Deadbeat Partial Payments

ask-the-attorneyThe Landlord Protection Agency®presents John Reno, Esq.,a highly experienced Landlord – Tenant attorney based on Long Island, NY.

Q:  Dear Mr. Reno:

My father passed away and left a rental house to my brother and I . The person living in the house has been there around 15 years. On the agreement that was signed by my parents and the attendant was for a one year lease and that the rent would be 100.00 a week. This home is in Tuscaloosa , Alabama.

1. The attendant is thousands of dollars behind in his rent. Over the years my parent let him slide. The attendant always had some problem to prevent him from paying, my question is can we have him evicted for not paying rent if there was never a renewal of the lease or anything that we can find that state he can live there regardless?

2.. We have received around 400.00 for the last 6 months. Question is : he was told that if he didn’t pay is rent for the month of June we were going to evict him. We received a check for 100.00 at end of June and just received a check for 350.00. Can we cash these.? Been told if we did take even partial payment that it would mass up getting out of the house. Is this true or can we cash the checks.?

Thank you or your help

Brittney, Tuscaloosa , Alabama

A: 1. Take the $. 2. Serve Notice of Default; let him know what you think he owes. 3. Start eviction for non-payment. Good luck.

Legal Disclaimer
The Landlord Protection Agency’s “Ask the Attorney” column is for informational purposes only. The questions answered by Mr. Reno on this site do not constitute an attorney – client relationship and are not to be considered legal advice. Not all questions will be answered and some may appear in the LPA Q&A Forum.
The Landlord Protection Agency recommends that you seek legal advice before using any of the material offered on this web site, and makes no guarantee on the effectiveness, compliance with local laws or success of any of the material offered on this web site. The Landlord Protection Agency is not engaged in rendering legal advice.

Ask The Attorney: Tenant Threatening to Sue

ask-the-attorneyThe Landlord Protection Agency®presents John Reno, Esq.,a highly experienced Landlord – Tenant attorney based on Long Island, NY.

Q:  Dear Mr. Reno:

I had a tenant who vacated and did not clean the home and there was close to $1,400.00 in damages which he refused to pay. I had 21 days to return his security deposit and I completely forgot because I was so overwhelm with the work that had to be done to the home. He sent me an email reminding me that I was late. I apologized to him and told him I would it send right out. He preferred to pick it up. His $3500.00 security deposit was minus the cleaning and the damages. The next day he spoke with a Lawyer and he threatened me with legal action and that he was entitle to a full refund of his security deposit. He took no ownership for his actions. I did return the remaining deposit because I had no time to go to court.

He rented the place for 3 years and he did not qualified to rent the home per our Property Management Company. I gave him a chance. I also told him before all this that if was to leave before the end of the lease I would only charge him for the days he will be there.
I would like to have my portion returned to me. Can you help me.

Regards,
Albert C., Clayton ,CA

A: You have won a no expense paid trip to small claims court to sue for your $1400 plus whatever. Good luck.

Legal Disclaimer
The Landlord Protection Agency’s “Ask the Attorney” column is for informational purposes only. The questions answered by Mr. Reno on this site do not constitute an attorney – client relationship and are not to be considered legal advice. Not all questions will be answered and some may appear in the LPA Q&A Forum.
The Landlord Protection Agency recommends that you seek legal advice before using any of the material offered on this web site, and makes no guarantee on the effectiveness, compliance with local laws or success of any of the material offered on this web site. The Landlord Protection Agency is not engaged in rendering legal advice.

Ask the Attorney: Tenants Moved Out & Refuse to Return Keys

ask-the-attorneyThe Landlord Protection Agency®presents John Reno, Esq.,a highly experienced Landlord – Tenant attorney based on Long Island, NY.

Q:  Dear Mr. Reno:

I have tenants that have moved out but are refusing to return the keys until they get the security deposit. I explained that I have 30 days to inspect the property and assess any damage and send them a notice of what, if any, the refund will be. They have also claimed the hot water heater is not working but have denied me access to the property and the police told me they can’t force them to let me enter the property.

The police told me as long as they are there I can’t make them give me back the keys but as of today the home is vacant. There are still a few of their possessions in the back yard but it seems to me they have moved out otherwise. Do I have the right to change the locks or am I breaking a law?
Thanks,

Renee, MI

A: It’s a judgment call. My opinion: if their clothing and valuables are gone (TV, Jewelry, Stereo) then they’re gone. Probably OK to change the locks.

Legal Disclaimer
The Landlord Protection Agency’s “Ask the Attorney” column is for informational purposes only. The questions answered by Mr. Reno on this site do not constitute an attorney – client relationship and are not to be considered legal advice. Not all questions will be answered and some may appear in the LPA Q&A Forum.
The Landlord Protection Agency recommends that you seek legal advice before using any of the material offered on this web site, and makes no guarantee on the effectiveness, compliance with local laws or success of any of the material offered on this web site. The Landlord Protection Agency is not engaged in rendering legal advice.

Setting Rents for the New Year

1The art of raising rents is a difficult one to master for newbie investors. The fear of creating a vacancy or offending a tenant is unbearable for most new landlords. It is a touchy dilemma. You are directly impacting the quality of a tenant’s life when you increase the rent, but you are also affecting your ability to pay your obligations with the rent increases. In this article, I would like to list reasons why raising the rent on your properties is a necessary decision, how to accurately assess the market rental rate, and how to raise the rents effectively without creating a mass exodus.

Let me list the reasons why rents should be raised:

1. Keep up with the rate of inflation.
2. Grow the top line (revenue).
3. Stay competitive in the market.
4. Fight the expense creep.


If you have just acquired a property, or are in the middle of a renovation, you should read our article on our Three Step Reposition.

It is our framework on how to take over the operations of a property, and to effectively increase any rents that are under market. It will show you how to fill the vacant units, implement Ratio Utility Billing (RUBS), and raise the remaining tenants to market.
Before you consider raising rents, you need to make sure you are delivering a quality product to your tenants. What does that entail? In our properties, we strive to deliver clean, safe, affordable units with stellar customer service. We guarantee potential tenants a same day guarantee if they qualify to rent one of our apartments. We are always stressing our customer service and our quick and professional maintenance staff.

If you are trying to raise rents, and you business model does not deliver a quality product, you are going to experience the vacancy that I alluded to earlier. A tenant knows exactly what a two bedroom apartment is renting for, and if he can get a better deal down the street, then he is gone. But, if you can couple customer service with a competitive price, your retention rate will rise.

I often discuss with our Jake & Gino community the commodity effect. If your product or service becomes a commodity in the marketplace, then people will only shop you for price, and your margins and business will suffer. Take a look at the baking industry. Money has turned into a commodity, and the investor has countless choices to access money. Investors can drive a hard bargain with banks when trying to secure financing.

You want to avoid this mistake at all costs. The Internet has revolutionized how we shop for products and has led to the commodity effect. How do we try to navigate around the commodity effect? By offering great customer service, by differentiating our product and by giving the consumer reasons other than price to do business with our brand.

Now that we’ve discussed the importance of operations, I think we should examine the reasons why you need to be “pushing” rents. The most obvious reason is to keep up with inflation. Your costs go up every year, and your revenue needs to increase to offset your increase in expenses. The next reason may not be as obvious. Jake refers to this burden as the expense creep.
Every year, vendors are testing you to see if you are checking invoices to see if expenses are rising. It is your responsibility as an owner to review your contracts with vendors every year to insure the best price and the best value. Rent increases will offset some of the expense creep that occurs in everyone’s business.

Another obvious yet often overlooked reason is that landlords who do not stay competitive in the market are not maximizing their value. Let me give you a quick example. If you own 50 units, and the units are $50 per month under market, you are potentially losing $30,000 in revenue per year. That’s not even the worst part. The value of the property is $375,000 less at an 8 cap, due to the diminished income (Income/Cap Rate: $30,000/8%).

At this point, I think you’ve realized the importance of maximizing the revenue on your property. Let’s discuss how to determine the market rent and how to implement your strategy.
The first step is to determine the market rent. There are two websites that we use as a barometer for the rents. The first one is Rentometer. Plug in your address, insert the rent you are charging, pick the unit size and voila. The rent-o-meter will give you an average price, a median price and will tell you if your price is a good deal or if you are overpriced. You need to decipher what amenities your property offers compared to the market, but this is an excellent starting point to evaluate rents in the area.

The other site that we often use is Apartments.com. Look up individual apartment complexes to see what pricing is, what amenities are offered, and what is available to rent. Most landlords use this site to advertise their rentals.

You can also try the good old fashioned way of picking up the phone and calling a couple of brokers in the market. A good multifamily broker should have the pulse of the market, and should be able to tell you what a two bed is renting for in a specific neighborhood. I employ all three of these strategies to price my property accordingly.
Now that we have assessed the market rent, it’s time to go to work. Once we have tenants coming off a lease, we will go to market rent with the apartment, depending upon how many leases come up at the same time. If you have several buildings in one property, you can select to target one building every month or two and institute rent increases. This will lower your risk of having too many tenants vacating at the same time. This will also give you an idea if your increases are in line with the market. If you are getting serious push back on the increases, then you can modify the increase or choose not to implement one.

It is imperative that you work with your staff and get constant feedback as to how the tenants are responding. Are they mad, threatening to leave, or are they just venting their frustrations. You need to maintain a careful eye upon how many tenants decide to vacate due to the increase.

Task:

Begin by analyzing the rental rates in your market. Once the market rate has been established, check to see where your rents fall. Are they at the market, or is their some upside? If there is some upside, then start renting the vacant units at the newly established market rate and begin to increase the leases that come due to the new market. Remember, take your time and be flexible with your pricing.
Please share with us any tools that you use to assess the rental rates in your market. I would also like to know how you address increasing those rents.

1. Determine the market rent
2. Look in December how you are performing
3. Take it one step at a time

Source: multifamilyinsiders.com

A Vacant Property is a Pimple on the Complexion of your Investment Business.

1

When you have a #vacant #rental property, it costs you money each day it sits empty, so it’s important to reduce time between tenants to a bare minimum. Filling a unit with qualified tenants takes more than just putting up a for rent sign in the yard. #BevRobertsRentals is the key to minimizing the time that your rental sits empty. We act quickly and effectively in marketing and attracting prospective tenants who are ready to sign a lease agreement—all without putting your cash flow at further risk.

7 Things to Include in a Rental Lease Agreement

1You’ve purchased a rental property, and now you’re figuring out how to get started as a landlord. Failing to specify all of your requirements and expectations in the lease is one of the more common landlord mistakes.

Smart landlords know the best way to safeguard their investment from potential tenant trouble is to craft a solid rental lease agreement that – at a minimum – includes these key things:

1. The basic clauses. Every rental lease agreement must list the parties to the agreement, which would be you and the tenant, along with the property’s address. You also want to state the term of the lease, which could be month-to-month starting on the first with a particular end date or an automatically continuing lease that remains in full force and effect.

2. Security deposit clause. Your lease should require the tenant to put up a security deposit that matches one month’s rent or more, depending on the value of furnishings and repair costs if something goes wrong. Some states require the landlord to place the tenant’s security deposit in a separate interest-bearing account and, at the end of the lease, return the deposit plus interest to the tenant, less any damages. Make sure you understand the laws and regulations in your area, and to save time and money over the long term, have your real estate attorney review your lease agreement to ensure that it follows the law. Security deposits can be a problem if not handled correctly.

3. Maintaining the premises. The lease should specify that tenants are required to maintain the premises, abide by noise control rules and not change the locks without your written approval. You will want to itemize the appliances (and any furniture, if applicable) that are part of the lease, and note their condition and any other special considerations. Don’t expect a tenant to follow oral requests, such as not parking in the driveway. All requirements must be spelled out in the lease agreement. Also note whether the tenant or landlord will be responsible for utilities. Take the time to clearly write out the details of your rental agreement.

4. Warning of concealed defect. In some jurisdictions, you have a legal duty to warn of a concealed defect known to you, or a defect that it is reasonable for you to know about. If you know the deck is crumbling and you fail to warn your tenant, then you may find yourself explaining the situation to a judge. Better to disclose the known defect in the lease and, best of all, fix it before the tenant moves in.

5. Subleasing clause. At some point, most landlords have a tenant who wants to sublet the apartment to a friend or stranger. To avoid trouble, make sure your lease agreement includes a subletting clause that requires the tenant to obtain your written permission before turning the rental over to someone else. When the tenant asks to sublet the property, you will be in a position to decline or accept their offer. But heed this caveat: If you want to agree to having the new tenant move in, then it’s best to end the original tenant’s lease and start the process from scratch with the new tenant. You should go through the entire background check with the new tenant, including a new security deposit and lease. Do not put yourself at risk by trying to enforce your original lease agreement against a new tenant who was not a party to it.

6. Termination. The best practice is to know your jurisdiction’s rules on terminating a lease and include those details in your rental lease agreement so your tenant will not be surprised. Terminations occur at the end of a non-continuing lease and also when there is an eviction. Evictions can be tricky; you may think you know the rules, but if you improperly notify your tenant of a coming eviction, you may find yourself on the wrong end of a lawsuit. You can find free eviction paperwork online, but if you are planning to evict a tenant, you would be wise to consult with an attorney.

7. After the tenant leaves. Would you ever hold a tenant’s personal property for unpaid rent? In some states it’s against the law for a landlord to confiscate a tenant’s property and demand rent money in return. Other jurisdictions consider the property abandoned and allow the landlord to dispose of the items. Most states require a landlord to hold the tenant’s property for a short period of time and give notice to the tenant, and some allow the landlord to claim a storage fee for the hassle. The key is to check your local laws and spell out in the lease what you plan to do with personal property left behind by the tenant.

Include these important clauses in your rental lease agreement and you will be well on your way toward building a successful real estate investment business.

Source: zillow.com

What They Don’t Teach You About Evictions in Landlord School

Eviction-OrderIf you’ve ever had any training buying rental properties, investing in real estate or taken actual training on being a landlord, one area they often either gloss over or entirely skip is the part about evictions. It’s easy to understand why, it’s not a very glamorous topic and it’s right up there with fixing toilets at 3am in the excuses for not being a landlord handbook. Yet knowing the rules, and following some simple steps in advance, can often mean the difference between making an eviction quick and cost effective, versus drawn out and costly for you the landlord.

Unfortunately, I can’t help you with the rules. The problem being that rules for evictions are all over the map. Some areas allow a 3-day notice, some a 7-day and others 14. Some places have landlord tenant courts, others call them tribunals and others picked letters out of a hat to create unpronounceable acronyms for a service landlords can’t understand!

Then there’s the rabbit hole of what to do with all the tenants belongings if you successfully evict them. While I don’t know of any areas that allow celebratory bonfires, there are usually specific rules about what to do with items if they exceed certain value amounts, how to store them (if you are allowed to store them) and how to dispose of them.

None of which is important until that dreaded day you discover you have a problem tenant and suddenly discover yourself over loaded with “what ifs”.

  • What if the tenant doesn’t pay?
  • What if the tenant destroys my property?
  • What if I can’t collect and much, much more.

Look, understanding your local rules should be one of the first things you learn, before you become a landlord, yet it’s often something we learn the hard way as we’re dealing with the additional stress of a problem tenant.

So let’s talk about what you can do to get up to speed, and why!

Lesson One – Leases

Probably the most important reason to understand the rules is to allow you to customize your leases so they help you work within the rules and give you the most power. Hold it, you do have a written lease don’t you?

Perhaps this is where I need to share some of my background.

I’ve been a landlord since the early 2000’s and I’ve had around 1,500 tenants during that time. Yes, 1,500 which is crazy when you see the number, but the positive is, it also has given me an over abundance of experience in evictions.

Maybe it’s just a sign of how crazy Real Estate folks can be, but I actually see the positive about this experience.

You see, I turned this experience into a benefit for other landlords as well as myself as I created a website for the area I’m in that walks landlords through the eviction process.

This has helped me see the same problems over and over and over and the biggest being no written lease, or a generic lease that allowed tenants to walk all over the landlord due to ambiguity or simply being too generic.

You need a written lease that allows you to enforce your rules within the local rules.

Whether this is making sure it contains a no smoking clause (where applicable), a no pets clause (again, where applicable) or specifics about what happens if they bounce a check, fail to pay, or skip out. Again, all worded and slanted to ensure you have the necessary power where needed.

So first lesson, if you don’t have a written lease, contact a local landlord association, a lawyer who specializes in Real Estate and rental issues or pick up some of the forms available here on AAOA.

Second Lesson – Evidence

The second problem landlords run into is not having enough hard evidence of a problem when it comes to an eviction.

As part of my eviction site, I also offer consulting services that walk landlords through the steps they need to successfully evict a tenant and as heart breaking as it can be sometimes I often end up telling landlords they won’t be able to get an eviction with the information they have.

I have to tell them that after months of stress and headaches, they’ll have to wait another month or two to have enough evidence to obtain the eviction they so desperately want and need.

And so begins lesson two!

Document, document, document!!!

If you don’t already have a tenant journal get one. It can be a simple notebook, an app on your smart phone, or some other method of recording interactions with your tenants. From the innocent call about a broken appliance to conversations about late payments you need to record it all in your journal along with dates and times.

These notes can become your timeline and your beginning pile of evidence. They can show a history of behavior from continuous late payments to a trail of lies and deceit. All which become incredibly handy in many hearings.

The extra benefit is you also come across as a professional landlord versus a run of the mill landlord which makes a huge difference in the eyes of a judge, hearing officer, tribunal or whomever you may face when evicting a tenant.

And any edge you can get is crucial, you’re dealing with a considerable investment when you own a rental property and you need to remember that.

One additional tip to include with this is to follow up any phone conversations with your tenants with written notice addressing what was talked about.

As an example of this, if your tenant calls explaining they need a couple extra days for rent and you agree to this, follow up with an email, a written notice dropped off at the place or both covering off what was discussed and any timelines agreed upon. And also document it in your tenant journal.

Third Lesson – Resolutions

The third lesson about evictions is to work with your tenant to resolve any issues, but make sure you have a line in the sand and an understanding of repercussions, your actions going forward and the end results.

This may involve providing extra leniency for a long standing tenant that has fallen behind, but with a firm understanding that you will take action if it continues.

Or it may require you to make decisions that while unsavory at the time are better long term for you. I’m not talking about breaking laws, shutting off utilities or removing front doors here either.

I’m talking about paying a tenant to leave, refunding full deposits even though tenants have left messes or not charging or going after any judgments in an effort to expedite getting control of your property back and having the problems go away.

You need to understand with evictions that your ultimate goal is to resolve the problem and get control of your property back. If it costs you $1,000 so your problem goes away and you can get a new paying tenant within a week or two it may well be worth it.

If you have to eat the cost of cleaning up after a tenant at your expense, but you have control of your property and they are gone, it may be worth it.

If you have to pay someone just to leave two weeks early, it could save you a month or two of lost rent on top of additional costs for repairs and hearings, so again it may be worth it.

Bottom line, you need to decide whether the short term pain of giving back a deposit, refunding a month’s rent or even paying someone to leave will save you weeks or months of additional headaches and expenses!

Just make sure if you do have to pay them, no money changes hands until they are out!!

Final Lesson – Learn Before You Have To

Finally, learn the local eviction systems before you need them.

Learning as you go can work for many different situations, but during the stress of an eviction, when your property that you worked hard for is potentially at risk of damages and destruction and when your bank account is spiraling downwards due to non-payment and unexpected costs, you’re probably not in the best position to blindly learn as you go…

If you have at least a basic understanding it can help pave the path moving forward and if you follow the first several lessons at least you will be more prepared if you do have to go down an eviction route.

The Ultimate Lesson Learned from Evictions

To really wrap this up, I need to share with you the most important lesson you need to know as a landlord. And unfortunately this is the lesson that gets reinforced after you’ve gone through your first eviction.

It’s far easier to let a bad tenant in, than it is to get a bad tenant out…

Think about that.

If you understand that and really let it sink in, it will change how you operate your landlord business.

It means you’ll put far more effort into screening your tenants, into not settling for someone just to get the burden of an upcoming mortgage payment off your back and into actually completing your due diligence properly.

I’m talking about checking all references, completing credit checks and verifying the tenants ID which are all parts of a solid tenant screening process. All steps to save you headaches down the road.

Yes, it’s definitely more upfront work, but as I mentioned skipping this can lead you right back to that Ultimate Lesson:

It’s far easier to let a bad tenant in, than it is to get a bad tenant out…

Bill Biko – “The Educated Landlord” has been an active landlord for well over a decade and during that time has packed more enough experience in for dozens of regular landlords. From rooming houses, to rent to owns, furnished rentals and“regular”rentals, Bill has had around 1,500 tenants which has made him a master of systems and a master of evictions. To find out more about Bill or to get access to additional tips, articles and Bill’s “7 Questions Landlords Must Ask” visit www.TheEducatedLandlord.com