Evictions That Are Never Allowed

As a landlord or property manager, you most likely believe that you have a right to evict any tenant who has not paid their rent or who has damaged your property.

Think again. The Fair Housing Act and the Violence Against Women Act (VAWA) limit your ability to evict such wrongdoers.

According to the U.S. Department of Housing and Urban Development (HUD), “Landlords can often decide when it’s legitimate to try to evict someone. There are some situations, however, in which landlords do not have a legally acceptable reason to evict someone.”

Legal Reasons to Evict a Tenant

Before you know what you can’t do, it is helpful to know what you can do. Although landlord-tenant laws vary by state, there is generally some uniformity in certain areas.

As a landlord, you have the right to remove a tenant from the property for any of the following reasons:

• The tenant does not vacate the property once the lease expires.
• Your renters have caused damage to your property.
• The tenants stopped paying their rent or have otherwise violated the terms of their lease.
• You are selling the property.
• You are going to do extensive renovations to the property.
• You are denied access to the property.
• The tenant is subletting the unit when the lease or rental agreement forbids it.
• Criminal activity in the home or on the property.
• Breaking a rule in the lease.

“Just Cause” and “No Fault” Eviction

Retaliatory actions by landlords are illegal throughout the United States. This means landlords cannot increase rent, decrease services or attempt eviction in response to tenants exercising their legal rights, such as reporting housing code violations or participating in tenant organizations. 

As an example, California law restricts a landlord’s ability to terminate a residential lease, evict the tenant and retake possession of the property. When a tenant has lawfully occupied the residential property for 12 months or more, the landlord is prohibited from ending the tenancy without “just cause.”

In most California cases, “the landlord must first give the tenant written notice of the alleged violation. Then the landlord must allow the tenant three full days to correct the deficiency before terminating the lease. The landlord can proceed with repossession only if the tenant fails to correct it within the 3-day time limit.”

“Just cause” refers to situations where the tenant has failed or refused to comply with the lease or other tenant responsibilities imposed by law. For instance, HUD points out that evicting someone for failing to pay pet fees for their assistance animals is not a good cause for eviction under the Fair Housing Act.

“No fault” eviction is where the tenant has no control of the termination. No fault just cause includes the following circumstances:

• The owner is reclaiming the property as their personal residence.
• The owner is removing the property from the rental market.
• An order to vacate by a governmental authority having jurisdiction over the property.
• The owner intends to demolish or substantially renovate the premises within a short time.

In these no-fault situations, the tenant cannot stop the lease termination. However, the landlord is required to provide the tenant with relocation assistance. They must either pay the tenant a sum equal to one month of the rental price or waive the rent payment due in the final month of occupancy.

The Colorado House of Representatives recently passed HB24-1098, which would bar landlords in the state from evicting residential tenants or denying lease renewals without providing a cause. If a landlord carries out a no-cause eviction, this is considered the unlawful removal of a tenant and renters can use the landlord’s violation as a defense in eviction proceedings in court. HB24-1098 will move next to the Colorado Senate. 

Evictions That Are Never Allowed

According to HUD, landlords may not evict or threaten to evict someone based on the following grounds. Note that It does not matter that a landlord might have the right to evict a tenant for other reasons. If the eviction decision was based in part on one of these reasons, the landlord has violated the Fair Housing Act.

Landlords must comply with the Federal Fair Housing Act and additional state laws prohibiting discrimination against tenants based on the reasons listed below. It is illegal to evict or threaten to evict anyone for exercising their rights under the Fair Housing Act.

• Race
• Color
  • A landlord violates the law if they evict a Black tenant for unpaid rent, but not a White tenant who also has not paid their rent.
• Religion
• Sex (including sexual orientation or gender identity
• National origin (country of origin or ancestry)
  • Threatening to evict a tenant for not speaking English or for having an accent is typically national origin discrimination
• Disability
  • A physical or mental impairment that substantially limits an individual’s major life activity or bodily function, being regarded as having such an impairment, or having a record of such an impairment)
• Familial status
  • A landlord may not evict a family because a child joins the family through birth, adoption, a change in custody, because the tenant is pregnant or otherwise has plans to add a child to their household.
  • Landlords may not impose overly restrictive rules about what minors may or may not do in their housing and then try to evict the family for breaking those rules.

Even if someone is behind on their rent and subject to eviction, a landlord may not pick and choose which tenants to evict based on any protected characteristic. For instance, HUD points out that “if a landlord refuses to add a tenant’s domestic partner to the lease because the partner is in a protected class, this refusal and any related threat to evict is illegal.”

It doesn’t matter whether:

• The lease gives the landlord the right to determine who is in the household.
• The lease gives the landlord the right to evict for unauthorized occupants.
• There is some other reason for the refusal to add the partner allowed by the lease.

If the landlord acts for a discriminatory reason, it is not allowed. It may not be obvious that a landlord is acting because of a person’s protected characteristic, but there can be clues:

• Evicting someone because a building manager believes the tenant is LGBTQI+ is discrimination because of sex.
• Evicting a tenant because other tenants or community members have discriminatory preferences or have made discriminatory statements is illegal discrimination.

Retaliating against a tenant for refusing their landlord’s sexual advances is also a violation of the Fair Housing Act. The landlord may not use eviction as a threat to get sexual favors or sexually explicit photographs from the tenant. Such actions could expose a landlord to civil penalties as well as to criminal charges because it is illegal to evict or threaten to evict anyone who is exerting their rights under the Fair Housing Act.

HUD also reports that “Under the Violence Against Women Act (VAWA), a landlord may not evict or otherwise penalize any tenant for seeking out law enforcement or emergency assistance on their own behalf or on behalf of another person in need of assistance. These calls for help can be for any emergency, such as needing medical assistance and do not have to involve a domestic violence or sexual assault incident.”

Illegal Ways for Landlords to Avoid Eviction

In order to avoid the aggravation and expense of going through the eviction process, some owners will use self-help eviction methods by attempting to retake possession of their rental property through other means.

The following are examples of illegal self-help evictions that could lead to your tenant rightfully suing you and damaging your business:

• Changing the locks while the tenant still lives in the property.
• Removing the tenant’s property.
• Failing to pay included utilities, such as water, and cutting them off.
• Threats of any kind.
• Direct orders to leave.

In addition to self-help evictions being illegal, landlords can be ordered to pay the tenant actual damages, court costs and attorney’s fees. In addition, statutes in many states, such as Virginia, also allow for the tenant to remain in the home.

Eviction Laws for Mobile Homes

Eviction laws do not only cover traditional multifamily and single-family rental homes, they also apply to manufactured and mobile home parks. If someone rents both the space and the mobile home, they are treated as if they were an apartment tenant.

However, the apartment tenant can be evicted without good cause. If the person is a mobile homeowner renting a space in a mobile home park, the landlord can evict them from the park only for good cause. This is true whether the rental agreement is month-to-month or a fixed term. The landlord also may not shut off the utilities to force the tenant to move. Only a sheriff with a court order can physically evict a tenant.

A landlord would have good cause to evict a tenant from their mobile home park for the following reasons:

1. A landlord can start an eviction case by giving a 30-day written notice if the rent payment was late three times or more during the past 12 months. 
2. The landlord can terminate the lease if the tenant fails to pay a late fee for past due rental payments. The landlord may only charge a late fee if it is agreed upon in the lease. 
3. A landlord can start an eviction case if the tenant has not lived up to a condition of their rental agreement, such as not maintaining their space. They can also be evicted for breaking any other law or ordinance of the mobile home park.
4. A landlord can start an eviction case if a tenant was convicted of being a predatory sex offender.
5. The landlord can start an eviction case if they believe someone in the tenant’s household, including a pet, has seriously injured someone, threatened someone with serious harm, done substantial damage to someone else’s belongings or committed an “extremely outrageous act” in or near the mobile home park. 
6. A manufactured dwelling cannot be forced out of a facility just because of its age, style or size, but a tenant whose home is deteriorated or in disrepair can be given a notice of termination that gives the tenant at least 60 days to repair the home to meet reasonable park standards. 

Conclusion

While it’s not always obvious that a tenant is going to cause their landlord trouble, it is possible to minimize the risk by carefully screening an applicant before you rent to them. An AAOA tenant background check and tenant screening will alert you to any suspicious or irresponsible activity on the part of the prospective tenant over the last seven years. You can clearly see if they have any criminal judgments against them and how responsibly they have been paying their bills or if they have declared bankruptcy during that time.

As laws become more tenant-friendly nationwide, be very careful when handing over the keys for your investment property to a new renter. And remember, AAOA is ready 24/7 to help you.

Source:

https://www.american-apartment-owners-association.org/property-management/evictions-that-are-never-allowed/?utm_medium=email&utm_source=rasa_io&utm_campaign=newsletter

How to Find the Best Property Manager for Your Rentals

Chris Lee / October 23, 2023

Owning rental properties can be a rewarding investment, but it also comes with a host of responsibilities. Many landlords often handle these responsibilities independently and we provide information on how to do so on our website. However, there are situations where they need to hire the best property manager for more efficient and hassle-free property management.

The right property manager can make your life as a landlord much easier and your investment more profitable. A skilled property manager is well-versed in local rental markets, enabling them to set optimal rent rates, attract high-quality tenants, and reduce vacancy periods. They also provide a buffer between landlords and tenants, handling tenant issues and conflict resolution professionally.

In this article, we’ll guide you through the process of finding the best property manager for your rentals.

How Do I Find the Best Property Manager for My Rental?

Choosing the right property manager is a decision that can significantly benefit landlords in various ways. It brings peace of mind, as a competent property manager can efficiently handle the day-to-day responsibilities of property maintenance, tenant communication, and financial management. This allows landlords to enjoy a more passive income stream without the stress of constant involvement.

Here are a few steps to help you find the best property manager for your rental:

1. Find Recommendations

Start by seeking recommendations from fellow landlords, real estate agents, or online communities.

Local landlords and real estate agents possess intimate knowledge of your specific real estate market. They can direct you to property managers who understand the nuances of your area, such as rental demand, pricing trends, and legal regulations. This local expertise can be a critical factor in the success of your rental property.

Word-of-mouth referrals can be a valuable resource, as they come from firsthand experiences. For example, your neighbor might recommend a local property manager who’s known for exceptional service.

2. Evaluate What They Bring to the Table

When you’ve gathered some names, evaluate potential property managers based on their procedures, responsiveness, and communication skills.

Look for someone who not only keeps you in the loop but also maintains good relationships with tenants, applicants, and vendors. A property manager with a reputation for handling tenant issues effectively can save you headaches down the line.

3. Interview Candidates

Schedule interviews with your top candidates to get a sense of their approach and expertise. Ask about their tenant screening process, maintenance procedures, and financial reporting.

Here are some key questions to consider:

• How do you screen prospective tenants to ensure they are reliable and responsible?
• What criteria do you use to approve or reject tenant applications?
• Can you provide an example of a challenging tenant situation you’ve successfully resolved?
• How do you handle maintenance requests and emergency repairs?
• What is your process for regular property inspections and maintenance checks?
• Can you share an example of how you’ve efficiently managed a maintenance issue in the past?
• How do you keep track of financial transactions related to the property, including rent collection, expenses, and property-related income?
• What kind of financial reports do you provide to landlords, and how frequently?
• How long have you been in the property management business, and what types of properties have you managed?
• How do you handle tenant inquiries, complaints, and conflicts?
• Have you ever had to deal with a difficult tenant, and how did you resolve the situation?
• How often do you conduct property inspections, and what aspects do you assess during these inspections?

Additionally, visit some properties they currently manage to assess their upkeep and tenant satisfaction.

4. Communicate Your Expectations

Once you’ve conducted interviews and are closer to making a decision, it’s essential to review the property management agreement thoroughly. This document outlines the terms, responsibilities, and expectations between you as the landlord and the property manager.

Take this opportunity to clearly communicate your specific requirements and expectations. Discuss your rental property’s unique needs, whether it’s related to property maintenance, tenant selection, or financial reporting. Also, express your preferred communication channels, so you can stay informed and in control of your investment.

A good property manager should not only be receptive to your expectations but also willing to adapt to your preferences. An open and transparent discussion at this stage can help ensure a harmonious and productive working relationship that aligns with your objectives as a landlord.

5. Consider the Pricing

While cost is a crucial factor, it shouldn’t be the sole deciding factor. Assess the fee structure and compare it with the services offered. Sometimes, a slightly higher fee is justified if the property manager offers a comprehensive package that saves you time and effort.

Comprehensive services often include tenant screening, rent collection, property maintenance, and even legal assistance. While these packages might come at a higher price point, they can streamline your property management tasks and protect your investment in the long run.

Opting for the cheapest option without considering the scope of services can lead to issues down the road. It’s essential to evaluate what’s included in the fee structure and ensure it aligns with your property management needs.

Finding the Best Property Manager: Landlord Gurus Takeaway

Finding the best property manager for your rentals requires careful consideration and research. Don’t rush the process; the right property manager can significantly impact the success of your real estate investment.

https://landlordgurus.com/how-to-find-the-best-property-manager-for-your-rentals

Don’t have a property manager? 12 Times a Landlord Can Sue a Tenant

Legal Reasons to Go to Court.

Conflicts between landlords and tenants cannot always be easily worked out. Sometimes, the only way to resolve the issue is in court. There are many times a landlord has a legal right to sue their tenant. Here are twelve reasons a landlord can bring a tenant to court. 

Why Would a Landlord Sue a Tenant

Filing a lawsuit against anyone can be a stressful experience, but it does have certain advantages.

• Tenant Could Settle to Avoid Court: The first advantage, and the one many people hope for when filing a lawsuit, is that the case will never actually go to court. The hope is that, after receiving the court summons, the tenant will want to avoid the hassle of going to court and potentially losing anyway. They would rather pay the amount the landlord is requesting or compromise on paying a lesser amount that the landlord agrees to accept. This would also keep the tenant’s name off the court records.
• Recover Money Owed: Sometimes taking a tenant to court is the only way to receive the money you are owed from the tenant. If a tenant does not believe they are responsible for paying for damages at the property, it can be very difficult to get them to pay the money unless they are legally obligated to do so.
• Receive Additional Damages: In court, you can sue the tenant for the actual money you are owed, but also for additional damages. For example, if a tenant breaks their lease and moves out early, you can sue them for the rent that is due for the remainder of the lease and potentially the costs associated with finding a new tenant to fill the vacancy.
• Clear Your Name: Suing your tenant and winning will provide legal proof that you were in the right.
• The Case Will Be on Record: You will have a record that you won a court case against your tenant. This can be beneficial if the tenant ever tries to sue you at some point in the future. A victory will also show that you are a landlord who follows the law and knows the proper procedures and practices for running a rental property.

Risks of Taking a Tenant to Court

There are advantages to suing your tenant, but a landlord must also understand the risks involved. There is no guarantee of victory and you could trigger a counterclaim from your tenant.

• You Could Lose: Filing a lawsuit is not a guarantee that you will win the lawsuit. You could spend your time, energy and money going to court and still lose.
• Could Win, But Never See the Money: You could be awarded the money owed to you by the court, but you may never actually collect this money. Although the tenant will now have a judgment against them, you could be trying to chase the tenant down for years to collect the money you are owed.
• Cost: Whether you win or lose, there will still be costs involved with going to court. You will have to pay a court fee just to file your case. This fee varies widely by jurisdiction. Depending on the nature of your case, you may also have to hire an attorney to represent you, which can get very expensive very quickly.
• Tenant Could Countersue: By initiating a lawsuit, you could anger your tenant, leading them to countersue. You could wind up losing the lawsuit and then have to pay even more money to the tenant in damages and attorney’s fees.

Is Suing the Only Option?

Instead of filing a lawsuit, a landlord can send a demand letter to the tenant in the hopes that it will be enough to get the tenant to pay what they owe. This letter may be intimidating enough to avoid a court battle. A landlord can also decide to do nothing and chalk up any losses as a learning experience.

12 Reasons You Can Sue Your Tenant

There are endless reasons that you can take a tenant to court. Some of the more common reasons a landlord can sue a tenant include:

1. Unpaid Rent: If a tenant has not paid their monthly rent, you can first send them a notice to pay rent or quit. If that does not work, you can file to evict the tenant. At the same time, you can also sue them for any rent they owe.
2. Unpaid Utility Bills: If there are any outstanding utility bills at the rental property in the tenant’s name, you can sue the tenant to recover this money. Often, you can deduct this amount from the tenant’s security deposit. If the security deposit is not enough to cover the expense, you can sue in small claims court to recover the rest.
3. Damage to the Property: A landlord can sue a tenant if the tenant has caused damage to the property. Again, you can start by deducting the amount of damage from the security deposit. If the security deposit does not cover the amount of damage done, you can take your tenant to court to hopefully get the rest of the money you are owed.
4. Unapproved Alterations to the Unit: If the tenant has made changes to the unit without approval, you can sue the tenant to recover the money it will take to restore the unit to its original condition.
5. Tenant Owes More Than Security Deposit Amount: If you have taken the maximum amount of deductions from the tenant’s security deposit, but they still owe more, you can try to recover the rest in small claims court.
6. Countersue for Security Deposit: A tenant may sue if they believe you wrongly withheld their security deposit. In this case, you can countersue to show you had every legal right to withhold or make deductions from their deposit.
7. To Recover Lost Rent From an Illegal Move Out: If the tenant moved out before their lease was actually up, you can take them to court to recover the rent they owed for the remaining time on their lease.
8. To Recover Costs to Find a New Tenant After Illegal Move Out: Some states will also allow you to pursue a tenant who has moved out early for the additional expenses you may incur trying to find a new tenant for the unit. This could include things like marketing costs and utilities.
9. Expenses to Dispose of Tenant’s Abandoned Property: You can sue a tenant for the cost to dispose of or to store their abandoned property.
10. Tenant Used the Property for Illegal Dealings: If a tenant used the property for some illegal means, you can sue them to recover damages.
11. Illegally Have a Pet: If you have a no pets policy and you find out the tenant has an animal, you can sue them for damages and for any additional damage the pet has caused at the property.
12. Other Breaches to the Lease Agreement: If the tenant has broken any other clause of the lease and it has caused you monetary, emotional or physical harm, taking the tenant to court could be the way to collect the money owed to you.

Source: liveaboutdotcom

Disclaimer: Nothing contained on this website constitutes tax, legal, insurance or investment advice, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument. AAOA recommends you consult with a financial advisor, tax specialist, attorney or other specialist who is able to properly advise you.

https://www.american-apartment-owners-association.org/property-management/12-times-landlord-can-sue-tenant/?utm_medium=email&utm_source=rasa_io&utm_campaign=newsletter

7 Predictions For The 2024 Rental Market

By John Triplett  -December 12, 2023

Here are 7 predictions for where the rental market is headed in 2024 from the economists at Apartment List as the once red-hot rental market of previous years has now cooled.

Here is a key topline summary for 2024:

• 2024 will be the strongest year for new apartment construction in decades, giving renters more options and better opportunities to negotiate price and lease terms.
• “We expect that year-over-year rent growth will crawl out of negative territory next year, but that it won’t rise above the low single-digits.”
• Even though mortgage rates are expected to ease modestly, home prices will remain prohibitively high and continue to create more long-term renters.

No. 1 – 2024 will bring the most new apartments in decades

Construction data from the Census Bureau suggests that multifamily supply growth should remain strong through 2024. The number of new multifamily apartment units under construction hit one million for the first time ever in 2023, and completions are expected to peak in 2024. With so many units in the construction pipeline, 2024 should be the strongest year for new multifamily supply since the 1980s.

No. 2 – Low single-digit rent growth in 2024

2023 is set to have the second slowest rent growth of any year in the history of our estimates (going back to 2017), coming ahead of only 2020. Looking ahead to 2024, “we expect demand to bounce back slightly, but remain on the soft side. The labor market remains fairly strong and there is likely some pent-up demand for new household formation. However, affordability continues to be a major concern and sentiment data shows that Americans still lack confidence in the economy. Even in the most bullish scenario, it’s unlikely that demand will be strong enough to outstrip all of the new supply that we know is coming, likely resulting in our vacancy index rising modestly from its current level in 2024. We expect that rent growth will rise out of negative territory early next year, but that it won’t get above the low single digits in 2024.”

No. 3- The changing rent vs. buy math will create more long-term renters

Many families are remaining renters longer than they may have in the past. Even those who can afford to buy in today’s market may find that renting now actually makes more financial sense. Although most Americans still aspire to own homes, more are now finding themselves renting later in life, and that trend is likely to continue. Consensus expectations are that mortgage rates will ease modestly next year, but likely not enough to significantly alter the prevailing dynamics of the for-sale market. As paths to homeownership fade for many, renting will increasingly be seen as the more practical housing option.

No. 4- Hybrid work will cement itself as the new norm for office jobs

In 2023, the remote work narrative focused on return-to-office plans, but this focus obscures the fact the pendulum will never swing fully back to the pre-pandemic norm. According to the latest estimates, 28 percent of all work days are still from home, and that figure appears to be stabilizing at that level. 42 percent of American workers currently have some form of remote work flexibility, and hybrid arrangements are much more common than fully remote ones. The data shows that hybrid work is here to stay, driving demand for rentals that provide spaces and amenities that blend work and home life for today’s flexible workforce.

No. 5- Sun Belt markets will see more renters, but not necessarily higher rents

The nation’s fastest population growth in recent years has been taking place throughout the Sun Belt. But in many cases, Sun Belt markets have also been among the most accommodating of growth, allowing for new housing development to meet the growing demand. The key takeaway: fast-growing Sun Belt markets will continue to be renter magnets, but rent growth should be kept in check thanks to lots multifamily development.

No. 6- As the economy takes center stage in the presidential election, candidates will need to speak to housing concerns

As we head into a presidential election year, the question of whether the economy is good or bad has proven to be surprisingly complicated. Most of the key indicators of economic health are looking quite strong, but economic sentiment surveys show that confidence and satisfaction in the economy remain weak. It’s likely that at least some of this disconnect is being driven by waning housing affordability. As the election cycle continues to ramp up, candidates on both sides of the aisle will need to articulate housing plans and speak to what has become one of the most pressing concerns of the American electorate. 2024 could be the year where housing rises to the forefront of the political discourse.

No. 7- More renters will use AI in their searches

“We expect 2024 to bring a new wave of AI-powered tools specifically for renters. It will soon become commonplace for renters to use AI in their apartment searches to search, compare, and coordinate actions. It will take time for these advancements to change macro market dynamics, but the next high-demand rental market cycle may look quite different with new power in renter’s pockets. And as adoption of AI-enabled rental search tools accelerates into 2024, both renters and property managers can seize opportunities from this new technological frontier.”

Conclusion

“2024 is certain to bring twists and turns no model can predict, as the new year always does. But we hope that by forewarning of what’s foreseeable—from new supply waves to persistent homeownership headwinds bolstering rental demand—we can help you prepare for what is ahead.”

About the Apartment List research team:

The Apartment List Research Team is a small group of economists and analysts dedicated to understanding the rental market as it evolves rapidly. “On our blog we publish original research reports and offer robust data products for public use.”

7 Predictions For The 2024 Rental Market

Q&A: Why Do Property Managers Suck?

QUESTION:

“Not meant to offend the property managers out there – I know the good ones exist. However, a common theme I’ve seen is how hard it is to find a good, reliable property manager that makes the money you spend on them worth it. So please share your stories of what has made you frustrated with your property manager (or what you’re looking for in a good one!)”

 

ANSWER:

Good morning Jen  – It’s disappointing to see your troubles and I get exactly where you are coming from.  Property Management has a low barrier of entry and in some states, zero licensing.  It makes good property managers stand out even more.

I would also ask – from a previous post of mine – Are you a “C” Class Landlord?

 

In the property management industry managing single family and multi-family homes, we have classifications for Landlords that are never put on paper and probably never talked about.

This has probably never been published before, so here goes something new… If you are a Landlord, you may want to read this and see what classification YOU would fall into. If the description fits you – wear it.

If you are subjective about your dealings with your Property Manager, it could help foster a better relationship between you and your property manager getting you better service.

Class “A” Landlord:

1. Hires a Property Manager and is glad to pay their fees understanding that they provide a valuable service assisting them in growing an asset.
2. Appreciates their systems, procedures, tools, and level of separation they provide from their tenants. They understand their job is often difficult being the punching bag for both sides of a management transaction that can last for years.
3. Allows them the flexibility to make tough decisions in a pinch on their behalf. (Spending $505 dollars for an AC repair in July when their spending limit is $500)
4. Understands that the Property Manager is not responsible for everything that goes on with the home – to include the weather and the marketplace.
5. Is easy to get in touch with and responds well to phone calls, emails, and even texts.
6. Realizes that by having a property manager and paying $20/hour (example) – it allows them to find bigger deals and more investments making $2,000/hour for their time.
7. These folks are full time, possibly part-time investors that have enough capital to back up their investments and truly understand that what they put out in management fees is far outweighed by appreciation and tax breaks. Simple depreciation is a monster and is often overlooked by a lesser class landlord.

Class “B” Landlord:

1. Reluctantly hires a Property Manager after some minor effort to shop for the cheapest property manager they can find.
2. Second guesses all repair items and laments about not having any money to cover large repairs.
3. Often classified as “Reluctant Landlords” for never planning on having a rental home, but being thrust into the realm of owning one by an unexpected relocation.
4. Wants two bids for every job in the effort to save $20.00 – not caring if the tenant goes without AC or hot water for several days.
5. Does not understand basic accounting and needs a constant explanation for what the income/expense statement means.
6. Is difficult to reach often not responding the same day for urgent matters.
7. These folks are often reluctant landlords, first-time landlords, and intermediate landlords away for a year or two then moving back into their home.

Class “C” Landlord:

1. Grudgingly hires a Property Manager because their CPA told them to do so.
2. Shops high and low for the cheapest property manager in town – then asks them for a discount because they are an “investor”….. with their two homes.
3. Is abusive to the property management staff requiring constant communication and taking the attitude “Don’t you know who I am?”.
4. Introduces themselves to the tenant behind the Property Managers back – telling the tenant they can call them anytime if the Property Manager does not immediately answer their every need. (This creates a Mommy / Daddy issue. The PM says “NO – You can’t pay your rent late this month”….then the tenant runs to the Landlord telling them the PM said “We are evicting you AND taking away your birthday”)
5. Wants three bids for EVERY repair – no matter the inconvenience to the tenant – no matter the headache to the property manager…all with the effort to save $5.00. (Sounds dramatic – but this is true!!! – seen it many times before!)
6. Blames the Property Manager for wind, hail, storms, tornadoes, winter storms, freezing pipes, foundation movement, dead grass, etc… Essentially, nothing is ever beyond anyone’s control – it’s always the PM’s fault. This is a deeper reflection of that type of person never taking accountability for anything.
7. Wants to sue everybody for….everything. Tenant did not water the grass last week, can we hire an attorney and sue them? You did not answer the phone on a Saturday if you don’t call me back and I will seek vengeance on you with my attorney!
8. Leaves negative reviews online about a property manager. Hides behind Google and Yelp to feel better about their cyberbullying. If the landlord truly had a real issue – almost all property management companies are governed by several entities to include the state. Threatening to leave a negative review if you don’t get your way is blackmail and extortion. The same tactic the mafia has used for years….no different. If the Landlord has a real issue with the property manager – point 7 above may be needed. Leaving negative reviews on public forums is not productive for anyone.
9. Is impossible to reach via phone/email. Then they respond at 10:00PM on a Saturday and is upset no one is available to speak with them at the time they finally call back.
10. Will not reduce asking price in rent. If a home is vacant – with good marketing photos (and video) – and is being advertised fully…..here is a hint: IT’S THE ASKING PRICE! There are two things that rent homes – Price and Condition….and Price can make up for everything. The Landlord not willing to reduce their asking price at any cost is a flat out moron. If you want to do the math – assume your property rents for $1,000 a month. But, you aren’t getting it. What do you lose every month that the home is not rented? That’s right – $1,000. What do you lose every month if the home rents for $950? Well done – $50 / month or $600 a year. Which would you choose?
11. Wants to do their own repairs. We have seen time and time again owners taking 6 months to do their own make-ready repairs spending several thousand dollars MORE to do it and losing 4-5 months in possible rent. I have seen the total swing to be $10,000 with several investors….all one can do is shake their heads at them.
12. These folks are often first-time investors, overly dramatic reluctant landlords, emotionally attached to their homes and in often cases have an “I’m smarter and better than anyone else in the entire universe and I can do it all” attitude.

Ask yourself – which type of Landlord are you?

 

Source: Bigger Pockets.com

10 Red Flag Questions from Tenants

After a while in the landlord business, showing rental properties to many tenants, you tend to hear some of the same questions and statements again and again. The screening process is alive from the moment you first speak with your new prospects until the leases are signed and the money is paid, so you must keep your eyes and ears open for clues and telltale signs of whether your prospect is the right tenant for your rental. Some of these questions can alert you if the tenant may be targeting you for a possible lawsuit concerning certain legal or housing issues.

10 Red Flag Questions or Statements that Should Worry You when Screening Tenants

1. 

   “We can have my wife sign the lease. Her credit is OK.”

2. “Why do you need our credit reports? That doesn’t tell you what good people we are.”
3. “We’re moving because our landlord is a jerk.”
4. “You won’t need a security deposit with us. We’ll take good care of your home.”
5. “I’m an attorney and more than qualified to rent your house. By the way, I found 3 illegal questions in your rental application.”
6. “Wait till you see the place when we’re done with it. You won’t recognize it.”
7. “What is your policy concerning drugs?”
8. “Are utilities included? I had a little dispute with the electric company.”
9. “Do you declare your rental income on your taxes?”
10. “Would you mind giving me the key so we can just put a few boxes in there today? I’ll have the money next week and we can sign the lease then.”

There are lots of “red flags” to watch for. What kind of “red flags” have you picked up in your landlord travels?

Source: The Landlord Protection Agency, Inc.

5 Habits You Didn’t Know Were Essential for Landlording

There’s no such thing as landlord school.

Most landlords just do a little reading online and dive right in. Which is fine – but it also means many new landlords are ill-prepared for the work of being a successful landlord.

Far too many landlords fail to bring a level of professionalism to their landlording side gigs. Sure, this can lead to some irked tenants, but the person who suffers the most is the landlord — in the form of shoddy returns.

My partner and I teach a property management course to mom-and-pop landlords. Here, we again and again return to a few simple themes. Most of these themes revolve around prevention, discipline, and staying several steps ahead of the irregular-but-expensive events that ruin returns.

Here are five habits that landlords need to develop if they want maximum profits and minimum headaches!

Related: How to Be a Landlord: Top 12 Tips for Success

1. The Unflinching Enforcer Mindset

A few months back I analyzed whether you should keep your home as a rental or sell it when you move. The first thing I talked about? Whether you have the disposition and discipline needed to be a landlord.

Tenants will push against your boundaries. Your job as a landlord is to firmly and professionally defend those boundaries.

That means enforcing your lease agreement — to the letter.

Rent doesn’t come in on the first? Send an unofficial late-rent reminder. Rent doesn’t come in before the legally-mandated grace period ends? Send an official eviction-warning notice.

They still don’t pay after the required waiting period? File in court for eviction.

You’ll get sob stories, often with literal sobbing. Many people bend and give their tenants leeway — and then they give some more leeway.

If you do this, you train your tenants to believe that the rent is not their most urgent bill. So why would they ever pay it on time when they have other bills they need to pay in which excuses are not an option?

Enforce your lease agreement and your tenants will know that they can’t get away with whatever they want. They’ll know the rent is their highest priority because you will enforce the late fee and evictions.

If you can’t do that, you will lose all credibility with your tenants. You’re better off investing your money in a REIT.

2. The Discipline to do Recurring, Scheduled Work (Even When it Doesn’t “Feel” Necessary)

Landlords have monthly, semi-annual, and annual work they should be doing.

As we discussed above, every month you need to stay on top of your tenants about rent. Set reminders on your calendar if need be. Every six months, you need to inspect your rental units. Semi-annual inspections should be written right into your lease agreement.

It doesn’t feel urgent. It’s not a frantic midnight phone call about a burst pipe. So, most landlords don’t do it.

But again, it comes down to setting expectations with your tenants. Send a loud, clear message that you care about the property, you care about the lease terms, and (if you do it right) you care about the tenants.

Check that they don’t have unauthorized people or pets living there. Make sure they’re keeping the property clean. Confirm that they’ve changed the air filters.

And use that face time to build more of a relationship with your tenants: Ask about their jobs, their kids, their lives.

Then, every year, you need to raise the rent. Many landlords wring their hands and fret about it, but the alternative is allowing rents to fall below market value — then hitting your tenants with a too-drastic rent hike all at once.

Related: I Asked Landlords for Their Best Tips: Here Are 6 Recurring Secrets to Success

3. Budget Like a Business (Because You Are One)

As a landlord, you’re a small business owner, whether you think of yourself that way or not.

The expenses involved in owning a rental property are largely hidden, because they’re irregular (but big when they happen). Expenses like turnovers, repairs, vacancies.

Here’s what rental property cash flow looks like visually – smooth periods, interrupted by huge spikes in expenses.

What does that all mean for you as a landlord? It means you don’t want to be that chump standing there with his jaw hanging open asking: “How am I supposed to pay for this $5,000 roof bill?!”

Here’s how: by setting aside money every month for these potential expenses. In a word, by budgeting.

And while we’re at it,if you ever want to retire with your rental income, budget your personal finances too. What’s the point of all the hard work building (and managing) your rental portfolio if you’re just going to turn around and spend it all on new shoes and dinners out?

If you want to get ahead, both as a landlord and as a person, get comfortable (and disciplined!) with your budgeting.

4. Think Long-Term to Vanquish Vacancies

Turnovers are where most of the work and costs involved in being a landlord lie.

You’ll have to repaint the unit. Maybe re-carpet it. You’ll have to go through and fix all the little things that the outgoing tenants either messed up or just lived with. Then there’s the lost rent, even as you continue carrying the costs of owning the property.

In other words, you have to spend money that you wouldn’t have had to if the tenants had stayed.

Then there’s the stress and headaches and work of advertising for new tenants, coordinating with contractors, screening tenants, signing a lease agreement, doing move-in and move-out inspections, etc. It’s labor. If you have a property manager, they’ll charge you dearly for that labor.

Speaking of tenant screening, your goal is not fill the unit as quickly as possible with an acceptable tenant. Shift your thinking to the long term, and instead make it a priority to fill the unit with a high-ROI, low-maintenance, long-term tenant.

You want someone who will be low-impact and treat your property with kid gloves. Someone who will pay the rent on time every month so you don’t have to chase them. Someone who will stick around for the long haul so you don’t have to worry about all the costs and headaches involved in a turnover.

5. The Meticulous Mindset: Records, Documentation & Attention to Detail

I’m just going to say it: If you’re not the anal-retentive type, hire someone to manage your rentals who is.

You need to be exacting in your record keeping, your documentation, and your attention to detail. For example, did you walk through the unit before your renters moved in to document the condition with them? Did you both sign the condition statement? Did you take photos with timestamps of every room from every angle?

Then what did you do with the photos and documentation? Is it stored securely on your computer or in your file folder where you can access it at a moment’s notice?

I’ll stop beating this horse; you get the idea. Active landlording is not a good fit for the laid-back and leisurely. There’s nothing wrong with hiring a property manager if you don’t have this meticulous personality type – the important thing is the self-awareness to acknowledge the bad fit and outsource your property management.

You’re in Business — Be Professional

Effective landlords have effective habits, that revolve around thinking long-term and embracing minor headaches today to avoid massive headaches tomorrow.

Keep a friendly but professional distance from your tenants; they’re your clients. Set a budget for expenses like you’re a professional, because you are. Set recurring reminders on your professional calendar, and then follow through actually execute them!

Catching a theme here? The landlords who succeed are the ones who bring professionalism to their rental management.

And if you can’t be professional, hire a professional.

Source: Bigger Pockets

5 Things Successful Landlords Do That Help Them Sleep Easy

Being a real estate investor and landlord has its pros, but there are times when it can be stressful, even overwhelming. And it’s in those moments that you have a decision to make: Let the stress eat away at you, or grab control of the situation.

Five Ways to Lower Your Stress and Get More Sleep

Sleep is an odd thing. We need it to function properly and feel good. But in order to get the sleep we need, we have to make healthy lifestyle choices.

According to a survey of more than 2,000 Americans, Amerisleep found a direct correlation between average sleep per night and average overall happiness. As the article explains, “The time difference is a relatively small one, with perfectly happy people getting only about 24 minutes more sleep per night than completely unhappy people, but even that little bit of extra sleep seems to make a big difference.”

Unfortunately, the stress of being a landlord can keep you up at night and prevent you from getting the sleep you require for health and happiness. You can get caught in a vicious cycle that will eventually wear you down.

If you wish to get more sleep at night – and enjoy the benefits that accompany it – you must lower your stress levels so you’ll have an easier time falling asleep and staying there. Here are five practical ways to do this:

1. Get Organized 

It’s amazing what a little organization can do for you, mentally and practically. Every property you own should have a folder in a filing cabinet and/or your computer.

In these folders, keep titles, financing documents, loan applications, tenant applications, HVAC warranties, service agreements, receipts, copies of rent checks, etc. When all that is readily accessible, you don’t have to waste time tracking down lost documents.

2. Take Preventive Measures

It’s much better to spend a little extra money on preventive measures than to be constantly stressed out over what could happen in an undesirable scenario. The best preventive measure you can take is to invest in adequate insurance.

If you’re renting out a property long term, you need to have a landlord-specific policy. You may also want to look at an umbrella policy to protect yourself personally in the event of specific calamities.

3. Carefully Screen Tenants

You have to be careful about the tenant screening process, and make sure you adhere to the proper laws, but being selective on the front end will save you a lot of trouble later on. Good tenant screening involves more than a background check.

You should meet the prospective renters in person, ask the right questions, consult their references, and request a substantial deposit to ensure they’re serious.

4. Automate Rent Collection

One of the worst parts about being a landlord is waiting on the rent checks to roll in. There always seem to be one or two problem tenants who don’t pay on time and come up with imaginative (or worse, repetitive) excuses for why the check is late. The best trick is to automate rent collection, so there’s less room for such problems.

5. Hire a Property Manager

The more you remove yourself from the dirty, mundane, and monotonous tasks of being a landlord, the less stressed you’re apt to be. It’ll cost you a percentage of your monthly rent but hiring a property manager can be one of the best investments you’ll make – particularly if you have multiple units.

Say Goodbye to Restless Nights

When you’re stressed about your properties, tenants, and income, you may lie awake at night and fail to get adequate sleep. If you don’t get enough sleep, you’ll be unhappy.

When you’re unhappy, you’re more susceptible to stress and making unhealthy decisions. The easiest way to break this cycle is to gain control of your investments.

By staying organized, implementing smart preventive measures, carefully screening tenants, automating rent collection, and hiring a property manager, you can take charge and sleep well. Don’t put it off!

Source: nuwireinvestor.com

Landlords: These Are the 4 Types of Insurance You May Need

The basics of becoming a landlord are straightforward: Buy a property in a promising neighborhood, fix it up, find tenants, and start charging slightly more than you’re paying in regular costs. But if you want to protect your assets and ensure you’re following every applicable law, things get more complicated.

Consider insurance. The right insurance policy should be able to cover any unexpected financial losses or massive expenses, protecting the profitability of your operation. It can also protect you from legal trouble. But what types of policies do you really need as a landlord?

Legal Requirements

Technically, landlords aren’t legally required to have any type of insurance. However, if you’ve taken out a loan on the home, you may be required by the lender that you have a basic homeowner’s insurance policy. Just note that a conventional homeowner’s policy may not protect you if you’re renting out the property to other tenants.

4 Types of Insurance to Consider

There are many types of insurance that you should consider:

1. Building and property insurance. First, you’ll want a policy that protects your building and property from unexpected damage. Your building is the most significant portion of your investment, and therefore, your biggest financial liability. If something happens to it — such as a roof caving in or a destructive event from a tenant who lives there — you’ll want a comfortable policy that can cover the damages. Otherwise, you’ll end up paying tens of thousands of dollars, possibly compromising your profitability.
2. Liability insurance. You should also have some type of liability insurance in place. Landlord liability varies depending on where you live, but for the most part, you’re responsible for keeping your property in a safe, livable condition. If one of your tenants trips and falls or hurts themselves while living in the property, they may have grounds to file suit against you. Liability insurance protects you from these events, covering your defense costs and compensating victims.
3. Loss of income and business interruption insurance. Landlords may also be able to get a form of business interruption insurance, protecting them from possible interruptions to their stream of rental income. For example, if you’re injured and unable to fulfill your responsibilities as a landlord, you may earn compensation that allows you to keep things running. This type of insurance may also help you secure rental income from tenants who are unable to pay.
4. Protection from specific threats. Property insurance doesn’t cover anything. You’ll want to read your policy closely and get coverage for other specific threats. For example, you might need a separate policy to protect your building from natural disasters like floods, hurricanes or earthquakes.

Landlord Insurance

If you’re looking for a comprehensive policy, you may be able to find a provider who offers collective “landlord insurance,” which offers coverage in several areas, including the four listed above. For the most part, these insurance policies are flexible; you’ll be able to pick the types of coverage and extent of coverage you need, so you can protect yourself from the majority of threats and still stay within your budget. If you’re interested in this type of insurance, it’s advisable to talk to an insurance agent, who will have more insight into the types of policies you need (and the total costs you might face).

Renter’s Insurance

It’s also important to note that your property insurance policy and liability insurance policy won’t protect any of your tenant’s possessions. For example, if leaky plumbing causes water damage to a tenant’s television, your insurance policy may not cover the damages (though it may cover you, if it offers liability coverage). For that, your tenants will need to get a renter’s insurance policy.

Conclusion

As a landlord, you aren’t required to have insurance, but it’s well worth the investment. At a minimum, make sure you have property insurance to protect your house and a liability policy to protect yourself in the event of tenant-related damage. Each new policy will only marginally increase your monthly premiums but may offer substantial additional coverage. So plan conservatively, and protect your investments as comprehensively as you can afford to. One enormous loss could be enough to negate any profit you’d otherwise stand to make.

 

Source: biggerpockets.com

10 Repairs That Aren’t Your Landlord’s Responsibility

One of the benefits of being a renter as opposed to being a homeowner is that the landlord is responsible for many costly home-improvement projects, like replacing a leaky roof or updating dying appliances. But not all domestic damage is his or her responsibility. What exactly are you on the hook for? Find out which home repairs are not your landlord’s problem — and start saving up for them now.

1. Replacing light bulbs, batteries, and HVAC filters

The landlord can’t control how much you run the lights, so replacing bulbs when they burn out is your responsibility. The same may be true for replacing batteries where necessary, including those in smoke and CO2 detectors, which should be outlined in your lease so that there’s no confusion about who’s supposed to keep up with home safety. Many leases will also require tenants to replace air filters in HVAC systems on a regular basis (ideally every three months, but landlords often supply the filters).

2. Unclogging backed-up drains that you caused

Here’s what I’ve learned from personal experience: Don’t put egg shells or potato skins in the garbage disposal if you don’t know how to unclog the sink. Otherwise, it’ll cost you a visit from the plumber, because this is definitely not your landlord’s problem. Same goes for the toilet — you do the crime, you do the time. Unclog it yourself or call someone ASAP before the problem turns into more damage from overflowing water and other “stuff.”

Practice other considerate grooming habits, too — like cleaning your hair out of drains to keep pipes in working order. If your landlord has to come over to do this for you, he or she has every right to tack an extra fee onto your rent that month.

3. Certain pest infestations

Assuming that you’re moving into a rental unit that doesn’t have any existing vermin problems (you should verify this independently before signing a lease; don’t just take the landlord’s word for it), you may be responsible for any rodent or bug infestations that occur after you move in. Be sure to check the terms of your lease as well as any state-specific laws regarding pests such as bedbugs.

Certain living habits, like leaving old food out or failing to regularly take out the trash, can attract ants, cockroaches, or even rats. If your landlord finds you responsible for the infestation, you will likely have to pay up to get rid of the problem.

Other bug or rodent infestations can happen naturally. Termites, for example, can infest any building regardless of your living habits. In this case, it’s on the landlord to get an exterminator.

4. Lawn care and snow shoveling at single-family homes

Unless your landlord has agreed to handle the mowing and snow shoveling in the single-family home you’re renting, you’ll need to get out there yourself. While you can let the lawn go for a little while, you’re legally required to have your sidewalk shoveled within a few hours after a snowstorm ceases. Fail to do it and you could face fines from the city, which also will be your responsibility. If you live in a multiunit dwelling, however, the landlord generally takes on this responsibility him or herself or hires someone to do it.

5. Damage to property due to your negligence

Being a decent human being means taking responsibility for damage caused by your own negligence — accidental or not — and that of your family, friends, kids, and other guests you invite into the home. Your landlord is not responsible for anyone’s carelessness; you can’t punch holes in the walls during an argument and expect them to fix it. And please, don’t lie to get out of whatever it is you or they did to damage the property. Be an adult, pay for the repairs, and move on (ideally with people who don’t destroy things).

6. Carpet cleaning and repainting

One of the biggest costs to landlords is replacing carpet ruined over time by tenants. I’ve seen some of this damage myself, and I’m frankly baffled by how disrespectful some people are and the lengths they’ll go to try to skirt the cost of cleaning or replacing the carpet.

Repainting the walls their original color (if you’ve painted them) is also your responsibility. This should absolutely be a clause in your lease, but you should always contact your landlord before making any paint decisions.

7. Pet damage

I once had a tenant who was not authorized to bring an animal into my rental but did so anyway. When I questioned her about it, she denied it. I explained to her the strong smell of feline urine upstairs, at which point she revised her story to having a dog in the house briefly. I wasn’t born yesterday, lady. The dog bit was a lie, too — but it didn’t matter what kind of pet was in my house. It was unauthorized, and I passed the cleaning bill right along to her.

8. Misuse of appliances that cause them to malfunction

You break it, you buy it — that’s the rule with appliances in your rental that you’ve damaged. Whether you’ve caused a dryer fire from neglecting to clean out the lint trap, burned out motors from working appliances too hard, or caused the dishwasher to overflow because you thought laundry detergent would work in lieu of dishwashing liquid (shout-out to my ex-husband), it’s all your responsibility. If any appliance just stops working, however, it’s probably on your landlord — so give ’em a call.

9. Holes in the wall from frames and shelving that you hung

Before you can get your security deposit back, your landlord will want to make sure a few tasks are completed, including patching up holes you’ve put in the wall from frames, shelves, and other damage you may have caused to the drywall and paint from adhesives. Skip out on it and you can kiss your money goodbye.

10. Anything else outlined in the lease

Read your lease closely before signing. Most issues of landlord/tenant responsibility are outlined in the document. Keep it on hand to go over again if issues arise so you can quickly determine whether or not the burden and financial responsibility falls on you. Once your signature is on the lease, you’re legally bound to it. If you feel like something outlined should be the landlord’s responsibility, discuss it beforehand to revise if necessary. After that there’s no wiggle room — it’s either your problem or not.

 Source: wisebread.com