• Rent increase from 2011: 1.7%
• Vacancy rate: 4.6%
• Forecasted effective rent growth in 2013: 2%

Fairfield County is one of the country's more expensive rental markets. According to the National Association of Realtors, the median price for a single-family home in the Bridgeport, Stamford and Norwalk metro area at the end of 2012 was $367,900. Zillow's data show that Stamford has seen home prices fall more than 25% since the peak of the housing market, making homebuying look pretty appealing.

Charleston, North Carolina:

• Effective rent at end of 2012: $794
• Rent increase from 2011: 4.4%
• Vacancy rate: 4.9%
• Forecasted effective rent growth in 2013: 2.6%

The median price for a single-family home in Charleston and North Charleston at the end of 2012 was $208,000, according to National Association of Realtors.

Buffalo, New York:

• Effective rent at end of 2012: $739
• Rent increase from 2011: 3.3%
• Vacancy rate: 3.2%
• Forecasted effective rent growth in 2013: 2.8%

The National Association of Realtors would be reported the median price for a single-family home in Buffalo and Niagara Falls area to be around $128,200 at the end of 2012.

Knoxville, Tennesse:

• Effective rent at end of 2012: $601
• Rent increase from 2011: 3.1%
• Vacancy rate: 5.4%
• Forecasted effective rent growth in 2013: 2.8%

The median single-family home price was $142,100 at the end of 2012, according to the NAR.

Westchester County, New York:

• Effective rent at end of 2012: $1,852
• Rent increase from 2011: 2.2%
• Vacancy rate: 3.5%
• Forecasted effective rent growth in 2013: 2.8%

The median single-family home price in the metropolitan area that includes Westchester County, NY was $375,900 at the end of 2012, according to NAR.

Columbia, South Carolina:

• Effective rent at end of 2012: $718
• Rent increase from 2011: 3.2%
• Vacancy rate: 6.9%
• Forecasted effective rent growth in 2013: 3%

NAR reported the median single-family home price for Columbia at $137,800 at the end of 2012.

Little Rock, Arkansas:

• Effective rent at end of 2012: $667
• Rent increase from 2011: 3.4%
• Vacancy rate: 5.7%
• Forecasted effective rent growth in 2013: 3.1%

The median price of a single-family home for Little Rock and North Little Rock was $139,900 at the end of 2012, according to NAR.

Norfolk-Hampton, Virginia:

• Effective rent at end of 2012: $893
• Rent increase from 2011: 2.7%
• Vacancy rate: 4%
• Forecasted effective rent growth in 2013: 3.1%

The median price of a median single-family home for Virginia Beach, Norfolk and Newport News was $185,000 at the end of 2012, according to NAR.

New Haven, Connecticut:

• Effective rent at end of 2012: $1,126
• Rent increase from 2011: 2.6%
• Vacancy rate: 2.4%
• Forecasted effective rent growth in 2013: 3.1%

According to NAR, the median single-family home price for New Haven and Milford was $221,200 at the end of 2012.

Northern New Jersey:

• Effective rent at end of 2012: $1,531
• Rent increase from 2011: 2.6%
• Vacancy rate: 3.8%
• Forecasted effective rent growth in 2013: 3.2%

Northern New Jersey, which includes Bergen, East Essex, Hudson, Morris, Passaic, Union and West Essex counties, which are all included in the same area as West Chester County, PA as far as the NAR data is considered. The median price of a single-family home in the area was $375,900 at the end of 2012.

]]> https://www.ezlandlordforms.com/articles/news/213/realtytrac-s-top-10-markets-for-single-family-rental-investing-by-cap-rate/ https://www.ezlandlordforms.com/articles/news/213/realtytrac-s-top-10-markets-for-single-family-rental-investing-by-cap-rate/ Thu, 18 Apr 2013 02:19:52 GMT Recently, individual mom-and-pop rental investors have largely strayed away from single home investments due to the market being overrun by large institutional investors.  But certain markets are looking more promising for landlords searching for good bargains and strong rental cash flow from foreclosures and single family homes.

Foreclosure- and real estate analyst RealtyTrac compiled data to compare markets nationwide, to calculate capitalization rates along with average cash flow, and compiled a list of the 10 best markets nationwide for purchasing single-family dwellings to hold as rental properties.

Memphis, TN
Median Sales Price 3-Bedroom Home: $72,605
Average Rent 3-Bedroom Home: $1,047
Estimated Monthly Mortgage Payment: $277
Financed Monthly Cash Flow: $351
Cash on Cash Rate of Return: 29%
Cash Purchase Cash Flow: $628
Cash Purchase Cap Rate: 10.38%

Saginaw, MI
Median Sales Price 3-Bedroom Home: $63,240
Average Rent 3-Bedroom Home: $907
Estimated Monthly Mortgage Payment: $242
Financed Monthly Cash Flow: $302
Cash on Cash Rate of Return: 29%
Cash Purchase Cash Flow: $544
Cash Purchase Cap Rate:10.32%

Toledo, OH
Median Sales Price 3-Bedroom Home: $67,617
Average Rent 3-Bedroom Home: $963
Estimated Monthly Mortgage Payment: $258
Financed Monthly Cash Flow: $320
Cash on Cash Rate of Return: 28%
Cash Purchase Cash Flow: $578
Cash Purchase Cap Rate: 10.26%

Ocala, FL
Median Sales Price 3-Bedroom Home: $75,357
Average Rent 3-Bedroom Home: $1,070
Estimated Monthly Mortgage Payment: $288
Financed Monthly Cash Flow: $354
Cash on Cash Rate of Return: 28%
Cash Purchase Cash Flow: $642
Cash Purchase Cap Rate: 10.23%

Las Vegas, NV
Median Sales Price 3-Bedroom Home: $115,000
Average Rent 3-Bedroom Home: $1,575
Estimated Monthly Mortgage Payment: $439
Financed Monthly Cash Flow: $506
Cash on Cash Rate of Return: 26%
Cash Purchase Cash Flow: $945
Cash Purchase Cap Rate: 9.86%

Palm Bay, FL
Median Sales Price 3-Bedroom Home: $91,950
Average Rent 3-Bedroom Home: $1,248
Estimated Monthly Mortgage Payment: $351
Financed Monthly Cash Flow: $398
Cash on Cash Rate of Return: 26%
Cash Purchase Cash Flow: $749
Cash Purchase Cap Rate: 9.77%

Atlanta, GA
Median Sales Price 3-Bedroom Home: $84,000
Average Rent 3-Bedroom Home: $1,132
Estimated Monthly Mortgage Payment: $321
Financed Monthly Cash Flow: $358
Cash on Cash Rate of Return: 26%
Cash Purchase Cash Flow: $679
Cash Purchase Cap Rate: 9.70%

Jacksonville, FL
Median Sales Price 3-Bedroom Home: $90,000
Average Rent 3-Bedroom Home: $1,198
Estimated Monthly Mortgage Payment: $344
Financed Monthly Cash Flow: $375
Cash on Cash Rate of Return: 25%
Cash Purchase Cash Flow: $719
Cash Purchase Cap Rate: 9.59%

Deltona, FL
Median Sales Price 3-Bedroom Home: $94,000
Average Rent 3-Bedroom Home: $1,225
Estimated Monthly Mortgage Payment: $359
Financed Monthly Cash Flow: $376
Cash on Cash Rate of Return: 24%
Cash Purchase Cash Flow: $735
Cash Purchase Cap Rate: 9.39%

Springfield, MO
Median Sales Price 3-Bedroom Home: $75,102
Average Rent 3-Bedroom Home: $969
Estimated Monthly Mortgage Payment: $287
Financed Monthly Cash Flow: $294
Cash on Cash Rate of Return: 24%
Cash Purchase Cash Flow: $581
Cash Purchase Cap Rate: 9.29%

Methodology:

To calculate cap rate and cash flow, RealtyTrac assumed a 20 percent down payment and a 4% interest rate to estimate the monthly mortgage payment.  Based on feedback from real estate investors, RealtyTrac subtracted an additional 40 percent out of the gross monthly rental proceeds for property taxes, insurance and repairs.

RealtyTrac limited the list to metropolitan areas with a population of at least 200,000.  They also only used areas where sufficient price and rental data was available and then further restricted the list to markets where the average monthly gross rent of a 3-bedroom home was at least 1% of the median sales price in that specific market. 

Results are sorted by Cash Purchase Cap Rate.

]]> https://www.ezlandlordforms.com/articles/news/207/new-credit-scoring-models-offer-better-payment-predictions-but-will-anyone-use-them/ https://www.ezlandlordforms.com/articles/news/207/new-credit-scoring-models-offer-better-payment-predictions-but-will-anyone-use-them/ Wed, 17 Apr 2013 10:30:41 GMT                                    By Brian Davis

New credit scoring models could help extend credit to an additional 27-30 million borrowers − people who were previously turned down for real estate mortgages, auto loans and the like, but may become eligible based on better credit scoring.

VantageScore Solutions offers an alternative to the widely-used FICO (originally Fair Isaac & Company) scoring model, and measures some of the financial behavior common to lower-income people who often have no credit history under FICO scoring models.  Their new model, VantageScore 3.0, includes such data as:
  •  rent payment history
  •  traditional credit data older than 24 months
  •  public records, collections and credit inquiries (which are also used by FICO, but VantageScore 3.0 weighs these more heavily if borrowers have little other data available)
  •  Includes a scorecard, for generating a credit score for borrowers with little data.

The data used by VantageScore is also more "granular" − separating out data that FICO scores tend to lump together.  For example, if a borrower has several mortgages, VantageScore separates out which is for the primary residence, versus mortgages on second homes and rental investment properties.

Barrett Burns, VantageScore Solutions' CEO, further explains "Today's competitive lending environment dictates that lenders need access to as many creditworthy consumers as possible within their target universe, demanding the highest level of predictive performance from the credit scoring models they use."

Rental payment histories have always been controversial however, and it is currently only possible to collect this information from the largest property management firms − the kind with thousands upon thousands of rental units under management.  Landlords with smaller portfolios are considered unreliable by most credit bureaus and scoring agencies, not to mention too disparate to practically reach.

VantageScore 3.0 is actually not alone in offering an alternative to traditional FICO scores; FICO itself has released an overhauled scoring model called FICO 8, which raises its focus to be more predictive of future financial behavior, rather than simply scoring borrowers on past history.  Improvements are wide-ranging, and include:
  •  Less punishment for "moderate" credit inquiries
  •  High credit card balances are punished more severely
  •  Actively using credit accounts (rather than holding rarely-used credit cards often used solely to establish credit) will help credit scores more
  •  Less emphasis placed on small unpaid medical payments, which are often due to erroneous billing.

But even FICO 8 is purely optional for lenders to use, and most major banks and lenders have not adopted these new (and seemingly improved) scoring models.  Large institutions tend to take a long time to adopt new technologies and techniques, and the massive lending banks from Wells Fargo to Bank of America are simply too bureaucratic to quickly respond to these improvements in scoring.  And the catch-22 is that landlords and smaller organizations (who might act as early adopters) generally do not have access to these new credit scoring models for their tenant credit reports and loans, so the market for these alternative reports remains small for now.

]]> https://www.ezlandlordforms.com/articles/news/206/study-shows-americans-are-dangerously-under-investing-for-retirement/ https://www.ezlandlordforms.com/articles/news/206/study-shows-americans-are-dangerously-under-investing-for-retirement/ Tue, 16 Apr 2013 08:25:21 GMT

By Brian Davis

Looking for a reason to invest in rental properties?

Consider the following uncomfortable question: What happens when workers are saving and investing less for retirement, employers are increasingly unable to pay their existing pension obligations and people are increasingly living longer?

The answer, of course, is that employees must work longer and spend less money once retired, and employers must stop offering as generous retirement benefits.  And those are the lucky ones - some people will need to live with their children or require other assistance, and some companies and government agencies will need to make drastic cuts elsewhere.

A recent study by the Employee Benefit Research Institute reveals some startling truths about Americans and their retirement investing.  The study shows that 57% of American workers have less than $25,000 in savings/investments, excluding their primary residences (up from 49% in 2008).  Even more shocking, 33% of workers have no money saved for retirement (up from 25% in 2009).  A full 28% of American workers report having "no confidence" they will have enough money to retire comfortably.

And then there are employers, who are equally in trouble.  Companies' pension obligations for existing employees could rise by $97 billion in the coming years, just from upwardly-revised life expectancies.  Publicly-traded U.S. companies' pension obligations totaled $1.93 trillion at the end of 2012, up from $1.60 trillion only four years earlier in 2008.

All but the oldest, most established companies have thrown out their old pension retirement systems because of the skyrocketing costs, with only 3% of private employees enrolled in pensions in 2011 (down from 28% in 1979).  This, in turn, means workers should be saving and investing more, not less.  And governments are even worse shape, with their higher likelihood of offering outdated pension plans, which pay out for the life of the employee.

And Americans are living longer... and longer.  The Society of Actuaries recently updated its longevity projections, showing the largest jump in life expectancy in 25 years.  A man who reaches age 65 in 2013 is expected to live an additional 20.5 years, up from 19.5 in previous projections. Women turning 65 this year are now expected to live an additional 22.7 years, up from 21.3.  If those seem like small increases, consider both that they are moving targets (and growing longer every year), and that every month that employees of the old pension system live longer, someone has to write them a paycheck for work they have not performed.

What does all this have to do with rental investing?

While traditional retirement accounts are drawn down over time (eventually hitting $0), income from rental properties continues forever.  Not only does it continue indefinitely, but rents typically rise over time, while mortgage balances decline.  At a certain point, rental properties are owned free-and-clear, allowing the landlord to simply pocket most of the rent each month as income.

Employees looking to diversify their retirement portfolios would do well to consider a few well-chosen rental properties among their retirement assets, to keep the income rolling inward long after their friends have had to move in with Junior.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/205/quebec-landlord-tenant-law-summary/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/205/quebec-landlord-tenant-law-summary/ Fri, 12 Apr 2013 14:55:20 GMT Are written rental agreements required?
Quebec does not require a written agreement. If a landlord decides to have a written rental agreement it MUST be the official Quebec-approved form. These forms are ONLY sold in the offices of the Régie du Logement and in Quebec bookstores. If a landlord decides to do an oral agreement, they must give the tenant the form “Mandatory Writing” within 10 days from the start of tenancy. This form is also available only in the offices of the Régie du Logement or in Quebec bookstores.

Can landlords collect a security deposit?
Landlords can not charge a security deposit in Quebec. Collecting the last months rent in advance is also not allowed.

Are signed inspection reports required?
Although it is not required in Quebec to have a inspection report, it is recommended.

What is the right of entry for a landlord in Quebec?
The landlord must give 24 hours verbal notice before entering into the rental unit, except in the case of an emergency. The landlord may only enter the premises between the hours of 7 AM and 7 PM to make minor repairs, and the hours of 9 AM and 9 PM to show the property to prospective renters or buyers.

What are the laws regarding rent increases?
Landlords may not increase rent for a tenant whose term is less than 12 months. On tenancies longer than 12 months, rent increases are permitted. The landlord and tenant may adjust the amount together, when permitted. Both the landlord and tenant have the right to contact the Régie du Logement if the increase is unreasonable. The Notice of Rent Increase and Modification of Another Condition of the Lease may be used to increase rent.

What is the proper way to end a tenancy?

• For a fixed term lease agreement that is more the 6 months, the landlord must give 6 months' notice before the lease term expiration to end the tenancy.
• For a fixed term of six months or less, the landlord must give one month's notice before the lease expiration, to end the tenancy.
• For a lease agreement with an undetermined ending date, the landlord must give 6 months' notice before reclaiming the property.

To end a tenancy, the official form that can be used is called the Notice of Repossession.

How can the Régie du Logement be contacted?
Visit the Régie du Logement’s web-site, or they can be reached by telephone as well: from Montréal, Laval and Longueuil : 514-873-2245 and for other locations: 800-683-2245.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/204/northwest-territories-landlord-tenant-law-summary/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/204/northwest-territories-landlord-tenant-law-summary/ Mon, 08 Apr 2013 09:19:15 GMT Is a written rental agreement required?
No, it is not legally mandatory to have a written rental agreement, but it will help avoid landlord-tenant disputes and ambiguities, and prevent false claims and lawsuits.

Can landlords charge tenants a security deposit?
Landlords may charge a security deposit in the Northwest Territories. When charging a security deposit in a weekly tenancy, the deposit may be no more than one weeks rent. In tenancies where the tenant pays monthly (i.e. month-to-month and fixed-term tenancies), the total security deposit can amount to no more than one month's rent. Other than in a weekly tenancy, the tenant must pay at least 50% of the deposit at the start of tenancy, and the other half, within three months from then.

May a landlord charge a pet deposit?
Landlords may charge a pet deposit in the Northwest Territories. The pet deposit is considered separate from the security deposit. It can be no more than 1/2 months rent. The landlord may only charge the pet deposit once, and it must be received at the start of the tenancy.
NOTE: Landlords may NOT charge a pet deposit for a tenant with a service animal due to a disability.

Are inspection/condition reports required?
Condition reports are required in the Northwest Territories. Landlords must make a reasonable effort to have the tenant participate in the inspection of the rental unit. The inspection must be done at the beginning and at the end of the tenancy. A signed copy of the report must be given to the tenant within five days after completion. If an inspection is not completed, the landlord forfeits the opportunity to withhold money from the security deposit toward repairs.

Is a landlord permitted to charge a late fee?
If the tenant is late on rent, the landlord may charge a late fee. Late fees may not exceed $5, plus $1 per day that the rent is late. It may not exceed $65 total.

When may a landlord enter the rental unit?
A landlord must give 24 hours written notice before entering the rental unit, unless it is an emergency. The notice must include the reason for entry, the day of entry, and how long the landlord will be in the unit. A landlord may only enter a rental unit between the hours of 8:00 AM and 8:00 PM.

What are the rules regarding rent increases?
Landlords in the Northwest Territories must wait 12 months from the start of tenancy, or from the date of the last rent increase before increasing the rent. A landlord must serve a tenant with a notice of increase three months prior to the scheduled increase date.

How must a landlord end a tenancy?
At the end of a term tenancy, it is automatically renewed as a month-to-month agreement. While the landlord and tenant can mutually agree to end the tenancy at any time, the landlord has the option to terminate the tenancy at the end of the lease term with written notice.

How do evictions work in the Northwest Territories?
A tenancy will end with proper notice served as per the instructions listed on the Northwest Territories Fact Sheet - Ending A Tenancy. To start the eviction, a landlord will make application to the Rental Officer. Usually there is a hearing and if the landlord wins possession and is given a Writ of Possession, the sheriff will take steps to return possession to the landlord.

]]> https://www.ezlandlordforms.com/articles/news/203/10-cities-where-rent-will-increase-the-most-in-2013/ https://www.ezlandlordforms.com/articles/news/203/10-cities-where-rent-will-increase-the-most-in-2013/ Sun, 07 Apr 2013 01:52:17 GMT

We all know that 2012 was a success for landlords.   Rates for rental units have been on the rise since 2010 and according to Reis Inc. vacancy rates have plunged from a high of 8% in 2009 to 4.5% at the end of 2012.  Rents are predicted to continue increasing throughout this year and some cities will be luckier than others. According to MSN.com these ten cities will see the largest rent increase in 2013.

San Jose, California

    •    Effective rent at end of 2012: $1,616
    •    Rent increase from 2011: 5.4%
    •    Vacancy rate: 2.8%
    •    Forecasted effective rent growth in 2013: 5.3%
San Jose is one of the largest populated cities in the area and this Silicon Valley city is known for its employees involved in technology. Because demand is largely driven by young tech workers moving to the area and homes prices are high in San Jose, it is likely that the folks of San Jose will continue to rent despite the increase in rental prices.  In San Jose, the average price for a single-family residence for the last quarter of 2012 was a hefty $685,000 according to the National Association of Realtors.

San Francisco, California

    •    Effective rent at end of 2012: $1,970
    •    Rent increase from 2011: 5.7%
    •    Vacancy rate: 3.2%
    •    Forecasted effective rent growth in 2013: 5.2%
Thanks to the ongoing flux of techlogy workers, San Francisco's rental rates have been on the rise. Competition to find apartments is fierce and according to Bloomberg Business Week the process consists of “having to stand around with 30 other people, filling out the equivalent of a college application that explains why you and your spectacular personality deserve to pay ridiculous amounts of money to live in the apartment they all want.” Despite the rat-race to secure an apartment, renting is still more affordable compared to the price of homes in San Francisco. At the end of 2012, the average price for a single-family dwelling was $593,200.

Seattle, Washington

    •    Effective rent at end of 2012: $1,060
    •    Rent increase from 2011: 5.8%
    •    Vacancy rate: 3.8%
    •    Forecasted effective rent growth in 2013: 5.2%
Because Seattle is the home of big corporations such as Amazon and Microsoft, the housing demand has increased; however, the unique geography of the city has limited the supply of rentals. In 2012 rental rates have increased more than any market in the US but there is a large amount of apartments due to come on the market this year will could have a long term effect on the price of rent. Seattle’s average single-family residence is priced at $313,000.

Minneapolis, Minnesota

    •    Effective rent at end of 2012: $980
    •    Rent increase from 2011: 4.2%
    •    Vacancy rate: 2.4%
    •    Forecasted effective rent growth in 2013: 5%
This Twin City experienced a huge leap in the construction of apartments; however that has not stopped the prices of rent from climbing or increased vacancies. Mary Bujold, President of The Maxfield Research Group, a Minneapolis housing organization explained “The rental market is quite healthy right now. Until people really gain some good confidence in the for-sale market, it's going to be this way for a while."

Dallas, Texas

    •    Effective rent at end of 2012: $802
    •    Rent increase from 2011: 3.9%
    •    Vacancy rate: 5.4%
    •    Forecasted effective rent growth in 2013: 5%
There has been a boom in apartment construction in Northern Texas, with about 20,000 units under way and it seems that the signs of the recession are a thing of the past. Vacancies have decreased and demand has increased which is nothing but good news for landlords. The average price for a single-family residence in the metro area (which includes Fort Worth and Arlington) was $157,2000 at the end of the fourth quarter in 2012, according to the National Association of Realtors.

Denver, Colorado
    •    Effective rent at end of 2012: $871
    •    Rent increase from 2011: 4.3%
    •    Vacancy rate: 3.9%
    •    Forecasted effective rent growth in 2013: 4.9%
According to the Apartment Association of Metro Denver, vacancy rates are at an all time low and the largest increases last year were for efficiency apartments. "This suggests that people are looking for the smallest, least expensive unit they can find in many cases, and that drives up rents for the smaller units too," Ryan McMaken, economist for the Colorado Division of Housing, told the Denver Business Journal. The median single-family home in Denver costs around $254,800.

Portland, Oregon

    •    Effective rent at end of 2012: $848
    •    Rent increase from 2011: 4.9%
    •    Vacancy rate: 3.3%
    •    Forecasted effective rent growth in 2013: 4.7%
To keep up with Portland's rising demand, the city is constructing thousands of apartments as this city is one of the tightest markets for rentals in the country. According to the Oregonian, the largest demand is for studio apartments and in the past two years studio rents have grown 30%. The newspaper goes on to explain that the increasing demand is derived from a mixture of issues: Many homeowners who could no longer afford their homes during the housing crisis have turned to renting, and those who consolidated households to save money are now moving out on their own (a process known as "unbundling"). The National Association of Realtors records the median price for a single-family dwelling in Portland metropolitan area at $242,000 at the end of 2012.

Houston, Texas

    •    Effective rent at end of 2012: $787
    •    Rent increase from 2011: 5.5%
    •    Vacancy rate: 7.1%
    •    Forecasted effective rent growth in 2013: 4.6%
In December, the New York Times reported that Houston is one of many cities experiencing an uptick in apartments as developers hurry to cash in on rising rental rates. Texas’ largest city is driven by the energy market and has been a regular on Forbes list of fastest-growing cities. According National Association of Realtors, the median single-family residence price to be $167,800 at the end of last year.

Fort Lauderdale, Florida

    •    Effective rent at end of 2012: $1,109
    •    Rent increase from 2011: 3.8%
    •    Vacancy rate: 4.1%
    •    Forecasted effective rent growth in 2013: 4.6%
Because the buying market in this city has struggled in recent years, the rental market has boomed. The value of homes in this city have taken a serious hit – approximately 50% according to Zillow.com – since the housing market reached its peak; however, they are quickly bouncing back with home values appreciating 9% in the past year. The average single-family residence was priced at $213,000 at the end of the fourth quarter in 2012.

Austin, Texas

    •    Effective rent at end of 2012: $862
    •    Rent increase from 2011: 3.8%
    •    Vacancy rate: 4%
    •    Forecasted effective rent growth in 2013: 4.6%
Occupancies and rents have hit record numbers this past year, according to Austin-based real estate consulting firm Capitol Market Research. Downtown occupancy rates are above 97%, and rents in this popular area are more than two times the median rent in the larger area. The average single-family home price was $203,100 at the end of 2012.

]]> https://www.ezlandlordforms.com/articles/news/202/proposed-oregon-legislation-restricts-landlords-background-checks/ https://www.ezlandlordforms.com/articles/news/202/proposed-oregon-legislation-restricts-landlords-background-checks/ Fri, 05 Apr 2013 00:14:39 GMT

By Cassandre Juste

A proposal for new legislation drafted by the Oregon Landlord-Tenant Coalition proves a mixed bag for landlords.  The proposal would allow landlords to require their tenants to obtain rental insurance and an amendment to Senate Bill 91 would give landlords the right to charge fees to tenants who disregard the policies of the lease agreement after issuing a written warning.  While this may benefit landlords, other aspects of the proposal are not quite as welcomed.

The proposed change to Oregon landlord-tenant laws would also prohibit landlords from considering certain parts of an applicant’s criminal history when completing tenant screening.  Landlords would be forbidden from considering arrests in tenant screening, and limit them to consider criminal convictions only if the crime is relevant to their tenancy.  Sexual offenses, drug crimes, and assault or financial crimes could be considered; however any offense that would not have an impact on the property or neighbors' right to peace, could not.

Under the new law, traffic offenses, including reckless driving and driving under the influence, would not be considered in background checks.  Also citations that often affect the homeless such as illegal camping, sidewalk violations or public urination, cannot be considered in tenant screening.

The Rental Housing Association of Greater Portland says the law could be a burden for small landlords.  Cindy Robert, a lobbyist for the group, said most of its members have 10 or fewer rental units and don't live on the premises or have a property manager checking on the property daily.  "They rely on the criminal history of the people that will be in that unit, who are independent of anyone watching over them.”  Landlords also would be restricted from considering evictions that occurred more than five years prior or evictions in which the court proceedings ruled in favor of the tenant.

However, the bill does have aspects that positively affect landlords.  The bill could allow landlords to require tenants to buy renter's insurance.  Renters' insurance typically cover a tenants’ belongings in the event of theft, fire, etc, and liability if someone is injured in the apartment or causes accidental damage to the property.  As reported in our recent article on Tenant Preparedness and Renters Insurance, the average monthly cost of renter's insurance is currently $15.75.

Lastly, the proposal would give landlords the right to charge tenants a fee for repeated violations of lease agreement policies after an initial written warning has been issued.  While the fee cannot exceed $50 for a second offense or $50 plus 5 percent of the monthly rent for a subsequent offense, this could be significantly helpful to landlords in terms of managing noisy tenants. 

The Consumer and Small Business Protection Committee heard testimony on Wednesday on the bill and an amendment, containing most of the proposed changes, but chose not to act on either.

]]> https://www.ezlandlordforms.com/articles/educational/5/201/new-survey-reveals-lack-of-preparedness-of-american-tenants/ https://www.ezlandlordforms.com/articles/educational/5/201/new-survey-reveals-lack-of-preparedness-of-american-tenants/ Thu, 04 Apr 2013 05:56:19 GMT

By Cassandre Juste

Landlords are well aware of the importance of things such as maintenance, security and insurance, especially when it can be a liability for landlords.  But do tenants understand the importance of these issues as well?  According to the latest research by Rent.com the answer is no.  After conducting a survey of 1,000 renters, it was shown that these crucial issues are often severely neglected.

In terms of emergency procedures, Rent.com found that 35 percent of renters have no plan for safety in case of an emergency.  Of those who do have an emergency safety plan, 54 percent are solely focused on fire emergencies and do not address other emergency situations.  The highest degree of emergency preparedness was found among renters between the ages of 45 and 64 years old who live in the earthquake-prone American West Coast.  Among tenants in the Midwest who often face tornadoes and droughts, a mere 36 percent are prepared for a natural disaster.

The survey also showed that as renters get older, there is a decrease in the frequency of routine household maintenance.  Crucial tasks such as updating smoke alarm batteries, changing air filters, checking door locks, windows and lighting tend to get overlooked.  Among renters 18-24 years of age, 27 percent make apartment safety a priority and perform maintenance about once a month.  Another 25 percent do it quarterly.  However, old age is not the only culprit resulting in neglected maintenance.  While it may sound like a no-brainer to some, 21 percent of 18-24 year old renters did not realize they were supposed to perform maintenance at all. Among renters in the 45-64 age range, conduct maintence a mere once a year.

What was discovered regarding insurance was particularly unexpected: over 55 percent of renters do not feel safe in their apartment and surrounding areas, however, 60 percent of them do not have renter’s insurance.  Among the uninsured renters, 60 percent claim they do not carry coverage because it is too costly. On the contrary, the National Association of Insurance Companies estimates that the median premium payment for renter’s insurance is just $15.75 per month.
Because this coverage does not protect the structure itself (which is covered by the property owner) coverage is fairly affordable for renters.  Renter's coverage, coupled with liability coverage, essentially covers tenants' prized possessions – that new 72 inch television purchased on Black Friday, the $600 smartphone that is permanently attached to one’s fingertips, etc.

Rent.com explains that the cost of insurance is very inexpensive when compared to other daily expenses. Renters insurance would be less than:

• The $80 a month that half of the American workforce spends buying coffee
• The approximately $148 a month more than half of American workers pay for lunch
• The cost of two movie tickets, at the national average of about $8 each

The other renters who don't carry insurance say they either do not understand it or do not think it is important.  However, a quarter of renters who had to utilize their insurance found it helpful and the majority of respondents said that it helped to replace lost items or provided reimbursement.  Every renter in the 18-24 years old and 65 and older age groups, who utilized their insurance in the past, found it to be of use.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/200/newfoundland-and-labrador-landlord-tenant-law-summary/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/200/newfoundland-and-labrador-landlord-tenant-law-summary/ Wed, 27 Mar 2013 11:20:31 GMT What is a good first step for a landlord before starting a new tenancy?
Service NL, the government agency responsible for consumer safety, suggests that landlords with investment property in the Newfoundland and Labrador province should require a written rental application from each prospective tenant. This involves investigating a tenant’s rental history, income, credit, and criminal background. From there, the landlord can approve a tenant and start the next step in the tenancy.

Is a written lease agreement (tenancy agreement) required?
A written lease/tenancy agreement is not required in Newfoundland and Labrador but any changes to the tenancy MUST be written and follow the Residential Tenancies Act. If a rental agreement is in writing, the landlord must provide the tenant with a copy of the tenancy agreement within 10 days of the lease signing.

What happens if a tenant is late on rent?
If the tenant's rent is late by 15 days, the landlord may serve a 10 day written notice. The landlord may also charge a late fee, the amount of which changes and is set by Service NL.

Is the collection of a security deposit permitted?
Landlords may collect a security deposit in Newfoundland and Labrador territories.Where a tenant pays rent weekly, the security deposit may be no more than an amount equal to two weeks rent. For those tenants who pay monthly, no more than an amount equal to three quarters of the monthly rent is permitted to be collected as a security deposit.

Is a signed condition report required in Newfoundland and Labrador?
Condition reports can be very beneficial to a landlord, documenting the condition of the rental unit at the beginning of the tenancy so that the landlord can hold the tenant responsible for damage done to the property since move-in. It is not required by the Residential Tenancies Act, but it is recommended.

Who is responsible for maintenance and repairs?
The landlord must keep the premises in compliance with habitation, housing and safety laws. This includes making repairs and keeping the unit safe with proper doors and locks. The tenant must make sure that neither she nor her guests or family commit abuse or negligence that attribute to any needed repairs.

Is it required to give a rent receipt in Newfoundland and Labrador?
The landlord must give the tenant a rent receipt and the security deposit. The receipt must include the date of the rent received, amount of rent and property address of the rental unit. In Newfoundland and Labrador It is required that the landlord keep records of rent and deposits.

When can a landlord enter the rental unit?
The landlord must give proper notice before entering the rental unit, except in the case of an emergency. Proper notice in Newfoundland and Labrador is 24 hours written notice. The landlord may only enter the unit between the hours of 9 AM - 5 PM and 7 - 9 PM.

What are the laws for rent increases?
In Newfoundland and Labrador, the landlord may not increase the rent in the midst of a fixed term tenancy. The landlord must wait 12 months after the start of tenancy before increasing the rent in a monthly or weekly tenancy. In a week-to-week tenancy, the landlord must serve a notice no less than 8 weeks before the day of increase. In a month-to-month tenancy, the landlord must serve the notice no later than 3 month before the date of increase.

How does a tenancy end?
At the end of a tenancy the landlord must give a proper termination notice to terminate the tenancy. For a fixed term and month-to-month tenancy, the landlord must give notice no later than 3 months before the end of tenancy. For a week-to-week tenancy, the landlord must give no less than 4 weeks notice.

]]> https://www.ezlandlordforms.com/articles/educational/4/199/can-tenants-be-evicted-for-being-too-loud-landlord-tenant-attorneys-weigh-in/ https://www.ezlandlordforms.com/articles/educational/4/199/can-tenants-be-evicted-for-being-too-loud-landlord-tenant-attorneys-weigh-in/ Tue, 26 Mar 2013 03:07:31 GMT Noisy tenants can be extremely irritating for landlords and neighbors alike, and trying to evict them can be even more frustrating.  Can a tenant be evicted for being too loud?  According to our team of legal experts, the answer is yes, but there are a few measures that should be taken to ensure that landlords are on the up & up when evicting a noisy tenant.

One of the reasons evicting noisy tenants is difficult is because the definition of what is “too loud” is inherently subjective.  As in many areas of the law that require an subjective judment, the reasonable-person standard applies – if a "reasonable person" would find the noise disruptive, then it is too loud.  As attorney Alisa Levine explains, “It is all about what is reasonable and how that is defined by the parties.  Most people would agree that loud music at 2:00 AM is unreasonable; however, a baby crying at 2:00 AM is probably fine.”

Attorney Jim Surane suggests including a solid noise provision in the lease agreement, along with a solid indemnification provision and default clause.  The noise provision should detail exactly what is unacceptable and the consequences for breaching this lease clause.  It is also important to include that the noise provision extends to the tenant, as well as any family members, invitees or guests.  To support the noise provision, the rental agreement should include a default provision explaining that violating the noise provision set forth by the landlord (or any other part of the lease agreement for that matter) is a breach of the lease contract and can be grounds for eviction.  Elizabeth Powell, an attorney specializing in landlord-tenant law explains that one way property owners address this issue is by specifying "quiet hours."  For example, a landlord could stipulate that the hours of 10PM to 7AM are designated quiet hours and during that time frame any noise that can be heard outside of the rental unit is prohibited.

However, not all tenants are noisy at night time and technically a “Quiet Hours” provision would not be sufficient to protect against a tenant that blasts the Spice Girls every day at 5:00 in the afternoon.  For instances that fall outside of the quiet hours time frame or if the lease did not detail a noise provision, the landlord may still have enforcement options, for example if the tenant’s noisy tendencies violate a local law or ordinance a landlord or staff member would be justified in calling the police or making noise complaints to authorities.  Usually noise complaints can lead to police/legal fines and landlords can often use violations of law on their property as a basis to evict.

If all else fails, there is always the “Right to Peaceful Enjoyment:” all residents are afforded basic rights to live in peace.  However, as attorney Alisa Levine points out, how "peace" is defined may vary from place to place.  “But in general if there is a verifiable nuisance or noise that is bothering a neighboring tenant to the degree that they might move, then the landlord may have an obligation to deal with it.  Or else face the tenant leaving, breaking the lease agreement, or suing for breach of the warranty.”  Neighboring tenants can also use a claim such as "constructive eviction" – meaning the landlord did not do anything to help them and they felt forced to move out.

Attorney Zach Jex explains further: “One of a tenant's conduct-related duties is to conduct him or herself or require other persons to conduct themselves in a manner that will not disturb his or her neighbors' peaceful enjoyment of their premises.  If neighbors were to complain to the landlord that the tenant or his/her guests were being too loud (i.e., disturbing their peaceful enjoyment), the landlord would have a statutory basis for evicting that tenant.”

 

 

 

 

Related Reading:

Eviction Notice Has Been Served… Now What?

Landlords, Tenants & Domestic Violence: Many State & Province Laws Now Involve Landlords

]]> https://www.ezlandlordforms.com/articles/educational/5/198/how-to-prevent-tenants-from-wrecking-your-rental-property/ https://www.ezlandlordforms.com/articles/educational/5/198/how-to-prevent-tenants-from-wrecking-your-rental-property/ Sat, 23 Mar 2013 16:26:15 GMT By Cassandre Juste

Recently, a judge in Alberta, Canada ruled against three tenants who destroyed their rental home and then took the landlord to court over the cost of repairs.  One of the tenants went as far as to bring his small dog into court with him to try to prove that such a small animal could have destroyed the carpet.

Despite the tenants’ attempt with the pint-sized pup, the judge ordered the tenants to pay over $19,000 for repairs and compensation for rent the landlord lost during the legal battle.

Despite winning in court, the landlord still has to pay for the repairs out of his own pocket, and then try to collect the judgment against the tenants.  And even this resolution (fruitless as it often is for the landlord) remains better than many, as landlords often lose in court due to poor record-keeping.  Good records, along with several other best-practices, can help landlords avoid having to take tenants to court for damages at all.  If a legal battle does begin, landlords can breathe a little bit easier knowing that they have the proper documentation to support their claims.

Requiring a move-in inspection with the tenant is an easy and effective way to avoid having a tenant wreck the rental property.  When the tenant knows the unit will be inspected at move-out, and they will be held accountable for any difference in condition, tenants are much more likely to take care of the property.

In some states and provinces, move-in and move-out inspections are mandatory and landlords who do not comply may not be able to deduct the cost of repairs from the tenants’ security deposit.  Even when inspections are not legally mandated, it is still an excellent way to avoid disputes and misunderstandings with tenants.  The best way to conduct inspections is in person alongside the tenants, so both parties agree and sign off on the condition of the property at the beginning of the tenancy and once again at the end.  Both inspections should be performed when the property is vacant.

During inspections, documentation is key.  Take pictures of the damage at move-in and move out for record keeping purposes.  It is also essential to have a Move-In/Move-Out Checklist, that both parties sign.  This will allow the landlord to document the condition of the rental at move-in and compare it to the condition of the property when it is time for the tenant to move-out.  The documentation along with the pictures will serve as proof of any changes that have occurred during the tenant’s term.

The inspection report will not only note the condition of such things as walls, ceilings, windows, floors and carpets, appliances, and plumbing fixtures, but also serves to document their inclusion in the property and the landlord's ownership.  All pictures taken should be attached to each inspection report.  Landlords may also want to make a note of the lack of odors, especially if the tenant is moving in with a pet or if the landlord is trying to enforce a non-smoking policy.  Both inspections should cover all the same  items within the unit and after each inspection, the tenant should receive a copy of the checklist/condition inspection report.

Usually, tenants are responsible for cleaning the rental property as well so landlords can give the tenant a Move-Out Cleaning Guide at the initial inspection, to let them know what will be expected of them upon move-out.  This should also be given in the weeks leading up to move-out, and will avoid any miscommunication regarding the original state of the property compared to its condition at move-out.  Inspection reports can also serve as a great defense if a tenant raises maintenance concerns if faced with eviction or attempts to collect unpaid rent.

]]> https://www.ezlandlordforms.com/articles/news/197/spring-real-estate-report-u-s-housing-market-improving-in-upward-spiral/ https://www.ezlandlordforms.com/articles/news/197/spring-real-estate-report-u-s-housing-market-improving-in-upward-spiral/ Thu, 21 Mar 2013 16:31:54 GMT By Brian Davis

The news is bright rather than blight, as the real estate market adds some spring to its step.

Foreclosures in February dropped to the lowest level since September 2007, to 45,038 completed home repossessions according to RealtyTrac.  This marks an 11% drop from January and a 29% drop from February last year, which is all excellent news for a real estate recovery that's starting to hit its stride.  While the foreclosure rate is still twice what it was in 2005, the foreclosure wave is clearly ebbing back out to sea.

Fueling the drop in foreclosures is the strengthening job market.  February's unemployment rate dropped to a four-year low of 7.7% - far from perfect, but also far from the 10% that the U.S. nudged in the Great Recession.  Also falling was the four-week moving average for new unemployment claims, which dropped to a five-year low.

The median U.S. home sales price sat at $192,000 in February, up 18.8% year-over-year from $162,000 according to Zillow.  Private housing starts were at a rate of 917,000/year in February, which is 27.7% above the February 2012 rate of 718,000/year.

That said, not all markets are created equal.  The housing collapse and subsequent beginnings of recovery were kinder to the larger, more glamorous urban areas and have left many rural areas and post-industrial cities with shrinking populations (see our article on demographic shifts and their effect on local markets).  It remains to be seen how and when the population swing will equalize.

The credit markets themselves prove a mixed bag.  On the public side, FHA-insured mortgages are about to become substantially more expensive on April 1, in a move that will largely hurt sub-prime (read: lower-income and lower-credit) and first-time homebuyers, and will raise the bar for entry into homeownership.  But conventional loans with private mortgage insurance (which are typically available for higher-income and higher-credit borrowers) are growing in popularity and availability, with lower down payments being required.  Interest rates have been low for ten years, so most of the juice has already been squeezed from the "refinance boom," leaving purchase mortgages an area of opportunity for mortgage lenders (which means lenders are more aggressively accepting them).

"The increase in low down payments is reflective of first time buyers coming off the sidelines and entering the market," says Craig Strent, who helms Apex Home Loans of Bethesda, Maryland.  "We're going to see more of this trend in the next couple of years as the economy improves and renters start to once again see the benefit of buying over renting.  FHA has become more expensive and the mortgage insurance companies are the beneficiary of that, which is really not a bad thing as it means the private market is insuring the lower down payments rather than the government."

One statistic that proves both fascinating and curiously empty is the now-complete recovery of American household wealth, or the cumulative net worth of U.S. households.  At its peak before the Great Recession, U.S. household wealth stood at a total of $67.4 trillion, which subsequently plummeted to $51.4 trillion in early 2009, and had climbed back to $66.1 trillion at the end of 2012.  Economists agree that by the end of the first quarter of 2013, the U.S. will have surpassed the $67.4 trillion peak, but with the unemployment rate still at 7.7% and median home prices still 14.7% below their 2006 peak, many Americans do not feel as well-off as they were pre-Recession.

Total American wealth has recovered largely due to a resurgent stock market, which has leapt more than 120% since its bottom four years ago in March 2009.  But roughly 80% of all American-owned stocks are owned by the wealthiest 10% of Americans, which means that while everyone felt the pain of the Great Recession, most of the lost wealth has re-coagulated at the top.

Real estate values, which reflects the middle class's largest assets, have made gains but still have a long climb back to pre-Recession levels.  The real estate outlook in America is optimistic, and the average American will breathe easier as real estate values continue to go through the predictable upward spiral of low inventory, followed by holdout sellers becoming rightside-up on their mortgage and listing homes for sale, followed by further credit loosening, followed by interest rate hikes and stabilization.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/196/nunavut-landlord-tenant-law-summary/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/196/nunavut-landlord-tenant-law-summary/ Wed, 20 Mar 2013 12:31:55 GMT Is a written lease a requirement in Nunavut?
There is no formal requirement that a lease agreement be in writing but Nunavut landlords are advised to use a written and signed rental contract. Using a Nunavut lease agreement provides protection for the landlord and spells out all of the terms of tenancy. An agreement between the landlord and tenant can be referred to as a rental agreement, tenancy agreement or lease. Where a written tenancy agreement is used, it must be signed by both parties and the tenant must be given a copy within sixty (60) days of the beginning of the tenancy.

Is the collection of a security deposit permitted in Nunavut?
The landlord may collect a security deposit of an amount equal to one week’s rent, if the tenancy is weekly; for all other terms, the amount may not exceed an amount equal to one month’s rent. Aside from weekly tenancies, tenants may pay half of the security deposit at the beginning of the tenancy and the balance within three months. **Subsidized or public housing recipients may differ.
IMPORTANT: The collection of the last month’s rent in advance is not permitted. In order to be able to collect a security deposit, a landlord must provide an inspection checklist to the tenant. The landlord must credit to the security deposit annual interest. All security deposits must be held in a separate, interest-bearing account from the landlord’s other monies.

How does the security deposit get disbursed after tenancy is ended?
Within ten (10) days from the end of the tenancy, the landlord must either return the entire security deposit back to the tenant OR provide the tenant with an itemized and estimated statement to the tenant and the Rental Officer as well. It is important to remember to calculate and include the interest as well. The landlord has thirty (30) days to provide to the tenant a final statement of itemization including the costs of any repairs along with the balance, if any, of the security deposit.

Must a landlord permit a tenant to change locks?
Neither landlord nor tenant may change or alter locks or locking mechanisms without consent from the other.

Can a landlord enter the premises at any time?
Unless there is an emergency present, a landlord may not enter the rental unit at his leisure; there are specific times and procedures to follow. Notification to the tenant must be given in writing at least twenty-four (24) hours ahead of time. There must be a valid purpose and the time of day must be between 8:00 AM and 8:00 PM.

What are the landlord’s responsibilities for maintenance?
The landlord must provide and maintain a fit premises. This means that the rental unit and any services provided must meet all safety, health and building codes set forth within the province and locally. This requirement cannot be waived or altered by the lease agreement and exists regardless of whether the tenant had advance knowledge of a deficiency. The tenant may be responsible for any repair needed because of negligence on behalf of the tenant or the tenant’s family or invitees. **A landlord may NEVER withhold essential services such as plumbing or electricity intentionally.

The tenant is late in paying the rent, may the landlord charge a late fee?
A late fee or penalty may be assessed if the tenant has not paid according to the lease agreement. The amount of the allowed per diem late fee changes often, so check with the Nunavut Depart of Justice.

How does the landlord evict a tenant?
The first step is serving a termination notice on the tenant in the manner prescribed by the Nunavut Residential Tenancy Act. If the tenant remains, then the landlord will obtain an eviction order from a registered Rental Officer. The Officer will then register the order with the Supreme Court in Nunavut. There will then be a hearing. Landlords are uged to hire a lawyer represent them. If the landlord wins in court, he will be awarded a “writ” which is an order that says possession will be returned to the landlord. This does not mean that the landlord may take it upon himself to change locks or touch any of the tenant’s personal belongings. Repossession of the leased premises must be overseen by a sheriff of the court.

How does a landlord contact the Department of Justice?
The Nunavut Department of Justice can be contacted via telephone at 867-975-6170 or email at justice@gov.nu.ca. Nunavut’s Minister of the Department of Justice is presently the Hon. Daniel Shewchuk.


DISCLAIMER: The reader understands that the information contained herein is not in any way legal advice or counsel. There are no warranties expressed to the accuracy of the content contained in this article. The use of a lawyer is strongly encouraged.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/195/alberta-landlord-tenant-law-summary/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/195/alberta-landlord-tenant-law-summary/ Tue, 19 Mar 2013 16:38:16 GMT What does a landlord need to do before a tenancy is started?
Conducting tenant screening by verifying the applicant's credit history, criminal history and rental history is crucial in an effort to choose the best tenant. In order to facilitate the screening process, it is important to gain information and legal permission from the applicant, which can be done with a rental application.

Must a landlord conduct an inspection of the rental unit?
In Alberta it is mandatory to do an inspection with an Alberta Walk-Through Checklist within one week before move-in and move-out. Both the landlord and the tenant must then keep a signed copy when the inspection is completed. If a landlord fails to conduct an inspection or complete an inspection report, the landlord may be prevented from making any deductions from the security deposit (AKA damage deposit).

Is a written lease required?
Although a written lease agreement is not specifically required by the Alberta Residential Tenancies Act, it is an essential document. Where this is a written agreement, if any of the terms or clauses are not in compliance with the Act, the Act prevails. The landlord must give the tenant a copy of the signed lease agreement within 21 days after it is signed.

Is the landlord or tenant responsible for maintaining the rental unit?
The landlord has a responsibility to make sure that the rental unit is safe, and in compliance with all Alberta and local health and fire regulations. The Act does not specify who is or is not responsible for overall maintenance and repairs. These items must be detailed in the lease agreement.

What procedures must a landlord follow if he must enter the rental unit?
The landlord must give 24 hours written notice to the tenant before entering the unit. The landlord may give the 24 hours written notice to do any inspections or repairs, or show the property to prospective tenants or purchasers. If the landlord is showing the property to prospective tenants, he/she may only show the property at the end of the month, after presenting a 24 hour written notice. If the landlord has reason to believe that an emergency exists, no notice is needed. WARNING: Neither landlord or tenant may change the locks to the leased premises without giving access or replacement key to the other immediately.

May a landlord charge a security deposit/damage deposit?
The landlord may charge a security deposit, or damage deposit, where the amount is equal to no more than one months rent. If the landlord would like to add a fee for keys, it must be included in the security deposit and counted towards the one month maximum amount.

When are rent increases allowed?
The amount of rent may not be increased until 12 months have elapsed from the beginning of the tenancy. And if the amount of rent was increased before, then the landlord must wait another period of 12 months before increasing the amount again. If a fixed term lease is used which is a lease with a specific ending date, then the landlord must wait until the end of the tenancy before increasing the rent. There are no laws restricting the amount of rent increase but when serving a notice of rent increase, the landlord must abide by Alberta’s laws. For a weekly tenancy, the landlord must give at least 12 tenancy weeks in advance to the day of rent increase, to serve the notice. If the landlord wants to increase the rent in a monthly tenancy, he/she must serve the notice of increase at least three tenancy months before the day of rent increase. For a periodic tenancy (e.g. one year), the landlord must wait at least 90 days before the day of rent increase, to serve the notice.

What procedures are to be followed by a landlord to end a periodic tenancy?
A notice must be given to the tenant in writing. The notice period will vary depending on the length of tenancy. The reason must be specified and whomever gives the notice to the tenant must sign the notice; either the landlord or the landlord’s agent. A landlord may not end a fixed-term tenancy mid-term without cause, however a landlord may choose not to renew the fixed-term lease upon its expiration.

What can a landlord do when a tenant is not paying rent?
A landlord may send the proper eviction notice, granting the non-paying tenant 14 days to vacate or pay. There is also the option to apply to the Residential Dispute Resolution Service or the court to end the tenancy.

What can a landlord do if the tenant abandons personal property in the rental premises?
If the items left behind are believed to be in value under $2000, then the landlord may dispose of the abandoned property as they see fit. If there is any money from the sale of the items, the money first will go to any costs of storage or removal as well as any outstanding debt to the landlord. Anything leftover will be paid to the Minister.
If the abandoned items are believed to be worth more than $2000, and the landlord believes storing the belongings would ruin the items, be unsafe OR the cost of storing, moving or selling the items will cost more than the items are actually worth, the landlord will have the option to sell the goods at a reasonable price. After the money received is applied to any costs of storage, sale as well as any outstanding debt of the tenant, the balance will be paid to the Minister of Service Alberta. Please note: If the property is worth more than $2000 and the cost of storing, selling and/or moving will NOT exceed the value, the landlord must provide storage for 30 days from the date of the abandonment. After the 30 days elapse, the landlord may sell the items at a public auction or by a private sale (only upon approval of the court or the Residential Tenancy Dispute Resolution Service.) As stated above, any excess after costs shall be paid to the Minster.

How do I contact the Minister of Service Alberta?
The telephone number is toll-free 310-0000, then dial 780-644-3000 or email rtdrs@gov.ab.ca.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/194/british-columbia-landlord-tenant-law-summary/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/194/british-columbia-landlord-tenant-law-summary/ Tue, 19 Mar 2013 16:04:56 GMT What is a good first step for a landlord before starting a new tenancy?
To start a tenancy landlords can conduct a credit check on their prospective tenant. This is a wise first step because it enables the landlord to be sure that the tenant is credit-worthy. Additionally, obtaining the applicant’s rental history, income, and criminal background are good rules of thumb. Landlords should have their prospective tenant fill out a rental application to gather all of the neccassary information, which include the required permissions to conduct background investigations in order to start the screening process.

Is a written rental agreement required?
A written tenancy agreement is required in British Columbia. A signed copy of the rental agreement must be given to the tenant within 21 days after the start of tenancy. Each Province possesses their own set of rules and regulations. It is important to use a British Columbia-specific rental agreement.

Are there any restrictions for fees such as application fees or late fees?
APPLICATION FEE: A landlord may NOT charge a fee for processing, accepting, or investigating a rental application. A fee for accepting a tenant is not permitted either.
LATE FEE/NSF FEE: A late fee or an insufficient funds (NSF) cheque fee may be charged but for not more than $25. This should be specified in the rental agreement.
KEYS: The landlord may charge a fee if the landlord requests additional keys or replacement keys. A fee for the initial keys is not permitted.

Are damage deposits allowed in British Columbia?
Landlords have the option to require tenants to pay a security deposit; also known as a damage deposit. It can be no more than an amount equal to one half of a months rent. The security deposit may only be accepted at the start of the tenancy.

At the end of the tenancy, what happens to the damage deposit?
Provided there are no damages, the landlord is required to return the entire damage deposit, plus any pet damage deposit if applicable as paid by the tenant including interest. This must be done within fifteen (15) days after the tenancy ends. The tenant must provide a forwarding address. If there are any physical damages created by the tenant, occupants or guests, these may be deducted from the damage deposit. There are specific procedures to follow regarding damage deposits in British Columbia. For specific information regarding damage and pet deposits, review the British Columbia Fact Sheet - Damage Deposits.

Are rent receipts required?
A rent receipt must be given to the tenant if rent is paid by cash.

Who is responsible for maintenance and repairs?
The landlord must maintain and provide repairs and make sure that the rental unit complies by all health, fire and safety laws. The tenant is responsible for any repairs directly resulting from the negligence or abuse of the tenant, the tenant’s occupants and any of the tenant’s guests. A tenancy agreement MAY NOT include terms that make the tenant responsible for maintenance and repairs as a condition of the rental agreement. A landlord and tenant may agree in a separate agreement that the tenant may provide for specific maintenance or repairs in return for direct payment or as rent.

When can a landlord enter the rental unit?
The landlord must give at least 24 hours' (but no longer than 30 days') written notice, stating why and when they will be entering the unit. This rule does not apply if there is an emergency.

When are rent increases allowed?
The landlord must wait 12 months from the start of lease term before increasing the rent. If the rent was previously increased, the landlord must still wait another 12 months before increasing the rent again. When increasing the rent the landlord must serve the tenant with the approved British Columbia Rent Increase Notice form. The amount permitted to increase rent is changed each year and is set by the Residential Tenancy Branch. This information is available on the British Columbia Residential Tenancy Branch website.

How does a tenancy end?
Generally, the tenant must vacate the unit by 1:00 PM on the day the the rental agreement terminates or ends, unless the landlord and tenant have agreed upon different terms. Otherwise a landlord must have a reason to end the tenancy, often referred to as “cause.” Examples of cause include non-payment of rent or utilities, or the landlord may need to live in the rental property herself, or a violation of the rental agreement or Residential Tenancy Act.

How is the Residential Tenancy Branch (RTB) contacted?
Landlords and tenants may contact the RTB either by phone:
Lower Mainland: 604-660-1020
Victoria: 250-387-1602
Elsewhere in BC: 1-800-665-8779; or email at: HSRTO@gov.bc.ca.

DISCLAIMER: This article is a general discussion of British Columbia rental regulations. It is not legal advice. Regulations are constantly changing and the reader is urged to always consult with the Residential Tenancy Branch or a local solicitor. No warranties or guarantees to the accurateness of this information are being made.

]]> https://www.ezlandlordforms.com/articles/news/193/over-1-in-3-u-s-counties-dying-off-as-young-adults-migrate-to-a-handful-of-southern-and-western-cities/ https://www.ezlandlordforms.com/articles/news/193/over-1-in-3-u-s-counties-dying-off-as-young-adults-migrate-to-a-handful-of-southern-and-western-cities/ Fri, 15 Mar 2013 09:53:46 GMT By Brian Davis

A record 1 in 3 U.S. counties is now experiencing "natural decrease," or a death rate that exceeds its birth rate, according to new U.S. Census data released yesterday.

With jobs starting to reappear, and not in rural or rust belt counties, young people of child-rearing age are increasingly moving to follow the jobs, which largely means south and west.  A full 1,135 of the 3,143 counties in America are seeing this demographic shift towards population decline, and the trend is growing.  In 2009, the number of counties with natural decrease sat at 880, or roughly 1 in 4 counties.

This proves a serious problem for local economies and housing markets, as counties with natural decrease experience a cyclical economic decline.  It starts because more jobs are available elsewhere (not to mention warmer weather and more sunny days/year), so young people leave.  As young people leave (taking their fertility and unborn children with them), population growth slows or reverses, so fewer people are earning money, paying taxes, spending money, buying homes and starting companies.  The remaining population of older people are less healthy, spend less, cost the government more money in social entitlement programs (e.g. Social Security and Medicare), and are less likely to start their own companies and create jobs.  Companies and local governments see less revenue, and are forced to cut payrolls and jobs, and young people are even more incentivized to migrate for greener pastures... a self-perpetuating cycle of decline.

So where are they going?

In brief, to the Sun Belt and Mountain West, where most of the 20 fastest-growing metro areas sit.  San Francisco, San Jose, Oakland, Austin, Houston, Dallas, Phoenix, Las Vegas and Orlando all saw large gains in young adults in 2012, and many are seeing subsequent spikes in rents.  To put the regional perspective to numbers, the Midwest's population growth in 2012 was 0.25%, and the Northeast 0.3%, compared to the West's 1.04% and the South's 1.1%.

Nor is the trend only regional: the shift moved decisively away from rural areas and towards a handful of brimming cities.  Rural areas saw a population decline of 0.1% in 2012, compared a 1% growth rate in large metropolitan areas.

In some cities, vacancy rates have dropped and rents jumped so precipitously that a new industry has arisen to service young professionals moving to the city.  "Rental concierges" help these migrant professionals find new apartments and homes in extremely competitive rental markets, with their intimate knowledge of local property management firms, apartment complexes and city neighborhoods.  In San Francisco, rents have leapt 5.1% in the last year to an average of $1,901, and the vacancy rate sits at a paltry 3.1%.  Neighboring San Jose has an even lower vacancy rate of 2.6%, and saw rents jump 4.3% in the last year.

An early rental concierge in San Francisco, Wendy Willbanks explains the market need: "Ask anyone how they found their apartment in San Francisco, and they will have a grueling story.  I'm getting them a town car and rolling around the city with them as if I am their best friend who knows the area."

And need there is.  With an influx of high-paying tech jobs boosting demand, and the City of San Francisco's heavy housing regulations all but preventing construction of new homes, desperate rental applicants arrive an hour early for open house showings and overwhelm landlords.  One landlord reported it felt “a little bit, uncomfortably, like speed dating.”

There is opportunity, nonetheless, for entrepreneurial employers to set up shop in many of today's underemployed zones in the Midwest and Northeast.  As unemployment rises, savvy entrepreneurs may recognize opportunities to acquire qualified employees and exceptional real estate at affordable rates.  But until then, 1 in 3 counties in the U.S. will have a hard time coping with negative growth, low birth rates and aging populations.

]]> https://www.ezlandlordforms.com/articles/news/192/ohio-landlord-spanks-tenant-over-unpaid-rent/ https://www.ezlandlordforms.com/articles/news/192/ohio-landlord-spanks-tenant-over-unpaid-rent/ Thu, 14 Mar 2013 03:16:49 GMT By Cassandre Juste

The mortgage is due and the tenant's rent payment is tardy.  Then one month goes by, then another, and maybe another - every landlord knows this frustration.  One Waynesville, Ohio landlord reached his breaking point and took matters into his own hands... literally.

According to the police report, a tenant owed $2,800 in unpaid rent, so landlord Ron Kronenberger told the 29 year-old man, “If you’re going to act like a child, I’m going to treat you like one.”  He then proceeded to spank the man four times on the rear with his belt.  The tenant explained that he was frightened and just wanted to get it over with so he complied with Kronenberger by bending over and placing his hands on a chair for the spanking.

Kronenberger is currently facing charges for allegedly spanking a tenant over unpaid rent.  The owner of Hometown Market in the heart of downtown Waynesville, OH, Kronenberger is well known in the small town.  A friend of the landlord was shocked by the allegations and claimed that it was very out of character for Kronenberger.

In a similar incident, a 58 year-old New Rochelle, NY landlord was recently arrested for entering his rental property and threatening tenants by swinging a large chain over his head and dousing two of them in gasoline. 

Tempting as it is to try and force rent out of tenants, it is a surefire way to give the tenant "the upper hand" (legally, if nothing else).  Nothing slows down rent collection faster than a lawsuit, and this Ohio landlord is in for quite the legal spanking himself.

]]> https://www.ezlandlordforms.com/articles/educational/5/191/the-rise-of-grow-ops-how-they-work-property-damage-caused-and-how-to-avoid-them/ https://www.ezlandlordforms.com/articles/educational/5/191/the-rise-of-grow-ops-how-they-work-property-damage-caused-and-how-to-avoid-them/ Tue, 12 Mar 2013 01:44:52 GMT Successful landlords screen tenants to avoid all kinds of problems: late and missing rent payments, lawsuit-lovers, criminals and simply loud and obnoxious tenants are just a few.  But even savvy landlords may not be expecting tenants to convert their rental unit into a grow-op.  A grow-op is essentially when a tenant uses a rental unit as a greenhouse to grow marijuana and the trend is becoming more popular.  Grow-op operations can destroy rental buildings and the damage is usually not covered by rental property insurance.

Similar to a natural greenhouse, tenants need large amounts of water, light and heat.  Ultraviolet lamps on this scale require massive amounts of electricity, so tenants often bypass the electric meter to get the electricity needed by cutting through walls and sometimes basement floors to access the power without running up the electric bill.

Water must be sprayed throughout the property to supply the plants so tenants will cut holes through floors and walls to pass the water tubing from one room to another, along with the electricity cables to power the heaters and UV lamps.  Walls and floors are destroyed, support beams are cut, water runs on the floors, down the walls and anywhere else it can reach.  Over time the accumulation of moisture will turn the unit into a den for mold and the wood will quickly rot, a process that often requires only months, not years. 

The harsh reality for these landlords is that not much can be done to salvage the rental unit.  Landlords are left with tens of thousands of dollars worth of damage that is usually not covered by insurance.  The result is a destroyed property, an unpaid mortgage, and monstrous electric and water bills.  What does these mean for small landlords?  For many it means bankruptcy, and for others it means abandonment of the rental property.

What type of tenants run these operations?  Criminal deviants with terrible records?  Think again.  Too often landlords discover that the kind couple with their children, Bob, Sue, and Jane, were actually a cover up for an organized drug operation.  These tenants will be polite, pay rent on time, and never complain about anything.  On the contrary, they will do anything they can to prevent the landlord from entering the rental unit.

To avoid finding themselves in this situation, landlords should make sure their rental agreement details right-of-entry for inspection.  Ottawa attorney Michael Thiele suggests explaining to potential tenants that the landlord has the right to (and will) enter the property to inspect for illegal activity once a month.  "This in itself should motivate the wrong tenants to move on."   After becoming better acquainted with the tenants and if satisfied that they are not the type to destroy the property, inspecitions can be less frequent.  However, he warns that "Even with the nicest tenants it is imperative that you conduct at least annual maintenance inspections to catch whatever problems may be developing."

]]> https://www.ezlandlordforms.com/articles/educational/2/190/interactive-map-displays-neighborhood-incomes-and-rents/ https://www.ezlandlordforms.com/articles/educational/2/190/interactive-map-displays-neighborhood-incomes-and-rents/ Mon, 11 Mar 2013 18:17:02 GMT By Brian Davis

Rich Blocks, Poor Blocks, a nifty new online data aggregating tool put together single-handedly by data journalist Chris Persaud, serves two extremely simple functions: mapping the United States by rents and income.

Breaking both rents and income down by census tract, some fascinating insights can emerge.  Where are rents low but incomes high?  How does the range of rent differ from the range of income, in a certain city?  Where are boundaries between high rent and low sharp, versus gradual?

Of course, for every question one can answer with Rich Blocks, Poor Blocks, there are plenty of others that arise.  What did the map look like one year ago?  Five years ago?  Ten?  A single snapshot in time does not demonstrate where neighborhoods are heading, only where they are now.

And then there are the measurement units: census tracts.  In dense urban areas, census tracts may be quite specific and cover only a handful of blocks, but in many suburban and rural areas, tracts may cover many square miles.

Nor can the tool answer why certain areas have the rents or income that they do.  Sometimes there are islands of wealth or apparent poverty standing starkly out on the map, which require deeper digging for explanations.  As an amusing example, in Towson, MD (a wealthy suburb of Baltimore), Census Tract 4906.05 pops off the map with poverty-level income (surrounded by high income), but shows the highest rent level listed on the map.  A closer examination reveals Towson University, populated with "poor" college students, whose parents (or student loans) pay the high rent.

The map uses data from the American Community Survey, which was taken between 2007-2011, and uses median incomes and median rents, reducing the impact of outliers, such as a few high-rise penthouses in an otherwise average neighborhood, on the data.  Some types of income, such as capital gains, were not included however.

While some tracts may not be well represented (e.g. areas where most wealthier people own their homes while poorer citizens rent), in most cases the map offers an insightful window to the geographic distribution of wealth, and the differences between rents and income.

]]> https://www.ezlandlordforms.com/articles/educational/2/189/the-best-and-worst-states-for-real-estate-taxes/ https://www.ezlandlordforms.com/articles/educational/2/189/the-best-and-worst-states-for-real-estate-taxes/ Thu, 28 Feb 2013 16:39:33 GMT Being a landlord has many perks, but paying property taxes is not one of them.  All states impose property taxes, but the amount collected varies greatly from state to state.  While a few tenths of a percentage may not seem like much, it makes a huge difference when comparing taxable values in the hundreds of thousands.

To get an idea of what is at stake, compare Louisiana and Connecticut.  Louisiana has one of the lowest state property tax rates in the United States at 0.18%.  Conversely, Connecticut has a higher property tax rate of 1.63%.  Not a huge difference, right?  Think again.  For a median home worth around $200,000, Connecticut landlords will pay $3,260 in real estate taxes each year, while Louisiana landlords will pay a lean $340.

Another way to consider it is by comparing a landlord who lives in a low-tax state and pays $2,000 in property taxes for a $1,000,000, 8-unit property, compared to a landlord in a high-tax state who pays $2,000 in taxes on a $150,000 single family property.  The landlord in State A is paying a mere 0.2% of their property value in taxes, while the landlord in State B is paying 1.33% of their property value in taxes.  And the state tax rate is just the beginning - landlords and homeowners must also pay county/municipality property taxes.

The Best States for Property Taxes

To locate the states with the highest and lowest property taxes, the nonprofit Tax Foundation has used Census data over a three year period using property taxes along with the percentage of property value paid in property taxes. The top ten best states for property taxes are as follows:

    1.    Louisiana - 0.18%
    2.    Hawaii - 0.26%
    3.    Alabama - 0.33%
    4.    Delaware - 0.43%
    5.    West Virginia - 0.49%
    6.    South Carolina - 0.50%
    7.    Arkansas - 0.52%
    8.    Mississippi - 0.52%
    9.    New Mexico - 0.55%
    10.  Wyoming - 0.58%

The Worst States for Property Taxes

The Tax Foundation found that property owners in the following states paid the most in property taxes compared to property value.  The percentages represent the percentage of property value that are paid in taxes:

    1.    New Jersey - 1.89%
    2.    New Hampshire - 1.86%
    3.    Texas - 1.81%
    4.    Wisconsin - 1.76%
    5.    Nebraska - 1.70%
    6.    Illinois - 1.73%
    7.    Connecticut - 1.63%
    8.    Michigan - 1.62%
    9.    Vermont - 1.59%
    10.  North Dakota - 1.42%

]]> https://www.ezlandlordforms.com/articles/news/188/florida-landlord-gets-jail-time-for-altered-lease-agreement/ https://www.ezlandlordforms.com/articles/news/188/florida-landlord-gets-jail-time-for-altered-lease-agreement/ Tue, 26 Feb 2013 02:55:03 GMT By Cassandre Juste

No landlord likes having to file for eviction (or be forced to take a tenant to court for any reason), but it is sometimes a reality of property management.  When that time comes, legal documentation matters, and one Florida landlord learned this lesson the hard way.

The landlord filed an eviction case in November 2012 and included the lease agreement in the file.  Throughout the hearing the landlord continued to argue that the tenant had breached a particular clause of the lease agreement.  When the tenant’s counsel provided the tenant’s copy of the lease, it was revealed that the rental agreement was expired and the tenant’s copy of the document had a different termination date on it.

After an intense round of questioning by the judge, the landlord finally admitted to altering the lease document he submitted to the court.  When asked what his reasoning for forging court documents was, the landlord explained that he “was a retired law enforcement officer who had served for 30 years in that capacity.”  He went on to explain that in his career as a police officer he became very familiar with the court system and he has testified in court numerous times.  The judge was stunned that someone with three decades worth of law enforcement knowledge would have the bad judgment to falsify court documents - and then lie about it.

Appalled, the judge found that the landlord was in violation of Florida Rules of Criminal Procedure as well as several Florida Statutes and sentenced the landlord to thirty days in prison.  Landlords beware: legal documentation matters, and the only act worse than appearing in court with illegal documents is presenting falsified documents.

 

 

 

 

]]> https://www.ezlandlordforms.com/articles/educational/2/187/what-is-a-quitclaim-deed-and-when-should-it-be-used/ https://www.ezlandlordforms.com/articles/educational/2/187/what-is-a-quitclaim-deed-and-when-should-it-be-used/ Mon, 25 Feb 2013 15:50:01 GMT By Brian Davis

A quitclaim deed is the simplest type of real estate transfer deed, in which the owner of a piece of real estate (the grantor) merely releases ("quits") all claims of ownership and transfers their ownership to a grantee.  The quitclaim deed does not make any guarantees whatsoever about the property - the grantor simply washes their hands of it and passes their ownership interest (if any even exists) to the grantee.

What Is Included?
There are surprisingly few details listed in a quitclaim deed.  The details of the two parties, the grantor and the grantee, are of course included, along with the consideration.  The consideration is what is being offered by the grantee in exchange for the ownership of the property - this is most often money, but it can be anything: a prized baseball card, custody of a pet or even something intangible like "love and affection."  The other critical component to a quitclaim deed is the legal description of the real property.  A legal description is a lengthy description of the property's boundaries that conforms with local legal requirements, and can be found on the original deed from when the property was purchased.   If lost, the deed can usually be found among the public records of the local courthouse or even online.

Pros & Cons of Quitclaim Deeds
There are many pros, and one giant con, to using quitclaim deeds.  The drawback, quite simply, is that quitclaim deeds offer the grantee/recipient no protection or guarantees whatsoever about the property or their ownership of it.  Maybe the grantor did not own the property at all, or maybe they only had partial ownership.  There could be liens that have been placed against the property such as for unpaid mortgages, utilities or taxes.  Easements or deed restrictions could restrict use of the property, and may not be disclosed in a quitclaim deed.  Perhaps there is a cloud on the title, leaving the ownership uncertain and the possibility of a lawsuit to settle who actually owns the property.

So what are the advantages?

First and foremost, cost.  Title companies routinely charge $1,000-2,000 for a real estate settlement, which may be unnecessary for informal transfers of ownership.  Beyond cost, title searches take time and can bring other delays and hassles with them.  For example, the title company generally requires any attached judgments and debts to be paid off, which may not be desirable.  Probate court may be avoidable, in some instances, through a combination of trusts and quitclaim deeds.

When Is a Quitclaim Deed Useful?
There are many situations where transferring ownership of real estate this way may be appropriate, usually in less formal transfers of ownership where the parties know one another and are less concerned with the title history than they are with speed and cost.  Someone may wish to transfer a property they own under their personal name to a company name (for tax or asset protection purposes), a simple change in legal/technical ownership.  A family member may quitclaim their ownership interest to another family member, to facilitate the closure of family finances (e.g. two siblings inherit a rental property, and one is not interested in it, so she signs a quitclaim deed to her brother who is).  It is also commonly used in marriage and divorce situations, to enable one spouse to inexpensively transfer their ownership interest to the other.

Ultimately, quitclaim deeds make it possible to quickly, quietly and cheaply transfer all or part of a property's ownership from one person/company to another, which can be useful for atypical real estate transactions.  If the grantee is at all concerned with the cleanliness of the title history, they should not accept a quitclaim deed, and should instead hire a title company to perform a title search and insure the clean title.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/186/ontario-landlord-tenant-laws-summary/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/186/ontario-landlord-tenant-laws-summary/ Mon, 25 Feb 2013 10:50:19 GMT What are good practices or requirements of a landlord before the start of a new tenancy?
Landlords should start by screening their tenant, and investigating all applicants' rental history, income, credit, and criminal background. These various background checks must be performed in accordance with Ontario’s Human Rights Code. In Ontario, landlords must provide new tenants with the prescribed form, Ontario Information for New Tenants, on or before the tenancy begins. This outlines the rights and responsibilities of the landlord and tenant.

What and who is the “Board” and how do I contact them?
The Board is the Ontario’s Landlord-Tenant Board. The Board administers and enforces Ontario’s Residential Tenancies Act. Landlord’s may contact the board at:
From within the Toronto area- 416-645-8080
From outside the Toronto area- 1-888-332-3234
Offices may be visited at any one of the local or regional offices. A list of these locations are provided at the Ontario Landlord Tenant Board’s website.

Is a written lease required?
While the Ontario Residential Tenancies Act allows landlords and tenants to have an oral agreement in most circumstances, a written Ontario-Specific Lease Agreement is reccommended for both compliance and enforceability.

When can a landlord enter the rental unit?
The landlord must give 24 hours written notice, stating why and when they will be entering the unit. This does not apply if there is an emergency.

What can a landlord do if the tenant pays the rent late?
The Landlord can serve a tenant with an Ontario Notice to Terminate for Rent Default. This form notifies the tenant that they will be evicted if the rent is not paid by the termination date. Landlords may not charge a late rent fee.

What fees may or may not be charged?
The landlord may assess a returned cheque fee that is no more than $20.00. As mentioned above, landlords may not charge a late rent fee. The collection of a key deposits or similar deposits whether they are refundable or not, including any penalties, premiums or commissions is prohibited according to Ontario’s Residential Tenancies Act, Section 134.1.

Are damage deposits allowed in Ontario?
A damage deposit is not permitted, however the landlord can collect a rent deposit of up to one month's rent (unless the tenant pays rent weekly - in this case the rent deposit can be no more than one week's rent). The rent deposit must be given to the landlord before or on the date the tenancy starts. Rent deposits may not be used for damages or anything other than the last month's rent at the end of tenancy.

Please note: If a tenant damages the rental property, the landlord can serve them with a notice to vacate and/or charge them for the damages that were caused. If the tenant refuses to pay for damages, the landlord can contact the Board to remedy the situation.

When are rent increases allowed?
The rent may be increased every 12 months. Landlords must wait until their tenant has occupied the rental unit for at least 12 months before increasing the rental amount. Ontario’s allowable rent increase rate varies each year and is posted on the Ontario’s Landlord Tenant Board website.

Are rent receipts required?
A landlord must always provide a receipt to a tenant upon the tenant’s request. This also includes receipts to former tenants, as long as that tenant makes the request within one year of moving. Failing to provide a receipt to a tenant after the tenant makes this request is considered an offense of the landlord, by Ontario’s Landlord-Tenant Board.

What can a tenant do to end tenancy?
The tenant may not just abandon the apartment - they must agree with the landlord to end the lease agreement early, otherwise the tenant must give the landlord written notice that they will be vacating at the end of the lease term. If the landlord and tenant agree to end the lease term early it may be an oral agreement, but it is recommended to have a written Mutual Termination of Lease Tenancy.

When and why may a landlord evict a tenant?
Landlords can evict if the tenant damages the leased premises or fails to pay rent or violates the lease or the act. When a landlord finds the need to evict, a tenant must be served written eviction notice first, sometimes with a chance to remedy the situation. However, if a tenant, their occupants or guests are involved in illegal activity, or causes damage to the premises, a landlord may serve an eviction notice to terminate the tenancy without giving the tenant a chance to remediate or fix the issue. A landlord must be cautioned however, that proper procedures must be followed; it is not permitted for a landlord to change locks or simply remove the tenants' property without following the rules in the Act.

Is the landlord or tenant responsible for maintaining the rental unit?
The landlord is responsible for maintaining the rental unit and keeping it in a habitable state. If the landlord states that the tenant is responsible for maintaining the rental unit in the lease agreement, it is void. It is recommended that both tenant and landlord conduct an inspection and use a written condition report of the rental unit at the beginning of tenancy, but it is not required. The tenant is responsible for keeping the premises in a clean and sanitary state. The tenant is responsible for repairing any damage the tenant, occupant, or guest permitted on premises may have caused.

When is the landlord responsible to provide heat?
The Ontario RTA requires that if a landlord provides the heat, it must stay at least 20 degrees Celsius between September 1st and June 15th. Additionally, the local municipal government may be contacted to check for any local heat laws or regulations.

What should a landlord do if their tenant has abandoned the rental unit?
The landlord will need to make a reasonable amount of attempts at contacting the tenant, provided no notice of leave was given. If the landlord believes the tenant abandoned the premises, they can apply to the Board for an order terminating the tenancy. If the landlord does not contact the board, and re-rents the property without the board confirming the property to be abandoned, the tenant can take legal action.

 

DISCLAIMER: The information provided herein is intended simply as a general discussion of legal issues concerning landlord tenant law. Information provided is NOT legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/news/185/superstorm-sandy-leaves-landlord-out-in-the-cold-still/ https://www.ezlandlordforms.com/articles/news/185/superstorm-sandy-leaves-landlord-out-in-the-cold-still/ Tue, 19 Feb 2013 21:06:38 GMT                   By Cassandre Juste

Thousands of landlords suffered damage at the spiraling arms of Superstorm Sandy, and millions of dollars' worth of damage went uncovered by insurance. Cities and towns across New York and New Jersey are still in the midst of recovering from the wrath of the storm and there is still plenty of work to be done to repair the damages caused to their rental properties. One Rockaway landlord is especially displeased with the cost of recovery for his properties.

Charles Zurheide’s property had a whopping $20,000 in damages caused by the superstorm last October.  Now to add insult to injury, Zurheide may have to fork up even more money to repair an underground city water main break..

Zurheide explains that the two inch pipe that runs from the water main to his property was broken during storm cleanup when a piece of heavy machinery used by the city crushed the sidewalk next to the home. The repair is necessary to restore water to the two-family property (which obviously remains uninhabitable, displacing his tenants and costing rent), and the estimated cost of repair is around $6,500. Because the line is on Zurheide’s property, the city holds him responsible for the repairs.

Rockaway’s Department of Environmental Protection told the landlord that if he did not fix the pipe within 10 days they would do it for him and send him the bill. He filed a claim with the Comptroller’s Office and refused to pay. “I want it fixed and I don’t want to have to pay for it, because it’s not something I did,” he said.

However, the landlord may not have a choice in the matter. Sanitation spokesman stated that without a witness, Zurheide has little chance of proving his case. Also a DEP spokesman explained the agency already forgave a $1,000 water shut-off fee and waived water bills and fees for storm-ravaged victims. While the harsh effects of the hurricane may have subsided, the storm has not yet passed for this landlord.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/184/saskatchewan-landlord-tenant-law-summary/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/184/saskatchewan-landlord-tenant-law-summary/ Fri, 15 Feb 2013 12:07:05 GMT Is there anything a landlord must do first before the start of a new tenancy?
No, but is a good idea to start by screening all potential tenants, including obtaining their rental history, income, credit, and criminal background. Landlords can use the ezLandlordForms rental application to gather all of a potential tenants personal information, to start the screening process, and are welcome to run tenant screening reports through this website. Landlords may not charge application fees or screening fees however.

Is a written lease required in Saskatchewan?
A written lease agreement is not required but it is a good idea to have one. When a written lease is used, the landlord must give the tenant a copy of the lease within 20 days of the time they enter into the tenancy. If there is no written tenancy agreement the landlord must provide the tenant with a phone number and address of the landlord, or a way to contact the landlord in case of an emergency.

Is the landlord or tenant responsible for maintaining the rental unit?
The landlord is responsible for maintaining the rental unit and keeping it in a habitable state.

When can a landlord enter the rental unit?
There are specific rules for a landlord to follow before entering the rental unit that is under a tenant’s possession. This does not apply if there is an emergency. The landlord must give at least 24 hours written notice, stating why and when they will be entering the unit. Landlord’s right of entry can not be more than a 7 days notice.

Are rent receipts required?
If rent is paid in cash, the landlord must give the tenant a rent receipt.

What can a landlord do if tenant is late on rent?
If the rent remains unpaid for at least 15 days, the landlord can begin evicting a tenant by serving them with a Saskatchewan Immediate Notice to Vacate (Non-Payment).

Are there specific fees that a landlord can charge a tenant?
A landlord may not charge any application fee, this includes for accepting, processing or investigating a tenant. A late fee is permitted if it is specified and agreed upon by both, landlord and tenant. Late fees can never be assessed as a penalty but rather a predetermined estimate of costs incurred by the landlord when the rent is late.

Are there any restrictions on security deposits?
Yes, the security deposit may not be more than one month's rent.

What happens with a security deposit after the tenant moves?
The tenant should provide the landlord with a forwarding address. The landlord has 7 business days to make any claim against the security deposit. Optimally, the tenant and the landlord can come to a written agreement for the disbursement of the security deposit along with any claims made against it.

When are rent increases allowed?
Fixed-term tenancies normally do not have mid-term increases. However if a landlord and tenant agree to a future rent increase before the tenancy starts, it is allowed. The agreement must state how much the increase will be in either percentage form or dollar amount, and when the increase will start. For periodic lease agreements (e.g. month-to-month), landlords must wait at least 18 months after the tenancy starts, and 12 months after the previous increase. Saskatchewan Rental Housing Industry Association Inc. (SRHIA) members must wait 12 months after the tenancy starts, and 6 months after the previous rent increase.

What is the rate of rent increase that is permitted under the Act?
The Saskatchewan Residential Tenancies Act (RTA) does not restrict the rate of rent increase.

What can a landlord evict a tenant for?
The landlord can evict a tenant:

• If a tenant fails to pay rent or pays late frequently
• If a tenant fails to pay the security deposit within 30 days
• If the tenant, their occupants and/or guests are disruptive to reasonable enjoyment, health or safety
• If the tenant, their occupants and/or guests have caused damage to property
• If the tenant has violated a provision of the lease agreement
• If a tenant is undertaking illegal activities.

How can I get all the details of what a landlord in Saskatchewan may and may not do?

Every landlord should read and become familiar with the Saskatchewan Residencies Tenancy Act of 2006.

Disclaimer:
The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

 

]]> https://www.ezlandlordforms.com/articles/educational/5/183/rental-property-registration-occupancy-certificates-and-other-scary-stories-of-red-tape/ https://www.ezlandlordforms.com/articles/educational/5/183/rental-property-registration-occupancy-certificates-and-other-scary-stories-of-red-tape/ Wed, 13 Feb 2013 02:07:29 GMT By Denise Supplee and Cassandre Juste

Landlords in Williamsport, Pennsylvania are objecting to Mayor Campana’s new proposal that landlords and tenants be required to register by providing proof of their identities.  Nor are they alone in their grumbling: more cities nationwide are enacting ordinances similar to this one, requiring landlords to register their rental properties, obtain occupancy certificates and of course pay the fees associated with each.  While the specifics vary greatly from one state to another, ignoring these ordinances can result in hefty penalties for landlords.

A certificate of occupancy (or occupancy permit) is simply a document stating that the specified unit can be inhabited by people and defines how the building can be used (e.g. a single-family home or a multi-family property). The certification is often required for selling or refinancing a property, or after substantial renovations.

So what happens when a landlord rents a property without obtaining an occupancy certificate first?  The tenant can often sue the landlord as well as receive reimbursement for repairs made to the property.  The tenant can also sue for reimbursement for filing costs along with cost of service process and interest.  In the state of Connecticut, if a landlord is found to have rented a property without having a certificate of occupancy, they can be fined for up for $20 per day, per unit.

To maintain the certificate of occupancy the property must be inspected periodically to ensure that the property is in a condition to be inhabited.  If the rental unit is not in proper condition and the certificate of occupancy is revoked there can be a variety of penalties, none pleasant for the landlord.  In the state of Texas if a certificate is revoked and the tenant has not broken the lease agreement, the landlord may be responsible for the full amount of the tenant's security deposit, the prorated portion of any rental payment the tenant has paid in advance, the tenant's actual damages (including any moving costs, utility connection fees, storage fees and lost wages), court costs and attorney's fees arising from any related cause of action by the tenant against the landlord.

Registration ordinances, on the other hand, require a landlord to register their property with the local government, and in some cases provide copies of the registration to the tenant.  According to New Jersey attorney Michael Mirne, “Compared with the Certificates of Occupancy, the registration statement application places relatively little burden upon the landlord.  Registration Statements do not require inspections and do not need to be repeated upon the arrival of new tenants."  But they still usually come with a registration fee, and, of course, paperwork.

Some states require landlords who do not reside in-state to register a local "resident agent" for the property.  The state of Rhode Island, for example, requires landlords who are not residents of Rhode Island to register an agent that is a resident of the state, a for-profit corporation, limited partnership, limited liability company, limited liability partnership, non-profit corporation or an attorney qualified to conduct business in the state.

Landlords who fail to obtain necessary permits and certificates are often discovered when they go to file for a judgment for possession in rent court.  While not having the proper registration or certificate of occupancy that may be required may or may not result in a dismissal of the eviction action, it can delay the process up to 90 days.  In short, in cities or states that require a certificate of occupancy or registration, beware all ye who fail to comply, and be prepared for fines, penalties, eviction delays and a host of headaches.

]]> https://www.ezlandlordforms.com/articles/news/182/fha-to-boost-fees-and-rates-again/ https://www.ezlandlordforms.com/articles/news/182/fha-to-boost-fees-and-rates-again/ Tue, 12 Feb 2013 15:17:15 GMT                                     By Brian Davis

The largest insurer of mortgages in the world, the Federal Housing Administration, has announced that new mortgage borrowers should prepare to pay more for their mortgages, because changes are coming (again).

As they announced last year around this time, the FHA is raising rates once more, this time by 10 basis points (0.1%) on nearly all new mortgage loans insured by the government agency.

But more drastic will be the requirement that borrowers pay the FHA premium for the entire life of the loan, instead of ceasing to charge once borrowers have paid their loan down to 78% of the home's value.

Consider an example: Helen Homebuyer wants to buy her first house.  Helen puts a home under contract for $200,000 (the current median U.S. real estate sales price is $202,100), and has saved up the 3.5% down payment she needs ($7,000 down, $193,000 loan), plus the $13,000 she will need for closing costs.  She has to pay an additional 1.75% of the loan amount to the FHA as an up-front fee ($3,378), and now she will pay an annual premium to FHA of 1.35% of the loan ($2,606/year).  But instead of paying $2,606/year for only the first 5 years (as currently required), she will have to pay all 30 years of her loan - that means she will pay $81,543 to the FHA for the life of her loan, instead of $16,405.  Put differently, she will have to pay the $217/month FHA insurance premium for not just the first 5 years, but all 30.

This time last year, before their last round of rate hikes in Spring 2012, she would have paid $1,930 up front (instead of $3,378), then $2,413/year for the first 5 years (instead of $2,606), or $13,993 (instead of $81,543) for the total FHA fees for the loan.

First-time homebuyers are especially critical to boosting real estate markets because they add to the net demand for homes.  When an existing homeowner sells his house and buys another, it is a net-neutral transaction for consumption of homes, but first-time homebuyers are not adding to the supply by selling, they only add to the demand side.

The FHA asserts that these new fee requirements are necessary to boost reserve coffers that were strained by all of the borrower defaults during the Great Recession and its aftermath.  In other words, says the FHA to Helen Homebuyer: "Your parents didn't pay their bills, so you will pay more to buy your first house."  And by more they mean $81,543 instead of $13,993.

In an additional change, the FHA now requires that borrowers with debt-to-income ratios above 43% and credit scores below 620 must have their loans manually underwritten by the Administration.  Alas, if this policy had been implemented a few years ago, perhaps they would not need to keep hiking fees and making it more expensive and difficult for legitimate, responsible borrowers to become homeowners.

]]> https://www.ezlandlordforms.com/articles/news/181/the-world-s-strangest-eviction-cases/ https://www.ezlandlordforms.com/articles/news/181/the-world-s-strangest-eviction-cases/ Thu, 07 Feb 2013 18:04:13 GMT By Cassandre Juste

Think your oddest eviction story takes the cake?

In Boulder, Colorado, 60 year-old Carol Burdick decorated her apartment door for Easter, using plastic grass, stickers and a self-erected four foot tall pyramid of colorful Peeps (yes, the bird-shaped marshmallow Easter candy).  The landlord requested that Burdick remove the tower of Peeps because they blocked a common area, violating the terms of her lease agreement.  After Burdick refused to remove the marshmallow structure, her landlord removed them himself and Burdick responded by refusing to pay rent, claiming her right to decorations was a Constitutional issue.  The management company promptly evicted her and countersued for two months rent and legal fees.  After the judge heard testimony from both sides (including an expert witness admitted to testify as a “Peeps expert”), the court eventually ruled that Carol Burdick owed the landlord a total of $1,132.66.

If Peeps caused tempers to flare among the Boulder landlord and neighbors, they would have been apoplectic over Gavin Townroe and his penchant to blast “Viva Forever” by the Spice Girls.  Repeatedly.  In the middle of the night.  The Nottingham, England man's neighbors reported they were forced to leave their homes to avoid the monstrous song blaring on repeat.  “Friday, Saturday, you don't mind, but seven days a week is very difficult to deal with,"  lamented one sleep-deprived neighbor who complained repeatedly to the property manager.  Britain’s Daily Mail reported that one of Gavin’s neighbors had to take sick leave from work due to lack of sleep. 

Townroe received an anti-social behavior order by Nottingham police, and in October of last year, Townroe was given a six-week suspended jail term after breaching the order.  This past month the Nottingham City Council finally evicted Townroe from his home and he was slapped with a 913 pound fine (roughly $1,500).

While forced repeated Spice Girls tunes at 3 AM does sound like something the CIA would do to interrogate detainees, neighbors in Portage County, Wisconsin argue they had it even worse.  Instead of Guantanamo Bay circa 2005, think George Orwell's 1984.

Some women may prefer jewelry or flowers as gifts, but a woman in Plover, Wisconsin was given a rat - and was ecstatic.  The rat multiplied and before long, Darlene Flatoff had hundreds of the creatures inhabiting her mobile home, earning a title as the world's first "crazy rat lady." 

"You could see them in the windows, that's how many there were," Park Manager Miguel Lopeez said.  "The smell was just unbearable."  If the stench and the infestation were not bad enough, an exterminator reported that the rats had chewed through the floor boards of the home and authorities estimated there were approximately 300 rats living in the property before the landlord intervened.  The tenant, however, claimed that the rats were her "friends" and did not cause any harm.

The infestation was reported and park managers warned the woman several times before beginning the eviction process.  Flatoff has since been evicted but her furry friends were not as easily removed, leaving exterminator Matthew Schneider with the joy of trying to evict the four-legged tenants.

]]> https://www.ezlandlordforms.com/articles/news/180/what-happens-when-homes-cost-more-to-demolish-than-they-are-worth/ https://www.ezlandlordforms.com/articles/news/180/what-happens-when-homes-cost-more-to-demolish-than-they-are-worth/ Thu, 07 Feb 2013 11:23:22 GMT By Brian Davis

The average cost to demolish a home in Detroit is $10,000, according to Detroit 2020, largely due to the thick red tape involved in the 36-step process mandated by Detroit's regulations.

The average listing price for a home in Detroit is, unbelievably, also $10,000, according to Zillow's December 2012 data (the most recent month available).

So what happens to the 50% of homes on the under-side of average, that cost more to take down than they are worth?

Homeowners and landlords are, of course, likely to abandon them, as they fall on the "Liability" side of the ledger books.  As more homeowners and landlords abandon homes around Detroit, real estate values near abandoned homes drop.  As home values drop, more people abandon them, thus creating a downward cycle.

And what happens to demolished properties afterward?  Do they sit as vacant lots?  In the best case scenario, the City may be able to convert them to park space (although this will create ongoing maintenance costs), or hold it for a year (or ten) to resell to a developer for a profit.  In the worst case scenario, the cityscape becomes pocked with empty pieces of land sitting in limbo, forgotten by the bureaucracy and scarring neighborhoods.

There is another possibility: homes can be recycled.  This solution is laudably green, cutting down on landfill usage and lumber/treecutting demand, and preventing the manufacture of unnecessary new products.  But if bulldozing a house costs $10,000, how much does it cost to carefully dismantle a home piece by piece and recycle each component?

And who is going to pay these costs, regardless of whether the home is demolished or recycled, converted to a park or added to a land bank?  The short answer is "the City of Detroit," but this cycle is not sustainable economically.  As more properties are abandoned and demolished, and property values are driven down, causing more homes to be abandoned and demolished, what happens to Detroit's tax revenue?  The majority of city-level revenue comes from real estate taxes, after all.  Detroit could cut spending, but Detroit has overspent for so long (Detroit has a $200 million budget deficit and $13.2 billion in long-term structural debt) that now that they actually need to spend, they are already in a hole too deep to dig themselves out.  They will need to raise revenues, which means charging their citizens more in taxes, fines and fees, which will push more residents to move away (and abandon their homes for possible demolition).



So what should the City of Detroit do?  The population drops, so tax revenues drop and home values drop.  Homeowners and landlords abandon their homes because they are worth less than their mortgage, or the cost to demolish.  The City of Detroit spends more, on demolition programs and social welfare, because there are fewer jobs and opportunities, which means more poverty.

One possibility is allowing the State of Michigan to assume control of the city government, as the State has threatened to do, which would set a new precedent for handling cities that have proven not responsible enough to govern themselves.  Another possibility is attacking the root of the problem: economic decline.  Population follows job availability, so if the mayor could magically snap his fingers and create 200,000 new private-sector jobs in Detroit, suddenly there would be a population spike and subsequent real estate value spike.  It would suddenly make sense financially for real estate investors to buy up empty homes and renovate or replace them.  Values and occupancy would rise, and city tax revenues would rise.

Alas, creating 200,000 private sector jobs would be a Herculean challenge, even if the City of Detroit utterly devoted its efforts to boosting entrepreneurship and attracting companies to relocate there (which it has not).  So Detroit will increase its deficit by demolishing homes - their goal is 10,000 total demolitions by the end of 2013 - and the downward spiral continues.

]]> https://www.ezlandlordforms.com/articles/educational/5/179/5-ways-to-improve-your-tenant-retention-rate/ https://www.ezlandlordforms.com/articles/educational/5/179/5-ways-to-improve-your-tenant-retention-rate/ Mon, 04 Feb 2013 01:59:13 GMT By Cassandre Juste & Brian Davis

Rental vacancies cost landlords millions of dollars each year.  The good news is that many tenants who leave are retainable - for effective landlords.  Here are five tips to boost your rental agreement renewal rates (and have happier tenants) by becoming a better landlord.

1. A Failure to Communicate
No landlord likes taking tenant phone calls, but tenants feel much more comfortable when landlords are easy to reach, and return their calls quickly.  Give tenants your business number and the hours that are best to reach you, along with your email address.  Keep all emails for a written record of communication.  Remember that even if you don't have any definitive answers, tenants will still feel better once they have spoken with you, even if all you have to tell them is that you have contacted the handyman and he will be in touch.  Tenants often need to be reassured, so do not ignore their calls, even if you have no new information for them.

2. Responsive = Proactive
From disruptive neighbors to leaking roofs, it is imperative to respond to all tenants concerns quickly.  With repairs, try to coordinate a same-day meeting between the tenant, contractor and yourself to inspect the problem, get a quote and get it fixed.  Many property problems quickly grow in cost, as more damage is caused, and even non-repair complaints should be addressed quickly to improve tenant retention. 

3. Observe Tenant Privacy
Many states have laws regulating landlord notice of entry, and of course tenants want to feel like they have privacy.  Obey state/local laws for written notice of entry, and call ahead to schedule a time to visit (assuming a non-emergency - landlords can generally enter without notice in cases of true emergencies).

4. Be an Institution, Not a Squabbler
Tenants will often infuriate you, from failing to pay the rent to damaging your rental property to constant demands for upgrades and repairs.  Growing frustrated and arguing with the tenants or ignoring their calls will not serve you however, it will only send that message that arguing with you is an option.  Instead, be polite and firm: thank them for letting you know that the rent will be late, tell them when the grace period expires, and how much the late fee is.  After the grace period expires, file for the eviction in court, and inform the tenant what the additional court fees will be.  They should come to think of you as an institution - firm, professional and efficient, something to adapt their behavior to, not try to argue with or fight.

5. Occasional Leeway for GOOD Tenants
Retention is all about keeping the good tenants, even if that means allowing them an extra pet, or waiving the occasional fee.  Maybe rent is late by a day because a tenant was traveling or they let their recently divorced sister stay with them for a week; try to make reasonable accommodations, and encourage tenants to renew the rental agreement at the end of the lease term.

]]> https://www.ezlandlordforms.com/articles/educational/2/178/7-bank-accounts-budgeting-to-become-a-wealthy-real-estate-investor/ https://www.ezlandlordforms.com/articles/educational/2/178/7-bank-accounts-budgeting-to-become-a-wealthy-real-estate-investor/ Thu, 31 Jan 2013 11:07:47 GMT

                                    By Brian Davis

How badly do you want to be wealthy?  Enough to change your habits from those of the middle class (i.e. "I got a raise" equals "I'm in the market for a larger house/car") to those of the wealthy?  If seven bank accounts sounds overwhelming, or if a maximum of 10% of your income budgeted for non-essentials sounds Draconian, then consider that becoming wealthy requires temporarily putting comfort second and becoming wealthy first.

1. Emergency Savings (5-10% of After-Tax Income)
This fund is literally for life and death issues only, e.g. "the bank is repossessing my house tomorrow."  This account should be kept at a different bank than your others, out of sight, and you should not think of this account as part of your assets.  Never draw on it unless a true emergency is looming and you have nowhere else to turn.  Automatically transfer 10% of your monthly income to this account on the first of the month until you have six months' living expenses covered, then you can lower it to 5% if you so choose. 
Purpose: Safety & Security

2. Investment Funding Account (25+% of After-Tax Income)
This account represents your savings account for buying new real estate investments.  Whether you buy with mortgage loans or cash, the post-bubble era requires heavy down payments from real estate investors, so cash on hand is more important than ever.  The more money you automatically transfer on the first of the month to this account, the faster you will accumulate income-producing rental properties, which means more income, which means more money transferred to this account, which means more income-producing rental properties... it is an upward spiral of wealth.
Purpose: Becoming Wealthy

3. Rental Unit Operating Account(s) (0% of After-Tax Income)
These accounts actually generate their own revenue.  If they do not, examine why not, and take measures to reverse the negative cash flow from rental units to become positive.  It is extremely difficult to become wealthy if your investments drain your income rather than add to it - this proves the difference between an asset and a liability.  After you have at least three months' expenses covered for each rental property in the operating account(s), start auto-transferring proceeds to the Investment Funding Account.
Purpose: Rental Expenses & Separation of Funds for Different Legal Entities

4. Regular Savings (5-10% of After-Tax Income)
There is always some big-ticket item that requires saving for - a down payment on a home, a car, a new roof, a much-needed vacation - everyone knows the drill for traditional savings accounts.  Automatically transfer 10% of your monthly income to this account, and do not withdraw for big-ticket purchases until you have three months' living expenses covered plus the big-ticket item's cost covered in this account.  Large unexpected bills (e.g. "the car needs a new transmission") can come out of this account, but this will of course postpone your next big-ticket purchase. 
Purpose: Lifestyle Security & Improvement

5. Household Checking (<40% of After-Tax Income)
Paychecks should be deposited here, and money automatically transferred out to the other accounts on the first of the month.  Ideally all recurring monthly bills (home mortgage, utilities, car payments, student loan payments, etc) should be auto-deducted from this account, but this account should retain no more than 40% of after-tax income, and should only be used for central living expenses and debts, and never optional expenses.
Purpose: Necessary Monthly Expenses

6. Health Savings Account (5% of After-Tax Income)
Health Savings Accounts (HSAs) offer benefits ranging from being untaxed to including debit cards exclusively for medical costs for easy accounting, and merit a more detailed discussion than can be covered here.  If your health care is covered by your employer, consider splitting this 5% between the Investments account and the Regular Savings account.
Purpose: Safety & Security

7. Personal/Disposable Checking (5-10% of After-Tax Income)
This account covers all the non-essentials: lunches out with work friends, new clothes, haircuts, dry cleaning, happy hour, long weekends skiing, etc.  If you have a credit card (which is a good way to ruin this carefully-architected budget), pay it from this account, and only spend on it up to what you can cover from this account's monthly allotment.  But the easiest approach is simply to withdraw all the cash on the first of the month, and only use cash throughout the month.  If you do not feel comfortable with cash, use a debit card, and just keep an eye on the balance throughout the month.
Purpose: Comfort & Immediate Happiness

It may not be fun or glamorous to put yourself on a stringent budget, but it is what separates the trajectories of two people who earn the same income.  One will grow wealthy (the hard way, the only way, despite what the lottery says), while the other stagnates under the debt and trappings of the middle class.  Becoming wealthy is not as much fun as spending everything you earn today, but being wealthy is a lot more fun than working longer and paying off debts tomorrow.

]]> https://www.ezlandlordforms.com/articles/educational/5/177/snow-and-ice-removal-when-is-the-landlord-liable/ https://www.ezlandlordforms.com/articles/educational/5/177/snow-and-ice-removal-when-is-the-landlord-liable/ Tue, 29 Jan 2013 01:20:56 GMT

By Cassandre Juste

While the winter season is a wonderful time of year, snow and ice can prove expensive - and dangerous - liabilities for landlords.  From snow-covered sidewalks, to treacherously icy walkways, to roofs collapsing beneath heavy snow, the landlord's liability often changes depending on the state/province and city, and depending on the rental agreement.  If you own property in one of the sunny states consider yourself lucky, because when the snow starts falling, landlord responsibility skyrockets.

Beyond the normal cold weather-related headaches, such as winterizing property, snow maintenance adds a whole new realm of responsibility for landlords and it can be a slippery slope (pun decidedly intended) as landlord-tenant laws outlining snow removal responsibility differs by state/province.

In Massachusetts, the general rule used to be that landowners were responsible for protecting people on their property from injuries caused by “unnatural” accumulations of snow and ice, but failed to address the “natural” accumulation of snow and ice.  However that is no longer the case - the Massachusetts Supreme Judicial Court recently ruled that property owners and landlords are responsible for every inch of snow and ice on their property. For landlords owning multiple properties, this can be quite a costly hassle.  The state of Ohio has caused similar challenges for landlords since a 2002 ruling by the Ohio Supreme Court.  Crawford v. Wolfe states that a landlord may be liable for injuries sustained on the property if they could be caused by the landlords’ failure to fulfill their obligations to maintain the safe rental property conditions.

In many states, cities have ordinances requiring snow removal from public sidewalks and paths, and fines for failing to comply with these ordinances.  While landlords of single-family rental properties can specify in the rental agreement that snow removal as the tenant’s responsibility in most states and provinces, multi-family rental properties often have common walkways that the landlord must maintain, and liability is a real concern.

Falls, injuries and snow removal disputes are an easy way to wind up in court with a lawsuit, so what are some common options for avoiding them? 

Specify the Tenant as Responsible in the Rental Agreement

If a landlord decides to leave the tenant responsible for snow removal by specifying this in the rental agreement, it can take a load of responsibility off of the landlord.  Aside from the obvious benefit of not having to take the time to shovel or pay someone else to do it, by stating that the tenant will be held accountable for snow removal in the lease, there is less liability for the landlord. If the tenant fails to properly remove the snow and a stranger falls and is injured, the landlord can simply reference the written rental contract showing the tenant was responsible for snow removal.  However, because there is so much variety in state and provincial law, it is essential to be aware of local landlord-tenant laws. 

Do-It-Yourself

If local law prohibits the landlord from assigning responsibility to the tenant, there are still positive aspects of opting to do it yourself over hiring a contractor.  First and foremost, it can be cost-effective - for landlords or property managers that own or have access to a truck and a plow, the D.I.Y. route will save money.  Another advantage is that by handling the snow removal yourself, you can ensure that the work is done properly (which does not always happen when asking a third party to do it). 

Hiring A Contractor

While it does require spending money, some landlords do not mind when writing a check from the warm and cozy confines of their home, opposed to spending hours plowing and shoveling.  For landlords that own multiple properties (especially if the properties are not close to one another), hiring a contractor may be the only option.

Regardless of which route landlords decide to take, it is critical that landlords understand their local laws, and if necessary ensure safe and complete snow removal.  A sloppy snow removal job can result in injuries and lawsuits, which no landlord wants on their hands. 

]]> https://www.ezlandlordforms.com/articles/educational/2/176/the-country-s-best-places-to-invest-in-rental-properties/ https://www.ezlandlordforms.com/articles/educational/2/176/the-country-s-best-places-to-invest-in-rental-properties/ Fri, 25 Jan 2013 01:20:00 GMT

By Cassandre Juste & Brian Davis

Location, location, location - everyone already knows the three most important factors in real estate investing.  But how do you determine what makes a profitable location?  Maybe the upcoming stadium to be built in a gentrifying neighborhood?  Or speculation on the influx of jobs in a given city?  People choose their real estate investments for all kinds of reasons, but here are three tangible ways to measure the best cities for rental investing.

Capitalization Rates

Cap rates are a quick and easy way to compare potential investments by determining the ratio of rental income to expenses.  For the uninitiated: higher cap rates mean higher income and lower costs, which equals profit.

According to CoreLogic, the top five cities with the highest average cap rates are:

1. West Palm Beach, FL -  12.4 percent
2. Cleveland, OH – 12.3 percent
3. Fort Lauderdale, FL – 12 percent
4. Chicago, IL – 11.6 percent
5. Las Vegas, NV – 11.4 percent

Vacancy Rates

Another factor that can determine an ideal location for a rental investment is the city’s vacancy rate.  There are two types of vacancy rates: one is the percentage of time, in a given year, the specific property is likely to be vacant (this is what is calculated into the cap rate), and the other is the geographic vacancy rate.  The geographic or local vacancy rate is the percentage of vacant units in a specified area (e.g. a sub-division, or within a city's limits), so the lower the vacancy rate, the better for investing.  That means more monthly income and less time finding tenants to fill empty units.

According to Forbes.com, the cities with the lowest vacancy rates are:

1. New York, NY - 2.4% vacancy
2. Minneapolis, MN - 3.3% vacancy
3. San Diego, CA - 3.4% vacancy

Landlord-Friendly Laws

Lastly, an oft-overlooked aspect of evaluating rental property locations is the local landlord-tenant law.  Certain states have dramatically more tenant-friendly legislation than others, so it is critical to be aware of the landlord-tenant laws where you are considering investing.

One of the more landlord-friendly states is Arkansas where failure to pay rent on time, for any reason, is grounds for eviction.  Further, when tenants lease property in Arkansas, the renters are accepting it "as is." The only required maintenance is that which would violate health and safety housing codes.  In the more renter-friendly states, including California, New York, Illinois and New Jersey, if a renter is without, say, hot water, they can legally withhold rent until it is fixed (or pay to fix it and deduct that from the rent).  Another example of a city that is more renter-friendly is Baltimore, Maryland.  In Baltimore City, the eviction process takes at least three months, often longer, while the landlord must carry the mortgage and the tenant simply lives for free.  And when a judge does agree to allow an eviction to move forward, the landlord is not automatically granted a money judgment - they have to apply through another court process to recover past due rent.  For many Baltimore landlords it is not worth the trouble.

Often large cities such as New York, Philadelphia, San Francisco, and Seattle have more strict laws and regulations at the city level.  The state of New Jersey has strict landlord registration requirements and specific step-by-step regulations to follow for eviction.  In some instances, even though a city may be tough on landlords regarding laws and regulations; the state itself may not be.  While Philadelphia levels harsh regulations including registration, long eviction turn-arounds and a Fair Housing Commission that can interfere in tenant eviction cases, Pennslyvania's state laws are far more landlord-friendly.  In cities like this, if landlords slip up on the minutiae and details they could extend the already lengthy timeframe in which to remove a problem tenant.

While local employment rates and upcoming improvements are worth bearing in mind, remember that capitalization rate and vacancy rate are impacted by all of the other economic factors, and are more direct measurements of potential profitability.  And after all of the economics have been evaluated, remember that even good economics can be hindered by arduous landlord-tenant laws.

]]> https://www.ezlandlordforms.com/articles/news/175/foreclosure-trends-and-their-effect-on-the-2013-housing-market/ https://www.ezlandlordforms.com/articles/news/175/foreclosure-trends-and-their-effect-on-the-2013-housing-market/ Fri, 18 Jan 2013 04:22:16 GMT                                                                                                              By Cassandre Juste & Brian Davis

To say the housing market has been on a roller coaster in the past decade is a serious understatement.

But according to the Wall Street Journal, home prices are increasing year-over-year for the first time in seven years.  The Federal Reserve has held interest rates extremely low for the last five years, which combines with low home prices to make for an attractive market for first-time homeowners and investors.  But housing markets would not be turning around at all without the foreclosure crisis subsiding. 

CoreLogic reported that as of November (the most recent month data is available for), 1.2 million homes were in some stage of the foreclosure process - 3% of all U.S. homes with a mortgage.  This figure represents a 20% decline from a year earlier, when a full 1.5 million homes were under foreclosure duress, comprising 3.5% of homes with a mortgage. 

Further, the percentage of bank-owned homes listed on the market for sale have dropped from 19.6% in January 2012 to 11.5% in November.  Fewer foreclosures available on the market means less "wholesale" competition for homeowners trying to sell their homes "retail," which in turn means rising prices.

One reason is unadulterated good news: fewer borrowers are defaulting on their mortgage payments.  Last month, LPS Analytics reported that the mortgage delinquency rate dropped from 7.83% at the end of 2011 to 7.12% at the end of 2012.  Not a massive drop, but signficant nonetheless.

The other reason is that many states intentionally made the foreclosure process extremely slow and arduous for mortgage lenders.  This has a variety of implications: first, it means that many states, especially those in which foreclosures have to go through the court judicial system, simply drew out the pain of the foreclosure crisis, by slowing the foreclosure pipeline.  In many faster, non-judicial states, the foreclosure pipeline has largely cleared, and these markets have passed clear of the foreclosure crisis. 

A second implication is that the foreclosure process is now so slow and expensive for banks that many banks are choosing to simply take a loss on the loan and agree to a short sale or loan modification.  While many borrowers have benefitted from the banks' losses, it means that lending conditions will continue to be tight, as banks will be far more cautious who they lend money to - a condition that will particularly affect lower-income borrowers and make it more difficult to obtain loans in the future.

In 2013, the national foreclosure discussion will be largely one centered around Eastern, slow-moving foreclosure states, who are still processing foreclosures from 2012 and 2011.  In faster states where the foreclosure pipeline has already cleared, the discussion will be more about demand for homes outpacing the available homes on the market (which will boost values), and about borrowers failing to qualify for loans, (which will slow the housing recovery).  After all, what good are low interest rates for would-be borrowers who do not qualify?  But the good news is that the delinquency rate should continue to drop, as tight credit markets continue to deny marginal borrowers and unemployment (hopefully) declines.

]]> https://www.ezlandlordforms.com/articles/educational/2/174/capitalization-rates-demystified-how-and-why-to-calculate-cap-rates/ https://www.ezlandlordforms.com/articles/educational/2/174/capitalization-rates-demystified-how-and-why-to-calculate-cap-rates/ Wed, 16 Jan 2013 11:56:29 GMT

By Brian Davis

You own a few single-family rental properties, and you are ready to invest in a larger apartment building – how do you compare potential investments, to determine the ratio of profit-to-expenses?  By using capitalization rates (also known as cap rates), of course.  If that sounds complicated, fear not, they are actually quite simple to calculate, and to use to compare multiple investment properties to one another.

How to Calculate Cap Rates
The math involved is not exactly rocket science:

                             Annual Net Rental Income
Cap Rate =   ---------------------------------------------
                                     Purchase Price

The key word, however, is net rental income.  That means that some judgment is required, to estimate the annual costs associated with managing the property.  The following annual costs need to be estimated:
• maintenance/repairs
• vacancy rate
• advertising
• property insurance
• property taxes
• property management fees (if applicable)
• supplies

Some costs are not included however, including mortgage costs, income taxes from rental income, and major property improvements (e.g. a new furnace for the building).

By way of example, if a property’s total rental income each month is $2,000, the annual gross rental income is $24,000.  Say the vacancy rate is estimated at 15%, that subtracts $3,600, and say the estimated annual maintenance/repair costs are $1,500.  Taxes and insurance account for another $1,500 annually, and advertising costs and supplies average $100 annually (for this example we will assume the landlord is managing the property and will not incur management costs).  Thus, the total annual expenses come to $6,700, which makes the annual net rental income $17,300 ($24,000 - $6,700 = $17,300).

Let us assume a purchase price of $155,000, which makes the cap rate 11.2% ($17,300 / $155,000 = .112, or 11.2%).  Note that capitalization rates are expressed as percentages.

How to Calculate Property Values, Using Cap Rates
Many investors will only buy investment properties above a certain cap rate.  Say the maximum cap rate you will accept is 10%, you can reverse the formula above to determine the maximum purchase price you are willing to pay.  Sticking with the example above, if the annual net rental income is $17,300, you can divide that by the .10 cap rate to calculate the maximum price – $173,000 – that you are willing to pay for the property.

Similarly, if you know the seller’s rock-bottom price, and you have a minimum cap rate you will consider, you can calculate the minimum annual net rental income the property would have to offer, to make it viable.  If the seller’s final offer is $155,000, and your minimum cap rate is 10%, then multiply .10 by $155,000 to reach $15,500 – the minimum annual net rental income necessary to make the deal worthwhile.

Capitalization rates are not the only measure that investors use to evaluate rental properties; some prefer calculating monthly cash flow, which includes the details of the specific mortgage costs for the property.  But there are several advantages to using cap rates to compare properties, including standardization by using a common measuring stick to measure all rental investment properties.  Further, it forces you to calculate in all of the average annual costs that are so often forgotten by excited investors calculating monthly cash flow too simply.  Keep capitalization rates in mind the next time you look at a potential rental investment, and take thirty seconds to calculate the cap rate – you will find it adds surprisingly to the professionalism of your investing strategy.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/173/washington-landlord-tries-to-ban-marijuana-and-kicks-a-hornets-nest-of-legal-questions/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/173/washington-landlord-tries-to-ban-marijuana-and-kicks-a-hornets-nest-of-legal-questions/ Mon, 14 Jan 2013 11:14:37 GMT

A Washington landlord launched a legal furor last week when it sent notices to tenants in all 171 rental units, banning all marijuana use in the Mercer Island apartment complex and pushing tenants to sign a lease amendment to this effect.  Washington was among the first states in the nation to legalize recreational marijuana use, a law that went into effect on January 1, 2013 (Initiative 502).

Aside from banning all types of marijuana use, the tenant notice further demanded that all residents report other tenants’ use of marijuana to the management company, Abode Management.  The notice threatened eviction of any tenants caught using marijuana on the apartment community’s grounds.

The policy stands on extremely spongy legal ground.  The first legal question arises because federal laws still classify marijuana as an illegal drug, which is in direct conflict with the Washington law declaring recreational uses legal.  This contradiction remains untested in the court system.

Then there is the question of medical marijuana, which has a longer (and more distinguished) history, which many patients and doctors contend is a separate legal right.  At least one tenant in the complex, Iraq war veteran Alex Aversano, has a prescription and uses liquid forms of medical marijuana, and has objected vocally to the new policy, and has refused to sign the lease amendment.

What is clear is that landlords cannot force tenants to sign a lease amendment in the middle of the lease term – they must wait until the term ends the tenant signs a new lease agreement.  Tenants may refuse to sign the lease amendment mid-term, although they would have to vacate at the end of the term if they still refuse to sign the lease amendment at the time of lease renewal.

Aversano’s particular usage raises yet another question: what are the legal differences between banning smoking and banning other forms of marijuana?  Washington laws are clear that landlords can ban smoking (which would include smoking marijuana) on the leased premises.  But other types of usage – liquid, edible or vaporized consumption – would not be covered under this allowed restriction.

Which, in turn, raises more questions: how would the landlord police tenants using non-smoked marijuana?  Would they show up for inspections and taste all the tenants’ brownies, or check every liquid they found in the apartment?  The requirement that tenants tattle-tale on their neighbors was one of the most vocally-rejected aspects of the notice that Abode Management sent last week.

And then there is the untested question of enforcement, even if the landlord did catch the tenant green-handed.  No Washington landlords have yet tried to evict tenants for the recreational use of marijuana, so the courts have yet to rule on the matter.

One possible outcome, as these legal questions untangle and become clearer in the coming months, is that apartment communities and rental properties will simply begin to market themselves as being “pot-friendly” or pot-restrictive, just as rental properties are pet-friendly or not.  Some people do not want to be anywhere near pets (or pot), and others do; but the beauty of markets is that there is room for diverse services and amenities, and savvy landlords will see money to be made or lost as supply and demand ebb and flow.

 

Related Reading:

A Sticky Situation (Pt. I): Can Landlords Ban Legal Marijuana Usage & Growth on Leased Premises?

]]> https://www.ezlandlordforms.com/articles/educational/2/172/tomorrow-s-trends-in-housing-what-amenities-will-the-next-tenant-look-for-when-renting/ https://www.ezlandlordforms.com/articles/educational/2/172/tomorrow-s-trends-in-housing-what-amenities-will-the-next-tenant-look-for-when-renting/ Thu, 10 Jan 2013 16:55:42 GMT

By Cassandre Juste & Brian Davis

Every prospective tenant looks for certain fundamentals in a new home: location, rent, and number of bedrooms and bathrooms are important to everyone.  But the amenities are what determine whether the tenant will fall in love with a home - people make decisions with emotions, then justify them with logic.  For a tenant deciding between two rental homes, a spacious walk-in closet or gleaming countertops may be the deciding factor, so it is critical to understand the evolving demands of the local rental market.

In today’s market, nothing catches a tenant’s attention like great textures.  A contrast between materials such as tile, stainless steel and granite will act as an eye catching feature for a possible tenant.  Ceramic or marble floor tiles can also be used to add a high-end feel to a rental unit.  Marble countertops are a luxurious (albeit expensive) feature, however, granite, quartz, porcelain or even synthetic stone can be less costly alternatives. These luxury touches combine particularly well with fireplaces, and while chimneys are expensive to install for wood fireplaces, gas fireplaces are far less expensive to install (these can be purchased and installed for as little as $500).

Spacious walk-in closets are also a very popular feature in homes and apartments.  Besides the space, having organizational features such as shelves and drawers in a closet can attract tenants.  Likewise, because privacy is sometimes a limited resource in apartment units, a balcony or terrace can give your tenants a private space where they can relax and enjoy the outdoors (without taking the trip up the hall, down the stairs, and through the lobby).

Another feature growing increasingly popular is the media room or entertainment center, as an informal room for relaxation separate from the more formal living room.  Formal dining rooms are not currently en vogue, due to their limited functionality, which makes them ripe for eventually becoming a status symbol for those wealthy enough to afford a room that is only useful for formal sit-down dinners. 

Tenants also love pools, hot tubs, spas, saunas and the like.  Patios, decks and rooftop terraces also remain extremely popular, and take on epic desirability when combined (imagine a hot tub on a rooftop deck overlooking the cityscape - potential tenants would swoon). 

For larger multi-family properties, an on-site fitness center proves an attractive community feature.  When prospective tenants see a fitness center in the rental community, they can justify paying more rent by telling themselves they can cancel their gym membership, or will suddenly start working out because of the convenience (they probably will not, but that is between them and their waistline).

While luxury amenities are excellent enticers, it is important to remember the basic amenities that tenants want as well.  According to ApartmentGuide.com, a laundry washer and dryer inside of a unit was one of the most searched-for amenities last year.  After a washer and dryer were central air conditioning, allowing pets, a dishwasher and cable-ready units.  Amenities geared towards convenience are basic but essential to most tenants.

]]> https://www.ezlandlordforms.com/articles/educational/4/171/landlords-tenants-and-domestic-violence-many-state-and-province-laws-now-involve-landlords/ https://www.ezlandlordforms.com/articles/educational/4/171/landlords-tenants-and-domestic-violence-many-state-and-province-laws-now-involve-landlords/ Fri, 04 Jan 2013 02:44:25 GMT

Did you know that California landlords must allow tenants to break their rental agreement (with no financial penalties) if they are victims of domestic violence?  Or that in Oregon, landlords cannot evict tenants who are victims of domestic violence for noise or disturbance violations?  And they are simply a few among many states and provinces with statutes regulating how landlords and property managers handle domestic violence scenarios.

Landlords and property managers who have been in the industry long enough have plenty of horror stories about tenants, and these often include domestic violence situations.  In the United States approximately 1.3 million women are victims of domestic violence each year, and about 1 in 4 women will experience domestic violence in their lifetime.  While these are disturbing statistics, they reveal how critical it is that landlords and property managers understand their local laws, both to help protect tenants and to avoid unwittingly breaking landlord-tenant laws.

One of the most vital factors in helping victims of domestic violence is physical separation from their abuser, which can be a sticky situation for a landlord or property manager.  If the victim breaks the rental agreement early and vacates the premises, they may be liable for the unpaid rent, depending on the laws in that particular state or province.  This may be considered abandonment, if the victim is the only signatory on the rental agreement and they vacate early.

For landlords and property managers, domestic violence situations can put not only the original victim at risk but other neighboring tenants as well, as they may feel inclined to intervene either physically or by calling the police.  This can cause further violence and retribution, which not only puts all of the tenants at risk but can cause major property damage and lead to tenant attrition.

There are a variety of statutes regulating what type of abuse and what type of victim qualify for early rental agreement termination.  Some statutes only apply when the tenant is the target of the abuse, while other statutes also apply to situations where a tenant’s child or another member of the household is the victim.  New York’s law applies when a person has obtained an order of protection and a court finds there is a “substantial risk of harm to the person or the person’s child”.  However, states such as New Jersey and Michigan only require a tenant to have a reasonable apprehension of harm to themselves or a child to terminate their lease early.

However, legal responsibility does not fall solely on the landlord.  Tenants must take the necessary steps as well.  All statutes require the tenant to notify the landlord of their early lease termination.  In addition, many states require some type of proof of the domestic violence, such as an order of protection or a police report documenting the domestic violence.  The time period for written notice varies greatly from state to state. Arizona and Indiana, for example, require that the incident must have occurred within the 30 days prior to the tenant’s notice.  California requires that the notice must be given within 60 days of the tenant obtaining documentary proof of the abuse and Illinois requires notice within 60 days of the act of sexual violence.

Each state and province has their own set of specific regulations, which is why it is so essential to be aware of the statutes in the states where your properties are located. In many states, such as Washington and Oregon, it is illegal for a landlord to evict tenants that are victim to domestic abuse for noise or disruption reasons, even in cases when there have been complaints from neighbors.  However, in Oregon and a number of other states, evicting the abusive tenant is legal.  Any discrimination of victims of domestic abuse is illegal, for example refusing to lease to, or threatening to evict, tenants because of their history of being victims of domestic violence.  There are also situations where it is lawful for a victim to change the locks of the property without the landlord’s approval for their own safety.

While one hopes to never encounter a situation where a tenant is a victim of domestic abuse, being aware of the domestic violence legislation in your state or province will help maintain a safe environment for all of your tenants and will keep you informed of your rights and options when these situations arise.

]]> https://www.ezlandlordforms.com/articles/educational/5/170/4-ways-to-minimize-eviction-exposure-before-tenants-stop-paying-the-rent/ https://www.ezlandlordforms.com/articles/educational/5/170/4-ways-to-minimize-eviction-exposure-before-tenants-stop-paying-the-rent/ Thu, 03 Jan 2013 16:59:53 GMT

                   By Brian Davis

Most landlords know the feeling – the mortgage payment on the rental property is due on the first of the month, but the rent payment did not arrive.  Thus begins the long, expensive eviction process, in which the landlord continues to pay the mortgage, and often other expenses like utilities and eviction costs, without any rental income to offset the expenses.  While eviction is a part of being a landlord, and it is a risk that all landlords must prepare for, there are ways that landlords can minimize this risk, from adhering to all the relevant landlord-tenant laws to rental income insurance to knowing the right people and process once eviction must be initiated.

1. Screen Tenants for Income and Credit
In the lending industry, they say that income offers insight into whether someone can pay, and credit history offers insight into whether someone will pay.  Carefully peruse rental applications, verify rental applicants’ income and credit history before signing a rental agreement with them, and avoid 90% of rent default scenarios.

2. Use a Legal Lease Agreement (Specific to Your State or Province)
It may sound self-explanatory and obvious, but it’s shocking how many landlords fail to use a lease agreement that’s even legal in their state or province.  If the landlord expects to be able to enforce their rental contract, then it must be legally enforceable!  Understand your local landlord-tenant laws and restrictions, and use a state-specific residential lease or province-specific Canadian lease. 

3. Insure Against Tenants’ Default on Rent Payments
Many U.S. and Canadian landlords are surprised when they learn that they can actually buy insurance to prevent losses from tenants failing to pay rent. 

4. Be Prepared for the Eviction Process, and Start It Immediately When Rent Is Late
The eviction process in most U.S. states takes several months, so it is critical that landlords start the process on the first day that the rent becomes late.  Aside from simply avoiding further delays, it sends a message to your tenant that they need to prioritize paying the rent over their other bills.

Each rental agreement sets a different grace period between when the rent is due (e.g. the first of the month) and when it becomes late (e.g. five days later, or the sixth of the month), and each state sets minimum grace periods.  When the grace period for the rent expires, the first step is serving the tenant with an eviction notice specific to your state or province.  Eviction notices give the tenants a second grace period (yet another reason to start the process immediately), the length of which varies depending on your location and the type of lease default.  When this second period expires, landlords must file in their local court for eviction.  If you do not know how to do this, or do not want to do this yourself, there are companies and attorneys you can hire to do it for you – inquire among other local landlords and property managers to find out who they use, or simply search your local listings for eviction specialists.  Once again, be prepared and know who to call before you actually need to file in rent court!

While evictions can’t always be avoided, the risk can be minimized through a multi-pronged approach.  Properly screening tenants for income and credit history is critical, and using the appropriate legal forms for your state or province will prevent the judge from delaying your eviction proceeding due to unenforceable legal forms.  Acting quickly when tenants default will both minimize the period that rent is not flowing inward, and will deter tenants from defaulting in the future.  Finally, rent default insurance will prevent actual loss of income, while you wade through the tedious eviction process (for more, read our overview of the eviction process from start to finish).

]]> https://www.ezlandlordforms.com/articles/educational/2/169/renovation-investing-tips-tricks-and-cautionary-tales/ https://www.ezlandlordforms.com/articles/educational/2/169/renovation-investing-tips-tricks-and-cautionary-tales/ Wed, 26 Dec 2012 10:16:57 GMT

With the spike in vacant and foreclosed homes flooding the market in the years after the real estate bubble burst, there are great opportunities for renovation investors in today’s market.  Television shows like House Hunters and Flip Men sprouted up, popularizing this technique, and these properties can be a goldmine – for those who know what they are doing.  For those who have bought and renovated fewer than 5-10 properties, there are plenty of risks, but wise investors learn from others’ mistakes, not their own.

Understand the Local Market
If purchasing a property with plans to lease it out, landlords must think about the “Who” and “What” aspects.  Who leases properties in this area?  Understanding the local rental market will clarify both the potential rent of the unit and the potential vacancy rates.  Who is renting determines the what – what kind of features and luxuries are expected by this specific market?  Young professionals in metropolitan areas often expect luxuries like rooftop decks and Jacuzzi tubs, whereas lower-end neighborhoods may only require inexpensive carpeting and finishes.  Knowing the market is essential to calculating all the relevant costs, and therefore to turning a predictable profit.

Investors should also consider if they have a sales outlet for a given property.  If so, to whom?  What kind of sales price can be expected, and what amenities will buyers in this market expect?  Beware of investing in any property without a relatively quick and simple sales outlet, as investors never know when conditions will shift and they will need to divest, for any number of personal, financial or market reasons.

Choose Finishing Touches Wisely
From countertops to flooring, lighting to fireplaces, investors have countless options when renovating a property.  Be sure to pick and choose the glamour touches very carefully.  Potential tenants (and buyers) will use logic to weigh things like how well the plumbing works (when they bother to think of them at all), but buying and renting decisions are made with emotions, then justified with logic.  Eye-catching features such as Jacuzzi tubs, fireplaces, patios, stone counters, walk-in closets and luxurious bathrooms are what will seduce renters and buyers.  But bear in mind that each one of these features add to the renovation costs, so these glamour selling points must be chosen wisely based on the specific market.

Understand Cosmetic Problems vs. Serious Issues
It is imperative to have an eye for distinguishing the cosmetic problems from the serious ones.  Is the crack in the ceiling a byproduct of a faulty structure, or merely an area where drywall should be replaced?  Mistaking a serious problem for a surface issue can be a costly error when investing in a fixer-upper.  Those who can look at ugly properties and determine which problems are only skin-deep can pick up houses others are afraid to tackle, and make a profit.

Prepare for Financing & Maintain Good Business Relationships
Going into a renovation deal can be both costly and logistically complex, so wise investors arrange both the rehabilitation loan and the permanent loan before placing properties under contract.  If an investor does not have a pre-existing relationship with lenders, they may find themselves unable to secure financing after they have already put down a deposit and signed a contract.

Having a strong relationship with a contractor before entering renovation deal is also critical for investors.  For those without one, it is a good idea to develop one by starting with small projects on rental properties that need only minor repairs and updates.  At times, contractors can be difficult to work with; some are untrustworthy, some are unreliable to schedule, and most will charge the maximum price they think the client is willing and able to pay.  Screen contractors extremely carefully to find trustworthy, skilled, reliable ones, as developing a relationship with them is both necessary for success and time-consuming.

Budget Realistically
One of the most important things about going into a renovation project is being realistic with your budget.  Budget for every conceivable cost, and then add more.  Consider less visible costs, such as the cost to carry the property through both the rehab period and the marketing period, the cost of permits, the cost of landscaping, the Realtor’s fee, the closing costs to sell it as well as buy it, and even items such as window bars if the property is located in a low-end area.   When every cost is accounted for, add a cushion of 15-20% to account for unpredictable costs.  Renovation projects turn ugly when an investor gets three-quarters of the way through a rehabilitation project and runs out of cash because it turns out the upstairs framing did need to be replaced after all.

It takes time to develop the expertise and relationships necessary to routinely succeed at renovation investing, so new investors are well advised to partner with experienced investors for their first 5-10 investments before attempting them on their own.  There is potential to make excellent profits, but also to lose spectacular amounts of money, so investors should focus on learning skills and developing relationships first and foremost, before trying their hand at making profits on their own.  

Related Reading:

Preparing a Vacant Rental Unit for Showing to Prospective Tenants

5 (Relatively) Cheap Upgrades to Boost Market Rents & Property Values

]]> https://www.ezlandlordforms.com/articles/educational/5/168/what-happens-when-your-tenants-break-up/ https://www.ezlandlordforms.com/articles/educational/5/168/what-happens-when-your-tenants-break-up/ Thu, 20 Dec 2012 11:57:39 GMT

By Jessica Bornman

Couples break up.  Marriages end in divorce.  It is unfortunate for both the tenants and the landlord, but the tenants signed a legal contract, and both tenants are individually liable.  How should landlords proceed, to minimize the potential for lost rent, damaged rental properties or lawsuits?

First and foremost, reiterate the legal obligation to both tenants.  The vacating tenant should be held responsible for rent owed and any property damage prior to moving out, regardless of when the lease term was scheduled to end.

A landlord should never conspire with one member of the couple and take any action such as changing locks, removing anyone from the lease agreement without both parties’ legal authorization or becoming involved in domestic disputes (the police can handle these).  Landlords and property managers must proceed with caution to avoid legal entanglement.

If one tenant wishes to remain in the leased premises, the landlord is well advised to evaluate the credit-worthiness of the remaining tenant prior to deciding whether or not to renew the lease agreement with them alone.  If the remaining tenant’s income is insufficient, landlords are well advised to require a cosigner or consider discontinuing the lease agreement and finding a new tenant.

Real estate investing and property management are businesses, and running a tight business means being particularly vigilant when emotions threaten to interfere with decision-making or revenue.  When tenant couples break up, the risks of rent default or intentional property damage grow much higher.  Most landlords will need to decide between signing a release of liability (with one or both tenants) and being prepared to pursue one or both tenants in rent court, should they default or damage the property.  If both tenants vacate before the lease term has ended, landlords may have legal grounds for pursuing them in court for lost rent (refer to local/state laws regarding early termination).

The security deposit may also become a point of contention, both between the tenants and between the landlord and tenants, so it should be addressed in any written release and signed by all parties (and perhaps notarized).  If the landlord does return all or part of the security deposit, they are advised to return the funds to whomever originally wrote the security deposit check, and leave the division of assets to the tenants’ attorneys.  When in doubt, landlords and property managers should always contact their attorney and stay informed of state laws.

 

 

]]> https://www.ezlandlordforms.com/articles/educational/3/167/renting-to-college-students-101/ https://www.ezlandlordforms.com/articles/educational/3/167/renting-to-college-students-101/ Tue, 18 Dec 2012 12:02:24 GMT All property managers and landlords have heard horror stories about renting to college students: absent rent payments, damaged property, and wild parties are just a few of the potential woes. However, for landlords who own properties in or near a college town, turning away students may be bad business. Luckily, for those considering renting to college students, there are a few precautions that can be taken to avoid common pitfalls.

Protect the Cash Flow
Students often have temporary and fluctuating part-time jobs, which means minimal income stability. In addition to screening all potential renters for income, criminal and credit histories (all of which tend to be minimal for students), it is usually prudent to require a parent cosigner who qualifies after being screened just like the live-in tenants.

It also helps to consistently remind tenants of rent policies. Make sure they are aware of how much rent is due and when it is due. They should also be periodically reminded that whoever signed the original lease agreement is legally liable for the rent, regardless of who is living in the apartment. If a roommate moves out, remind the remaining tenants that they are each individually liable for the full amount of the rent. It is also helpful to occasionally remind tenants of the late fees, and to contact the landlord/property manager if they know the rent will be late that month. 

Protect the Summer Months' Rent
Because most students are only interested in housing during the school months, some landlords cater leases to the academic year. By offering student tenants the choice between a full-year lease or a more expensive August-May lease, landlords can charge more during the school year and still lease the unit separately in the summer months. Or, to avoid the hassle of finding summer tenants, landlords can allow their student tenants to sublease the unit during the summer months they will be away.

Protect the Property
While not all college students want to throw parties, for landlords it is imperative to impose a strict party policy - and enforce it. While some landlords try setting a limit on the number of parties that students can throw each month, or a limit on the number of guests the tenants can have in the rental unit, these restrictions may not be legally enforceable. Many landlords instead choose to include strict penalties for noise or disruptive conduct in their lease agreement, with clauses to allow for eviction after a certain number of infractions.

Student tenants carry a greater risk of damaging the rental property than most tenants, and landlords need to plan accordingly. The higher the security deposit that a landlord can collect, the better. Landlords should make it extremely clear to student tenants that any property damage will be their responsibility, and includes the possibility of eviction for excessive damage to the property.
   
While renting to students does include risks, with the proper policies in place (and enforced), college students can be a very profitable market for landlords and property managers.
]]> https://www.ezlandlordforms.com/articles/educational/5/166/vacant-and-abandoned-properties-the-neighborhood-nuisance/ https://www.ezlandlordforms.com/articles/educational/5/166/vacant-and-abandoned-properties-the-neighborhood-nuisance/ Fri, 14 Dec 2012 11:33:48 GMT Since the housing market crash and Great Recession, there has been a massive spike in the number of vacant and abandoned properties.  In the third quarter of 2012, the Census Bureau reported 18.1 million vacant homes in the United States.  The reasons why properties become vacant are endless, from foreclosures to evictions to strategic abandonment, and unfortunately so are the reasons why properties remain that way.

According to foreclosure data firm RealtyTrac, there are about 532,000 properties that are currently in the possession of banks and other government-sponsored investors.  Most of these homes are vacant and not currently listed for sale.  Because of this, they often end up being neglected and do nothing but deteriorate and depreciate over time, dragging down the value of the property and the neighborhood as well.

No one likes having a deteriorating home in their community, and the problems caused by vacant homes go far beyond mere unsightliness.  For investors, landlords and property managers, abandoned homes and properties will devalue their neighborhood and their investment.  Vacant properties nearby often make it difficult for landlords to find tenants, especially high-quality, long-term residents.  For landlords seeking tenants that will lease-to-own, vacant properties can even further turn off tenant-buyers. 

Vacant and abandoned homes are also highly correlated with crime.  Vacant properties often attract squatters and proves a magnet to looters looking for abandoned furniture, pipes, and anything else that can be scavenged from inside the home.  Crime further depresses neighborhood property values, and is a major deterrent for potential renters, making it difficult for landlords to find and keep quality tenants.

Beyond attracting crime, vacant properties also attract pests.  Bed bugs, cockroaches and rats all thrive in areas with a high proportion of vacant homes, where they can breed and spread unchecked.  Neighbors are often subjected to repeated infestations, as pests retreat to the vacant property only to breed and re-infest the neighboring properties again a month later.

So what can landlords do about neighboring vacant properties? The first challenge is discovering who is in possession of a vacant property, which is not always simple.  If a bank owns it, sometimes a few persistent phone calls to the bank will bring their attention to it faster.  Local property owners can also take photos of the vacant property and report it to the local zoning board or sheriff’s office to report the condition.  Another approach is to contact the local property tax office to inquire as to whether the property has been repossessed by the local government or sold at tax sale, and perhaps this process can be expedited through vocal complaints to the right government employees.  Concerned property owners can also contact their local elected representative to complain, which often achieves results faster than calling the local bureaucratic office in charge of zoning or tax sales.  While these methods may not immediately solve the problem, they are the first steps on the road to saving the value of a neighborhood and investment.v
]]> https://www.ezlandlordforms.com/articles/news/165/the-year-in-review-housing-trends-in-2012-and-into-2013/ https://www.ezlandlordforms.com/articles/news/165/the-year-in-review-housing-trends-in-2012-and-into-2013/ Wed, 05 Dec 2012 12:04:59 GMT The past year has been good to homeowners, investors and landlords alike, with rents continuing to rise, home prices finally turning upward, and interest rates remaining low.  Just how much cause for celebration is there?  Where are home and rental markets headed in 2013?  There are a lot of statistics and indicators out there, so here are a few of the most important ones - and what they mean.

The Rental Industry
The numbers in the rental industry are encouraging.  Rents rose in 2012, although how much depends on who reports the numbers: the U.S. Census Bureau reports a sluggish .9% growth year-over-year, from $700 last year this time to $706 this year.  Zillow reports 2.3% growth year-over-year, from $1,300 last year to $1,330.  Reis Inc (which tracks the top 82 metropolitan areas in the U.S.) shows a whopping 8.67% growth in the asking rents in the top metro areas, rising from $1,004 in the third quarter of 2011 to $1,091 in the third quarter of 2012.

Developers have noticed the strengthening rental market as well – the U.S. Census Bureau reports that housing starts on rental dwellings have reached 105,000 in the third quarter 2012.  This represents an increase of 6.1% over the second quarter (99,000), and a 19.3% increase since this time last year (88,000). 

Rental vacancy rates are also sharply down, dropping to 8.6% in the third quarter of 2012 from 9.8% a year earlier, according to the Census Bureau.

Home Sales & Prices
Likewise, the numbers vary depending on the source and the metrics they use, but most data sources agree that home prices have turned around and started rising in 2012.  In October 2012, Zillow’s median home sales price was $198,000, up 1% from September and up 14.5% from last October.  The Census Bureau reports minimal growth in median home asking prices, up only $300 from $136,700 in the third quarter of 2011 to $137,000 in Q3 2021.

The homeowner housing vacancy rate declined, dropping to 1.9% in the third quarter from 2.1% in the second quarter, and down from 2.4% this time last year. 

The homeownership rate is down from this time last year, however: in the third quarter of 2012, it dropped to 65.5%, down from 66.3% this time last year.

Shadow Inventory & Foreclosures
There has been plenty of talk over the last few years about “shadow inventory,” or housing inventory that is not listed on the market but is in some stage of the foreclosure process and therefore very likely to end up on the market eventually.  The fear among analysts is that there is a glut of supply headed for the market, fueled by the foreclosure crisis over the last four years, which depresses prices by overloading the market with cheap supply.  Fortunately, the foreclosure crisis appears to be slowly winding down; according to RealtyTrac, foreclosure filings did rise by 3% in October to 186,455, but are still down 19% from this time last year, when they sat at 230,678.  

Still, foreclosures remain a largely localized problem.  The states that were hit hardest by the real estate bubble bursting – Florida, Nevada, Illinois, California, Ohio and Arizona – are still experiencing the highest foreclosure rates, which continue to hamper housing recoveries in these states.  Many of these states initiated laws that slow the foreclosure process down, which means that these states continue to churn out foreclosures from defaults in 2011 and before.

A bright spot in the foreclosure picture is that bank repossessions are down for the 24th straight month, down by 21% since this time last year according to RealtyTrac. 

While shadow inventory remains an issue in housing markets nationwide, the discussion is shifting from foreclosure-related shadow inventory to an even more difficult-to-quantify "latent inventory."  Latent inventory consists of properties that owners wish to sell as soon as the market improves enough: homes that homeowners held only because they were unable to sell over the last 3-4 years, and inventory that was bought up inexpensively by investors over the last few years with the intention to sell as prices rise again.  It remains to be seen how pronounced this phenomenon will prove.

Unemployment
The good news is that the unemployment rate has been gradually decreasing over the last three years, and is now hovering just under 8%.  The bad news is that, at the current rate of decline, it will be 2017 before the unemployment rate finally reaches a healthy level of 5%.

The Year Ahead
So what does this all mean for 2013?  Most analysts agree that increasing prices and rents are sustainable through 2013 and beyond, if the U.S. continues to see an improving household formation rate and decreasing unemployment rate, and if Washington avoids the fiscal cliff. 

With prices low (but increasing), rents on the rise, and interest rates to remain low through at least mid-2015, it remains a good market to buy and hold residential real estate as rental properties.  Credit markets have been loosening as well, making it easier for buyers to qualify for a mortgage loan.

But for all of the talk of prices and rents rising nationally, the true focus for investors, landlords and property managers should be local.  Overall nationwide trends simply balance the strength of one local market against the weakness of another: San Jose and San Francisco saw rising rents of 8% and 7.5% respectively this year, but drive an hour east to Modesto and the story changes dramatically to one of high unemployment, high foreclosure rates, low prices, and low rents (Modesto asking rents fell 2% in the last year).  All of the trends outlined above should ultimately be examined at the local level, to determine suitability of local investing.

 

Brian Davis is the Vice President of ezLandlordForms, a real estate investor and a landlord.  Any views, express or implied, in the above article are his and his alone, and do not represent the views of ezLandlordForms, LLC.

]]> https://www.ezlandlordforms.com/articles/news/164/new-law-holds-harrisburg-landlords-liable-for-disruptive-tenants/ https://www.ezlandlordforms.com/articles/news/164/new-law-holds-harrisburg-landlords-liable-for-disruptive-tenants/ Thu, 29 Nov 2012 12:27:27 GMT Can disruptive tenants cost landlords their rental permits if the landlord does not evict immediately? For Harrisburg landlords and property managers, the answer is yes.

The new Bill 12 in Harrisburg, Pennsylvania has landlords up in arms. This law, which went into effect in December, states that if a tenant receives two disruptive conduct reports from the city within a twelve month period, the landlord will lose his or her residential rental permit for that unit.

Sound harsh? If the landlord does not serve an eviction notice and begin the eviction process for disruptive conduct within 15 days, the rental unit will be deemed unfit for occupancy and the landlord's rental permit temporarily revoked. The unit cannot be rented again until the cited tenants have been evicted. City officials assert that the purpose of this law is to prevent disruptive tenants from impeding the peace and quiet of their neighbors, but landlords in Harrisburg are considering a lawsuit.

According to the city, disruptive conduct is considered any violation that disturbs the peace of neighbors or causes damage to neighboring properties. This can range from using firearms to playing music too loudly. Because the term “disruptive conduct” is subjective, even traditionally good tenants could be labeled disruptive.

This grey area would force landlords to go through the long and expensive eviction process, followed by a costly vacancy, and then the tedious process of re-renting the unit. Attorney Dave Lanza argues that this ordinance goes beyond the city’s scope of power, and Harrisburg landlords have been objecting to the very notion that they should be liable for their tenants’ behavior.

 State officials explain that the purpose of this law is crack down on tenants that truly disrupt the community, and will make them accountable for their actions. Mayor Linda Thompson stated that property owners who rent to quality tenants should not have to worry about this law. The city hopes that the law will act as a deterrent for “slum landlords” who do not properly screen their tenants and neglect their properties.

A similar law was passed in Watertown, NY just last year, allowing the city to fine landlords up to $500 for each disorderly conduct citation that a tenant receives. East Syracuse, NY has also enacted a similar ordinance, and the spread of laws such as these is starting to concern both landlords and tenants across the country.

These laws can have a serious impact on landlords’ bottom line, and serve as a reminder that landlords and property managers must thoroughly know and understand their local rules and regulations. Especially, it seems, as ordinances like this one become more popular.

]]> https://www.ezlandlordforms.com/articles/educational/2/163/the-pros-and-cons-of-leasing-to-your-grown-children/ https://www.ezlandlordforms.com/articles/educational/2/163/the-pros-and-cons-of-leasing-to-your-grown-children/ Tue, 27 Nov 2012 16:15:49 GMT Many investment-oriented parents consider the possibility: “What if I bought an investment property for my grown child to rent from me, while they are a single young professional?”  It is an intriguing idea, and one that many parents act on, given the many advantages of a trustworthy, long-term tenant.  Still, there are plenty of risks to beware, particularly for parents who are unfamiliar with the property management business.
 

Advantages

Fewer Headaches:  Finding and screening tenants is usually the most time-consuming task that landlords undertake.  A tenant who is trustworthy, open about their plans for the future, and reliably employed is a landlord’s dream, and parents often (but not always) have these ideal characteristics in their adult children. 

Better ROI:  Vacancies and troublesome tenants who fail to pay rent are two of the most expensive problems that landlords face.  The risk of offspring tenants simply vanishing from the property one day, leaving it vacant and damaged, is obviously much lower than the average tenant with no personal connection.  Likewise, the risk of them squatting in the property without paying the rent, and forcing their parents to take them to court to evict them, is also lower.  By reducing these major risks landlords can expect a far greater return on their investment.  And there is almost no risk of a parent’s grown child suing them for, say, lead paint poisoning, or other common litigation liabilities.

Appreciation:  Like all real estate, the property may well appreciate in value over time but artists, musicians and young professionals also tend to be harbingers of neighborhood gentrification. Because of their modest finances, they cannot afford neighborhoods that have already gentrified so they look for the safest, most fun community that they can afford.  They then proceed to improve these neighborhoods with co-ops, art galleries, hip little bars, funky restaurants and a disdain for criminal elements, all of which leads to the neighborhoods’ sudden explosion in popularity (and, of course, value).

Tax Advantages:  While these are largely understood, they are worth reiterating here: every single expense the landlord incurs, from mortgage interest to repairs to insurance to property taxes to “depreciation,” it all can be deducted from landlords’ taxable income.


Risks

Beware of Exceptions to Good Rules:  Landlords who lease to their children are far more likely to make exceptions for them in an effort to help their children out – at the expense of their bottom line.  For example, landlords are more likely to accept a lower security deposit, or no deposit at all.  They are also more likely to charge below market rents, fail to charge their children late fees, fail to file for eviction, and fail to deduct charges from the security deposit (if they bothered to collect one in the first place).  Finally, the parent investors are likely to consider their children’s opinions and preferences when choosing the investment property, a decision that should be made based on market factors alone.

Strained Relations:  Landlord-tenant disputes happen all the time, because what is best for the landlord is not always best for the tenant.  Landlords want the maximum rent and minimum costs sunk into upgrades, repairs and maintenance, while tenants want the opposite.  It is possible to successfully mix family and business, but all parties involved need to understand and respect the inherent challenges and risks involved.

Adult children who remain young, single and promisingly employed can be the perfect tenants, and finding a great deal on an investment property for them to inhabit can prove a grand slam investment for parents looking for cash flow, tax deductions and appreciation.  But parent investors should treat these rental investments just like any other investment, with an eye for profits and strict efficiency.  Otherwise they may find themselves strapped with financial losses and strained relationships with their children.

]]> https://www.ezlandlordforms.com/articles/news/162/how-would-housing-markets-respond-to-the-fiscal-cliff/ https://www.ezlandlordforms.com/articles/news/162/how-would-housing-markets-respond-to-the-fiscal-cliff/ Fri, 23 Nov 2012 13:54:22 GMT Most analysts agree that the austerity measures scheduled to take place at the end of the year if Congress and the White House fail to reach a budget agreement for 2013 would plunge the U.S. economy back into recession.  Economists predict a drop in gross domestic product (GDP) of up to 5%, while economic growth has been limping along at 2% for the last several years.  That is terrible news for a housing sector that has only just begun to see recovery this year.

The fiscal cliff’s measures include tax hikes, automatic spending cuts and the expiration of the Bush-era tax cuts.  Among the tax increases is the removal of the mortgage interest deduction, which is the largest real estate-related tax deduction for most taxpayers and one that makes real estate a particularly attractive investment.  Even if Washington agrees to a budget and avoids the fiscal cliff, the mortgage interest deduction may remain on the chopping block in a compromise deal, or may be drastically reduced.  Among the possibilities being discussed is only allowing it to be taken for primary residences, which would eliminate the deduction for rental properties and skyrocket tax liability for landlords.

Some analysts have looked to the United Kingdom and how their economy has weathered the reduced government spending and tax increases that were implemented in early 2010.  Since then, the unemployment rate has risen, lending has slowed, and credit quality has declined.  In the U.S., this sounds awfully familiar, after the credit crunch that made borrowing money so difficult in the years following the Great Recession.  Regardless of how low interest rates are, if banks are unable or unwilling to lend money then fewer homebuyers and real estate investors will be able to buy, which means lower demand and thus lower values.

And a potential credit crunch is far from the only familiar feature that would re-emerge in a second recession.  Higher taxes (including an expiration of the payroll tax break) would mean less money for individuals to pay bills, less money for companies to hire, and a sudden spike in payroll tax liability for employers (a recipe for layoffs).  Mass spending cuts would mean $109 billion/year in government employee layoffs and cuts in government contracts to private employers.  In other words, thousands of people would lose their jobs, and those that did keep their jobs would take home less money.  Higher unemployment and lower take-home income would mean more defaults on rent and mortgages, which means a second foreclosure crisis, which in turn will drive down values and further prevent banks from lending.  Higher rent defaults means more evictions, more turnovers and higher vacancy rates, all of which are terrible news for landlords and property managers (not to mention the displaced tenants).

A less obvious effect that high unemployment and lower take-home incomes would have on the housing sector is another round of household “bundling,” in a housing sector that has just begun unbundling from the last recession.  The bundling effect occurs when adults who would ordinarily live independently decide to share a household with others, which can be seen when young professionals live with roommates instead of living alone, or when couples move in together sooner than they would otherwise, or when recent graduates move back in with their parents (or fail to move out in the first place).  According to National Association of Realtors’ spokesman Walter Molony, "Household formation in the US in the past four years has been half of what it should be," for a population growing at roughly three million people each year.  The household formation rate has been growing closer to normal in 2012, a trend that would quickly reverse given higher unemployment and hefty tax hikes.  Household bundling is a primary reason that the housing sector lagged so far behind other sectors’ growth over the last few years: with more people sharing one roof, there is far less demand for housing units.

So what are the likely scenarios for how the budget negotiations will play out?  A deadlock is one possibility, sending the U.S. over the fiscal cliff, but both Congress and the White House claim they want to avoid this outcome.  On the other extreme of the spectrum, Democrats and Republicans could theoretically map out a long-term roadmap to balancing the budget, offering businesses and investors a predictable and stable economic environment in which to make long-term investments.  Both of these extremes are considered unlikely by most analysts, leaving the most likely outcome a short-term resolution that will solve few problems other than immediate avoidance of the fiscal cliff.  This could take the form of either postponing the budget decision until new members of Congress are inaugurated in early 2013, or a minor set of compromises that will get the federal budget through another year but fail to address the unsustainable growth in public sector spending relative to GDP. 

In other words, Washington will likely pass the buck along to next year, and no substantive change will be made to avoid the kind of budget imbalance that landed Europe in its present economic turmoil.
]]> https://www.ezlandlordforms.com/articles/educational/5/161/is-social-media-useful-for-landlords-and-property-managers/ https://www.ezlandlordforms.com/articles/educational/5/161/is-social-media-useful-for-landlords-and-property-managers/ Tue, 20 Nov 2012 10:21:01 GMT A commonly asked question from landlords and property managers is whether they should try using social media networks such as Twitter, Facebook and Google+ as communication tools in their management.  While often not utilized effectively, social media networks can prove a free and tenant-friendly way to connect with residents and market vacant units.

Here are three ways landlords and property managers can leverage social media trends to minimize vacancy rates and boost tenant engagement for increased retention.

Lead Generation: Social media engagement continues to grow, and more people are becoming social media-savvy and look for deals, offers and leads on social media.  A recent study found that 56% of Americans have at least one social media profile, and it is not just young adults that are fueling the trend: 55% of Americans between the ages of 45-54 also have profiles.  But even more significant than the sheer numbers is that almost half of them claim that Facebook (more than any other marketing medium) has the strongest influence on their purchasing behavior.

So how do tenants’ social media usage translate to lower vacancy rates?  Property managers and landlords who engage their tenants through social media and have their attention can leverage their tenants’ contacts, by alerting them of upcoming or current vacancies and encouraging referrals.  If an apartment building contains 30 units and the average resident has 50 connections in their social networks, and each passes along information about the upcoming vacancy in hopes their friends might move in and become neighbors, that represents an instant reach of 1,500 potential tenants who already have a good reason to want to live there.

Managers and landlords can also use social media to offer discounts, referral bonuses, gifts and other promotions to either the referring tenant or new tenants who move in, and it is easy for word of these promotions to pass along through social media networks.

Heightened Visibility:  Increasing numbers of tenants search online for a new home, whether through search engines (by terms like “Appleton apartment buildings”) or by searching rental listing websites (like Craigslist).  Imagine a property manager’s delight if the first four results that appeared among Google results were their company’s website followed by their Facebook, Twitter and Google+ pages – potential tenants may not even look far enough down the page to see the other competition.  Google has shifted increasingly toward local-oriented search results, and there is increasing speculation that social media engagement has a positive impact on company websites' search rankings in addition to their social media pages’ rankings. 

Landlords and managers can also leverage social media in their rental listings by including links to their social media profiles.  How better to demonstrate the high quality of life in an apartment community than to push potential renters to social media pages filled with photos of fun community activities, happy tenants using the communal facilities and calendars of upcoming events?  Every picture of a tenant smiling, every upbeat post that tenants have made, every follower of the account shows just how excited the current residents are to live there, and makes for a powerful marketing message.

Tenant Engagement:  The more engaged that tenants are with both each other and with the management, the less likely they are to move out, as the apartment complex shifts from being just a place to live to being a community filled with new friends.  Planning fun community events to engage residents and bring them together is fantastic, but it is equally critical that the residents actually turn out for these events, and social media is a great way to market them.  For example, as more residents RSVP on the social media page for a community event, the more attractive the event looks, because “everyone will be there.”  Encouraging tenants to post pictures of events after they happen is a great way to show just how fun the community events are, and encourage participation in the next one. 

Property managers can share information about home maintenance, seasonal tips and reminders, news about upcoming improvements (such as a new courtyard area), scheduled maintenance updates and reminders, upcoming vacancies and promotions, and any other creative ideas for boosting resident engagement and minimizing vacancies.

Landlords or managers who are just starting a social media presence for their community can encourage residents to follow the community social media account by offering a $5 or $10 discount or credit on next month’s rent to do so, and encouraging residents to do so with each written and verbal communication.  Social media is an inexpensive way to engage both current and future tenants, to boost tenant retention rates, minimize vacancy rates and increase community visibility and exposure.
]]> https://www.ezlandlordforms.com/articles/news/160/carbon-monoxide-from-furnace-causes-tenant-death-in-colorado/ https://www.ezlandlordforms.com/articles/news/160/carbon-monoxide-from-furnace-causes-tenant-death-in-colorado/ Mon, 19 Nov 2012 12:08:46 GMT Every fall the furnaces turn on for the first time of the season, and many need servicing and repairs.  But furnaces and heaters are inherently one of the most dangerous appliances in a home or apartment building, and each year cause fires, carbon monoxide poisoning and deaths.  The first U.S. heater-related death of the season occurred last month when a tenant in a Colorado Springs apartment building passed away due to a carbon monoxide leak that did not set off the carbon monoxide alarm. 

Laura Russman of the Apartment Association of Colorado commented, “A working detector is your only line of defense when you are sleeping and there’s smoke, carbon monoxide, and fire.”

Unfortunately the detector was unable to save tenant Benito Valdez, who was 50 years old and died on October 7, 2012 after a furnace malfunctioned and churned out toxic fumes through the vents and into his apartment.

Firefighters who were called to the scene stated that the detector was not working because it was not plugged in.  Chief Tracy Billipando of the Colorado Springs Fire Department said, “It is that season to make sure and check that your detectors are plugged in and functioning properly.”

The law in Colorado requires all rental apartments and buildings to contain at least one working carbon monoxide and smoke detector.  Landlords and property managers should be aware of all state and local regulations regarding smoke and carbon monoxide detectors, and be sure that all rental properties are equipped with properly placed, working detectors at the time of lease signing.  The general rule of thumb is to install a working smoke detector in every bedroom and a combination smoke and carbon monoxide detector on every floor.  Some states and municipalities also require the detectors to be hard-wired and connected together, with a battery backup.

For renters, it is vital to check the lease agreement and make note of who is responsible for making sure the detectors are working properly.

Russman went on to say, “Every time you sign your lease, make sure the landlord makes a note in writing that the detectors are in place and working properly.”

Tenants should know however, that once the keys are in their hands, it then becomes their responsibility.  If a detector or furnace is not working properly, it is up to the tenant to notify the property manager or landlord to get the detector fixed, and generally speaking it is the tenant’s responsibility to keep working batteries in smoke and carbon monoxide detectors.

]]> https://www.ezlandlordforms.com/articles/educational/5/159/can-landlords-still-collect-rent-when-the-power-is-down-after-a-disaster/ https://www.ezlandlordforms.com/articles/educational/5/159/can-landlords-still-collect-rent-when-the-power-is-down-after-a-disaster/ Fri, 16 Nov 2012 08:55:30 GMT Natural disasters can be nightmares for both landlords and tenants, causing expensive damage and leaving many rental properties without basic services like electricity, hot water and heat.  In the aftermath of large-scale disasters, many landlords and tenants both wonder “Can the landlord legally require rent payments if the rental property is without amenities like electricity, hot water and heat?” 

The short answer is a qualified yes; landlords can still require the rent to be paid, as tenants have a contractual obligation to pay it.  But if rent disputes end up in court, judges may well side with the unhappy tenant who has been living without electricity, heat, or hot water, rather than the oft-perceived “greedy” and “heartless” landlord (regardless that the landlord still has to pay the mortgage). 

Alienating tenants is also a bad business decision, as it often equates to having to find new ones, once the repairs are finished and the lights are back on.

Alternatives include offering a one-time reduced rent or rent credit to compensate tenants for the period when the rental units are uninhabitable.  However, landlords may have trouble collecting even reduced rent when the rental property is uninhabitable, regardless of whether it is the landlord’s fault, as tenants sometimes have legal grounds for breaching their lease agreement in these cases.  Leases and state laws differ, but most state- and provincial landlord-tenant codes protect renters from inhabitable living conditions, even if caused by "fire or other casualty."  Under these provisions, tenants often have the right to break their lease agreement and vacate early if the rental unit is not made habitable within 30 days. 

Landlords might consider requiring rent payments made on time, while assuring tenants that a credit will be made once the problem has been resolved.  That way, landlords can make decisions about how much to credit after the crisis is over, and they know the extent of the problem.  This prevents tenants from growing accustomed to less expensive rent, or making rent payments late.

The best way landlords can address disasters is through preparedness, particularly by maintaining comprehensive insurance and remaining capitalized.  Good rental property insurance includes coverage for lost rent due to disasters such as storms and fires, and rental income insurance is available as well.  Keeping a deep cash cushion on hand is also critical; it may not be possible to predict natural disasters such as hurricanes and blizzards, but smart landlords can and do prepare for the unpredictable by staying insured and keeping cash on hand.
]]> https://www.ezlandlordforms.com/articles/news/158/apartment-complexes-experiment-with-the-little-free-library-project/ https://www.ezlandlordforms.com/articles/news/158/apartment-complexes-experiment-with-the-little-free-library-project/ Mon, 12 Nov 2012 11:04:29 GMT Among the more creative ideas that multi-family property managers are experimenting with is creating a “Little Free Library” (LFL) as promoted by the Little Free Library Project. 

Using the “leave a penny, take a penny” spirit, LFLs are established as a free book exchange for anyone to browse, read, borrow or even keep a book permanently.  The system keeps sustains itself because tenants donate the books they no longer want to keep, to pass along for other tenants to read and enjoy.

Generally a property manager will start with a cabinet or corner set aside in one of the common spaces in the apartment complex, ideally in a style that fits the design and atmosphere of the community.  Manages can even get creative and have their tenants volunteer to help put one together.

A library that operates on the principles of honesty and sharing is similar to having a community garden.  Some communities who have established LFLs have taken it one step further and also host a weekly or monthly reading series or start a book club, to further engage residents and promote literacy and a sense of community.

A few of the potential benefits of apartment community book exchanges include:

• Manager-Tenant Relationship Building: Working together on a project can strengthen the relationships property managers have with their tenants, and free book exchanges are a free and easy way for property managers to interact positively with tenants.

• Tenant Community Building: Many tenants in multi-family apartment complexes report that they feel disconnected from other residents in their apartment building and community.  An LFL (particularly with regular readings or events) can connect tenants to each other by creating engaging social events within the community.

• Recycle Old Books: No one likes to throw away a perfectly good book.  Giving other people the chance to read old books is a great way to recycle them and pass along good books.

• Increased Literacy in the Tenant Community: Quite simply, when more books are available and circulating among a community, the more people tend to read.  Property managers can even grab some pamphlets from their local library and leave them in the LFL to remind tenants that there are additional free book resources available nearby.

• Increased Tenant Retention: Studies show that the more engaged tenants feel in their community, the longer the average tenancy, which reduces turnovers and therefore vacancy rates.

A free tenant book exchange offers an easy, inexpensive way to bring tenants together, improve the quality of their lives, keep old books in circulation and increase tenant retention to reduce vacancy rates. 


If you try a Little Free Library in your tenant community, contact us let us know how it works for you! 

]]> https://www.ezlandlordforms.com/articles/educational/5/157/winterizing-rental-properties-and-homes-protection-against-damage-lawsuits-and-tenant-attrition/ https://www.ezlandlordforms.com/articles/educational/5/157/winterizing-rental-properties-and-homes-protection-against-damage-lawsuits-and-tenant-attrition/ Mon, 05 Nov 2012 16:39:44 GMT

The days are growing shorter and the nights colder, which means it is time to winterize both homes and properties to save money and avoid property damage and lawsuits. Winterization is not just for the northern states; even properties in southern climates can experience freezes and damage from cold, wet weather.

Creating a checklist of items that should be updated, changed or checked will ensure that any required repairs will be done in a timely manner - before the damage is caused. Interior items to inspect include:

• Plumbing: In vacant properties in particular, landlords and property managers should drain all the water from the pipes and shut off the water, to prevent freezing and bursting. Burst pipes are a landlord’s nightmare, because when the pipes thaw and the water starts running again, it will continue to do so until someone appears at the property to shut off the water. Insurance companies will often decline claims caused by burst pipes, due to either landlord negligence or the fact that many rental dwelling policies do not cover the property while vacant and include clauses requiring the landlord to obtain separate insurance while the property is vacant.
• Water Heaters: It’s prudent to inspect hot water heaters for any possible leaks. Handling this now may reduce costs for potential water problems during the cold winter months.
• Furnaces: Landlords and property managers who maintain single family homes should consider having furnaces serviced as well, as faulty furnaces can cause problems ranging from smoke to gas leaks to fires to simple breakdowns on the coldest day of the year when they are under the most stress.
• Windows: Every single window should be inspected for drafts (or cracks). Make sure to repair or replace the windows that might be drafty or cracked, to lower utility costs, make the tenants happier and increase your tenant retention rate.
• Doors: Inspect your doors for warping and excessive wear. If necessary, replace the weather stripping to prevent drafts under and around the doorway.
• Fireplaces: Prior to use, all fireplaces should be checked for proper ventilation, in an effort to prevent smoke and possible fire damage.

Remember to check the following on the exterior of your property:
• Roofs: Check the roofs of your buildings for excessive wear and leaks, and repair before that first winter storm. Such repairs help the roof endure the heavy snow or rain, withstanding the weight and pressure of bad weather. This simple tip can save you thousands in potential roof damage.
• Chimney: If the rental property has a chimney, make sure to inspect it. Birds and squirrels often nest in chimneys, which can block the flow of smoke and cause a smoke and fire hazard. Be sure to remove any blockage or nests before lighting the fireplace for the first time of the season.
• Gutters: Check with tenants about whether they have noticed any gutter leaks, because freezes will make the cracks and leaks worse, and the leaking water can cause basement leaks, walkway damage, patio damage, and can create icy conditions that can lead to falls (and lawsuits).
• Walkways and Stairs: Make sure to inspect stairways and all walkways for breakage or cracks. The combination of snow, ice and rain is a recipe for potential disaster; trips, falls and lawsuits can easily be avoided with some minor foresight.
• Balcony and Patios: Check these routinely for signs of damage, but especially when winter arrives the freezing and thawing of ice can accelerate damage to the wood. This creates a potentially dangerous situation for your tenants, which can mean liability for the landlord and property manager.
• Outside Windows: Check the sealant and caulking in and around the outside of your windows, and consider replacing it. Even if the window is sealed on the inside, if the outside is not handled accordingly, a draft can still result.

Once the first major snowstorm or cold spell comes through town, contractors' phones will be ringing off the hook with requests to service furnaces, fix roof leaks, and clean out fireplaces and chimneys, so call them before it grows too cold, and avoid the backlog and heightened prices!

Related Reading:

When Is the Landlord Liable for Snow & Ice Removal, and for Tenant Injuries?

Common Property Repairs All Landlords Should Know (infographic)

]]> https://www.ezlandlordforms.com/articles/news/156/landlord-charged-in-tenant-s-pit-bull-attack/ https://www.ezlandlordforms.com/articles/news/156/landlord-charged-in-tenant-s-pit-bull-attack/ Fri, 02 Nov 2012 11:06:29 GMT A landlord from Harrisburg, Pennsylvania is being charged with letting two pit bulls out of the home of one of her tenants. According to reports in the Patriot-News, a ten year old boy was attacked by one of the pit bulls.

The landlord, Roxanne Peters of Mechanicsberg, PA went inside her tenant’s unit to fix a repair when she watched one of the dogs urinate on her hardwood flooring. Peters opened the front door of the apartment and shooed the dogs out into the street. Moments later, one of the pit bulls attacked a 10-year-old boy who was walking down the street. Thankfully, a 72-year-old grandmother was able to pry the pit bull from the boy’s leg.

The boy was immediately driven to Harrisburg Hospital for treatment.

According to the police report, another occupant of the rental apartment where the pit bulls lived was able to coax both dogs back in the unit. The pit bull that bit the child was placed inside his cage; the other dog was chained to the radiator. The report went on to state that after the police arrived to investigate, the pit bull tied to the radiator broke free and tried to attack the officer, who shot it dead on the spot. The other pit bull was rescued and placed in another home by the Humane League.

The boy was released from the hospital two days later and went home to finish with his recovery. Thankfully, the boy’s grandmother was not injured helping the boy to safety.

Landlord Peters was charged with recklessly endangering the life of another person, disorderly conduct, and aggravated assault.  No mention was made as to whether the pit bulls were allowed in the lease agreement.

Once the warrant for her arrest was issued, police contacted her family. Soon thereafter, Peters turned herself in to the authorities.

]]> https://www.ezlandlordforms.com/articles/educational/5/155/6-maintenance-tips-for-property-managers/ https://www.ezlandlordforms.com/articles/educational/5/155/6-maintenance-tips-for-property-managers/ Tue, 30 Oct 2012 15:51:11 GMT Maintenance issues are not fun; they are expensive, time-consuming and tedious.  But maintenance (or more specifically a lack thereof) is one of the top reasons that vacating tenants cite as their cause for moving, which has several implications.  First, many property managers are failing to handle maintenance issues quickly and effectively, and you may be one of them.  Second, this represents is a market opportunity for property managers to differentiate themselves from weak competition.

Attentive maintenance is a form of customer service, which ultimately serves two purposes: protection of the property against further damage (for the landlord/owner), and increasing satisfaction levels for the tenant (which in turn reduces vacancy rates for the landlord).  The speed of the property manager’s response is crucial - both the landlord and the tenant will appreciate a swift, decisive and effective response to maintenance problems in the rental unit.

Below are six tips to improve your effectiveness in handling maintenance issues, which will in turn improve retention of both owner contracts and tenants.

1. Find a top-notch maintenance supervisor (or for managers of single family rentals, a contractor or handyman). This person will be your first phone call when issues arise, and will help coordinate and prioritize the work that needs to be done.

2. Organize and coordinate all maintenance tickets with the contractor/repairman through a simple online system (e.g. Google Drive) that is accessible through smartphones.  They can then be updated and viewed at any time or place by either party, and ranked for priority.

3. Remain in communication with your tenants.  You may be exchanging frantic phone calls and text messages with the contractor, trying to coordinate the repairs, but the tenants will not be aware of your efforts on their behalf unless you stay in constant contact with them.

4. Accommodate the tenants as best you can until the contractor or repairman arrives.  Tenants are often reassured by speaking with the contractor directly – when you reach the contractor and are scheduling the repairs, conference the tenant into the call so they can coordinate with the repairman as well.  Similarly, many tenants like to be present when a stranger is in their home, so consulting them on scheduling will appease them.  Try to keep them comfortable until the repairs can be made; if there is a leak and their carpet is wet, perhaps you can provide them with towels and a fan to dry it out until the repairs can be made.

5. Remain in communication with the landlord or owner throughout the process if the repair is substantial (unless they specifically asked not to be bothered).  They are paying you to alleviate their headaches, so subtle reminders of the headaches you are enduring on their behalf is a good way to retain their business.

6. Meet the tenant at the rental unit after the repairs are reported as finished. When the contractor or repairman alerts you that the repairs are finished, contact the tenant and arrange to meet them at the rental unit.  You can confirm that the work was performed professionally by viewing and testing it yourself, and be sure to ask the tenant if they are happy with the work.  They may have noticed something that you did not, and it is good customer service.

Always remember that property management is, in fact, customer service, and you have two customers: the landlord and the tenant.  By remaining in communication with all parties and doing all you can to make their lives easier, you send a strong message to them that you are part of the solution, and an invaluable part at that.

]]> https://www.ezlandlordforms.com/articles/news/152/housing-sales-and-rental-markets-today-vs-four-years-ago-an-overview-of-market-indicators/ https://www.ezlandlordforms.com/articles/news/152/housing-sales-and-rental-markets-today-vs-four-years-ago-an-overview-of-market-indicators/ Mon, 22 Oct 2012 00:00:00 GMT Any views in the article below, whether express or implied, are the author’s own, and do not reflect the views of ezLandlordForms, LLC. 

While the presidential candidates each cite different economic statistics and hurl accusations, one topic voters might like to understand better is how the real estate and rental markets today measure against the markets four years ago.  In an effort to provide both data and context, below are the facts on the most important metrics in gauging the health of America’s housing markets, and when possible we provide both the statistics from four years ago and the last statistics available from before President Obama took office.

1. Home Values
According to Zillow Inc, the median home value in America was $152,000 in August of 2012 and $176,000 in August of 2008, for a roughly 13.6% drop in average residential home values over the last four years.  However, home values were already trending downward when President Obama took office – on January 1, 2008 the median home value had dropped to $165,000.  The U.S. Census Bureau reports an average nationwide asking price of $134,600 in the second quarter of 2012, compared to $187,600 in the second quarter of 2008 and $162,100 in the fourth quarter of 2008. 

2. Homeownership Rate
The most recent data released by the U.S. Census Bureau indicate a homeownership rate of 65.5% in the second quarter of 2012, compared to a homeownership rate of 68.1% in the second quarter of 2008.  The homeownership rate in the last quarter before President Obama took office (Q4 2008) was 67.5%.  A drop of 2% represents roughly 2.65 million families (a family here defined as the occupants of a single housing unit) that went from being owner-occupants to renters.

3. Rents
The average asking rent in the top 82 markets in the country was $1,090 in the third quarter of 2012, compared to $719 in the third quarter of 2008, according to Reis Inc (a private research firm that tracks the largest real estate and rental markets nationwide).  Median asking rent nationwide according to the U.S. Census Bureau was $716 in the second quarter of 2012 compared to $686 in the second quarter of 2008.

4. Foreclosure Rate
In September 2012, there were 180,427 foreclosure filings (combined default notices, scheduled auctions and bank repossessions), compared to 265,968 in September 2008 according to RealtyTrac, who leads the field in foreclosure research and statistical analysis. 

5. Housing Starts 
Construction began on 603,000 single family dwellings in September 2012, compared to 532,000 in September 2008.  For multi-family buildings intended to be rented, construction began on 53,000 units in the second quarter of 2012 compared to 67,000 units in the second quarter of 2008.

While interpretation of the data above is largely open to debate, a few concrete conclusions can be drawn.  First, more people today are renting than in 2008, which is reflected in higher rents, lower rental vacancy rates and a lower homeownership rate.  Second, real estate values are down precipitously since before President Obama took office, but the decline started before he took office, and they have started trending upward again in 2012.  Lastly, the foreclosure wave is ebbing, after years of wreaking havoc on real estate markets nationwide. 




In addition to being Vice President of ezLandlordForms, Brian Davis is a landlord and real estate investor, and has served as a rental industry expert for Investor's Business Daily, CBS Radio and The Wall Street Journal, among other media outlets.  Any perceived views in the article above are his and his alone, and do not represent the views of ezLandlordForms.

]]> https://www.ezlandlordforms.com/articles/news/151/america-s-new-giant-landlords-private-equity-firms/ https://www.ezlandlordforms.com/articles/news/151/america-s-new-giant-landlords-private-equity-firms/ Thu, 11 Oct 2012 15:37:11 GMT Who is the biggest investor in single-family rental properties in America?  Forget the real estate gurus and the big names like Donald Trump, because the answer is neither a person nor even a corporation, but private-equity giant Blackstone Group LP.

Blackstone has spent over $1 billion since the beginning of the year purchasing over 6,500 foreclosed properties, and is in the process of finalizing a loan from Deutsche Bank for another $300 million to buy more.  And while Blackstone may be the largest, they are far from the only private-equity firm buying up foreclosures to repair, lease out and eventually sell; additional firms buying up foreclosures by the thousands include Colony Capital LLC, Oaktree Capital Group LLC and KKR & Co.  Analysts estimate that private-equity firms and other large-scale investors have raised between $6-8 billion for mass foreclosure purchases, to take advantage of low prices, strong and rising rents, and appreciating values as markets nationwide climb upward again.

This is mixed news for real estate markets nationwide.  While it will buoy markets by removing much of the excess supply caused by foreclosures, these massive private-equity firms may muscle out the largely mom-and-pop competition, who currently buy the majority of foreclosed homes. 

For all the money being raised and invested, there is also no assurance that it will generate a return on the private-equity firms’ investment.  While the firms hope to take advantage of large, bargain-priced bundles of properties from foreclosing lenders, most of the properties must still be individually renovated, rented and eventually sold, which makes it difficult to create an economy of scale.

Real estate is, of course, fundamentally local, and poses a challenge for large-scale equity firms as it requires local property management and servicing.  Many of the firms are responding by partnering with local property management companies to repair, lease and manage the investment properties.  Blackstone, for example, has partnered with a Tempe-based property management company and a Dallas-based company to form Invitation Homes, a joint venture to manage the Southwestern rental properties in Blackstone’s portfolio.

Still, Blackstone closed a $13.3 billion property fund last month, and as they continue buying and leasing out homes, a spokesman for the firm reports they expect a 6-7% return from the rental income.  Though Blackstone typically promises a higher return on investment to their investors, they hope that rising rents, and rising real estate prices, will eventually create the double-digit return on investment that they promise their investors. 

Additionally these rental properties are tangible assets that firms like Blackstone can leverage by borrowing against – which is exactly how Blackstone is achieving their $300 million loan from Deutsche Bank.
]]> https://www.ezlandlordforms.com/articles/news/150/how-demographics-will-affect-the-canadian-housing-market-over-the-next-decade/ https://www.ezlandlordforms.com/articles/news/150/how-demographics-will-affect-the-canadian-housing-market-over-the-next-decade/ Fri, 05 Oct 2012 09:24:43 GMT Canada’s real estate market has been reaching skyward for over ten years, and continues to climb. But there’s concern among some Canadian homeowners and investors alike that the housing market may experience in a bursting bubble similar to the one that struck the United States in 2007. Others believe that it will simply stabilize over the next two to three years, as the rest of world markets work the tensions of the global recession out of their system, and Canada can avoid a housing crash and subsequent economic ripple effects.

Fortunately, the demographics of Canada are favorable for a “soft landing” (a relatively painless shift from a high growth market to a more stable market). Many Canadian housing experts and economists believe that shifts in the country’s demographics will help support the major Canadian real estate markets into the next decade.

Consider real estate markets from a demographic perspective: which age group constitutes the most first-time homebuyers? Luckily for Canada, this age group, the 25-34 year age bracket, is projected to grow faster over the next decade. The reason first-time homebuyers matter more than, say, middle-age homebuyers who sell one house and buy another is that first-time homebuyers have a net impact on purchases: they consume without offsetting the purchase by adding to housing inventory for sale. Homeowners who move still positively affect the real estate sector (through both an “upgrade effect” and by generating jobs in the housing sector), but the effect is not as pronounced.

A common misconception is that older citizens (55-75) all sell their single family dwellings and downsize to smaller condominiums or rental apartments. However, housing experts estimate that the downsizing phenomenon actually only occurs in roughly one third of Canadians in that age bracket, and should actually happen less frequently among baby boomers, who are remaining healthier longer than previous generations. While the 75 and older demographic will increase in population, and will of course be divesting their real estate, the increase in population over the next decade is not pronounced enough to cause much impact.

Analysts expect that British Columbia will experience the largest increase in demand for new housing, followed by Ontario, and then Manitoba.

Conversely Scotiabank, one of Canada’s largest banks, estimates that Canadian housing prices will fall approximately 10% over the next 2-3 years, and then stabilize and perhaps start appreciating once more. They believe the largest drops will be in the Toronto and Vancouver areas.

Low interest rates have spawned the recent real estate boom, however they cannot remain low forever. Most Canadians should be able to weather a mild rise in market interest rates, due to the widespread use of fixed rate mortgages in Canada. Further, Canada’s real estate market will find additional support from immigrants, who provide demand for both rental housing and often add to the ranks of first-time homebuyers, buoying the market.

According to Scotiabank’s numbers, the average amount of equity in their Canadian borrowers’ homes is 67%, as opposed to 41% in the U.S. Scotiabank also reports that their mortgage payment delinquency rate is low, and dropping even lower. A chief economist for the bank, Benjamin Tal, warns however that high personal debt levels, and asset portfolios consisting too much of real estate, leave the Canadian economy at higher risk from spikes in unemployment or crashes in the real estate market. Tal adds though that he considers a real estate crash like the U.S. experienced as unlikely to occur in Canada, however.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/149/north-carolina-landlord-tenant-law-updates-as-of-october-1-2012/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/149/north-carolina-landlord-tenant-law-updates-as-of-october-1-2012/ Tue, 02 Oct 2012 16:38:16 GMT North Carolina’s new House Bill 493, entitled “Landlord Tenant Law Changes” has been passed and signed into legislation by Governor Beverly Perdue. These changes went into effect on October 1, 2012.

The Eviction Appeal statute has been changed so that the tenant, being the appellant, must pay his/her rent on time while the appeal is pending.

Accepting a partial rent payment no longer negates an eviction proceeding, provided the written lease or rental agreement specifies so.

Further, the streamlined disposal limits on abandoned belongings have risen, allowing the landlord or property manager to more often dispose of abandoned belongings five days after the execution of the judgment for possession (instead of the standard ten day waiting period). If the landlord donates the abandoned belongings to a charitable organization, they may donate up to $750 worth of belongings (provided the charity keeps them for 30 days and allows the tenant to claim them in that time). Alternatively, the landlord or property manager may throw away up to $500 worth of belongings. Once again, the five day waiting period remains the same, as do all other procedures for personal property disposal.

The new regulations no longer require but allow the landlord to remove the belongings of a tenant who has passed away and store them in order to re-rent the rental unit. This is done after the landlord properly files an affidavit with the court. A landlord may be entitled and be able to collect the costs of the storage of the deceased tenant’s property from the estate.

Security deposit deductions can now include unpaid late charges and damages made to smoke and carbon monoxide detectors. Additionally, the costs of re-renting a rental unit when a tenant vacates before the end of the tenancy through abandonment or eviction may also be deducted from the security deposit.

Landlords of vacation rentals must now separate the cleaning costs and be very specific to the customer what they are being charged for.

See our summary of North Carolina Landlord-Tenant Law for more details about North Carolina’s laws.
]]> https://www.ezlandlordforms.com/articles/educational/1/148/lease-cosigners-aka-guarantors-frequently-asked-questions/ https://www.ezlandlordforms.com/articles/educational/1/148/lease-cosigners-aka-guarantors-frequently-asked-questions/ Tue, 02 Oct 2012 13:21:31 GMT Having a co-signer or guarantor sign the rental agreement alongside the tenants can be useful, if a prospective tenant doesn’t qualify on their own after reviewing their rental application. But many prospective tenants (and guarantors, for that matter) fail to understand all that may be involved.

Below are some frequently asked questions regarding lease agreement co-signers/guarantors.


Q: Do the terms “guarantor” and “cosigner” refer to the same role?
A: Yes, landlords and property managers use the words guarantor and cosigner interchangeably.

 

Q: What exactly is a guarantor/cosigner?
A: A guarantor is a person who will sign the rental agreement along with a tenant and will then have the same financial obligations as the tenant. The difference is that the guarantor will not actually live in the rental unit. Although (s)he will not become an occupant, (s)he will be financially liable for the obligations of the lease agreement just as the tenant is.

Q: Who are the people that usually sign on as a guarantor?
A: Most often the prospective tenant’s parent or guardian will sign the rental agreement as the guarantor. If a parent is not able or willing to sign as a guarantor or co-signer, sometimes another relative or even a close friend may do so (at the discretion of the landlord).

Q: What is the specific responsibility of a potential guarantor?
A: A potential guarantor will be bound by the same terms of the lease agreement as the tenant. This includes being responsible for the rent should the tenant fail to pay it. The rent is not the only responsibility; a guarantor can be held liable for whatever a tenant is liable for. This could be physical damages and not abiding by all the rules of the rental agreement. If the landlord files for eviction, the court action will be against both the tenant and the co-signer, as would any resulting judgment. If this happens, this could adversely affect the credit of the guarantor.

Q: What paperwork will be collected from the guarantor?
A: It depends on the landlord, but most often, a guarantor will be asked to provide all of the same documentation as the prospective tenant including income verification and employment verification. Landlords often run tenant screening reports (such as credit checks and criminal history reports) on the guarantor as well as the tenants, to verify their suitability to guarantee on the tenants’ behalf. Toward that end, the guarantor would have to complete and sign a rental application which includes their social security number, address, date of birth and permission to run the tenant screening reports.

Although this may seem excessive by some, if the guarantor is going to be liable for the rent and the provisions spelled out in the lease, so it’s equally important that the landlord verify the guarantor’s ability and likelihood to pay. If the guarantor is reluctant to provide this information, landlords would be wise to look elsewhere for a tenant. 

Q: Is there any reason a guarantor would get a copy of the tenant’s screening report?
A: The landlord would not provide such a report. Credit reporting laws remain extremely strict on confidentiality. Should the guarantor or co-signer want the tenant’s information, this would be arranged between the tenant and his co-signer.

Q: Does a guarantor have to live in the same state as the tenant?
A: Not necessarily – this decision is at the landlord’s discretion. However it’s worth noting that collecting money from out-of-state residents can prove extremely difficult and expensive.

As a final note, it’s worth reiterating that in all tenant screening situations, landlords and property managers must adhere to Fair Housing Laws.

Related Reading:

Security Deposits vs. Surety Bonds: The Greatest Thing You Never Heard

Safeguarding Your Rental Property from Your Tenants, While Still Cashing In

]]> https://www.ezlandlordforms.com/articles/educational/1/147/prior-landlords-word-on-prospective-tenants-how-much-is-it-worth/ https://www.ezlandlordforms.com/articles/educational/1/147/prior-landlords-word-on-prospective-tenants-how-much-is-it-worth/ Wed, 26 Sep 2012 10:17:13 GMT As part of a thorough tenant background check, most landlords recommend you contact the prospective tenant’s previous landlord to inquire after their rental history. This follows conventional wisdom; after all, employers call prospective employees’ current boss, when evaluating them for hire. But is the current landlord truly unbiased?

Consider this: what’s the faster way to be rid of a terrible tenant, the expensive and bureaucratic eviction process, or simply telling the new prospective landlord that the tenant has been wonderful? Or if they don’t feel comfortable outright lying, perhaps they will simply dissemble and offer vague answers.

Here’s another scenario: say the prospective tenant asks you not to contact their current landlord, because they are afraid the current landlord will terminate their rental agreement. Should you do it anyway?

This could, of course, be an excuse for the tenant who has behaved terribly at their current residence, whether by paying rent inconsistently or breaching the rules outlined in the lease agreement.

Another possibility, if you are a prospective tenant who has flaunted every clause of your current rental agreement, is to provide a friend or family member's name and phone number, as the "landlord's" contact information.

In short, it’s worth contacting the applicant’s present landlord to inquire about their rental history, but the information should be taken with a proverbial grain of salt. If the rental applicant balks, simply inform them that your policy is to always contact current/prior landlords as part of your tenant screening process, and allow the applicant to withdraw their rental application if they are not comfortable with it.

A comprehensive tenant screening process includes a tenant credit report, criminal background check, eviction history, employment and income verification, current residence walk-through and current/prior landlord inquiry. If the applicant’s current/prior landlord’s information does not align with the other information gathered as part of the tenant screening process, it’s a good indication that they may not be sharing the whole truth.

 

]]> https://www.ezlandlordforms.com/articles/news/146/tenant-tries-to-sell-landlord-s-furniture-and-belongings/ https://www.ezlandlordforms.com/articles/news/146/tenant-tries-to-sell-landlord-s-furniture-and-belongings/ Tue, 25 Sep 2012 11:23:59 GMT According to the local sheriff’s office, landlords just outside Scott Mills, Oregon found one of their tenants holding a yard sale and attempting to sell furniture. The landlord’s furniture, that is.  The landlords, upon finding out this news alerted the local news outlet, KGW Channel 8 to assist them in stopping the sale.

A few days before the big sale, the landlords said they began getting phone calls about flyers that had been posted in the community. Needless to say, the landlords were angry and frustrated. But since the law states landlords cannot enter their rental property without a proper 24-hour notice, all they could do was sit at the bottom of their driveway and try to convince people not to purchase their furniture. According to the owners, most of the potential buyers went back home.

The landlords were quoted as saying the tenant was conducting a robbery right before their eyes while the tenant maintained he was holding an admissible estate sale. Cars from all over town began pouring into the “estate sale” while the husband and wife landlords watched in awe. The landlords said they have rented to their tenant for several years and that the rental agreement stated that the rental unit was furnished.

According to the news station, the tenant had no comment when asked what she was attempting to do. Friends of the tenant claim she said they the owners had sold her the furniture and she was rightfully selling her furniture. The landlords disagreed.

The sheriff at first said their hands were tied due to the fact that it was a civil situation. Later in the day though, two more sheriffs stopped by along with the sergeant. The sergeant asked the tenant to end the estate sale and she cooperated.

The landlords pursued eviction the following Monday.

The silver lining in this cautionary tale is that the landlords had the foresight to sign a furnished rental agreement, preventing a he-said/she-said situation. While this remains only one landlord-tenant incident out of millions that occur every year throughout the United States, it illustrates a broader point that landlords need to protect themselves against unpredictable tenant situations, with comprehensive and state-specific rental agreements.
]]> https://www.ezlandlordforms.com/articles/educational/3/145/what-s-the-difference-between-a-rental-agreement-and-a-lease-agreement/ https://www.ezlandlordforms.com/articles/educational/3/145/what-s-the-difference-between-a-rental-agreement-and-a-lease-agreement/ Wed, 19 Sep 2012 12:06:02 GMT Is there a difference between a Lease Agreement and a Rental Agreement?

The answer is… it depends. 

In many parts of the world (and in different regions of the United States), the two terms are used interchangeably as synonyms, for a written contract in which a landlord rents a residence to a tenant. 

Elsewhere, however, some landlords and property managers use the term “lease agreement” when referring to a contract that lasts for a specific term (most often a one year term).  The contract may automatically continue for another full term, or may “roll over” to a month-to-month term, or may require the tenant to vacate at the end of the term, but an exact term is specified up front in the lease agreement.

Conversely, these landlords and property managers refer to a “rental agreement” as a contract without a fixed term, but which lasts for a month (or sometimes a week) and then automatically renews unless sufficient notice to end the contract has been given by one party to the other.  Thus, people refer to “month-to-month rental agreements” (or “week-to-week rental agreements”).  Another term for this type of arrangement is a “tenancy at will,” or a “tenancy at will agreement.”

On ezLandlordForms.com, our Lease Wizard allows you to select the lease term to be month-to-month, but to make it clear to people who consider a rental agreement to be a different document, we also list a separate document entitled Rental Agreement (Month-to-Month).  This separate document uses the exact same Lease Wizard to produce the documents however, so regardless of which document you use to create a lease or rental agreement, you will be given the same opportunities to customize your lease/rental package.

As always, these lease/rental packages are tailored to your state’s laws or your province or territory’s laws if your rental property is in Canada.
]]> https://www.ezlandlordforms.com/articles/educational/2/144/securing-low-interest-real-estate-loans-part-ii-credit-down-payments-and-financial-history/ https://www.ezlandlordforms.com/articles/educational/2/144/securing-low-interest-real-estate-loans-part-ii-credit-down-payments-and-financial-history/ Mon, 17 Sep 2012 16:09:40 GMT This is Part II of a two-part article - Part I can be viewed at Interest, Fees & Diligent Shopping.

 

Tip #3: Be Honest

Because of the disaster that was the real estate bubble of the 2000s, lenders are requiring a lot more detail about your financial status and history. The paperwork your lenders will require is exhaustive.

If your financial closet has a few skeletons in it, don’t let that keep you from applying, but be honest if your loan officer asks about a specific incident. There are fewer and fewer undocumented secrets in today’s world, and your credit history contains a lot of information about your financial past.
 

Tip #4: Know – And Improve – Your Credit Scores

Your credit or FICO scores are the first item any lender will look at when considering your mortgage application.

Credit scores range from the worst possible score of 300 all the way to the best possible of 850, although most scores range from 500-800. These not only determine whether the lender will make you a loan, but also the interest rate, loan-to-value (LTV) ratio (the percentage of the real estate’s value that the lender will lend you), original fees and other fees the lender will charge.

The differences between the loans available to borrowers with strong versus weak credit are hard to overstate. Real estate investors with poor credit are often left with no options but hard money (or private) lenders, who routinely charge 5 points as an origination fee and 15% interest, and often lend only 60% LTV.

For more information read our Real Estate Investors’ Guide to Credit Scores.
 

Tip #5: Put Down as Much Down Payment as You Can

The higher the down payment you make, the less risk the lender carries, and as anyone who has ever been in the lending business can tell you, loan prices are all about risk. Generally speaking, mortgage lenders will lend at lower interest rates and fees, the lower the LTV of the loan, because of the lower risk for the lender.

As an added benefit, if you can make a 20% or higher down payment, you may avoid the private mortgage insurance (PMI) payments entirely.
 

The impact that lower interest rate mortgages have on real estate investors and landlords is profound – a lower interest rate is often the difference between positive and negative cash flow on a rental property, and the difference between a lucrative career and ledger books covered in red ink. Take especially good care of your credit, shop around, and remember to take a close look at the lender’s proposed fees, which can easily climb over $1,000.

]]> https://www.ezlandlordforms.com/articles/educational/2/143/securing-low-interest-real-estate-loans-part-i-interest-fees-and-diligent-shopping/ https://www.ezlandlordforms.com/articles/educational/2/143/securing-low-interest-real-estate-loans-part-i-interest-fees-and-diligent-shopping/ Mon, 17 Sep 2012 15:48:09 GMT  

If you don’t think mortgage interest rates particularly matter, consider that a 30-year, $250,000 at 3.75% costs $1,157.79/month, but the same loan at 7.5% interest costs $1,748.04/month. That’s the difference between a profitable investment with a strong cash flow, and a negative cash flow. Whether you are buying your first rental property or refinancing your current loan, here are five tips to help secure the best interest rate.

 

Tip #1: Be a Diligent Shopper

Just because a lender has the best rate doesn’t mean it’s the best loan for you.
Loan officers are salesmen, and are paid on a commission. They will quote you the highest rate and fees that they think they can get away with, without losing your business. So shop around, leverage different rate and fee quotes against each other, threaten to go elsewhere, negotiate and generally be a savvy shopper.

Also remember that even small differences in interest rates add up to substantial sums over the course of a 30-year loan – the difference between the total interest for a 5% and a 6% interest mortgage for $250,000 is over $56,000 in interest payments to the bank.

Remember - when it comes to your mortgage, you won't get what you deserve, you'll get what you negotiate, so be prepared to push hard for better loan terms, and if you haven't talked to at least three lending companies, you haven't talked to enough.

 

Tip #2: Know What Fees You Are Paying

Your interest is not the only cost of taking out a home loan, and generally speaking you can opt to pay higher fees for a lower interest rate. Fees vary from the type of loan you have to the amount of the loan to who the lender is and in some cases, the state your property is in.

Below is a (far from exhaustive) list of fees that sometimes affect interest rates:

Application Fee: Any bank is going to add this fee on to your statement. It covers the processing of your request for the loan and for investigating your FICO score. The average cost for application fees is $350.

Loan Origination Fee: This is the sales fee charged by the mortgage broker (or lender, if there is no broker), and this is one of the places the loan officer’s commission comes from. This fee is almost always negotiable, and often is charged in “points” - one point is equal to one percent of the loan amount. If you took out a $600,000 loan, one point would be $6,000.

Private Mortgage Insurance (PMI): If you are making a down payment on your home that is less than 20% of the amount of the loan, a lender will often require you to buy mortgage insurance. This insurance will cover the bank’s loss if you fail to pay your mortgage, and the bank takes a loss when they foreclose on the property. In most cases this takes the form of higher monthly payments for the first few years of your loan, but in some cases borrowers may be able to secure a lower-interest loan by choosing a loan that includes an up-front mortgage insurance fee (an example includes FHA-insured loans).

Continue to Part II: Credit, Down Payments & Financial History

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/142/canadian-bedbug-housing-laws-province-by-province/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/142/canadian-bedbug-housing-laws-province-by-province/ Fri, 07 Sep 2012 11:15:16 GMT When it comes to figuring out whether the landlord or the tenant is responsible for bedbug invasions and who should cover the costs for exterminating them, matters often grow heated to say the least. Because bedbugs are a recent problem in Canada, a lot of provinces and municipalities do not currently have legislation dictating who is responsible for extermination and ridding the rental premises of bedbugs. As it stands now, tenants usually go before a landlord-tenant arbitrator with their case and it is then up to the arbitrator to decide where the bedbugs originated to assess who is the responsible party. This is extremely difficult to prove and usually becomes a subjective decision by the arbitrator.

Information regarding local arbitrators may be found at: http://www.adrcanada.ca/about/contact.cfm Below are summaries for each province regarding how bedbug infestations are handled:

Alberta: Regulations regarding the public health and housing act state that it is the responsibility of the tenant to report any bedbug incidents to their landlord. The landlord must then hire a professional exterminator that is approved by Alberta Environment Public Health office. Landlords or tenants may contact their local Public Health Office with questions:
     Edmonton Main Office: (780) 735-1800
     Calgary Main Office: (403) 943-2295
     Lethbridge Main Office: (403) 388-6689
     Grande Prairie Main Office: (780) 513-7517
     Red Deer Main Office: (403) 356-6366
     Website: www.albertahealthservices.ca/eph.asp  

British Columbia: In British Columbia’s Residential Tenancy Act, it is the stated responsibility of the landlord to deliver a healthy and safe apartment dwelling at the time the rental agreement is signed. Although it does not specifically mention bedbugs, there is a by-law with regard to health in Vancouver that says the landlord is obliged to exterminate bedbugs. Bedbug infestations are handled by British Columbia’s health authorities who work with local governments, healthcare providers, building owners and individuals to provide information and reinforcement in the extermination of bedbugs. Vancouver Coastal Health and the Vancouver Island Health Authority have helpful information on bedbugs on their websites.


Manitoba: Although there are no laws specific to bedbugs in Manitoba, there is a section of municipal by-laws that cover other parts of pest control. In general, it is the responsibility of landlords to get rid of any and all pest problems, including rats, roaches, and ants. At the same time, it is the responsibility of the tenant to keep the rental property clean and orderly.

New Brunswick: Currently New Brunswick does not have any legislation in place that pertains to bedbugs, but rental disputes in New Brunswick are governed by the Office of the Rentalsman, including tenant bedbug cases. The Rentalsman will demand that the landlord pay for the extermination of the bedbugs if the tenant can prove that they are not responsible for the infestation. Information on how to contact the New Brunswick Office of the Rentalsman.   

Newfoundland and Labrador: Tenants and landlords who are experiencing a bedbug problem are told to work out a resolution themselves. If neither party can come up with a mutually agreeable solution, they are told to go to mediation. Mediation is overseen by a residential tenancy branch, and more information can be found at: http://www.servicenl.gov.nl.ca/landlord/residential_tenancies.html.

Nova Scotia: Halifax does not have any definitive laws regarding bedbugs. If the landlord can prove the tenant brought the bedbugs in, the tenant is then responsible for having them exterminated. However, because this is so difficult to prove, many landlords end up covering the costs of the extermination themselves. It is the responsibility of the tenant to write the landlord a letter requesting extermination within a reasonable timeframe from the bedbug discovery. Should the landlord refuse servicing the problem, the tenant can request a hearing at the Office of Residential Tendencies.

Ontario: Although there is no current legislation regarding bedbugs, the Ontario’s Tenant-Landlord Act clearly states that it is the tenant’s responsibility to keep their home “orderly and clean,” and it is the responsibility of the landlord to keep their property “healthy and safe.” Because there is no specific bedbug law enacted currently, the Ontario Landlord and Tenant Board usually recommends that landlords pay for bedbug extermination. Contact information regarding the dispute resolution may be found at: http://www.sjto.gov.on.ca/

Prince Edward Island: All landlord-tenant disputes involving bedbugs are overseen by the Director of Residential Property. At time of publication, the present Director is Cathy Flanagan, who may be reached at:
      cflanagan@irac.pe.ca 
      Director of Residential Rental Property
      902-892-3501

Quebec: In Quebec, the burden of proof is on the tenant to prove that it is the landlord’s fault that bedbugs infested the rental property, if they wish the landlord to pay the costs of bedbug extermination. However, it is the duty of the landlord to make sure the infestation does not get worse.

Saskatchewan: There are no clauses in the landlord-tenant act to specify whether the landlord or tenant is responsible for bedbug infestations. Each case is brought before a hearing with an arbitrator, and if the tenant can prove the bedbugs had already infested the leased premises before they signed the rental agreement, the landlord will be directed to pay for the extermination.

Bedbugs are extremely resilient and difficult to eliminate. Getting rid of them can be stressful and expensive, so when the landlord and tenant can cooperate to eradicate them, the extermination is usually much smoother. Landlords should discuss bedbugs and other pest control issues with their tenants up front, and address them specifically in the rental agreement, so as to avoid any misunderstandings.

]]> https://www.ezlandlordforms.com/articles/news/141/landlord-convicted-sentenced-to-prison-for-lead-based-paint-violations/ https://www.ezlandlordforms.com/articles/news/141/landlord-convicted-sentenced-to-prison-for-lead-based-paint-violations/ Fri, 31 Aug 2012 17:21:45 GMT How much attention do you pay to lead-based paint laws and regulations? A landlord in Baltimore, Maryland was found guilty of lead paint violations in all of his rental properties throughout Baltimore and the greater metropolitan area.

Cephus Murrell received a 12 month prison sentence, plus a six-month home detention, plus another year of work-release while supervised. He was charged with not having proper lead-based paint abatements at any of his properties, and with failure to inform existing tenants that they were renting homes with lead-based paint in them.

Murrell owns and manages one-hundred seventy-five rental units in the Baltimore area. U.S. Attorney Rod Rosenstein stated that Mr. Murrell put adults and children into environments where they could have sustained permanent and life-threatening injury in his willful violation to ignore federal law as well as consistent demands from local housing inspectors to comply with the lawful regulations for lead-based paint. Rosenstein further commented that it was despicable that Mr. Murrell would expose pregnant women and children to the lead-based paint.

Robert Summers, Secretary of the Maryland Department of the Environment (MDE), went on to say that the best way to prevent lead-based paint poisoning is to reduce the amount of exposure people have to the product as much as possible. This is the reason for Maryland’s extremely aggressive lead-based paint prevention program. He went on to say that hopefully with a strong conviction like the one suffered by Mr. Murrell, other landlords and property owners will now be on high alert to make sure they follow the laws and guidelines established by the Maryland Department of the Environment.

All of Mr. Murrell’s rental properties were built prior to 1978 and are therefore subject to local, state and federal laws regulating the treatment of lead-based paint. The MDE and the agencies that came before them have conducted spontaneous lead paint inspections for many years at units managed by Mr. Murrell, after reports came in that there were children with high lead blood count levels living in the units. 
   
Murrell eventually pleaded guilty to three misdemeanor counts of violating of the Toxic Substances Control Act.  Included among his violations was hiring unlicensed abatement workers to address the lead paint, after it became clear that he needed to address the problem. He also failed to inform any of his tenants that their units contained lead-based paint, or that abatement work was being performed, as he was lawfully obliged to do.

There are many local and state laws regarding hazardous living environments, ranging from lead-based paint to mold to radon. Be sure to understand your state and local laws, and particularly to remain cautious whenever you have cause to believe that one of your rental units may contain these or other hazards. Aside from financial losses, there can also be criminal prosecutions, as Mr. Murrell discovered the hard way – don’t let this happen to you.
]]> https://www.ezlandlordforms.com/articles/news/140/satellite-dish-destruction-new-case-against-satellite-providers-rules-in-favor-of-landlord/ https://www.ezlandlordforms.com/articles/news/140/satellite-dish-destruction-new-case-against-satellite-providers-rules-in-favor-of-landlord/ Tue, 14 Aug 2012 12:56:56 GMT How many times have you experienced a tenant that wants to install a satellite service, such as DirecTV or The Dish Network and has the company come out and install the dish without asking for your permission first? We’d be willing to bet you experience this all the time.

The tenant either ignores or doesn’t realize there is a clause within their lease agreement specifically stating no modifications can be made to the rental unit (or the building) without the landlord’s prior written consent. And naturally, the satellite television provider doesn’t bother to ask you, the landlord, whether or not this is permissible. And why would they? They don’t want to jeopardize their business by not being able to install the satellite. The satellite company merely asks the tenant if they have permission and the tenant tells them, “Yes, of course.” It’s no skin off the tenant’s nose.

However, it is a big deal for the landlord, who is stuck with a bulky satellite dish on the roof (or side) of the building. Eventually, the dish will need to be removed; leaving you with holes that can create an easy way for water and pests to enter the walls and roof of your property.

But what can really be done about a situation like this? Most often owners and property managers take on the costs to remove the satellite and fix the damage that was left after its removal. Sometimes, they may try to charge the tenant for the damage, but even if they do and the tenants don’t pay, there is very little to be done by way of collecting the money. If it seems fruitless, don’t abandon all hope quite yet.

A property owner just outside Los Angeles decided he was no longer going to deal with this type of nuisance anymore, so he decided to pursue the satellite television provider instead. Mark Kellum of the Glendale News Press states that this is a brand new avenue for landlords to pursue, and that this is a precedent-setting legal case. Mr. Christopher Spencer sued The Dish Network for the costs to remove and repair the damage left from three of the dishes they had installed at his property.

Mr. Spencer obtained a judgment of $850 to cover the costs to remove three satellite dishes from his apartment building and $110 in court costs. It’s worth mentioning that Mr. Spencer tried informal negotiations with The Dish Network for over six months before giving up and taking them to court.

There is a federal law that allows a tenant to have a satellite dish installed on a rental property, but only if it is in an area completely under the tenant’s control, like the porch or the balcony. Conversely, tenants are not allowed to have a dish installed in any of the common areas, such as the courtyard, roof, or the side of the building, unless of course, the landlord consents (read the FCC’s summary of the rule here).

Although this doesn’t mean you will be able to sue the dish providers for damage at every turn, it is a good indication that all dish installation companies will soon require written permission from the landlord or property manager, as Comcast currently requires if they will be drilling in a rental property.

To view a copy of our satellite dish addendum, click here: Landlord Permission for Satellite Dish addendum.

]]> https://www.ezlandlordforms.com/articles/educational/3/139/the-sublet-process-for-dummies-roommates-landlords-screening-and-sublease-agreements/ https://www.ezlandlordforms.com/articles/educational/3/139/the-sublet-process-for-dummies-roommates-landlords-screening-and-sublease-agreements/ Fri, 13 Apr 2012 11:34:52 GMT Maybe you’re a tenant with six months left on your lease agreement, and you have to move three states away for work.  Or maybe your roommate is the one who’s moving three states away, but you want to stay.  What to do? 

Sublet, of course.

A sublet or sublease agreement is a lease agreement between a tenant and a sub-tenant, where the original tenant effectively becomes a middle-man in between the landlord and the sub-tenant, and assumes both landlord duties to the sub-tenant and tenant duties to the landlord.  The original tenant is still legally responsible for paying the rent to the landlord and abiding by all of the original terms of the lease agreement.  Generally, they (you) collect rent from the sub-tenant, and pay rent to the landlord.  If this sounds like a pain, that’s because it can be one, but there are some advantages as well, such as allowing flexibility to move out early, or rent out a vacant room, or even earn a profit by charging the sub-tenant more rent than the original lease agreement charges.

So what do you need to know, if you’re considering subletting your apartment?

Step 1: Ensure your original lease agreement allows subletting.
Read your lease agreement very carefully to ensure it allows subletting in the first place.  If it doesn’t, then you’re in violation of your lease and the landlord can pursue you through all legal channels available to them, including eviction and possibly financial penalties.  If you will no longer be occupying the rental property, it’s a good idea to notify the landlord about what’s going on and give them the contact information for the sub-tenant in case of an emergency.

Step 2: When advertising your sublease, adhere to fair housing laws that apply to landlords.
You’re the landlord now, so you’re bound by all the laws that apply to landlords, including fair housing laws.  Consider reading this article on rental advertising, tenant screening and fair housing laws.

Step 3: Screen the applicants like you’re the landlord (because you are)!
Do you want someone moving in with a 520 credit score who’s never seen a bill they felt like paying?  Or perhaps a convicted felon?  Or someone with a 140-pound mastiff?  Does your original lease agreement even allow pets?  Screen your sublease applicants, and remember that regardless of whether they pay the rent, you still have to pay the landlord.  Finally, charge an application fee that will cover the cost of you to run background checks on them.

Step 4: If you’re adding/replacing a roommate, make sure they’re compatible.
This sounds intuitive, and it is, but people fail to do this all the time.  Does the applicant work nights, when you work days?  Do they like to party while you have your Series 7 to study for (or vice versa)?  Are they obsessively clean while you’re messy (or vice versa)?  Maybe one of you has very strict ideas about what kind of lifestyle is appropriate for an unmarried person, and the other doesn’t.  Ask these questions and more when the applicant is walking through the rental property, or when you collect the rental application.

Step 5: Use and sign a legal sublease agreement in your state.
Now that you’re the landlord, you need to abide by all those strict state laws that used to seem wonderful, but now seem complex, daunting and heavily tenant-favored.  Make sure you don’t charge than is allowed for the security deposit, make sure the sublease agreement you use is state-specific, make sure you comply with any restrictions on, well, everything ranging from pet fees to application fees to notification requirements to disclosures and much, much more.  We have a sublease agreement wizard that will walk you through your state’s laws and generate a state-specific sublet agreement, but be aware that you do need to pay attention to the laws now. Be sure to walk through the property with the sub-tenant and sign a Move-In Walk-Through Checklist about the condition of the property upon their move-in to prevent disputes about who caused what damage, when they move out.

As a final note, it’s worth mentioning that you should advertise on the higher side of what your room or apartment will rent for, to attract a higher-caliber applicant.  You can always reduce the rent at the time you sign the sublease agreement, but you can’t raise it.  Remember that you have obligations to both the landlord and the sub-tenant, and if you no longer reside in the rental property yourself, usually this dual set of obligations is more trouble than it’s worth once the original lease term has expired.  Thirty days before the original lease term is scheduled to expire, you should consider sending the landlord notice that you will not be renewing, and putting your sub-tenant in touch with the landlord directly to discuss whether or not they will continue their relationship without you.
]]> https://www.ezlandlordforms.com/articles/news/138/state-of-the-rental-industry-early-2012/ https://www.ezlandlordforms.com/articles/news/138/state-of-the-rental-industry-early-2012/ Thu, 29 Mar 2012 12:49:54 GMT The rental industry has had a good year or two, compared to the rest of the American economy. Last year saw quite a bit of discussion about America’s rental boom, but where does the American rental market stand now?

First, rents are still rising, and are up 2.4% since early 2011.  That said, rental vacancy rates are flat year-over-year according to the US Census Bureau, although they did drop from the third quarter in 2011 to the fourth quarter (9.8% down to 9.4%).

Homeownership rates are down, which means demand for rental housing is up, as is the number of landlords. Nationwide, the homeownership rate is currently 66% (compared to an all-time high in 2004 of 69.2%), and the homeownership rate in the top 75 metropolitan areas is 64.6%.

There are two positive indicators about tenants’ ability to pay their rent: first, the unemployment rate is down from 9% in early 2011 to 8.3% in early 2012, which is good news (albeit still much higher than a healthy unemployment rate of 4-5%). Second, foreclosures are down – over the last 12 months, the number of properties in foreclosure as dropped from 239,795 to 206,900. This decline should not be overstated however, as it is only an indirect measure of Americans’ ability to pay their housing bills, and includes extraneous factors such as the slow speed of the courts in handling foreclosure cases.

Despite the media angst about home prices supposedly still declining, actual home prices have been flat both month over month and year over year, at Zillow’s last figures from January 2012, with an average home sale price of $175,000.

So what do these figures mean?

They mean that right now is a good time to be a landlord, and a good time to buy rental properties. Home prices have leveled out and are poised to start rising, interest rates remain low, rents are rising, and the demand for rental housing is increasing.

That is not to say that landlords have no risk at the moment. With the unemployment rate still high, there are higher-than-normal odds that tenants will default on their rent, putting landlords’ cash flow at risk. But there are increasing options for mitigating the risk of lost rental income, including insurance that covers rent payments, so that if a tenant defaults, the landlord will be reimbursed for lost rental income while working through the arduous eviction process. This type of rent default insurance is common internationally, in places like Britain and Australia, but has no tradition here in America.

The dropping unemployment rate and foreclosure rate, and the leveling real estate sales market, also have implications for the supply side of the market. Over the last five years, there’s been a much-discussed “reluctant landlord” phenomenon, in which would-be sellers have been forced to become landlords and rent out their property instead of selling. As prices level out and the unemployment rate drops, fewer people will be forced to become landlords, which means the increase in rental housing supply should slow. 

Furthermore, construction over the last two years has favored rental housing more than usual, although that too appears to be slowing. The number of housing starts for rental units dropped to 31,000 in the fourth quarter in 2011 (from 35,000 in the third quarter, and 35,000 a year before). The percentage of housing starts made up of rental units also dropped from a year earlier, down from 36.5% in the fourth quarter of 2010 to 31% in the fourth quarter of 2011. This suggests that developers believe the rental boom will ease off, but it also means the supply of rental housing will be expanding less rapidly.

Whether it happens this year or next, real estate prices will start rising again, as will interest rates over the next few years. Not a lot of people have extra cash sitting around right now, or perfect credit to be obtaining mortgages on rental properties, but for those who are able, this is a good market to invest. Look for neighborhoods that are poised to increase in homeownership (increasing numbers of artists and young professionals are good indicators), look for ways of protecting your cash flow, screen your tenants carefully, and enjoy this investor’s market while it lasts.
]]> https://www.ezlandlordforms.com/articles/news/137/year-in-review-real-estate-trends-in-2011-predictions-for-2012/ https://www.ezlandlordforms.com/articles/news/137/year-in-review-real-estate-trends-in-2011-predictions-for-2012/ Tue, 20 Dec 2011 12:03:33 GMT The world hasn’t ended yet, and people still need a place to live, but economic growth is slow, job expansion is slow, and home prices are low, so few real estate professionals are out celebrating in the streets at the end of 2011. That said, rents rose faster than expected in 2011, so it was actually a pretty good year to be a landlord or a property manager. Here’s a look back at 2011, and a look into the crystal ball for 2012.

 

The Rental Boom

While easily overstated, there has been something of a rental boom in 2011. Vacancy rates dropped sharply to 5.6% in the third quarter of 2011, the lowest level since 2006. Meanwhile, rents rose to a nationwide average of $1,004 in the third quarter, a rise of 2.4% year over year, and Reis Inc (the source of the above data) estimates that the total rise in rents for 2011 will be 3.6%. Developers (who tend to do plenty of market research before committing to construction projects) are acting on this information as well: rental unit construction starts are up 33.3% in the third quarter since the same period last year, to 48 million units according to the U.S. Census Bureau. A look at the November figures (the most recent monthly figures) show even more drastic differences: the rate of housing starts for apartment buildings with 5 or more units rose to 230,000, an increase of 25.7% since October, and 219.4% since November of 2010.

 

Home Sales & Prices

It’s estimated that 2011 will see a record low 302,000 new home sales, which is obviously bad news for developers and the construction industry. Single family housing starts are down 3.9% since this time last year, but building permits for single family homes are up by 4.6%, suggesting that we’ll see a bump in new home construction in 2012, and that developers are confident that 2012 new home sales will be substantially stronger.

In the third quarter of 2011, home prices were down in 111 out of the 150 markets that the National Association of Realtors monitors, which is disheartening for anyone looking to sell. For landlords and property managers however, the news is brighter: 81 of the 82 rental markets that Reis Inc monitors saw rising rents. At a certain point, this trend will drive up home prices, as renters start deciding it makes more fiscal sense to buy a home.

 

Shadow Inventory

We talked about it this time last year, and it’s still just as relevant and troubling this year. Shadow inventory is housing that is not yet listed on the market for sale, but that is likely to end up on the market through distressed means: either a short sale, a foreclosure auction, or a bank REO (bank-owned property). Estimates range from 1.6 million homes on the very low end up to 15.3 million homes, which would take between 1 year and 4 years to unload. Current rate of sale is 4.97 million homes/year, and there’s currently 3.5 million homes listed for sale (a 9 month supply – for reference, a normal market has a 6 month supply). Even if home sales improve dramatically (which few experts are holding their breath for), we’re looking at several years just to clear out all the shadow inventory, which suppresses prices because foreclosures, short sales, and bank REOs all sell for less than normal market prices.

 

Public Opinion

Real estate markets share several qualities with politics, and one of these shared qualities is that public opinion matters. Currently, 73% of the public believes that real estate sales will be either stagnant or lower in a year from now, and that public sentiment will have a very tangible effect on the markets as a self-fulfilling prophecy: fewer people will look to buy if they believe the housing market is still declining, which in turn will drive the decline further. And speaking of politics, 70% of the public believes that the housing sector will be a key issue in the 2012 election.

 

Predictions for 2012

The crystal ball is murkier than usual, between the unstable US markets and economy, the upcoming election cycle in 2012, and the continued uncertainty in the European Union (yes, it matters: a collapse in Europe would have a devastating impact on US economic markets which are intimately tied to the housing market). But enough equivocating, here are some firm predictions:

• Home prices will continue to decline through the end of the second quarter in 2012, and will then roughly stabilize for the following year.
• Rents will continue to rise. My official forecast: 2.5%.
• We’ll still be talking about shadow inventory this time next year, and we’ll still have 1-2 years’ shadow inventory looming over the market.
• Jobs & local markets: One of the other qualities real estate markets share with politics is that all housing markets are local. National trends are all well and good, but there are some markets that basically haven’t seen a recession at all (Washington D.C. comes to mind) and others that have been annihilated (Las Vegas comes to mind). As local job markets improve, local housing markets will improve, starting with the rental market and then spilling into the home sales market.
• Cash will remain king: Sure, interest rates are low, but guess what? Only buyers with plenty of cash are being qualified for loans! LTV (loan-to-value) ratios are down, which mean buyers need to put down more money at the table than they did 5-10 years ago. Stay liquid, and don’t over-leverage yourself – the rental industry in particular requires a hearty cash cushion, as rental income can be inconsistent, and repair expenses are unpredictable.

It’s a good time to be a landlord, but only if you’re not mortgaged to the hilt, and only if you have a comfortable cash cushion. With some foresight, some cash, and a little luck, 2012 will be a great year to buy and hold rental properties, as real estate prices remain low and rents continue to rise.

 

Brian Davis is a rental industry expert and the Vice President of ezLandlordForms. He is a frequent guest on radio programs ranging from Fox Business to the Wall Street Business Network to CBS Radio and more. He is also a landlord himself, who owns and manages over a dozen rental units.

]]> https://www.ezlandlordforms.com/articles/educational/4/136/uninvited-what-s-the-difference-between-a-squatter-and-a-trespasser/ https://www.ezlandlordforms.com/articles/educational/4/136/uninvited-what-s-the-difference-between-a-squatter-and-a-trespasser/ Mon, 17 Oct 2011 18:53:28 GMT Can someone come onto your property and spend the night, uninvited, and then decide to stay? Can they just decide to receive mail at your place? When does the law differentiate between trespass and squatting? When does squatting become a tenancy? Where does the line get drawn between calling the cops and filing an eviction notice? Asked by my friends at ezLandlordForms.com, I’ve decided to investigate what is happening, at least here in Illinois. Here is what I found.

In Illinois, when someone enters real property without authorization they can be found guilty of criminal trespass to real property. For the actual Illinois legal code, see, 720 ILCS 5/21-3, et seq, but in lay terms, if a person were to enter and remain upon real estate without authority or permission, that is criminal trespass. It is not a requirement that the landlord or owner have to actually “say” that it’s illegal or without authority, but there are instances where, if someone stays after being notified that they are unwelcome, that the crime of criminal trespass will be found. There is a part of the law that makes mention of falsely claiming a right to be there, such as presenting false or fraudulent papers to an owner of real estate. Also, Illinois law mentions that access does not have to be just on foot, and that access can be made by use of a motor vehicle of sorts – which would apply to a “private road” for example. While your state may be different and it’s best to check with your local municipality, these concepts are usually very common across the country.

One interesting exception to the rule here in Illinois is if a person in Illinois “beautifies unoccupied and abandoned residential and industrial properties located in any municipality” (see, 720 ILCS 5/21-3(d), et seq). Basically, in Illinois, if you plant flowers or remove debris (adding in a few other technicalities), one could avoid prosecution for trespass. That is interesting – and it’s something you may be interested in. Another exception that is probably foreseeable is in the case of emergency. In that situation, a person who accessed property without authorization or permission (provided there is a bona fide emergency) may be exempt from trespass. Also in Illinois, in the case of Williams v. Nagel, the Illinois Supreme Court found that the owners of an apartment complex could bar certain individuals from the property, even guests of tenants, and even prosecute them. 162 Ill.2d 542 (Ill. 1994). There, in the situation where the tenant’s guests had been barred, if the management company elected to bar the guest, and the tenant extended an invitation to the guest to come onto the property, there could be an arrest for criminal trespass. The kicker there was that the lease in question gave the landlord the right to bar people from the premises. What is the lesson to be learned for our landlords and even our tenant readers? Including language in your lease relating to management discretion to bar access to tenants’ invited guests may give the landlord some very specific rights. Check in your local jurisdiction to be sure, since there is some legal authority in Illinois and likely in other jurisdictions, that provides that a person who is on property through the express invitation of a tenant is not a trespasser.

But what about squatting? Does the law mention squatters? In Illinois, I could not find any law that directly mentioned it. That must mean, for the moment, that the criminal trespass law would apply to trespass in the case where there was no authority given by the owner or manager. A property owner could invoke the law after one night, one week or one month. However, it is important to keep in mind that there are legal principles in place that do give people rights – such as the concept of adverse possession, and situations where written or oral leases may apply. Here in our great Midwestern state, there exists a Forcible Entry and Detainer Act, which is essentially an eviction law. That act is usually a landlord’s exclusive remedy for evictions. The key to this being applicable at all though – is that there must first exist a “landlord/tenant” relationship. In situations where the eviction laws are arguably the path on which to travel, because there is a landlord-tenant relationship somewhere in the mix, then there, a landlord would not normally use a criminal law to enforce rights or settle disputes.

One example of this was in the Illinois case of the City of Quincy v. Daniels, 246 Ill.App.3d 792 (4th Dist. 1993). There, a tenant’s mother who was occupying an apartment at her daughter’s request but in violation of the lease, was initially convicted of criminal trespass. After an appeal, the appellate court found that the only way for the landlord to have removed the mother, was to have evicted her under the statute. One way for you all to think about this distinction then, is to try to determine if someone is living on the property, like the mother in Quincy v. Daniels, or visiting, as in the Williams v. Nagel case. These differences are important.

Still wondering the difference between squatting and trespassing is? Squatting can be defined as “one who finds empty or vacant or abandoned property and who moves in and resides upon it, for either a short or long term.” The difference in the law is that trespass is usually considered a criminal matter, while squatting and landlord-tenant matters are usually civil in nature. In general, if the landlord discovers an uninvited occupant, they should first try calling the police and having them removed as trespassers. If the police refuse, claiming squatters rights, then the landlord must go through the lengthy civil eviction process. Keep in mind that such a civil action requires court appearances and personal (in-hand) service of all relevant papers. If the squatters challenge your eviction motion, it may be time to talk to an attorney, as some "professional tenants" can be extremely adept at prolonging the eviction process almost indefinitely.

Alisa M. Levin, Esq. has been providing professional legal services to lenders, landlords, developers, investors, managers and other business professionals for over ten years. 

]]> https://www.ezlandlordforms.com/articles/educational/1/135/felons-and-fair-housing-how-discrimination-can-include-the-disparate-impact-rule/ https://www.ezlandlordforms.com/articles/educational/1/135/felons-and-fair-housing-how-discrimination-can-include-the-disparate-impact-rule/ Thu, 15 Sep 2011 16:31:07 GMT When we think of discrimination we usually think in terms of intentional acts which exclude members of certain groups from employment, housing, or other opportunities. The civil rights laws, however, protect against not only intentional acts of discrimination but acts which, though apparently neutral on their face, actually have a discriminatory impact on protected groups.

Not all discrimination is illegal. We discriminate against various people regularly and legally. We choose people with good credit over those with bad credit. We reject applicants who have a previous history of evictions or nonpayment of rent. Such discrimination is legal and based on a legitimate business purpose. Illegal discrimination occurs if we make a choice based on a person’s membership in a protected class. These protected classes include, under the federal Fair Housing Act, race, color, national origin, religion, sex, disability, and families with children. (The first five categories were contained in the original Fair Housing Act. The last two categories were added when the Act was amended in 1988.)

Under what circumstances might you be liable for violating the law unintentionally? What if you implement a policy which is neutral on its face and has no discriminatory intent but has a discriminatory effect when actually put into practice? This is the question of disparate impact.

The disparate impact doctrine is a creature of court decisions. You will not gain any information on disparate impact by reading the Fair Housing Act. The courts decided that the civil rights laws imply a disparate impact rule in order to enforce the goals of equal opportunity. There has never been a US Supreme Court case which says the Fair Housing Act is violated by a practice which has a disparate impact. However, the majority of the federal Courts of Appeals, including those in Missouri and Kansas have upheld the disparate impact doctrine. This is primarily due to the fact that the US Supreme Court did uphold disparate impact in employment law in the case of Griggs v. Duke Power Company (1971). Since the same language is used in both the Fair Housing Act and Title VII of the Civil Rights Act (the subject of the Griggs case) it is reasonable to conclude that the same rule would be applied to Fair Housing.

Disparate impact is presently becoming a controversial issue due to several cities, including Kansas City, Missouri, raising the issue of the impact of housing restrictions directed at persons with felony criminal records. Several cities across the country have enacted restrictions on rental property owners regarding the general exclusion of felons. New York and Philadelphia have enacted ordinances to prevent blanket discrimination against felons and San Francisco and Seattle are presently considering such restrictions. These ordinances would make felons a protected category like the now existing seven categories. At the present time, the city of Kansas City, Missouri, has filed fair housing complaints against properties which have a general prohibition against renting to anyone with a felony record. The city's claim is that a general prohibition against renting to felons will have a disparate impact on racial minorities, specifically African-Americans and Hispanic Americans, and therefore violates the Fair Housing Act. The Human Relations Department of Kansas City, Missouri, is apparently of the opinion that a blanket prohibition on renting to a felon is a violation of Fair Housing but a restriction limited to a specific time frame would not be a violation.

Many courts have considered the issue of disparate impact. Some courts have stated, "the relevant question is whether a policy, procedure, or practice specifically identified by the plaintiff has a significantly greater discriminatory impact on members of a protected class." The court considers whether the impact of the defendant's policy or practice is significantly greater on a class of persons protected by the Fair Housing Act than it is on unprotected class members, and if so, whether the defendant has provided a sufficiently strong justification for using this policy or practice to overcome the prima facie case that the plaintiff showing of disparate impact has created."

One of the earliest cases raising the issue of disparate impact was Betsey v. Turtle Creek Associates in 1984. The owners of the property decided to make it an all adult property and began to evict all the families with children. (In 1984 it was legal to discriminate against families with children, so there was not the blatant violation there would be today.) As with most disparate impact cases, the evidence was largely statistical. Although families with children were not a protected class at the time, the facts were that of the families to be evicted, 74.9% of the nonwhite families were given eviction notices and only 26.4% of the white families received such notices. The court held that a disparate impact had been proven.

Although statistics are important in determining whether there is a disparate impact on a protected class, there is no precise formula for such a determination. The courts have clearly held that only a "significant" discriminatory effect violates the act.

The Eighth Federal Circuit Court of Appeals, in which Missouri is located, has recently dealt with two disparate impact housing cases. In 2003, the Eighth Circuit decided Oti Kaga, Inc. v. South Dakota Housing Development Authority. This case involved a complicated dealing with the funding of housing for Indian tribes in South Dakota. The plaintiff alleged a disparate impact on those tribes. The court set forth the standard for deciding disparate impact cases. First, the plaintiff must "show a facially neutral policy has a significant adverse impact on members of a protected minority group." If the plaintiff shows such an impact, the burden then shifts to the defendant to show justification for its policy. If the defendant is able to show such justification, the burden shifts back to the plaintiff to show that another policy would accomplish the defendant's goals without the discriminatory effect. One of the reasons that the plaintiff failed in this case, was that it failed to offer any alternative policy which would meet the defendant's needs as effectively.

In 2005, the Eighth Circuit decided a case which arose in St. Louis, Missouri. Darst Webbe Tenant Association v. St. Louis Housing Authority involved a plan to demolish a property of low income, public housing rental units to be replaced by a mix of housing which included low income, public housing, low income tax credit units, and market-rate rental units. The property to be demolished included 758 low income public housing rental units and 242 units designated for the elderly. By the time of the revitalization plan, only 220 of the public housing units remained occupied. The residents were mostly African-Americans and/or female-headed households with children. The plaintiff therefore, alleged a discriminatory impact on race, sex, and familial status. The court restated the proof necessary to make such a case. The plaintiff must demonstrate that the challenged action or policy “results in, or can be predicted to result in, a disparate impact upon protected classes compared to a relevant population.” The burden then shifts to the defendant to show a legitimate non-discriminatory policy objective. If the defendant offers such justification, the plaintiff “must offer a viable alternative that satisfies the [defendant’s] legitimate policy objectives while reducing the . . .  discriminatory impact.” In the Darst-Webbe case, the plaintiff failed to offer any viable alternative.

We will now turn to the proposal of making felons a protected class and the possible progress of a Fair Housing case based on disparate impact.

When looking at the present categories which are protected by the Fair Housing Act, it is apparent that felons are not similar to those which are presently protected. All seven present protected classes consist of categories in which people have no choice in participation – race, color, national origin, sex, persons with disabilities – or groups in which the choice should not be relevant to a landlord, such as religion or families with children. The same cannot be said regarding felons. No one is born with a felony conviction. A felony conviction results from choices made by that individual. To give felons the protection of the Fair Housing Act protects them from the consequences of their own conduct. No such protection is presently afforded to anyone by the Fair Housing Act.

There is another obvious distinction between the present protected classes and felons. The fact that a person is African-American, Jewish, Catholic, male, female, etc., does not tell you anything relevant about his/her character or what kind of tenant that person might be. On the other hand, the fact that a person has committed a felony does say something relevant about his/her character. It has been proven that the person, on a least one occasion has shown disregard for the life, safety, or property of another person or has otherwise disregarded the rules of society. Is a landlord being totally unreasonable to think that a felony conviction says something relevant about what kind of tenant that person might be? Preferring a non-felon to a felon is not as unreasonable as preferring a member of one race over another, for example.

Let’s look at the scenario of a property owner who refuses to rent to anyone with a felony conviction and a suit brought by the City based on disparate discriminatory impact on a protected class. Let’s refer to that protected group as Group X. How might such a Fair Housing suit actually progress?

The City would be required to prove that a refusal to rent to anyone with a felony record would have a “significant adverse impact” on members of Group X. That is, not necessarily that felons can’t find housing, but that members of the protected Group X can’t find housing. If the property in question had any significant number of Group X residents, as compared with the local population, the City might not prove its case.

For the sake of argument, let us assume that the City has shown such an impact. The property owner would then offer its justification that, regardless of its effect on any group, it is reasonable to exclude felons for the sake of safety and crime prevention. If the court accepts such a justification, the City then has the burden of showing how the same goals can be achieved with less discriminatory results. The City’s position thus far has been that the property owner should put some time limit on the use of felony convictions rather than a blanket prohibition – but would that solve the disparate impact problem?

Let us assume that in the last 50 years, 50% of felonies were committed by members of Group X, 30% by members of Group Y, and 20% by Group Z. Certainly, members of Group X would be hardest hit by a blanket prohibition against felons. Suppose the City argues that a property owner should only look at crimes committed in the last ten years. What if the statistics are the same and 50% of the crimes committed in the last 10 years were committed by Group X members? What if the statistics were the same for crimes committed in just the last year? If the statistics were basically the same for any given period of time, then the same impact on Group X would exist regardless of the policy in place. If that is true, then the City would not be able to offer “a viable alternative that satisfies the defendant’s policy objectives while reducing the discriminatory impact.” In short, if the City brings a lawsuit based on disparate impact, it has the burden of offering a plan showing that the same objectives of crime reduction can be accomplished in a manner which has a lesser impact on the protected group.

At the present time, HUD has not taken the position that a blanket prohibition against felons violates the Fair Housing Act. In a letter dated June 17, 2011, Sandra B. Henriquez, Assistant Secretary for Public and Indian Housing, discourages such a prohibition but does not state that it constitutes a violation of law. Henriquez states that the Obama administration “believes in the importance of second chances – that people who have paid their debt to society deserve the opportunity to become productive citizens . . .” Her letter to Public Housing directors points out that the only “explicit bans on occupancy based on criminal activity” (in Public Housing) is for persons involved in methamphetamine production on federally assisted housing property and registered sex offenders. “Beyond these restrictions, PHAs have broad discretion to set admission and termination policies” and they may consider evidence of rehabilitation and likelihood of “favorable future conduct.”(Emphasis added.) It is noteworthy that even when addressing Public Housing directors (over whom HUD has more control than conventional landlords) the Assistant Secretary does not say “Thou shalt not discriminate against felons,” nor does she say that such a policy violates the Fair Housing Act.

 

Sources:
Quotes not otherwise attributed are from “Housing Discrimination: Law & Litigation,” by Robert G. Schwemm.
“San Francisco Considers Legal Protection for Criminals,” Claudia Cowan, Fox News, July 22, 2011.

 

Robert J. Wise has been practicing housing law in the Kansas City metropolitan area since 1975. He is a former member of the AAKC Board of Directors, former executive director of the Missouri Apartment Association. He is presently the executive director of Mid-America Crime Free, Inc. and a partner in the law firm of Wise & Anderson, LLC.

]]> https://www.ezlandlordforms.com/articles/news/134/a-brief-overview-of-the-economics-of-real-estate-and-employment/ https://www.ezlandlordforms.com/articles/news/134/a-brief-overview-of-the-economics-of-real-estate-and-employment/ Tue, 06 Sep 2011 10:34:29 GMT It’s easy to understand that unemployed people aren’t buying houses, thus depriving demand within the real estate market. However, the entire cycle is far more pervasive, and merits a closer look.

Economists estimate that America lost between 1.5-2.5 million real estate industry jobs during the housing crash and subsequent Great Recession. At the same time, trillions of dollars in real estate-related wealth disappeared, causing all assets secured by real estate to lose value, causing investment securities to plummet, further layoffs and eventually about 8 million jobs lost.

These unemployed people often stop paying their mortgage, their rent, their auto loans, their credit card bills, etc. Thus, as they start losing their homes to foreclosure and eviction, the supply side of real estate spikes upward, at the same time the demand side is dropping. Further depressing real estate markets is the fact that foreclosed homes sell for 25-40% less than listed homes for sale, because they are generally sold without an opportunity to inspect the interior of the property (for legal reasons).

The unemployed also stop going out to eat, stop shopping at local businesses, stop traveling, and generally withdraw from the overall economy as much as possible in an attempt to save money. This deprives local businesses of revenues, which leads to even more layoffs and even less hiring.

Now, several years later, the unemployed are starting to quit looking for work entirely. Some of these are reluctantly retiring baby boomers who would not have elected to retire for another 5-15 years, while others are returning to school, and still others are simply giving up and going on the proverbial dole. The unemployment rate today is 9.2 percent, down from 9.5% two years ago, which sounds like an improvement, until looking closer at the numbers. Based on population growth, America should have seen 4 million people enter the job market (either employed or looking for employment) in the last two years, but instead 1 million people have actually exited the job market. For the first time in 50 years, the number of people in the labor force has shrunk.

There are other problems associated with prolonged unemployment, aside from the devastating effects it has on the rest of the economy and real estate market. The long-term unemployed are losing job skills and grow less “employable” – less desirable to employers – with each month of unemployment.

On the governmental level, public coffers have been hit hard by high unemployment, low GDP growth rates, a stagnating real estate market and increasing dependence on entitlement programs. Local, state and federal government deficits (and debts) are skyrocketing, hampering their ability to stimulate the economy. It also leads to a strong possibility of rising taxes, which further decreases the amount of capital circulating in the investment engines that power business (and therefore job) growth. The drop in real estate values is a particularly sharp blow to local governments, who collect a major portion of their revenues from real estate taxes.

Finally, credit markets remain tight, because the companies who actually have capital to invest/lend are reluctant to do so, as there are no sectors of the economy that look like sure winners. Real estate markets remain stagnant, so investors are reluctant to put money into mortgage lending, which means it’s hard for homebuyers to qualify, which means fewer people buy houses, which means the market remains soft. Likewise, small businesses are suffering and stock markets around the world have seen more erratic fluctuation in the last three years than ever before, making them uncertain as well. Thus, many of those who have money are simply sitting on it, waiting for more promising investments to present themselves.

In short, the effects of a battered real estate market and industry, high unemployment, broader economic instability, pinched government budgets and tight credit markets are all self-reinforcing, causing a cycle of economic stagnation. One of the few clear conclusions is that a boost in private sector jobs will increase demand for real estate, offering job growth in the drastically tightened real estate and finance industries, which will push the cycle upward instead of downward. Where those private sector jobs will come from, however, remains a mystery.

]]> https://www.ezlandlordforms.com/articles/news/133/flippers-reluctantly-turn-to-leasing-investment-properties/ https://www.ezlandlordforms.com/articles/news/133/flippers-reluctantly-turn-to-leasing-investment-properties/ Fri, 26 Aug 2011 15:55:01 GMT With the real estate sales market floundering, investors who buy old houses and renovate them for resale (“flippers”) are finding themselves unable to resell their investments. Many of these investors are becoming reluctant (or unwilling) landlords, and others are pulling back from the real estate investment game altogether.

A recent study by Campbell/Inside Mortgage Finance found that 48% of investor-purchased properties are being held as rental properties as of July 2011, up from 28% this time last year.

At the same time, the percentage of properties purchased by investors has been dropping for several months, down from 23% in April to 19.6% in July. This trend is in some ways surprising, as it’s usually investors and speculators who start buying up discounted investments of any kind, when they appear to be at the bottom of a down-cycle.

The problem is that many investors are either unwilling or unable to hold real estate long-term. Either they do not have the borrowing power for a long-term mortgage, or the rental income potential of the property is not sufficient to justify leasing, or the investor is simply not interested in property management.

Contributing to the weak demand among buyers are several factors, most of which are well-publicized. Lending has tightened up, leaving many would-be buyers unable to qualify for a mortgage. Many Americans are opting to lease instead of buy, which has manifested itself in the declining homeownership rate within the US. More people are cohabitating, and, of course, the unemployment rate remains painfully high, cutting a deep gash in the pool of would-be homebuyers.

With the buying demand low among homeowners, a feedback loop is created, where investors are showing less demand and involvement in the real estate market, because they aren’t confident that they can resell. In many cities, more than half of real estate transactions are made by all-cash investors, and a drop in demand among them could spell trouble if they decide to put their cash elsewhere.

The federal government is even changing its approach to housing inventory. Between Fannie Mae, Freddie Mac, and the FHA, Uncle Sam owns roughly 250,000 properties, which until now it has been trying to sell individually. Now, the Treasury Department and HUD are looking for ways to either lease many of these properties (by hiring private property management companies) or sell off bulk inventory to large-scale investment firms.

The market is swinging towards more renters, more rental properties and, inevitably, more landlords. With demand shifting away from home-buying and towards leasing, many flippers will need to reevaluate their business model and consider buying with the intent to lease, instead of reselling for immediate liquidation.

]]> https://www.ezlandlordforms.com/articles/news/132/rental-industry-gaining-momentum-nationwide/ https://www.ezlandlordforms.com/articles/news/132/rental-industry-gaining-momentum-nationwide/ Tue, 09 Aug 2011 12:35:22 GMT Home prices and sales may be flat, but the rental industry is booming. The percentage of renters is on the rise, the number of households are increasing and more Americans are downsizing, all of which point in a single direction: rents are on the rise.

At the peak of the housing boom, homeownership in America reached an all-time high; 69.2%. Today that number has plummeted to fewer than 67%, which may not sound like a huge drop, but that represents roughly 3 million households that were owner-occupied and are now tenant-occupied. The high foreclosure rate has accelerated the transition towards leasing, but there are a myriad of other trends coalescing to boost demand for rental housing.

For the first time in forty years, demand has been shifting towards smaller dwellings; coinciding with a shift in demand towards urban centers. Baby boomers are considering downsizing, moving towards areas with more amenities and Generation Y is just hitting their single, urban-living years. Only the relatively small Generation X is in the buy-a-large-house-in-suburbs, which means the demand for the traditional single-family home with a white picket fence is weak.

The number of households in the U.S. was artificially stifled during the Great Recession, as people took on roommates, moved in with family or remained with their parents longer than they would have otherwise. It’s estimated that 1.2 million young adults moved back with their parents from 2005-2010, which does not include the number of adults who moved in with roommates, or those who would have moved out of their parents’ houses but didn’t because the economy was so bad. Now, however, these artificially joined households are separating, the vast majority starting with a lease agreement.

Rental vacancy rates are sharply on the decline as well. In the first quarter of 2011, rental vacancy rates had dropped to 6.2% according to Reis, Inc. who tracks nationwide residency data. This figure is down sharply from the 8% vacancy rate just one year earlier.

Which, of course, means that rents are on the rise. Reis tracks data for 82 metropolitan areas in America, and of those, 75 experienced increased rents from early 2010 to early 2011. Furthermore, the nationwide average rental amount rose from $967 in early 2010 to $991 in 2011.

Each of these indicators are entire topics in themselves, but the bottom line is that the rental industry is on the rise and most real estate experts agree that its growth will accelerate rapidly over the next three to five years. Apartment building construction is already responding to the growing demand for rental housing, but with so much of the construction industry either out of business or licking their wounds, it’s anticipated that there will be a rental housing shortage in many major cities around the country over the next few years.

]]> https://www.ezlandlordforms.com/articles/news/131/tax-updates-affecting-real-estate-investors-capital-gains-and-1031-exchanges/ https://www.ezlandlordforms.com/articles/news/131/tax-updates-affecting-real-estate-investors-capital-gains-and-1031-exchanges/ Mon, 28 Feb 2011 11:26:35 GMT Nothing is more certain then “death and taxes,” however many investors may not be aware of the new capital gains taxes affecting the real estate industry of 2011 and beyond.

As of January 1, 2011, the previous capital gains tax reduction referred to as the Tax Increase Prevention and Reconciliation Act will no longer be in effect. The tax rate has now reverted from 15 percent to the former 20 percent capital gains tax rate. Investors selling second homes and investment properties, will incur a tax applied to the amount of gain realized if the income reported is over $200,000/$250,000 (filing individually or jointly).

If the first increase doesn’t catch your attention, be aware there is also a second. Beginning in 2013, the national health care reform legislation enacted in March, 2010 imposes another 3.8 percent tax on single filers with incomes over $200,000 and married taxpayers with incomes over $250,000. The net effect of both equals 23.8 percent, the highest rate for long-term capital gains tax since 1997.

The economic impact of these two tax increases may affect the very investors who help promote economic growth. However, there is a solution for smart investors, in the form of a 1031 tax-deferred exchange.

The Internal Revenue Service (IRS) on April 25, 1991 released a program: The Deferred Exchange Regulation-Reg 1.1031(k)-1, branded the IRC 1031 Exchange. What this means to a real estate investor is they can defer (put-off) capital gains taxes that come about from the sale of an investment property as long as the proceeds from that sale are used to buy one or more investment properties within 180 days of the close of the sale. All purchases and sales must adhere to the specifications listed in the IRC 1031 Exchange guidelines. It is important to know that both properties must be held for use in a trade, business or for investment real estate. Properties used primarily for personal use, like a primary residence, second home or vacation home, do not qualify for the deferment.

Please note that the above description of a 1031 tax-deferred exchange is a brief overview, and serves only as an introduction. It’s highly recommended that all real estate investors consult an real estate accounting or tax law expert, and review the IRS's overview of 1031 Exchanges, as 1031 exchanges are extremely complex. Finally, for more information about tax deductions for real estate investors, please see our article on Landlord Tax Strategies.


The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.
]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/130/michigan-landlord-tenant-act-tenants-subjected-to-violence/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/130/michigan-landlord-tenant-act-tenants-subjected-to-violence/ Thu, 17 Feb 2011 12:52:05 GMT The Michigan Landlord Tenant Relationship Act (“LTRA”) regulates rental agreements between landlords and tenants of residential property. In 2010, this act was amended to include a clause that releases tenants from their payment obligations when the tenant has reasonable apprehension of present danger arising from domestic violence, sexual assault, or stalking. Please read the following article written by Attorney Stuart M. Collis, Esq. for further clarification.

In order to be released from their leases, the tenant must submit written notice via certified mail of his/her intent to seek a release and provide written documentation demonstrating that the tenant has reasonable apprehension of present danger to the tenant himself or to his/her child.

Acceptable forms of written documentation demonstrating reasonable apprehension include:
• a copy of a valid personal protection order or an order removing an abusive person from a home,
• a valid probation order, conditional release order, or parole order that is still in effect ordering that the released person is to have no contact with the tenant or child,
• a written police report that has resulted in charges being filed with the prosecuting attorney that has jurisdiction over the matter,
• a written report from a qualified third party, such as a professional services provider, clinic, or protection agency, testifying to the factual basis for the tenant’s apprehension.


Landlords must be aware of the other burdens this amendment thrusts upon them. First, landlords are required to provide notice of this release clause to their tenants, either directly in their lease agreements or through personal notification, or indirectly through postings in their management office. Second, this release clause does not apply to prepaid rent, or release other tenants who are parties to the rental agreement. Third, the release is only effective upon the tenant vacating the premises, and is only applicable to leases entered into, renewed or renegotiated after October 5, 2010. Fourth, the tenant is released from his/her obligation to pay no later than the first day of the second month that rent is due after notice is given. Finally, to ensure the safety of tenants wishing to move an account of their reasonable apprehension of danger, landlords must not intentionally reveal forwarding addresses or documentation submitted by the tenant under this provision to the alleged aggressor.

Importantly, this amendment does not prevent the landlord from withholding the tenant’s security deposit. Landlords who are concerned with the implications of this law should consult an attorney.

Attorney Stuart M. Collis, Esq. has been providing professional legal services to lenders, landlords, developers, investors, managers and other business professionals for over 15 years.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/educational/5/129/accepting-electronic-rent-payments/ https://www.ezlandlordforms.com/articles/educational/5/129/accepting-electronic-rent-payments/ Thu, 20 Jan 2011 10:13:45 GMT A commonly asked question by both new and seasoned landlords is “How should I accept rental payments?” The days of writing a check have become outdated when there are many new options to take into account. Please see the pros and cons highlighted below by attorney Ronald L. Dunn, Esq.

Many landlords are arranging direct rent deposits by their tenants. This is accomplished either by arranging (1) automatic withdrawals from tenants’ bank accounts or (2) direct deposit by tenants into landlords’ accounts. This can be an invaluable strategy, especially for out-of-town landlords who have no local property management. They are not without risks, however.

Automatic Withdrawals
With automatic withdrawals, there is little risk to the landlord, other than the tenant having insufficient funds in his account or insufficient credit on his credit card. The convenience and reduction in administrative costs make this option especially attractive. Landlords should double-check their bank’s fee structure for making automated withdrawals, particularly in the event of insufficient funds or if a credit card is involved.

Direct Deposits
When a landlord gives her tenant her banking information, however, there are significant risks. First, a person she doesn’t know and has no reason to trust has access to her banking information. With the rampant fraud in today’s digital age, extraordinary care should be taken to limit tenants’ actual access. Check with your bank on how best to keep your banking information secure.

Second, and perhaps most significant, is the problem of the defaulting tenant. If the tenant is in arrears, he controls when he pays and how much he pays. If the landlord has commenced eviction, some states will invalidate the eviction upon receipt of any rent – even partial rent. Having to restart your eviction upon receipt of a direct deposit of $20 can be costly and frustrating; check with your attorney to see if this applies in your state, county and city.

You can address this problem by careful drafting: add a fee to your leases for creating and serving any eviction notices. Paying a fee may not be sufficient disincentive to the crafty tenant, however.

PayPal Rent Payments
One of the pioneers of web-based electronic payments, PayPal remains secure and trusted to this day. Additionally, landlords do not need to disclose their banking details to their tenants in order to receive rent payments through PayPal, they need only give the tenants their email address. PayPal is available to anyone with a checking account and an internet connection, and offers instant electronic payments over the internet.

That said, PayPal has its own drawbacks. First, users need to select that the payment is "personal" in order to avoid a transaction fee. Second, there is usually a delay when PayPal users go to transfer funds from their PayPal account to their checking or savings account. Finally, just like direct deposits, in giving the tenant control over when and how much rent payment they send, landlords and property managers risk invalidating a pending eviction case, although because the rental payment can be rejected and refunded in PayPal, it's less clear whether the payment has been "accepted" for legal purposes.

Accounting
There may be local legal requirements for segregating and accounting for rent received. There are some states, for example, where rents and security deposits cannot even be held in the same account. Be sure to thoroughly review our State Assist information when creating lease agreements, and consult an attorney to determine whether you need to keep a separate account for direct deposit or automatic withdrawal rent collection.

Direct Deposit/Automatic Withdrawal Exclusively
There are industries where automatic withdrawal from checking or credit card are the only option for tenants: storage units, for example. There are, however, different issues in play when it comes to residential housing. Local or state government may and sometimes do enact restrictions on limiting how a tenant may pay for housing. Check with your attorney to determine what the rules are where you own rental real estate.

The easy availability and convenience of internet banking, electronic transfers, automatic withdrawal and the like open up new avenues to landlords for streamlining their rent collection and accounting. While there are risks, those risks can be minimized by careful planning and understanding of state (and local) laws.

Attorney Ronald L. Dunn, Esq. has been providing professional legal services to lenders, landlords, developers, investors, managers and other business professionals for over 25 years.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.
]]> https://www.ezlandlordforms.com/articles/news/128/lessons-from-2010-real-estate-trends-to-watch-in-2011/ https://www.ezlandlordforms.com/articles/news/128/lessons-from-2010-real-estate-trends-to-watch-in-2011/ Wed, 15 Dec 2010 17:02:30 GMT
Unemployment
The unemployment rate, and particularly private-sector jobs, can’t be overstated as the most critical predictor of recovery, both generally and for the real estate sector. Unemployment is what’s fueling the foreclosure spike (and subsequent value drain), it’s what’s causing people to default on their lease agreements (and subsequent vacancy problems), and is generally what’s preventing people from participating in the overall economy. Once job growth is back on track, the foreclosure boom will turn around, and the rental industry will stabilize.

Supply: Shadow Inventory
On the supply side, prices are further driven down by foreclosures, in the form of a massive shadow inventory (properties scheduled for foreclosure or taken back by the lender, but not yet listed for sale, and therefore not included in the normal real estate inventory statistics). Currently, there are 2.1 million residential properties in shadow inventory, or an eight month supply, which has to be tacked onto the normal supply of housing available for sale (which is 4.2 million homes, or a fifteen month supply). Real estate markets nationwide (including lease markets) aren’t going to see substantial value growth until this shadow inventory dissipates, and that will take several years, especially given the current long wait times for foreclosures caused by lender documentation issues. As a final note, it’s worth mentioning that Fitch Ratings currently places the number of vacant residential dwellings in the United States at 14.4 million, and that does not include the shadow inventory described above.

Demand: From Deeds to Leases
Without the artificial boost in real estate demand caused by the tax credit (R.I.P. June, 2010), demand has dropped off, causing real estate sales and prices to languish. But even taking a long-term view, homeownership rates are dropping, for reasons ranging from the high unemployment and foreclosure rates, to household consolidations, to the tightened credit market. The all-time peak for homeownership in America was reached in 2004, at a rate of 69.2%. This number is now down to 66.9% and still dropping, which means tens of millions of Americans who were in owner-occupied dwellings are now signing a lease agreement instead. In a study by Trulia a few months ago, over 27% of Americans report that they have no interest in buying a home in their lifetime, and fewer Americans believe that homeownership has any relation to the American dream (72%, down from 77% only six months earlier). This is actually good news for landlords and real estate investors in a position to buy, as it will create a more stable tenant population, and a survey by Fannie Mae in late 2010 showed that the average predicted change in lease pricing over the next year is a 2.8% increase.

Conclusions
A year ago, there was simultaneously more hope for a healthy recovery, and more fear that we might slip into a double dip recession. It’s now far more likely that neither will occur, and that we’re in for a long, painstakingly slow recovery, which will lurch and splutter along over the next three to five years. Home prices are still dropping in most cities, and while the decline is leveling off, we are still down by over 25% from 2006 prices (comparable to the home value loss in the Great Depression, which was 25.9% from peak to valley). Here are a few take-home points from the trends in 2010, which are expected to continue through 2011:

• Now is a good time to buy real estate investment properties, but only if you can profitably hold the property as a rental unit for several years to come.
• Most real estate markets will continue to be soft through 2011. Exceptions will be cities with job growth.
• Real estate investors should be careful not to over-improve rental properties in lower-income areas, as tightened lending guidelines and diminishing demand for homeownership will prevent investors from being able to “retail” these homes to first-time homebuyers.
• Beware of rising bed bug infestations and litigation, and be pro-active in establishing a bed bugs policy.
• Protect your cash cushion: stay liquid, as lease default rates are up and vacancies are prevalent, and selling properties for quick cash may not be an option.

Stay profitable, stay liquid, and stay in business for another year!

Aside from being our Marketing VP, Brian Davis is a real estate investor and landlord, and tracks nationwide real estate market trends, and has made numerous appearances on news radio shows and websites. Feel free to send an email to him at gbdavis (at) ezlandlordforms.com, ATTN: Brian Davis, with any comments, questions, or interest in a guest blog post or article.]]> https://www.ezlandlordforms.com/articles/educational/5/126/bed-bugs-property-management-and-landlord-liability/ https://www.ezlandlordforms.com/articles/educational/5/126/bed-bugs-property-management-and-landlord-liability/ Fri, 17 Sep 2010 09:54:39 GMT Most of us heard the nursery rhyme warning “don’t let the bed bugs bite,” but grew up without even knowing what this mythical bed bug was. Unfortunately, bed bugs have made a rampant return, and are proving to be a major nuisance in many urban areas.

Bed bugs are reddish brown in color, have an oval shape, and are about a quarter inch long. They like to live within five feet of their host, which means mattresses and clutter around the bed are the most likely place for them to gather and breed. While they don’t breed nearly as fast as some other parasites, they are extremely resilient, resisting both chemical treatments and starvation (they can live up to eighteen months without feeding).

One of the few consolations is that bed bugs do not carry any known pathogens or diseases. That said, they can cost landlords and property management firms in lost rent, battered reputations, and lawsuits, despite the fact that it is usually the tenants who bring the bed bugs into apartments and rental homes.

As a landlord or property management firm, you’ll need a comprehensive bed bug policy to prevent infestations, eradicate colonies if they arise, and prevent lawsuits and other risks caused by bed bugs.

Step 1: Before Signing a Lease Agreement with New Tenants
When your rental unit is vacant, have it inspected and certified bed bug-free by a licensed pest control company. Train your staff to recognize bed bugs and signs of their infestation, so that you are better equipped to catch an infestation early on, when it’s still relatively easy to treat.

Step 2: The Lease Agreement Itself
Where legal (more on this below), your lease agreement should contain language that makes it clear that the tenant is responsible for paying all pest control services necessary, including bed bugs treatment. It should also require tenants to report all pest sightings – including bed bugs – to the landlord or property management immediately. It’s recommended that the lease agreement require synthetic encasements around the tenants’ mattress and box spring, to prevent bed bugs from creating a home there, and be sure to prohibit tenants from obtaining furniture from dumpsters or other unknown sources. There are some states where the landlord or property management company are automatically responsible for bed bug treatment and damages, such as New Jersey, Maine, and Massachusetts, so be sure your lease agreement is state-specific and complies with all state laws regarding bed bugs and pest control.

Step 3: Include a Bed Bug Lease Addendum
Tenants should be given, upon signing the lease agreement, a copy of the bed bug certification, and should sign a bed bug lease addendum acknowledging both receipt of the certification and that the rental unit was bed bug-free upon move-in. Specify that the tenant is contractually obligated to allow entry to pest control exterminators to treat a bed bug infestation if it arises, and to cooperate fully in eradicating any bed bug infestations. Additionally, indicate that failure to report bed bugs or to cooperate in their treatment is a breach of the lease agreement, and is cause for lease termination.

Step 4: Include Bed Bug Information Along with your Lease Agreement
Educate tenants about what bed bugs look like, how to identify signs of their presence, where they like to live, how to prevent their entry to the rental unit, and that reducing clutter in the apartment reduces the number of places they can live. It’s also worth mentioning that often tenant furniture must be burned or otherwise destroyed once an infestation occurs – an outcome that most tenants will go to lengths to avoid.

Step 5: Bed Bug Treatment
First of all, the earlier you treat a bed bug infestation, the easier it is to contain and eradicate. Contact your pest control company immediately upon evidence of an infestation. Second, inform tenants not to move any of their furniture or belongings before the pest control exterminators arrive – moving belongings can spread the infestation.

The items that can be washed, such as linens, blankets, sofa covers, and clothes, should be washed in the hottest possible water, with detergent, and dried with high heat. Furniture may need to be destroyed, depending on the recommendation of the pest control company.

The pest control company has a variety of treatments available at their disposal, including the use of steam, extreme heat or cold, chemical carpet treatments, and fumigation. These treatments should only be performed by a licensed professional.

Liability
The legal liability for bed bugs is primarily legislated on the state and local levels, so it’s important to check the laws in your area. That said, landlords and property management companies can minimize the risk of bed bugs, and their legal liability, by following the directions above, and therefore creating a paper trail of their diligence. A proper lease agreement that outlines the tenant’s responsibilities is incredibly valuable, and can prevent many disputes before they devolve into litigation. By adhering to the guidelines above, you can document your diligence, and can both prevent bed bug infestations before they happen, and catch infestations early before they become an expensive problem.

The most important thing that you, as a landlord or property manager, can do is to be proactive in preventing bed bug infestations and litigation. Establish a relationship with a local pest control company, have your vacant rental units certified, establish a bed bug policy that includes your lease agreement and addendums and/or disclosures, and act as quickly as possible when treating bed bugs, and you’ll avoid the worst of the bed bug-related headaches.
Resources
Bed Bug Legal Summary
Maine Bed Bug Legislation

]]> https://www.ezlandlordforms.com/articles/educational/5/124/an-overview-the-protecting-tenants-at-foreclosure-act/ https://www.ezlandlordforms.com/articles/educational/5/124/an-overview-the-protecting-tenants-at-foreclosure-act/ Thu, 15 Jul 2010 11:29:06 GMT Foreclosure rates have continued to rise across the country, including rental properties with an active lease agreement in place. To protect tenants from short-notice evictions due to a foreclosure, The Protecting Tenants at Foreclosure Act took effect on May 20, 2009, and will expire on December 31, 2012 (amendment: the sunset was extended to December 31, 2014 by the Dodd-Frank Wall Street Reform & Consumer Proction Act). The tenant protection provisions apply to any foreclosure/federally related mortgage loan or on any dwelling or residential real property.

Here are some answers, provided by Alisa M. Levin, Esq. to some frequently asked questions regarding the Protecting Tenants from Foreclosure Act.

Is it true that the fundamental provision of the bill requires that most foreclosure purchasers of properties with active leases must give tenants at least 90 days notice before servicing eviction notices and filing for eviction in rent court?
Yes. The Act provides that any immediate successor in interest (meaning the person who owns it after the landlord – the bank or another buyer) must deliver a notice to vacate to any tenant giving 90 days’ notice. The new owner can terminate a lease, or honor it, but if they terminate the lease then they must provide the 90-day notice.

When the lease agreement is signed before the foreclosing loan was originated, i.e. when the loan is younger than the lease, is it true that the lease survives the foreclosure and the foreclosure purchaser must honor the lease until the end of the term?
Not necessarily. The Act does not differentiate between leases that existed before the loan originated and after. The Act provides that the preexisting tenant’s lease must be honored until the end of the term, UNLESS the new owner plans to occupy the property as his/her primary residence, then in that case, the new owner must provide the 90-day notice and the tenant can be ousted. The catch-point in the Act appears to be whether the next owner is a bank or another party intending to use the property as a primary residence. This implies that a tenant in an eviction proceeding MIGHT have a defense; if it can be proven that the successor-in-interest to the mortgagor (landlord) is not a purchaser occupying the property as a primary residence.

What key aspects should landlords be aware of?
Landlords should be aware of the main 90-day notice requirement. If the successor owner is not going to use the property as a primary residence, then the tenant’s lease must be honored. If a landlord is in a short-sale or foreclosure situation and their tenant asks them questions, it’s important not to promise that the tenant can definitely live out their lease term. The landlord should decline to answer those questions specifically and should state that there may be a situation where the tenant has to leave, but in no case will the tenant be asked to leave without notice.

Does the new eviction notice requirements under the Act exclude certain rental situations?
Yes, it appears to exclude situations where the landlord/tenant relationship is between family members or relatives or where the rent is substantially lower than market value for the property (which is likely evaluated on a case-by-case basis).

It remains to be seen whether the bill has any impact on home values, due to buyers factoring in the additional cost burden of purchasing foreclosures with active lease agreement contracts, but time will tell. Whether you're a landlord or tenant, it's important to be aware of this new bill and what you can expect from it.

The Protecting Tenants at Foreclosure Act is a federal law. We advise verifying your states regulations with regards to this subject matter.
]]> https://www.ezlandlordforms.com/articles/educational/5/123/pool-safety-stay-informed-and-protect-your-investment/ https://www.ezlandlordforms.com/articles/educational/5/123/pool-safety-stay-informed-and-protect-your-investment/ Thu, 24 Jun 2010 10:44:20 GMT

Pools can be an enticing amenity for many tenants, and can raise the value of a rental property considerably, but they also come with liability for the landlord. If you own a rental property with a pool or spa/hot tub, you have a legal responsibility to make sure it is safely maintained.
The extent of your liability depends on your relationship to the injured swimmer. Generally, there are three categories with regards to liability:

• Invitee
• Licensee
• Trespasser

An invitee is a guest who is allowed to enter the pool premises for social reasons, such as a tenant using the pool or a party guest who swims in a residential pool at a social gathering. A licensee is a person who is allowed to enter the pool premises for business reasons, such as to service the pool. A trespasser is a person who does not have your permission to enter the pool premises, for example, a person who jumps the fence to swim in the pool without the owner's knowledge or consent.
You owe a high degree of care to the invitee and the licensee, and less or no duty of care to the trespasser. If you own a pool, ensure the pool is safely maintained and remember to follow the safety regulations to avoid liability.
Suppose that your rental has a pool or hot tub that doesn’t have a fence around it or the fence has a broken gate, allowing children to gain access. If a child drowns because of gained access by way of a broken gate or improperly installed fence, the landlord may be held liable. To ensure there are no holes large enough for small children to crawl through or gain access to the pool or Jacuzzi the landlord or his or her agents must make periodic inspections of the fencing. Additionally, periodic inspections must be made to ensure self-closing and self-latching gates are in proper working order.
What is a landlord’s liability and responsibility if a tenant has a pool with permission of landlord? Liability is a very broad term. However, if you are wondering if some responsibility may be placed on you due to the tenant having a pool on the property, the answer (depending on the specific circumstance) is yes.
It’s also important to know that on December 19, 2007, the President signed into law the Virginia Graeme Baker Pool and Spa Safety Act . The Act specifies that on or after December 19, 2008, swimming pool and spa drain covers available for purchase in the United States must meet specific performance requirements.
Along with federal laws, there are state and local pool safety laws that apply to both private and public pools. These laws may include provisions requiring child-resistant fencing, pool alarms, anti-entrapment devices, warning signs, etc. These laws vary by state and locality; therefore, it is extremely important to check with your particular jurisdiction to verify you are in compliance.
In addition to taking every possible safety measure, pool owners also need to ensure that they are adequately covered against any potential risks. Pools are considered an “attractive nuisance” and it may be advisable to purchase additional liability insurance. Check with your insurance agent to find out what safety and protective equipment is required by your policy. Also ask whether discounts are available if you install additional types of equipment, such as pool alarms.
Consider including our Pool/Hot Tub Addendum with your lease agreement, which can be directly edited to reflect the particulars of your rental property. This addendum outlines the tenant’s pool cleaning and maintenance responsibilities, and sets forth safety guidelines and limits the property owner’s liability in the case of an injury sustained in the pool or hot tub.
If you have a pool, you have an obligation, stay informed and protect your investment.

]]> https://www.ezlandlordforms.com/articles/educational/2/121/the-real-estate-investor-s-guide-to-improving-credit-scores/ https://www.ezlandlordforms.com/articles/educational/2/121/the-real-estate-investor-s-guide-to-improving-credit-scores/ Fri, 14 May 2010 13:39:54 GMT As a real estate investor, I realize how important credit is to my career… do you? Poor credit scores often mean the difference between having to make a down payment of up to 35%, and a down payment of 10%. Or the difference between a 14% interest rate and a 6% interest rate. Or the difference between paying 4 points, and paying none. If those examples sound overstated, they’re not – hard money lenders (the only resort for many real estate investors with bad credit) routinely charge interest rates in the mid-teens, 4-6 points, and only lend at a 65% LTV (loan-to-value) ratio.

Don’t want this to be you? Here’s a brief overview of how credit scores are calculated, and how you can increase your scores.

Credit scores are determined by tabulating a wide range of financial information, including some basics that you’re probably already familiar with, and some less understood factors as well. One of the most commonly understood factors is payment history – how many on-time payments you’ve made, versus how many late payments. Not all monthly bills are reported to the credit bureaus; utility bills, services such as mobile phone bills, and the like are not (unless you rack up a large overdue balance, in which case they may send your account to a collection agency). Debt payments, on the other hand, almost always report – loans such as mortgages, auto loans, and credit card bills being prime examples. For this simple reason, these bills that are reported to the credit bureaus should take first priority, if you have to choose which bills to pay first.

Another well-understood factor in the calculation of credit scores is the appearance of negative public records, such as bankruptcies, foreclosures and judgments.  Collection accounts are also a painful hit on your credit score, so resolve any unpaid balances before they’re sent to a collection agency.

There are some aspects of credit scoring that are less understood, such as the average age of your credit account. Credit bureaus prefer to see older (but still active) accounts, with a long-standing history of timely payments, and they will calculate the average age of all of your open accounts. It’s tempting to open a new credit card for every store you like to shop at, but don’t do it – stick with one or two credit cards, preferably ones you’ve already had for a long time.

Another less-understood factor that credit bureaus use to determine your score is the ratio of how much credit you use, versus how much you have available. They love to see people who have been granted high credit limits, but who don’t actually use them, and simply pay off their revolving debt each month. But it’s not about the amount of your credit limit, it’s about the percentage of your available credit limit that you use. It’s better to have a $1,000 credit limit, and only have a balance of $50, than to have a $50,000 credit limit and a balance of $47,000. Likewise, credit bureaus love to see car loans that you’ve paid down substantially, or mortgages you’ve had for ten years and continue to pay down on time, lowering the balance compared to the “credit limit” of the original balance.

We suggest obtaining a copy of your credit score every 4-5 months. Unfortunately, mistakes on credit reports are quite common due to misreporting or credit bureau errors. In order for you to become aware of such errors, you must regularly review your credit report. Correcting these mistakes is extremely important and a fast way to improve your score. That said, having your credit report pulled too often will have a negative effect on your credit score. Too much credit report activity paints the picture that you are desperately searching for credit wherever you can.

Improving your credit score should be a top priority. The number of real estate investments you can make, or even “how much house” you can buy, is directly impacted by your credit scores. If you have $20,000 saved to put down, and can afford $2,000/month on payments, that will go a lot further if your loan terms are 6% interest and a 10% down payment, instead of 10% interest and a 30% down payment.
]]> https://www.ezlandlordforms.com/articles/educational/5/119/collecting-rent-early-and-other-tips-for-peak-performance/ https://www.ezlandlordforms.com/articles/educational/5/119/collecting-rent-early-and-other-tips-for-peak-performance/ Thu, 06 May 2010 09:18:49 GMT Can you imagine tenants consistently paying on time or possibly even early? Amazing concept, isn't it. While many tenants initially perform well, over time many become lackadaisical with their rental payments, and their adherence to the rental agreement. Try out these five great tips that will help ensure your tenants (and your rental investments) stay in great condition.

Tip 1: Bonus Offer for Early Rental Payments
Who doesn't love a bargain, or a great sale? Offering an incentive for advance rental payments will encourage your tenants to pay their rent early. It could be a $50 break on rent, a discount on the following month's rent, a credit towards their utility bill, or a gift card to Best Buy! Incentives are the way to go and more often than not ensure landlords timely payments.

Tip 2: Late Payment Penalties
Positive reinforcement works, right? Well, so does negative reinforcement! We strongly encourage your rental agreement to include a late payment penalty. Still, the ultimate responsibility for enforcing timely payments is up to you. Filing for eviction over a $40 late fee may seem extreme, but it will send a strong message, and you probably will not have the same problem again.

Tip 3: Don’t Accept Rental Agreement Violations
Being a landlord is being in business, and businesses do not simply allow their clients to break their contracts. For example, prohibits tenants from keeping pets, but you discover the tenant has a mastiff, it’s time for a swift and effective intervention. If you send your tenant a notice informing them that they must cure or vacate, followed by an eviction complaint, you put yourself in an excellent negotiating position. From there, you may decide to let them keep the pet, but only if they pay an additional monthly fee, or put down an additional deposit, etc. However, it’s critical that you send an unambiguous message that you will not tolerate any violation of your rental agreement.

Tip 4: Rental Inspections Are Essential
We suggest checking on your rental properties as often as you can, keeping an eye on how your tenants are treating your investment and verifying there are no rental violations. Once again, this sends a message that you are a serious landlord, and that the rental property is a priority for you. This may also encourage your tenants to keep the property clean.

Tip 5: Report Rental Payments to the Credit Bureaus
Credit is critically important in today’s society, and many tenants appreciate this, going to great lengths to protect their credit ratings. People are far more likely to pay bills on time when they know the payments are being reported to credit bureaus, so give your tenants a strong incentive to actually make those payments on time, or even early.

If you want your tenants to perform and your rental property to yield the maximum possible return, you must be aggressive in managing that investment: be proactive, be responsive, and above all, enforce the rules of your rental agreement!
 
]]> https://www.ezlandlordforms.com/articles/educational/3/118/top-5-new-landlord-mistakes-to-avoid/ https://www.ezlandlordforms.com/articles/educational/3/118/top-5-new-landlord-mistakes-to-avoid/ Mon, 03 May 2010 11:48:36 GMT What could be better than earning money each month while someone else pays your mortgage? Being a landlord can be a dream come true for new real estate investors, and with some work and expertise, can become reality. Below are our top five rookie landlord mistakes, and by avoiding these you will be on your way towards a successful career in real estate.

New Landlord Mistake 1: Over-Leveraged, Under-Capitalized
Borrowing as much money as possible when buying or refinancing rental properties may seem like a great idea, but it is all too easy to leverage yourself out of your monthly cash flow. This means you will be in the red as soon as you have a vacancy, or unexpected property repairs, or unpaid rent, or a lawsuit, or a bed bug infestation occurs, or any of the limitless landlord problems that arise. By keeping predictable monthly costs low, and a healthy cash cushion on hand for unexpected expenses, landlords will profit most months and will be prepared for the lean months. At the end of the year, you should show a profit if you keep your predictable monthly expenses (mortgage, taxes, and insurance) at no more than 50% of your month rent. 

New Landlord Mistake 2: Using a Generic Rental Agreement
Using a generic rental agreement can leave landlords open to lawsuits, unenforceable leases and worse. Many states have special language that must be included within the rental agreement, or state-specific disclosures that must be attached to the lease, and there are even federal lead paint pamphlets that often must be included. Additionally, states place limits on how much a landlord may charge for security deposits, how many days late the rent must be before a late fee can be charged, and countless other restrictions that landlords must know. We suggest either hiring a landlord-tenant attorney or using a credible online rental forms service that helps you through the process of creating a rental agreement for your state.

New Landlord Mistake 3: Failing to Properly Screen Tenants
When it comes to locating tenants, there can be a lot of bad apples out there, particularly when screening for lower-income rental properties. People tend to be fundamentally responsible or fundamentally irresponsible with money; in the mortgage industry they say "an applicant's income tells whether they can pay, but their credit history shows whether they will pay." Remember to verify employment, income, tenant credit history, criminal background, and obtain current and past rental history.

New Landlord Mistake 4: Ignoring your Rental Properties
The roof is leaking, the washer is not working, and there are ants in my apartment… easy to procrastinate but harder to ignore long term. Addressing tenant concerns and potential problems with your rental properties quickly and effectively, will save you financially and may prevent any possible law suits. Send a handyman you trust out to the property to take a look, and more often than not, the tenant was merely overreacting… but you still have to check.

New Landlord Mistake 5: Failing to Serve Tenant Violations
While your heartstrings will tug, falling behind on rent is not an option. Patience may be a virtue but real estate investing is a business, and needs to be run like clockwork in order to succeed. Serve the tenants quickly when their rent is not paid, and it will send a strong message.

Follow these steps, and you'll find that your rental business runs smoothly and profitably, with unexpected costs minimized.
]]> https://www.ezlandlordforms.com/articles/educational/1/117/spotting-a-trouble-tenant-safeguarding-your-rental-property/ https://www.ezlandlordforms.com/articles/educational/1/117/spotting-a-trouble-tenant-safeguarding-your-rental-property/ Thu, 29 Apr 2010 10:38:27 GMT From lawsuits, to destroying your property, a terrible tenant is a landlord's worst nightmare. Trouble tenants may even drag out the eviction process indefinitely, all the while living in your rental property free of charge.

So, how can landlords safeguard their rental property? Spotting trouble tenants before they cause headaches is key.

First things first, the rental application. A prospective tenant may cause problems without even being a tenant, by claiming "discrimination" in the rental application process. If the rental application has been submitted, and you feel the prospective tenant may cause problems and in turn deny their application, they can sue you. The prospective tenant may claim you denied their application for reasons unrelated to their ability to pay rent.

Great news, the above mentioned situation can easily be avoided! First, speak with the possible tenant extensively and learn as much as possible, before offering the opportunity to fill out a rental application. Ask a lot of questions regarding current and past employment, their income, rental history (a great indication if they've lived in the same rental for a while), etc. Try to develop a "gut feeling" regarding the kind of person they are; easygoing and friendly, or reactionary? Do not give them a rental application if you feel the slightest hint of a red flag, take their phone number and tell them you'll contact them.

When giving an applicant a rental application, be sure to also include a letter outlining the criteria you'll be using as a deciding factor. Be sure to verify the prospective tenant's income, past and current employment, along with their credit report, criminal background and eviction history. Being informed will help you to make an educated decision.

If a rental application has already been submitted, and you feel you may have a trouble tenant on your hands, mail them a written notice rejecting their rental application. Be sure to keep all written records with regards their rental application; credit report, employment and income history, and any other collected information. This information is priceless if for some reason the person claims discrimination. Your due diligence in evaluating their rental application will come in handy.

If the rental agreement has already been signed, and indications of trouble arise, be sure that all correspondence between you and the tenant is in writing, and keep copies. Documentation will be necessary if you find yourself in court. Depending on your state, send written notice in advance ( 60 days may be necessary) stating that you will not be renewing their rental agreement, and they must vacate by a certain date.

Lastly, don't give tenants an excuse to sue you, tread lightly and be very diligent in offering all disclosures and pamphlets with the rental agreement (such as lead paint disclosures), and be responsive when they contact you about repairs.

Get trouble tenants out quickly, quietly, and try to minimize their damage to your rental property.
]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/116/baltimore-city-carbon-monoxide-detector-requirements/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/116/baltimore-city-carbon-monoxide-detector-requirements/ Tue, 27 Apr 2010 17:34:15 GMT Carbon Monoxide (CO) Alarms

Effective March 1, 2010 in Baltimore City

Building, Fire and Related Codes of Baltimore City §1211 Carbon Monoxide Alarms

Overview – Carbon monoxide is a colorless and odorless gas produced by appliances and other devices that burn gas, petroleum products, wood and other fuels. Carbon monoxide replaces oxygen in your blood — and the consequences can be fatal. Effective March 1, 2010 any property in Baltimore City that has appliances or other devices that burn gas, petroleum products, wood and other fuels must have a working carbon monoxide alarm installed outside of all sleeping areas.


KEY POINTS

Affected properties: All (both rental and owner occupied) dwelling units in Baltimore City that:
1. use gas or fossil-fuel for heating, cooking, hot water or clothes drying;
2. is attached to a garage; or
3. have a gas or wood burning fireplace.

Owner’s Responsibility: The owner must:
1. Provide and install a CO alarm outside all sleeping areas;
2. Test and maintain CO alarm, except in rental property;
3. Provide tenants with written information on alarm testing and maintenance.

Occupant’s responsibility: In rental property the occupant is responsible for testing, maintaining and replacing batteries.

Type of CO Alarm: Any CO alarm that is certified by a nationally recognized testing labratory will meet the requirements of our code. A device that combines a smoke alarm and a CO alarm is acceptable.

New Construction: All new construction of dwelling units must have CO alarms that are wired to an AC primary source of power and have a battery powered back up.


NEW VIOLATIONS:

CO Alarm - Hard Wired, New Construction Only
Sec. 1211.4.1 BFRCBC Carbon Monoxide Alarms not installed properly. Carbon Monoxide Alarms installed in newly constructed dwellings are to be wired to an AC primary source of power and have a battery powered back up. Install proper carbon monoxide alarms.

CO Alarm – Not Installed – Issue to Owner
Sec. 1211.3.3 BFRCBC - Area outside of a sleeping area lacks a carbon monoxide alarm. Install an approved carbon monoxide alarm. This violation must be corrected within five (5) days of receipt of notice.

CO Alarm – Improperly Installed – Issue to Owner
Sec. 1211.3.4 BFRCBC - Carbon monoxide alarm not properly installed. Install an approved carbon monoxide alarm outside of all sleeping areas in the dwelling unit.
Install the carbon monoxide alarm in accordance with: National Fire Protection Association (NFPA) 720, Standard for the Installation of Household Carbon Monoxide
(CO) Warning Equipment in Dwelling Units; or the manufacturer’s recommendations. This violation must be corrected within five (5) days of receipt of notice.

CO Alarm Battery defective - Issue to Occupant
Sec. 1211.3.2 BFRCBC - Carbon Monoxide Alarm not properly maintained. The owner of rental property is responsible for providing a carbon monoxide alarm and the occupants are responsible for testing, maintaining and replacing batteries in the carbon monoxide alarm. Replace batteries.


THE RELEVANT CODES:

Building, Fire and Related Codes of Baltimore City

SECTION 1211 CARBON MONOXIDE ALARMS.

1211.1 Definitions. In this § 1211, the following terms have the meaning indicated.

1211.1.1 Carbon monoxide alarm. “Carbon monoxide alarm” means a device that:
1. senses carbon monoxide,
2. when sensing carbon monoxide, emits a distinct and audible sound, and
3. is certified by a nationally recognized testing laboratory that has been approved by:
a. the Office of the State Fire Marshal, or
b. for dwellings subject to this section but not to State Public Safety Article Title 12 {“Building and Material Codes”}, Subtitle 11 {“Carbon Monoxide Alarms”}, either:
i. the Office of the State Fire Marshall, or
ii. the City Fire Code Official.

1211.1.2 Dwelling. “Dwelling” includes a hotel, motel, boarding house, rooming house, or other building or part of a building that provides living or sleeping facilities for 1 or more individuals.

1211.2 Scope. This § 1211 applies to any dwelling, whether newly constructed or already existing, that:
1. uses gas- or fossil-fuel for heating, cooking, hot water, or clothes-drying operations,
2. is attached to a garage, or
3. has a gas- or wood-burning fireplace.

1211.3 Installation and maintenance required.

1211.3.1 Owners’ responsibilities. In every dwelling subject to this section, the owner of the dwelling must:
1. supply and install 1 or more carbon monoxide alarms,
2. except for alarms in a tenant-occupied dwelling unit, test and maintain these alarms according to their manufacturers’ guidelines, and
3. for alarms in a tenant-occupied dwelling unit, provide written information on alarm testing and maintenance to at least 1 adult occupant of that unit.

1211.3.2 Occupants’ responsibilities. For carbon monoxide alarms located in a tenant-occupied dwelling unit, the tenant must:
1. test and maintain the alarms according to their manufacturers’ guidelines, and
2. replace batteries as needed.

1211.3.3 Required locations. A carbon monoxide alarm must be installed in a central location outside of each sleeping area in the dwelling.

1211.3.4 Method of installation. Installation of an alarm must be by attachment to a wall or ceiling in accordance with:
1. National Fire Protection Association (NFPA) 720, Standard for the Installation of Household Carbon Monoxide (CO)Warning Equipment in Dwelling Units; or
2. the manufacturer’s recommendations.

1211.4 Power source.

1211.4.1 Dwellings subject to State law. For a newly constructed dwelling to which State Public Safety Article Title 12 {“Building and Material Codes”}, Subtitle 11 {“Carbon Monoxide Alarms”} applies, the carbon monoxide alarm must be wired into an alternating current (AC) power line with battery backup.

1211.4.2 Other dwellings. For an existing or newly constructed dwelling to which State Public Safety Article Title 12, Subtitle 11, does not apply, the alarm must be:
1. hardwired into an alternating current (AC) power line, with battery backup,
2. plugged into an electrical outlet not controlled by a switch, with battery backup, or
3. battery-powered.

1211.5 Light signal for hearing impaired. The owner of a rental unit must provide a carbon monoxide alarm that is designed (and has been tested and certified by an approved testing laboratory) to alert persons with hearing impairments, if the tenancy is occupied by a person who is hearing impaired and the tenant has asked for the alarm in writing by certified or registered mail.

1211.6 Combined CO and smoke alarms. A carbon monoxide alarm may be combined\ with a smoke alarm if the combined device complies with:
1. all state and local laws that, at the time of installation, govern these devices, and
2. Underwriters Laboratories (UL) standards 217 and 2034.

1211.7 Tampering, etc., prohibited. Except as needed for repair or routine maintenance, no person may:
1. remove or disconnect a required carbon monoxide alarm,
2. remove batteries from a required carbon monoxide alarm, or
3. in any way, render a required carbon monoxide alarm inoperable.

(Ord. 08-059; Ord. 09-218.) MD Ann. Code - Pubic Safety § 12-1102. Scope.
This subtitle only applies to a dwelling that:
(1) relies on the combustion of a fossil fuel for heat, ventilation, hot water, or clothes dryer operation; and
(2) is a newly constructed dwelling for which a building permit is issued on or after January 1, 2008.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/115/virginia-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/115/virginia-landlord-tenant-law-and-regulations/ Thu, 22 Apr 2010 12:10:45 GMT

IMPORTANT: There are properties that are exempt from the guidelines listed in the Virginia Residential Landlord Tenant Act (VRLTA). These are all listed in Section § 55-248.5. For instance, some of these exemptions include single-family rental houses where the landlord owns and rents ten or fewer such houses.

 

May I charge an application fee?
The landlord may charge an application fee. This fee may be no more than $50. If the application fee was made for a rental property in public housing contingent to regulation by the Department of Housing and Urban Development, then the fee may be no more than $32. If the applicant does not rent the unit, the landlord shall refund the fee within twenty days of rejection or tenant’s failure to rent the unit. Although, the landlord must refund the application fee within 10 days, if the deposit was made by cashier's check, cash, certified check, or postal money order.

How much can I charge for rent?
The General Assembly of Virginia has declared that federal rent control is no longer necessary. However, there are areas where subsidized and low-income housing is still in place, but no rent control.

May I accept Prepaid Rent?
If agreed to, by both landlord and tenant, prepaid rent may be accepted. Any prepaid rent shall be placed into a federally insured depository escrow account in Virginia. It must remain in the account until the rent becomes due. Unless the landlord has otherwise become entitled to receive any portion of the prepaid rent, it shall not be removed from the escrow account.

May I charge a late fee?
Assessed fees should be reasonably related to the expenses the landlord incurs as a result of a late payment.

May I charge a returned payment fee?
The processing fee for a returned check or payment shall not exceed $50 and must be specified in the rental agreement.

Is there a limit to the amount I may collect for a security deposit?
The security deposit may not exceed two months’ periodic rent.

After my tenant has moved, how long do I have to send the security deposit back?
A landlord is required to either hand deliver or mail the security deposit return, along with a written statement listing any deductions, to the tenant, at their last known address, within 45 days after termination. Electronic delivery of notice is accepted if stated in the lease agreement.

If stated in a termination notice, vacating notice, or a separate written notice abiding by chapter 596 of the Code of Virginia, the landlord may deduct a portion of the security deposit to substitute for an amount of the balance due on sewer, water, or any other utility bill that is the responsibility of the tenant. The landlord must provide the tenant with a written confirmation within 10 days, accompanying payment of any other balances due to the tenant.

What are the rules for ending a Lease Agreement?
Week-to-Week: The landlord or the tenant may terminate a tenancy by serving a written notice to the other 7 days prior to the next rental due date.
Month-to-Month: A month to month tenancy may be terminated by giving a written notice to either the landlord or tenant at least 30 days before the next rent is due. A shorter or longer notice period MAY be permitted as long as it is outlined in the written lease agreement and signed by both parties.
Year to Year: The landlord or tenant may terminate a tenancy by either party giving 3 month's notice, in writing, prior to the end of any year of the tenancy.
Fixed-Term: As specified in the Lease Agreement.

PLEASE NOTE: In a building of at least four residential units, the lease may be terminated by the landlord for rehabilitation or change in use of the building, by giving 120 days written notice, except in the case of a month to month agreement, see above.

What must I do to inspect my property? Do I have to notify the tenant?
In the case of an emergency or when it is unrealistic to do so, the landlord must give the tenant 24 hour notice of intent, to enter the rental property. The tenant may not unreasonably refuse entry to the landlord for necessary or prearranged repairs, services, or showings.

What circumstances must require me to release a tenant from the lease obligations?
The landlord must release the tenant from the lease agreement in the case of a military tenant, called to active duty. A tenant may also be relieved from the obligations of a lease agreement if he/she is a victim of family abuse, criminal sexual assault, or sexual abuse. Any type of destruction or harm to the property, that deems the property uninhabitable, that was not caused by the tenant, will conclude in the tenant being released from the agreement.

How do I tell if my tenant has “skipped” out of the apartment?
According to the VRTLA 55-248.33 The tenant is required to give notice if they presume to be absent from the property for an excess of seven days. If the tenant fails to give notice, the landlord may enter the premises at a reasonable time to protect his or her possessions and property. If the landlord is unsure if the property is abandoned, he or she may serve the tenant with notice that abides by §55-248.6. The tenant then has seven days to give written notice determining occupancy.

Aside from the lease agreement, are there any additional documents necessary?
Inspection Report
Within five days of the tenant’s occupancy of the rental unit, the landlord shall provide a written inspection report that will itemize any damages that existed in the rental at the tim eof occupancy. This report will be considered correct unless the tenant objects in writing within five days of receipt of the report. The landlord may also adopt a written policy allowing a tenant to prepare a move-in inspection report in which case the tenant will submit the report to the landlord within five days after receipt, and both landlord and tenant will sign and receive a copy. If no objections are noted, the report will be deemed correct.

Mold Disclosure
If there is any visible evidence of mold, the landlord must disclose this information to the tenant. This written statement is assumed to be correct unless the tenant opposes by a written statement within five days of the mold disclosure. The tenant may terminate the agreement if there is visible mold, although, if the tenant decides to take the possession after acknowledging the mold then the landlord must expeditiously rectify the mold infested environment within five days.

Disclosure of Military Facility
If the rental property is located within a noise zone or accident potential zone or both as designated by its locality on the official zoning map, the landlord must provide written disclosure to prospective tenants. A person who is not provided a disclosure as specified in VRLTA §55-248.12:1, may terminate the lease agreement at any time during the first 30 days of the lease as per the VRLTA.

Lead Disclosure
If the property was constructed before 1978, the Lead-Based Paint EPA Disclosure and Lead Based Paint EPA Pamphlet must be provided to all tenants.

Disclosure
If the landlord gives authorization to any person or company to act on his or her behalf, he or she must disclose, in writing, the name and address, to the tenant:

Methamphetamine Disclosure
If the landlord has knowledge that the rented premises was previously used to manufacture methamphetamine that has not been cleaned up according to the guidelines, they must provide a Meth Disclosure

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord-tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seeks independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/113/south-dakota-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/113/south-dakota-landlord-tenant-law-and-regulations/ Tue, 13 Apr 2010 08:47:27 GMT How much may I charge for rent?
South Dakota does not restrict the amount of rent a Landlord is permitted to charge. Additionally, the state of South Dakota has not established rent control or stabilization.

May I charge an application fee?
Reasonable cost should always be kept in mind when instituting any charges. Although there are no limits placed on the amount a landlord may charge for an application fee.

May I charge a late fee?
There is no limit placed on the amount that may be charged for a late fee, however, assessed fees should be reasonably related to the expenses the landlord incurs as a result of a late payment.

Please Note: The late charge should be specified in the lease.

May I charge a returned payment fee?
57A-3-421. Collection costs and expenses--Liability of issuer of dishonored check.
If a landlord conspicuously places in the lease that a fee will be assessed against returned checks, any person who issues a check or other draft to the merchant or place of business which is not honored for any of the following reasons upon presentment is liable for all reasonable costs and expenses of collection:
• (1) The drawer's account is closed;
• (2) The drawer's account does not have sufficient funds; or
• (3) The drawer does not have sufficient credit with the drawee.


The costs and expenses provided for must be reasonable and may not exceed $40.

Is there a limit on the amount I may collect for a security deposit?
Landlords may not require a sum in excess of 1 months’ rent for a security deposit.

However, a larger deposit may be agreed upon between the landlord and the tenant where special conditions pose a danger to the maintenance of the leased premises. For example, when a lease allows the tenant to have a pet, an additional amount may be negotiated and agreed upon.

After my tenant has moved, how long do I have to send the security deposit back?
43-32-24. Every landlord of residential premises shall, within two weeks after the termination of tenancy and receipt of the tenant's mailing address or delivery instructions, return the security deposit to the tenant, or furnish to the tenant a written statement showing the specific reason for the withholding of the deposit or any portion thereof. The landlord may withhold only such amounts as are reasonably necessary to remedy tenant defaults in the payment of rent or of other funds due to the landlord pursuant to an agreement or to restore the premises to their condition. At the commencement of the tenancy, ordinary wear and tear is excepted. Within 45 days after termination of the tenancy, upon request of the tenant, the landlord shall provide the tenant with an itemized accounting of any deposit withheld.

Important: Any landlord of residential premises who fails to comply with this section shall forfeit all rights to withhold any portion of such deposit. The bad faith retention of a deposit or any portion of a deposit by a landlord will be in violation, including failure to provide the written statement and itemized accounting required, shall subject the landlord to punitive damages not to exceed $200.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures. Another error landlords make is not returning the security deposit according to law and in a timely fashion.

What are the rules for ending a Lease Agreement?
If the written lease does not give a specific time period for renewal or expiration of the lease, then advance notice must be given at least one full rental period before the tenancy's last day.

My tenant has not paid rent, what can I do?
If the tenant violates a provision of the lease including non-payment of rent, after giving a 3-day notice, a landlord can secure a court order to have a tenant removed via a Forcible Entry and Detainer.

How long does it usually take for an eviction?
It depends and varies, but could take approximately 4-6 weeks to obtain possession.

What must I do to inspect my property? Do I have to notify the tenant?
There is no statute that defines a landlord's right of entry. However, the landlord should attempt to contact a tenant prior to entering. It is a good practice to specify this within the lease agreement.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclosure to the tenant of any existence of prior manufacturing of methamphetamines is required if a landlord has actual knowledge of the existence of any prior manufacturing of methamphetamines on the premises. If the residential property consists of two or more housing units, the disclosure requirements only apply to the unit where there is knowledge of the existence of any prior manufacturing of methamphetamines.

 

Disclosure: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Please feel free to review our other South Dakota rental resources, and you can ask SD law questions in our landlord law forum.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/112/pennsylvania-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/112/pennsylvania-landlord-tenant-law-and-regulations/ Thu, 08 Apr 2010 12:44:40 GMT Is there a limit to the maximum amount of rent a landlord can charge and are there rent control/rent stabilization policies or laws in Pennsylvania?
The state of Pennsylvania has not established limits on rental amounts, rent control ,or stabilization.

May I charge an application fee, late rent charge or a returned payment fee?
Application Fee: An application fee may be charged and may be nonrefundable; whether a tenant is approved or not. There are no statutes governing the limits on how much may be charged for an application fee.

Late charge: There are no statutes governing the limits on how much may be charged for a late fee however, late fees must bear a reasonable relation to the consequential damages that a landlord incurs in receiving rent late.

Returned Payment Fee: A service charge if written notice of the service charge was specified within the lease shall not exceed $50 unless the payee is charged fees in excess of $50. If the payee is charged fees in excess of $20, then the service charge shall not exceed the actual amount of the fees. 18 Pa. Cons. Stat. § 4105 Bad checks

May I use a daily late charge?
There are no statutes governing whether a daily or per day late charge may be used, however, the courts have held that they are not to be used as a penalty and that late fees must bear a reasonable relation to the consequential damages that a landlord incurs in receiving rent late.

What is the maximum amount I can collect as a security deposit?
Landlords may not require a sum in excess of 2 months’ rent for a security deposit during the first year. During the second and subsequent years of the lease, or during any renewal of the original lease, the security deposit may not exceed 1 month’s rent. Additionally, if a tenant has been in possession of the leased d premises for a period of 5 years or greater, any increase or increases in rent shall not require a concomitant increase in any security deposit.

My tenant has moved out, what do I do with their security deposit?
Within 30 days of tenancy termination and acceptance by the landlord, the landlord must return the security deposit or provide the tenant with a list of damages, the cost of the repairs and a final account of rent still owing. The landlord must refund any balance of the deposit owing plus interest minus any monies owed for damages to the apartment and for rent. No interest has to be paid to the tenant during the first two years. Beginning in the third year and thereafter, interest has to be paid to the tenant. The law does not set a rate of interest. Additionally, the landlord may retain an amount equal to one percent per year of the total escrow deposit as an administrative expense of the fund.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage as well as including repair receipts and pictures. It is also important that the landlord return the security deposit or a portion thereof along with an explanation of the damages and what was deducted from the security deposit within 30 days, as provided for by law.

How can I end a lease agreement?
There are no restrictions or limits placed on the notice required to end a lease, other than what is specified within the lease agreement. However, a lease cannot be terminated for discriminatory or retaliatory purposes.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain renter’s liability insurance, and can make the failure to do so a breach of the lease agreement.

My tenant has not paid rent; how much notice do I have to give a tenant in order to evict them?
If the landlord wishes to file an eviction, a 10 day notice to vacate must either be given to the tenant or posted on the door of the premises. The notice provided in the Landlord-Tenant Act may be for a lesser time or waived by the tenant if the lease so provides.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, barring any complications, the eviction process, from start to finish, takes approximately 4-5 weeks from the time the Complaint is filed in the districts in Pennsylvania and approximate 6-8 weeks in Philadelphia.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

What can I do if my tenant files for bankruptcy?
The procedures a landlord should take will be determined by bankruptcy court laws. Since the bankruptcy rules were changed in 2005, a bankruptcy will not stay an eviction if a judgment has already been obtained. United States Bankruptcy Code, section 362(b)(22). However, if a judgment has not yet been obtained, a Landlord should proceed with Relief from the Automatic Stay once the tenant fails to pay for post-petition rents. This is a complicated procedure and warrants at least a consult with an attorney.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

Do I have to give the tenant notice before I enter the rental property?
The landlord must give the tenant reasonable notice, however, there are no restrictions, common sense prevails.

Additionally, in an emergency situation, it is permissible to enter the unit to prevent or control said emergency.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Legal questions can be asked in our state law forum, and additional Pennsylvania landlord resources can be found here!

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/111/new-york-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/111/new-york-landlord-tenant-law-and-regulations/ Mon, 15 Mar 2010 12:15:20 GMT May I charge an application fee?
Reasonable cost should always be kept in mind when instituting any charges. Although there are no limits placed on the amount a landlord can charge for an application fee; $25 seems to be the standard.

How much can I charge for rent?
Where an apartment is not subject to rent stabilization, rent control or other rent regulation, a landlord is free to charge any rent agreed upon by both the parties. Additionally, the landlord is required to give written receipt to all tenants upon payment of rent when paid by any means other than by check.

In New York City and certain communities in Nassau, Rockland, and Westchester counties where rent stabilization laws apply, the landlord may not charge more than the legal-regulated rent. If the apartment is subject to such rent regulation, the rent and subsequent rent increases are set by law.

May I charge a late fee?
As long as the late charge is specified within the lease; there are no limits imposed. Although, any late charge or fee should not be disproportionate to the amount of damages or costs imposed on a landlord as a result of the late payment. High-priced fees whether charged per day or as a flat fee may be seen as a penalty. A judge may overturn such an exorbitant fee as unconscionable which goes against New York State Law Article 7 : 235c.

May I charge a returned payment fee?
According to New York Laws: General Obligations-Title 3 § 5-328-2(a), as long as specified in the lease, a dishonored check charge may be charged but not be more than $20.

Is there a limit on the amount I may collect for a security deposit?
There is no statutory limit placed on the amount that may be charged for a security deposit, but it's fairly common to accept an amount equal to 1 months rent.

Please Note: The security deposit for a rent regulated apartment is usually limited by law to 1 month's rent.

 

 

• If the apartment is in a building with 6 or more units, the landlord is required by law to place the security deposit in a separate interest bearing bank account in New York State and notify the tenant concerning the bank in which it's being held. The landlord may keep 1% of the amount deposited per year for administrative expenses, the remaining interest is to be paid annually to the tenant or left to accumulate.

 


After my tenant has moved, how long do I have to send the security deposit back?
The landlord must return the security deposit, less any lawful deduction, to the tenant at the end of the lease or within a reasonable time thereafter. If damage was done, the landlord may apply part or all of the security deposit to the cost of repairs.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

What are the rules for ending a Lease Agreement?
Month to Month: Rental properties located outside the city of New York may be terminated by the landlord or the tenant upon notifying the other at least one month before the expiration of the term; provided, however, that no notification shall be necessary to terminate a tenancy for a definite term.

Apartments with Rent Regulation: have different requirements to renew a lease. Landlords should check with an attorney or the DHCR to ensure they are in compliance.

How much notice do I have to give a tenant in order to evict them?
If the tenant has defaulted in the payment of rent, pursuant to the agreement under which the premises are held, a demand of the rent must be made, with at least 3 Days' Notice in writing requiring the payment of rent, or possession of the premises.

How long does it usually take for eviction?
It depends and varies, but could take approximately 4-6 weeks to obtain possession.

My tenant has not paid his rent and I served him notice. What do I do next?
Landlord/Tenant laws in New York are amongst the most complex in the nation. It is highly recommended that you contact the Rent Stabilization Association (212) 214-9200 or the Small Property Owners of New York (212) 410-4600 for advice on how to proceed.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. In New York victims of domestic violence, senior citizens and military personnel and their family may be released from a lease when specific criteria is met.< br> What must I do to inspect my property? Do I have to notify the tenant?
There is no statute that defines a landlord's right of entry, however both Rent Control and Rent Stabilization laws contain limited entry provisions. It is important for the landlord in those circumstances to contact the appropriate housing agency for the applicable rules.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Can I require my tenants to obtain renter's insurance?
Landlords may not require tenants to obtain rental insurance and cannot make the failure to do so a breach of the lease.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978(or prior to January 1, 1960 within New York City Limits), the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclosure: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Additional New York rental resources can be found here, and NY landlords and property managers can also ask legal questions in our rental expert forum.

 

Image Provided by Tourist Maker - Image link: http://www.touristmaker.com/blog/100-sights-in-usa/

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/110/tennessee-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/110/tennessee-landlord-tenant-law-and-regulations/ Thu, 11 Mar 2010 13:56:25 GMT How much can I charge for rent?
The state of Tennessee does not restrict the amount of rent a landlord is permitted to charge. Additionally, there is no established rent control or stabilization.

May I charge a late fee?
There shall be a 5 day grace period between the day the rent was due and the day a fee for the late payment of rent may be charged. If the last day of the 5 day grace period occurs on a Saturday, Sunday or legal holiday, the landlord shall not impose any charge or fee for the late payment of rent, provided that the rent is paid on the next business day. Any charge or fee, however described, which is charged by the landlord for the late payment of rent shall not exceed 10% of the amount of rent past due.

Please Note: No charge or fee for the late payment of rent due from a tenant in a public housing project shall exceed $5.00 per month. No late charge or fee shall be assessed such tenant unless more than 15 days have elapsed since the rent was due.

May I charge a returned payment fee?
The service or handling charge may not exceed $30.00.

Is it required to register as a landlord?
Yes, a landlord's registration is required!
Landlord's who own 1 or more dwelling units are required to furnish the following, to the agency or department of local government that is responsible for enforcing building codes in the jurisdiction where the dwelling units are located:
1. The landlord's name, address and telephone number, or the name, address and telephone number of the landlord's agent.
2. The street address and unit number, as appropriate, for each dwelling unit that the landlord owns, leases, or subleases or has the right to own, lease, or sublease.

Please Note: This information shall be furnished on a form provided by the agency or department responsible for enforcing building codes. The agency or department is authorized to collect from a landlord filing the form a fee not to exceed $10.00 per year.

Important: Any landlord who fails to register as required may be assessed a fine in the amount of $50.00 per week by the agency or department of local government that is responsible for enforcing building codes in the jurisdiction where the dwelling unit(s) are located.

Is there a limit on the amount I may collect for a security deposit?
There are no stated regulations regarding a limit on the amount that may be charged for a security deposit, however, it should not be an amount that may be considered unconscionable.

The security deposit must be held in a separate account, in any financial institution regulated by the state of Tennessee or any agency of the United States government and tenants shall be informed of the location of the separate account.

After my tenant has moved, how long do I have to send the security deposit back?
After landlords request for a tenant to vacate or within 5 days after landlord receives written notice that tenant is vacating the premises, the landlord may issue the tenant a notice to let the tenant know that he/she may be present for a rental unit inspection. The landlord may request that this inspection be completed on the day the tenant moves everything out of the rental unit or within 4 days after the tenant completely vacates.

After a tenant vacates from the rental unit before ANY work is done to prepare the premises for the next occupant and within 10 days, an inspection must be completed.

The tenant has the right to be present for this inspection unless certain conditions apply such as:

If after the inspection, damages are found:
1. Tenant is present at the inspection: Both landlord and tenant should sign the inspection report. This provides proof that both landlord and tenant are in agreement. If tenant does not agree with any damages, the tenant may bring suit against the landlord.
2. If tenant is not present during the inspection If no damages are found and no money is owed to the landlord by the tenant then the landlord should return the full deposit to the tenant.

What is a common problem where security deposits are concerned?
It is very important to follow ALL regulations and laws surrounding the handling of a security deposit from receiving it to returning it. Failing to do so, can be a large problem for a landlord.


What are the rules for ending a lease agreement?
Week to Week Tenancies: The landlord or tenant must give the other at least 10 days notice prior to the termination date specified in the notice.
Month to Month Tenancies: The landlord or tenant must give the other at least 30 days notice prior to the termination date specified in the notice.
Fixed Term Tenancies: The landlord or tenant must give the other at least 30 days notice or notice as specified within the lease, prior to the termination date or if no notice is given, the lease ends at the end of the term and the tenant must vacate.

Beware: Landlords must provide 60 days notice to increase rent.

How much notice do I have to give a tenant in order to evict them?
14 days' notice by a landlord shall be sufficient notice of termination of tenancy for the purpose of eviction of a residential tenant, if the termination of tenancy is for one of the following reasons:

• tenant has not requested an inspection;
• abandonment of the rental unit;
• eviction;
• not responding to the landlord’s notification of the mutual inspection;
• not showing up to the mutually agreed upon inspection or is not available for the landlord to contact.
  • (1) Tenant neglect or refusal to pay rent that is due and is in arrears, upon demand
  • (2) Damage beyond normal wear and tear to the premises by the tenant, members of the household, or guests; or
  • (3) The tenant or any other person on the premises with the tenant's consent willfully or intentionally commits a violent act or behaves in a manner which constitutes or threatens to be a real and present danger to the health, safety or welfare of the life or property of other tenants, the landlord, the landlord's representatives or other persons on the premises.
  • (4) For all other defaults in the lease agreement, a 30 day termination notice from the date such notice is given by the landlord shall be required for the purpose of eviction of a residential tenant.

I have sent my tenant an eviction notice; he has not complied. What do I do next?

If the tenant does not remedy the breach or make payment of arrearages, the landlord may bring suit in court for possession and damages.

Please Note: If the landlord accepts rent without reservation and with knowledge of a tenant default, the landlord by such acceptance condones the default and thereby waives his/her right and is then prevented from terminating the rental agreement as to that breach.

How long does it usually take for eviction?
It depends and varies, but could take approximately 4-6 weeks to obtain possession.

What must I do to inspect my property? Do I have to notify the tenant?
The tenant shall not unreasonably with-hold consent to the landlord to enter into the dwelling unit in order to inspect the premises, make necessary or agreed repairs, decorations, alterations, or improvements, supply necessary or agreed services, or exhibit the dwelling unit to prospective or actual purchasers, mortgagees, tenants, workers or contractors.

The landlord may enter the dwelling unit without consent in cases of emergency. "Emergency" means a sudden, generally unexpected occurrence or set of circumstances demanding immediate action.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

Can I require my tenants to obtain renter's insurance?
There are no statutory regulations regarding the requirement of a tenant by a landlord to obtain rental insurance.

I want to create a Lease Purchase for my tenant; do I need to know anything?
The State of Tennessee has specific laws and criteria for Lease Purchase Agreements. Information may be found at:
TENNESSEE RENTAL PURCHASE AGREEMENT ACT

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclosure: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Please feel free to ask any questions about Tennessee leasing laws in our expert landlord forum, and review further Tennessee rental resources here.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/109/wisconsin-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/109/wisconsin-landlord-tenant-law-and-regulations/ Mon, 22 Feb 2010 14:32:31 GMT How much can I charge for rent?
Wisconsin does not restrict the amount of rent a Landlord is permitted to charge. Therefore, a landlord may charge whatever he feels necessary. Additionally, the state of Wisconsin has not established rent control or stabilization.

May I charge an application fee?
A landlord may require an applicant to pay the landlord’s actual cost( up to $20) to obtain a credit report from a consumer reporting agency that compiles and maintains files on a nationwide basis. The landlord shall notify the prospective tenant of the charge before requesting the consumer credit report, and shall provide the prospective tenant with a copy of the report. A landlord may not require a prospective tenant to pay for a consumer credit report before the landlord requests a such a report.

May I charge a late fee?
Late rent fees or late rent penalties may be charged only as specifically provided in the rental agreement. Before assessing a fee, a landlord shall apply all rent prepayments received from that tenant to offset the amount of rent owed by the tenant.

May I charge a returned payment fee?
A tenant who issues a check that is not honored because either the tenant does not have an account with the financial institution or because the tenant does not have sufficient funds in his or her account, is liable for all reasonable costs and expenses in connection with the collection of the amount for which the check or draft was written.

Is there a limit on the amount I may collect for a security deposit?
Although a limit is not imposed by the state. There are limits imposed in the city of Madison and Fitchburg.
• Wisconsin law does not require payment of interest on the security deposit. However, each municipality may have their own requirements.
• In the City of Madison, a 5% simple interest must be paid on a security deposit.

Please Note: It is important to check with your local jurisdiction to get accurate information regarding limits placed on security deposits and how much interest must be paid.

Important: Before a landlord may accept a security deposit, there are certain procedures that must be followed. For more information see the Wisconsin Move-In/Move-Out Condition Checklist.

 

How long does it usually take for eviction?
It depends and varies, but could take approximately 4-6 weeks to obtain possession.

What must I do to inspect my property? Do I have to notify the tenant?
Except for an emergency situation, a landlord has the right to inspect, repair and how the premises at reasonable times with 12 hours notice. The tenant shall not unreasonably with-hold consent to the landlord to enter into the dwelling and may allow for a shorter notice.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

What do I do if my tenant moves and leaves property behind?
If a tenant vacates the premises and leaves personal property, the landlord may store the personal property, on or off the premises, with a lien on the property for the actual and reasonable cost of removal and storage. The landlord shall give written notice of the storage to the tenant within 10 days after the charges begin. The landlord shall give the notice either personally or by ordinary mail addressed to the tenant's last-known address and shall state the daily charges for storage. The landlord may not include the cost of damages to the premises or past or future rent due in the amount demanded for satisfaction of the lien. The landlord may not include rent charged for the premises in calculating the cost of storage. Medicine and medical equipment are not subject to the lien and the landlord shall promptly return them to the tenant upon request.

Can I require my tenants to obtain renter's insurance?
There are no statutory regulations regarding the requirement of a tenant by a landlord to obtain rental insurance.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclosure: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Feel free to review our other Wisconsin rental resources, and to pose questions about Wisconsin law in our rental experts' forum.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/108/vermont-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/108/vermont-landlord-tenant-law-and-regulations/ Thu, 18 Feb 2010 13:48:23 GMT

Must I register my rental property or myself as a landlord?

Each locale is different and every landlord should consult with their local housing department. For instance, owners of all rental units in Burlington, Vermont are subject to inspection including rental units within the city. The landlord is required to file an annual registration application and fee with the enforcement agency, which shall be due on or before April 1st of each year. For further information contact the Burlington, Vermont zoning office.


How much can I charge for rent?

Vermont does not restrict the amount of rent a Landlord is permitted to charge. Therefore, a landlord may charge whatever he/she feels necessary.  

 

How much is the maximum I may charge for an application fee?

This is not a permitted fee for the state of Vermont.

 

May I charge a late fee?

Landlords may only charge a late fee to cover expenses actually incurred as the result of tenant’s tardiness in paying rent. A late fee must be specified in the rental agreement.

 

May I charge a returned payment fee?

Any person submitting a bad check may be subject to civil and criminal penalties under the laws of the State of Vermont: Under Chapter 57, § 2311- http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=09&Chapter=057&Section=02311)

The landlord is entitled to a returned check fee of no more than $50.00.
 

Is there a limit on the amount I may collect for a security deposit?

In Vermont, the function of a security deposit is to secure the tenant's obligations to pay rent and to maintain a dwelling unit. There is no regulation on what may be charged for the security deposit with the exception of a few jurisdictions.

Some of these  jurisdictions such as Burlington and Barre DO limit the amount of the security deposit to an amount equal to one month and do require interest to be paid on the security deposit. Landlords should check with their local authorities for the requirements of their location.

 

After my tenant has moved, how long do I have to send the security deposit back?

The security deposit or balance after repairs must be returned to the tenant within 14 days from the date on which the tenant left the unit.  There must be a list of  itemized deductions if the entire deposit were not to be refunded. In the case of a seasonal occupancy, the security deposit and written statement shall be returned within 60 days. The full security statues are can be found in:  http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=09&Chapter=137&Section=04461

 

What is a common problem where security deposits are concerned?

Normal wear and tear items may not be repaired with security deposit monies. Making a checklist to differentiate repairables can help sort these items from, repairs needed due to tenant upkeep. The property must be evaluated and documentation of proof will help decipher expenses that can be deducted from the security deposit.

 

What are the rules for ending a Lease Agreement?

If there is a written rental agreement, the landlord may terminate a tenancy in accordance to the terms in the agreement.Where there is no rental agreement or there was one that is now expired, the landlord can legally terminate and evict a tenant for no reason at all. In this case, the eviction notice may be sent by ordinary mail or hand-delivered to the tenant.

Leases for two Years or Less: If rent is payable on a monthly basis, and the tenant has resided on the premises for two years or less, the notice must give the tenant at least 60 days from the date it is received to leave the premises.

Leases for two Years or Longer: If the tenant has resided on the premises continuously for longer than two years, the tenant is entitled to a 90-day advance notice before the termination date.

If rent is due weekly, there must be a 21 days notice before the termination date.  

 

My tenant has not paid rent, how may I proceed?

The landlord must provide the tenant with a 14 day written notice giving the tenant the option to pay or vacate. The notice must specifically state the amount owed, and that if the amount that is due is paid before the termination date, the tenancy will continue. A tenant may not defeat an ejectment (eviction) action in this way more than one time within twelve months. The twelve-month period commences from the day that payment is made.

 

My tenant has violated provisions of the lease agreement, how may I proceed?

The landlord may terminate the tenancy by giving the tenant at least 30 days written notice. The notice must specifically state what actions are the cause(s) for the eviction. If the termination is based on criminal activity, illegal drug activity, or acts of violence, which threaten the health or safety of other residents, the landlord may terminate the tenancy with 14 days notice. If the tenant does not comply, the landlord may file in court for possession and damages.  

 

How long does it usually take for eviction?

It depends and varies, but could take approximately two months, give or take a week or so, to obtain possession.

 

What must I do if I need to enter my property? Do I have to notify the tenant?

Once the landlord provides 48 hours notice; a tenant cannot refuse the landlord entrance to the rental unit in order to view, inspect, repair or improve the home. The landlord or landlord's contractors must be allowed to enter to perform necessary or agreed services and/or show the property to potential buyers. The landlord can enter the rental unit without notice in the case of emergency.

 

Do I have the right to enforce no smoking in my rental property?

A landlord may establish a “No Smoking” policy by providing so in the lease.

 

How do I tell if my tenant has “skipped” out of the apartment?

A tenant may be considered as to have abandoned a dwelling unit if:

(1) there are signs that the living unit is no longer inhabited as a full-time residence;

(2) rent is past due or not paid; and

(3) you made attempts to contact the tenant to verify their intentions.

Please Note: Even if a tenant abandons the rental property, they are held accountable for the remainder of rent until the final day of the lease. Should there be a lease with new tenants, then the tenants who abandoned will no longer be responsible for the rent from the time the new tenants start paying.   

 

If a tenant vacates the property what should I do with everything left behind?

When a tenant leaves the rental unit for any reason permanently and leaves items behind, the landlord must notify them by written letter and must send it to their previous known mailing address. Property excluding garbage and refuse must be documented and listed. Notification should be made that the landlord means to dispose of the remaining property after 60 days if no one claims the items. If any fees took place against the landlord for storage or any other reason, these must be presented along with the letter for reimbursement. The property that is left behind must be kept in a secure location safe from the elements and any other damage that could happen. If a tenant fails to claim the property within the time allotted in the notice, it will, then become the landlord's property to do with whatever he sees fit. If the tenant does claim the property, the landlord must make the property available to the tenant to be picked-up at a set place. 
 

Can I require my tenants to obtain renter's insurance?

Landlords may require tenants to obtain rental insurance, and could make the failure to do so a breach of the lease.

 

Aside from the lease agreement, are there any additional documents necessary?

If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

 

Disclosure: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Further Vermont rental resources available, and Vermont landlord-tenant law questions can be asked in our state law forum.

]]> https://www.ezlandlordforms.com/articles/educational/3/107/a-landlord-s-guide-to-service-animals/ https://www.ezlandlordforms.com/articles/educational/3/107/a-landlord-s-guide-to-service-animals/ Thu, 18 Feb 2010 08:31:23 GMT Many people with disabilities and/or health-care problems often rely on service animals for assistance with their daily lives. Service animals enhance the quality of life for many people with disabilities.

Landlords who maintain a “no pet” policy may not refuse to rent or prohibit a disabled person from having a service animal within the rental property. Federal law does not require the animal that provides the assistance to be a dog; although most service animals seem to be. There are three important points to consider when renting to a disabled individual with a service animal.

1. Service animals, therapy animals, or animal aides all fall into the same category under federal law.
2. Service animals are NOT pets and therefore may not be considered as such. Landlords who have strict no-pet policies may not enforce them with regards to service animal.
3. Assistance animals are covered under the Fair Housing Amendments Act, Americans with Disabilities Act and the Rehab Act Section 504. Be familiar with these laws!

Under the Fair Housing Act, persons with disabilities who are accompanied by a service animal are a protected group. To be an individual protected under the Fair Housing Act; that person must have a disability as defined by the act; the service animal must have a direct function related to the individual’s disability and the request to have the service animal must be reasonable.

According to 42 U.S.C. § 3604(f)(3)(B), a landlord must make “reasonable accommodations” for a disabled tenant to be able to use and enjoy a rental property on an equal basis with tenants who are not disabled. For instance, if a tenant requests to have safety bars installed in the bath-tub, a landlord may not refuse to make such accommodations.

Landlords of subsidized housing may be required to accept service animals; see HUD's updated rules on subsidized housing and service animals.

What can a landlord to do to prevent non-disabled persons from using this law to bring in an ordinary house pet? Unfortunately, there is no law or regulation that provides specifics on what the landlord may or may not do. Only a court decision can actually determine whether a landlord must allow a particular animal. A landlord may ask for “proof” that a service animal is just that but a landlord must be very careful in how the tenant is questioned. Never ask a tenant whether he/she is disabled, what kind of disability he/she has or how severe the disability is. All persons with a disability who require a service animal must be permitted to have that animal regardless of race, color, religion, sex, familial status, or national origin under the Fair Housing Act.

Fair housing lawsuits are common and can be easy for the renter to win, so be careful to avoid even the appearance of discrimination.

Related Reading:

Tired of Dog Waste in Common Areas? Property Managers Turn to DNA Testing

Tenant Pet Policies: How Should Landlords Handle Pets in their Rental Properties?

]]> https://www.ezlandlordforms.com/articles/educational/5/106/landlords-beware-of-rent-check-scams/ https://www.ezlandlordforms.com/articles/educational/5/106/landlords-beware-of-rent-check-scams/ Fri, 18 Dec 2009 11:07:46 GMT I am sure you are well aware of the recent increase in fraudulent claims and Internet scams. It was only a matter of time before landlords would be affected. The United States Postal Inspector recently warned property owners to be cautious when answering prospective tenants who respond to online rental advertisements from overseas.

These scam artists will ask to pay the deposit with a cashier’s check, money order or some other form of paper tender; in many cases asking to pay several months in advance plus administrative fees. The scammers may also say it’s too complicated to send you the money directly, so they’ll arrange for someone in the United States to send you a check.

These above mentioned payments may look real, however, are in fact fake. Bank Tellers may even be fooled, as the checks are made to mislead. The companies names who appear on the check may be real, dummied up to fool even savvy investors. They may come in the form of phony cashiers checks, or may appear to be from legitimate business accounts.

Under federal law, banks must make deposited funds readily available, usually within one to five business days. However, this does not mean the check has cleared and the funds are available. Please be aware that it may take weeks for the check to bounce and for the forgery to be discovered.

The scammer will then ask the landlord to wire back part of the money, usually the “administrative fee or costs” or ask that the entire amount be returned by giving a reason that they may not take possession of the unit. After the landlord returns some or all of the money, the check is then found to be fraudulent. These con-artists are most often from foreign countries and very hard to track down. This scam has also taken place via the telephone.

Here are some tips to steer clear of these scammers:

1. Always request a face to face meeting with any prospective tenant.
2. Upon accepting any tender, unless cash; make sure that you wait for the check to clear and allow an extra 10 days.
3. Conduct thorough background checks.
4. "If it seems too good to be true, it is!


If you happen to become a victim of one of these scams, report it to the Post Office Inspector General http://www.uspsoig.gov/ and The FBI-Internet Fraud Unit, http://www.fbi.gov/majcases/fraud/internetschemes.htm
]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/105/texas-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/105/texas-landlord-tenant-law-and-regulations/ Thu, 10 Dec 2009 14:39:16 GMT How much can I charge for rent?
Texas does not restrict the amount of rent a Landlord is permitted to charge.

How many tenants can I rent to for a single unit?

The number of live in tenants may be three (3) times the number of bedrooms as in the rental unit.

What is the limit on application fees?
The state of Texas places no limit on the amount of money that can be charged to perform a back-ground check on a future tenant.

Is there any restriction on what may be charged to a tenant as a late fee when he is late on his rent?
The tenant must be at least one day behind the due date of the rent payment before you can assess a fee. The fee that is charged must be relational to any monies incurred by the landlord because the rent is late. For instance, if the landlord must pay a late charge to a mortgage company; this can be figured in as part of a late charge. Late fees and/or charges must be specifically detailed in a lease.  

Is there a limit on what may be set as a fee when a tenant’s payment does not clear his bank?
According to Texas Business and Commerce Code Section 3.506(a), a maximum charge of $30 may be charged to a tenant as a processing fee. There are other ramifications when a check is written and fails to clear. Some are classified as criminal offenses.

Is there a limit on the amount I may collect for a security deposit?
Texas law does not provide for any limitations on a security deposit.

Do I need a separate bank account for the security deposit?
There are no specific regulations in Texas regarding the placement of security deposits. However, the landlord must keep accurate records of all security deposits.

After my tenant has moved, how long do I have to send the security deposit back?

You are obligated to return a security deposit within 30 days after the tenant vacates. However, the tenant must provide you with a forwarding address in a written form. Please understand though that a refund is not nullified simply because the tenant fails to do so. Provided, repairs were required, a list must be provided for the tenant with itemized deductions of the costs along with the return of any monies leftover. Repair costs that are deducted should not be items that are occurrences through normal wear and tear. Costs incurred should be in excess of this.  

What are the rules for ending a Texas lease agreement?
The lease is the determining factor as to when and how a lease will end. It is important that this particular item is spelled out in detail in a written lease. In the absence of a printed lease agreement, where rent is paid each month, an advance notice of 30 days is needed by the tenant to be released from the rental obligations. If rent is paid on less than a monthly basis (such as weekly payments), the amount of notice needed to end the lease by a tenant, will be the amount between payments, not including the actual day the notice is given.

My tenant has not moved out yet and is supposed to be, what can I do?
If a tenant has not left the premises at the end of the lease, you may either accept the rent and continue on a periodic tenancy or bring an action for possession.

How much notice do I have to give a tenant in order to evict them?

Generally, you must give at least three days' written notice to vacate the premises before filing a forcible detainer lawsuit. If there is a written lease, and the notice period is specified as more or less than the three days, then that will take precedent.  
My tenant has not paid his rent, and I served notice. What shall I do next?

Go to the District or circuit court where the property is located. You will file a court action referred to as an unlawful detainer with the clerk of court. Note that each court has their own fee. The landlord may sue to regain possession, and for monies lost due to mispayment. It is important to include a copy of the “Notice to Tenant” when filing an original action.  
I have been assigned a court date, must I go?

Once a court date is set, a landlord should always arrive prepared. In many cases, tenant’s often fail to appear in court, subsequently favoring the landlord. Regardless of the assumption that a tenant may not come to the court hearing, it is important to have all your ducks in a row. Come prepared and bring proof of rents received, such as a current rental ledger along with all correspondence, including letters, tenant notices and emails. If you have dates of phone conversations, they can be important as well. Proof is especially vital in cases that involve nuisance or other lease violations.   

I won in court! Now what happens?
A landlord who wins in an eviction suit is eligible to a writ of possession to the premises. A writ of possession must be issued six days after the deciding court date. Once the writ is issued, an appointed authority such as a constable must remove the tenants. You cannot lock the tenant out yourself!  

What must I do to inspect my property? Do I have to notify the tenant?

Unless the lease agreement states the landlord may enter the premises, then the landlord has NO right to do so, unless there is an emergency or for regular inspections/repairs. The tenant has his or her own right to privacy in the rental unit. A landlord can be held liable for infringing on tenant rights should they enter the unit without the tenant's permission by advance notice, regardless of how the lease is written.   

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. In Texas, under Section 92.0161 of Title 8, Subchapter A allows lease termination rights for sexual assault survivors when the assault has occurred within the preceding six months. Additionally, a tenant may have the right to vacate for issues regarding family violence. This is specified in Section 92.016 of Title 8, Subchapter A of the Texas Property Code for Landlords and Tenants. 

Do I have the right to enforce no smoking in my rental property?
Yes. No smoking policies are becoming more and more popular. It can be advantageous in re-renting to future tenants as well. All policies must be exacted in the lease or rental agreement.


Disclosure: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/104/district-of-columbia-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/104/district-of-columbia-landlord-tenant-law-and-regulations/ Fri, 04 Dec 2009 14:05:44 GMT Are there rent control/rent stabilization policies or laws in DC?
In DC, all landlords are governed by the Rental Housing Act of 1985. The District of Columbia does have rent stabilization policies.
Landlords should check with local housing officials, an attorney, or the rent control board for further information and to ensure compliance.

How much may I charge for rent?
In DC, all landlords are governed by the Rental Housing Act of 1985 (unless they are exempt or excluded from the Act). Landlords must register with the Housing Regulation Administration to ensure compliance with DC's complex rent control system (which establishes a maximum amount of rent a landlord may charge for a rental unit).
Landlords should check with local housing officials, an attorney, or the rent control board for further information to ensure compliance.

 

What's the maximum rent increase I can make?

Pursuant to the requirements of Section 202(a)(3) of the Rental Housing Act of 1985, D.C. Law 6-10; rent adjustments may not exceed 3.6%. Complete information regarding rent adjustments may be found at DC Certification of Rent Adjustment of General Applicability.

What is the maximum amount I can collect as a security deposit?
Landlords may not charge tenants more than 1 month's rent as a security deposit, and this fee many only be collected once.

Are there requirements for where a security deposit must be held, for example, in a separate escrow account?
Landlords must place the security deposit in an interest bearing account . The terms of the security deposit must be in writing, and given to the tenant. If the premises has been leased for at least 12 months then interest must be paid to the tenant after lease termination.

May I charge an application fee, late rent charge or a returned payment fee?
There are no statutory limits placed on the collection of an application fee, returned payment or late fees.However, it is a good practice to keep the fees reasonable in relation to the costs they incur and not punitive.

Is it permitted to charge a per-diem late fee?
Although this is not prohibited, it tends to be a rare practice.

My tenant has moved out, what do I do with their security deposit?
45 days after lease termination, the landlord must either return the security deposit plus interest, if applicable, or notify the tenant in writing that all or part of the deposit will be used to cover expenses.

• The landlord must then send the tenant an itemized list of repairs and deductions that have been taken out of the security deposit.
• After the first notification, the landlord must return the balance of deposit, if any, to the tenant within 30 days.


What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage as well as including repair receipts and pictures.

How can I end a Washington DC lease greement?
Periodic leases such as month to month or quarter to quarter agreements require an advance notice of , 30 days when ending or renewing a lease. When a fixed term is used, (this is a lease with a definite beginning and ending date) no notice to terminate is necessary unless provided in the lease, however, the landlord is entitled to possession immediately upon the expiration of the term.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable, or If the tenant is called to active military duty. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

My tenant has not paid rent; how much notice do I have to give a tenant in order to evict them?
A landlord may evict a tenant without prior written notice in the case of non-payment of rent.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

Can I require my tenants to obtain renter's insurance?
In DC, landlords are not permitted to require tenants to obtain rental insurance.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the Lease.

Do I have to give the tenant notice before I enter the rental property?
There are no statutory requirements limiting a landlord's right to enter the leased premises. However, a landlord may not interfere with the tenant’s peace and enjoyment. Therefore, landlords should exercise caution and fairness when entering the leased premises. It's best to give tenants adequate notice, unless an emergency requires immediate entrance.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/103/utah-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/103/utah-landlord-tenant-law-and-regulations/ Wed, 25 Nov 2009 11:10:48 GMT

Do I need to register as a landlord or register the property I am renting out?
It is important to contact the municipality where your rental unit is located. There are some locations that require either landlord registration or unit registration or both. The Utah Apartment Association has initiated state legislation that enforces  a “Good Landlord Program” in eleven cities. This has been implemented to reduce the crime rates that have been increasing in cities with large volumes of rental properties. Check to see if your city is one of the eleven by contacting your township or city hall.

 

What criteria do I need to know when conducting a credit check on an applicant? Is there a limit on how much to charge for a background screening?

It is very important to get to know and understand Fair Housing regulations. In the state of Utah, “source of income” is considered  a “protected class” in addition to the federal descriptions. What this means is that a landlord may not discriminate based on the type of income an individual receives or earns as long as it is legal. For instance, if you have a perspective tenant who receives disability income from the Government and qualifies in all other ways; you cannot reject this applicant based on the source of the income. PLEASE NOTE: There are many locales within Utah that have two additional protected classes, specifically “sexual orientation” and “gender identity”. Utah does not possess any stated limits on the amount that may be charged for an application fee.

 

Is there a limit on the amount I may collect for a security deposit?

There are no asserted statutes that limit the amount a landlord may charge a tenant for a security deposit. If any monies are taken as a non-refundable fee/deposit, it must be in writing and agreed to by both landlord and tenant.

After my tenant has moved, how long do I have to send the security deposit back?

A landlord must send a written notification to the tenant within 30 days after the tenant moves out of the residence. This is sent to the tenant’s forwarding address; if the forwarding address is not known or provided, then it will be mailed to the last known address which is most likely the rental units’ address.

The landlord will send a tenant one of four types of notices:

     1. the full security deposit remittance.

     2. partial refund along with a written statement of deductions.

     3. no refund along with a written statement of deductions.

     4. no refund along with a written statement of deductions and a balance due.

 

When my tenant has not paid his rent on time, may I charge a late fee and how much can I charge?

Utah’s law does not specifically contain language that limits the amount of money a landlord can charge for a late fee. The amount that is charged should not be so much it is considered a penalty but rather more closely related to any costs incurred by the landlord when the tenant is late in rent. Whatever the amount a landlord decides to charge must be contained in the lease.

 

The rent payment I received was not honored by the bank. Can I charge a fee for this?

First thing a landlord must do is to notify tenant that the payment has been returned. The landlord may charge no more than a twenty dollar fee but the tenant must be notified first in a manner specified under the Title 7 Financial Institutions Act (Chapter 15, Section 2).

 

What are the rules for ending a Utah lease agreement?

Generally speaking, the lease will determine how and when a lease will end. When a lease is void of any terms and conditions on how to end a lease, at least fifteen days advance notice  is needed by either party to end the lease. Otherwise the lease continues.

 

What happens if a tenant does not vacate the premises after the ending of our contract?

If the tenant is still residing at the apartment without authorization of the landlord, then the landlord may begin proceedings or an action for possession. A landlord may not  just change the locks, remove a tenant’s personal things or forcibly remove a tenant by himself. There are specific notices that must be sent; court procedures to follow and timeframes to go by.

 

How do I let a tenant know that they will be evicted?

In Utah, there are three types of evictions; a failure to pay, failure to comply or a nuisance violation. Each of these would require the tenant be given notification of three days. Except in nuisance situations which is when a tenant or their guests commit a crime or create a public nuisance, the tenant will have the opportunity to fix the situation. This means either pay any monies due or change the behavior in a failure to comply situation. At the end of three days, if the tenant does not either fix the situation or move out, then the landlord may start the legal procedure called an unlawful detainer action in the local courthouse. In counting the three days, you skip the actual day of service, and count three calendar days starting the day after service.
 

My tenant wants to pay his rent but I have already filed in court. Can I accept a partial payment and still proceed with eviction?

If a landlord accepts part of the rent, even though the lawsuit may commence, there is a chance that a judge may not permit the suit to follow through. This may be considered a waiver of the landlord’s right to proceed with the eviction, so it is advisable to always consult with an attorney before accepting a partial payment.

 

How long does it usually take for eviction?

In the state of Utah, eviction can be a fairly quick legal process, although the timing can vary. But in many cases the entire process from serving notice to court proceedings can take as little as one month.

 

What do I do with the tenant’s personal items that are left behind?

If there is significant evidence to substantiate that a tenant has abandoned the rental unit and his personal effects, the landlord may enter the unit without a court order to remove the tenants personal property, repair and prepare the unit, and re-rent it to someone else. The landlord may remove the tenant’s personal belongings and store them at the tenant’s expense. The landlord MUST make every reasonable attempt to contact the tenant to notify the tenant where his/her belongings are. After 15 days have gone by after making these contact attempts, the landlord may sell the property and apply the money to what is owed, donate the property or dispose of the property in any way deemed necessary. IF the tenant was a victim of domestic violence, was hospitalized, or has passed away; a request may be made in writing by the tenant along with proof of the situation to have an additional fifteen days to remove the items. A tenant may remove his own medical equipment, prescription drugs, identification to qualify for government benefits, and/or clothing within five days.

 

How can I get access to inspect the rental unit?  Is it mandatory to notify the renter?

The landlord has the right to enter the property at reasonable times, when proper notice has been given to the tenant, unless in cases of emergency. The tenant may require 24 hours’ advance notice to be given before entrance again unless an emergency.

 

Do I have the right to enforce no smoking in my rental property?

In the state of Utah, the Landlord may instill a policy of no-smoking.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/102/west-virginia-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/102/west-virginia-landlord-tenant-law-and-regulations/ Tue, 24 Nov 2009 10:14:45 GMT

How much can I charge for rent?

The state of West Virginia does not restrict the amount of rent a landlord is permitted to charge, he may charge whatever he deems suitable.   Additionally, the state of West Virginia has not established a system of rent control or stabilization.

 

May I charge an application fee, late rent charge or a returned payment fee?

Application Fees and Late Charges: There is no legal limit on the charging of an application or late fee however, any fee agreed upon in the lease should be reasonably related to the expenses the landlord incurs.

Returned Payment Fee: The payee or holder of a worthless check may impose a service charge not to exceed $25 if the holder sends a written notice of dishonor to the maker. The notice should specify the amount of the check, the check number, the name of the financial institution and to whom payment is made. The notice should give the tenant 10 days to satisfy the payment plus the service charge. The notice should also state that in the event payment is not made in full, the tenant might be subject to legal proceedings, criminal or civil.

 

Is there a limit on the amount I may collect for a security deposit?

There is no statutory limit on the security deposit charged to the tenant so long as it is reasonable.

 

Do I need a separate bank account for the security deposit?

There are no specific regulations in West Virginia regarding the placement of security deposits.

 

My tenant has moved out, what shall I do with their security deposit?

A collected security deposit is to be returned within 60 days of termination or 45 days of new tenants moving into the rental unit.  When the tenant has moved out after the lease has ended, repairs and damages must be assessed. If the damages are greater than that of the security deposit or require a third party to make repairs; the landlord must itemize and list all deductions and costs.  The landlord must present the document to request money for repairs and upon presentation will have an extra 15 days to compile remaining repairs.

 

Delivery of the security deposit may be by personal delivery or by postage to forwarding or new address of tenant. The new address must be provided by the tenant and it is their responsibility to offer accurate information so that the money can be returned without delivery issues.  If the delivery cannot be made due to an inaccurate mailing address or being unable to reach the tenant in person, the landlord must hold the money up to 6 months after making a personal delivery.

 

What are the rules for ending a West Virginia lease or rental agreement?

     (1) In a yearly lease agreement, the term may be ended by either the landlord or the tenant if they give a written notice at least 3 months before the end of the tenancy.

     (2) If the tenancy is less than 1 year; either party may terminate by giving the other a notice to terminate one full rental period from the final date of ending.

     (3) For a fixed term lease, the tenant shall vacate upon the finish date agreed upon unless landlord and tenant have made other arrangements.

 

Are there circumstances where I am required to release a tenant from a lease agreement?

There may be circumstances when a tenant may be released from a contract due to the property becoming damaged or unsafe so long as it is not by fault of the renter.

 

When my tenant’s lease ended they did not leave the property. What do I do?

If a tenant remains in the dwelling without the landlord's approval after the end of the rental agreement, the landlord may initiate an action for possession.

 

If the lease has ended and the renter has not moved out, this is termed as holding over. The landlord may continue to be entitled to rent. If the landlord chooses not to collect rent, he may begin a legal process of evicting the tenant. After the leasing period ends,  it is at the landlords discretion as to whether the tenant will remain a tenant or is seen as a trespasser. The landlord may decide to offer an extended or new lease or evict.

 

How much notice do I have to give a tenant in order to evict them?

If you want to evict your tenant, a WRITTEN notice of eviction must be given to the tenant. Included in this written notice must be the date on which the tenant must vacate the premises. Unless it is stated differently in the lease agreement,  the notice should give the tenant one full rental period before eviction proceedings are filed. (a full rental period is the time in between your rent payments).

 

My tenant has not paid his rent and I served him notice. What do I do next?

Go to the District or County court where the property is located. You will file either file an unlawful detainer or summary ejectment suit. Check with the clerk of court, as there are fees involved.

 

I have been assigned a court date, must I go?

On the day of the appointed court day it is wise for a landlord to arrive promptly and prepared. Often times a renter will not make an appearance at the hearing ultimately helping the landlord’s odds of winning.  Regardless, it is important to be ready and organized. Bring proof of rents received such as a current rental ledger, along with all correspondence letters, notices and emails. Phone records may prove to be helpful in the court process.   In the case of criminal or other lease violations, criminal records along with any proof to substantiate the allegations will help in the lawsuit.

 

What do I do with the tenant’s personal items that are left behind?

Upon regaining legal possession of the property, the landlord, his or her agent or housing authority may take, dispose of or otherwise remove the tenant's personal property without incurring any liability to the tenant or any other person. To dispose of the tenant's property, the landlord or housing authority shall give a written notice to the tenant.

 

If the property is left by the tenant, The landlord must post a notice of abandonment on the house. In the notice is, it must state that the the property is abandoned and the actions that will take place after 30 days of non-payment.  The landlord may do as he/she deems fit with the remaining property unless it is valued at $300 or more.  The tenant has the right to ask for the property to be stored but not for more than 30 days at which time they may claim it.

 

What must I do if I need to inspect, make repairs or enter the dwelling? Do I have to notify the tenant?

There is no statute that defines a landlord's right of entry, however, the landlord should exercise caution and not abuse the right of entry.

 

Do I have the right to enforce no smoking in my rental property?

A landlord may establish a “No Smoking” policy by providing so in the Lease.

 

Disclosure: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

 

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/101/wyoming-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/101/wyoming-landlord-tenant-law-and-regulations/ Fri, 20 Nov 2009 13:20:28 GMT How much can I charge for rent?
The state of Wyoming does not restrict the amount of rent a Landlord is permitted to charge. Therefore, a landlord may charge whatever he feels necessary. Additionally, the state of Wyoming has not established rent control or stabilization.

May I charge late payment fees?
There is no statutory limit on late charges, however, assessed fees should be reasonably related to the expenses the landlord incurs as a result of a late payment.

May I charge a returned payment fee?
Any person who issues a check which has been dishonored for any reason must pay to the holder of the check the amount of the check, and a collection fee not to exceed $30.

Is there a limit on the amount I may collect for a security deposit?
There are no statutory limits placed on the amount of the security deposit charged to the tenant so long as it is reasonable.

Please Note: Any rental agreement shall state whether any portion of a deposit is nonrefundable and written notice of this fact shall be provided to the tenant at the time the deposit is taken.

Do I need a separate bank account for the security deposit?
There are no specific regulations in Wyoming regarding the placement of security deposits. However, it’s good practice to keep a tenant’s security deposit separate from the landlord’s personal finances.

My tenant has moved out, what shall I do with their security deposit?
The full balance of any deposit and prepaid rent or the partial balance along with written itemization of any deductions from the deposit together with reasons therefore, shall be delivered or mailed without interest to the renter within thirty (30) days after termination of the rental agreement or within fifteen (15) days after receipt of the renter's new mailing address, whichever is later. If there is damage to the residential rental unit, this period shall be extended by thirty (30) days. The renter shall within thirty (30) days of termination of the rental agreement, notify the owner or designated agent of the location where payment and notice may be made or mailed.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

What are the rules for ending a Wyoming lease in the state of Wyoming ?
¿ A Fixed Term Lease is an agreement that contains a beginning and ending date. In Wyoming a fixed term lease ordinarily expires by its own terms without written notice from either party unless specified differently in the rental agreement.

¿A Periodic Lease is a lease that continues from period to period (i.e. month to month). In Wyoming for a Periodic Tenancy, advance notice of termination by the landlord or tenant, as the case may be, is required to terminate a periodic tenancy. The amount of notice required is usually determined by the period of the tenancy itself. The notice must be of 1 full rental period, and the termination date must coincide with the beginning of a new period. Therefore, a month-to-month lease would require 30 day notice and a week-to-week lease would require a 7 day notice.

How much notice do I have to give a tenant in order to evict them?
The party desiring to commence an action for forcible entry or detainer must notify the adverse party to leave the premises involved. The notice shall be served at least three (3) days before commencing the action, by leaving a written copy with the defendant or at his usual place of abode or business if he cannot be found.

My tenant has not paid his rent and I served him notice. What do I do next?
Go to the District court in the county of which the property is located. You will file a court action referred to as an unlawful detainer, filed with the clerk of court. Check with the appropriate court as there are fees involved. The Landlord/Plaintiff may sue for possession of property and for money damages in the same action. It is important to include a copy of the “Notice to Tenant” when filing an original action. The Unlawful Detainer Complaint must be served by certified mail or personal service by either the Sheriff's office or a private process server.

I won in court! Now what happens?
Unless the defendant takes an appeal, the officer shall execute the writ of restitution within two (2) days after receiving it, Sundays excepted, by restoring the plaintiff to possession of the premises. He shall levy and collect the execution for rent and costs and make return as upon other executions.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

What do I do if my tenant has “skipped” out of the apartment?
Upon regaining lawful possession by going through the courts for possession of the rental unit, the owner may immediately dispose of any trash or property the owner reasonably believes to be hazardous, perishable or valueless and abandoned. Any property remaining within the rental unit after termination of the rental agreement shall be presumed to be both valueless and abandoned.
Any valuable property may be removed from the residential rental unit and shall thereafter be disposed of as follows:
¿ The owner shall provide written notice to the renter, describing the property claimed to be abandoned and stating that the property shall be disposed of after seven (7) days from the date of service of the notice if the renter or his agent does not, within the seven (7) day period, take possession of the property or notify the owner in writing of the renter's intent to take possession of the property.

Do I have to give the tenant notice before I enter the rental property?
Landlords should give tenants at least 2 days notice to enter the leased premises for non-emergency reasons. In the event of an emergency, no advance notice is required to be given to tenant.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

Aside from the lease agreement, are there any additional documents necessary?
If the Leased Premises was constructed before 1978, the landlord must provide all tenants with Lead-Based Paint EPA Disclosure and Lead-Based Paint EPA Pamphlet.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.
]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/100/south-carolina-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/100/south-carolina-landlord-tenant-law-and-regulations/ Fri, 06 Nov 2009 14:07:52 GMT What is the maximum amount I can collect as a security deposit?
There is no limit to the maximum amount a landlord may collect for the security deposit.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance, and could make the failure to do so a breach of the lease.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

May I charge a late payment fee?
There is no limit placed on the amount that may be charged for a late fee, however, assessed fees should be reasonably related to the expenses the landlord incurs as a result of a late payment.

May I charge a returned payment fee?
A fee not to exceed $30.00 may be charged to the tenant for a returned check.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a South Carolina lease agreement?
The Notice Required to End a Lease is as Follows:
• Week-to-Week: 7 days notice is required.
• Month-to-Month: 30 days notice is required.
• Fixed Term: No additional notice is required other than what is contained in the written lease. If nothing is contained in the lease regarding notice, then the lease terminates at the end of the term.


My tenant has moved out, what shall I do with their security deposit?
Money held by the landlord as security must be returned within 30 days after termination of the tenancy and demand by the tenant, whichever is later.

• Amounts withheld by the landlord for accrued rent and damages must be itemized by the landlord in a written notice to the tenant, together with the amount due.


The tenant shall provide the landlord in writing with a forwarding address or new address to which the written notice and amount due from the landlord may be sent. If the tenant fails to provide the landlord with the forwarding or new address, the tenant is not entitled to the security deposit if the landlord can prove they had no notice of the tenant's whereabouts and mailed the written notice and amount due, if any, to the tenant's last known address.

IMPORTANT: If the landlord fails to return any prepaid rent or security/rental deposit that is due to the tenant, the tenant may recover money in an amount equal to 3 times the amount wrongfully withheld and reasonable attorney's fees.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
Except in the case of an emergency or pursuant to a court order, the landlord may only enter the leased premises with the consent of the tenant; or without the consent of the tenant in an emergency as follows:

• Between the hours of 9:00 a.m. and 6:00 p.m. for the purpose of performing certain regularly scheduled periodic services;
• Between the hours of 8:00 a.m. and 8:00 p.m. for the purpose of performing services requested by the tenant.

Except in an emergency and in the limited circumstances stated above, the landlord is required to give the tenant at least 24 hours notice of the intent to enter.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/99/oregon-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/99/oregon-landlord-tenant-law-and-regulations/ Wed, 04 Nov 2009 14:28:24 GMT What is the maximum amount I can collect as a security deposit?
There is no limit to the maximum amount a landlord may collect for the security deposit.

A landlord must supply a receipt for any security deposit paid by the tenant.

Before the landlord enters into a new rental agreement with an applicant or accepts any payment from an applicant, the landlord shall provide the applicant with a written list of all deposits, fees and rent that are required by the landlord. The landlord and applicant may agree to amend the written list before entering into the rental agreement. The list may be included in the written rental agreement. The written rental agreement must, at a minimum, include a description of the fees that the landlord may charge.

Do I have the right to enforce no smoking in my rental property?
Landlords must disclose in writing a smoking policy for the rental unit. The disclosure must state whether smoking is prohibited on the premises, allowed on the entire premises or allowed in limited areas on the premises. If the smoking policy allows smoking in limited areas on the premises, the disclosure must identify the areas on the premises where smoking is allowed.

Non Compliance Fees for written rules or policies are allowed but may not exceed $50. ORS 90.302(2)(f).

May I charge late payment fees?
The rental agreement must state the type and amount of late fee and when it can be charged. There are 3 different kinds of late fees:
• Per Rental Period Late Fee: a reasonable flat amount charged one time for the month once the rent is late by 4 days.
• Per Day Late Fee: a daily fee that cannot be more that 6% of the reasonable flat monthly late fee described above .
• A 5-Day Period Late Fee: a fee that is 5% of the rent, charged once for each 5-day period the rent is late.

Please Note: The landlord can change the type of late fee that is charged by sending the tenant a 30-day notice in advance.

May I charge a Non-Compliance fee?
Non Compliance Fees for written rules or policies are allowed - not to exceed $50, for only the following circumstances ORS 90.302(2)(f):

• Late payment of utility or service charge.
• Failure to clean up pet waste from premises (other than dwelling unit).
• Failure to clean up garbage, rubbish, or other waste from premises (other than dwelling unit).
• Parking violations & improper use of vehicles within the premises.


May I charge a returned payment fee?
Assessed fees must be reasonably related to the expenses the landlord incurs as a result of a returned payment. The NSF Check Fee plus any bank charges must be included within the written rental agreement for the authority to charge.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a lease agreement?
If the tenancy is:

• Month-to-Month: A 30-day advance written notice is required.
• Week-to-Week: A 10-day advance written notice is required.
• Fixed Term Lease: At any time during the fixed term tenancy the landlord or the tenant may terminate the tenancy without cause by giving the other 30 days written notice prior to the specified ending date or no less than 30 days prior to the date designated in the notice for the termination of the tenancy, whichever is later. ORS 90.427(5)-In the event of a property sale, a 30 day notice may still be given within certain limits.


Additionally, a 60 day notice period is needed for a no cause eviction for all tenancies of more than one year and the 30 day no cause eviction period remains for tenancies where any tenant has lived in the rental unit for less than one year. Tenants may still give the landlord a 30 day notice.

My tenant has moved out, what shall I do with their security deposit?
Within 31 Days of tenancy termination, the landlord must return the entire security deposit, or written account that states specifically why a portion or all of the deposit , if any, was withheld.

Please Note: If a landlord requires a new or increased security deposit after the first year of the tenancy, the landlord shall allow the tenant at least 3 months to pay the deposit.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state's landlord obligations.

If a tenant is a victim of domestic violence and gives the landlord at least 14 days' written notice, and the notice so requests, the landlord shall release the tenant and any immediate family member of the tenant from the rental agreement.


How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has "skipped" out of the apartment?
Often times it's best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It's extremely important to document all of the "proof" gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
The landlord shall have the right to enter the leased premises at reasonable times and hours, after reasonable notice has been given to the tenant(24 hrs), unless in cases of emergency.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.
If a rental unit is located within a 100 year flood plain, the Landlord must disclose that fact in the rental agreement. 100 year flood plain status is determined by the National Flood Insurance Program of FEMA, the Federal Emergency Management Agency.
If the landlord fails to provide this disclosure notice, and the tenant suffers an uninsured loss, the tenant may recover from the landlords two months' rent or the lesser of the actual damages for the uninsured loss.

Oregon Landlord Tenant Law may be found at: https://www.oregonlegislature.gov/bills_laws/lawsstatutes/2013ors090.html

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Questions about Oregon rental property regulations can be asked in our Rental Expert Forum, and additional help can be found on our list of Oregon Rental Resources.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/98/oklahoma-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/98/oklahoma-landlord-tenant-law-and-regulations/ Tue, 03 Nov 2009 13:59:35 GMT What is the maximum amount I can collect as a security deposit?
There is no limit on the amount collected for a security deposit. The deposit must be kept in an escrow account in a federally insured institution in the State of Oklahoma; misappropriation of the fund is a misdemeanor.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

May I charge a late payment or a returned check fee?
Assessed fees must be reasonably related to the expenses the landlord incurs as a result of a late payment. There are no stated regulations on the amount that can be charged for a returned or dishonored payment. But any amount charged should not be so high as to be considered unconscionable.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a Oklahoma lease agreement?
If the tenancy is:
• Week to Week Tenancy: 7 days advance written notice.
• Month-to-Month Tenancy: 30 days advance written notice.
• Fixed Term: Expires on the stated ending date without notice, unless otherwise agreed upon.


My tenant has moved out, what shall I do with their security deposit?
Upon termination of the tenancy, any security deposit held by the landlord may be applied to the payment of accrued rent and damages which the landlord has suffered by reason of the tenant’s noncompliance with the rental agreement, all as itemized by the landlord in a written statement delivered by mail to be by return receipt requested and to be signed for by any person of statutory service age at such address or in person to the tenant. If the landlord proposes to retain any portion of the security deposit for rent, damages or other legally allowable charges stated in the rental agreement, the landlord shall return the balance of the security deposit without interest to the tenant within 30 days (45 days as of November 1, 2015) after the termination of tenancy, delivery of possession and written demand by the tenant.

• If the tenant does not make such written demand of such deposit within 6 months after termination of the tenancy, the deposit reverts to the landlord in consideration of the costs and burden of maintaining the escrow account, and the interest of the tenant in that deposit terminates at that time.


Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
The landlord shall have the right to enter the leased premises at reasonable times and hours, after reasonable notice has been given to the tenant(24 hrs), unless in cases of emergency.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

If the premises to be rented has flooded within the past 5 years and such fact is known to the landlord, the landlord shall include such information prominently and in writing as part of any written rental agreement. Failure to provide such information shall entitle any tenant who is a party to the rental agreement to sue the landlord for recovery of personal property damages sustained by the tenant, from flooding of the leased premises.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Oklahoma law questions can be posted in our Rental Expert Forum, and you can view additional Oklahoma rental resources here.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/97/north-dakota-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/97/north-dakota-landlord-tenant-law-and-regulations/ Tue, 03 Nov 2009 12:23:35 GMT

What is the maximum amount I can collect as a security deposit?
A security deposit may not exceed an amount equal to 1 month’s rent and the landlord is obligated to deposit the money in a federally insured interest-bearing savings or checking account.

Please Note: The landlord may require a "pet deposit" which may not exceed an amount of $2,500 or 2 month's rent, whichever is greater.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance.

May I charge late and returned payment fees?
The landlord may charge a late fee, however, it must be a provision of the lease (verbal or written) or it is not legal. In addition, the lease must state how much the late fee will be and on what date it will be effective. The maker of a dishonored check may be liable for collection fees or costs not to exceed $30. N.D. Cent. Code § 6-08-16 and N.D. Cent. Code § 6-08-16.2

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a North Dakota lease agreement?
If the tenancy is:

• Month-to-Month: If there is no provision in the month-to-month periodic lease stating how much advance notice must be given to end the lease (written or verbal), either party may terminate the lease by giving at least 30 days written notice at any time.
• Fixed Term: Terminates automatically at the end of the lease period without the need of any notice from either landlord or tenant unless otherwise specified within the lease.


Please Note: NOTICE TO TERMINATE LEASE- 60 DAY NOTICE Requirement
Where an advance 60 day notice to end or renew the tenancy is specified in the lease, the landlord must provide a space for the resident to initial next to the notice requirement. If that notice requirement is not initialed by the resident, the lease can be terminated by either party with at least one calendar months notice to take effect on the last day of the month.

• If a Month-to-Month lease from the inception requires a 60 day notice to terminate, that termination clause must be also initialed by the resident.
• After August 1, 2007, if the term lease is going to convert on a Month-to-Month basis, the landlord will no longer be allowed to require 60 days notice to terminate from the resident, even if the resident initialed such language.


My tenant has moved out, what shall I do with their security deposit?
Within 30 days of tenancy termination, the landlord must return the tenant's security deposit (plus interest if the leased premises was occupied for 9 months or longer), or give the tenant a written explanation as to why the deposit (or any part of the deposit) will not be returned.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations. You may not deny a tenant release from a contract if they are part of domestic abuse, are threatened or in harms way do to domestic abuse.  NOTE:  The tenant must provide advance written notice to the landlord stating:  The tenant fears imminent domestic violence from a person named in court or restraining order. 

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
Unless it is an emergency or impractical to do so, the landlord must attempt to obtain the tenant's consent for an agreed time of entry. Consent may be presumed from the tenant's failure to object to access after reasonable notice is given.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Questions about North Dakota landlord-tenant laws can be asked in our Landlord Q&A Forum, and additional North Dakota rental resources are also available.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/96/new-mexico-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/96/new-mexico-landlord-tenant-law-and-regulations/ Mon, 02 Nov 2009 13:49:05 GMT What is the maximum amount I can collect as a security deposit?
If the Duration of the Lease is Less than 1 Year, the landlord cannot demand or receive a deposit that is more than the amount of 1 month’s rent.
If the Duration of the Lease is 1 Year or Greater, a landlord may demand a reasonable deposit from the tenant, which may be used to cover the cost of any damages caused by the tenant during the term of residency. Under an annual rental agreement, if the landlord receives a deposit from the tenant in an amount greater than one month’s rent, the landlord is required to pay the tenant interest equal to the passbook interest on savings and loan associations in New Mexico.

Please Note: If the landlord demands prepaid rent for the last month of the tenancy, such amount is not considered a deposit.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance.

May I charge late and returned payment fees?
The landlord may charge a late fee in an amount not to exceed 10% of the total rent payment for each rental period that the resident is in default. To assess a late fee, the owner shall provide notice no later than the last day of the next rental period (immediately following the period in which the default occurred). There are no statutory limits placed on a fee for a returned payment, however such fees should remain reasonable and related to the landlord's actual expenses incurred.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a New Mexico lease agreement?
If the tenancy is:
• Week to Week: The tenant or landlord must give written notice to the other at least 7 days prior to the termination date specified within the notice.
• Month to Month: The tenant or landlord must give written notice to the other at least 30 days prior to the periodic rental date as specified in the notice.
• Fixed Term: The tenant or landlord must give written notice to the other as specified within the lease or at least 30 days prior to the end of the rental agreement.


My tenant has moved out, what shall I do with their security deposit?
Within 30 days of the termination of tenancy, the landlord must provide the tenant with an itemized list of deductions from the deposit and the balance of the deposit, if any.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
Landlords shall give tenants 24 hours written notification of their intent to enter, the purpose for entry, and the date and reasonable estimate of the time frame of the entry, except for cases of emergency or if it's impracticable to do so.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Have more questions about New Mexico rental laws?  Just ask in our Rental Forum, and check out our other New Mexico rental property resources!

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/95/new-hampshire-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/95/new-hampshire-landlord-tenant-law-and-regulations/ Thu, 29 Oct 2009 15:34:09 GMT Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance, and could make the failure to do so a breach of the lease.

May I charge a returned payment fee?
Landlords may assess a collection fee for a dishonored payment of no more than $25, unless otherwise authorized by written agreement with the tenant.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

What is the maximum amount I can collect as a security deposit?
In New Hampshire, a landlord who owns more than 6 units can asses a security deposit of no more than one month's rent or $100, whichever is larger.

• Upon receiving a deposit, the landlord is required to give the tenant a signed receipt stating the amount of the deposit and specifying the place where the deposit will be held. During the term of the lease, a landlord is also required to provide specific information regarding the deposit upon request.
• A landlord who holds a security deposit for a period of one year or longer shall pay interest on the deposit at a rate equal to the interest rate paid on regular savings accounts in the New Hampshire bank savings and loan association, or credit union in which it is deposited; commencing from the date the landlord receives the deposit.
• Tenants may request the accrued interest on a security deposit every 3 years ( 30 days before the expiration of that year's tenancy). The landlord shall comply with the request within 15 days of the expiration of that year's tenancy.


Please Note: A person who rents or leases a single-family residence or who rents or leases rental units in an owner-occupied building of 5 units or less, shall not be considered a "landlord" for the purposes of this subdivision (except for any individual unit in such building which is occupied by a person or persons 60 years of age or older).

How can I end a New Hampshire lease agreement?
30 Days notice is required by statute to end a lease agreement.

My tenant has moved out, what shall I do with their security deposit?
The security deposit and/or the balance, including an itemized list, must be returned to the tenant within 30 days.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
In New Hampshire there are specific procedures to follow and a notice to send out if you believe your tenant has abandoned the rental unit and lease agreement. The New Hampshire Tenant Abandonment Letter provides the proper notice and follows the requirements in these circumstances.

 

Do I have to give the tenant notice before I enter the rental property?
Landlords may not enter the leased premises without prior notice and consent, except in cases of emergency and to make repairs.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

 

Have questions for the experts? Pose them in our Rental Laws Forum, and also check out our other New Hampshire rental resources.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/94/nebraska-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/94/nebraska-landlord-tenant-law-and-regulations/ Tue, 27 Oct 2009 15:07:15 GMT What is the maximum amount I can collect as a security deposit?
The security deposit may not exceed an amount greater then 1 months rent.
Please Note: If a pet deposit is required, an additional amount not to exceed one-quarter of one month’s rent may be collected.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

Can I require my tenants to obtain renter's insurance?
Landlords in the state of Nebraska may require tenants to obtain rental insurance.

May I charge a fee for late rent or a returned payment?
There are no maximum limits or restrictions placed on the amount charged for a late fee. However, assessed fees should be reasonably related to cover the expenses the landlord incurs as a result of a late payment.

Issuing a dishonored check may be a criminal offense under Nebraska law, and may subject the violator to fines, imprisonment, and be ordered to make restitution to the payee. There is generally a presumption that the writer of a bad check has knowledge of insufficient funds. Within 10 days after receiving notice of a dishonored check, the tenant must pay restitution for the value of the check plus $10, and any reasonable service charges. (Section 28-611.)

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a Nebraska lease agreement?
The Landlord or Tenant May Terminate a Lease by Giving Advance Written Notice as Follows:
• Week to Week: Requires a 7 day notice .
• Month to Month: Requires a 30 day notice .
• Fixed Term: Requires notice as specified in the lease or the lease simply terminates at the end of the rental agreement.

My tenant has moved out, what shall I do with their security deposit?
Upon termination of the tenancy, money held by the landlord as a security deposit may be applied to the payment of rent and damages which the landlord has suffered do to the tenant's noncompliance of the rental agreement. The balance, if any, and a written itemization shall be delivered or mailed to the tenant within 14 days.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
Except in case of emergency or unless it is impracticable to do so, the landlord must give the tenant at least 24 hours' notice of intent to enter and may enter only at reasonable times.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

 

]]> https://www.ezlandlordforms.com/articles/news/93/designing-spaces-features-ez-landlord-forms/ https://www.ezlandlordforms.com/articles/news/93/designing-spaces-features-ez-landlord-forms/ Fri, 23 Oct 2009 11:05:16 GMT Recently, the producers and hosts of the multiple Telly Award-winning show Designing Spaces (which airs on TLC) invited EZ Landlord Forms' CEO Kevin Kiene, along with EZ Landlord Forms’ legal counsel Paul Cohen, to visit their studios to film an informative segment regarding the rental industry.


EZ Landlord Forms, the premier online resource for landlords, has made it a priority to offer informative and educational content publicly available to the consumer landlord. The Designing Spaces segment is part of their goal to educate landlords, from green novices to seasoned experts.


On August 31st Kevin and Paul traveled to sunny Florida and met with directors, video and sound technicians, television crews and even make-up personnel to shoot the segment. Along with the hostess, Andy Tillis; both Kevin and Paul met up with a new landlord, Susan, at her beautiful rental property.

 

 

 

Susan was anxious to receive some much-needed information, to help her succeed in her new real estate investing endeavor. With some helpful guidance from Kevin and Paul, Susan felt much more comfortable and ready to enter the exciting world of being a landlord.

 


Going from web-site developer to television star was a fun and exciting process but also came with some stress and frustration. While the Designing Spaces crew and staff made the process as easy as possible, there were a few comic missteps along the way. On the morning of the shoot, Kevin and Paul decided to save time by dressing in their “show” wardrobe at the hotel. While eating breakfast, Kevin joked about the possibility of getting food on their outfits. Foretelling of the future, a piece of Paul’s breakfast fell from his grasp onto his crisp, show ready shirt.


Prepared and armed with a GPS to guide them to the segment location on time,  both were surprised to find themselves in unexpected, horrid, rush hour traffic- causing them to arrive twenty minutes late.


Though there were a few bumps in the road, everything came together and the shoot was a success. The Designing Spaces segment will begin airing on October 24th, with additional airings scheduled throughout October and November. You can also view the segment right here on our website!

 

 

 

 

 

 

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/92/montana-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/92/montana-landlord-tenant-law-and-regulations/ Thu, 22 Oct 2009 12:41:39 GMT What is the maximum amount I can collect as a security deposit?
There is no limit on the security deposit charged to the tenant so long as it is reasonable.

However, when a landlord requires a security deposit, a written statement must be provided stating the condition of the premises at the execution of the lease. If the landlord fails to furnish this statement, they may be barred from recovering any damages, unless additional evidence can establish the damage was caused by the tenant.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

Can I require my tenants to obtain renter's insurance?
Landlords in the state of Montana may require tenants to obtain rental insurance.

May I charge a fee for late rent or a returned payment?
Late fees should remain reasonable and related to the landlord's actual expenses incurred. A person who issues a dishonored check is liable to the holder for the amount of the check and a service charge for a reasonable amount, not to exceed $30.00. To recover the service charge, the holder must make a demand in writing.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a Montana lease agreement?
The landlord or the tenant may terminate a Week to Week Tenancy by written notice given to the other at least 7 days prior to the termination date. A Month to Month Tenancy may be terminated by written notice given to the other at least 30 days prior to the rental termination date, and a Fixed Term Lease has a specific ending date, and automatically terminates without notice unless otherwise specified in the lease.

My tenant has moved out, what shall I do with their security deposit?
A final inspection by the landlord must be completed within 7 days of lease termination. The landlord must deliver within 24 hours after the inspection, to the tenant a written list of damages and/or additional cleaning that may be needed.
• The landlord must give the tenant at least 24 hours to complete the required cleaning.
• If, after the final inspection, there are no charges against the security deposit, the landlord must return the full amount to the tenant within 10 days.
• Otherwise, the landlord must deliver to the tenant, within 30 days, an itemized list of deductions from the security deposit, along with any portion of the security deposit remaining.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
Except in case of emergency or unless it is impracticable to do so, the landlord must give the tenant at least 24 hours' notice of intent to enter and may enter only at reasonable times.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Additionally, at the beginning of the tenancy the landlord must provide the tenant with a written statement of the condition of the premises. The landlord may use the Move in Move Out Condition Report.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Review our other Montana rental resources, and ask questions in our Rental Laws Forum!

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/91/new-north-carolina-statutes-affect-landlords/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/91/new-north-carolina-statutes-affect-landlords/ Thu, 15 Oct 2009 15:14:45 GMT New Landlord Tenant Statutes for North Carolina; Effective October 1, 2009

Hot-Water-Only Sub-metering (pre-1989 properties only)
On October 1, 2009, NC Gen. Stat. § 62-110(g) was modified to add a new subsection, (1a). This will permit older properties (built prior to 1989) to sub-meter hot water usage only as a means of billing costs to residential tenants. Basically, landlords with properties built prior to 1989 may install water meters to measure the amount of hot water used and bill accordingly in addition to the estimated cold water usage.

Repair of "Imminently Dangerous Conditions"
On October 1, 2009, N.C. GEN. STAT. § 42-42(a) was changed to add subsection (8), which requires landlords to repair or remedy any "imminently dangerous condition" upon realization or notification via an inspection, walkthrough, a notice, or telephone call.

The term "imminently dangerous condition" includes a list of twelve items. These items should be considered as a high priority for the landlord to repair upon discovery or notification. If any of these items are found to be the tenants fault, then the tenant shall be responsible for reimbursement.
1. Unsafe wiring
2. Unsafe flooring or steps
3. Unsafe ceilings or roofs
4. Unsafe chimneys or flues
5. Lack of potable water
6. Lack of operable locks on all doors leading to the outside
7. Broken windows or lack of operable locks on all windows on the ground level
8. Lack of operable heating facilities capable of heating living areas to 65 degrees Fahrenheit when it is 20 degrees Fahrenheit outside from November 1 through March 31
9. Lack of an operable toilet
10. Lack of an operable bathtub or shower
11. Rat infestation as a result of defects in the structure that make the premises not impervious to rodents
12. Excessive standing water, sewage, or flooding problems caused by plumbing leaks or inadequate drainage that contribute to mosquito infestation or mold.


Extend Time to Account for Use of Security Deposits
The original language of NC Gen. Stat. § 42-52 required that all landlords must itemize any deductions from the security deposit and refund any remaining balance to the tenant within 30 days after the Tenant relinquishes tenancy and vacates the unit. However, in consideration of the difficulty some landlords had in determining the extent of the damages and the cost along with generating or furnishing invoices for the repairs; the landlord now has up to 60 days to provide an itemization and accounting if this cannot be determined within 30 days.

Stronger Penalties for Willful Non-Compliance with Security Deposit Laws
Effective October 1, 2009, are new penalties regarding a landlord's "willful" failure to comply with the deposit, bond, or notice requirements of the applicable security deposit laws. Upon the showing of any "willful failure" of compliance with NC security deposit laws, a landlord shall lose the right to retain any portion of the deposit. The term "willful" has been defined by the N.C. Supreme Court as "the wrongful doing of an act without justification or excuse, or the commission of an act purposely and deliberately in violation of law." A landlord cannot cite ignorance as an excuse. Know the law!

New Fees for Evictions
Effective October 1st, 2009, a landlord may now charge precise fees when evicting a tenant. VERY IMPORTANT: These fees must be specified with a NC lease! They are not automatically owed unless provisions for them are included in a lease. If not, a landlord may not charge these fees. The new charges are:

• Complaint-Filing Fee: A fee equal to five percent (5%) of the monthly rent, in addition to court costs, attorney's fees, and any late fee owed. This fee can only be charged if you filed a complaint for a default of the lease, and the tenant cured the default, and you elected to dismiss the case prior to trial.
• Court-Appearance Fee: A fee equal to ten percent (10%) of the monthly rent, in addition to court costs, attorney's fees, and any late fee owed. This can be charged if you filed a complaint for a default of the lease, you obtained a judgment, and the tenant did not appeal it.
• Second Trial Fee: A fee equal to twelve percent (12%) of the monthly rent, in addition to court costs, attorney's fees, and any late fee owed. This can be charged if you filed a complaint for a default of the lease; you obtained a judgment; the tenant appealed the case to District Court, and you obtained a district court judgment.


Beware! There are certain restrictions to these fees.
The Landlord may only charge ONE of these fees. For instance, if you filed a summary ejectment suit against a tenant, and charged and collected a complaint filing fee, you cannot also charge a second trial fee. It is a bit of a gamble. Again, these fees are in addition to your normal late fees. In terms of an eviction, you cannot charge any other fees besides late fees, court costs, and attorney's fees - regardless of what your lease may say. These laws only affect leases signed after October 1, 2009. Existing leases will be grandfathered until the end of the current term of the lease; do not assume that month-to-month leases are exempt; unless your tenants sign a new month-to-month lease after October 1, 2009. Any other fees in leases signed after October 1, 2009 are void and against public policy. Be careful with the "against public policy" aspect, since it can form the basis for an unfair/deceptive trade practice claim. This means that you cannot charge administrative fees for evictions on all leases signed after October 1, 2009.

Section 8 Leases: These fees are only assessed on the tenant's portion of rent, not the gross rent.

TIP: It's best NOT to list these fees as damages in your eviction case because according to the new statutes, the landlord is not eligible to claim them - until after the case is over or dismissed. It is considered premature to demand them as part of your eviction lawsuit. They are to be collected afterwards - not beforehand.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/90/north-carolina-carbon-monoxide-2010-landlord-tenant-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/90/north-carolina-carbon-monoxide-2010-landlord-tenant-regulations/ Wed, 14 Oct 2009 13:01:09 GMT In North Carolina, as of January 1, 2010 the landlord must provide a minimum of one operable carbon monoxide detector per rental unit per level, either battery operated or electrical, that is listed by a nationally recognized testing laboratory that is OSHA approved to test and certify to American National Standards Institute/Underwriters Laboratories Standards ANSI/UL2034 or ANSI/UL2075.

The installation of the carbon monoxide detectors must be in accordance with either the standards of the National Fire Protection Association or the minimum protection designated in the manufacturer's instructions, which the landlord shall retain or provide as proof of compliance.

A landlord that installs one carbon monoxide detector per rental unit per level shall be deemed to be in compliance with standards under this subdivision covering the location and number of detectors.

The landlord shall replace or repair the carbon monoxide detectors within 15 days of receipt of notification if the landlord is notified of needed replacement or repairs in writing by the tenant.

The landlord shall ensure that a carbon monoxide detector is operable and in good repair at the beginning of each tenancy. Unless the landlord and the tenant have a written agreement to the contrary, the landlord shall place new batteries in a battery operated carbon monoxide detector at the beginning of a tenancy with a North Carolina lease, and the tenant shall replace the batteries as needed during the tenancy. Failure of the tenant to replace the batteries as needed shall not be considered as negligence on the part of the tenant or the landlord.

A carbon monoxide detector may be combined with smoke detectors if the combined detector does both of the following:
(i) complies withANSI/UL2034 or ANSI/UL2075 for carbon monoxide alarms and ANSI/UL217 for smoke detectors; and
(ii) emits an alarm in a manner that clearly differentiates between detecting the presence of carbon monoxide and the presence of smoke.

This subdivision applies only to dwelling units having a fossil fuel burning heater or appliance, fireplace, or an attached garage. Any operable carbon monoxide detector installed before January 1, 2010, shall be deemed to be in compliance with this subdivision.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/89/mississippi-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/89/mississippi-landlord-tenant-law-and-regulations/ Tue, 13 Oct 2009 14:16:33 GMT What is the maximum amount I can collect as a security deposit?
There is no limit on the security deposit charged to the tenant so long as it is reasonable.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

Can I require my tenants to obtain renter's insurance?
Landlords in the state of Mississippi may require tenants to obtain rental insurance.

May I charge a fee for late rent or a returned payment?
Late fees should remain reasonable and related to the landlord's actual expenses incurred. Landlords may not assess a service charge or returned payment fee that exceeds $40. Miss. Code Ann. § 97-19-5.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a Mississippi lease agreement?
The landlord or the tenant may terminate a Week to Week Tenancy by written notice given to the other at least 7 days prior to the termination date. A Month to Month Tenancy may be terminated by written notice given to the other at least 30 days prior to the rental termination date, and a Fixed Term Lease has a specific ending date, and automatically terminates without notice unless otherwise specified in the lease.

My tenant has not paid rent, what shall I do?
The landlord must give the tenant a 3 day notice, in writing, to evict for non payment of rent. The notice must state that the tenant must pay rent or vacate. If the tenant does not pay in 3 days, the landlord may file an eviction action in court and obtain an order of eviction.

My tenant has moved out, what shall I do with their security deposit?
The written notice by which the landlord claims all or any portion of the security deposit shall itemize the amounts claimed. Any remaining portion of the security deposit shall be returned to the tenant at their request no later than 45 days after ending the tenancy and leaving the premises.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
A landlord has no right to enter the leased premises unless that right is reserved in the lease.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Further Mississippi rental resources are available, and questions about MS landlord-tenant laws can be asked in our Rental Laws Forum.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/88/michigan-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/88/michigan-landlord-tenant-law-and-regulations/ Mon, 05 Oct 2009 13:27:05 GMT What is the maximum amount I can collect as a security deposit?
The security deposit shall not exceed 1 1/2 months rent.

Are there any specifications regarding the placement and/or acceptance of the security deposit?
The landlord must either deposit the funds in a regulated financial institution OR deposit a cash or surety bond, securing the entire deposit with the Secretary of State.

Please also note that within 14 days of the tenant’s move-in day, the landlord must provide written notice to the tenant stating the name and address of the financial institution of where the security deposit is held, or the surety company who filed the bond with the state.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance.

May I charge a fee for late rent or a returned payment?
Landlords may assess late fees when the rent is past due. However, the fee must approximate the actual damages suffered and must compensate; they cannot penalize. "Actual damages" might include lost interest on the rent, the cost of sending the tenant a letter requesting payment of rent, making a phone call, and any penalty the landlord was charged for making a late mortgage payment.

Returned Check fees may not exceed $25 if paid within 7 days, excluding weekends & holidays, after notice was mailed. If not paid as requested above, but within 30 days after notice was mailed, the service fee is $35. Mich. Comp. Laws § 600.2952

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a Michigan lease agreement?
A Fixed-Term Lease automatically terminates at the end of the lease unless otherwise specified. A Periodic Lease is automatically renewed at the end of each rental period (month-to-month or week-to-week, depending on how often rent must be paid) unless a written notice is provided equal to the amount of time of one rental period (one month, one week, etc.).

Please Note: Lease agreements entered into, renewed, or renegotiated after June 15, 1995, must provide special termination rights for senior citizens and persons incapable of independent living. These leases must allow the tenant who has occupied a rental unit for more than 13 months to terminate the lease with 60 days’ written notice if either of the following occurs:
• Tenant becomes eligible to move into a rental unit in senior-citizen housing subsidized by a federal, state, or local government program, OR
• Tenant becomes incapable of living independently, as certified by a physician in a notarized statement.

My tenant has moved out, what shall I do with their security deposit?
The security deposit must be refunded within 30 days of termination of occupancy.

In cases of damage to the rental unit or other obligation against the security deposit, the landlord shall mail to the tenant within 30 days, an itemized list of damages claimed against the security deposit, including the estimated cost of repair. The list shall be accompanied by a check or money order for the difference between the damages claimed and the amount of the security deposit held by the landlord. The notice of damages must include the following statement in which shall be at least 4 points larger than the body of the notice: “You must respond to this notice by mail within 7 days after receipt, otherwise you will forfeit the amount claimed for damages."

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
There are no statutory requirements limiting a landlord's right to enter the leased premises. However, a landlord may not interfere with the tenants peace and enjoyment. Therefore, landlords should exercise caution and fairness when entering the leased premises. It's best to give tenants adequate notice, unless an emergency requires immediate entrance.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Have questions about Michigan rental regulations?  Ask them in our Rental Q&A Forum, and see our other Michigan rental resources for additional help.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/87/maryland-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/87/maryland-landlord-tenant-law-and-regulations/ Wed, 30 Sep 2009 14:28:49 GMT Are there rent control/rent stabilization policies or laws in Maryland?
Rent Control Policies Exist in the Following Locations: College Park, Frederick County, Takoma Park, and Washington County. Landlords should check with their local housing authority for further information and to determine regulations.

What is the maximum amount I can collect as a security deposit?
Security deposits may not exceed 2 month's rent.

Are there any specifications regarding the placement and/or acceptance of the security deposit?
Security deposits are required to be held in an interest bearing account that is maintained by a financial institution located within the state and the account must exclusively house only the security deposit. Additionally, the security deposit must be placed in an account within 30 days of receipt and a written statement of the deposit must be provided to the tenant.

Please Note: When the tenant provides the landlord with the security deposit, the landlord must then provide a written statement showing the tenant they have the right to be present at an inspection of the property when tenant moves out.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

May I charge a fee for late rent or a returned payment?
Late fees may not exceed 5% of the amount owed for rent. Week to Week leases may charge a late penalty of no more than $3 per week or a total of no more than $12 per month. A returned payment fee must be no more than $35. Md. Code Ann., Com. Law § 15-802.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a Maryland lease agreement?
Any lease or other written agreement may not require the tenant to give a longer notice of termination than the landlord. (Md. Code, Real Property, Section 8-501.) When a written lease contains termination provisions; the required notice of intent to vacate shall be provided within the lease.
• Baltimore City law requires the landlord to give at least 60 days’ written notice before the end of the year, month, or week when the tenant is to leave. The tenant normally has to give only a 30-day written notice.(Public Local Laws, Sec. 9-16.M)

My tenant has moved out, what shall I do with their security deposit?
Landlord must return a tenant’s security deposit within 45 days after the tenancy ends. Either the full deposit plus interest (if the deposit was in excess of $50) must be provided OR an itemization of any deductions and the balance, if applicable. The interest may be computed using the : Maryland Rental Security Deposit Calculator. , which is provided by Maryland.gov web-site.

Maryland provides very strict laws regarding the acceptance and return of security deposits. Failure to follow them may bring stiff fines and legal ramifications. Security Deposits are governed by Maryland Chapter 489.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
There are no clearly-defined state-wide limits on the landlord’s right to enter the leased premises. Rather, in the absence of a genuine emergency, there is a balance between the tenant’s right of privacy and the landlord’s right to enter regarding tasks such as performing an inspection, making repairs, and/or showing the leased premises.

Please Note: In Montgomery and Prince George's Counties, the landlord is required to give 24 hours notice prior to entering the leased premises.

Aside from the lease agreement, are there any additional documents necessary?
The landlord has a duty to disclose material facts and/or latent (hidden) defects relating to the leased premises.
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

VERY IMPORTANT: The owner must give the MDE pamphlet, “LEAD POISONING PREVENTION - Notice of Tenants’ Rights” to all new tenants as well as every two years thereafter for long term tenants. Notices and packets must be provided in a verifiable manner, such as by certified mail.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Have questions about Maryland laws?  Ask them in our State Law Forum, and also review our other Maryland rental resources!

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/86/louisiana-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/86/louisiana-landlord-tenant-law-and-regulations/ Wed, 30 Sep 2009 13:33:26 GMT What is the maximum amount I can collect as a security deposit?
There is no limit placed on the security deposit charged to the tenant so long as it is reasonable

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance, and could make the failure to do so a breach of the lease.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

May I charge a fee for late rent or a returned payment?
Late fees should remain reasonable and related to the landlord's actual expenses incurred. Returned payment fees may not exceed $25 or 5% of face amount, whichever is greater, as long as specified within the lease. La. Rev. Stat. Ann. § 9:2782

May the tenant make rental repairs and deduct expenses from their rental payment?
The Louisiana Civil Code provides that if the landlord does not make necessary repairs to the premises after the tenant has called upon him/her to do so, the tenant can make the repairs and deduct their costs from the rent due. La. Civ. Code art. 2694.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a Louisiana lease agreement?
With regards to a fixed term Louisiana lease, notice is not required and the tenant shall vacate the premises unless otherwise specified within the lease. However, for a month to month lease, written notice must be given at least 10 days prior to expiration of the current month.

My tenant has moved out, what shall I do with their security deposit?
Landlords are required to return a tenant’s deposit, minus any portion which is necessary to remedy a tenant’s default, or to remedy unreasonable wear to the premises, within 1 month of the termination of the lease .

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
The landlord shall have the right to enter the leased premises at reasonable times and hours, after reasonable notice has been given to the tenant (24-72 hours), unless in cases of emergency.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint Disclosure and the Lead-Based Paint EPA Pamphlet. Additionally, a Mold Lease Disclosure must be provided to the tenant.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Ask legal questions in our state landlord-tenant law forum, and feel free to also view our other Louisiana rental resources!

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/85/kentucky-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/85/kentucky-landlord-tenant-law-and-regulations/ Mon, 28 Sep 2009 14:52:43 GMT

What is the maximum amount I can collect as a security deposit?
There is no limit placed on the security deposit charged to the tenant so long as it is reasonable.

Are there any specifications regarding the acceptance and/or placement of the security deposit?
Landlords must place the security deposit in a bank or lending institution subject to regulation by the Commonwealth of Kentucky or any agency of the United States Government. This account must not commingle with the landlords personal funds. The tenant must be informed of where the security deposit is being placed, including the bank account location and number as stated within the lease.

Prior to the tenant moving into the rental unit, shall there be a scheduled walk through determining the condition of the rental property?
Prior to occupancy, a complete list of any existing damage and a cost estimate for the necessary repairs is required before the tenant moves into the premises.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance, and could make the failure to do so a breach of the lease.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

May I charge a fee for late rent or a returned payment?
Late payment fees should remain reasonable and related to the landlord's actual expenses incurred. Returned payment fees may not exceed $50 and must be specified within the lease. Ky. Rev. Stat. Ann. § 514.040

My tenant has moved out, what shall I do with their security deposit?
When the tenant vacates the premises, the landlord shall make another list of damages and the cost of repairing them. The tenant must sign both “lists” the one at move-in and the one at move-out, in order to show that they agree, or refuse to sign if they disagree.

• If the landlord fails to place the security deposit in a separate account, and/or does not furnish lists of damages as described above, they are not entitled to retain any part of the deposit.
• Although the landlord may be precluded from retaining any portion of the security deposit due to his failure to comply, the landlord is not prohibited from taking legal action against the tenant to recover damages or losses.
• If the tenant moves out without paying the last month's rent, and does not demand a return of the security deposit within 30 days, the landlord may use the deposit as payment for rent. However, if the tenant moves out having paid all rent due, the deposit must be refunded if no damages have been incurred. In this case, when the tenant is entitled to a refund of the security deposit, the landlord should attempt to notify the tenant of the amount to be repaid. If the tenant has not responded after 60 days, the landlord may retain the deposit free from claim.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a Kentucky lease agreement?
Landlords may terminate a lease by the following;

• Week to Week: The landlord or tenant may terminate tenancy by written notice given to the other at least 7 days prior to the termination date specified in the notice.
• Month to Month: The landlord or tenant may terminate tenancy by written notice given to the other at least 30 days before the periodic date specified within the notice.
• Fixed Term Leases: Unless otherwise specified within the lease, the tenant vacates when the lease terminates.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
Except in cases of emergency, the tenant may require the landlord to give at least 48 hours notice of their intent to enter, and may allow the landlord access only at reasonable hours of the day.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Please view our Kentucky rental resources page for more information, and feel free to post questions about Kentucky landlord-tenant laws on our State Laws Forum.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/84/kansas-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/84/kansas-landlord-tenant-law-and-regulations/ Mon, 28 Sep 2009 13:11:27 GMT What is the maximum amount I can collect as a security deposit?
The Security Deposit is to be Collected as Follows:

For an Unfurnished Leased Premises: An amount not to exceed 1 month's rent is permitted.

For a Furnished Leased Premises: An amount not to exceed 1 1/2 month's rent is permitted.

Pet Occupied Leased Premises: An additional amount not to exceed 1/2 month's rent may be collected by the landlord.

Please Note: Security deposits must be placed in a bank, credit union, or savings & loan account insured by the federal government, and may not commingle with the landlord's personal funds.

 

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance, and could make the failure to do so a breach of the lease.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

May I charge a fee for late rent or a returned payment?
There are no limits on the amount charged for a late fee, however, assessed fees should remain reasonable and related to the landlord's actual expenses incurred. Returned payment fees must not exceed $30.

Please Note: If a tenant's check is returned for insufficient funds and the tenant fails to make alternative arrangements for the payment of rent within 5 days of the landlord's demand, the landlord may seek civil damages pursuant to recover a compensatory amount of 3 times the face amount of such check or $100.00, whichever amount is greater, along with reasonable attorney's fees and court costs associated with such civil action.

My tenant has moved out, what may I do with their security deposit?
If the landlord proposes to retain any portion of the security deposit for expenses, damages, or other legally allowable charges under the provisions of the rental agreement (other than rent), the landlord shall return the balance of the security deposit to the tenant within 14 days after the determination of such expenses, damages or other charges. In no event should this time frame exceed 30 days after termination of the tenancy, delivery of possession and demand by the tenant.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a Kansas lease agreement?
Landlords may terminate a lease by the following;

• Month to Month: The landlord or the tenant may terminate a tenancy by written notice given to the other party stating that the tenancy shall terminate no less than 30 days after receipt of the notice.
• Definite Term of More than 30 Days: Shall not be construed as a month to month tenancy, even though the rent is reserved payable at intervals of 30 days. The lease shall either end at the end of the term or renew with 30 days notice.
• Week to Week Tenancy: Shall terminate by a written notice given to the other at least 7 days prior to the termination date specified in the notice.

Please Note: Where the tenant is in the military service of the United States and termination of the tenancy is necessitated by military orders, not more than 15 days' written notice by a tenant shall be necessary to terminate any such tenancy.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have to give the tenant notice before I enter the rental property?
The landlord shall have the right to enter the leased premises at reasonable times and hours, after reasonable notice has been given to the tenant, unless in cases of emergency.

Aside from the lease agreement, are there any additional documents necessary?
Statute # 58-2548 states that within 5 days of the initial date of occupancy or upon delivery of possession, the landlord, or such landlord's designated representative, and the tenant shall jointly inventory the premises. A written record detailing the condition of the premises and any furnishings or appliances provided shall be documented. Duplicate copies of the record shall be signed by the landlord and the tenant as an indication the inventory was completed. The tenant shall be given a copy of the inventory.
Additionally, If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Feel free to ask Kansas law questions in our State Laws Forum, and view our other Kansas rental resources page as well.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/83/delaware-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/83/delaware-landlord-tenant-law-and-regulations/ Thu, 24 Sep 2009 14:52:15 GMT

What is the maximum amount I can collect as a security deposit?
When the rental agreement is for 1 year or more, or month to month tenancies that last one year or more, the security deposit may not exceed an amount equal to one month's rent. However, the landlord may require a security deposit in excess of 1 month's rent for a furnished rental unit, federally-assisted housing , and where the tenancy is expected to last less than 1 year.
Additionally, each security deposit shall be placed by the landlord in an escrow bank account in a federally-insured banking institution with an office that accepts deposits within the state.
Please Note: The landlord must disclose to the tenant the location of the security deposit account.

Landlords and tenants do have the option to use "surety bonds". A tenant would pay a non-refundable deposit for a bond instead of a security deposit. This will provide the landlord with the safety of a security deposit in place by the bond company while it permits the tenant to pay a lower cost, albeit a non-refundable cost.

Is it true that I must maintain an office for the receipt of rental payments?
Yes, landlords shall, in the county in which the rental unit is located, maintain an office or other permanent place for receipt of rental payments. Failure to maintain such an office, or other permanent place of payment where rent may be paid, shall extend the agreed upon time for payment of rent by 3 days beyond the due date.

May I charge a Pet Security Deposit?
A separate pet security deposit may be assessed, however, may not exceed an amount equal to 1 months rent. A Pet security deposit is not permitted for service animals.

May I charge a fee for late rent or a returned payment?
If the possibility of late fees are stated within the lease, late charges may not exceed $40. A late charge is considered additional rent and may not be imposed until 5 days after the date rent is due. Landlords may add reasonable fees to the rental payment to cover costs associated with returned payments, plus any charges the financial institution assesses.

My tenant has moved out, what do I do with their security deposit?
Within 20 days of lease termination or expiration of any rental agreement, the landlord shall provide the tenant with a refund of the full security deposit or an itemized list of damages, with the estimated costs of repairs for each deduction and shall tender payment for the difference between the security deposit and such costs of repair.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage, as well as including repair receipts and pictures.

How can I end a Delaware lease agreement?
Landlords may terminate a lease by giving the tenant advance written notice of a minimum of 60 days’ as specified below:

• Fixed Term Lease: Notice shall be given to tenant prior to the expiration of the term of the lease.
• Month to Month Lease: Notice shall be given on the first day of the month following the actual notice.


Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable, or If the tenant is called to active military duty. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the lease.

Do I have to give the tenant notice before I enter the rental property?
Landlords must give their tenants at least 48 hours' notice of intent to enter the rental premises. However, when repairs have been requested by the tenant, landlords may enter between 8:00 a.m. and 9:00 p.m. In the case of an emergency the landlord may enter at any time.

Aside from the lease agreement, are there any additional documents necessary?
If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and Lead-Based Paint EPA Pamphlet. The Landlord must also provide the tenant with a copy of an executed lease, free of charge.
In addition, a summary of The Delaware Residential Landlord Tenant Code" as prepared by the Consumer Protection Unit of the Attorney General's Office is required to be given to the new tenant at the beginning of the rental term and is included below under Addendums.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Delaware legal questions can be asked and discussed on our State Landlord Law Forum, and further information can be found on our Delaware rental resources page.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/82/idaho-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/82/idaho-landlord-tenant-law-and-regulations/ Tue, 22 Sep 2009 13:22:08 GMT

What are key elements a landlord should know about the application/tenant screening process?

It is not required for a landlord to run a credit check before approving a tenant’s application. Before running a prospective tenants credit, a landlord must get written consent. If a prospective tenant’s application is denied because of poor credit information the landlord must give the reason the application was rejected, the information of the credit reporting agency, and the right to acquire a copy of the report at no cost, from the credit reporting agency.

 

What types of agreements are permitted?

Landlords may establish a written lease or an oral lease. If the landlord decides to go the route of an oral lease it must be less than a one year term. Oral leases are not recommended because it is hard to hold liability to a conversation.

 

Are their restrictions on the amount a landlord may collect as a security deposit, late rent fee, or any other charges?

Idaho has no laws or restrictions on the amount of security deposit a landlord may charge. There are also no restrictions or limits established on the collection of a late fee. All fees should remain reasonable and related to the landlord's actual expenses incurred. With regards to returned payments, assessed fees should not exceed $20.

 

What are the procedures to be followed with security deposits after a tenant moves out?

The security deposit shall be refunded within 21 days. If no time frame is specified within the lease agreement, the security deposit or list of deductions must be refunded no later than 30 days after tenant surrenders possession of the premises.

 

How much notice must be given to end an Idaho lease agreement?

A Month to Month Lease may be terminated by either party issuing a one months written notice prior to the end of the rental period. A Fixed Term Lease will automatically renew unless a landlord issues a 90 day written notice to the tenant of intent to not renew. The tenant is required to give the landlord 30 days written notice of the intent to not renew..

 

What circumstances must a landlord release a tenant?

Landlords must release their tenant from the rental agreement if the tenant is called to active military duty. A landlord may be compelled to release a tenant, if the rental unit or premises is deemed unlivable by a casualty or fire, not caused by the tenant.

 

Is it required by law for a tenant to obtain renters insurance?

It is not required by Idaho law for tenants to obtain renters insurance, but a landlords may require a tenant to obtain rental insurance, and could make the failure to do so a breach of the lease.


May a landlord establish a “No Smoking” policy?

A landlord may set his/her own smoking policy in the lease as long as it is not discriminatory.

 

How much notice is required for a landlord to enter the rented premises?

There are no statutory requirements to the amount of notice required before a landlord may enter the leased premises. Landlords should exercise caution and use common sense when they need to gain entrance into the leased premises.

 

Aside from the lease agreement, are there any additional documents necessary?

Yes, If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.

 

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Idaho landlord-tenant law questions can be answered in our State Law Q&A Forum, and additional Idaho rental resources can be found here.

]]> https://www.ezlandlordforms.com/articles/educational/5/81/when-does-the-landlord-have-the-right-of-entry/ https://www.ezlandlordforms.com/articles/educational/5/81/when-does-the-landlord-have-the-right-of-entry/ Mon, 21 Sep 2009 10:51:06 GMT
Henry Pharr is a landlord-tenant attorney with Horack Talley law firm.

As a landlord, you may own a rental property, but once a tenant inhabits it, you can no longer enter the premises whenever you wish. In fact, tenant privacy rights are very closely regulated, although the laws do vary from state to state.

However, even though there are differences in the way each state protects tenants’ rights, there are some general requirements that are applicable in almost every situation, says attorney Henry Pharr III, a partner with the law firm of Horack Talley. Along with his paid work, Henry also has a pro bono practice, which includes landlord/tenant cases for Mecklenburg County (North Carolina) Legal Aid.

Henry noted that unless the lease says that the landlord is to have unlimited access to the apartment, the landlord is required to give reasonable notice, either written or verbal, that they will be entering the apartment and the reason for the entry. Other than an emergency, the two reasons for entry are to make a repair, or to show the apartment to a perspective tenant.

Henry added that the term “reasonable notice” is generally interpreted to mean that the tenant is given enough time to be out of the apartment if they choose, or at least not be caught in an embarrassing situation.

There’s another important point to remember about having given notice. Even though you have told the tenant you are coming, you don’t have the right to enter the property anytime of the day or night unless it is a real emergency. To enter at unreasonable time of the day or night would be violating the tenant’s right to the “quiet enjoyment” of the apartment, and the tenant’s right to have full reign over the space. If a landlord violates these rights by continually entering the premises with their key and without giving notice, the tenant can go to court and sue as long as they can show they have suffered damages a s a result of this action. A good example of this is if the tenant works from home, and the landlord’s repeated entry has caused the tenant to be unable to finish their work.

Knowing when you as landlord can enter an apartment isn’t as difficult as it may seem. Here’s how Henry breaks it down:
• Obvious emergency like smoke coming out of the apartment – landlord can enter and the tenant would not be able to contest.
• Serious repair, but not an emergency such as replacing a substantial length of leaking pipes – The landlord should be able to get access, although the tenant has some input as to when this can be done.
• Showing the apartment to a perspective tenant – Here is where the tenant has the most input, and the landlord must respect their rights when making an appointment to show the apartment.

Each state may have different requirements pertaining to when the landlord may enter the leased premises. So what is the best way to protect yourself from being sued for violating a tenant’s right to privacy? Have a lease that spells out when the landlord can enter, and know your state’s privacy statutes. Contact your State Attorney General's Office or Consumer Protection Agency to get advice about tenant privacy rights.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/80/washington-state-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/80/washington-state-landlord-tenant-law-and-regulations/ Thu, 10 Sep 2009 13:08:38 GMT

Is there a standard for charging an application fee or holding deposit?

Landlords may not charge an applicant more than the actual costs of a background check. The landlord must provide a receipt to the tenant for fees or deposits charged to hold a dwelling and also give a written description of the conditions under which the deposit may be returned. The landlord must follow the rules listed below when conducting tenant screening.

The landlord is required to first notify the applicant in writing, or by posting, of the following:

•What type of information will be accessed to conduct the tenant screening;

•What criteria may result in denial of the application; and

•In the event of a denial, if a consumer report is used, the name and address of the screening company and the applicant’s right to get a free copy of the report and a statement of the applicant's right  to dispute the accuracy of information in the report.

Warning: If the landlord does not abide by these requirements they may be held liable to owe tenant a sum of up to but not more than one hundred dollars plus the cost of legal and attorney charges.

 

Is it lawful to set a late fee for unpaid or untimely payments?

If there are any late charges that the landlord intends on imposing they must be stated in the lease and may not be collected unless it is written so.  The fee must not be unreasonable and may be charged each month that rent is in default.


Is it permitted to charge a per day late fee?

There are no stated restrictions regarding the charge of a per day late fee, although, such charges should remain modest.

 

If the tenant sends a bounced check or bad payment can I set a penalty fee?

A landlord may collect reasonable handling fees if not paid within 15 days. The penalty may not exceed $40 or the amount of check, whichever is less (Washington. Rev. Code § 62A.3-515).
 

May I increase the amount of rent charged to my tenant or make changes to provisions in the lease?

If the landlord wants to change the provisions of a month-to-month rental agreement, for example: raising the rent or changing the rules; the tenant must be given at least 30 days notice in writing. (less notice is not allowed under the law.) These changes can only become effective at the beginning of a rental period (the day the rent is due).

Rent Increases: The Landlord-Tenant Act does not limit how much the rent can be increased, or how often.  A landlord may never raise the rent in retaliation against a tenant.

If the landlord wishes to convert the rental property to a condominium the tenant must be given a 90-day notice.  

Under a fixed term lease, in most cases, changes cannot be made until the lease ends or unless both landlord and tenant agree to the proposed change.

 

What is the maximum amount I can collect as a security deposit?

There are no restrictions on the maximum amount that may be collected as a security deposit.

 

Are there any special rules regarding the collection of a security deposit?

The laws regarding the collection of a security deposit are found in Washington statute RCW 59.18.260.  The landlord must provide an inspection checklist signed by both parties stating the condition and cleanliness of the premises along with the written rental agreement. The conditions under which a deposit may be retained must also be described within the lease. Additionally, the landlord must place the deposit in a trust account within Washington State and give the tenant a receipt indicating the location.

IMPORTANT: If any type of fee or refundable deposit is being paid by the tenant, the rental agreement must be in writing.  In the agreement it must state condition of the premises, which can include walls, floors, any counter or banister tops, appliances supplied by the landlord, blinds or window coverings.  Itemizations of these objects will need to be signed and dated by the landlord and tenant at lease signing.  The tenant has a right to retain a copy of the checklist and if damages fall under normal wear and tear they may not be deducted from the deposit. If this list is not provided along with the signed lease only the landlord is held liable for the damages, and if it is a case that goes to court the winning party may recover court costs and legal fees

 

My tenant has moved out, what do I do with their security deposit?

A landlord is required mail or hand deliver a security deposit return with a record of cost deductions per damaged article, within 14 days after the tenant moves out, to a tenant’s last known address.

According to Washington landlord-tenant law, the 14 day period begins on the day that the landlord finds that the tenant has left the rental home or the move out date submitted to the landlord from the renter. The landlord may not refuse or try to deter returning the security deposit as there are considerable consequences.

What is a common problem where security deposits are concerned?

A landlord on occasion may try to take the security deposit to put toward damages that fall under normal wear and tear.  So that things may be appropriately covered items, they must be realistically looked at and evaluated.  An itemized list can help organize deductions as well as proof of damages.  If a landlord tries to claim deductions they must include all of the repair costs along with the itemized list, and they must include any third party that charges for repairs.  

 

How can I end a Washington lease agreement?

A Periodic Lease may be terminated by either party giving the other a written notice at least 20 days prior to the end of the rental period. A Fixed Term Lease generally terminates automatically on the last day of the lease period without any notice required from either party. However, the parties may agree in the lease that the tenant or landlord must give notice of an intent to either continue or end the tenancy.

 

Are there circumstances where I am required to release a tenant from a lease agreement?

As the landlord you may have to release a tenant from the agreement if destruction to the living unit renders it unsafe for living, if the damage is not caused by tenants own actions or If the tenant must do military service.  If there is any occurrence of domestic violence, the victims (including any family members) may demand to be released from the lease agreement.  Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

 

My tenant has not paid rent, how much notice do I have to give a tenant in order to evict them?

Before a Summons and Complaint for eviction can be filed, a 3 day notice to pay or vacate is required. The day of posting does not count, nor does any day in which the court is not open such as holidays or weekends. After the 3 day notice is served, then a court proceeding can be initiated. If, however there are other violations such as failure to correct a violation of the rental agreement or lease, than a 10 day-written notice to comply or vacate would be necessary.

Destruction of property, causing a nuisance, conducting an illegal business or engaging in drug related activities would require a 3 day written notice.

 

How long does the eviction process take?

As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

 

Can I require the prospective tenant to buy renters insurance?

The landlord may not require the tenant to insure the premises, however, the landlord may encourage the tenant to purchase rental insurance to cover their personal belongings from any damages that may occur.

 

How do I tell if my tenant has “skipped” out of the apartment?

Under the law, abandonment occurs when a tenant has both failed to pay rent PLUS has clearly indicated by words and/or actions an intention not to continue living in the leased premises.

 

What do I do with property left behind?

When the leased premises has been abandoned, the landlord may enter the unit and remove any abandoned property. This property must then be stored in a reasonably secure place. Landlord must send written notice that must be mailed to the tenant specifying where the property is being kept and when it will be sold or disposed of. If the landlord does not have a new address for the tenant, the notice should be mailed to the leased premises so it can be forwarded by the post office.

 

How long must the landlord wait before selling or disposing of the abandoned property?

That depends on the value of the goods. As stated in the written law, if the total value of the property is less than $250, the landlord must mail a notice of the sale to the tenant and then wait seven days. Family pictures, keepsakes, and personal papers cannot be sold until 45 days after the landlord mails the notice of abandonment. If the total value of the property is more than $50, the landlord must mail a notice of the sale to the tenant and then wait 45 days. After those 45 days personal papers, family pictures and keepsakes can be sold at the same time as other property. The money raised by the sale of the property gets applied to any money owed to the landlord, such as back rent and the cost of storing and selling the goods. If there is any money left over, the landlord must hold it for the tenant for one year. If it is not claimed within that time, it belongs to the landlord.

Be careful: If a landlord takes a tenant's property and a court later determines there had not actually been an abandonment, the landlord could be ordered to pay the tenant for loss of the property, as well as paying any
court and attorney costs.

Do I have the right to enforce no smoking in my rental property?

A landlord may establish a “No Smoking” policy by providing so in the lease.

 

Do I have to give the tenant notice before I enter the rental property?

In case of an emergency, or if the property has been established as abandoned, the landlord can enter without notice.  A tenant cannot deny the landlord entrance to the rental unit for home inspection, make repairs, decorate, or home improvements, carry out services agreed upon or required for upkeep, or show the rental to tenants, workers or contractors. The Landlord shall not abuse the right of access. The landlord may not enter the dwelling unit without consent unless it is an emergency. Important:To show the leased premises to prospective or actual buyers or tenants, the law says that tenants may not unreasonably refuse to allow the landlord to enter the rental when the landlord has given at least one-day's notice of intent to enter at a specified time. Any provision in a rental agreement which allows the landlord to enter without such notice is not valid under the law.

 

Aside from the lease agreement, are there any additional documents necessary?

Yes, If the leased premises was constructed prior to 1978, the landlord must provide all tenants with the Lead-Based Paint EPA Disclosure and the Lead-Based Paint EPA Pamphlet.  The Mold Disclosure must also be provided to tenant.

 

Please Note: All Seattle rental properties must include the addendum Summary of Washington State and City of Seattle Landlord/Tenant Regulations.

 

Disclosure: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. There are now warranties or guarantees of the accuracy of this information. This summary  provided is NOT legal advice or a legal opinion the reader is strongly advised to seek independent counsel for any concerns or specific issues.

Have legal questions?  Ask them in our Local Rental Laws Forum, and also check out our other Washington State Landlord Resources.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/79/nevada-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/79/nevada-landlord-tenant-law-and-regulations/ Wed, 09 Sep 2009 14:47:53 GMT

I have found a good perspective tenant and want to run a background screening. Are there limits as to what I may charge to do this?

In the state of Nevada, there are no statutes that place specific conditions on the fee that may be charged to run tenant screening checks. It is wise; however, to keep things pretty relational, meaning that the costs of conducting the test should be fairly close to the actual costs incurred.

 

Must a lease or agreement be in a written form?

Although in Nevada, there is no requirement for a written agreement, using a rental lease that is printed or written is a favorable choice as it creates a set of standards, which alleviates problematic situations as the tenancy progresses. In 2007, statutes were created that afforded the tenant one free copy of a written lease. If the tenant were to need a subsequent copy due to loss, damage or just wanting an additional copy, the landlord is, then permitted to charge a reasonable fee.

 

Is it required to do a walk through before renting a property?

Even though Nevada's statute is silent on this issue, performing a walk-through and having a written inspection prior to the tenant moving their personal effects into the rental unit just makes good sense. Why, you ask? Most residential spaces that are rented consist of at least walls, windows and doors; nevertheless, it usually will have much more like appliances, carpeting, and in some cases- furniture. Although one may have a good memory of the condition overall, it is impossible to remember every nook and cranny. Having a written assessment of your rental that is signed by both parties BEFORE your tenants move in is essential in preventing the “he said-she said” scenario.

 

What circumstances require a landlord to release a tenant from the lease agreement?

Along with the federally mandated military requirements for a service members release from the agreement, in Nevada anyone who is 60 years or older and entering a senior care facility and/or has a mental or physical disability possess certain rights to be able to exit a lease earlier than the ending date. Nev. Rev. Stat. Ann. § 118A.340 spells this out in great detail directing the reader of the exact procedures.

Another reason that a landlord may have to release a tenant is when a tenant is a victim of domestic abuse. There are specific procedures to follow that are found in Nevada Revised Statute 118A.345.

 

How much written notice is required for increasing the rent?

According to NRS 118A.300, The landlord may not increase the rent payable by a tenant unless the tenant is served with 45 days advance written notice advising the tenant of the increase. In cases of periodic tenancies of less than one month then an advance 15-day notice is needed, prior to the first rental payment.

 

What may I charge a tenant when rent is behind? Must the late fee be one sum or can it be incurred daily?
Nevada has no stated limitations or statutes regarding the charging of or collection of late fees. Be careful though not to create a fee that is considered excessive or penalizing as this could be called into question should it end up in court. It is difficult to calculate the costs incurred when figuring what to charge for a late fee, but if it is fair and reasonable; it keeps the landlord out of any possible “hot water."

 

My tenant’s check was returned by the bank unpaid? Is there a limit to the fee that may be charged?

Nevada Landlord Tenant statutes do not have any covered stated rule on this issue. However, according to NRS 597.960 Trade Regulations, the receiver of a “bad” check may charge the writer of the instrument a $25 fee.

 

What is the maximum amount I can collect as a security deposit?
A landlord may not collect any more than an amount equal to three-months rent as a security deposit. Furthermore, if the landlord is asking for the last month's rent to be paid in advance, it must be figured into the total security deposit of three months. For instance, if a landlord wants to collect a security deposit along with the last month rent prepaid; then he may ask the tenant for an amount equal to two months for the security deposit and one month for the last month's rent.
**Very important: A security deposit may never be designated as non-refundable.

 

Do I need to pay interest on the security deposit?

No, there is no such requirement for the state of Nevada.

 

My tenant has moved out, how do I handle the disbursement of their security deposit?
The timely return of a security deposit is of the utmost importance! In the state of Nevada, the landlord has 30 days to return the entire security deposit OR provide the tenant with a full accounting of all expenses rendered plus any balance left over, if applicable. Damages are considered as items that are in disrepair beyond normal use. Any unpaid rent or charges may also be deducted. The landlord may either hand this directly to the tenant, mail it to the tenant's’ forwarding address or last known address.

 

What is a common problem where security deposits are concerned?  

Having sufficient proof is one of the larger issues for security deposits. Coming in a close second, is not returning a security deposit in a timely and proper fashion according to Nevada's law.

 

How can I end a Nevada lease agreement?

It is important to understand the difference between fixed-term leases and periodic. A fixed-term lease contains a defined beginning and ending date; whereas a periodic lease begins on a specific date but then continues either monthly or weekly until either a landlord or tenant gives sufficient notice to end. With oral agreements, it is presumed that it is a month to month agreement if a tenant pays rent each month and week to week if the tenant pays rent weekly; therefore, a full month's notice is needed to end the tenancy when rent is paid monthly, and a full week's notice is needed when paying rent weekly.  

 

What are items not permitted to be in a lease?
A landlord may not include text where the tenant is being asked to agree to waive or forego any of his rights as explained in Nevada Revised Statutes 118A. The lease cannot authorize anyone to confess judgement on any claim made against the other nor can it state that a tenant must pay the landlord’s attorneys fees. An agreement may express that the prevailing party may be awarded attorneys costs. Leases may not absolve a landlord from a responsibility that belongs to the landlord. And finally, a rental agreement may not provide that the landlord desire a different notice than required by law to end the tenancy.

 

My tenant has not paid rent, how much notice do I have to give a tenant in order to evict them?

If the tenant owes rent, a landlord will send five-day notice that tells the tenant to either pay the rent within five days or the tenancy is terminated. When five days have elapsed after the notice is sent, and the rent is not received, the landlord may then file an “Unlawful Detainer” in court to start the necessary proceedings to regain possession. Please note, in the counting of the five days, the landlord will not factor in the actual day the tenant is given the notice along with weekends, or any other day the court is closed.

 

Can I require my tenants to obtain renter's insurance?

There is no specific statute that prohibits this requirement.  

 

What do I do if my tenant has left personal effects in the rental unit after he moved?

One of the first things a landlord wants to be sure of is that the tenant actually did move. This will be evidenced by either a legal lockout by a court official, the tenant handing over the keys to the landlord or other substantial proof such as no food left in the refrigerator, no bedding or no clothing in closets. Once it has been established that the tenant has vacated, there are specific procedures that must be followed to remove the tenant’s goods. A landlord is obligated to store and keep the items safe for 30 days after the abandonment. (the cost to store may be charged and collected). At the expiration of the 30 days, the landlord will have to make every reasonable attempt to notify the tenant in writing that the property will be disposed of as the landlord sees fit if the tenant does not respond within 14 days of the notification. The specific procedures for disposing a tenant’s abandoned property may be found in Nev. Rev. Stat. Ann. § 118A.460. 

 

Do I have to give the tenant notice before I enter the rental property?

Although a tenant may not withhold permission for a landlord to enter the premises to make repairs and provide maintenance, show prospective tenants and/or buyers the property or provide any necessary inspections, the landlord must be careful not to abuse this right. A 24-hour notice must be provided. Entrance must be made during normal business hours unless the tenant agrees otherwise or in case of emergencies.

 

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord-tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.   

Have law questions?  Ask the experts in our Local Laws Q&A Forum, or view our additional Nevada rental resources page.

]]> https://www.ezlandlordforms.com/articles/educational/2/78/the-property-management-dilemma-should-you-hire-a-property-manager/ https://www.ezlandlordforms.com/articles/educational/2/78/the-property-management-dilemma-should-you-hire-a-property-manager/ Fri, 04 Sep 2009 18:22:17 GMT Deciding to use a property manager is a major step, which means you need to consider all of the ramifications of your decision. They can provide many important services, relieving you of the burden of the day-to-day management of your properties. But just as in any service industry, the cost for this kind of individualized attention is high. Standard pricing for the industry is generally between 4-12% of gross rents, usually tending towards the higher end for single-family dwellings and lower for large apartment buildings.

The property manager can offer a wide range of services depending on the company and your individualized needs. The major areas in which they can be most helpful are:

• Marketing your rental property to minimize the number of vacancies.
• Maintenance and repair, including emergency repairs.
• Analysis of income and expenses to be sure the property remains profitable.
• Administrative duties such as negotiating rental agreements, collecting rent, and responding to tenant requests.

In addition to these basic services, some property managers can provide solutions to more specialized needs. Rick Kinnaird, President of Half Vast Enterprises, has two rental properties and he uses property managers for both. One is a single vacation rental unit, and the other is a number of vacation rental units at one location. He says property managers can “provide cleaning and linen service during turnover for guests. They can also maintain the yard and lawn, replace light bulbs and do handy man work even construction.”

So how do you find a property manager to suit your needs? Rick says that they’re often connected with a real estate firm. However, there are individual companies that work directly with property owners. The best way to find a property manager is to ask around in the area where you are looking for those kinds of services. Be sure to keep in mind that most states require a property manager to have a property manager’s license or a real estate broker’s license.

There are some real advantages for property owners to have someone else look after the daily operations. Rick says, “You can go on vacation, or do your regular job and not worry about getting a call in the middle of the night.”

But you aren’t always lucky enough to find a property manager who knows their job, says Rick. They may not do what you ask, and ignore your instructions. With big firms, they may keep sending someone out to reset a breaker and charge you for the service call and never diagnose and fix the problem.

Another thing to keep in mind when you are looking for a property manager is that there is a difference between them and a resident manager. According to Rick, “A property manager doesn’t typically live at the property. They come in on a regular basis and carry out specified chores and do inspections. A resident manager is on the premises and may spend considerable more time taking care of the property; that’s the up side. The down side is they may come to believe the property is more theirs than yours.”

The way to avoid a situation in which you lose control of your property is to understand exactly what services will be provided by the manager, and then to develop a strong relationship with them to be sure they understand how you want things done.
]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/77/indiana-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/77/indiana-landlord-tenant-law-and-regulations/ Fri, 04 Sep 2009 11:47:02 GMT How much may I charge for rent?
Indiana doesn’t limit the amount of rent a landlord is permitted to charge. Therefore a landlord may charge whatever he feels desirable. Additionally, the state of Indiana has not introduced rent control or stabilization.

What is the maximum amount I can collect as a security deposit?
There is no limit on the security deposit charged to the tenant so long as it is reasonable.

Are there requirements for where a security deposit must be held, for example, in a separate escrow account?
No, there are no such requirements within the state of Indiana.

May I charge an application fee, late rent charge or a returned payment fee?
There are no restrictions or limits placed on the collection of an application fee or a late rent charge. However, assessed fees should be reasonably related to cover the expenses the landlord incurs as a result of a late payment. A landlord should not charge a fee so high that it calls into question the fairness of the fee, if challenged in court.

In Indiana, the reasonable rate is $25.00 for returned payments.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage as well as including repair receipts and pictures.

My tenant has moved out, what do I do with their security deposit?
Within 45 days of lease termination, the landlord shall mail the tenant the entire security deposit OR an itemized list of damages and the estimated cost of repair for each damaged item. The landlord shall include with the list a check or money order for the difference between the damages claimed and the amount of the security deposit held by the landlord.

Do Indiana lease agreements need to be recorded?
If a lease is for a period longer than 3 years it must be recorded in the Miscellaneous Records in the Recorder’s office in the county of which the rental property is located.

How can I end a lease agreement?
With regards to a yearly lease, advance notice of no less than 3 months is required to end the lease. One full months notice is required for month to month leases, 7 days advance notice is required for weekly leases, and with regards to a fixed term lease, notice is not required, tenant shall vacate the premises at the end of the lease unless otherwise specified.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable, or If the tenant is called to active military duty. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

My tenant has not paid rent, how much notice do I have to give a tenant in order to evict them?
If a tenant refuses or neglects to pay rent when due, or if a tenant willfully does not comply with a provision of the lease, a landlord may terminate the lease by giving a 10 Day Notice to the tenant.
If the tenant does not pay the rent or cure the non-compliance after notice expires, the landlord can force the tenant to vacate by filing for the tenants eviction in court.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance, and could make the failure to do so a breach of the lease.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

What can I do if my tenant files for bankruptcy?
The procedures a landlord should take will be determined by bankruptcy court laws. A Landlord usually will proceed with a relief from the “stay” deeming the tenant responsible for rent incurred during the pendency of bankruptcy proceedings. This is a complicated procedure and warrants at least a consult with an attorney.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the Lease.

Can I make the tenant responsible to install or maintain smoke detectors?
At the time a landlord delivers a rental unit to a tenant, the landlord shall require the tenant to acknowledge in writing that the rental unit is equipped with a functional smoke detector.

Do I have to give the tenant notice before I enter the rental property?
Landlords may not enter the leased premises without prior notice and consent, except in cases of emergency.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue and not rely on these answers to conduct their affairs.

Questions?  Ask questions about Indiana rental laws on our Landlord Law Forum, and view our other Indiana rental resources here.

]]> https://www.ezlandlordforms.com/articles/educational/3/76/verbal-vs-written-rental-contracts-do-you-really-need-a-signed-lease-agreement/ https://www.ezlandlordforms.com/articles/educational/3/76/verbal-vs-written-rental-contracts-do-you-really-need-a-signed-lease-agreement/ Thu, 03 Sep 2009 22:25:12 GMT
Luigi Rosabianca is principal attorney for Rosabianca & Associates

Whether or not to use a lease agreement when you rent is a subject that ignites a good deal of debate. There are many landlords that will tell you that they have been renting for years without having the tenant sign a lease, and it has worked out just fine.

However, for every story with a happy ending, there is another that will make every landlord's hair stand on end. Here’s one such example from Steve Replin, a CPA and practicing attorney in Colorado:

“I used to own a 17,500 square foot shopping center in Denver, and two fellows rented a space to open a deli that offered specialty foods from other countries. They began their own rennovations, drilling holes in the concrete, putting in cooling cases and putting in wiring, which they left exposed. A building inspector, who was there to inspect another store, happened to walk into the deli and asked to see the building permit. One of the men started cursing at him and saying, ‘We don’t need no stinking building permit.’ Even though the tenants committed lease violations (by not doing that work properly) there was no lease yet. So they couldn’t be held accountable. I started eviction proceedings against the tenants, but without a lease they put up a powerful fight not to leave.”

It’s cases like these that should make every landlord understand the need for a lease agreement, because without one, you are subject to risk exposure from tenant actions that could make you liable. Formalizing the agreement through a written lease makes certain that all the Ts are crossed and the Is dotted, says Luigi Rosabianca, principal attorney and founder of real estate law firm Rosabianca & Associates. It allows you to decrease your level of risk.

Luigi emphasized that anyone who plans on owning real estate should have a basic understanding of the real estate laws of their state. That’s because these laws become the default provisions of the agreement between the tenant and the landlord if there is no lease. What that means is that if there is no formal document that spells out the rights and responsibilities of the landlord and the tenant, then state law determines what those rights and responsibilities are.

Many states do provide protections for both sides, Luigi added, but if you want to deviate from those guidelines in any way, you need a formal lease agreement. For example, most states don’t require a tenant to carry renter’s insurance. However, a landlord may decide they want their tenants to have renter’s insurance in the event the tenant causes damage. The landlord can also stipulate in the lease agreement that they be named as an additional insured on the tenant’s policy so they receive the same coverage protection as the tenant.

Another important function of the lease agreement, according to Luigi, is that it “draws a very clear dividing point between the rights of both sides as opposed to the gray area that would exist if a disagreement should arise.” That’s because a lease spells out what each side can expect from the other in terms of issues like who is responsible for paying the utilities, or whose job it is to maintain the property.

The third, and probably the most frequently overlooked reason to have a lease is that it serves as a proof of income. It’s no secret that since the real estate bubble burst, lending institutions have become a lot more cautious when it comes to financing. If you are trying to refinance a mortgage, presenting a lease agreement can serve as proof of the monthly income you receive from the rental property. Luigi noted that it carries more weight than cancelled checks. And, needless to say, if your tenant pays you in cash, it is the only proof of the income you receive from your property.

Luigi was in agreement that there are “tens of thousands of rental arrangements that are not formalized, and they never get litigated.” But, rather than leaving it to chance that your informal arrangement will work. Luigi recommended having your tenants sign a lease. As he says, “It will help you sleep better at night.”

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/75/maine-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/75/maine-landlord-tenant-law-and-regulations/ Thu, 03 Sep 2009 14:03:41 GMT Are there rent control/rent stabilization policies or laws in Maine?
The state of Maine has not established rent control or stabilization practices.

What is the maximum amount I can collect as a security deposit?
A landlord shall not demand or receive a security deposit in excess of 2 months' rent.

Do I need to pay interest on the security deposit?
No, the landlord does not need to pay interest on the security deposit.

Are there requirements for where a security deposit must be held, for example, in a separate escrow account?
Yes, the security deposit must be held in a separate escrow account.

My tenant has moved out, what do I do with their security deposit?
The landlord must return the full security deposit within 21 days if not stated in the lease. If the lease specifies in writing that the security deposit will be returned within 30 days then 30 days after lease termination the security deposit may be returned. If there is cause for retaining the security deposit or any portion of it, the landlord shall provide the tenant with a written statement itemizing the reasons for the retention along with a full payment of the difference between the security deposit and the amount retained to the tenant's last known address.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage as well as including repair receipts and pictures.

May I charge a late rent or a returned payment fee?
According to Maine regulation a rent payment is late if it is not made within 15 days from the time the payment is due. It is only after such time that a landlord may assess a penalty no more than 4% of the amount due for 1 month.

Landlords may charge tenants a fee not to exceed $50 for a returned payment. The tenant is liable and subject to civil penalties if no payment is made.
• Landlords must give notice that the check has been dishonored. The notice must state to whom the check was payable, the amount, date, and number of the check, and the name of the bank on which the check is drawn.
• The notice must also contain a warning that failure to pay within 10 days will subject the tenant to additional costs which include court costs, processing charges incurred by the landlord, interest at the rate of 12% per year from the date of failed payment, and attorney's fees.


How can I end a Maine lease agreement?
Unless otherwise specified within the lease, or if a tenant is a tenant at will; (a tenant without a written lease) landlords or tenants must give 30 day advance notice prior to lease termination.

What are the Landlord’s legal rights when a tenant remains after a lease has ended or terminated?
A landlord has 7 days to file an action, otherwise it turns into a tenancy at will which requires 30 days notice to terminate.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable, or If the tenant is called to active military duty. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the Lease.

Do I have to give the tenant notice before I enter the rental property?
The landlord shall have the right to enter the leased premises at reasonable times and hours, after 24 hours notice has been given to the tenant, unless in cases of emergency.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. The law is subject to change due to both legislation and court decisions. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue. An attorney client relationship is not created by the presentation of this information.

Feel free to post questions about Maine laws in our Local Law Forum, and view our other Maine lease resources here.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/73/illinois-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/73/illinois-landlord-tenant-law-and-regulations/ Tue, 01 Sep 2009 10:50:53 GMT Leases - A lease may be written or oral. Oral leases are only permitted if the term is less than one year
• Lease Term - A lease may have an unspecified term like a month to month, and must be ended by notice. A lease may also be for a specific amount of time, like one year, one month, etc.
• Ending a lease - With regards to a fixed term lease, unless otherwise specified in the lease, the tenant shall move out when the rental agreement ends. 30 Days notice is required for month to month leases and 60 days notice is required for year to year leases. Weekly leases require a 7 Days notice. A landlord is not required to give any reason to terminate a lease.

Security Deposit - There are no statutory limitations placed on the maximum amount for a security deposit but there are several municipalities in Illinois that have comprehensive Landlord-Tenant Statutes. Landlords should contact an attorney or the city agency in which his or her rental building is located to determine municipal-specific statutory limitations.

• Interest on the security deposit? Rental properties located in Chicago, Evanston, or Mt. Prospect, requires that the tenant be paid interest each year. Elsewhere in Illinois, the landlord is only required to pay interest for a building or complex with 25 or more units.

• Returning the Security Deposit - The state of Illinois has no comparable statute for houses or properties with fewer than 5 units. Otherwise; The Illinois Security Deposit Return Act requires a landlord to return the security deposit in full within 45 days of the date a tenant has vacated the unit if:

  • Your building or complex consists of 5 or more units.

  • The tenant does not owe any back rent.

  • The tenant has not damaged the rental unit.

Important: Chicago and Evanston may have slightly different procedures for the handling and the return of the security deposit. Check with the proper municipality for specific rules. If the landlord withholds any portion of the security deposit he/she must provide an itemized statement of all damages INCLUDING receipts, within 30 days the tenant vacated the premises.

 

Subleasing - A tenant is not permitted to sub-lease unless otherwise stated in the lease or the landlord gives permission.

 

Late Fees - There are no limits on late fees, however, they must be reasonable. A returned payment fee may not exceed $25. Daily late fees are not prohibited, but tend to be a rare practice. There is no legal grace period in regards to payment of rent imposed by the State of Illinois Landlord Tenant Act (ILTA). This is usually governed by the rental agreement, and typically there is a 5 day grace period.

 

Rent - Illinois does not have a rent control law.

• Rent Increases - Landlords may schedule a rent increase for a week-to-week tenancy by serving a 7 days notice or month to month tenancy by serving a 30 days notice. It is not permitted to raise the rent during a fixed-term lease. For instance, the landlord is prohibited from raising the rent prior to the end of a lease, if the lease has a beginning date and an ending date. A landlord can raise the rent as much as he/she feels is necessary. To see if your city or county has a rent control ordinance, you should contact your local units of government.

• Non Payment of Rent - If the tenant breaks the lease by failing to pay rent, a 5 day notice is required before a Summons and Complaint for eviction can be filed. The day of posting does not count, nor does any day in which the court is not open such as holidays or weekends. After the 5 day notice is served, then a court proceeding can be initiated. A landlord may not change the locks or turn off utilities because the tenant did not pay rent.

MORE INFORMATION - It is very important that all landlords and owners of investment property contact their local zoning and housing offices to be sure they are aware of any regulations and/or restrictions. Most larger cities do have their own ordinances.

 

CHICAGO: Please view the Chicago Landlord Tenant Law Summary, which is available as a free download and contains information that all Chicago landlords should know. Additionally, landlords of high-rise buildings must begin providing Life Safety Disclosure Statements to new AND renewing tenants PRIOR to lease execution. The city clerks office has these available.

 

EVANSTON: Leases and rules governing Evanston, Illinois are subject to requirements of local ordinances that differ from state requirements which can be found in the document titled City of Evanston Landlord Tenant Ordinance.

 

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

For additional information see our Illinois leasing resources, or feel free to ask legal questions in our State Law Forum.

]]> https://www.ezlandlordforms.com/articles/educational/2/72/california-real-estate-investing-what-is-it-like-to-be-a-california-landlord/ https://www.ezlandlordforms.com/articles/educational/2/72/california-real-estate-investing-what-is-it-like-to-be-a-california-landlord/ Tue, 01 Sep 2009 10:03:49 GMT
Ziad Najm is the owner of Cedar Real Estate in Orange County, California.

Throughout our country’ s history, the lure of California has always been strong. It was Horace Greeley who is believed to have advised young men seeking to make their fortune to head west. And, of course, at the end of that journey to the Pacific coast, lay the golden state of California.

But despite its past history as the land of opportunity, today’s California is no longer the Mecca it once was, thanks, in part, to the meltdown of the real estate market. This has also resulted in a number of significant changes in the way landlords market their rentals and choose their tenants.

The biggest change over the last 18 months to two years, according to Ziad Najm, real estate broker, property manager, and owner of Cedar Real Estate, Inc. in Orange County, is that “credit reports almost don’t matter.” Landlords still run credit reports and verify employment; but instead of giving equal weight to the data gathered from both sources, landlords now put the emphasis on income. If the applicant’s employment is verifiable and seems solid, but their credit report is only in the 500s, the landlord may choose to rent to them. However, that doesn’t mean that landlords ignore the information credit reports contain. They still evaluate the type and number of derogatory remarks on the credit report, and if the situations these remarks describe are serious enough, it might be the deciding factor against renting to the applicant.

Why did this change in attitude come about? Ziad says it’s because the rise in the number of short sales and foreclosures have wrecked many people’ s credit. When landlords were using credit reports to make decisions about renting, they couldn’t fill their vacancies even though they were priced right to market.

Landlords have also adopted a somewhat different strategy when it comes to signing a California lease with tenants who can't verify their employment and income. If they have enough assets to offset their lack of income, a landlord may choose to rent to them. The other alternative is if they can put down from 3 to 6 months rent.

The actual rents that are being charged aren’t what they once were. Ziad noted that 2006 to 2007 was a boom time for landlords to get substantial increases. However, this was the beginning of the downturn, and by 2008, there was a buildup of the inventory of available rentals for longer amounts of time, and this caused rents to start to decrease. Today, a 2-bedroom condo with no garage in Orange County can run between $1350.00 to $1550.00. If you want 3 bedrooms, expect to pay between $2100.00 to $2300.00. But you can rent a single-family detached home in Mission Viejo for about $2500.00.

Orange County is fairly typical for the rest of the state in that there aren’t an excessive amount of vacancies. However, Inland Empire in Southern California hasn’t really been unable to attract renters and consequently, there are many vacancies there.

As for the future, Ziad doesn’t feel that there will be any real changes from the strategies that landlords are employing now. But there are also some other marketing ideas that are gaining in popularity. Landlords are shying away from newspaper ads and putting their ads on Craigslist. It cuts costs and reaches a wider audience. They are also going back to putting up “For Rent” signs on the property.

In addition, tenants are changing the way they approach renting. Families are consolidating and sharing a living space, and renting with a roommate is on the rise. Tenants are willing to divide a property up into smaller living spaces as long as it means saving money.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/71/massachusetts-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/71/massachusetts-landlord-tenant-law-and-regulations/ Fri, 28 Aug 2009 07:32:25 GMT What is the maximum amount I can collect as a security deposit?
The security deposit cannot exceed more than one months' worth of rent.

What are there requirements for security deposits or any other pre-paid deposits?
A landlord can only require a tenant to pay for the following items upon moving in:
• first month's rent
• last month's rent
• a security deposit of no more than one month's rent
• the cost of buying and installing a new lock

If the landlord requires a security deposit, then the tenant must be given a written statement of condition within 10 days of receiving the money. This statement must list all damages that exist in the apartment and in all common areas prior to the tenant moving in. Once the tenant receives the statement, the tenant has 15 days to either agree with the conditions, or personally prepare a list of damages.

The landlord must hold the deposit in an interest-bearing Massachusetts bank separate from his or her personal funds; provide a receipt to the tenant within 30 days of receiving the deposit, identify the bank, address, account number, the amount of the deposit held; and pay 5% interest or any lesser amount of interest actually received from the bank (if the tenant resides on the premises for at least 1 year). The landlord is also required to pay interest on the last month’s rent when collected upon moving in.

More information may be found at: www.mass.gov/legis/laws

Upon termination of a Massachusetts lease, the landlord must return the security deposit or the balance within 30 days of the tenant vacating the property. The Massachusetts Security Deposit Law is very complex. A Landlord should consult with an attorney before taking a deposit or making deductions to insure compliance with the law.

Is my rental unit required by the state to include appliances?
Massachusetts regulations require landlords to supply cooking appliances (range and oven).

My tenant has not paid rent; how much notice do I have to give a tenant in order to evict them?
Before a Summons and Complaint for eviction can be filed, a 14 day notice is required for non payment of rent. The day of posting does not count, nor does any day in which the court is not open such as holidays or weekends. After the 14 day notice is served, then a court proceeding can be initiated.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as utilities being shut off or removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the Lease.

Do I have to give the tenant notice before I enter the rental property?
The landlord shall have the right to enter the leased premises at reasonable times and hours, after reasonable notice has been given to the tenant, unless in cases of emergency. 24 hours notice can be sufficient notice in most circumstances.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

For more information, view our Massachusetts rental resources page, or pose legal questions in our State Law Forum.

]]> https://www.ezlandlordforms.com/articles/educational/3/70/tenant-pet-policies-how-should-landlords-handle-pets-in-their-rental-properties/ https://www.ezlandlordforms.com/articles/educational/3/70/tenant-pet-policies-how-should-landlords-handle-pets-in-their-rental-properties/ Wed, 19 Aug 2009 20:01:50 GMT



According to the Humane Society of the United States, almost 50 percent of renters in this country have pets. While this can be a lucrative market that many landlords would want to tap into, not every pet is appropriate for apartment living.


That’s why many landlords who rent to pet owners develop some kind of guidelines for the types of pets they will accept, says Jesse Holland, Certified Property Manager and President of Sunrise Management & Consulting. He added that many landlords base their decisions, especially when it comes to dogs, on the type of breed and weight limits. For example, if a landlord imposed a policy that said no tenant could have a pet that weighed over 30 pounds, it would automatically allow the landlord to reject a rental application from a perspective tenant that had a pit bull or a Doberman Pinscher.

There are some resources that a landlord can use to help them formulate a policy. The Human Society of the United States (see the Resource Box below for their policy suggestions) recommends that landlords evaluate tenant applicants and their pets on a case-by-case basis. They also add that size and breed aren’t indicative of a pet's temperament, and local laws may prohibit a landlord from refusing a certain type of animal based solely on what kind of breed it is.

However, the agency does say that landlords need to do their homework and research the history of that particular pet. Talk to the applicant’s former landlord, neighbors, and veterinarian, and if the animal has a history of dangerous behavior, don’t accept the rental application. A landlord should also require that all dogs be spayed or neutered because this makes them less likely to exhibit dangerous behavior.

The Centers for Disease Control (CDC) issued a report in September 2000 (see Resource Box for report) indicating what they considered to be the most dangerous breeds of dogs in terms of fatal human attacks. The agency performed this study over a 20-year period, gathering data from a variety of sources including the Humane Society of the United States and the American Kennel Club.

This emphasis on determining the right breeds to accept isn’t only about the safety of other tenants and the prevention of possible lawsuits. Many insurance companies will deny or revoke your insurance coverage if you rent to tenants with certain breeds or breed mixes. There is also the issue of the laws your local municipality may have regarding renting to dangerous breeds. Before you accept a rental application from a tenant with a pet that may be considered dangerous, you need to check local law to see if there is any statute that prohibits renting to a tenant with this kind of pet; and then check with your insurance carrier to see if renting to this individual will invalidate your coverage.

Once you have established you policy, it is important that you be consistent in enforcing it, says Jesse. If you aren’t then you can be cited for violating the Fair Housing Act.

The other thing to keep in mind is that service animals aren’t bound by any restrictions. A tenant who can present a doctor’s note that says their pet is in some way responsible for their health, either physical or mental, can’t be denied residency based on the animal’s size or breed. The landlord cannot charge extra rent or a pet deposit for animals that are considered service animals.

Finally, even though you may have rented to a tenant who had no pets, they may change their minds over the course of their tenancy and decide to get one. If an existing tenant decides to get a pet that is prohibited by your policy, Jesse says you can evict that tenant. Just be sure your rental agreement has the proper wording that indicates that violating the pet policy is grounds for eviction.

__________________
Resource Box
Humane Society Pet Policy Tips for Landlords
CDC Report on Dangerous Breeds

]]> https://www.ezlandlordforms.com/articles/educational/4/69/abandoned-rental-property-how-to-tell-if-your-rental-has-been-abandoned-and-what-to-do-with-abandoned-real-estate/ https://www.ezlandlordforms.com/articles/educational/4/69/abandoned-rental-property-how-to-tell-if-your-rental-has-been-abandoned-and-what-to-do-with-abandoned-real-estate/ Wed, 12 Aug 2009 09:30:48 GMT  

Las Vegas, the internationally renowned city known for its nightlife, has just gotten another dubious distinction. In an article titled ‘America’s emptiest city’ published in the February 18, 2009 edition of the Las Vegas Review-Journal, Forbes.com ranked the city number one when it comes to the number of abandoned apartments and homes.

While this clearly is an honor the city’s landlords can do without, it is indicative of the fact that abandoned property has become a national problem. As the number of abandoned rentals increase, it becomes imperative for landlords to recognize when a property has been deserted by the tenant, and what the landlord’s legal rights are when it happens.

According to Matthew Zifrony, Director at Tripp Scott Attorneys at Law, the first element necessary in making a determination about abandonment is knowledge. The tenant is not physically there; however, did they tell the landlord they would be out of town or away on vacation? If they did, obviously the property hasn’t been abandoned even though the tenant may be away for an extended period of time.

On the other hand, if the tenant isn’t physically present, but nothing was said to the landlord about being away, and there is visual evidence that no one has been there for a while (i.e. the mailbox is overflowing with mail, the grass hasn’t been mowed, and the neighbors say they haven’t seen anyone for a long time), than the rental may be considered abandoned.

So what can the landlord do if they suspect the tenant is no longer living in the unit? First and foremost, a landlord wants to make sure that the rental property is secure and safe. That means that the landlord may take whatever action is necessary to secure the property. This may be in making sure there is running water and heat in the winter to prevent plumbing problems. If a tenant is behind on paying their rental payments, serving them with an eviction notice to initiate eviction proceedings is a solution.

In Florida, if the tenant’s personal property has been left behind, the landlord is required to send a notice to where they think the tenant is currently living, stating that the tenant has 10 days to claim what was left behind. Mark noted that a landlord should go to the post office to see if the tenant left a forwarding address in order to send the notice to claim property. The handling of the property if it remains unclaimed is determined by its dollar value. If the property is worth less than $500.00, the landlord can keep it, sell it, or destroy it. If it’s worth more than $500.00, the landlord can sell the items and deduct the cost for the sale and for storing the items, but the remainder of the money must be given either to the tenant or, if they can’t be found, to the state.

Many states require that a written notice to reclaim property be sent to the tenant. However, the time frame in which the property can be claimed may vary from state to state. There may also be differences in terms of the handling of the property according to its dollar value.

While many states are quite explicit about the handling of abandoned property, they may have no provision for pets that have been left behind. Matthew recommends calling the local shelter to have the animal removed because there is safety issues involved in leaving the pet unattended. The landlord can list the location of the shelter in the notice to claim property sent to the tenant.

Occasionally, there can be an instance in which the notice to claim property may trigger a response from the tenant that they didn’t abandon the property and they want to return. In this case, Matthew said that if the tenant was one that was worth keeping, the landlord can allow the tenant to make up the back rent and remain in the apartment. But if the landlord refuses to grant reinstatement, the tenant can sue. The burden of proof would be on the tenant who would have to show that they weren’t behind in the rent, the landlord knew they were coming back, and that they weren’t away from the property for 15 days without anyone’s knowledge. Matthew noted that tenants who abandon property seldom try to sue to be reinstated; they simply walk away and stay away.

The key point to remember if you believe that your rental property has been abandoned is to look for the visual evidence that indicates the tenant has left for good. These tell tale signs will help you make your case should the tenant try to argue that they never intended to abandon the apartment. Check with your state’s regulations on abandonment, as they differ from state to state.

]]> https://www.ezlandlordforms.com/articles/educational/3/68/a-smoke-free-rental-property-is-it-possible-to-prohibit-smoking-in-your-rental-property/ https://www.ezlandlordforms.com/articles/educational/3/68/a-smoke-free-rental-property-is-it-possible-to-prohibit-smoking-in-your-rental-property/ Mon, 10 Aug 2009 20:54:35 GMT

According to the Environmental Protection Agency (EPA), secondhand smoke is a carcinogen that causes approximately 3,000 lung cancer deaths each year in U.S. nonsmokers. Children are even more susceptible to the effects of secondhand smoke because they are still developing. Those that are exposed to high levels of the carcinogen have the greatest chance of developing asthma, pneumonia, bronchitis and middle ear infections.

These discoveries have prompted a growing number of renters to seek out smoke-free housing, so as to prevent the health risks of secondhand smoke. But is the increasing demand profitable enough for landlords to turn their rental properties into non-smoking zones, and is the conversion so difficult as to not be worth the profit? These are questions that need to be considered before taking any such action.

A basic definition of smoke-free housing, according to David Sacks, a partner with the real estate law firm Pathman Lewis LLP, “is about control once the decision has been made to implement the policy of prohibiting tenants from using tobacco products anywhere in the building.” He went on to add that in his view there is a market for this type of housing because clients ask him to draft these types of agreements. There have also been studies like those discussed in the December 2007 edition of UNITS, a publication of the National Apartment Association (report available below) that show a high demand for the banning of smoking in rental properties.

Mr. Sacks went on to note that the demand is probably greater in areas where there are high-end rental properties as opposed to properties in lower economic areas, as high-end properties attract people who tend to be more health conscious, who see a smoke free environment as a valuable amenity. However, that doesn’t mean that a landlord who doesn’t own high-end properties shouldn’t explore the possibility of making their property smoke-free. David recommends that they talk to a real estate broker in the area who knows the community and who can relate what the general consensus is toward smoke-free housing.

David Sacks is a Partner with the real estate law firm Pathman Lewis LLP

Making a property smoke-free is legal according to Mr. Sacks: “The Constitution doesn’t guarantee the right to smoke.” Of course, a smoker can sue that it is a violation of their civil rights, but if they have signed a lease agreement with a well-written policy whose provisions have been clearly stated, they have a much harder argument that their rights have been violated. Mr. Sacks also pointed out that this type of conversion is legal with Section 8 housing as well. The one caveat he did add is that the local laws are constantly changing, so it’s a good idea to check with an attorney to see if there are any legal obstacles before you make a conversion.

When you do adapt a smoke-free policy, Mr. Sacks recommends that you clearly spell out all of the rules and regulations in the body of the lease agreement, including any fines that may be imposed for policy violation. He also brought up the instance in which a landlord wants to convert a building with a 90 percent occupancy rate. In this scenario, David said you ask the tenants to sign a lease addendum, which outlines the new policy. Be advised that tenants are not obliged to sign the addendum, and landlords cannot evict a tenant who refuses to sign unless the original lease agreement contained wording that said that refusal to agree to changes in rules is a violation of the lease agreement. That said, if the tenant still refuses to agree to the new policy at the end of their lease term, the landlord can choose not to renew their lease agreement.

There are some significant benefits to converting to a smoke-free environment. From a cost perspective, allowing tenants to smoke results in extensive cleaning costs, like increased repainting and continually changing carpeting and window treatments. Then there is the issue of warranty of habitability. This is a law that exists in most states, which says the landlord must provide premises that are safe and habitable. Under certain circumstances a tenant can sue saying that secondhand smoke makes the rental uninhabitable. Having a smoke-free policy in place can protect you from this kind of suit.

Keep in mind that turning a rental property into a non-smoking residence is not for everyone. Landlords are wise to consider all of the financial and legal consequences before making a final decision, particularly in assessing the demand for smoke-free housing among the target tenant demographic.


Resource Box
http://www.smokefreewashington.com/documents/UNITS_Smokefree_Housing_Article_12.07.pdf

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/67/new-jersey-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/67/new-jersey-landlord-tenant-law-and-regulations/ Fri, 07 Aug 2009 13:31:56 GMT Are there rent control/rent stabilization policies or laws in New Jersey?
More than 100 cities and townships in New Jersey have passed rent control ordinances. To find out if your city or township has rent control, please contact your city or township hall.

Is it a requirement for landlords to file a certificate of registration for their rental property?
According to -N.J.S.A. 46:8-28, every landlord of a dwelling, except owner-occupied properties with no more than 2 rental units, must file a certificate of registration with the clerk of the municipality in which the residential property is situated, or with the Bureau of Housing Inspection in the Department of Community Affairs. Please also note, if a landlord plans to file for eviction and has not registered with the township in which the dwelling is located, the court has no legal power to evict until the landlord has complied with the law. Furthermore, if the landlord registration statement is not filed, the landlord can be fined up to $500.

What is the maximum amount I can collect as a security deposit?
The security deposit cannot exceed more than one and one-half times the monthly rent and this applies to all items that are non-refundable deposits including but not limited to a pet, key, cleaning and the payment of the last month’s rent in advance.

Are there requirements for where a security deposit must be held, for example, in a separate escrow account?
The landlord must provide the tenant with written documentation stating the name and address of the bank where the deposit is being kept, the amount of the deposit, the type of account, and the current interest rate for that account within 30 days of receiving the deposit. Please also note, the security deposit must be placed in a New Jersey bank and if not, the law requires the landlord to use the deposit in lieu of the rent and to forfeit the right to the deposit.

My tenant has moved out, what do I do with their security deposit?
Once the tenant vacates and within 30 days of lease termination, the landlord must return the entire balance or the remainder of the security deposit plus interest , along with a complete list of the damages, if any.

May I charge an application fee, late rent charge or a returned payment fee?
Application Fee:: There are no restrictions or limits placed on the collection of an application, however, if contested, the courts generally will limit the fee to what is reasonable as compared to the general market.
Late Charge:There are no limits placed on the amount of a late charge; although senior citizens may not be charged more than 5% which the Courts generally apply to all cases. A landlord may charge more if it can be supported as reasonable. However, Landlords must wait until 5 days have passed before assessing a late charge or fee.
Returned payment fees:These fees should remain reasonably related to the landlord's actual expenses incurred. However, Landlords must wait until 5 days have passed before assessing a late charge or fee.

How can I end a New Jersey lease agreement?
Because of the Anti-Eviction Act, a landlord cannot evict a tenant simply because the lease ends. The only reason a landlord may end a lease is after a tenant has rejected a new lease with different terms, such as a higher rent or new rules and regulations.

Important: The landlord cannot force a tenant to move unless a tenant does not accept the new lease conditions or for specific "cause" in the New Jersey Anti-Eviction Law. The ending or expiration of a lease is not a good enough cause for eviction.

Note: The exception to this rule is if landlord owns a building with only 2 or 3 units and lives in one of the them.

The law requires that, for a landlord to raise the rent, the tenant must be given proper written notice. A proper notice must inform the tenant that the current written or oral lease is being ended and that the tenant can stay in the rental unit by signing a new lease at a higher rent.
Month to Month tenancies: The proper notice must explain that the existing lease will be terminated or ended in one full calendar month. Tenant must receive this notice at least one month before the lease ends.
Fixed Term Tenancies: The notice must explain that the lease will terminate on the date the lease ends, and tenant must receive this notice at least one month before that date. The notice can be for a longer period, if the lease specifies so. To learn more, go to: http://www.lsnjlaw.org/english/placeilive/

A tenant may end a lease:
Month to Month lease by giving landlord one months notice before the end of the lease
a fixed term lease or yearly lease: unless the lease says otherwise, tenant must give the landlord a written notice at least one full month before the end of the lease.Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable or if the tenant is called to active military duty. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

My tenant has not paid rent; how much notice do I have to give a tenant in order to evict them? Written demand is not necessary for non-payment of rent only. Landlord may go to the appropriate court and file. New Jersey has specific laws about eviction referred to as the New Jersey Anti-Eviction Law. Information may be found at New Jersey Anti-Eviction Law.

Can I require my tenants to obtain renter's insurance?
All residential landlords in New Jersey have an obligation to advise their tenants within 30 days of occupancy of the right to purchase renter’s insurance. Landlords may require tenants to obtain rental insurance, and can make the failure to do so a breach of the lease agreement.

How do I tell if my tenant has “skipped” out of the apartment?
Generally, unless the tenant returns the keys or otherwise states in writing that they have moved out of the rental property, it is best to seek a judgment of possession through the court system.

What may I do with my tenant's personal belongings if they have left them in the rental unit?
Before disposing of the tenant’s personal property, the landlord must give the tenant a notice of 30 days specifying the tenant‘s right to claim the items. The landlord should send this notice, certified mail to the tenant’s last known address (it may be the address of the rental unit that contains the tenants belongings). The landlord doesn’t have to prove that the tenant has received the notice, just that it’s been sent. After mailing the notice, the landlord may not dispose of any of the items left behind until the full 30 days have passed. The landlord may move the tenant’s personal property to another location if such a need arises. If the landlord incurs a charge for storage, he/she can pass that charge onto the tenant, but it must be reasonable.

What can I do if my tenant files for bankruptcy?
The procedures a landlord should take will be determined by bankruptcy court laws. A Landlord usually will proceed with a relief from the “stay” deeming the tenant responsible for rent incurred during the pendency of bankruptcy proceedings. This is a complicated procedure and warrants at least a consult with an attorney.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the Lease as long as the landlord uniformly enforces it.

Do I have to give the tenant notice before I enter the rental property?
The landlord shall have the right to enter the leased premises at reasonable times and hours, after reasonable notice has been given to the tenant, unless in cases of emergency.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Feel free to explore our other New Jersey landlord resources, and to ask legal questions in our Rental Expert Forum.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/66/minnesota-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/66/minnesota-landlord-tenant-law-and-regulations/ Fri, 07 Aug 2009 08:34:24 GMT Are there rent control/rent stabilization policies or laws in Minnesota?
The state of Minnesota has not established rent control or stabilization practices.

What special rules are there regarding rental applications?
According to 504B.173 of the Minnesota Landlord Tenant Laws, the following are important points to know with regards to rental applications. Additionally, the landlord should be very familiar with the Fair Housing Laws as well as the Fair Credit Reporting Act.
• There is a limit to the number of applicant screening fees. A landlord or the landlord's agent may not charge an applicant a screening fee when the landlord knows or should have known that no rental unit is available at that time.
• A landlord or agent must return the screening fee amount that was not used to perform a tenant screening report, consumer credit report, or personal reference check. The screening fee may be mailed to the tenant or retrieved by pick up. If payment was made by check, it may be destroyed upon the request of the applicant.
• Before accepting any application fee, the landlord or agent must inform the prospective tenant in writing, the name, address, and telephone number of the service the owner will use for the screening process. The letter must also include the criteria in which the decision to accept the application will be based on.
• In addition to any other remedies, a landlord who violates this section is liable to the applicant for the application fee plus a civil penalty of up to $100, civil court filing costs, and reasonable attorney fees incurred to enforce this remedy.
   

What is the maximum amount I can collect as a security deposit?
There is no limit to the security deposit charged to the tenant so long as it is reasonable.

My tenant has moved out, what do I do with their security deposit?
Once the tenant vacates the landlord must return the balance of the security deposit plus one percent interest (currently). This must be done within 21 days after the day the tenancy ends and the tenant has provided a forwarding address. Interest begins on the first day of the month after receiving full payment of the security deposit. Interest is paid to the last day of the month in which the landlord returns the deposit. If there are any deductions made, a complete accounting must be mailed to the tenant’s forwarding address with any balance thereof.

May I charge a late rent or returned payment fee?
Landlords may assess late fees when the rent is past due if it is in writing. However, the fee must approximate the actual damages suffered and must compensate; they cannot penalize. Returned check fees may not to exceed $30; and must be specified so in the lease or posted conspicuously on the Leased Premises. Minn. Stat. § 604.113

How can I end a Minnesota lease agreement?
If there is no provision in the lease stating how much advance notice must be given to end the tenancy, the landlord or tenant must provide written notice of at least one full rental period before the tenancy's last day. The same is true for periodic leases such as month to month or week to week.

Are there circumstances where I am required to release a tenant from a lease agreement?
The “personal representative” of a renter’s estate may terminate a lease upon the death of the renter after two full months’ written notice. A tenant may vacate a unit if it becomes uninhabitable or unfit for occupancy. In certain circumstances, a renter called to duty in the armed forces can give 30 days notice. The military service member/tenant should contact his/her Judge Advocate General Office for information. A victim of domestic abuse may terminate a rental agreement by providing proper written notice.

My tenant has not paid rent; how much notice do I have to give a tenant in order to evict them?
In general, if a tenant does not pay rent on the day it is due, the landlord may immediately bring an Eviction Action unless the lease provides otherwise.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance, and can make the failure to do so a breach of the lease agreement.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

How must a Landlord handle abandoned property left behind by a tenant?
If a tenant abandons rented premises, the landlord may take possession of the tenant's personal property remaining on the premises, and shall store and care for the property. The landlord has a claim against the tenant for reasonable costs and expenses incurred in removing the tenant's property and in storing and caring for the property.

The landlord may sell or otherwise dispose of the property 28 days after the landlord receives actual notice of the abandonment, or 28 days after it reasonably appears to the landlord that the tenant has abandoned the premises, whichever occurs last.

Prior to a sale, the landlord shall make reasonable efforts to notify the tenant at least 14 days prior to the sale, by personal service in writing or sending written notification of the sale by first class and certified mail to the tenant's last known address or usual place of abode, if known by the landlord, and by posting notice of the sale in a conspicuous place on the premises at least two weeks prior to the sale. If notification by mail is used, the 14-day period shall be deemed to start on the day the notices are deposited in the United States mail.

Please Note: The remedies provided in this section are in addition to and shall not limit other rights or remedies available to landlords and tenants.


Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the Lease.

Do I have to give the tenant notice before I enter the rental property?
Landlords may not enter the leased premises without prior notice and consent, except in cases of emergency.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

View our additional Minnesota landlord-tenant resources, and if you have legal questions, ask the experts in our Property Management Forum!

]]> https://www.ezlandlordforms.com/articles/educational/2/65/the-new-york-city-landlord-experience-what-is-it-like-to-be-a-new-york-landlord/ https://www.ezlandlordforms.com/articles/educational/2/65/the-new-york-city-landlord-experience-what-is-it-like-to-be-a-new-york-landlord/ Wed, 05 Aug 2009 13:46:54 GMT
Sheila Collins is a second-generation landlord and property manager in New York City.

Just about everyone’s heard that if you can make it in the Big Apple, you can make it anywhere. So what does it take to make it as a landlord in New York City? Is it the jungle that some claim it to be, or is it possible to use your wits to survive and prosper?

Brooklyn landlord Sheila Collins knows the answer to that question. She currently owns a 3-unit property in Prospect Heights, and she is in the process of purchasing a second 3-unit property. Sheila is a second-generation property owner whose father owned a 3-unit property in Flatbush where she grew up.

Circumstances are a lot different for Sheila than they were for her father when it comes to finding suitable tenants, “The neighborhood I live in is desirable. It’s near the Brooklyn Library, Prospect Park, and the Brooklyn Botanical Gardens. It’s up and coming, not posh.” In the language of New York real estate, that means you can find lots of amenities like cultural institutions and restaurants, but at a price that’s still affordable. Her Dad, on the other hand, didn’t have all of those extras to offer tenants, so he couldn’t attract the same quality individuals that Sheila does.

In spite of everything the neighborhood has to offer, Sheila still needs to spend a significant amount of time finding good tenants. She uses sources like Craigslist and real estate brokers, but she always practices due diligence by conducting a credit check on a possible candidate. She also meets with them to engage them in conversation to see what kind of people they are. She asks them things like how they like their job, and what they do in their free time, to get an insight into what type of tenant they will be.

The other part of her strategy is to charge less than market value rent because she finds that it widens the pool of possible tenants and increases her chances of finding the best ones. Her approach seems to work because she doesn’t have any problems with delinquent tenants who don’t pay the rent. In fact, she has one tenant who pays ahead of time.

She isn’t always this lucky when it comes to finding repairmen. Describing the process as “challenging”, Sheila asks friends and neighbors to give her referrals. This seems to work out much better than just “letting her fingers do the walking through the Yellow Pages.” Sheila illustrated her point with an anecdote about finding a locksmith on her own. In her words, “He beat me over the head with what he charged me.”

Her tenants are for the most part fairly responsible when it comes to maintaining the property to avoid unnecessary repairs. But this isn’t a matter of luck, but rather of experience. Sheila learned what to look for when it comes to responsible tenants by making the mistake of renting to college roommates who treated the apartment like a Frat House. She also adds an addendum to the lease regarding things like noise level.

She considers her costs for things like property tax and insurance to be reasonable as compared to what landlords on Long Island and in Upstate New York pay. She carries standard homeowners insurance, but doesn’t have extra coverage for natural disasters like floods.

Sheila deliberately chooses 3-unit properties to avoid being subject to rent control. This is a government program run either by the local municipality, as is the case with New York City, or by the state. It puts limits on the amount of rent a landlord can charge a tenant and also regulates the services the landlord must provide in their New York lease.

An apartment is considered rent controlled if the tenant, or their lawful successor such as a family member or spouse, has continuously lived in that apartment since before July 1, 1971. When a rent controlled apartment becomes vacant, one of two things can happen. It can become rent stabilized, meaning that tenants are protected from significant increases in rent and have the right to renew their leases. The New York City Rent Guidelines Board sets the amount a landlord may increase a rent-stabilized tenant’s rent. Or, if it is in a building with fewer than six units, it becomes deregulated, meaning it’s no longer part of the rent control program.

Apartments in one or two family houses can also be considered rent controlled if the tenant has continuously lived there since April 1, 1953. In this case, when the apartment becomes vacant, it is automatically deregulated. There is no rent-stabilization option.

What makes Sheila so successful as a landlord is that she doesn’t see things like rent control as a roadblock to her goal, but rather as an obstacle that can be maneuvered around. She is proof-positive that with enough good old-fashioned street smarts you can make it in New York City and beyond.

]]> https://www.ezlandlordforms.com/articles/educational/5/64/mold-remediation-mold-laws-and-what-to-do-if-you-find-mold-in-your-rental-property/ https://www.ezlandlordforms.com/articles/educational/5/64/mold-remediation-mold-laws-and-what-to-do-if-you-find-mold-in-your-rental-property/ Tue, 04 Aug 2009 22:47:24 GMT



The name Amanda Bonnen has become synonymous with the devastating effects the presence of mold, or its suspected presence, can have for landlords. The former tenant of the Horizon Realty Group posted a “tweet” to her Twitter account that said; “Who said sleeping in a moldy apartment was bad for you? Horizon Realty thinks it’s okay.”


The management company issued a statement saying it found the May 12th “tweet” while defending a class action lawsuit Bonnen filed against it claiming alleged violations of the Chicago Residential Landlord Tenant Ordinance.

Horizon went on to add that no mold was ever found in Bonnen’s apartment. However, in March water had leaked into her unit and some others in the building after a faulty roof repair job. Horizon said that all affected tenants were contacted so that any water damage that resulted from the repair could be resolved. Of all the tenants involved in the matter, only Bonnen remained dissatisfied, and she moved out when her lease expired on June 30.

The reason mold causes such concern is because of the health risks associated with it, such as allergic reactions, asthma attacks, sinus infections, memory loss and lung problems in the very young and the elderly. The best way to protect yourself from a tenant like Amanda Bonnen is to get as much information as possible as to what mold is and how it can be removed.

According to Bill Begal, President of Begal Enterprises Inc, a company that does disaster mitigation and restoration, mold is a natural, growing object that can never be completely removed. That’s because once an area is cleaned and you open it up to the rest of the environment, mold will be brought in from the environment and start living there again.

He cautioned landlords to remember that not all mold is bad, and not all black mold is toxic. The strain of black mold that carries toxicity is known as stachybotrys chartarum. It is this type of mold that produces byproducts called mycotoxins, which cause health problems.

Bill says there are six conditions that are necessary for mold to grow:
• Lack of light
• Lack of air
• The right temperature
• The proper humidity
• A mold spore (the reproductive system of the mold)
• A host (place for the mold to grow)

Mold can grow anywhere these six conditions exist, especially in areas where there is water intrusion like a basement or a roof.

Once a landlord finds mold present on their property, the legal time frame allowed to remove it varies from state-to-state. However, Bill says that despite the legal requirements, landlords should resolve any leaking water problem as soon as possible because when building materials get wet, mold begins to develop within 48 to 72 hours.

Mold remediation, as the cleaning process is called, should be done by professionals who know how to properly contain and remove moldy building materials. The containment is equally as important as the removal because you don’t want to cross contaminate other parts of the home. Professionals use various kinds of equipment like air scrubbers and HEPA filters to avoid spreading the mold. The cost for this type of work can range from a few hundred to millions of dollars depending upon the size of the space to be cleaned and the access to the property, among other factors.

Some jurisdictions allow landlords to clean up to 10 square feet of mold –infected space without calling in a professional. The guidelines for remediation can be found on the Environmental Protection Agency (EPA) web site at http://www.epa.gov/mold/mold_remediation.html. As Bill explained, these are the only written guidelines on the subject.

When it comes to the question of whether or not the landlord must disclose the presence of mold to tenants, with very few exceptions, most states have not clearly defined what the landlord’s responsibilities are. Bill notes that in the absence of a clear legal directive, landlords should use common sense. Instead of worrying about whether or not you can get away with renting an apartment with mold present, limit your liability by being proactive and resolving the problem.

One important caveat should be noted here. The liability issue changes dramatically depending on the reason for the mold’s existence. If the mold results from the landlord’s failure to maintain the property in a habitable condition, then the landlord is legally liable. However, if the cause of the mold growth is due to tenant actions like creating high humidity, or failing to clean the premises, then the landlord is not liable.

In somre jurisdictions, the presence of mold can be grounds for breaking a lease. And as the Bonnen case shows, it can also be grounds for a lawsuit. Bill recommends that you check with a real eatate attorney in your area to determine your exposure in this regard.

Bill added that a savvy landlord will limit exposure to legal action by being proactive and examining your property for things like the presence of mold at least twice a year. This will not only give you the opportunity to fix the problem, but to document that it was resolved. With the proper recordkeeping, you can head off a lawsuit before it even gets started.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/63/hawaii-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/63/hawaii-landlord-tenant-law-and-regulations/ Mon, 03 Aug 2009 07:34:26 GMT

Are written agreements required?

In Hawaii it is legal to have a written or oral lease agreement, but written lease agreements are very strongly encouraged by Hawaii courts.

 

Must a landlord provide a condition report to tenant?

Before starting a tenancy, a landlord must write a detailed report of the condition of the property. This report should be completely accurate explaining the state of the property, including a precise list of items or furnishings and the condition they are in.

 

Is the landlord required to disclose his/her address?

The landlord or agent must provide the tenant, in writing, their name and address to receive rent, notices and demands. The tenant must be notified of any change of the landlord or agent’s information.

Please Note: Failing to provide disclosure as specified above may result in a $100 fine to the Landlord.

 

How much notice must a landlord give before entering the rental?

A 48 hour minimum notice is required for entry, except in cases of an emergency.

 

What is the limit on the amount of security deposit a landlord may collect?

The security deposit may not surpass the amount of one months rent.

 

Is it legal for a landlord to charge a Pet Deposit?

Landlords may charge a pet deposit, separate from the security deposit. The pet deposit may be discussed between the landlord and tenant, but may be no more than one months rent. A landlord may NOT charge a deposit for a service animal.

 

What procedures are taken with the security deposit at the end of a lease?

The security deposit must be returned 14 days after termination of lease. If the landlord must keep any portion of the security deposit, he must give the tenant written notice of any deductions made and the balance as well as the notice must be provided to tenant within 14 days after lease termination.

The landlord must notify the tenant in writing regarding the reasons for retention of any portion of the security deposit, and must forward the entire security deposit or the balance after deductions to the tenant within 14 days after the termination of the lease.

 

Are there regulations on the amount I may charge for fees?

There are no stated limits placed on the amount that can be charged for either an application fee or a late fee. Returned payment fees may not exceed $30 and must be reasonably related to expenses the landlord incurs as a result of a returned payment or applicable to the actual charge received from the bank.

 

Are there policies or laws respecting rent control or stabilization in Hawaii?

The state of Hawaii currently does not have any rent control or stabilization practices established.

 

Is it mandatory for a landlord to issue a rent receipt?

It is required for a landlord to provide a tenant with a receipt of any rent paid.

 

How much notice is required to increase the rent?

Landlords must give a tenant at least 45 days notice when increasing the rent in a month to month tenancy. In a fixed term, the rent is set by the terms of the rental agreement. For leases with tenancies less than month-to-month (week to week), 15 days notice is required.

 

How much notice is needed to terminate the tenancy?

In a month to month agreement, the landlord must give at least 45 days written notice to end the tenancy. For a tenancy less than month-to-month, a landlord must give at least 10 days, oral or written, notice. If the rented premises has a presumed demolition, or is transforming into a condominium or vacation rental, the landlord must give at least 120 days written notice. No notice is required in a fixed term tenancy for the termination date is already stated in the lease.

Important: For a term of one year or less, tenants may terminate a rental agreement if tenant or family member residing at rented premises is a victim of domestic violence. Notice must be given at least 14 days before the date of early termination stated on the notice, it can be no more then 104 days from the previous domestic violence act. For more information and instructions visit Hawaii HB858.

 

My tenant has not paid rent, how much notice do I have to give in order to evict them?

If the landlord wishes to file an eviction, a 5 day notice to cure or vacate must either be given to the tenant or posted on the door of the premises. The day of posting does not count, nor does any day in which the court is not open such as holidays or weekends.

 

May I demand my tenants to acquire renter's insurance?

Landlords may require tenants to obtain rental insurance, and can make the failure to do so a breach of the lease agreement.



Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Additional Hawaii property management resources available here, and legal questions can be asked - and answered - on our Landlord-Tenant Forum.

]]> https://www.ezlandlordforms.com/articles/educational/3/62/the-lease-option-agreement-pros-cons-and-a-creative-approach-to-real-estate/ https://www.ezlandlordforms.com/articles/educational/3/62/the-lease-option-agreement-pros-cons-and-a-creative-approach-to-real-estate/ Wed, 29 Jul 2009 11:45:39 GMT A lease option agreement can be an advantageous arrangement for both the landlord and tenant. However, there are pitfalls that you as a landlord need to be mindful of so that the agreement can be drawn to work to your benefit.

The simplest definition of a lease option agreement, according to Frank Uzzi, private practice real estate attorney and licensed real estate broker, is the right for a tenant to purchase your property at a future time. It is also sometimes called a rent-to-own agreement.

One of the important features of this type of agreement is that it is usually drawn up so that the option is exclusive to the tenant. Legally, options are assignable, meaning that the tenant can sell or give their option to buy to someone else if there is no specific wording in the agreement that prohibits this. Another feature is that this agreement doesn’t obligate the tenant to buy the property. It is merely the right to exercise the option if they choose to do so.

The option can be designed so that it begins at a certain time during the life of the lease, and expires at a certain time. It can also be drawn so that it expires when the lease expires. The pricing structure can be different at certain times when the option is exercised. Frank gave the following example, “The agreement can be structured so that the purchase price within the first 12 months of the lease is $100,000. If the tenant decides to purchase in year two of the lease, the price is $105,000.” The other alternative to naming a set price is to have a custom market analysis performed at the time the tenant wants to exercise the option to determine fair market value.

The way the agreement works, according to Frank, is that the tenant usually pays rent that is higher than market value. A portion of that rent goes toward the purchase price. Frank added that in some cases, the entire rent could go toward the purchase price. If the tenant fails to exercise the option, the extra money they paid the landlord isn’t refundable.

Frank noted that this type of arrangement has become slightly more popular in the current real estate climate. There are two major reasons for this. The first is the declining housing market. Prices have fallen, and landlords know they can’t get fair market value for their property. So they try to “beef up” rents instead by offering tenants the option to buy.

The second reason the lease option agreement is gaining in popularity is the credit crunch. Working men and women who in the past would have been suitable candidates for financing now find themselves unable to qualify for a mortgage. Because credit is so tight, they are actively looking for lease option agreements.

There are some significant advantages for landlords to enter into this type of agreement. Even though a tenant may start out assuming they will be able to purchase the property down the road, a lot of them may not be able to obtain financing to complete the purchase. The money paid toward the purchase price remains with the landlord.

The other distinct advantage is the difference in attitude between a tenant who simply rents and one who intends to eventually own. Here’s how Frank explains it, “The landlord-tenant relationship is usually a push-pull in terms of getting the tenant to take care of the property. The tenant that wants to purchase will typically take better care of the place, pay rent on time, and even make improvements.”

But in spite of these obvious incentives for a landlord to consider a lease option agreement, you can’t overlook the drawbacks. If a landlord needs to sell the property, but the tenant turns out not to have substantial enough credit to go through with the sale, the property remains unsold.

Frank said that landlords also need to keep in mind that tenants are agreeing to purchase in the future. This is a volatile market both in terms of price and interest rates. What seems like an affordable price now, may seem unfair two years from now, resulting in the tenant either asking to renegotiate, or deciding to renege on the option.

If you’re thinking about entering into a lease option agreement, a consult with an attorney may prove to be beneficial. They will be able to take certain steps to ensure that you maintain ownership. Frank explained that some lease option agreements have been interpreted by the court to be sale contracts, not lease option arrangements because of the way they were written. You certainly don’t want to find yourself in the position of having to turn over your property to a tenant because the agreement you signed was subject to misinterpretation.
]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/61/north-carolina-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/61/north-carolina-landlord-tenant-law-and-regulations/ Tue, 28 Jul 2009 10:01:59 GMT Are there rent control/rent stabilization policies or laws in North Carolina?
The state of North Carolina has not established rent control or stabilization practices.

What is the maximum amount I can collect as a security deposit?
Security deposits may not exceed the following amounts:
• If rent is collected weekly, the landlord may require an amount equal to 2 weeks rent.
• If rent is collected monthly and there is no written lease, the landlord may require an amount equal to 1 and a 1/2 month’s rent.
• If there is a lease for more than a month, the landlord may require an amount equal to 2 months.


Please Note: The landlord must give the tenant written notice of the name of the bank that is holding the tenant’s security deposit or the name and address of the insurance company providing a bond to cover the security deposit.

My tenant has moved out, what do I do with their security deposit?
The original language of NC Gen. Stat. § 42-52 required that all landlords must itemize any deductions from the security deposit and refund any remaining balance to the tenant within 30 days after the tenant relinquishes tenancy and vacates the unit. However, in consideration of the difficulty some landlords had in determining the extent of the damages and the cost along with generating or furnishing invoices for the repairs; the landlord now has up to 60 days to provide an itemization and accounting if this cannot be determined within 30 days.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage as well as including repair receipts and pictures.

May I charge an application fee, late rent charge or a returned payment fee?
Reasonable cost should always be kept in mind when initiating any charges. There are no restrictions or limits placed on the collection of an application fee. Once a rental payment is 5 days late or more, a landlord may assess a late fee which may not exceed $15 or 5% of the rental payment, whichever is greater. The processing fee which may be charged and collected for a check on which payment has been refused by the bank because of insufficient funds is not to exceed $25. N.C. Gen. Stat. § 25-3-506.

How can I end a North Carolina lease agreement?
For month to month tenancies, the lease may be terminated by a notice of 7 days before the end of the current month of tenancy. If the lease is yearly, then written notice shall be given 30 days before the end of the current term of tenancy. With regards to a week to week tenancy, the lease may be terminated by a notice of 2 days before the end of the current week of tenancy. Regardless of the term, if the rental is a manufactured home, the tenant must give 30 day's notice before vacating.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable.

Additionally, any member of the US Armed Forces who is required to move pursuant to permanent change of station with orders to depart 50 miles or more from the leased property is released from the rental agreement. Military person must provide at least 30 days notice to the landlord. In addition, any military person who is deployed for more than 90 days may terminate their lease with written notice which will become effective 30 days after the first date on which the next rental payment is due, or 45 days notice, whichever is shorter.

Victims of domestic violence, sexual assault, or stalking, may terminate their lease with 30 days written notice along with a copy of the valid order of protection/other restraining order/address confidentiality card.

My tenant has not paid rent; how much notice do I have to give a tenant in order to evict them?
If the tenant has breached the lease, then the landlord must notify the tenant of the breach and termination of the lease. This notice should be written and also contain a demand for possession of the property, as well as a statement to the reason(s) why the landlord is terminating the lease and/or a demand for all monies due.

If the landlord then wishes to file an eviction, a 10 day notice to vacate must either be given to the tenant or posted on the door of the premises. The day of posting does not count, nor does any day in which the court is not open such as holidays or weekends.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

What are the Landlord’s legal rights when a tenant remains after a lease has ended or been terminated?
The landlord may terminate the tenancy upon express notification. If the tenant remains, the landlord may remove the tenant through the courts with an eviction known as summary ejectment.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance, and can make the failure to do so a breach of the lease agreement.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the Lease.

Do I have to give the tenant notice before I enter the rental property?
There are no statutory regulations regarding a landlords right to enter the leased premises. However, landlords should exercise caution and use reasonable judgment.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. The answers to the questions may vary depending on your factual situation. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Additional North Carolina rental resources are available, and legal questions about NC landlord-tenant law can be asked (and answered) through our ezLandlord Forum.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/60/colorado-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/60/colorado-landlord-tenant-law-and-regulations/ Fri, 24 Jul 2009 06:57:45 GMT

What are the rent control/stabilization laws in Colorado?
There are currently no rent control or stabilization laws in Colorado.

What fees may I charge?
There currently are no restrictions or limits placed on the collection of a late charge, an application fee, or a returned payment. However, reasonable cost should always be kept in mind when initiating any charges. Landlords and tenants can also create their own agreement about fees for returned payments.

Are there limitations on the amount I can collect for a security deposit?
There is no limit on the security deposit charged to the tenant so long as it is reasonable. Some jurisdictions such as Boulder have different requirements (in Boulder, the landlord must pay the tenant interest on a security deposit). Landlords should check with local housing laws for variables that may differ from state regulations.

What do I do with the security deposit after my tenant has moved out?
Colorado law requires the landlord to return the security deposit or an itemized statement of the deductions and balance, if any, to the tenant within 30 days after lease termination. This time period may be extended up to 60 days if stated in the lease.

What are common issues involving security deposits.
Often times, landlords try to collect deductions for items that are described as normal wear and tear. To prevent a situation like this, the landlord should provide proof of each deduction with pictures, and receipts.

How can I terminate a Colorado lease agreement?
In regards to a fixed term rental agreement, notice would apply to the terms specified within the lease. Tenancies that are one year or longer may be terminated by either party, giving at least 3 months advanced written notice. With regards to a lease that is 6 months or longer but less than 1 year, tenancies may be terminated by either party, giving at least 30 days advanced written notice. For tenancies that are one month or longer, but less than 6 months, tenancies may be terminated by either party, giving at least 10 days advanced written notice.

In which situations must I release a tenant from the rental agreement?
In the case of a fire not caused by the tenant, may the landlord release the tenant from the agreement. A tenant may also be released from a contractual agreement if he/she is called to active military duty. Furthermore, a tenant may be removed from the lease agreement from the court if a landlord does not follow Colorado’s landlord obligations.

How much notice is needed to evict a tenant for nonpayment of rent?
If the tenant has not paid rent, the landlord can serve a 3 day notice to pay or quit. The notice must be either posted on the door or the premises, or given to the tenant. The 3 days do not include holidays or weekends. A court proceeding may be initiated after the 3 day notice has been served to the tenant.

What must I do to physically remove my tenant after possession was granted to me?
After the court grants possession, the landlord must obtain a Writ of Eviction issues by the court clerk. The Sheriff will serve The Writ by posting it on the door of the rental property.

What is the time frame for the eviction process?
There are many factors that go into the eviction process which makes exact timing almost unattainable. If there are no complications, the process should take around 4-5 weeks.

May I demand my tenants to renter’s insurance mandatory for my tenants to obtain?
Landlords may require tenants to obtain rental insurance, and can make the failure to do so a breach of the lease agreement.

What are the landlord’s legal rights in the event of the death of a tenant?
The lease is automatically terminated in the event of the death of a tenant. If the lease states conditions regarding the death of a tenant, then the lease prevails. If there is no lease agreement, then the landlord must get authorization from a probate court to remove all contents from the premises.

How will I know if my tenant abandoned the rental unit?
There are a few obvious ways to figure out whether or not your tenant has abandoned the rental or not. It is recommended to check if tenant removed any personal items or to find whether the tenant has returned to the property at any time during a one week period. It is recommended to take pictures and document all sufficient evidence in order to rule out abandonment.

May I enforce a no smoking policy in my rental agreement?
A landlord may establish a “No Smoking” policy in the Lease.

How much notice must I give before entering the rental unit?
A landlord must give reasonable advanced notice, unless stated otherwise in the lease.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

 

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/59/florida-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/59/florida-landlord-tenant-law-and-regulations/ Fri, 24 Jul 2009 06:45:19 GMT

Does Florida have rent control or stabilization policies?

The state of Florida has not established rent control or stabilization practices.

 

What fees may I charge?

Landlords may assess late fees when specified within the lease. If a payment is returned by a financial institution as unpaid, landlords may impose a fee of $25, if the face value does not exceed $50, $30, if the face value exceeds $50 but does not exceed $300, $40, if the face value exceeds $300, or 5% of the face amount of the check, whichever is greater. Fla. Stat. § 68.065

 

What is the limit I can charge for a security deposit?

There is no limit on the security deposit charged to the tenant, so long as it is reasonable.

 

Do I need a separate bank account for the security deposit?

Landlords must place the security deposit into either a post bond or an interest bearing or non interest bearing account that does not commingle with any personal funds. Additionally, landlords must provide tenants with written notice within 30 days stating where the security deposit is being held. This notice must also include the name, address, how the security deposit is being held, and interest it is bearing, if any.

 

After my tenant has moved, how long do I have to send their security deposit back?

After lease termination, a landlord has 15 days to return the security deposit with interest OR give the tenant written notice by certified mail to the tenant's last known address of their intention to impose a claim on the deposit, and the reason for imposing the claim. If there is a claim, landlords must return the balance, if any within 30 days of the written notice.

 

What are some common issues concerning security deposits?

A fairly common issue regarding the return of a security deposit is obtaining a forwarding address for the tenant. To circumvent this problem a landlord should insist upon a mailing address that is separate from the rental location, such as a post-office box.

 

How can I end a Florida lease agreement?

The lease agreement would supply the language to end a fixed term lease; a fixed term lease is when a lease has a beginning date and an end date. The lease agreement may specify whether a notice is needed or whether the lease would simply end at the end of the agreement. For a non-specific term lease or periodic lease, notice depends on how often the rent is paid. If rent is paid weekly, then 7 days would be needed to end the agreement; if rent is paid on a monthly basis, than 15 days notice would be needed. Quarterly requires thirty days notice and yearly requires sixty days notice. The same is true for a verbal agreement.

 

My tenant has not paid rent; how much notice do I have to give a tenant in order to evict them?

If a tenant does not pay rent, a 3 day “Notice to Quit” shall be issued before the landlord may file for formal eviction proceedings.

 

Are there special requirements for the delivery or service of notices, for example, constable, sheriff or a registered process server, taped to entrance, certified mail, etc.?

Lease termination notices must be hand-delivered, and can be received by any adult person. In the event the tenant cannot be found at the property, the termination notice may be posted on the door.

 

When may a landlord release a tenant from the lease agreement?

In the case of a fire or casualty not caused by the tenant, considering the property unlivable, may a landlord be forced to release the tenant from the agreement. If the resident is called to active military duty, the landlord must release him/her from the lease contract.

 

My tenant wants to pay only part of the rent he owes? I have already started eviction proceedings; should I accept the partial payment?

Landlords may now accept partial payment and still proceed with an eviction that same month if he/she does one of the following:

1. Gives tenant a receipt of the partial rent payment.

2. Post a new 3 day notice with the new balance owed.

3. Place the amount of partial rent into the court registry, if the eviction is filed.

 

What are signs that my tenant has abandoned the rental unit?

Normally, if the unit is abandoned, the tenant has not paid the rent, so the landlord may file for eviction. Another clue to realizing your unit is abandoned is noticing that the tenant's personal property is no longer in the unit. If it is plausible, check to see if your tenant has returned to the premises at any time during a period of one week. All “proof” should be documented and gathered to determine abandonment.

 

Are “No Smoking” policies legal in Florida?

Yes, a landlord may include a “No Smoking” policy in the Lease.

 

What is the required amount of notice before entering the rental unit?

The landlord shall give the tenant at least 12 hours notice of intent to enter the premises, except in case of emergency or if it's impracticable to do so.

 

May I require my tenants to get renters insurance?

Landlords may require tenants to obtain rental insurance.


Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Please feel free to review our other Florida landlord-tenant resources, including our Florida lease agreement, and you can post any legal questions to our community of attorneys, landlords and property managers in our Rental Forum.

]]> https://www.ezlandlordforms.com/articles/educational/2/58/rental-property-insurance-coverage-claims-and-what-to-look-for-in-rental-insurance/ https://www.ezlandlordforms.com/articles/educational/2/58/rental-property-insurance-coverage-claims-and-what-to-look-for-in-rental-insurance/ Thu, 23 Jul 2009 09:28:39 GMT Having the appropriate insurance coverage is an essential if you own rental property. Not only does your insurance company assume the risk for damages to your premises, but it also covers you against any injuries or accidents to others that may occur there.

The type of insurance coverage landlords need falls under the umbrella term “property and casualty insurance,” which covers anything other than life and health, says Tom Shriver, vice president of NetQuote.com, a company that connects consumers with multiple insurance agents who compete for their business. However, there is no such thing as a property and casualty policy. You can purchase car insurance, homeowners insurance, and in the case of landlords, landlord protector insurance, also known as landlord protection insurance.

While a landlord protector insurance policy appears on paper to be just like the standard homeowners insurance policy, there is one significant difference between the two, says Tom. Homeowners insurance mainly includes coverage for the contents of the house, while landlord protector insurance has much less coverage for contents. Its focus is damage to the property and liability for injury. Landlord protector insurance policies are written on a structure that has four units or less. Anything above that, says Tom, becomes a commercial risk, which requires a commercial policy known as a habitational policy.

The policy is written as a package policy, meaning that it covers a number of what insurance companies refer to as “perils.” These are causes of loss, like fire, theft, tornado, hurricane, wind, and water. The assumption of risk is covered under the named insured, which is the landlord. This is an extremely important point because when a claim is filed, a determination is made as to who is liable for the damage. For example, if a fire broke out in the house as a result of faulty wiring, then the landlord would be liable, and their insurance would pay for repairs and the replacement of any of the tenant’s possessions that were damaged. However, if the fire was caused because the tenant fell asleep with a lit cigarette, then the tenant is liable not only for their own possessions, but for the damage to the house as well.

Another important aspect to landlord protector insurance, according to Tom, is coverage for loss of rent while the unit is being repaired. As long as the damage was caused by a covered loss, landlords are reimbursed because the unit isn’t in a habitable condition.

In addition to the dwelling itself, part B of the landlord protector policy covers any detached structure on the property like a garage or a storage shed. These structures are covered for 10 percent of the amount of coverage on the dwelling.

In terms of coverage limitations, there are two important things to remember. With fire damage, which is a covered peril, the landlord’s contents would be covered, but not the tenant’s. Also, there is a high limit of contents coverage, explained Tom.

Secondly, with loss caused by theft, another covered peril, it is important to review the coverage limitations in the policy. Most of these policies have a $1000.00 limitation on theft for jewelry. If you don’t a have a floater on your policy, meaning a type of insurance that provides additional coverage above the policy limit for property that is easily transportable, you will have to settle for the $1000,00 no matter what your actual loss is.

There are causes for loss that aren’t covered by landlord protector insurance, like earthquakes, which require a separate policy. Floods are another natural disaster that isn’t covered. By definition, a flood is water that hits the ground before it comes into your house. This is an important distinction when the insurance company makes the determination if the cause of loss is covered, because although a flood isn’t covered, water damage is. Tom used the following illustration to explain, “If the window blew out in a garden apartment or a basement apartment and water came into the unit as a result of that broken window, then the damage caused by that water would be covered.”

There is the additional issue of water damage caused by backup from sewers and drains. These types of water damage have specific coverage in a landlord protector policy, but there are limitations to that coverage.

When it comes to the question of whether or not all landlords should carry flood insurance, Tom believes that only those landlords who own property in the federally identified flood zones need to carry it. Flood insurance is only written through the federal government’s National Flood Insurance program, but it is sold through insurance companies. That’s why flood insurance policies are the same from insurer to insurer. You can find out more about the program, and check to see if you are in a high-risk area, at their website (see the Resource Box below).

Tom noted that buying landlord protector insurance can be expensive. The reason for the high cost is that a landlord doesn’t have any control over a tenant’s actions. Because that implies a high element of risk, insurance companies charge a high premium. In spite of the high cost, landlord protector insurance can be made more affordable through discounts for having security alarms, especially monitored ones, burglar alarms, deadbolt locks, and fire extinguishers.

While it’s important to have the protection insurance provides it’s just as important to reduce your dependency on it by taking a number of steps to reduce loss. Here’s what Tom recommends:

• Insist that tenants buy renter’s insurance. The cost for coverage isn’t that expensive. To purchase $300,000 -worth of liability coverage costs less than $200 per year.

• Make sure tenants have working fire extinguishers that are easily accessible, like under the bed. Most fires happen between 11:00 pm and 5:00 am, which isn’t a time frame when most people are alert enough to remember where they put the fire extinguisher.

• Instruct your tenant in the correct way to turn off the water main. The number one cause of damage is water.

• Conduct a semi-annual property inspection to be sure you don’t have any hazards, like loose handrails or broken boards on the deck that could lead to a liability suit.

An ounce of prevention is worth a pound of cure; so eliminate the risk, and you won’t have to file that claim.


Additional Resources:
http://www.floodsmart.gov/
http://www.netquote.com/
]]> https://www.ezlandlordforms.com/articles/educational/2/57/evaluating-rental-properties-what-to-look-for-in-a-rental-investment/ https://www.ezlandlordforms.com/articles/educational/2/57/evaluating-rental-properties-what-to-look-for-in-a-rental-investment/ Tue, 21 Jul 2009 16:39:38 GMT In spite of the current condition of the real estate market, investing in a rental property can still provide you with a decent income if you perform the due diligence necessary to find the right property. That means you’ll have to analyze a number of factors before you decide to buy.

The first factor to consider is the rental’s location. Your experience as an investor is going to play a major role in where you should look, says Ben Spofford, President of Realtyrto.com, a company that provides rent-to-own real estate. An experienced investor can find a gem in any neighborhood, but if you’re just starting out, Ben recommends looking in your own backyard because you need to understand in what type of neighborhood you’re investing. For example, knowing if there are advantages like easy access to transportation, schools, and shopping malls will tell you the types of renters the property will be best suited. Once you determine who the possible renters are, then it becomes a question of finding the lower priced homes in the area. Starting off with a house that is on the low end of the price range for the area gives you a chance to learn without putting everything on the line.

The next thing to consider is the condition of the property. Any property is fair game as long as it isn’t condemned, says Ben. He added that buying a fixer upper isn’t necessarily a bad idea; however, it can present a big challenge for the new investor who isn’t in the trades. If your background doesn’t include experience in the construction industry, says Ben, then you need to put together a good team who understand the various aspects of the home’s construction, so that they can determine what the necessary upgrades are and what those upgrades will cost. Ben used the following anecdote to illustrate his point, “In Cleveland where I do some work, the homes built in the 30s and the 40s were made from plaster and lath. In the 50s, this process was replaced with plasterboard. The cost to upgrade these older homes is greater than for the newer ones.”

As to whether or not you should purchase properties at or below market value, Ben responded that in this current economy, market value is extremely difficult to determine because it changes from street-to-street and neighborhood-to-neighborhood. Once again, the renter will be the determinant of the market value. Ben noted that you can have a property on a street that is a cul-de-sac, with no kids, and good lighting that can be highly desirable to a certain type of renter, which increases its worth.

If you’re considering a property that already has tenants, it’s important to find out if the rent they’re paying is at or below market value. Ben cautions investors from buying a property where the tenants are paying below market value rents unless you know that the supply of desirable rentals in the area is low, and that demand will increase in the future because this will allow you to raise rents to make them consistent with what other landlords in the area are getting.

When it comes to financing, Ben says that anything that is owner financed is a superior investment unless your costs for items such as interest on the loan, taxes and insurance result in a negative cash flow, then the property isn’t a good opportunity. The only exception is if you purchase the property with enough of an equity cushion, meaning the amount of surplus equity you hold in collateral beyond the amount of the debt, so that you can sell the property quickly at a later date.

And speaking of finances, you will need to do a comparative market rent analysis to see the amount of income you can anticipate. Ben says that this relatively simple because there are a number of sites on the Internet like that provide the tools to do this, such as Rentometer.com.

Ben concluded his remarks with a final tip for the new investor, ‘You can get better rent with a subsidized program like Section 8 than you can renting to non-subsidized tenants.” So it’s a good idea to become involved the program as soon as possible.


]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/56/arkansas-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/56/arkansas-landlord-tenant-law-and-regulations/ Tue, 21 Jul 2009 13:57:40 GMT Are there rent control/rent stabilization policies or laws in Arkansas?
The state of Arkansas has not established rent control or stabilization practices.

 

What is the limit Arkansas law will allow me to charge for a security deposit?
Arkansas regulates the security deposit when:
(1) A landlord/Owner owns partially or totally, at least five dwelling units which are rented to members of the public, OR
(2) The rental unit is managed by someone else other than the owner, (the number of units does not come into question here) then Arkansas law regulations of the security deposit are followed.
In such conditions, the security deposit may not exceed an amount in excess of 2 month's rent or 2 times the periodic rent.

**For landlords that do not meet the conditions specified above, the security deposit would be regulated by the written lease. It is fair to say that all landlords should try and be reasonable so to stay out of court.

 

What do I do with the security deposit at the end of the tenancy?

Arkansas law regarding security deposits are effective for landlord/owners of 6 units or more or agents or representatives of the owner (no matter how many units may be involved). In these cases, an itemized list of any charges withheld must be provided to the tenant within sixty (60) days of the time the tenant moves out of the rental unit. However, the deposit may be applied toward the payment of unpaid rent, damages suffered by reason of the tenant's noncompliance, or physical damages to the premises. All deductions must be itemized by the landlord in a written notice and delivered to the tenant's last known address, along with the remainder, if any of the deposit.

 

What is a common issue regarding security deposits?
In Arkansas there are no stated regulations for landlords or owners with less than 6 rental units. In these cases the lease will set the tone of how a security deposit is collected and returned. It is important for landlords to be fair and reasonable in these circumstances.

 

May I charge an application fee, late rent charge or a returned payment fee?
Reasonable cost should always be kept in mind when initiating any charges. There are no restrictions or limits placed on the collection of a late charge or application fee. However, a service charge for a returned payment is permitted. The maker of the bad check must pay the amount of the check plus a service charge not to exceed $20.00 within 10 days after receiving written notice of dishonor.

 

How can I end an Arkansas lease agreement?
In regards to a fixed term rental agreement, notice would apply to the terms specified within the lease. With regards to a month to month tenancy written notice must be given at least 30 days; a week to week tenancy, written notice must be given to the tenant at least 10 days. These notices are sent prior to the termination date specified in the notice and prior to the periodic rental date specified in the rental agreement.

 

Are there circumstances where I am required to release a tenant from a lease agreement?
In circumstances where the tenant must report to active military duty, or the rental property is destroyed or damaged by a fire, not cause by the tenant,  may the landlord be forced to release the tenant from the lease agreement.

 

How much notice must I give to evict a tenant who has not paid rent?

Arkansas requires a landlord to give 5 days notice to vacate evict a tenant.The notice must be given to the tenant or posted on the door of the rental unit. The 5 days does not include the day of posting, holidays or weekends.

 

What steps must be taken to remove the tenant from the rental unit after the landlord is given possession in court?

Once possession is granted by the court, then the landlord must obtain a Writ of Eviction issued by the court clerk. The Writ is served by the Sheriff by posting it on the door of the premises. The Writ can give the tenant as little as 24 hours to vacate.

What is the typical timeframe for an eviction?

Many factors go into the eviction process, which makes it difficult to project an exact timeframe. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.


May I make it a requirement in the lease for the tenant to purchase a renter's insurance policy?

A landlord has the right to require tenants to purchase renter’s insurance. The landlord may also breach the lease agreement if the tenant fails to obtain renters insurance.

 

What are the landlord’s legal rights in the event of the death of a tenant?

In the event of the death of a tenant, the lease is automatically terminated. However, if the lease agreement specifies terms in regards to this situation, then the lease prevails. If there is no lease agreement, then the landlord must obtain an order from a probate court authorizing removal of the contents of the apartment.

 

What are ways to determine if the tenant has abandoned the rental property?
When determining whether a tenant has abandoned the premises or not, it is best to look at key points such as the removal of personal goods, whether or not the tenant has returned to the rental unit in a one week period, or simply there being no food in the refrigerator. It is extremely important and highly recommended to document all of the “proof” gathered in order to determine abandonment. The landlord may always file for eviction is rent payment has not been made.

 

What can I do if my tenant files for bankruptcy?

The bankruptcy court laws will determine the procedures a landlord should take. A landlord usually will proceed with a relief from the “stay” deeming the tenant responsible for rent incurred during the pendency of bankruptcy proceedings. This procedure is very complicated and demands at least a consultation with an attorney.

 

Do I have the right to enforce no smoking in my rental property?

A landlord may implement a “No Smoking” policy in the lease.

 

Must I give the tenant notice before entering the rented premises?
There are no statutory regulations regarding a landlords right to enter the leased premises. However, landlords should exercise caution and use reasonable judgment.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Please see our other Arkansas leasing resources, and feel free to ask legal questions in our Property Management Forum.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/55/iowa-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/55/iowa-landlord-tenant-law-and-regulations/ Thu, 16 Jul 2009 14:27:20 GMT How much can I charge for rent?
Iowa doesn’t limit the amount of rent a landlord is permitted to charge. Therefore a landlord may charge whatever he feels desirable. Additionally, the state of Iowa has not introduced rent control or stabilization.

May I charge an application fee, late rent charge or a returned payment fee and are there limits to these fees?
Reasonable cost should always be kept in mind when initiating any charges. The maximum allowed by law in Iowa for a late charge is $40 a month and no more that $10 per day. However, the maximum fee that may be charged for a dishonored payment is $30, provided it is specified within the lease or posted conspicuously. Iowa Code § 554.3512

Are there any regulations regarding the security deposit?
Landlords may not collect a security deposit that is greater than 2 month's rent. All security deposits shall be held in a bank or savings and loan association, or credit union which is insured by an agency of the federal government. Security deposits must not commingle with the personal funds of the landlord. Any interest earned on a security deposit during the first 5 years of a tenancy shall be the property of the landlord.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court (when a tenant sues for the return of a security deposit) as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage as well as including re-pair receipts and pictures.

After my tenant has moved, how long do I have to send their security deposit back?
Within 30 days from the termination of tenancy and receipt of the tenant's forwarding mailing address, the landlord shall either return the entire security deposit to the tenant or a written statement showing the specific reason for withholding the security deposit or any portion of it. It is wise to keep track and have receipts of all costs such as labor and material.

What happens at the end of a Iowa lease or how much notice must I give a tenant to move?
A fixed term lease is a rental agreement that contains a beginning and ending date. In this circumstance, the lease agreement simply ends on the date specified within the contract unless the lease specifies otherwise. A periodic lease is a lease that continues from period to period (i.e. month to month). Periodic leases continue until either a landlord or tenant gives notice of at least 30 days. If no lease is used, it is considered a verbal lease agreement; the rules for a periodic lease would then apply.

My tenant was supposed to be out of the apartment and he is still there. What can I do?
If a tenant remains in possession without the landlord's consent after expiration of the rental agreement or its termination, the landlord may bring an action for possession. In order to begin the process, the landlord will give the tenant a seven day eviction notice and then follow the court rules for eviction.

My tenant wants to pay only part of the rent he owes? I have already started eviction proceedings; should I accept the partial payment?
Accepting payment whether full or partial, may waive the landlord’s right to proceed and evict the tenant unless a non-waiver agreement is signed. This may be complicated and it may be wise to contact an attorney.

Can I force my tenant to pay for attorney fees?
In Iowa attorney fees and court costs may be recovered if specified within the lease agreement and awarded by a judge.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the Lease.

Do I have to give the tenant notice before I enter the rental property?
The landlord shall give the tenant at least 24 hours notice of intent to enter the premises, except in case of emergency or if it's impracticable to do so.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance.

 

Want more information?  View our additional Iowa rental resources for landlords and property managers, and ask legal and other questions in our Landlord Forum.


Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/54/new-fire-alarm-notice-and-tenant-fire-safety-amendment-requirements-for-district-of-columbia/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/54/new-fire-alarm-notice-and-tenant-fire-safety-amendment-requirements-for-district-of-columbia/ Wed, 15 Jul 2009 15:03:38 GMT

Suggested language:

WHAT TO DO IN CASE OF A FIRE EMERGENCY

• Smoke detectors in individual units are NOT connected to this building’s fire alarm system.
• The interior fire alarm system in this building is NOT connected to DC Fire and Emergency Medical Services. It is for evacuation purposes only.
• In case of a fire emergency, activate the interior alarm station, following the instructions on the face of the alarm box, evacuate the building, and call 911. Do NOT use elevators during a fire emergency.
• Remember that the smoke detector in your unit or the fire alarm system in this building DOES NOT call DC Fire and Emergency Medical Services.

IN ANY FIRE EMERGENCY, EVACUATE THE BUILDING AND CALL 911!

In Spanish:

QUE HACER EN CASO DE UNA EMERGENCIA DE INCENDIO

• Los detectores de humo de unidades individuales NO están conectados al sistema de alarma del edificio.
• El sistema de alarma interna del edificio NO esta conectada con el Departamento de bomberos. Es un recurso para uso en caso de una evacuación solamente.
• En caso de un incendio, active la alarma del edificio siguiendo las instrucciones en la parte de enfrente de la caja de emergencia, salir del edificio, y llamar al 911. NO USE los elevadores durante una emergencia de incendio.
• Recuerde que los detectores de humo en su unidad o el sistema de alarma del edificio NO LLAMAN al Departamento de bomberos. ¡EN CASO DE UN INCENDIO DESALOJE EL EDIFICIO Y LLAME AL 911!

  This information is provided by the Consumer & Regulatory Affairs of Washington D.C..
  To visit their web-site: http://Newsroom.dc.gov

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/53/rental-registration-guide-for-the-district-of-columbia/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/53/rental-registration-guide-for-the-district-of-columbia/ Wed, 15 Jul 2009 15:00:41 GMT
]]> https://www.ezlandlordforms.com/articles/educational/2/52/asset-protection-for-rental-investing-legal-entities-lawsuit-protection-and-taxation/ https://www.ezlandlordforms.com/articles/educational/2/52/asset-protection-for-rental-investing-legal-entities-lawsuit-protection-and-taxation/ Wed, 15 Jul 2009 13:02:48 GMT
Owning property by definition makes you vulnerable to risk. Landlords have traditionally faced exposure from incidents like slip and fall accidents suffered by tenants, guests, or passersby, under-insured workmen, who while on your property, become injured during the course of their job, and animals that exhibit their hostility.
However, the old liability minefield has broadened to include some new sources of risk.
“Landlords are more liable because of the bad economy,” says John Walker, asset protection planning attorney, of counsel to Duke Law Firm. “In addition to the sub-prime problem, you have people who had a job, but don’t have one now, who may be looking for someone to take money from. Then there is the issue of occupancy rates dropping. This creates a problem because real estate investment is a cash flow business. The Mom and Pop owners don’t have deep pockets. A large number of vacancies can lead to bankruptcy.”
That’s why Walker firmly believes that every landlord, no matter how many rental units they have, needs to create a protective barrier around their property through asset protection planning. This is an area of legal practice that was developed during the 1970s, and is based on five areas of the law:
1. Taxation
2. Estate planning
3. Corporate law/business planning
4. Bankruptcy
5. Litigation

Walker says that one way to look at it is that you're avoiding the high toll that litigation can have on your assets: "The idea is to protect assets so that if you’re attacked, after the attack is over, you still have something left.”

Asset protection planning makes use of exemptions in both common and statutory law so that the landlord owns their assets. This is accomplished by taking assets that are exempt from a creditor’s grasp, and putting them into business entities that have protection built in so that the landlord becomes insulated from litigation.
However, Walker says, despite the claims of some, asset protection planning doesn’t make a landlord bullet proof.

“Laws are complex and changing all the time. What we set up three years ago we have to go back and revisit. Also, creditors’ lawyers are aggressive and they will look to undo what has been set up. Courts don’t like it [the attitude that you’re bullet proof]. You will pay your debts. You’re not supposed to try and get out of it. When you injure someone, you must make them whole. If you believe you’re bullet proof, the court may deal harshly with you,” he says.
Instead of the false bravado, landlords should look at asset protection planning as a way to dissuade a lawsuit. The established business entity should make it so difficult to sue, that the creditors would rather settle than pursue litigation.
When it comes to the question of whether or not there is any circumstance under whch landlords should leave property in their own names, Walker emphatically answered, “No!”

“Landlords live in a hostile environment. You can compare it to a snowstorm with snow blowing all around. We need to go outside once and a while, but if we go out in a tee shirt and shorts, we won’t last very long. So we need to have layers of protective clothing, with each layer serving a different function. The layers are attacked, but we’re safe. Creating a business entity is like having layers of protective clothing.”
So what options are available in terms of business entities, and how do you know which one is right for you? This area of the law, according to Walker, is called entity selection and it is part corporate law and part business planning. The idea is to get the protection of a corporation and the tax advantages of a partnership.

While the corporation and the partnership are options, they aren’t really used as much as they were in the past. The two types of entities that are most common are the limited liability partnership (LLP) and the limited liability company (LLC).

The LLP will give you the liability protection of a corporation, meaning that creditors cannot come straight to the landlord. There is a protective barrier between the landlord and the creditors, because the LLP makes the business separate from the owner. However, the LLC has the added advantage of being what Walker calls a “tax chameleon.” If there are two or more owners, then they can choose how the LLC will be taxed, which means getting the advantageous tax status of a partnership.

Of course, all of this protection doesn’t come without a few drawbacks. It is expensive to set up a business entity. The fact that it is separate from the owner means separate bank accounts, and separate tax returns, which translates into additional record-keeping and higher bookkeeping costs. Additionally, there are some states that charge filing fees and annual fees to continue to do business.

But as Walker notes, you have to weigh these additional costs against the benefits. And in the current volatile environment that landlords find themselves in, you can’t put a price on protection.

 

John Walker is an asset protection planning attorney with Duke Law Firm

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/51/missouri-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/51/missouri-landlord-tenant-law-and-regulations/ Tue, 14 Jul 2009 10:26:15 GMT Are there rent control/rent stabilization policies or laws in Missouri?
The state of Missouri has not established rent control or stabilization.

May I charge an application fee, late rent charge or a returned payment fee?
Reasonable cost should always be kept in mind when initiating any charges. There are no restrictions or limits placed on the collection of a late charge or application fee. However, a fee not to exceed $25, plus an amount equal to the actual charge by the depository institution is permitted for the return of each unpaid or dishonored instrument. Mo. Rev. Stat. § 570.120

What is the maximum amount I can collect as a security deposit and can I charge a refundable pet deposit over and above the maximum security deposit limit?
The security deposit may not exceed an amount greater than two month’s rent. There is no limit on a pet deposit, assuming that it is designated as such and detailed separately within the lease.

Do I need a separate bank account for the security deposit?
There are no requirements stating that a landlord must place the security deposit in a separate escrow account in Missouri. However, if a property management company is managing the property and collecting the rent and security deposit and holding those deposits for the landlord, Missouri real estate brokerage guidelines require that the property management company hold the deposits in a separate escrow account. It is not necessary to specify the escrow account information in the lease.

After my tenant has moved, how long do I have to send their security deposit back?
If proper notice is given, landlords must return the security deposit or the balance of the security deposit with an accounting of the deductions within 30 days. If non-proper or no notice is given, the landlord has 30 days after becoming aware that the rental unit is vacated, or tenancy has been terminated in order to return the security deposit. Please Note: funds may be withheld from the security deposit to cover unpaid rent, or damages. "Damages" is defined as deterioration to the premises or contents of the premises, but doesn’t include "normal, non-abusive living" or any failure of the landlord to comply with the landlord's obligations.

What is a common problem where security deposits are concerned?
A fairly common issue regarding the return of a security deposit is obtaining a forwarding address for the tenant. To circumvent this problem a landlord should insist upon a mailing address that is separate from the rental location, such as a post-office box.

How can I end a Missouri lease agreement?
A fixed term lease is a lease that has a beginning date and an end date. The lease agreement would supply the language to end a fixed term lease. The lease agreement would also specify whether a notice is needed or whether the lease would simply end at the end of the agreement. A periodic lease is a lease that continues from term to term (i.e. month to month). Periodic leases continue until either a landlord or tenant gives the other notice of at least 30 days. Where no written lease is used the notice requirements would be the same as if a periodic lease was in place.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable or If the tenant is called to active military duty. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

In the event of the death of a tenant, what are my legal rights as a landlord?
The landlord has the right to terminate the lease if the rent is not being paid, and sue the estate of the decedent for any unpaid rent. If the rent is being paid, the lease would continue unaffected.

What is the notice that is required for Non-payment of Rent?
While the statute in Missouri provides that demand for rent must be made as a requirement for filing a Landlord Tenant action, there is no set method for demanding the rent, and it may be done verbally. In addition, the statute provides that if prior demand was not made on the tenant, the service of the summons for the Landlord Tenant action serves as a demand for the rent. For an Unlawful Detainer Rent & Possession case, the tenant must be served personally at least 4 days in advance of the court date, and in a Rent & Possession case for possession only, the summons must be posted at least 10 days prior to the court date.

Are there special requirements for the delivery or service of notices, for example, constable, sheriff or a registered process server, taped to entrance, certified mail, etc.?
Lease termination notices must be hand-delivered, and can be received by any adult person. In the event the tenant cannot be found at the property, the termination notice may be posted on the door.

How long does the eviction process take?
It depends on many factors but generally it takes approximately 4-6 weeks to get possession.

My tenant has not moved out and I was awarded possession by a judge. Can I lock my tenant out? How do I remove him?
There is a 10 day right to appeal the judgment. After the 10 day period has passed, the landlord may file an Execution on the judgment with the court. The Court will process the paperwork and either forward it to the attorney/landlord or the sheriff's department. Once the sheriff's fees are paid, the sheriff will make an appointment with the landlord to supervise the eviction and keep the peace. The sheriff will remove the tenant if necessary, but the landlord is required to provide the manpower to remove the belongings, if necessary. The sheriff will allow the landlord to change the locks once all of the tenant's belongings have been removed.

How do I tell if my tenant has “skipped” out of the apartment?
Often times a tenant will leave without notice and leave property behind. The best way for the landlord to handle this is to go through the courts. It is generally up to the judge to determine if a property is in fact abandoned.

Do I have to give the tenant notice before I enter the rental property?
Landlords must give reasonable notice (24 hours) except in cases of emergency.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the Lease.

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

Additional Missouri rental resources and a Landlord Forum for legal questions answered by our community of attorneys, landlords and property managers are available as well.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/50/ohio-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/50/ohio-landlord-tenant-law-and-regulations/ Tue, 14 Jul 2009 08:35:15 GMT How much can I charge for rent?
Ohio does not restrict the amount of rent a landlord is permitted to charge. Therefore, a landlord may charge whatever he feels necessary. Additionally, the state of Ohio has not established rent control or stabilization.

May I charge an application fee, late rent charge, or a returned payment fee?
Reasonable cost should always be kept in mind when instituting any charges. There are no limits placed on the amount a landlord may charge for an application fee or a late payment. However, a landlord should not charge a fee so high that it calls into question the fairness of the fee if challenged in court. Assessed fees for a returned check may not exceed $30 or 10% of the face amount of the instrument, whichever is greater, plus the amount of any fees charged to the holder of the check by any financial institution as a result of the check not being honored. Ohio Rev. Code Ann. § 1319.16

May I use a daily late charge?
Although this is not prohibited, it tends to be a rare practice and generally not encouraged.

What is the maximum amount I can collect as a security deposit?
There is no limit to the maximum amount a landlord may collect for the security deposit. However, please note that the landlord must pay the tenant interest on any amount of the security deposit in excess of 1 month’s rent.

What is a common problem where security deposits are concerned?
At times landlords may try claiming deductions for items that are often characterized by the court as normal wear and tear. This situation may be prevented by realistically evaluating each deduction, providing proof of damage as well as including repair receipts and pictures.

My tenant has moved out, what do I do with their security deposit?
A landlord who has received written notice of the tenant’s forwarding address must return the security deposit or an itemized list of proper deductions within 30 days of the termination of the lease, and the tenant’s return of possession to the landlord, or be liable for double damages and attorney’s fees. Please also be aware that the landlord must pay the tenant interest on any amount of the security deposit in excess of one month’s rent.

How can I end an Ohio lease agreement?
In regards to a fixed term rental agreement, notice would apply to the terms specified within the lease. With regards to a periodic tenancy, however long the tenancy is, that is how much notice one party wishing to terminate the lease must give the other. For instance, a month to month lease requires 30 days notice of intent to terminate. The notice period does not begin until the start of the next rental period.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable or If the tenant is called to active military duty. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance, and can make the failure to do so a breach of the lease agreement.

What are the landlord’s legal rights in the event of the death of a tenant?
The tenant’s estate steps into the shoes of the tenant and must pay the rent and fulfill the obligations of the lease agreement.

My tenant has not paid rent; how much notice do I have to give a tenant in order to evict them? If the landlord wishes to file an eviction, a 3 day notice to vacate must either be given to the tenant or posted on the door of the premises. The day of posting does not count, nor does any day in which the court is not open. Thus a notice posted on Friday will allow an eviction to be filed with the Court upon the following Thursday provided that neither Monday, Tuesday, or Wednesday happen to be holidays upon which the court is not open.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes approximately 4-5 weeks.

Can I force my tenant to pay for attorney fees?
Ohio law does not allow for the landlord to obtain attorneys fees pursuant to a lease agreement. However, if the tenant violates Ohio Revised Code Section 5321.05, then the law does provide for attorneys fees payable by the tenant to the landlord.

How do I tell if my tenant has “skipped” out of the apartment?
Often times it’s best to look for the obvious, such as removal of personal goods, whether or not the tenant has come back to the premises at any time during a one week period, and simply no food in the refrigerator. It’s extremely important to document all of the “proof” gathered in order to determine abandonment. When in doubt, if payment of rent has not been made, the landlord may always file for eviction.

What can I do if my tenant files for bankruptcy?
The procedures a landlord should take will be determined by bankruptcy court laws. A Landlord usually will proceed with a relief from the “stay” deeming the tenant responsible for rent incurred during the pendency of bankruptcy proceedings. This is a complicated procedure and warrants at least a consult with an attorney.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the Lease.

Do I have to give the tenant notice before I enter the rental property?
The landlord must give the tenant reasonable notice (presumed to be 24 hours) of intent to enter for the purposes of inspection or repair. R.C. 5321.04(A)(8)

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.
]]> https://www.ezlandlordforms.com/articles/educational/3/49/demystifying-the-section-8-housing-program/ https://www.ezlandlordforms.com/articles/educational/3/49/demystifying-the-section-8-housing-program/ Sat, 11 Jul 2009 13:20:30 GMT When Congress passed the Housing Act of 1937, incorporated in the legislation was a program designed to sponsor subsidized housing for low-income families. Officially known as the Housing Choice Voucher Program, but more commonly referred to as Section 8 housing because this is the section of the Housing Act that authorized it, the program provides federal assistance through the U.S. Department of Housing and Urban Development (HUD), but it is actually administered through local housing authorities.

“It [the program] provides rental payments on behalf of the tenant to the landlord,” says Michael Minervini, Founder and President of Multi-Family Specialist, a training organization for real estate agents. Landlords can take part in the program by contacting the local housing authority and notifying the agency that they wish to become a receiving landlord. There is no application process for the landlord. However, a tenant who wishes to qualify must formally apply and show that their income is below 50 percent of the median income of the geograpic area in which they wish to live.

Michael noted that there are several significant advantages for landlords who take part in the program:
• It ensures a steady stream of tenants, which in turn means low vacancy rates.
• It provides guaranteed income.
• The monthly rental stipends are consistent.
• The landlord is assisting with housing placements within the community.

While the benefits are clear cut, the risks aren’t so well defined. As Michael explained, “Section 8 is the mechanism through which the landlord is getting paid. The risks to the landlord who take part in this program are the same as renting to any other tenant. It is still vitally important to screen tenants.”

The amount of rent per month a landlord receives from the housing authority varies from jurisdiction to jurisdiction. Michael says that each agency will pay what it considers to be fair market value based on an assessment of the location of the apartment, its size, the kinds of amenities offered, and the tenant’s income. Once that determination is made, any difference between that amount and the amount the landlord is charging per month is the responsibility of the tenant. Most housing authorities make payment between the first and seventh of each month. The landlord must collect the Section 8 tenant’s portion of the rent in the same manner as for any other tenant.

Any property that will be used for Section 8 housing must be properly inspected to be sure it is in suitable condition to be rented. Once again, the type of inspection required varies based on the local housing authority. In some cases, the agency relies on the municipality’s local code inspection or Certificate of Occupany inspection, whichever is applicable. In other instances, the housing authority will dispatch its own inspector to check for things like functioning utilities and heating/cooling systems, no peeling paint, no leaky roofs, no cracked windows/doors, and the presence of fire extinguishers, smoke alarms, and carbon monoxide dectectors.

An important point to note is that existing properties do not necessarily have to be compliant with the Americans With Disabilities Act (ADA). However, any new housing being built must conform to the guidelines set forth by the ADA if it is to qualify to be used for Section 8 tenants.

Once the unit has been rented, the landlord can usually use a standard lease. But Michael added that there are some housing authorities that require the landlord to use their leases. The terms are generally the same as in any other lease, except for one important difference. While a landlord typically has the option to rent to tenants either annually or month-to-month, with Section 8 tenants, the landlord can only rent on an annual basis.

When it comes to the question of securty deposits, Michael says, “This is a typical rental with a different revenue source, so the landlord can absolutely ask for a security deposit. In my experience, the tenant generally pays it.”

Rent increases are somewhat trickier. It depends on the amount determined by economic and geographic data, such as the location of the rental, the number of people in the unit, area wages, and the types of amenities offered. Even when the landlord builds the increase into the lease, the local housing authority may not approve it, making the tenant responsible for paying it. Of course, if the unit is subject to rent control, than the question of rent increases is subject to those guidelines.

Just as in any rental situation, you are going to find tenants that need to be evicted for non-payment of rent, or other lease violations. Michael says that not only is the eviction process the same, the court doesn’t give any special weight to the fact that it is a Section 8 tenant that is being evicted.

On a final note, Michael offered an insider’s tip as to how to successfully rent under the Section 8 program. He said that a landlord should make every effort to build a relationship with the local housing authority. If the representative knows your name, they will remember you when they have a good tenant looking for a rental. Maintaining a cordial relationship with the housing authority is a sure fire way of ensuring you receive a steady stream of tenants.
]]> https://www.ezlandlordforms.com/articles/educational/5/48/landlord-tax-strategies-and-rental-property-accounting/ https://www.ezlandlordforms.com/articles/educational/5/48/landlord-tax-strategies-and-rental-property-accounting/ Fri, 10 Jul 2009 11:12:42 GMT



Keeping your rental properties earning a profit is becoming increasingly more challenging as the economy continues to falter. According to real estate research firm Reis Inc., the vacancy rate for apartments across the nation reached a 22-year high in the period between April-to-June because the rising level of unemployment has reduced demand.


So what do you do if your are among those landlords who are finding it difficult to rent, or who rent, but with a significant cut in the profit margin because they have to sweeten the pot with incentives like a month's free rent or a reduced security deposit?

You can raise rents, but ultimately that move may leave you with more vacancies. There is a strategy you can use to boost that bottom line, that won't backfire in the long run. You need to make sure you're maximizing your tax deductions.

The key to getting the most bang for the buck from your deductions is keeping comprehensive records, says real estate and tax attorney Robert D. Lattas. Robert also based his comments on his experiences as a landlord. Good records make it easy to see all the deductions you are entitled to take, and taking every one you're permitted allows you to significantly lower your taxable income for the year.

There are a number of deductions Robert itemized that every landlord should be sure they include when they file their federal return:

• Interest you pay on your mortgage/building loans
• Real estate taxes you pay to the county
• Maintenance costs for the upkeep of the property
• Gas and electric bills for common areas
• Insurance costs
• Maintenance, oil and gas for vehicles used by your maintenance person(s)
• Building manager's salary
• Condo association fees


There are two important caveats Robert noted when it somes to deductions. The first is that you cannot deduct for vacancies, even if they are long term. However, he went on to explain that since landlords are required to report all income earned from rents each month, having a long term vacancy will lower the amount of income you will report, which lowers your taxable income.

The second is that you cannot take deductions for work done on your personal residence. Deductions must be associated with the upkeep of the building.

In addition to deductions, there are depreciable expenses you can claim. Almost all capital assets are depreciable. Robert explained it in this way, "When you buy a building new, in ten years it won't be worth nearly the same. The building loses its value over the years. That's depreciation."

Besides the building, which is undoubtedly a landlord's biggest asset, there are other capital assets like washer/dryers that are in common areas, computers, and furniture and equipment in your office in the building. Another important caveat to remember is that land, although it is an asset, is never depreciable.

The IRS code is very specific when it comes to taking depreciation. It spells out the useful life for all assets. It also requires that the depreciation deduction must be evenly spread out over the useful life of the asset, and that a portion of that depreciation must be taken each year. If a landlord fails to take a depreciation deduction for an asset in one tax year, they cannot double up the following year. That deduction is lost forever. Landlords must also be sure that they have receipts to prove how much they paid for the asset to substantiate the deduction.

Robert added to be sure to deduct expenses that you pay that may not be typically associated with owning a building. For example, if your building has a pool for common use, the expenses associated with the pool's upkeep are deductible. Some jurisdictions require landlords to pay water bills, these are also deductible. And if you live in a county that requires landlords to buy special permits each year, the fees paid for the permits are deductible.

Although some of these expenditures may be small, when added with all of the other deductions, they go along way in reducing the amount of taxable income you have to report to the IRS. And as Robert says, "As much as we love this country, nobody wants to pay more taxes to the government than they have to."

]]> https://www.ezlandlordforms.com/articles/news/47/the-real-estate-downturn-and-a-rental-market-case-study-madison-wisconsin/ https://www.ezlandlordforms.com/articles/news/47/the-real-estate-downturn-and-a-rental-market-case-study-madison-wisconsin/ Wed, 08 Jul 2009 11:37:26 GMT
Steve Schuster is a Real Estate Consultant for Re/Max

In the midst of all of the talk about Federal Reserve Chairman Ben Bernanke’s sighting of green shoots in the economy, and Warren Buffet’s insistence that in spite of his recent cataract surgery, he still can’t see them, comes the grim news that employers cut 467,000 jobs in June, pushing the unemployment rate up to a 26-year high of 9.5 percent. This surely signals some depressing times ahead for the economy as a whole, and for many individual sectors like real estate.

In fact as unemployment goes, so goes the real estate market. In areas with the highest numbers of out-of-work residents, the real estate market has plummeted to some all time lows because people are leaving to find work elsewhere. However, in Madison, Wisconsin, maintaining a stable employment market has been the secret weapon in the fight to keep the real estate sector alive.

Steve Schuster, Real Estate Consultant for Re/Max Preferred, summed it up this way, “In our market here in Madison we’re still doing okay. We have a number of things that help fuel our market such as the University, numerous hospitals, government employees, several large insurance companies, and a good number of corporate headquarters.” Of course, conditions aren’t as good as they have been, Steve added. In a recent meeting with his agents, they reported that real estate transactions were half of what they were three years ago when the real estate market was in its prime. So, while there are definitely some green shoots in the Madison economy, they’re just a little brown around the edges.

Another problem facing many U.S. housing markets that has left Madison unscathed is a glut in the number of available apartments. Real estate research firm Reis Inc. reported that the vacancy rate for apartments across the country rose to a three-year high in the first quarter of 2009, resulting in a downward spiral for rent prices. The situation is predicted to get worse as more apartment buildings are slated to open this year.

The Madison market, on the other hand, still seems to be maintaining that delicate balance between supply and demand, according to Steve. “Property managers I talked to said supply/demand is still pretty much in check in this area. From what I’m told rents have actually increased and landlords are being increasingly choosier about their tenants. I know in our area the closer to downtown Madison the higher the rent. The rent for a 3 bedroom, 2 bath apartment 20-30 minutes from downtown would typically be $900-$1000.00 per month. Whereas a similar property closer to downtown would be $1500.00, and in the downtown area itself, it could be as much as $2-3000.00 per month.”

Even though rents have increased, there are factors that offset the higher cost and keep demand for apartments steady: • The drop off in the purchase of homes because the lending requirements have gotten a lot tougher. • The increasing foreclosure rates, which force former homeowners to rent because their credit scores were lowered due to a short sale or foreclosure action. • The growing trend to shy away from purchasing, especially if the individual hasn’t owned previously, due to the economic uncertainty.

As economists around the nation continue to argue about whether or not the worst is passed, Steve remains optimistic about his little corner of the real estate world. “Although our market has fared much better than others, if rates stay favorable and government incentives keep showing up, I think real estate will come around in the near future.”

But Steve sees an even bigger obstacle than the economy in reviving the market. “I do believe, however, that a good share of our problem is the media scaring the daylights out of people. People come to me with a preconceived notion that you should be able to buy any property for half the listed price. Now I do believe there are some potholes like that out there. But in my market, if people were willing to sell properties for that, investors would buy them before they hit the market and rent them until the market comes back.”

That last statement pretty much exemplifies Steve’s solution for surviving the current real estate slump. If you can’t find the green shoots, look for the lemons, and then squeeze enough of them until you can make a big pitcher of lemonade.

]]> https://www.ezlandlordforms.com/articles/educational/4/46/security-deposits-defining-normal-wear-and-tear-and-how-to-handle-security-deposit-disputes/ https://www.ezlandlordforms.com/articles/educational/4/46/security-deposits-defining-normal-wear-and-tear-and-how-to-handle-security-deposit-disputes/ Wed, 01 Jul 2009 15:13:31 GMT
Priscilla McDonald is an Associate Broker with RE/MAX Action Realty

No matter how well you screen your tenants, chances are that every now and then you will rent to one that won’t treat your property with the proper respect. That’s why security deposits were developed; to give some measure of protection to landlords from the expense of repairing and cleaning a unit after one of those types of tenants has vacated.

“The security deposit ensures that when the tenant leaves, he leaves the premises in a clean, rentable condition just as he received it,” says Priscilla Nieto McDonald, Associate Broker with RE/MAX Action Realty. Priscilla went on to add that any expenses incurred to bring the property back to a rentable condition can be deducted from a security deposit as long as those repairs are more than what is necessary because of normal wear and tear.

The phrase “normal wear and tear” can itself be subject to a certain amount of subjectivity. However, Priscilla explained that there are instances that are clearly indicative of tenant abuse: “If a ten-year-old door is falling off the hinges, that’s normal wear and tear. But, if the door has a great big hole in it because a tenant put their foot through it, that’s not. If the wall has children’s finger prints on it where the kids held on as they climbed the stairs, that’s wear and tear. But, if the wall has a big hole in it because the tenant brought the sofa down the stairs and it didn’t fit, that isn’t.”

The other important thing to remember about security deposits is that they may be regulated in your state. Many states limit the amount of security deposit landlords can charge. Some states, however, have no statutory limit, meaning that landlords can use their own discretion when setting the amount.

Residential security deposits may also have a state-imposed limit on the amount of time a landlord has after the tenant leaves to return the security deposit. In most states, this time frame is between one to three months.

Because as Priscilla noted, “One person’s idea of damage is different from another person’s,” she recommends that landlords take pictures of the apartment after the tenant leaves. The landlord has to make a claim for the security deposit, so it‘s a good idea to have documentation to back up that claim. She added that it is the tenant’s responsibility to mitigate damages by calling the landlord as soon as a repair becomes necessary.

The biggest mistake many landlords make is thinking that the security deposit belongs to them. The security deposit is the tenant’s money, which means it cannot be comingled with the landlord’s money. Priscilla creates a special bank account with the tenant as the owner of the account, and with herself as the escrow agent. By establishing the account in this manner, she not only maintains separation, but the interest on any monies in it are mailed directly to the tenant, freeing her from the legal obligation to do so.

She also recommends that if it is permitted, a landlord should charge a month’s security deposit and the last month’s rent. The last month’s rent can immediately be put into the landlord’s checking account to help pay expenses. Of course, when the tenant gives notice, you have to remember that they already paid in full.

And speaking of that last month’s rent, Priscilla said that if the tenant leaves without paying it, you can subtract it from the security deposit. The same goes for any late fees and any interest on the unpaid amount.

Although the security deposit is there to protect you from tenant abuse, if you abuse it by not returning it, or by not returning it on time, there are consequences. The tenant can sue you for the money, and as Pricilla explained, “The law would be on the tenant’s side.” That’s why it is imperative that you maintain the separation between your money and the security deposit, and that you have documentation in the form of receipts, pictures, etc. to prove that any money subtracted from the security depost was legitimately done so.

]]> https://www.ezlandlordforms.com/articles/educational/3/45/renting-to-immigrants-the-laws-affecting-landlords-and-undocumented-immigrants/ https://www.ezlandlordforms.com/articles/educational/3/45/renting-to-immigrants-the-laws-affecting-landlords-and-undocumented-immigrants/ Sat, 27 Jun 2009 11:07:10 GMT



According to the Department of Homeland Security, in 2008, there were 1,107,126 documented immigrants in the U.S. The agency also estimated that the number of unauthorized immigrants residing here totaled 11.6 million. On the surface this would seem to represent a burgeoning housing market of which landlords would want to take advantage. However, tapping into this market is not without its difficulties.

The problems associated with renting to non-U.S. citizens are compounded by the dichotomy between federal and state law, says Professor Michael Seng, Director of the Fair Housing Legal Clinic at the John Marshall Law School. The federal government makes no distinction between a legal or illegal immigrant, so renting to a foreign national is subject to the same standards as renting to a U.S. citizen. The difficulty arises on the state level if you live in a municipality that has made it an offense to rent to an undocumented immigrant. In some of these jurisdictions renting to an illegal "alien" is punishable by the imposition of a fine, but in others renting to unauthorized immigrants is a criminal offense.

If you do live in a state that allows you to rent to immigrants regardless of their legal status, keep in mind that the provisions of the Fair Housing Act apply even though non-U.S. citizens are not a protected class under the law.



There is also the question of what additional steps the state may require if you rent to a non-U.S. citizen. Some states may call for the tenant to produce verification of their legal status. There may also be a specific form that the landlord must file with the state that indicates that a documented foreigner is renting from you.

In general, the landlord doesn’t have the duty to inquire about status, explains Professor Seng. That means that since most criminal standards require that the offender know that they are committing the offense, renting to an illegal immigrant is typically not prosecuted as a criminal offense even in the states that consider it to be one.

You may decide, however, that even though it is sanctioned, you will follow a general policy against renting to non-citizens. This isn’t necessarily a violation of fair housing legislation. Where landlords can get in trouble is if their policy can be shown to have a greater impact on one particular immigrant group, meaning that by not renting to one group it is causing people with the same national origin to have the least chance of any immigrants to get an apartment in that neighborhood. Then it becomes a matter of discrimination based on national origin, which is a violation of the Fair Housing Act. Professor Seng was quick to note that this is a difficult case to prove.

Professor Seng added that credit checks could be performed on tenants that are non-U.S. citizens provided that you run credit checks on all of your tenants. If you only check the credit of minority applicants, then you’re violating the Fair Housing Act because you’re applying different standards to different rental applicants (also known as discrimination, under the law).

The eviction process doesn’t change if the tenant you’re evicting is a non-U.S. citizen. The only difficulty that Professor Seng anticipated was if local law required all evictions to be tracked. This could lead to problems if the state has a policy prohibiting leasing to undocumented immigrants, and you rented to one.

Finally, all of this boils down to one big question: Should you rent to non-U.S. citizens? “Yes”, says Professor Seng. “Legal foreign residents have the same rights under the law as anyone else. Besides, if you don’t rent to them, you could be opening yourself up to a charge of discrimination based on national origin.”

Related Reading:

Are "Birth Tourist" Renters a Risk for Landlords?

Supreme Court Ruling: Didn’t Intend to Discriminate? You Can Still Get Sued

]]> https://www.ezlandlordforms.com/articles/educational/3/44/renters-insurance-worthwhile-landlord-requirement-or-unnecessary-tenant-burden/ https://www.ezlandlordforms.com/articles/educational/3/44/renters-insurance-worthwhile-landlord-requirement-or-unnecessary-tenant-burden/ Wed, 24 Jun 2009 17:03:31 GMT When tenants rent apartments, there are so many things that they need to consider. If you were to make a list of the top ten things they should be thinking about, the question of how they would replace their personal property if it were stolen from or damaged inside the unit would certainly have a place on that list. Another item that would be included is where would they get the money to compensate you if their negligence caused loss to the structure itself?

These are the very issues insurance is designed to address. The problem is that most of your tenants will not be aware that they aren’t addressed by your homeowners insurance. These types of policies only cover non-negligent damage to the building, and to the loss of your own personal property.

To safeguard their personal belongings and to have liability protection, the tenant needs to purchase renter’s insurance. Kip Diggs of the Corporate Public Affairs Department at State Farm Insurance says that, “In addition to contents coverage, renters insurance also provides liability coverage for the policyholder and medical payments coverage which provides immediate medical expenses coverage without regard to fault.”

The liability insurance not only covers liability for damage to their apartment or the general structure because of negligence, but it also provides coverage if a guest is injured while in their apartment. If another person’s property is stolen or destroyed while it is in the tenant’s unit, renter’s insurance will cover that, too.

Included within the liability portion of the policy are medical payments if the tenant’s guest is injured and requires medical help. This coverage extends to persons who are hurt while in the tenant’s apartment on business-related matters as well.

The amount the tenant will receive if a claim is made depends upon whether or not it is an "actual cash value" policy or "replacement cost coverage" policy. Actual cash value coverage will pay only what the property is worth at the time it is damaged or stolen minus the policy deductible.

Replacement cost coverage is the better alternative of the two, because it pays the insured what it really costs to replace the lost or stolen items minus the deductible. Needless to say, this option is also the more expensive of the two. Keep in mind that state law determines the kind of payout on a policy, so an insurance company can offer replacement cost coverage in one state while at the same time being limited to offering actual cash value in another.

In addition to the coverage provided by the basic policy, tenants with high-tickets items like home entertainment equipment, or pricey pieces of jewelry should have the additional protection of a rider. This provides coverage for the full loss of these items even if it is beyond the limits of the policy.

Although it’s easy to see why tenants need renter’s insurance, it isn’t as obvious what the benefits are for the landlord. According to Kip, the fact that your tenant has insurance coverage doesn’t affect the amount of homeowners insurance you need to carry to be sure your property is fully protected.

In fact, even if the tenant has renter’s insurance, it doesn’t remove landlord liability in all instances, Kip explained. “The landlord is going to be responsible for maintenance and liability of common areas, like parking lots, stairwells and sidewalks. The renter is generally responsible for the areas under their control.”

So why would consider making renter’s insurance a provision in the lease agreement? The answer is quite clear. Paying for property damage resulting from your tenant’s negligent behavior can get pretty expensive. If your tenant doesn’t have coverage, you have two alternatives to defray the cost. You can either raise the rents of other tenants (if you have them), and risk losing them; or you can put in a claim against your homeowner’s insurance, and get hit with higher premiums.

However, if your tenant has renter’s insurance, it provides a third and clearly the most preferable option because it takes the onus off of you to find repair money. And as every landlord knows, maintenance is a large part of your job regardless of what it costs.
]]> https://www.ezlandlordforms.com/articles/educational/5/43/rent-collection-quick-response-debt-collection-and-techniques-to-collect-rent/ https://www.ezlandlordforms.com/articles/educational/5/43/rent-collection-quick-response-debt-collection-and-techniques-to-collect-rent/ Tue, 23 Jun 2009 11:09:07 GMT



While no landlord enjoys being put in the position of having to collect unpaid rent, it does sometimes happen. In order to keep the situation from becoming a black hole from which you’ll never recover any money, attorney Phil A. Taylor says you should always remember the following points:


“Be sure to have good information about the tenant from the beginning of the tenancy and do not let the back rent get to be too much. Act quickly to keep arrears low. This does not mean you have to evict the tenant right away, just limit your exposure.”

Phil, in private practice in Massachusetts, has a long history with collections, both in his current practice and as a member of a corporate legal team. He says that the first month a tenant falls behind in the rent, you need to bring it to their attention.

Of course, how you approach the tenant is an integral part of the resolution. Phil says that unless you are on site and have a cordial relationship with the tenant, you want to avoid face-to-face contact because it could become a confrontation.

Instead, he recommends you send a letter to the tenant. It’s important to note that you don’t have to send the letter by certified mail. Legally, any letter that is properly addressed and has the correct postage is considered to have been received once it is mailed. Therefore, a politely worded letter asking the tenant to call you so that the matter can be resolved, and mailed by normal means is sufficient at this stage of the collections process.

Oftentimes, when the tenant does make contact they will tell you that due to their financial situation, they can only make a partial payment. Phil recommends that you accept it, and that you give them a receipt noting it’s a partial payment, and that accepting it doesn’t mean you’re relinquishing any of your rights to collect the remainder of the debt. You also need to ask the tenant what their intentions are regarding paying the rest of the overdue rent.

You may also feel that you should investigate in how serious a financial jam they are be checking to see if they’re still employed, and how much other debt they’re carrying. You can legally make these inquiries, says Phil. If your original rental agreement doesn’t contain any verbiage barring you from calling the employer listed, you can certainly do so now to verify your tenant is still working there. In addition, as long as the landlord-tenant relationship remains a debtor-creditor relationship, under the Fair Credit Reporting Act you can get a copy of the tenant’s credit report. Most rental applications have a release allowing the landlord to obtain it.

Although you do have access to this information, Phil says you need to ask yourself what you expect to gain from knowing this? It’s actually a question of diminishing returns, because even if the tenant is unemployed and is carrying crushing debt, as long as they pay the rent they cannot be evicted. The only value that information might have is if you weight it against the tenant’s payment history to see how far you are willing to work with them to resolve the issue.

The real problems arise when you’ve put off trying to collect back rent, and the tenant now owes you several months. The only course of action, notes Phil, is to start the eviction process.

The first step is to send your tenant a Notice To Quit. This is a warning letter before you actually start the eviction. In the notice, your tenant must be given a fixed period of time to pay the back rent. In most cases, this ranges from 3 to 14 days according to state law. If the tenant makes good on the debt, their tenancy is reinstated, but if they fail to pay what they owe, they must vacate the rental property.

It’s crucial that you’re aware that even though your notice specifically states that the tenant either pays the money or moves out, you cannot force them out by changing the locks or taking any action to prevent them from gaining access to the apartment if they refuse to leave. Your only course of action is to follow through with the eviction.

If, however, as a result of your sending the Notice To Quit, your tenant skips owing you back money, you’re forced to attempt to collect the debt through other means.

The first problem is to find a valid address/telephone number. Phil says there are subscription services that can help you do this. He recommended Accurint, a division of LexisNexis (see Resource Box below for link).

Once you have that information, and start to make collection efforts, are you subject to the Fair Debt Collections Practices Act (FDCPA), which protects consumers from abusive debt collection actions? As a landlord acting on your own behalf, you aren’t subject to the law because you aren’t considered a debt collector. However, your attempts to collect the money owed cannot include any of the prohibited actions specified in Section 806 of the Fair Debt Collections Practice Act (see Resource Box below for link).

Even property managers aren’t considered debt collectors under the FDCPA. In a letter ruling dated November 16, 1995 written on behalf of the Division of Credit Practices, Bureau of Consumer Protection of the Federal Trade Commission, Thomas E. Kane offered this explanation:

“If the property manager is an agent of the property owner, the property manager probably is a "creditor" and not a "debt collector" because the debt (the rental payments) would not be owed to "another."

Moreover, even property managers who are not agents of the property owner probably are not "debt collectors" for the following reason. It is my understanding that rental payments being collected by property managers are current when the property managers begin sending bills to renters. Because the debts (the rental payments) owed to another (the property owner) are not in default at the time the property managers obtain them, the property managers do not appear to be debt collectors for purposes of the FDCPA, even when they collect rental payments that were current when obtained but subsequently become delinquent.”

Keep in mind that even if you are a landlord/property manager, if at any time during the attempt to collect you mention any name other than your own, you indicate that a third person is collecting the debt, and you become a debt collector subject to the provisions of the FDCPA.

If all of your efforts fail, then the next logical step would be to sue for the amount owed under breech of contract. An attorney familiar with your state’s collection laws will be able to help you. Phil noted that most attorneys involved in collections work on a contingency basis.


_________________
Resource Box

Accurint - https://risk.lexisnexis.com/products/accurint-for-collections---contact-and-locate-workflow
Fair Debt Collections Practice Act - http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf

]]> https://www.ezlandlordforms.com/articles/educational/4/42/the-eviction-procedure-when-and-how-to-file-eviction/ https://www.ezlandlordforms.com/articles/educational/4/42/the-eviction-procedure-when-and-how-to-file-eviction/ Fri, 19 Jun 2009 11:38:20 GMT Evictions can be a traumatic event for tenants, because they are being ordered to leave their home. But no one stops to realize that an eviction can be equally as traumatic for landlords because it is a costly, convoluted process that is different in each state. When a landlord decides to evict, it is generally not a decision made lightly.

So, what circumstances could cause a landlord to start the eviction process? According to Mike Hill, owner of Mike Hill Real Estate, "Eviction can be initiated for any violation of any provision of the lease." Even if the landlord fails to renew, if there's a clause in the lease that says that if it rolls over into a month-to-month rental, all other terms and conditions continue to apply, then the landlord retains the right to evict if a tenant violates one of the provisions of the original lease.

If the landlord does decide that the tenant has broken one of the provisions, and there is a need to begin an eviction, then the landlord must start the process by giving the tenant a Notice To Quit. This is a written notice requiring the tenant to move out by a certain deadline unless the problem is resolved. Your state's property laws determine this deadline, and it depends on the reason you're asking your tenants to leave, and the type of tenants you have.

There are three types of Notice To Quit:
1. For nonpayment of rent - Mike says that in many states, landlords are "required to make a final demand for rent and warn of the consequences of not paying it, before initiating the usual legal action to remove the tenant. If the tenant immediately pays rent, no problem, as long as the late charge is included. At this point, before the landlord starts the eviction process, the landlord must accept the rent, even if late."
2. For violation of a term or condition of the lease other than non-payment of rent - These are commonly known as Cure or Quit Notices, and refer to situations such as keeping a pet if the lease prohibits it, or making excessive noise.
3. For termination of tenancy – This is used to end a periodic tenancy. In general, this type of notice requires the landlord to give the tenant a 30-day advance warning that the tenancy is being ended. Some states require that a 60-day notice be given to tenants who have been in residence for over a year.


Care should be given as to the way the Notice To Quit is delivered. In some cases, if it is determined that the letter was improperly delivered, it can prevent the landlord from filing for eviction.

The best approach is for landlords or their representatives to hand deliver the Notice directly to the tenant. If the tenant is unavailable to receive it, then it can be left with a family member other than a young child. It can also be tacked on the front door. However, it must be readily visible. The last alternative is to send it by certified mail, but you should also send a copy by first class mail, too. Finally, it's important to note that each state has different laws about the delivery of eviction notices, so be sure to double check your state's laws.

Once the Notice is served, the tenant must respond within the specified period stated. Failure to do so, results in the landlord being able to file a complaint for eviction. This has a variety of names depending upon the state. For example, in Mike's home state of Georgia, it is called Dispossessory Warrant, and it is filed through Lowndes County Magistrate Court, formerly known as Small Claims Court. However, in some states the complaint is filed in Superior Court.

Mike explained that the complaint gives the tenant the option to move or solve the problem. He added that even though "non-payment of rent is an absolute reason for eviction, it's still possible for the tenant to answer the warrant in two ways: The tenant can claim to be withholding the rent due to something like repairs not being made, or the tenant can kill the warrant by an 'answer' in the form of rent, late charges and court costs, which the landlord must accept the first time. If the landlord takes out another non-payment warrant [against the same tenant] within the same 12-month period, the landlord has the option of taking or not taking the money, thus forcing the tenant out, if the landlord has had enough of him/her."

If the tenant refuses to file an answer with the court, the court will enter a default judgment for eviction provided the landlord proves that the court papers were served properly. Default judgments can be set aside if the tenant can provide a valid explanation as to why they didn’t respond.

If the tenant can show cause, the case will be scheduled for a hearing. If the court rules that the landlord can evict, the landlord must take the court order to the sheriff and the sheriff will post a notice on the tenant's door, telling the tenant that if they don't vacate by the date and time given, the sheriff will remove the tenant and their property from the apartment.

In this very long process, there are plenty of opportunities for error. However, Mike notes that, "The biggest and most costly mistake is not beginning the eviction process soon enough, which is within the same month in which rent isn't paid. They [landlords] make the huge mistake of accepting whatever excuse the tenant has for not making the payment. For those landlords, it’s not that the eviction process itself gets more costly, it's the lack of the eviction process that gets expensive."

Finally, Mike cautions landlords not to personalize the relationship between themselves and their tenants. "It's a business transaction that needs to be made every month and on time, according to the agreement both tenant and landlord signed."

For eviction notices and forms, and State Assist help with your state's eviction laws, visit our Eviction Notices page.

]]> https://www.ezlandlordforms.com/articles/educational/1/41/tenant-screening-rental-advertising-and-the-fair-housing-act/ https://www.ezlandlordforms.com/articles/educational/1/41/tenant-screening-rental-advertising-and-the-fair-housing-act/ Thu, 11 Jun 2009 13:24:32 GMT

Whether you're a homeowner with a single apartment to rent, or whether you're a property manager who oversees large numbers of apartments, your primary objective is making sure your rental units are occupied. But in the quest to find tenants, oftentimes people develop tunnel vision, losing sight of the fact that the methods they're using to find and screen renters could be in violation of federal law.

The specific law that established guidelines for these processes is the Fair Housing Act. Adopted in 1968 as part of a larger piece of legislation known as The Civil Rights Act, it was the federal government's attempt to mandate fair housing throughout the country within the limitations created by the Constitution.

The section of the law that covers advertising is 804(c), which states that it's unlawful to publish any advertisement for the sale or rental of a dwelling that indicates any preference, limitation, or discrimination against people who are covered by, what attorney Nadeen Green calls, "the seven protected classes:" race, color, national heritage, religion, gender, disability, and familial status (whether or not you have a child under 18 living with you).

Nadeen, who is Senior Legal Counsel for Rent Media Solutions, a blogger for the National Apartment Association, and author of countless articles concerning fair housing, has delivered 900 presentations educating landlords/property managers on the complexities of the law. She explains that, "The law applies to every landlord and every place. While no state or local government can take away the [federal] law, they can add their own provisions regarding things like age, source of income, and sexual orientation." Nadeen cautions landlords to become familiar with both federal and state fair housing laws before they attempt to advertise for tenants.

While the federal law is generally considered universally applicable to all landlords throughout the U.S., its full force is reserved for those with a substantial number of apartments to rent. Any person with less than four rental units under their control isn't subject to the provisions of the Fair Housing Law. However, even though a landlord may be considered exempt from the law, they are still bound by the necessity to create an advertisement that is in compliance with it, meaning they too, are forbidden from saying anything that indicates preference, limitation, or discrimination against people within the protected classes.

Although a lot of what the law has to say about advertising focuses on not showing preference, Nadeen was quick to point out that there are preferences a landlord can include that are legally acceptable. You can indicate partiality for people with children, or people with disabilities. That's because people without children and people without disabilities aren't protected classes, so they aren't being discriminated against by the request.

But the biggest problem with most ads is what many landlords include along with the description of the apartment, says Nadeen. Instead of simply giving an account of the physical features, they offer an opinion as to what sort of renter would be best suited for the place. If you want your ad to be in compliance, you can describe the number of bedrooms, bathrooms, and whether or not it has an eat-in kitchen, but you can't say something like, "This one bedroom apartment would be ideal for a single person." So stick to a description of the features and amenities, and stay away from expressing your thoughts as to the type of tenant you anticipate living there.

When it comes to placing the ad, there are no real requirements regarding the types of publications you can use, unless if publishing it in a particular periodical will result in "geographic discrimination". A classic example of this kind of situation is if a devout practitioner of a particular religious sect wants to be sure that they only receive responses to their ad from like-minded individuals, so they advertise the apartment exclusively in their church bulletin. Limiting your advertising in this way results in geographic discrimination because you're not reaching enough people who might be interested in renting the unit.

Nadeen advises landlords to avoid developing a profile of the perfect tenant because, "It is almost impossible to create a profile without stepping on the toes of the protected classes. There are only three things you should be concerned with, that the tenants will pay the rent, maintain the premises, and follow the rules." Still, that doesn't mean you shouldn't be consistent when undergoing tenant screening. Nadeen says that landlords should decide what information (such as rental history and data from a credit check and criminal background check) they need to know about a prospective tenant, and then be sure to collect that information from their rental application forms and tenant screening reports. Just be sure that the questions are neutral, and in no way discriminate against the protected classes.

Finally on the issue of using rental applications, Nadeen says they are a good idea. However, she cautions landlords against writing their own unless they can have it vetted, meaning examined by someone conversant with fair housing law who can determine that it is in compliance.

In addition to the question of compliance, you also want to be sure the rental application you're using is comprehensive enough to provide you with critical information such as employment history, income, housing history, social security numbers, and landlord contact information.

Related Reading:

Supreme Court Ruling: Didn’t Intend to Discriminate? You Can Still Get Sued

How to Screen Tenants & Reject Bad Applicants – Without Running Afoul of Fair Housing Laws

Felons & Fair Housing - How Discrimination Can Include the "Disparate Impact" Rule

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/40/connecticut-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/40/connecticut-landlord-tenant-law-and-regulations/ Mon, 11 May 2009 14:45:33 GMT

How much may I charge for rent?

There are several localities that enforce fair rent commission practices. Some of these cities are: Bloomfield, Bridgeport, Colchester, Enfield, Farmington, Glastonbury, Groton, Hamden, Hartford, Manchester, New Haven, Newington, Norwalk, Rocky Hill, Simsbury, Stamford, Westbrook, West Hartford, West Haven, Wethersfield, and Windsor. Check with local housing officials, an attorney, or the rent control board for further information to ensure compliance.

 

Are there laws regarding methods of payments?
Landlords may not accept electronic funds transfer (EFT) as the only method of payment for rent or security deposit starting on October 1st, 2013.

 

Am I required to give a rent receipt?
Landlords are required to give a receipt of the payment of rent, if the tenant pays in cash. A landlord must also give a receipt if an occupant pays the landlord, on behalf of the tenant. The receipt must have the date, the amount, and what the payment is for.

 

May I charge an application, late rent, or returned payment fee?
There are no limits on the collection of an application fee, or late charges. However, a returned payment fee must not exceed $20 and must be specified within the lease.

 

May I charge a daily late fee?
Although this is not prohibited, it tends to be a rare practice and generally not encouraged.

 

How much may I accept as a security deposit?

• 62 years or older, the security deposit shall not exceed 1 month's rent.

• 62 years or younger, the security deposit shall not exceed 2 month's rent.

Please Note: landlords must place the security deposit into an escrow account where it will earn annual interest at a rate set by the Banking Commissioner. Tenants are entitled to interest for all months on which rent is paid on time. Landlords must pay interest to the tenant each year (usually on the first day of each year). Landlords who fail to pay interest on the security deposit may be sued or subjected to a fine.

 

What circumstances require a tenant to be released from a lease agreement?

If a tenant is called to active military duty, the landlord must excuse the tenant from the lease. If the rented premises is destroyed or damaged by a casualty, which deems the property unlivable, and not caused by the tenant then the landlord may be forced to release a tenant from the lease agreement.  A tenant may also seek release from an agreement through the court, when a landlord does not abide by the state’s landlord obligations.  As of October 1st, 2013, any agreements or renewals entered into on or after January 1st, 2014 must follow the new law for sexual assault victims. The law gives a tenant the right to terminate a lease if victimized by a sexual assault crime.

 

What do I do with the security deposit after the tenant moves out?
Landlords must return the balance of the security deposit within 30 days after lease termination, plus any unpaid interest, and if applicable a list of damages and/or monies that the landlord has deducted

 

My tenant was supposed to be out of the rental property and is still there. What can I do?
If a tenant continues to occupy the residence without the landlord's consent after the lease is terminated or expired, then the landlord may end the lease by giving notice, or the landlord has the right to receive the last amount agreed upon rent (i.e. as specified within the lease).

 

How much notice do I have to give a tenant who has not paid rent, in order to evict them?
If a tenant does not pay rent by the 10th of the month, a 3 day “Notice to Quit” (or by the 5th day of the week for a week-to-week lease) shall be issued.

 

How long does the eviction process take?

With no complications, the eviction process takes approximately 45 days. Although, with any legal matter, exact timing is almost impossible as it depends on many factors.

Can I force my tenant to pay for attorney fees?

There must be a provision in the lease providing for attorney fees, but only 15% of attorney fees may be charged to the tenant as specified within the rental agreement.

 

My tenant wants to pay only part of the rent owed? I have already started eviction proceedings; should I accept the partial payment?

Be very careful not to accept any payments once the eviction action has started without stating on the check that it is “accepted as use and occupancy only" . Not doing so may invalidate the eviction. Also, if you have not started the eviction process and the tenant wishes to pay the rent and any associated costs in full, the landlord cannot refuse. Refusal to accept the payment may invalidate your eviction action even if it is after the l0th of the month. Evictions can be complicated and getting the advice of an attorney is strongly encouraged.

 

Is it legal to enforce no smoking in my rental property?

A landlord may include a “No Smoking Policy” in the lease to enforce these rules.

 

Do I have to give the tenant notice before I enter the rental property?

Landlords should give the tenants reasonable written or oral notice of their intent to enter the premises, and may enter only after tenants have given permission, except in cases of emergency.

 

 

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/39/alaska-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/39/alaska-landlord-tenant-law-and-regulations/ Mon, 11 May 2009 13:28:34 GMT How much can I charge for rent?
Alaska doesn’t limit the amount of rent a landlord is permitted to charge. Therefore a landlord may charge whatever he feels desirable. Additionally, the state of Alaska has not introduced rent control or stabilization.

May I charge an application fee, late rent charge or a returned payment fee?
Reasonable cost should always be kept in mind when initiating any charges. There are no restrictions or limits placed on the collection of a late charge or application fee. However, a returned check fee may not exceed $30. The rental agreement may specify a reasonable percentage-per-day late charge but such a charge is limited by the state usury law to an annual interest rate of a maximum of 5 percentage points above the Federal Reserve discount rate, or if no precise rate is specified, 10.5%. Remember, an automatic late charge or NSF fee is not enforceable unless it has been agreed upon beforehand.

May I limit how many occupants are inhabiting the rental unit?
A landlord may limit the number of tenants or occupants he/she will permit to reside in the rental premises but the landlord should always remember to keep in compliance with any local occupancy rules.

How do I handle a security deposit?
The security deposit may not exceed an amount greater than two month’s rent unless your rental rents for more than $2000 per month. This includes any security deposit or pre-paid rent.

 The landlord in Alaska who accepts pets (not service animals) may now accept a separate pet deposit in an amount equal up to one month’s rent. This is over and above the security deposit limitations. This pet damage deposit, however may only be used for damages caused by the tenant’s pet.

Do I need a separate bank account for the security deposit?
A security deposit whenever practical should be placed in one of the following: a trust account, bank account, savings and loan, or deposited with a licensed escrow agent.
It is important that all landlords understand that in the collections and accounting of security deposits, pre-paid rent and pet deposits; these particular designated funds may not be mixed (it must be kept separate from the landlord’s other money). However, one account may be set up for all tenants, the funds for EACH tenant must be accounted for in a separate way. Under no circumstance, may one tenant’s deposits be used or applied to another tenant’s deposit.

After my tenant has moved, how long do I have to send their security deposit back?
If proper notice is given, landlords must return the security deposit or the balance of the security deposit with an accounting of the deductions within 14 days. If non-proper or no notice is given, the landlord has 30 days after becoming aware that the rental unit is vacated, or tenancy has been terminated in order to return the security deposit. Please Note: funds may be withheld from the security deposit to cover unpaid rent, or damages. "Damages" is defined as deterioration to the premises or contents of the premises, but doesn’t include "normal, non-abusive living" or any failure of the landlord to comply with the landlord's obligations.

May I charge my tenant for carpet shampooing?
When a landlord has the carpets cleaned by a professional before the tenant moves in, then the landlord may require that tenant to clean the carpets upon move-out. This should be provided in the lease so as not to leave any questions.

What is a common problem where security deposits are concerned?
Often a tenant forgets or neglects to provide a forwarding address. Additionally, making sure the timing to return the deposit is essential and often overlooked. Normal wear and tear is a term used and confused often especially in the realm of renting. The state of Alaska has defined “normal wear and tear as “without negligence, carelessness, accident, misuse, or abuse of the premises or contents” by the tenant or visitors.”

How can I end an Alaska lease agreement?
The lease that has a definitive end date dictates when the lease ends. In that case, the tenant is supposed to move-out at the end of the lease and follow any other instructions for notice. If a tenant is on a month to month lease, 30 days prior notification is required; week to week, then a 14 day notice would be needed.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Additionally, a tenant may seek release from a rental agreement with the court when a landlord does not abide by the state’s landlord obligations.

How do I start an eviction if my tenant stops paying rent or creates a problem?
In Alaska, in order to begin proceedings for an eviction, the landlord must first serve proper notice. This notice is usually called a "Notice of Termination of Tenancy" or "Notice to Quit." The notice must explain what, if anything, the tenant can do to correct the problem and must also include the deadline (both date and time) for fixing the problem.
If a tenant is not paying their rent than a 7 day notice is required. The landlord may not include late fees or charges (only actual rent) when beginning the legal process to remove a tenant.
A general breach or material breach of a lease requires a 10 day notice (i.e. loud partying/ music or dangerous dogs on the premises in violation of lease) A 10 day notice gives the tenant an opportunity to cure. If that tenant cures the problem but re-offends within 6 months, than the landlord may issue a 5 day notice and evict without giving the tenant another opportunity for cure. Landlord may issue a 24 hour notice if tenant deliberately inflicts damages on premises in excess of $400.
It's important to keep a copy of any notices as landlords must show proof of service of all notices served. A notice to quit must be in writing and shall be served upon the tenant or person in possession by being either delivered to the tenant or person, left at the premises, or sent by registered/ certified mail.
If the tenant does not pay the rent, correct the problem or move out within the notice period (weekends and holidays are not excluded) then the landlord may file a lawsuit by completing a Summons and Complaint order and filing it in the district or county court of where the rental property is located. The court clerk assigns the hearing to be held at least two days after the summons and complaint are served on the defendant but not more than 15 days after the case is filed. The summons and complaint must be served on each of the named defendants by a process server or peace officer. The process server or peace officer will need to provide the landlord a notarized “Return of Service” which is required for court actions.
New legislation has provided for expedited evictions when a tenant or tenant's guests are involced in criminal activity or prostitution.

My tenant has not moved out and I was awarded possession by a judge. Can I lock my tenant out? How do I remove him?
A landlord should NEVER lock a tenant out or change the locks on the rental property! Once possession is granted to the landlord by the judge, the judge will order the defendant to leave the property by a specific date and time. If the tenant does not move out as ordered, the landlord may ask for a Writ of Assistance. An Order for Possession and a Writ of Assistance will take effect within 48 hours. If the tenant has not moved out or delivered possession, the Writ may be filed with the Alaska State Troopers, who will physically remove tenant. The Alaska Permanent Fund is an established fund set up and managed by a state-owned corporation, the Alaska Permanent Fund Corporation (APFC). Landlord will now be able to attach a tenant’s Permanent Fund Dividend distribution if they have a judgment for unpaid rent or damages.

What do I do with the tenant’s personal items that are left behind?
A landlord must provide notification to tenant that unless he removes the property within at least 15 days, the landlord will sell it or, if valueless, otherwise dispose of it. The tenant may be charged for storage costs. After 15 days have passed, and the tenant has not removed their belongings, the landlord may sell, destroy, or otherwise dispose of it.

How long does the eviction process take?
It depends on many factors but generally it takes approximately 4-6 weeks to get possession. Under some circumstances like for those where criminal activity is concerned, expedited evictions are available. This is new as of September 15, 2014.

How do I tell if my tenant has “skipped” out of the apartment?
Often times a tenant will leave without notice and leave property behind. The best way for the landlord to handle this is to go through the courts. It is generally up to the judge to determine if a property is in fact abandoned.

Do I have to give the tenant notice before I enter the rental property?
Landlords must give reasonable notice (24 hours) except in cases of emergency. A landlord may only enter with the tenant’s consent, but the tenant may not unreasonably withhold consent.

What do I do if my tenant files for bankruptcy?
The procedures a landlord should take will be determined by bankruptcy court laws. A Landlord usually will proceed with a relief from the “stay” deeming the tenant responsible for rent incurred during the pendency of bankruptcy proceedings. This is a complicated procedure and warrants at least a consult with an attorney.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the Lease.

 


Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

ue.

 

]]> https://www.ezlandlordforms.com/articles/educational/2/38/long-term-real-estate-investing-tips-ideas-and-supply-and-demand/ https://www.ezlandlordforms.com/articles/educational/2/38/long-term-real-estate-investing-tips-ideas-and-supply-and-demand/ Sat, 11 Apr 2009 16:40:21 GMT With worldwide confidence in real estate markets down, it's no surprise that investors are looking for safe, long term investments at the moment. But what makes for a "safe" real estate investment? Do they exist at all?

There is risk involved in any investment, from stocks to commodities to real estate to bonds. But there are still long-term trends among real estate markets, that can help you identify strong investment opportunities. Here are a few of those trends to keep an eye out for, and why they make sense.



Population Growth

It's not cerebellum surgery to figure out that growing populations create growing demand for housing, which will in turn increase real estate values. Start looking at long term population projections for a particular town or neighborhood, and look particularly at desirable locations with no further room for development (fixed supply). And here's a hint: the fastest vector for population growth isn't breeding, especially in America. Immigration accounts for the fastest growth, so consider investing in neighborhoods with strong roots for a specific immigrant group, and one that's still arriving in droves.

Urban Planning & Sprawl

It's shocking how little attention we in this country pay to urban planning, and the price we pay as a result. Consider for a moment what happens to a town without organized and well-conceived urban planning: developers build further and further outward, wherever they feel they can sell for the highest price, and continue to sprawl outward until they can no longer earn their minimal return. Aside from heinously unattractive stretches of strip malls and cloned two-story housing developments, this creates a virtually limitless supply of real estate, which means (duh!) that values will stagnate or decline in the face of limited demand and unlimited supply.

Water

The whole world wants to be near water, whether it's a bay, a river, an ocean, a strait, a sound, or an alligator-infested bayou. But guess what? There's a finite supply of water-access property in the world, and an ever-growing population desperate to fish, boat, and swim, which means rapidly increasing values due to the growing demand and fixed supply. Beware, however, of certain pitfalls of owning property near water, including flooding, hurricanes, and difficulty to insure.

Stable Institutions and Employment Providers

There are certain employers who are so large, and so stable over time, that they create their own economic center of gravity. Housing, along with all the commercial and support industries that accompany human habitation, will pop into orbit around these behemoths, but certain neighborhoods will always be more attractive to these institutional employees than others. First, identify some of these institutions near you that might make strong candidates; examples may be large government complexes, university campuses, long term military bases, or large medical campuses. Second, research that institution's long term plans regarding relocation or expansion, and third, find out where the employees there prefer to live. These neighborhoods can become increasingly desirable real estate, as that institution expands, and the alternative housing becomes farther and with fewer commercial resources.

This list is by no means exhaustive, but should help grease the gears and offer a few ideas. The bottom line is to evaluate long term changes in supply and demand, and to think in terms of a neighborhood's long term demographic changes. Good luck, and happy investing!

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/37/georgia-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/37/georgia-landlord-tenant-law-and-regulations/ Fri, 03 Oct 2008 14:04:50 GMT

Is there a limit on how much I can charge for rent?

A landlord may charge whatever he/she feels is reasonable because Georgia law does not limit the amount of rent a landlord is permitted to charge. The state of Georgia has not introduced rent control or rent stabilization.

 

Am I required to provide smoke detectors?

As of June 1st, 1994, a house, apartment, or condominium must contain a smoke detector. The smoke detector must be located in a passageway by the bedrooms of the dwelling. There must be a smoke detector on each floor, except the attic, unless it is used as a living space. All detectors must be listed and meet the specifications of the NFPA 72.
 

What are the limits on the amount I can charge for fees?

In Georgia, returned payment fees are to be charged to the tenant as follows: $30 or 5 percent of the instrument, whichever is greater, plus the amount of fees charged to the holder of the instrument by a bank or financial institution as a result of the instrument not being honored. Late fees are not prohibited, but tend to be a rare practice and generally not encouraged (Ga. Code Ann. § 13-6-15).
 

Are there specific instructions regarding security deposits?

There are no limits on the amount a landlord may charge for a security deposit. Security deposits must be placed in either a post bond or escrow account. Landlords must provide tenants with written notice stating the name, address, account number, as well as the manner in which the security deposit is being held. At the end of a tenancy, the security deposit must be returned within 30 days or written notice stating the reason for withholding any amount. If the landlord keeps a portion of the security deposit, he or she must return the balance along with the reasons for retention to the tenant’s last known address.

 

May I limit the amount of visitors in my rental?

A landlord may not limit the amount of guests a tenant allows into their unit, although, if a tenant has the same visitor spend too many nights a landlord may deem the guests as an unauthorized occupant.


How can I terminate a Georgia lease?

For a Written Lease: There is no minimum or maximum time restriction for notice to end or renew a lease, except that terms of notice shall be clearly specified in the lease.

No written lease: A landlord must give a tenant 60 days notice to end the lease and a tenant may give the landlord 30 days notice.


Are there circumstances where I am required to release a tenant from a lease?

A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable.

 

I have already started eviction proceedings; should I accept a partial payment?

Accepting payment whether full or partial, may waive the landlord’s right to proceed and evict the tenant.


What do I do to initiate eviction?

The basis for evicting a tenant is:

• The non-payment of rent.
• Failure to surrender the premises at the end of the lease term.
• Breach of the lease, including any rules that are part of the lease, entitling the landlord to terminate the lease.

Prior to going to court, the landlord must give written notice to the tenant stating that they must immediately give up possession and vacate. If the tenant refuses or fails to hand over possession, the landlord, the landlord's agent, or the attorney must go to the magistrate court and file a dispossessory affidavit under oath.


Can I charge attorney fees and court costs?

In the State of Georgia, attorney fees may be recovered by the prevailing party if specified within the lease agreement. Court costs however, are usually awarded by the judge to the prevailing party


May I require renter’s insurance?

A landlord may require a tenant to get renter’s insurance, although, there is no law that states a tenant must purchase renter’s insurance.


How much notice must I give before entering the rental unit?

Before entering the premises, a landlord must give at least 24 hours notice, except in the case of an emergency, or if it is impracticable to do so.

 

 

Disclaimer: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Each issue has unique circumstances that may be too complicated to put a simple answer to. The answers in this Q & A are only guidelines. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/36/rhode-island-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/36/rhode-island-landlord-tenant-law-and-regulations/ Fri, 12 Sep 2008 15:52:12 GMT How much can I charge for rent?
Rhode Island does not have any statewide rent restrictions, therefore landlords may charge what the market will bear. However, local municipalities may impose rent control in specific districts, so landlords should always make sure that they check the local laws affecting their municipality.

How much may I accept as a security deposit?
The security deposit, however denominated, may not exceed an amount greater than one month’s rent.
**For example, a landlord may not collect one month's rent for a damage deposit in addition to a half month's rent for a pet deposit; rather, landlords are restricted to a total deposit of one month’s rent.

Can I require my tenants to obtain renter's insurance?
Landlords may require tenants to obtain rental insurance and if provided in the lease may make the failure to do so a breach of the lease.

My tenant has moved out. What do I do with their security deposit?
In Rhode Island at termination of tenancy, the security deposit due to the tenant shall be the entire amount previously given, minus any unpaid accrued rent as well as the cost of physical damages to the premises, other than ordinary wear and tear. This should be itemized by the landlord in a written notice to be delivered to the tenant.

The landlord shall deliver the notice, together with the amount of the security deposit due within 20 days of either termination of the tenancy, delivery of possession, or the tenant's providing the landlord with a forwarding address for the purpose of receiving the security deposit.

What is a common problem where security deposits are concerned?
A common issue amongst landlords regarding security deposits is charging for items that constitute normal wear and tear. Landlord should keep in mind that charges and/or deductions may only be made for items that are considered as damage beyond normal wear and tear.

May I charge an application fee, late rent charge or a returned payment fee?

There are no statutory limits placed on late fees and/or application fees in Rhode Island. However, reasonable cost should always be kept in mind when instituting any charges and the landlord should be fair when assessing such fees.

Landlords may not charge a tenant a fee that exceeds the amount of $25.00 for a returned check.

How can I terminate a Rhode Island lease?

• A fixed term lease is a lease that contains a beginning date and an end date. Under Rhode Island statute, a fixed term lease requires 90 days notice prior to lease expiration unless otherwise stated.
• A periodic lease is a lease that continues from period to period (i.e. month to month). In Rhode Island, a periodic lease will usually continue until either a landlord or tenant gives the other notice of:
     -10 days prior to ending a week to week agreement
     -30 days prior to ending a month to month agreement.

Are there circumstances where I am required to release a tenant from a lease?

In Rhode Island if a U.S. Military Service member receives orders for a transfer, the landlord is obligated to release the tenant from the lease. Additionally, if a landlord violates the lease, a tenant may seek to be released from the tenancy. Additionally, a landlord is required to release a senior over the age of sixty-five when there is a need for placement in an assisted living situation or nursing home. There are specific requirements for this as set out in Rhode Island landlord tenant law § 34-18-15.

My tenant was supposed to be out of the apartment and he is still there. What can I do?
This situation is often referred to as “holdover” tenancy. Under these circumstances, a landlord may file for eviction.

How do I start eviction?

• Eviction for Failure to Pay Rent: After 15 days from the time rent is due, the landlord can deliver a written notice demanding payment in 5 days or the lease will terminate. The landlord can then file an action with the local district court.
• Eviction for Failure to Abide by Rental Agreement: If the tenant fails to abide by the rental agreement and the breach is substantial, the landlord may deliver a 20 day written notice to the tenant pointing out the specific problem and what the tenant must do (make certain changes, repairs, payments, etc.)to remedy the situation. If the tenant does not eliminate the issue by the 21st day, the landlord can file an action with the local district court.
  **Please note If the same violation re-occurs within 6 months, the landlord can simply end the rental agreement with a 20-day written notice, specifying the breach and the termination date. No allowance for time to make changes, repairs, payments, etc., is required in this situation.
• Eviction for Illegal Activity: No advance notice prior to filing for eviction is required if the violations involve illegal narcotics, other controlled substances, any crime of violence in the rental unit or on the premises, or if any of these activities occur on adjacent public property and the tenant is proven to be involved. In such a case, the landlord can file an immediate eviction complaint at the local district court.

My tenant wants to pay only part of the rent he owes? I have already started eviction proceedings; should I accept the partial payment?
Accepting payment whether full or partial, waives the landlord’s right to proceed and evict the tenant unless a non-waiver agreement is signed.

My tenant signed a one year lease and has been evicted after only 4 months. I have not been able to find a replacement. Is the tenant responsible for the balance of the lease term?
This is commonly referred to as “accelerating the balance of the lease”. This is permissible but not commonly practiced in Rhode Island but the landlord is obligated to mitigate damages. Mitigating damages means that the landlord must do everything within their power to re-rent the available apartment.

Can I make my tenant responsible for attorney fees and court costs?
In Rhode Island, attorney fees and court costs may be recovered if specified within the lease agreement.

How long does the eviction process take?
As with any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, the eviction process usually takes about 30 days.

Do I have to give the tenant notice before I enter the rental property?
The landlord shall have the right to enter the leased premises at reasonable times and hours, only after reasonable written or verbal notice (48 hrs) has been given to the tenant, unless in cases of emergency.

 

Disclosure: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/35/arizona-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/35/arizona-landlord-tenant-law-and-regulations/ Fri, 12 Sep 2008 11:58:10 GMT How much may I accept as a security deposit?
A security deposit may not exceed an amount greater than one and a half month’s rent. However, a separate refundable pet deposit in addition to the security deposit may be permitted if the tenant voluntarily agrees.

Am I required to register my rental property?
It is required that all owners of residential rental property file with the county assessor’s office where the property is located. Registration information must include a name, address, telephone number of the owner; or company information for any organized corporation, limited liability company or partnerships. If an owner of Arizona residential rental property does not reside in the state, they shall designate a county assessor, legal representative or agent who will accept legal services on behalf or the owner. This is per Arizona Revised Statutes Section 33-1902.

My tenant has moved out. What do I do with their security deposit?
The landlord must return to the tenant the full security deposit or an itemized list of all deductions made, along with the amount owed, if any within 14 days; excluding Saturdays, Sundays, or other legal holidays. Unless other arrangements are made in writing by the tenant, the landlord shall mail the tenant's security deposit to the last known place of residence. When deductions are made to the security deposit, normal wear and tear is usually excluded, excess damage may be deducted.

What is a common problem where security deposits are concerned?
A common issue amongst landlords regarding security deposits is that of over-estimating damages and charging for items that constitute normal wear and tear. Landlord should keep in mind that charges and/or deductions may only be made for items that are considered as damage beyond normal wear and tear. Another frequent issue is not providing documentation of all deductions or cancelled checks. It is a good practice to document move out conditions with photos or video.

May I charge an application fee, late rent charge or a returned payment fee?
There are no statutory limits placed on late fees and/or application fees in Arizona. However, reasonable cost should always be kept in mind when instituting any charges and the landlord should be fair when assessing such fees.

Notwithstanding any other law, the holder, payee or assignee of the holder or payee of a dishonored check, draft, order or note may charge and collect from the maker or drawer a service fee of not more than twenty-five dollars plus any actual charges assessed by the financial institution of the holder, payee or assignee of the holder or payee as a result of the dishonored instrument.

How can I terminate an Arizona lease?
• A fixed term lease is a lease that contains a beginning date and an end date. Under Arizona statute, a fixed term lease simply ends on the date specified in the lease unless otherwise stated.
• A periodic lease is a lease that continues from period to period (i.e. month to month). In Arizona, a periodic lease will usually continue until either a landlord or tenant gives the other notice of at least 30 days.


Are there circumstances where I am required to release a tenant from a lease?
In Arizona if a U.S. Military Service member receives orders for a transfer, the landlord is obligated to release the tenant from the lease. Additionally, if a landlord violates the lease, a tenant may seek to be released from the tenancy.

My tenant was supposed to be out of the apartment and he is still there. What can I do?
Often referred to as “holdover” tenancy, a landlord may file for eviction and may be awarded up to twice the monthly rent or for actual damages; whichever is greater.

How much notice is required in order to evict my tenant?
Prior to filing for an eviction, written notification is required. However, notices may differ based on the situation.

• If the situation concerns non-payment of rent, a five day notice is required, notifying the tenant that they must pay their rent or their agreement will be terminated and they will be evicted.
• If the situation pertains to other violations of the lease agreement, a ten day notice is required highlighting the violation as well as stating that if tenant does not cure (“fix” or “stop”) the cause of the breach, than the rental agreement will terminate and the tenant may be evicted.

If the tenant(s) does not pay rent or cure the default after the notice period expires, landlords may than file in the appropriate court for any rent due, damages and possession.

My tenant wants to pay only part of the rent he owes? I have already started eviction proceedings; should I accept the partial payment?
Accepting payment whether full or partial, waives the landlord’s right to proceed and evict the tenant unless a non-waiver agreement is signed.

My tenant signed a one year lease and has been evicted after only 4 months. I have not been able to find a replacement. Is the tenant responsible for the balance of the lease term?
Making a tenant fiscally responsible for the balance of their lease term is commonly called “accelerating the balance of the lease”. This is permissible in Arizona but the landlord is obligated to mitigate damages. Mitigating damages means that the landlord must do everything within their power to re-rent the available apartment.

Can I force my tenant to pay for attorney fees and court costs?
In Arizona, attorney fees may be recovered if specified within the lease agreement. Generally court costs are awarded to the prevailing party by the judge.

How long does the eviction process take?
With any legal matter, exact timing is almost impossible as it depends on many factors. Overall, with no complications, an eviction process usually takes about 3 to 4 weeks.

My tenant moved out without notice and left property behind. What can I do?
A landlord must follow the Arizona statute ARS 33-1370 to post and certify notice;

• then wait five full days.
• After five days have passed, then the landlord may change the locks, inventory the property left behind and hold the personal property for ten days.

In the meantime the landlord is obligated to notify the tenant via certified mail explaining where the property will be stored for the following ten days. At the end of the required storage period, the landlord may sell the property. It is good practice to document all actions and take photos of all property left behind.

Do I have to give the tenant notice before I enter the rental property?
If a landlord must enter the rental unit to make any repairs or improvements they must give 48 hours written notice, unless in cases of emergency.

Do I need to be licensed or registered in order to be a landlord?
In Arizona, landlords and/or property owners must register the rental property with the appropriate county assessor’s office.

 


Disclosure: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/32/california-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/32/california-landlord-tenant-law-and-regulations/ Fri, 05 Sep 2008 12:38:31 GMT

Are there rent laws in California?

There are rent control laws in some California cities that restrict or prohibit rental increases, support rent control, and can even make the eviction process more problematic. Each city’s regulations are different.

 

May I charge an application fee, late rent charge or a returned payment fee?

In California, the application fee cannot be more than the landlord's actual out-of-pocket costs, and can never be more than $49.50 per applicant. Additionally, landlords must provide rental applicants with an itemized accounting of the landlord's screening expenses.

Technically a late fee cannot be predetermined but there is an exception when it is difficult to assess the actual cost. But keep in mind when determining a late fee, that it must be reasonably related to the actual costs a landlord may incur as a result of the tenant's late payment.

Returned payment charges must not be more than $25 for the first check and a service fee of up to $35 for each subsequent check to that same payee. Reasonable cost should always be kept in mind when instituting any charges.
 

Are there any special considerations regarding security deposits in California?

Many states have limits and requirements regarding the security deposit, and California is no exception. A landlord may not demand or receive security in excess of an amount equal to two months' rent in the case of an unfurnished residential property, and an amount equal to three months' rent in the case of a furnished residential property. Security deposits are considered refundable, and include pet, lock, key, carpet etc., and in combination, none of these may exceed the amounts stated above.

California law mandates that a landlord notify a tenant in writing of the option of having an initial inspection two weeks before terminating a rental agreement or lease in order to identify problems (and possible deductions from the security deposit) and be given a chance to rectify them and avoid the deduction. Failure of the landlord to do this may void the opportunity to collect for damages.

 

Do I have to pay interest on the security deposit?

Some jurisdictions such as San Francisco and Berkeley require interest to be paid to the tenant. Generally this is based on the CPI and is paid annually. Landlords should check with either their attorney or the local jurisdiction for exact requirements.

 

How much time do I have to return the security deposit after my tenant has moved?

Landlords have twenty-one days to either return the full security deposit or an accounting of any deductions with the balance, if any remains. Stated deductions must apply to property damage beyond normal wear and tear. It’s very important for a landlord to read and understand the detailed procedures set forth in Civil Code Section 1950.5. This information may be seen in the booklet: California Landlord-Tenant Law Guide.

 

What seems to be a common concern regarding security deposits?

Landlords often try to overreach, claiming deductions for items that are characterized by the court (when a tenant sues for the return of a security deposit) as normal wear and tear. This situation is preventable by reasonably assessing each deduction, including proof of damage, repair, receipts and pictures.
 

How can I terminate a California lease?

A fixed term lease starts and ends on specific dates. In this circumstance, a lease simply ends on the date specified within the lease. A periodic lease continues from term to term (i.e. month to month). Periodic leases remain in place until either a landlord or a tenant gives the other notice of at least the length of each term (i.e. month to month leases would require one month notice). In cases where the situation is based on subsidized housing, generally a ninety day notice is required; however we suggest contacting the housing agency for exact requirements. Properties that are under eviction control regulation, the landlord must have “just cause” to terminate the residential tenancy. Again, it is important to consult an attorney or your local state agency.

 

Are there circumstances where I am required to release a tenant from a lease?

There are many circumstances such as military relocation or entrance of service that require specific procedures on both landlord and tenant in order to "break a lease" in a lawful manner. Individuals involved as a direct victim or a child of a victim of domestic abuse may also be released from a tenancy provided specifc procedures are followed.

 

When a tenant, tenants occupant, or visitor is involved with certain criminal activities, a landlord, owner and the tenant all will be provided notice from the authorities and that landlord must file for evicton of that tenant using such notice as evidence.
 

My tenant is still living in the rental unit after the lease has been terminated. What do I do?

If a tenant continues their residence after the expiration or termination of the lease agreement, without consent or permission from the landlord, the landlord may start the eviction proceedings through court and recover any rent or damages.  If the rental property is located within an eviction controlled jurisdiction, the landlord should either consult with an attorney or contact the local housing agency for exact requirements.
 

How much notice is required in order to evict my tenant?

A 3-day written notice is required before a landlord may file an eviction action in court. However, notices may differ based on the situation.

(1) If the situation is concerning non-payment of rent, the notice must specify the amount owed in rent only. The total may not include any other fees such as late charges, interest, or damages. This notice will give the tenant three days to pay or quit.

(2) If the reason for eviction pertains to other violations, a 3-Day Notice to Perform Covenants or Quit may be filed. Landlords may use this type of notice if the tenant breaks the lease or rental agreement and the problem can be fixed. For example, if the tenant is subletting the unit, not keeping the unit clean, or some other violation of the agreement, the notice will ask the tenant to correct the violation within three days or vacate.

(3) A 3-Day Notice to Quit may be used if there have been ongoing problems with a tenant who causes or allows a “nuisance” on the rental property, or is using the property for criminal activity. A 3-Day Notice to Quit may also be used if a tenants behavior threatens the safety and health of other residents/general public or if waste is committed that lowers the value of the property significantly. This notice is more of a warning and does not require a tenant to remediate.

As soon as the three day period passes and the tenant remains in non-compliance, the landlord may file a suit for eviction. Rental properties located in areas that practice rent or eviction control, may have different requirements. Landlords should check with their local housing agency to ensure compliance.

Notices should be personally delivered to the tenant. If the tenant is absent from his or her place of residence, the landlord may leave a copy with some person of suitable age and discretion. Notices may also be mailed, preferably certified and return receipt requested to the tenant at his or her place of residence. If the whereabouts of the tenant is unknown, the landlord may affix a copy in a conspicuous place on the property.
 

I sent the eviction notice to my tenant and it was ignored. What do I do next?

The landlord may go to the local courthouse and file with the court clerk the necessary documents to begin an unlawful detainer lawsuit. This is when a hearing is held at which the parties can present evidence and explain their situation. If the court decides in favor of the landlord, the court will issue a writ of possession. The writ of possession authorizes the sheriff to force the tenant to vacate the premises. The tenant has five days from the date that the writ is served to leave willingly. If the tenant does not vacate by the end of the fifth day, the writ of possession allows the sheriff to physically remove the tenant and confiscate any personal property that is left in the rental unit. A landlord may not take possession until this is completed.

 

How long does the eviction process take?

Generally the process for eviction takes approximately two to eight weeks. However, this depends on many factors such as what type of case it is and whether or not the tenant chooses to defend.

 

How do I tell if my tenant has “skipped” out of the property?

It is considered abandonment when a tenant moves without the proper notice. In the California landlord tenant statutes it does not define the term “abandonment” although, there are clues to look for. It is a good idea to take some pictures and document your findings so that you will have proof for court, just in case.

 

What happens if my tenant files for bankruptcy?

Unfortunately, all rent collection and eviction efforts must stop, however, there are situations where a court will grant a relief. It is important for a landlord to consult with an attorney immediately.

 

Do I need to be licensed or registered in order to be a landlord?

Many jurisdictions require a business license. Some localities, like Berkeley, require registration of the rental unit with the local rent board. All first time landlords should check with their local court or housing agency to verify requirements.


 

Disclosure: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.

]]> https://www.ezlandlordforms.com/articles/educational/4/31/critical-protection-tips-for-new-landlords/ https://www.ezlandlordforms.com/articles/educational/4/31/critical-protection-tips-for-new-landlords/ Wed, 25 Jun 2008 19:44:43 GMT
Find a good attorney ahead of time: One of the most important rules of thumb to remember is that as a landlord, no matter what, always be prepared for people that may neglect to pay their rent. Hiring a good eviction attorney is part of this preparation process. Take your time and interview several attorneys to get a feel for how they work and whether or not the two of you can develop a sound professional relationship. You should be on the same page in terms of how soon to begin an eviction and how involved you need to be on the legal end of the process. Look for an attorney that has a good record of accomplishment in resolving eviction cases in favor of the landlord and make sure whomever you choose has a solid background in property management law.

When you find an attorney, find out what you need to evict: Once you have determined to hire, you then need to go over everything you need to begin and process an eviction. Depending on where you live, local laws govern how tenants can be evicted; this is where an attorney can provide guidance. Gather all of your appropriate paperwork ahead of time and be prepared. You may not need the various forms right away, but eventually a problem will arise and when it does, you won’t have to waste time trying to get what you need to evict; you and your attorney will have all of the forms you need to begin an eviction.

Formulate a schedule and stick with it: Put together a timeline on evicting and stick with it! If you have good communication with a tenant, it’s okay to be a little lenient. After all, bad things can happen to good people and as long as they continue to communicate with you, you can allow them some flexibility. However, if they won’t answer calls or letters, then zero tolerance is the answer and you must take immediate legal action. The way to form a schedule is to use a site that specializes in property management forms to use late notices to establish a pattern of communication on your end. For example, you would send a notice after the rent is three days late. Then, send another notice after the rent is one week late. Keep copies of each notice you send to your tenant. This information should be added to your eviction file and given to the courts, if necessary.

Whatever you do, don’t want too long to evict a tenant. Remember, non-payment of rent is not a personal attack on you and you need to stay professional as a property manager. Having an attorney right from the start will enable you feel empowered knowing you have everything you need to evict, should the need arise to do so. ]]> https://www.ezlandlordforms.com/articles/educational/3/30/safeguarding-your-rental-property-from-your-tenants-while-still-cashing-in/ https://www.ezlandlordforms.com/articles/educational/3/30/safeguarding-your-rental-property-from-your-tenants-while-still-cashing-in/ Sun, 22 Jun 2008 17:47:40 GMT Being a landlord is a complex job. Not only do you have to deal with a whole plethora of issues, but some of these issues may have been caused by your tenants, and you must, as well deal with them in a diplomatic manner. We suggest 4 basic steps to help you avoid potential problems with your tenants.

Step 1: Safeguard your Rental Property – Your property is your cash cow, so you must treat it as such, and take advantage of the many available options when making decisions that affect you cash cow. Please refer to the following examples:

a. Smoke detectors – Your tenant is cooking dinner, and the smoke detector starts going off because dinner is burning. The tenant then removes the smoke detector from the ceiling or wall, or simply removes the battery. Many times, the tenant never quite makes it back to reinstalling the smoke detector or batteries. What happens then if there is a fire? As a landlord, you must address these issues before they occur. Choose your options wisely. When purchasing a smoke detector for your rental property, do not choose the cheapest one. Choose one that is tamper proof. The tenant will not be able to take it down or remove the battery, and the batteries last for 10 years.

b. Move-outs – Your tenants are getting ready to move out, and they have been great tenants, so when they tell you not to worry, they will leave the place in clean, and ready to go for the next tenant, you believe them. Then you come in for your final walkthrough and there are dents and dings in the wall from furniture; peeling paint from posters hung with tape; a child’s doodles on the bedroom wall. Again, choose your options wisely. When selecting paint, eggshell is the preferred finish. It has a slight gloss to it, and is washable, and much more resistant to use than flat paint. The slight gloss also helps to cover up any small dings in the wall.

c. Carpeting – Pets and children can be a carpet’s worst enemy. Between the pet hair, and mishaps, and children’s spills, carpets can easily become stained and tattered looking. Be sure to choose a dark colored carpet, or a carpet with a pattern. These carpets withstand heavy use better than others, as they are less likely to show stains. Such carpeting may cost more to purchase and install, but due to its longer life expectancy, you will save money in the long run.

d. Bugs, Pests and Rodents – Everybody hates dealing with bugs, pests and rodents, and the first thought is to call an exterminator. However, exterminators cannot necessarily guarantee that the issue will not return, and are generally very expensive. Why not try to correct the problem yourself first? There are many excellent options out there, such as Maxforce bait, Maki pellets, and Catchmaster glue traps. These are all sufficient, and affordable options.

e. Lighting – A tenant moves out, and you, again, do your final walkthrough, and notice that many of the lights are not working. Do not panic call an electrician. First, check each light with a new light bulb. Many tenants will not replace burnt out bulbs prior to a move out.

f. Tiles – You are renovating your rental property, and want to find cheap tile to use, so you go comparison shopping, and find a great price on some 12x12 tiles. Make sure to consider the cost of installation, and how that factors into your bargain price. After consideration, make sure that you choose a resilient ceramic or vinyl.

Step 2: Choosing a Tenant – Landlords must screen their potential tenants. This process should be organized using a Phone Screening Form. The form should log the inquiries you receive, and should list important questions for you to ask each potential tenant, such as their possible move-in date, how many occupants there will be in the property, or if they have any pets. The form should also log the applicants complete contract information, such as their cell phone number. You should also give the applicant your cell phone number upon making an appointment for him to see the property in case he gets lost or something comes up. Be sure to confirm the appointment with the applicant on the scheduled day so that you aren’t stuck waiting for them if they have had a change of plans, or have simply forgot about the appointment.

Landlords must be cautious when choosing the occupant for their rental property. As described above, this is your cash cow, so you must be sure that the person you are handing the keys over to is someone responsible and trustworthy. Finding such a person can help avoid many potential issues.

Another important part of the screening process is the rental application. Landlords must be sure to have a good rental application. The application should include the following:

a. Credit check – regardless of whether you use our tenant credit check or someone else's, be sure to run a full credit report with FICO score.  You should also run a nationwide criminal background check (this is included alongside our tenant credit check).

b. Employment verification – you should confirm the potential applicants employment by calling his current, and possibly even previous, employers. You may also want to ask to see a copy of their current pay stub or W2. Be sure to look at the net income, and not just the gross income.

You may even want to think of an excuse to “drop by some paperwork” at your applicants current residence so that you can get a feel for their living style (if their home is in order, or if it is a complete mess).

Step 3: The Lease Agreement – The lease agreement is the key to a landlord’s success in safeguarding his property. It must be specific, and detailed, outlining all of the essentials. Your lease agreement should include the following imperative information:

a. Rental term

b. Amount of rent, due date, and submission method (make sure the first month’s rent is collected before you turn over the keys)

c. Rental late fee

d. Security deposit (make sure this is collected before you turn over the keys as well)

e. Maintenance information

f. Consequences to broken lease terms

g. Lead based paint brochure and disclosure (if your property was built prior to 1978)

h. Utility information (make sure the tenant has the utilities put in his name)

The tenant should initial by each of the above, and any other important sections of the lease. Finally, once the lease agreement has been signed, make 2 copies so that both you and the tenant have one for your records.

Step 4: Eviction – A landlord must always be prepared for the worst case scenario, such as eviction. If your tenant negligently or purposefully damages the rental property, or is delinquent in rental payments, eviction may be necessary.

The following are some suggestions to consider:

a. Use an attorney that specializes in such property management issues as eviction – you should not try to interpret the law on your own.

b. Make a plan of action regarding the notices and correspondence you will be sending to the tenant, and then keep a journal of any delinquency notices, the eviction notice, and other paperwork you have sent to the tenant.

c. Keep a rent ledger to record payments, late fees, damages, and any other monies collected from the tenant.

d. Do not wait until the last minute to evict. Remember, the original point, the rental property is your cash cow.
]]> https://www.ezlandlordforms.com/articles/landlord-tenant-laws/27/alabama-landlord-tenant-law-and-regulations/ https://www.ezlandlordforms.com/articles/landlord-tenant-laws/27/alabama-landlord-tenant-law-and-regulations/ Fri, 16 May 2008 10:16:47 GMT How much can I charge for rent?
Alabama does not restrict the amount of rent a Landlord is permitted to charge. Therefore, a landlord may charge whatever he feels necessary. Additionally, the state of Alabama has not established rent control or stabilization.

May I charge an application fee, late rent charge or a returned payment fee?
Reasonable cost should always be kept in mind when instituting any charges. Although there are no limits placed on the amount a landlord can charge for the above stated fees, landlords should always execute caution and fairness.

How do I handle a security deposit?
The security deposit may not exceed an amount greater than one month’s rent. The collection of the last month’s rent in advance; in addition to the security deposit is not permissible. Alabama Landlord Tenant statutes contain no specific criteria regarding the acceptance of a non-refundable pet deposit, key or lock deposit. The absence of a statute or rule regarding “other” deposits does not necessarily signify that it’s an accepted practice. Landlords should keep this in mind when deciding to use miscellaneous deposits in addition to the security deposit.

Do I need a separate bank account for the security deposit?
There are no specific regulations in Alabama regarding the placement of security deposits. However, it’s good practice to keep a tenant’s security deposit separate from the landlord’s personal finances. A landlord is not required to pay interest on a security deposit.

After my tenant has moved, how long do I have to send the security deposit back?
Landlord’s must return the security deposit or provide accounting for the deductions taken from the deposit within 60 days of lease termination. When deductions are made to a security deposit, normal wear and tear is usually excluded, while excess damage may be deducted.

What are the rules for ending an Alabama lease agreement?
A fixed term lease is a rental agreement that contains a beginning and ending date. In this circumstance, the lease agreement simply ends on the date specified within the contract. If the lease agreement specifies a notice; under those circumstances, the notice that is spelled out in the lease would be followed. A periodic lease is a lease that continues from period to period (i.e. month to month). Periodic leases continue until either a landlord or tenant gives notice of at least 30 days. If the lease agreement is based upon week to week periods then only 7 days notice is required. If no lease is used, it is considered a verbal lease agreement; the rules for a periodic lease would then apply.

Are there circumstances where I am required to release a tenant from a lease agreement?
A landlord may be forced to release a tenant from a contractual agreement when the dwelling unit or premise is damaged and/or destroyed by fire or casualty not caused by the tenant, deeming the rental property unlivable. Under these circumstances, a tenant may immediately vacate the premise and notify the landlord in writing within 14 days of the tenant's intention to terminate the rental agreement.

My tenant was supposed to be out of the apartment and he is still there. What do I do?
If a tenant remains in possession without the landlord's consent after expiration of the rental agreement or its termination, the landlord may bring an action for possession. If the tenant's holdover is willful and not in good faith, the landlord may also recover an amount equal to but not more than 3 month's periodic rent or the actual damages sustained by the landlord, whichever is greater, along with reasonable attorney’s fees.

How much notice do I have to give a tenant in order to evict them?
The first step towards eviction is giving proper notice to your tenant regarding the violation. When a tenant has not paid rent, the landlord must give at least a 7 day notice. If the problem consists of a lease violation such as the tenant being a nuisance, a 7 day notice is also required. This 7 day notice is a notice to cure. This means that the tenant must fix the problem and stop the behavior or their lease rights will be terminated. These warning notices must be served to the tenant by either hand delivery or by posting somewhere on the property. If the posting method is used, then notice must also be mailed within one day of the posting.

My tenant has not paid his rent and I served him notice. What do I do next?
Go to the District court in the county of which the property is located. You will file a court action referred to as an unlawful detainer, filed with the clerk of court. Check with the appropriate court as there are fees involved. The Landlord/Plaintiff may sue for possession of property and for money damages in the same action. It is important to include a copy of the “Notice to Tenant” when filing an original action. The Unlawful Detainer Complaint must be served by certified mail or personal service by either the Sheriff's office or a private process server.

My tenant wants to pay his rent but I have already filed in court. Can I accept the payment and still proceed with eviction?
Yes, the acceptance of unpaid rent after expiration of a termination notice is permitted, however this does not constitute a waiver of the termination. Therefore, a landlord may still move forward and seek possession and the tenant’s removal.

I have been assigned a court date, must I go?
Once a court date is set, a landlord should always arrive prepared. In many cases tenant’s often fail to appear in court, ultimately favoring the landlord. Regardless of the assumption that a tenant may not come to the court hearing, it is important to have all your ducks in a row. Come prepared and bring proof of rents received, such as a current rental ledger along with all correspondence including letters, notices and emails. If you have dates of phone conversations, they can be important as well. Proof is especially important in cases that involve nuisance or other lease violations.

I won in court! Now what happens?
A Writ of Restitution or Possession cannot be requested until after the filing of a post-judgment motion and the appeal time has expired. This would be fourteen days from the date of the judgment in the District Court. The landlord must seek a writ of restitution or possession that will order the sheriff to physically remove the tenants and the tenant’s personal property.

What do I do with the tenant’s personal items that are left behind?
The landlord has no duty to store the tenant's property if abandoned for more than 14 days. After 14 days have passed, you can either discard everything or donate it to a charity.

How long does it usually take for eviction?
It depends, but could take approximately 4-6 weeks to obtain possession.

How can I tell if my tenant has “skipped” out of the apartment?
When a tenant moves out without proper notice it is considered abandonment. Although the Alabama landlord tenant statutes do not define the term abandonment, there are clues to look for. A landlord should probably consider whether the property appears to be lived in, whether there are utilities and/or whether the tenant has removed a significant amount of their possessions from the unit. Check for food in the cabinets or refrigerator. Usually if there is none, this can be pretty significant in determining abandonment. Take pictures and save them as proof for court, just in case.

If a landlord  finds that a tenant has abandoned the rental property, the landlord can mail a notice of abandonment to the tenant's last known address as well as post a notice of abandonment on the door of the rental property. Five days after mailing the abandonment notice to the tenant and posting it upon the door of the rental unit, the landlord can change the locks and retake possession of the rental property.

After the landlord has retaken possession of the rental property, he/she must hold
abandoned possessions for ten (10) days. Thereafter, they may be sold or discarded. The tenant is responsible to pay for storage and moving costs in order to claim the held possessions.

What must I do to inspect my property? Do I have to notify the tenant?
A landlord may not abuse the right of access or use it to harass the tenant. Emergency situations do warrant entry, however the landlord should give the tenant at least 2 days' notice of the landlord's intent to enter. Under normal circumstances, a landlord may enter at reasonable times only. Posting of a notice on the primary entrance to the residence stating the intended time and purpose of the entry is a permitted method for the purpose of the landlord's right of access to the premises.

Do I have the right to enforce no smoking in my rental property?
A landlord may establish a “No Smoking” policy by providing so in the Lease.

_______________________

Disclosure: The information provided herein is intended as a general discussion of legal issues concerning landlord tenant law. Information provided is not legal advice or a legal opinion, and it is recommended that the reader seek independent counsel for any specific issue.
]]> https://www.ezlandlordforms.com/articles/educational/4/26/landlords-collect-that-judgment/ https://www.ezlandlordforms.com/articles/educational/4/26/landlords-collect-that-judgment/ Thu, 13 Mar 2008 15:45:09 GMT
First, let’s define what we mean by a money judgment. In a civil matter, a money judgment is an order issued by a court that one party in the lawsuit is to pay the other party a certain sum of money. The amount of money awarded is referred to as a “money judgment”. Although a judgment gives the Landlord the right to collect the money owed, there are several legal steps involved before you get to the collection process. Each state has its own criteria for recording judgments and enforcing the collection. In all probability it is best to have an attorney or collection agency handle the collection of judgments. Without professional legal counsel, mistakes may be made that will wind up costing the landlord more in the end.

It’s important for a landlord to be educated on the procedure for collecting on a judgment award. Individual cases may vary but a tenant will usually receive an order by law such as a signed judgment stipulation. However, it is not until the judgment is recorded that is becomes enforceable. In order to facilitate actual collection, a “Writ” or “Order” of Execution must first be obtained. Each jurisdiction handles this process slightly different so it is important to contact the appropriate local government agency or the sheriff’s office. Once the collection process begins, there are several possibilities that may occur to force your tenant(s) to pay.

Provided the proper procedure for your jurisdiction has been followed, the judgment will appear on a transcript file which is usually submitted to credit reporting agencies. These measures are what most often force a tenant to pay the judgment or negotiate a settlement with the landlord because a recorded judgment on their credit report can prevent them from obtaining a credit card, automobile loan, student loan, or home mortgage. Attorneys and collection agencies encounter numerous circumstances where tenants contacted them sometimes years later, to make settlement on this type of judgment.

In order to proceed with any of the above remedies, you must have knowledge of the existence of the tenant’s assets. Assets including wages, bank accounts, vehicles and personal property may be seized to satisfy a judgment. This information is easier to access by using a comprehensive rental application when screening your tenants.Without the tenant’s asset information, collecting on a judgment becomes more expensive. Under these circumstances the judgment award may not be sufficient enough to compensate the costs involved.

Unless a tenant files for bankruptcy, a judgment is valid for a period of ten years from the date it was entered by the Court. In addition, prior to the expiration of the ten year period, you can apply to the Court for an extension for an additional ten year period. Therefore, you have a total of twenty years to collect on your judgment.

Although, it can be advantageous for the landlord to collect on a judgment award, it is wise to have the assistance of an attorney or collection firm. Professional fees may be negotiated and are often deducted from the amount collected. ]]> https://www.ezlandlordforms.com/articles/educational/1/25/landlords-advertise-your-rental-and-select-the-right-tenant-legally/ https://www.ezlandlordforms.com/articles/educational/1/25/landlords-advertise-your-rental-and-select-the-right-tenant-legally/ Thu, 13 Mar 2008 15:42:23 GMT
When a person speaks of fair housing regulations, he is actually referring to several individual laws meant to ensure that a prospective tenant is not discriminated against. The original Fair Housing Act is Title VIII of the Civil Rights Act of 1968. This act prohibits discrimination against a potential tenant on the grounds of race, color, familial status, handicap, sex, religion or national origin. While landlords must avoid issues of discrimination in each of these areas, the most difficult they face is the issue of disability.

Many older rental properties do not have the necessary features to make them handicap-accessible. Even if such accessibility is an issue of concern for a landlord, he cannot announce a preference for tenants who are not disabled. An advertisement stating ‘no wheelchairs’ can be considered just as discriminatory as a landlord advertising only for Christian tenants. The Federal Department of Housing and Urban Development (HUD) has also pursued a number of cases where a landlord refused to rent to a prospective tenant who needed a seeing-eye dog or other guide animal on the basis of a ‘no pets’ policy.

Because of the broad language of the laws affecting fair housing, simply expressing a preference as to the sort of tenant, whether through an ad, in writing, or through the application process, can constitute discrimination, and get a landlord into trouble. There is an unfortunately wide set of opportunities to accidentally discriminate against prospective tenants. For instance, simply describing an apartment as ‘perfect for a couple’ discourages prospective tenants who have children. This sort of discouraging communication is considered as discriminatory as an outright ‘no children’ policy. Even a policy that does not expressly forbid a certain group can be problematic. A landlord may express a preference of renting to no more than two people for a two-bedroom apartment, which would effectively prohibit families.

There are only a few exceptions to the fair housing laws. An exemption for shared housing — rentals in which tenants share bathrooms, kitchens or other common areas — allows landlords to limit tenants on the basis of sex only. There is also an exemption on housing for older tenants. Landlords are exempt from prohibitions regarding family status if the rental property exclusively leases to tenants 62 years old, or older, or if 80 percent of a complex’s occupied units have at least one tenant 55 years old, or older. There are certain areas in which landlords are effectively allowed to discriminate: landlords may request financial information from prospective tenants and refuse to rent to those tenants who will not be able to afford the unit. Landlords may also request references and refuse to rent to prospective tenants on the basis of their past behavior.

With such a broad definition of discrimination, it can be hard for the average landlord to know how to avoid violating fair housing provisions. In general, the simplest ways for a landlord to avoid any discrimination issues is to not discuss any sort of preference when renting a unit, and avoid asking questions about the various protected categories. For instance, while a landlord should ask the number of individuals in a prospective tenant’s household, it is generally best to avoid asking the ages of those individuals. Local governmental housing agencies often provide sample tenant applications and other advice to landlords, especially regarding state and municipal policies regarding fair housing, which can differ, or expand on, federal law.

While it may seem like a great deal of work to comply with fair housing laws, there are consequences for non-compliance. Prospective tenants who believe that they have experienced discrimination can file a complaint with HUD, which then is responsible for investigating. HUD typically attempts to create a conciliation agreement between tenants and landlords, but does have the power to recommend that the Attorney General file suit against landlords accused of discrimination. If a judge finds in favor of a tenant, a landlord can be fined $10,000 for a first violation, as well as be required to compensate the tenant for actual damages and either make housing available to the tenant or to provide equitable relief. All of that can be extremely expensive, in both money and time and is best avoided. ]]> https://www.ezlandlordforms.com/articles/educational/2/24/real-estate-investing-products-and-links/ https://www.ezlandlordforms.com/articles/educational/2/24/real-estate-investing-products-and-links/ Wed, 27 Feb 2008 02:24:19 GMT It may be true that your tenants may be hard or destructive to your rental property. BUT... Being pro-active by using good and strong products will save money and aggravation in the end. Below you will find useful information and links to various products of use to the Landlord.

The Rental Application
The Rental Application is the sacred text of successful property management. This tool is geared to help you make an informed decision about a potential tenant's suitability. Our comprehensive rental application form provides fields for every prospective occupant over the age of 18, including employment, rental histories and credit checks. Remember that this data is very sensitive -- carefully protect all completed applications in order to comply with federal privacy regulations.

To get this form for FREE click here: Rental Application



Smoke Detectors
How often do you end up replacing either batteries or entire smoke detectors? Sometimes spending a bit more upfront saves time and money later on. This Smoke Detector from First Alert is a great one for Landlords!
• 10 Year lithium power cell. No costly battery replacement for the 10 year life of the detector.
• Mute button- Mutes unnecessary alarms immediately and also tests function with the same button. (You know the scenario-Tenant is burning food-alarm goes off-tenant gets mad-knocks it off the wall or removes the battery) With this feature, your tenant simply hits a mute button.
• Tamper-proof design meets code for sealed/tamperproof alarms.


Amazon.com Shopping: First Alert Smoke Alarm

DO-It-Yourself-Exterminating Don’t waste your time with routine extermination which is usually nothing more than a temporary fix. Do-It-Yourself products are available and not difficult to use and what’s more- they can be MORE effective! Often paying for monthly pest control spraying doesn’t even touch the problem. Sure it is good for your exterminator but what has he done for you lately?

Maxforce Roach Bait stations last for a full year and will solve just about any roach problem. Don't get fooled into thinking that routine extermination will do better. This solution is not only effective but inexpensive as well.

DoMyOwnPestControl.com Shopping: Maxforce Roach Bait Stations


Maki Pellets and other Rodent Exterminating Products.
Before using any mouse/rat control substance it is important to take measures to mouse-proof the property. Make sure all open area’s (holes, gaps or cracks) are sealed. Any of these openings are an invitation to rodents. Make sure that all food is covered tightly. Remove any crumbs or food tid-bits. Place all food in upper cabinets rather than the lower ones.

E-Bug.net Shopping: Rodent Control


LIGHTING
Change lightbulbs less frequently and save money. The inexpensive "regular" type of lightbulbs do not last long at all. Using a good, longer life bulb saves you time and money. Stock-up on these light bulbs. They are less than $2.00 each and last a lot longer than standard light bulbs.

Service Lighting Shopping: Super Long Life Light Bulbs


More products coming soon!

]]> https://www.ezlandlordforms.com/articles/educational/3/23/why-you-can-not-afford-to-do-without-a-top-notch-lease-agreement/ https://www.ezlandlordforms.com/articles/educational/3/23/why-you-can-not-afford-to-do-without-a-top-notch-lease-agreement/ Tue, 22 May 2007 08:17:39 GMT Most great landlord-tenant relationships hold one key element in common: they’re built on the foundation of a concise, airtight lease. Like any other type of legal contract, the goal of a lease agreement is to clearly describe the terms of the rental relationship, spelling out the rights, responsibilities, privileges, and limitations that apply to both the landlord and the tenants.

A high-quality lease agreement sets the tone of the landlord-tenant relationship from the get-go, ensuring that all involved parties fully understand what they can -- and can’t -- expect from one another. Perhaps even more importantly, it provides guidance and recourse to the landlord and tenant alike in the event that things go sour in the rental relationship.

However, far too many landlords rely on informal leases, generic lease forms, or handshake agreements when renting out a property. The process of compiling and completing a comprehensive lease form may seem to some to be too time-consuming or too “official".

Unfortunately, these basic agreements aren’t much help when a crisis arises, as it inevitably will. Even the best intentions don’t hold up to the harsh scrutiny of a court of law. To truly protect your investment, you need a comprehensive lease agreement that covers all the bases.

There are a lot of options out there when it comes to selecting a lease agreement. Selecting the one that’s right for you and your business can prove to be a challenge. Here are some guidelines that will help you distinguish the good from the bad.

• Is it legal? Most of the generic lease agreement forms available on the market contain only the bare essentials. Paper forms, such as those that are purchased at an office supply chain, may not have been updated to reflect recent legal changes. Make sure the lease agreement you use is up-to-date and in full compliance with current contract law.
• Is it applicable in my state? At the state level, laws impacting the landlord-tenant relationship are constantly changing and evolving. Trying to keep up with emerging laws on your own can be overwhelming. If the lease agreement you select doesn’t reflect the latest legislation, you may be out of luck if you ever end up in court. Make sure your lease agreement incorporates the latest state laws and regulations.
• Is it comprehensive? Most generic lease forms cover the basics, but they don’t delve into the kind of details that will define the day-to-day relationship between you and your tenants. Who will cut the grass? Who will shovel snow? Who will check the smoke detectors? If the lease agreement you select doesn’t spell out these kinds of details, you can expect the problems to quickly start piling up.
• Is it informative? Your tenants may not know how best to respond to situations like house fires, burst pipes, or gas leaks. A high-quality lease agreement package will double as a teaching tool, providing simple guidelines outlining the proper response in number of common household crisis situations; a generic lease form can’t and won’t.
• Is it professional? The lease package you hand to your new tenants says a lot about who you are and what kind of behavior you expect. If your lease agreement is a slapdash, paragraph-long contract you hastily scrawled on the back of a “For Rent” flyer, what does that say about the kind of relationship you expect to have with your tenant? On the other hand, if you hand your new tenants a comprehensive, custom lease agreement package complete with a cover sheet and table of contents, you’re establishing a tone of professionalism, respect, and decorum that will set the stage for the entire relationship.

Now that you’re armed with these guidelines, selecting the right lease should be simple. Remember, just as you would never skimp on the cost of a foundation for a new home, don’t put your property and livelihood at risk by building a rental relationship on a substandard lease. That’s one mistake landlords and property managers simply can’t afford to make.

]]> https://www.ezlandlordforms.com/articles/educational/2/22/when-is-the-right-time-to-buy-real-estate-now/ https://www.ezlandlordforms.com/articles/educational/2/22/when-is-the-right-time-to-buy-real-estate-now/ Tue, 26 Dec 2006 00:00:00 GMT Wait for the right time to buy real estate, and you may still be waiting 10 years from now. Despite what you may hear, you'd don't need a crystal ball to make money in real estate. With simple strategies, you can make big profits in real estate, no matter how cold the market seems to be.

Buy Wholesale
The point is, people buy and sell houses every day, even in cold markets. The same principles apply in both hot and cold markets - buy low, or at "wholesale," and sell high, or "retail".

There will always be homeowners who need to sell their property fast, and are willing to let their house "go" for well below its market value. You can always buy houses wholesale and "flip" them or if you know an investor who is willing to pay cash, you can purchase the property and sell it on the same day. The key to wholesaling is locating deeply discounted properties that are easy to rent or flip.

Rent it Out/Wait it Out
When the real estate market starts to slow down, many investors are tempted to sell their properties for what they can and get out of the market. However, you can purchase and rent out that property and still make plenty of money. Renting out an investment property will usually net you a positive cash flow, increase your equity with every mortgage payment, and even make tax-deductible improvements that increase the property value. When the market is hot again, you have a property that has cost you little or nothing to maintain, and has increased in value along with your equity.

The Real Estate market will always have its highs and lows although the market may seem cold right now; it is really just a matter of time until the real estate market becomes hot again. By sticking with and continuing to build on your investments, you will make profits, and be ahead of the game when the market goes up again. But you knew that. You were in it all the time.

]]> https://www.ezlandlordforms.com/articles/educational/2/21/to-flip-it-or-rent-it/ https://www.ezlandlordforms.com/articles/educational/2/21/to-flip-it-or-rent-it/ Wed, 29 Nov 2006 00:00:00 GMT Which will bring you the largest profits from Real Estate Investing?

Real estate is a tried and true investment that offers both short-term and long-term gains. Before you purchase a property, you will have to determine if it is best to flip the property - make improvements and sell it fast - or rent it out. We all know the market fluctuates; even people who are not involved in real estate investing know the terms "buyer's market" and "seller's market." Which decision you make depends on what is happening in the market and how much the property costs.

How to Know When to Flip a Property
House flipping can provide huge profits if you do it right. Key factors are the purchase price, the location and condition of the property, and what similar homes in the area are selling for (and how fast!).

Generally speaking, if you plan to purchase a home with a high price tag, your best bet is to turn it around quickly. Expensive homes come with big mortgage and property tax payments, which usually rules out much if any cash flow for renting. It can also be difficult to find renters for higher priced homes, and if they miss a rent payment for one or several months, not only can all your profits disappear, you may take a loss.

If you find a great property that requires mostly cosmetic changes, you should be able to flip it easily for a nice profit. A property with major structural problems can be a "money pit," especially if the price was high to begin with. Before you commit to any major change, assess not only your cash resources, but also your work force resources. Do you have relationships with contractors, landscapers, and other skilled labor professionals?

How to Know When to Rent a Property
Renting your investment property can provide you with monthly cash flow while you build equity. Renting also allows you to take advantage of tax breaks for any improvements you make to the property. Again, key factors are the price of the home, if the market has growth potential, and the condition of the property.

A lower-priced home translates to a lower monthly payment, property taxes and insurance. Remember, you don't need to make a huge profit every month, the idea here is you can own more properties and make your profits over time. When you rent a property out, you are building equity using your tenant's money. Add up the costs related to the property, including a small amount for repairs and any utilities you plan to pay for. This is a safer way to invest in Real Estate and can net you very high profits.

Another way to determine if you should flip or rent is if the market is growing. Does the area have a lot of new construction? Are there new industries moving in? Is the location near an urban area, with plans for an existing public transportation system to the city? Properties located in these "growth" areas almost always net the largest gains over time.

In a growth market, you can make money flipping a house, but you may be able to make considerably more money if you rent it out, build equity, and sell it for an even higher price at the optimum time. Even if you buy yourself a vacation home, you can make money down the road if you hold on to it, and you can rent it out as a vacation home or to tourists when you do not plan to live there.

It's Not Just About the Bottom Line
When deciding whether to flip or rent out a property, assess the market, do the math, and then consider your own interests and abilities. The perfect flip is not so perfect for those who have no construction or renovation experience, and being a landlord may not be a role you wish to take on. In the end, it's about what's best for your pocketbook, and what's best for you.

 

]]> https://www.ezlandlordforms.com/articles/educational/2/20/how-to-get-started-in-real-estate-investing-without-cash/ https://www.ezlandlordforms.com/articles/educational/2/20/how-to-get-started-in-real-estate-investing-without-cash/ Tue, 14 Nov 2006 00:00:00 GMT So you want to get involved in real estate investing, but you just don't have any extra money to get started? This is a common situation, but what most people don't realize, is that you may already have enough resources to get started. If you own your own home, you can leverage this asset and be well on your way in no time.

Unless you purchased your home with an interest-only loan, you are building equity each time you make a mortgage payment. To figure out how much equity you have in your home, subtract the balance on your mortgage, from the value of your home. If you have any other loans attached to your home, or other liabilities, subtract them as well. Most people are surprised to learn how much equity they actually have. In many cases, it's more than enough for a down payment and improvements on your investment property.

There are several ways to use the equity in your home to raise cash for real estate investing. Here are the basics:

1. Refinance Your House. You can refinance your home in order to get an improved interest rate, but you can also get a cash-out refinance mortgage, and use the cash to purchase an investment property, or you should have least enough for a down payment. Your current lender may have rules about cash-out refinancing, so check with your mortgage advisor before you begin the process. Keep in mind, a cash-out refinance mortgage can have higher interest rates than other mortgages.
2. Take Out a Home Equity Loan. A home equity loan is a loan using the equity in your home as collateral, and is separate from your mortgage. The amount is of the loan is based on a percentage of the equity in your home, you may be able to borrow 90% or more of your homes value; less if you are taking out a home equity loan on a second property that you do not occupy. The advantages of a home equity loan the option to pay the loan back early without penalty, and you may choose to pay off those high interest credit cards.
3. Open a Home Equity Line of Credit. A home equity line of credit has a credit limit just like a credit card. Like a home equity loan, the amount of the limit is based on your credit worthiness and the equity in your home. You can transfer funds from your home equity line of credit, or even write checks directly from the account. Interest rates are generally lower than cash-out refinance mortgages, and there are tax advantages as well. Another advantage is you are only paying interest and making payments on the amount you owe, not the entire amount of the loan. You may also be able to renegotiate in the future for a higher credit line when the equity in your home increases, especially if you have made above-minimum payments on timely basis, or home improvements.

Investing in real estate is not only for the rich; the average homeowner can become a real estate investor even without a lot of money in your bank account. You can use cash-out refinance mortgages, home equity loans, and home equity lines of credit to purchase your first investment property, and many more properties to come.

]]> https://www.ezlandlordforms.com/articles/news/19/ezlandlordforms-press-release/ https://www.ezlandlordforms.com/articles/news/19/ezlandlordforms-press-release/ Mon, 13 Nov 2006 00:00:00 GMT
Landlords and Property Managers Vote YES for
New One-Stop Online Document Resource

New website ezLandlordForms.com is the Internet's only state-of-the-art document system for landlords, providing state specific lease agreements and a complete library of documents for efficient property management.

Philadelphia, Pennsylvania (PRWeb) November, 2006
The newly launched website of EZ Landlord Forms, LLC is the Internet's only state-of-the-art document system for landlords. Founder J. Kevin Kiene developed the company based upon insights he has gained in more than 16 years as a landlord, with a background managing over 250 properties, and a wealth of experience working in the technology sector.

Unique Services Make Managing Easy
EZ Landlord Forms provides online legal forms for landlords that are "simple to create and just as simple to use," says Kiene. "Our goal is to make landlording as easy as possible by providing all the documents needed for property management."

"Our system pre-fills the forms for the landlord," explains Kiene. Landlord and Tenants Address fields are automatically inserted into all mail-able documents so they may be used with window envelopes. "We also are the only online company that logs documents sent to tenants, and documents may be sent by email with a confirmation."

Safe and Legal
Kiene says EZ Landlord Forms is further distinguished as the only system that offers State Assist, guiding investors in the lease creation process, ensuring that leases conform to the laws of individual states.

"A good lease is a landlord's best protection in court," Kiene observes. "I have hired over 50 attorneys from across the US to provide the legal information required for our state specific clauses and State Assist."

To further protect landlords and create a "paper trail," the company's Document Log "ensures that all notices sent to tenants are documented," says Kiene.

Kiene notes that EZ Landlord Forms is the only company that allows landlords to build a customized 'lease package.' Each document is dynamically numbered and can include an auto-generated table of contents "to further simplify a property manager's work," he says.

"Our system lets landlords include other documents with the lease in a package that they can personally tailor to their needs."

Created by A Landlord For Landlords
EZ Landlord Forms was the natural outgrowth of Kiene's personal negative experience trying to automate his business processes. "Every set of documents I tried was incomplete, incorrect, or just plain too cumbersome to use," reports Kiene. "I was so frustrated that I decided to create my own document system."

A project that began as a quest for a personal solution would soon evolve into a professional success story that Kiene wanted to share with other landlords and property managers.

Kiene used his computer skills and landlord experience to develop EZ Landlord Forms, a one-stop online resource that landlords may access day and night to get the documents they need for effective property management. "I've distilled the best information I could find down to the essentials," he reports. "These documents have professionally designed, professionally written, and I've personally overseen the creation of each one to ensure that they meet my very stringent standards for excellence."

A Place For Landlords To Get Help Along With Forms
Kiene points to the input of "one of the best web programmers in the industry" as a key component to EZ Landlord Forms functionality and user-friendly interface. "Even non-computer users and techno-phobes will find our system easy to use," says Kiene.

A question and answer section for landlords helps solve lingering problems. "We also provide free articles and free newsletters," says Kiene. "The site is a lively forum for exchanging tips and advice among fellow landlords."

More Success With Less Work and Less Money
Part-time landlords, full-time property management companies and real estate agents/brokers may all benefit from the automated approach offered at EZ Landlord Forms. "Our state specific Lease Agreements and complete library of documents translate into reduced paperwork and more efficient management regardless of how many properties you own," says Kiene.

"Some property managers may be able to reduce their workforce along with the number of hours they're putting in themselves," says Kiene. "And that translates into less expense and more profits."

]]> https://www.ezlandlordforms.com/articles/educational/2/18/how-to-choose-a-good-investment-property/ https://www.ezlandlordforms.com/articles/educational/2/18/how-to-choose-a-good-investment-property/ Tue, 07 Nov 2006 00:00:00 GMT When you are considering purchasing a property for real estate investing, you’ll want to remember that there are generally two ways to make money on the property you purchased. One is from capital appreciation, where the value of the property increases, and the other is from renting your property out. However, how do you know whether a property is a good investment? The following information will help you to choose a good property for real estate investing.

Obviously, one of the most important factors in determining whether a property is a good investment or not, is to consider the price of the property. If after you’ve made the initial down payment and your mortgage payment is over and above what you can rent the property out for, you’ll find that to be a poor investment. Determining whether or not the property will bring in a positive monthly cash flow for you is one of the most important factors.

The location of the investment property is also an important factor. Regardless of whether or not you purchase a rental property well below its market value, if you can not find tenants for the property, it won’t matter. Make sure you choose a property in a location where there is a demand for housing. Researching the market can save you the hassle of a poor choice in real estate investing. You’ll also want to make sure the property you choose will appeal to the masses. Just because you like the uniqueness of a house, doesn’t mean someone else will and you may have trouble renting or selling when the time comes.

If the investment property you are considering is a fixer-upper, you may want to bring a contractor with you to determine the cost for repairs and renovations. You’ll want to figure this into the cost of the property and if it will not yield you a return on your money, whether you plan to sell or rent, you are taking the risk that it may be a very poor investment.

Real estate, whether you plan to flip houses or rent them out, can be a very profitable business for yourself. While determining whether or not a property will make a good investment or not can be difficult, the important thing to remember is to always do your research. Find out the rental history on the property, the demand for housing in that particular area, and any other pertinent information you can find on the investment. Any research you do will help you to choose properties that will be beneficial to your real estate investing.

]]> https://www.ezlandlordforms.com/articles/educational/3/17/the-lease-agreement/ https://www.ezlandlordforms.com/articles/educational/3/17/the-lease-agreement/ Tue, 07 Nov 2006 00:00:00 GMT Q: What is the Most Important Document in Landlord/Tenant Court?
A: The Lease Agreement

When you decide to do a little real estate investing, you will most often find yourself amongst those known as landlords. Taking on this designation will allow you to play many roles. You may be the rent collector and the maintenance person. Most of the tasks you perform will be very important to your success in real estate investing. However, one of the most important things you can do for yourself is to use a complete and thorough lease agreement including any other required documents.

Most states do not require the lease agreement to be in writing. It can be an implied lease or oral lease, depending upon the state you live in. However, regardless of what the state requires for a lease agreement to be valid, landlords should have a written lease agreement signed and dated by both the landlord and tenant to make certain all rights and responsibilities are agreed upon.

The lease or rental agreement should include all the details of who is responsible for maintaining the property. Here are some important items that should be included in the lease; whether the tenant or landlord is responsible for checking smoke detectors, mowing the lawn, shoveling the snow, and whether or not the tenant is required to obtain renter’s insurance. By outlining each of these items in detail, should the landlord or tenant end up in court, the lease will be a legal document and proof to who was designated as the responsible party.

When renting a property built before 1978 the government (EPA) requires the landlord to supply the tenant a copy of a Lead-based Paint Pamphlet, which outlines the potential hazard of lead-based paint, and a disclosure stating whether or not the rental unit they are occupying has or may have lead-based paint in it. This document must be signed by the landlord and tenant and will protect both parties if the legal need arises.

The most important document a landlord can ever give to a tenant is the lease agreement and the more detailed the lease is, the better protection it will provide. Detailing the payment system for rents, late fees, and other pertinent information will only provide more protection for both the landlords and tenants.

]]> https://www.ezlandlordforms.com/articles/educational/2/15/why-does-investing-in-real-estate-create-wealth/ https://www.ezlandlordforms.com/articles/educational/2/15/why-does-investing-in-real-estate-create-wealth/ Sat, 04 Nov 2006 00:00:00 GMT When investing in Real Estate, you may choose to buy and rent a property, or you may choose it "flip it" (buy and sell quickly). The safest way to invest is to buy wholesale properties that are in the "sweet spot" of the rental market i.e. they are not in the best or worst neighborhoods. The goal is to find an investment property with a good (or great) positive cash flow. This is how you will create wealth.

Positive cash flow is the amount of money that is left over after all of the expenses have been paid on the property and what you can put into your pocket at the end of the month. Expenses that you deduct from the rent payments you’ve collected may include items such as operating costs, taxes, and the mortgage payment. The positive cash flow that one gets from a property will depend upon three different things: the amount of the rent being charged, the amount of the mortgage payment, and the cost of operating the building. To create wealth by investing in real estate, analyzing these three things is crucial.

Using borrowed money to finance your real estate investment is how many investors make a profit. They simply make money off borrowed money. One way to get a positive cash flow is to make a small down payment on the property, making certain you acquire a mortgage that is lengthy and low-interest. Basically, a lower mortgage payment means you will be getting a higher cash flow.

For example, if you purchase a four-unit apartment building for $125,000 and rent each apartment for $600 each month, you will receive $2,400 a month. Less your mortgage payment of $625 and operating expenses of $300, you should have a positive cash flow of $1,475. If, however, your mortgage went up to $925 per month, you would only have a positive cash flow of $1,175 each month. The key is to get the lowest payment possible and keep your operating expenses down.

Another method of keeping a positive cash flow is to take out an interest-only loan. This type of loan usually is a short-term loan, usually about a five-to-ten year length of time, in which you are paying the interest only. After the period of the loan is up, you will need to either sell the property or refinance. This, however, does give you a low payment and will help you to get a higher positive cash flow from your investment property.

With a positive cash flow coming in from your investment property, you can use this to help you acquire more investment properties. One way to do this is to refinance your current investment property, using the money you get to help you acquire another investment property and so on. In this sense, you are creating positive cash flow from several properties and you haven’t had to pay the capital gains tax on the original property as you did not sell it, but instead, refinanced it to help you purchase more properties.

The most important thing to remember is that if you want to create wealth by investing in real estate, you must maintain a positive cash flow on your properties. By making certain your mortgage payment is as low as it could be, keeping the operating expenses at a minimum, and pricing the rent amounts correctly, you will find that you will not only create a positive cash flow, you will be able to create the wealth you want for yourself.

]]> https://www.ezlandlordforms.com/articles/educational/2/16/making-money-in-a-s-l-o-w-real-estate-market/ https://www.ezlandlordforms.com/articles/educational/2/16/making-money-in-a-s-l-o-w-real-estate-market/ Sat, 04 Nov 2006 00:00:00 GMT If you are looking to profit from the real estate market, do not let a slow market scare you away from the potential to earn a bit of extra money and seriously increase your cash flow. There are ways around a slow market that will allow you to earn an income, even while the home sales in your area are low.

One of the best ways to make real money in real estate is to buy and fix distressed properties, or to "rescue" foreclosed properties from auction. Buying houses at such a discounted price means that you can fix them up and sell them under the market average and still make a tidy profit in the mix.

If you are not a handyman, and don’t want to learn, you can still hire out the work on these properties, but be prepared for a much slimmer profit margin. Focus on the less expensive but more valuable repairs, and you will have yourself a saleable home in no time at all.

If you are looking for more than a quick fix of income, consider keeping the property on as a rental property or lease it out to tenants. A residential rental agreement can keep the cash flowing your way for years to come, and if you find yourself reliable tenants the income could be a steady thing for decades. If your tenants move, it is a perfectly simple procedure to touch up the house and re-rent it. If you play your cards right, one property becomes two or three, and soon you will be able to live on your real estate income alone.

The question is if you can make money in a strong or hot market, wouldn't you be able to make money in a cold market? In a hot market, property is scarce and finding a "deal" on a property just becomes that much more difficult. Let's face it, in a cold market there are more houses on the market than the demand. This creates a great opportunity to acquiring wholesale properties. The truth is investing in real estate can net you large profits no matter what type of market were in. Just play your cards right, invest in one property that can soon become two then three, and before you know it you will be able to live on your real estate income alone.

]]> https://www.ezlandlordforms.com/articles/educational/2/14/how-to-locate-wholesale-properties/ https://www.ezlandlordforms.com/articles/educational/2/14/how-to-locate-wholesale-properties/ Tue, 31 Oct 2006 00:00:00 GMT Wholesaling generally refers to the process of buying a property for below market price, and then selling it to another investor, usually without fixing up the property - it's a procedure also sometimes described as "flipping properties".

Buying and selling wholesale real estate property can be difficult and challenging as sellers are instinctively inclined to sell their property for more if they realize you are a wholesale investor.

Whereas the deal itself can sometimes be difficult, finding properties to resell at a profit is relatively easy - if you know where to look. Many people who sell properties at wholesale prices are what might be called "motivated sellers" - those who are desperately trying to sell for a compelling reason. These reasons can include foreclosure, relocation or personal or health issues.

There are several methods of finding suitable properties that can potentially be wholesaled. Some of the best wholesale deals can be obtained from a county or city that has taken over a property, often for failure to pay taxes - a procedure known in the industry as "landbanking".

Concentrate on looking for foreclosures. Apart from lists provided by banks and other lenders, you can also locate foreclosures by reading the notices issued by the city or county and posted in the legal sections of business journals and local newspapers.

Some properties are available to purchase when the city or county has "red-tagged" them, meaning that the house is unfit for human habitation because of a safety or health issue.

Look for newspaper advertisements that state that the advertiser buys properties - "We buy Houses" is often a giveaway. These are usually ads that have been placed by fellow investors and there is nothing to stop you calling them and asking for their list of properties.

Networking is important when it comes to locating and buying wholesale properties. If local realtors are aware that you are interested in potential wholesale deals, you will find it a lot easier to find properties. A good network of useful contacts is invaluable and one of the best things you can have in real estate. Make sure you always follow up with your contacts - rather than waiting for them to call you back.

And sometimes the simple approach is effective - many successful investors advise that you can do worse than simply drive around respectable neighborhoods and look for slightly run down houses that are for sale.

Many people who are trying to locate wholesale properties make the understandable mistake of concentrating on the cheapest properties in their area. In fact, a profit can be made from wholesaling more expensive homes as there are usually homeowners who are desperate to sell their more expensive home, too.

Wholesaling has been around for a while, but in recent years it has become more widespread and acceptable - and contrary to what some people believe, it is perfectly legal. And with the right knowledge, foresight and connections it can be a profitable venture.

]]> https://www.ezlandlordforms.com/articles/educational/3/11/the-secrets-to-a-great-lease-agreement/ https://www.ezlandlordforms.com/articles/educational/3/11/the-secrets-to-a-great-lease-agreement/ Fri, 20 Oct 2006 00:00:00 GMT One of the most important aspects of renting property is having a good, ironclad Lease agreement. A Lease is a legal document and must contain certain necessary components. The Lease that you use should be easy to understand. This is often referred to as a "plain language" Lease. This indicates a contract that is not full of legal terms and hard to understand language but instead a contract that is clear, concise, and comprehensible to the average "Joe".

There are many obvious parts to a Lease as well as to any legal contract. There must be an offer (the rental property) and compensation (rent) and an agreement between two sides (Landlord and Tenant), which is evidenced by signatures usually at the end of the agreement.

There are also many unobvious components to a rental Lease. For instance, each state may have different sets of requirements. There may be clauses or an addendum that must be included. It is important to check with your states Attorney General's office or the Department of Real Estate. ezLandlordForms.com offers a great feature in their Lease building process called the "State Assist." The State Assist" provides you with the required clauses that are automatically inserted into your Lease while you create it. ezLandlordForms' State Assist also provides information required in your state through the entire Lease creation process.

Below is a list of ten of the very important parts of a good Lease agreement:

1. Names of all of the Tenants.
   
   
2. Number and limit of occupants.
   
   
3. Rent How much? How to pay? When to pay? Consequences for not paying.
   
   
4. Security Deposit How much? What it is used for? *Please note in some states there are regulations on how much security deposit may be taken as well as what kind of account it may be in.
   
   
5. Term of the Lease (Will you use a specified term such as MM-DD-YY to MM-DD-YY or perhaps go on a month-to-month basis?)
   
   
6. Repairs and Maintenance Who will be responsible for what?
   
   
7. Utilities Who will pay for what?
   
   
8. Restrictions What may or may not be permitted on the property such as pets, subletting, etc.)
   
   
9. Consequences What will happen if any term of the Lease is broken
   
   
10. Signatures and dates It may be wise to have your tenants initial all pages or even the more relevant parts of your Lease after you have explained it to them.
]]> https://www.ezlandlordforms.com/articles/educational/5/13/nice-landlord-or-mean-landlord/ https://www.ezlandlordforms.com/articles/educational/5/13/nice-landlord-or-mean-landlord/ Fri, 20 Oct 2006 00:00:00 GMT Many Landlords make the mistake of getting too emotional and personal with their Tenants. Some Tenants are very skilled at creating this type of relationship.

It is very important for a Landlord to realize that getting too friendly or emotionally involved may not only end up costing a lot of money, but wasting much time as well as leading to legal headaches. Keeping business, business is very important if you want a successful real estate investment career.

It is okay to be friendly but it is important to keep a bit of distance as well. Using letters and e-mails is much better than visiting your Tenants or making phone calls. Not only does this provide the necessary distance but it provides a tangible trail of communication. It also avoids the "he said, she said" scenario.

A Landlord will look more credible in court with proof of notice. The more proof, the better. Tenants sometimes lie. Having written documentation is excellent proof for court. Telephone calls and verbal communication is not going to hold weight in an eviction hearing.

Phone calls and visits to the Tenant may also leave the Landlord open for arguments and even danger. Keep these to a minimum. Some Tenants are very skilled at deluding a Landlord with intimidation or just being too friendly, believing these tactics may prevent them from being evicted.

So can you be a nice Landlord? Yes, it is possible to be nice without getting emotionally involved. Have a good Lease that sets up the rules. Use written communication to notify your tenants of any Lease violations, change of Lease terms or to assist with rent collection.

ezLandlordForms gives the Landlord an easy way to communicate and keep track of all communication with your tenants. It assists you in creating a state specific Lease and gives access to over 65 documents.

]]> https://www.ezlandlordforms.com/articles/educational/4/12/rent-collection-101/ https://www.ezlandlordforms.com/articles/educational/4/12/rent-collection-101/ Fri, 20 Oct 2006 00:00:00 GMT Collecting and receiving rent is the cornerstone of investing in rental properties. For some Landlords, collecting rent is not difficult and for others it can be a nightmare.

It is very important to be consistent from the beginning of the Lease. Start out by explaining to your Tenants in detail, the terms of payment in the Lease and any consequences for late payment.

It is a good practice to send rent reminders, before rent is late. ezLandlordForms has a great letter for this.

Precedent must be set from the beginning as soon as a Tenant fails to pay rent on time. Once you start accepting excuses, you have lost footing. It gives the Tenants the assumption that it is ok to pay the rent late because they had a problem. The next time they have a situation or issue, they will believe that you will be understanding once again. This sets the tone for a frequently late rent payer or worst an eventual legal matter.

Keep all communication in written or email form to avoid the "he said, she said" scenario. Send a letter out as soon as rent becomes late, the very first day after any grace period specified in your Lease. Include the late charge if there is one and do not make "deals." As soon as you negotiate with your Tenant on late rent or late charges or fees, they tend not to take a Landlord seriously and may try to push things farther.

It is a good idea to send a sequence of notices. ezLandlordForms has a set of such notices to make this easier for the Landlord. Mark on a calendar when you will send these notices out, if need be.

Check with your local jurisdiction to find out the regulations for eviction. Each state, county and/or jurisdiction may institute requirements for how many days may pass before legal proceedings can be brought against the Tenant. There may be certain notices required such as a "Notice to Quit," before you may even file in a local court. If after several attempts are made to collect the past due rent, follow your jurisdiction rules as soon as possible. Eviction can be a lengthy battle, especially in larger cities.

Be sure and remember it is important from the beginning of the Landlord/Tenant relationship to set an example in your collection efforts. Do not get emotionally involved. Keep it business, after all you invested in order to make money not lose money.

For all of your Lease and document needs, go to www.ezLandlordForms.com. Starting off with a good Lease is essential and having the necessary documents and notices can be just as important. ezLandlordForms offers the only Lease and document system for all Landlords.

Related Documents:

• Late Rent Reminder
• Late Fee Due Notice
• Late Rent - Demand for Payment
• Late Rent - Eviction Warning
• Lease Documents

 

]]>