Popularity of pet-friendly rentals sparks growth in dubious online services

The popularity of pet-friendly apartments has led to development of dubious services on the Internet designed to get owners out of paying high pet fees. The services allow people to obtain phony dog service certification deeming the animal an “emotional support pet,” a designation that not only exempts owners from pet fees but often grants the animal access to rentals that are not pet friendly.

The problem with such efforts is they are sparking more scrutiny from landlords and more calls for increased regulation on issuing emotional support pet certification, which ultimately may make it difficult for people who legitimately need it.44334346_s-228x300

Many of the dubious services have online “therapists” who provide documentation that an emotional support pet is needed. Many provide the “doctor’s note” within 24 hours. As I was looking at some of these websites, one was summoning me to register a pet with them via a pop up. They are very persistent. These services provide a method for people to avoid pet fees and a way to have a pet in a residence that does not allow pets. Pet rents range from $25 to $75 monthly and up front pet fees range from $250 to $1,000 on average per pet.

Emotional support pets are companion animals that provide a therapeutic benefit to individuals with a verifiable mental or psychiatric disability. Emotional support pets are one type of assistance animal, according to the U.S. Department of Housing and Urban Development. An emotional support pet can be any type of animal and is allowed as a reasonable accommodation in a residence that does not otherwise allow pets. This allows dogs, cats, alligators, any type of pet at all with no restriction. You do not have to pay pet fees to a landlord for an emotional support pet.

The difference between an emotional support animal and a service animal is a service animal is trained to perform certain tasks to help people with disabilities, while an emotional support pet is not trained. Unlike service animals, an emotional support pet is not granted access to public places such as movie theaters and hospitals.

HUD does not require a tenant to disclose their disability to a prospective landlord, but they will need to provide documentation from a doctor or other health care professional that the assistance animal lessens one or more of the identified symptoms or effects of an existing disability.

A companion animal can also travel with their person in the cabin of a plane, as allowed by the Air Carrier Access Act, without fees. Typically, the fee to have a pet fly is about $125.

The Transportation Department formed a panel of advisers to look into the issue. Airlines are concerned about the safety of the passengers around the untrained animals and want to know whether their owners legitimately need them for emotional support or are just trying to avoid a fee. The panel was disbanded without a solution, experts say, but with the increase of animals on flights this is bound to come up again.

There is no standardized form that can be used to prove an emotional support pet’s status.  The increase in people fraudulently identifying their pets as assistance animals has led to a consideration of  more regulations for identifying an assistance animal.

An online petition being circulated through Change.org is asking Anna Maria Farias, HUD’s assistant secretary for fair housing and equal opportunity, to reform laws surrounding emotional support animals. While supporting people who legitimately need comfort animals, the petition wants the government to stop allowing owners to get doctors’ notes for emotional support pets online for a fee. The petition asserts these online methods are not credible.

More regulation is needed to prevent people from falsely claiming their pets as companion animals. Let’s hope the regulations will not hinder the process for people who have a legitimate need for an emotional support pet.

 

Source: washingtonpost.com

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South Dakota Law Alters How Landlords Handle Support Animals

1SIOUX FALLS, S.D. (AP) — New South Dakota legislation will allow landlords to evict or fine tenants who fake a disability or provide false documentation to keep a pet in their rental unit.

 

Gov. Dennis Daugaard signed into law this month a bill intended to prevent tenants from lying about medical conditions and claiming they have an emotional support animal. The law takes effect July 1, the Argus Leader reported.

 

A loophole in current law allows tenants to keep miniature horses, snakes and chickens as support animals, said Amy Miller, president of Charisma Property Management.

“It’s a huge problem,” Miller said. “Nobody wants to get sued so nobody’s pressing it.”

The federal Americans with Disabilities Act describes trained animals but not specifically therapy or emotional support animals. The language means that landlords can’t deny tenants from living with the animals.

 

But state law didn’t distinguish service or therapy animals either, so landlords often choose to allow them in order to avoid lawsuits.

 

“It goes unquestioned because (the law is) so ambiguous that unfortunately, I think landlords get taken advantage of,” said Paul Gourley, chair of the South Dakota Multi-Housing Association. “There’s a loophole in the system that needs to be corrected.”

The new law says landlords can request that tenants whose disability or health condition isn’t “readily apparent” provide a doctor’s note affirming their need for the service or emotional support animal.

 

University of South Dakota student Taiya Bunde has a support cat named Snuggles that she keeps in her off-campus apartment. Bunde’s psychiatrist approved Snuggles as an emotional therapy animal. The 21-year-old said she hopes “that people don’t abuse it and ruin for those that need it.”

 

Source: usnews.com

Why Not Sticking to Your Late Fees is Hurting Your Landlording Business

1A grace period is additional time given to the tenant to pay their rent before they will be charged a late fee or given eviction notice. For example, rent may be due on the 1st of every month, but the tenant has until, say, the 5th to make their payment. Grace periods can be anywhere between 2–“X” number of days. They are actually a requirement in some states, and in others they are not, but we have found that they are useful for a couple reasons:

  1. Many tenants are on a fixed, government income and don’t get paid until the 3rd of the month, and
  2. It shows the tenant that the landlord gives them flexibility in when they make their payment. Nice guy.

However, the flexibility is on the landlord’s terms. We always let our tenants know that rent is still due on the 1st, so technically if they take advantage of the grace period, they are considered late, though we won’t initiate eviction notice and penalties until the 6th of the month.

Whatever you do, make sure all your tenants are on the same schedule. Don’t change due dates and grace periods to suit the tenant when they move in (because they will ask). It may work out fine for the first few tenants, but as you continue to acquire more rentals, you will want everyone to be paying at the same time so you can keep track of who has paid and who has not.

Our grace period goes through the 5th of the month. If rent has not been paid by the 5th, they will get a late fee, currently $50. Additionally, we charge them an extra $10 per day after that until they have paid their rent in full. For example, on the 6th they receive a one-time $50 late fee, on the 7th an additional $10 is added to the $50, on the 8th an additional $10 is added to the $60, and so forth. Every day gets a little more expensive.

Stick to Your Late Fees—No Matter What

When your tenant pays late, it is vital that you follow through with the late fees. This bears repeating: It is vital that you follow through with the late fees. Don’t waiver, as the late fee’s sole purpose is to motivate your tenant to pay as quickly as possible. Take away that motivation, and good luck getting your rent—that is, until the tenant gets around to paying it. If there is one simple piece of advice in this entire book that you should listen to it is this: always follow through with late fees.

Let’s be real: The number one reason most tenants are late on their rent is not because of an emergency or some unforeseen necessary expense, but because of priorities. They are late because paying rent on time has not been made a priority. The best way to make timely payments a priority is by following through on the late fees. Tenants, and America in general, usually live above their means. In other words, there’s always more month than money. Therefore, every month requires sacrifice and prioritization of bills: food, clothing, rent, cable, a new TV, a game console, tattoos, medical bills, Starbucks—these are all expenses your tenant is internally trying to prioritize.

Naturally, the bills with the highest penalty for negligence are usually prioritized the highest. Those will be the bills that get paid first. So the question is, is the consequence for paying rent late greater than or less than the consequence of having the cable turned off or having to go without their daily coffee or smoke fix? Despite what tenants think, late fees are not about lining the landlord’s pockets. Late fees are designed to give rent a place of high priority because of the consequence. You may feel bad or think you’re being cruel by charging a late fee, but by following through, you are helping your tenant prioritize the most important bill they have: their housing.

This last month we had a tenant call us a couple days before her grace period was up to let us know that she had some unexpected expenses come up, wouldn’t have the full rent in time, and wanted to know if she could pay the rest at the end of the month. We told her we needed to follow her lease, and the lease says her full rent payment is due the 1st and late after the 5th.

Any rent not paid would trigger both late fees and eviction notice. Guess what? On the 5th her priorities suddenly changed, and she paid her entire rent payment. From past experience, this particular tenant knew that we take non-timely rent payments seriously.

The One Alternative

We do offer our tenants one alternative to the late fee penalty, but it requires their planning ahead and communication. We call it the rent extension, and it is not something we advertise to our tenants. However, if a tenant calls us before the 1st to let us know they will be late on their rent, we will offer them a rent extension up to the 10th for a $20 penalty. If they don’t follow through on the 10th, they are hit with the full late fees and eviction notice. The reason for the rent extension is to reward responsible behavior:

  1. They planned ahead to deal with the problem,
  2. They communicated, and
  3. They initiated the communication, rather than waiting for us to call them once the rent was already late.

Source: biggerpockets.com

12 “Sure” Deal Breakers When Screening a Prospective Tenant

1If you are a discriminating landlord, you surely have a number of conditions on which you will disqualify a prospective tenant. As long as you discriminate legally, and not against any fair housing laws, we may share the same “Deal Breakers” below. Some of these can go either way, depending on the needs of the landlord. Please let us know if you have any “sure deal-breakers” not listed.

  1. Bankruptcy
    Do you know what a person has to go through before deciding to declare bankruptcy? It can sometimes be years of dodging creditors and bill collectors. It is a process that teaches an individual how to get around paying creditors. It is not a pleasant experience, and it usually educates and hardens a person towards all creditors.
    I don’t mean to say people who have gone bankrupt are not nice people or will not be good tenants!I mean to say that I prefer not to rent to people who are not afraid to damage their already damaged credit.

 

  1. Prior Eviction
    Any tenant who has been evicted probably has very bad credit and may feel confident in gaining a few months free rent in an eviction should the need arise.

 

  1. Criminal History
    I’ve been asked by a few landlords, “Am I allowed to discriminate against someone with a criminal history?” Of course you can! Yes, it is legal to decline an applicant because they have a criminal record.
    It may notbe politically correct to decline criminals, but Criminals are not a protected class…. Yet. Obviously, you need to use your common sense on this. A DUI or speeding ticket, for instance doesn’t necessarily make someone a bad tenant, while a conviction for domestic violence could be more of a warning sign.

 

  1. No Money
    Are you a landlord who needs to collect the rent? Or are you a charity who takes in unfortunates who don’t have all the required move-in money?
    If you want to survive in the landlord business, you need tenants who can afford to move in and pay the rent every month.
    It is a major RED FLAG when a prospect is unable to provide you with the necessary security deposit and rent. I am amazed at how many landlords allow tenants to move in without first collecting the rent and a deposit!

 

  1. Bad Credit
    What is the purpose of running a credit report on a prospective tenant? You’d be surprised at how many landlords run credit reports that come up BAD and still accept the applicant anyway. For me, bad credit history is a sure denial. Otherwise, why bother running a credit report? Needless to say, credit history is often indicative of how your rent will be paid.

 

  1. Tenant Unable or Unwilling to provide satisfactory references
    If they’re not willing or able to comply with your rental application, why in the world would you expect them to follow the rules of your lease?

 

  1. Tenant unwilling to agree with your lease
    That’s a no-brainer. DECLINED!
    I am surprised at how many landlords are willing to sacrifice important landlord protection lease clauses simply because the tenant wants them to. Of course, you need to to be sensitive to the tenant’s needs, and weigh certain arguments on a case by case basis.

 

  1. Bad Attitude
    That’s a no-brainer. DECLINED!

 

  1. Alcohol and/or Drug Problem 
    I know you want to be fair and help people, but steer clear of these kinds of problems, especially when they are obvious. You are looking for a responsible tenant who you can rely on.

 

  1. Smoking
    This is a judgment call. I try to keep my properties smoke free whenever possible. I find it is difficult to rent a unit to non-smokers that had smokers in it before. Rental re-prep involves a vacancy and is usually more painting and cleaning, and still may not eliminate the odor.

 

  1. Pets
    This is also a judgment call. I try to keep my properties pet free. I learned that it can be difficult to rent after a pet was there, for allergy reasons, odors, etc. Rental re-prep usually includes more painting and cleaning and often new carpeting, and still may not eliminate all the odors.
    On occasion when I have great applicants and have inspected the previous home and the pet, I may make an exception, but I am still reminded of the immortal words of my landlord mentor, Nick Koon: “No dog every improved the value of a rental property.

 

  1. Tenant Unable or Unwilling to see the rental personally or meet landlord before application being accepted
    Big RED FLAG. Do a search of “Scams” in the LPA Landlord Q&A Forum.
    Even if the tenant is legit, you should not be deprived of the right to do a proper screening, including the opportunity to meet the prospect so you can decide if you will be comfortable renting to him or her.

About the author:
As a Real Estate broker / investor in New York, John Nuzzolese has been involved with rentals and investment property since 1979. Besides owning and operating two real estate businesses, he is president and founder of The Landlord Protection Agency, Inc. , an organization specializing in helping landlords and property managers avoid the hurdles and pitfalls and expensive blunders common when dealing with tenants.

More information on The Landlord Protection Agency is available at www.theLPA.com

 

Traits to Look for in a Potential Tenant

1Finding a good tenant is essential, but it can also be tricky. It requires more than just putting an ad on the internet. To find a great tenant for your rental property, it pays to know what makes a good tenant.

So, we’ve created a list for you. These are 8 traits to look for in a potential tenant.

1. Openness Toward Background Checks It’s important for you as a landlord to know who you are renting to before you rent out your property. This is because you never know when a tenant is going to be reliable and worthwhile or seriously problematic.

A tenant background check is important for the following reasons:
• To find out if they have a criminal record • To choose the best tenants from your pool • To check their work history • To make sure that they will comply with your rules • To confirm your tenant’s rental history • To know which questions to ask during screening • To confirm their identity

2. Reasons for Moving Tenants move for various reasons. For example:
• To change their neighborhood • They had problems with neighbors • A job change/relocation • The need for more space • They had problems with their previous landlord

Contacting their previous landlord isn’t 100% reliable, as some might throw an array of unjust accusations. The only option is to ask them directly. Granted, the tenant may lie but some of the reasons are quite straightforward and oftentimes completely honest answers.

3. Personal Behavior You should call up tenant’s previous landlords to ask how they were personally. Good questions to ask them include:
• Did the previous tenant pay the rent and on time? • Did they do a reasonably good job of taking care of the rental property? • Was the person disruptive towards neighbors? • Was the unit clean and in good order when the tenant left? • Was the tenant evicted?

4. Ability to Pay Rent This is a no-brainer. The prospective tenant should be able to pay rent without struggling. To verify whether they can afford the price of the rent, you need to look at their proof of employment.

Look for a tenant who has good job prospects and a steady, reliable income. A good rule of thumb is that the price of rent shouldn’t exceed 30% of the tenant’s income.

Some red flags to look out for include a person who has long periods of unemployment or if the person changes jobs often.

5. Cleanliness A good tenant maintains cleanliness. It’s every landlord’s dream to get a tenant who will take good care of your property. You obviously wouldn’t want a person who is going to let trash pile up on the patio or leave food remnants building up in the microwave.

You can get a better idea of the way they would maintain your property if you get a glimpse of their car or if they allow you to meet them at their current residence. You could also include a cleaning clause in your lease as well.

6. Subletting When you are a landlord, it’s important to protect yourself against as many potential risks as possible. This is the same reason why you have to do a proper tenant screening before renting out your property in the first place.

But should you allow a tenant to sublet? Subletting happens when an existing tenant lets all or part of their home to someone else.

Allowing subletting is risky. Some tenants want to sublet as a way to earn extra cash or to avoid paying rent on a vacant apartment. Also, there’s no guarantee that they would pay as much attention to the tenant selection as you did.

It would be counterintuitive to be okay with your tenant getting a couple of tenants of their own.

7. Roommates It’s important to know how many people are going to be living with your renter. The tenant might be planning to move in with their significant other or even their entire family.

Should you allow roommates, here’s how to do it smoothly while protecting your investment:
• Consider updating your occupancy limit • Be prepared to consider a unit switch • Be cautious about creating new lease terms • Require potential roommates to be screened as tenants

8. Plans for residence Your final layer of screening is a simple practicality test. If they have a job nearby, verify that your house is not an impractical distance away. If they have a family, check that there is a room for everyone in the home. If they have a pet, confirm that they are willing to conform to the pet clause in your lease agreement.

Generally, tenants will have an excellent plan for residence, but it never hurts to check.

If your prospective tenant possesses most of these traits, then they are a great candidate for a long-term renter. They will most likely keep the home in good condition, and that they will be responsible and well-behaved.

Source: realtybiznews.com

FORBES: Eight Reasons You Shouldn’t Manage Your Own Investment Properties

1Purchasing an investment property is an exciting business venture. If your building is in good shape and you find the right tenants, you stand to earn a lot of money from your rental units.

At first it may seem like a good idea to manage your own property and retain full control over costs, tenants and income. However, self-management can often be a headache: When something breaks down or your tenants are late with rent, you bear the sole responsibility to address it.

Hiring a third-party property management company can be worth every penny, especially if you’re looking to grow your investment business over time. Members of Forbes Real Estate Council shared eight common scenarios in which it makes more sense to outsource your property management tasks.

1. If Real Estate Investing Is Your Side Hustle

If an investor has a full-time job and they are investing as a side hustle, I would suggest hiring a property manager from day one. If the investor is fully focused on real estate investing, it makes sense to bring in a third party once they reach 10 units. At that point, their time is better used looking at more deals versus collecting rents or dealing with tenant maintenance issues. – Ali Jamal, Stablegold Hospitality

2. If You Lack Housing Expertise

Investors should not manage their own properties in situations where they are not familiar with the type of housing being managed. For example, with affordable housing, there is much compliance involved and making a mistake can result in fines. In that scenario, property management is best left to third-party companies that specialize in affordable housing. – Nathaniel Kunes, AppFolio Inc.

3. If You Want To Maximize Your Time As A Passive Investor

Your time is valuable, and technology is opening up many outsourcing options by connecting investors with qualified professionals in property management and skilled labor. Take advantage of every opportunity to maximize yourtime. In fact, investment platforms are allowing people to diversify across several properties without ever picking up a hammer. – Nav Athwal, RealtyShares

4. If You Need To Fill In Skill Or Resource Gaps

Each investor’s access to resources and prior skills and knowledge needs to be reviewed before providing this type of recommendation. It needs to be personalized. An investor who is a handyman likely doesn’t need to pay someone to make repairs. Finding the right tenant can make or break success, so evaluating candidates may be the best area to have help, particularly at first. – Michelle Ames, HorsePower Team Texas/Independent Realty

5. If You Don’t Have Time To Learn The Laws And Run It As A Business

Outsourcing will avoid legal liabilities from Fair Housing and Fair Credit Reporting Acts, state landlord-tenant laws and local regulations. Property managers will have resources that can perform services for less. You’ll also be less likely to lose income from tenants who don’t pay their rent or rents that end up being below market. – Alex Hemani, ALNA Companies

6. If Your Properties Are Located In Different Markets

Using third-party management is usually advisable when properties are located in different markets, as well as when owners don’t have the time or skills required to manage the property effectively. While it is tempting to save the 7-8% management fee typically paid to property managers, there are a host of tasks they take care of to keep the property occupied, cash-flowing and maintained. – Gary Beasley, Roofstock

7. If You’re New To Being A Landlord

You should hire a third-party manager if you’re new to being a landlord and don’t completely understand local ordinances and leasing practices, or don’t have all the contacts needed for repairs and maintenance items. A good third-party manager will know all of the above and you will learn them over time. – Lee Kiser, Kiser Group

8. If You Want To Scale Your Investment Business

If you want a large income property portfolio, don’t self-manage beyond one to two years. After that time, you will be better able to understand “a manager’s perspective.” Your highest and best use isn’t faucet repair or replacing bathrooms. It’s researching geographic markets and establishing competent teams. If you self-manage, ask yourself better questions like, “How scalable is this?” – Keith Weinhold, Get Rich Education

Source: forbes.com

How Tenant Screening Changed In 2017

1One of the most important things that property owners and landlords can do to prevent problems with renters is to conduct a thorough tenant screening. The best tenant screening reports cover areas like criminal record, eviction history and credit score. Without it, landlords increase their risk of dealing with tenants that have a history of unpaid rent, costly damages and evictions.

However, there were two major changes in 2017 that affected the way that landlords get information from tenant screening efforts.

National Consumer Assistance Plan

The National Consumer Assistance Plan (NCAP) is a joint venture between the three credit bureaus, Equifax, Experian and Transunion. The plan stems from a settlement in 2015 between more than 30 state attorneys general and the three major credit bureaus.

The goal of NCAP is to boost the accuracy of the information on the credit report, among other things. One of the ways they plan to do this is by decreasing the reporting of such public records such as tax liens, parking tickets and civil judgments. So how does this affect landlords?

The new reporting changes are especially critical for landlords because evictions are civil judgments and as of July 1, 2017, they disappeared from credit reports of any prospective tenants. If tenant screening companies provide landlords with just a credit report as part of an applicant’s background check, the landlord will have no insight into that person’s rental history.

Landlords need to check with their tenant screening service to ensure that they are now using an alternative source to discover any eviction judgments on an applicant. There are several national companies that do provide information on forcible detainer and unlawful detainer judgements for tenant screening companies. It’s now the only way that landlords can get information on prior evictions.

Because of the extra cost involved in using a national eviction search, many tenant screening companies are increasing their fees and passing the cost on to their clients. Landlords may have to charge more for their application fees (if allowable in their state) to cover their own costs.

Any landlord that wants a thorough background check on an applicant must ensure that the tenant screening service they now use includes this separate eviction search.

Equifax Breach

One of the country’s largest credit reporting companies experienced a data breach that compromised information for more than 145 million customers. The company experienced unauthorized access to data from May through June and key identity information was accessed, including names, birthdays, social security numbers, driver’s license numbers and more.

Because of the massive potential for identity theft, many consumers placed a freeze on their credit report. With a freeze, potential creditors are unable to access someone’s report without the consumer removing it temporarily. This prevents anyone from opening a line of credit with that information, including identity thieves. However, it also prevents landlords from accessing the info they need to get a complete picture of their applicants.

Landlords need to be aware that identity theft and fraud will be on the rise as a result of the data breach, affecting innocent applicants. They should also know that because many people have put a freeze on their report, their tenant screening company may not be able to access anything without consent.

During the application process, landlords can make things go a little more smoothly with any applicants that have set up a freeze. Many tenants don’t think about unlocking their credit report for a background check on a rental home. Landlords can ask applicants or include a reminder on the application about lifting the freeze temporarily. If the applicant can’t or won’t lift the freeze in a timely manner, landlords may have to move to the next applicant.

Despite the freeze on a credit, landlords should never change their tenant screening practices. When looking for the best tenants, landlords need to get a good idea of what kind of renter an applicant will be. Proper tenant screening will always save landlords time, damages and money. However, in 2017, these two factors just made it a little more difficult for landlords and tenant screening companies to get the background information they need.

Source: realtybiznews.com