Dear Landlords & Tenants,
Season’s Greetings! Our office will be closed on Thursday, December 22, 2016 through Monday, January 2, 2017 in observance of the holidays. We will return to regular business hours on Tuesday, January 3rd at 9:00 AM EST. As customary, we will remain available by phone and appointment while the office building is closed. The outdoor drop-box and office door-slot will be checked daily. The online portal system is available during non-business hours as well.
The Bev Roberts Rentals Family
With the weather more unpredictable than ever, you’ll want to be sure your properties are well prepared for whatever weather may head your way. For those of you living in more temperate climates, now is a good time to perform some annual maintenance on your properties. Here are some suggestions to get you started before that first snow storm hits:
· Have snow removal equipment supplies ready and waiting. No one (or almost no one) looks forward to a big snow storm, but it can be even worse when you realize that you’re out of salt or sand, or your snow removal equipment needs a new motor.
· Be sure to get up on the roof and clean out leaves and other debris from the gutters. Clogged gutters can lead to all sorts of issues when the rain or snow arrives.
· While you’re up there, be sure to inspect the roof. Be sure to keep an eye out for missing or broken shingles or shingles that look like they’re curling up. Taking care of roof problems now will eliminate costly winter repairs, while ensuring that the roof is able to withstand the onslaught of rain or snow that is likely.
· Have maintenance check all furnaces or boilers on the property, repairing any issues immediately. Emergency calls are costly.
· Inspect windows and doorways for drafts and seal the drafty areas immediately with exterior grade caulking. New weather stripping will also work to seal any drafty areas around doors.
· Be sure not to neglect the landscape around your properties; checking all trees for weakened tree limbs, removing them before they have the chance to possibly come crashing down on a tenant or employee. Also take the time to inspect the property for dried brush, which can easily dislodged during a wind storm and become a hazard to anyone walking on the property.
· If your property has wood-burning fireplaces, be sure to have each fireplace inspected prior to use to ensure that the flue is in good working order and that wildlife has not taken up residence in the chimney.
· Provide your tenants with a list of things they can do to save energy and stay safe during the winter months.
Being prepared can eliminate costly repair bills, while keeping your tenants safe and warm during the cold winter months.
When you sign a lease, you’re committing to a binding contract – but life happens and you may need to break the lease and move out early.
There are only a few reasons for breaking a lease without being liable for the entire lease amount. They include:
- Military duty: Federal law permits you to terminate your lease with 30 days’ notice if you’re called to active duty.
- Constructive eviction: This legal term refers to the failure of the landlord to keep the residence in habitable condition. What constitutes constructive eviction varies from state to state.
- Bankruptcy: Early lease termination may be included in the judgment of a Chapter 7 or 11 bankruptcy proceeding.
- Natural disaster: An earthquake, tornado, or some other disaster renders the premises uninhabitable.
You also might be able to break your lease if your landlord violates your privacy by showing up repeatedly without giving the required notice.
The following usually aren’t good reasons to break a lease:
- Relocation by employer
- Getting married
- Noisy neighbors
- Rats, mold, and other hygiene issues
- Loss of income or other financial hardship
It’s important to maintain positive communication and a helpful attitude with your landlord.
This could save you from legal proceedings and possible financial burdens. A good attitude together with knowledge of your rights can help you make a graceful exit while retaining resources you need to relocate.
Give Adequate Notice
One of the worst things you can do is to leave your landlord in the lurch. You should give written notice even if you’ve been called to active military duty or you just suffered a fire in the unit.
Explain the Situation
Perhaps you’ve been relocated by your employer or a health crisis is forcing you to move into a supervised care situation. If the landlord understands and sympathizes, there is a better chance of working out an agreement.
If bed bugs or some other condition has made the unit uninhabitable, you must give the landlord an opportunity to correct the problem if the problem happened through no fault of yours. But if you caused the problem, you would be responsible for fixing it.
If you’re leaving for reasons of inhabitability, be clear regarding what that means for you. It may take concessions, such as surrendering all or part of your security deposit, to come to an amicable agreement.
Help Make the Transition Smoother
The landlord needs to make a reasonable effort to find a new tenant if you leave before your lease is up. Reliable, considerate tenants can be difficult to find, though, and many landlords don’t have time to look for one. Your help will probably be appreciated, and it could save you money. Your lease may even require you to advertise the unit in the event of early termination.
Note that the landlord can refuse the tenant you select if they don’t meet the requirements the landlord sets.
Sublet the Unit/Assign the Lease
Not all landlords are open to third-party sublets. But if yours is, you may be able to find someone in your circle of friends that can sublet the unit from you. That sidesteps the need to terminate the lease. Assuming the landlord’s approval, the new tenant pays the rent in your place, and if everything works out, signs a new rental agreement when the lease terminates. In the ideal case, you get your security deposit back upon termination of the lease.
Note that it is usually reasonable for the landlord to deduct the processing costs, such as the costs for credit checks, from your security deposit.
Leaving your rental unit clean makes a statement of respect for the property that landlords appreciate. You’ll likely save the money the landlord would have spent cleaning and generate good karma for yourself as well as for the tenants who come after you.
Understand Your Rights
When circumstances force you to move, it’s important to read your lease. It may contain language that spells out what needs to happen. You should also look up the tenancy laws in your state.
In a constructive eviction claim, terms like “reasonable effort” and “habitable conditions” are fuzzy ones, and documentation helps support your interpretation. Take pictures and get statements from neighbors. Document your efforts to find a new tenant so that, if the efforts are unsuccessful, you can prove you tried.
When you claim inhabitability, it’s often difficult for a landlord to decide who is at fault and what to correct. Instead of simply acting on your frustrations and leaving, try holding a mediation session with a third-party facilitator. Call your local jurisdiction to find out how to obtain one.
Remember that old girlfriend of yours — the one with the annoying laugh? You put up with her because she was nice, but one day you met that new girl, and she was everything you ever wanted. Best of all, the new girl started showing definite signs of interest and wanted to date — but you had a problem: You still had the old girlfriend.
While this drama doesn’t take place in the life of every high school student, something similar does happen to most adults — but rather than girlfriends… it’s houses.
You buy a house and it’s fine, but then you need to move on to another property. Maybe it’s by choice or maybe your work is forcing you to relocate. Either way, you have the same problem as that high school lover: What do you do with the old
While trying to date two girls at once might prove difficult, owning two homes can actually work and be profitable if you decide to rent out the previous home. By keeping the house, you can begin building serious wealth through cash flow and equity.
But how do you know if that’s the right move?
Should you just sell the house and move on? Or should you rent it out? As with most real estate questions, these are not universal “right or wrong” questions, but once you understand the options, you can make the best choice for your situation.
Below I’ll discuss five factors to consider when deciding whether to sell or rent out your house.
1. Will This Property Cash Flow?
The first thing to look at when deciding whether to rent out your house or sell it is to look at the math. I know, math was likely not your favorite subject in school, but luckily it doesn’t require anything more than a fifth-grade mind to understand real estate investment math.
First, ask yourself: Will this property produce positive cash flow?
In other words, when this property is rented out, and I deduct all of the expenses associated with the property (mortgage, taxes, insurance, utilities, management, vacancy, repairs, HOAs, etc.), will the property produce a monthly profit or a loss? If you are looking at a loss, consider selling.
For more on analyzing properties, read my Ultimate Guide to Analyzing Rental Properties.
2. What About My Return on Investment?
Next, consider how much you would profit if you sold the property today, assuming you’d lose around 10 percent to agent fees, closing costs, and other sales expenses. If you would make little or nothing, it may be advantageous to hold onto the property, waiting for the market to improve over time. This is especially true if the property will provide positive cash flow in the meantime.
If you would make a profit by selling, consider your return on investment. For example, if you could make $100,000 in profit by selling your house and would only achieve $1,000 per year in cash flow, that’s a 1% return on investment. I would much rather take that $100,000 profit and invest it in something else that could give me a higher return.
3. Consider the Taxes
The United States Government does a lot of things I don’t agree with, but one thing they do that I absolutely love is the potential exclusion from paying capital gains tax on the sale of your primary residence.
Normally, if you sell real estate and make a profit, you’ll have to pay capital gains tax on the sale, which can be up to 20% depending on your tax bracket. However, the IRS allows homeowners (sorry, investors!) to exclude the sale of up to $250,000 (or $500,000 if married filing jointly) of a primary residence if you lived in the home for at least two of the last five years.
Let’s look at another example where this might come in handy. Bob and Marge bought their home in 1990 for $150,000. Today, they can sell the property for $500,000, clearing $300,000 after the sales expenses. If they keep the home as a rental for, let’s say, five years and then sell, they’ll potentially owe $60,000 in taxes. But if they sell now, they can potentially keep that $300,000 in profit without paying any capital gains tax.
Of course, by keeping the property, there is always the likelihood that the property will appreciate in value higher than what the tax would have been, but there are no guarantees when it comes to real estate values.
(And I’m not a CPA, so to learn more about this possible capital gains tax exclusion, consult a tax advisor or read the IRS’s rules on the topic.)
4. Does the Future Look Bright?
Another important factor to consider when deciding whether to rent or sell your house would be to put on your crystal ball and gaze into the future. What do the next five, ten, twenty years look like for your home’s location? Are things improving? Will your neighborhood decline in value? If the future looks dark, consider selling now to avoid problems later on.
Of course, we don’t have crystal balls, but trying to gauge where the market’s going is not impossible. Take a look at the growth of your city — is it moving away from you or towards you? Are businesses moving into your area? Are homes being fixed up or left to rot? You can’t know with 100 percent certainty, but by analyzing the current trends in your market, you can make a more informed decision on whether to hold on or sell now.
5. Can You Handle Tenants?
Finally, ask yourself: Are you willing to be a landlord? Because honestly, many people are simply not cut out for the life. While some tenants are a dream to manage, others require significant time and patience to deal with. Last week I had to deal with the eviction of a “garbage hoarder.” It wasn’t pretty.
Luckily, landlording is a skill that can be learned and improved upon. All new landlords make mistakes, but if you are the kind of person who is willing to learn, you’ll do fine.
Also, just because you own rental properties does not mean you have to be the person dealing with the tenants. Professional property management companies exist in nearly every city, and if you can find a great manager, they can cut the stress of rental property ownership down to a minimum (for a fee, of course!).
So, Should You Rent or Sell Your House?
Unlike high school girlfriends, real estate allows you to keep the old and the new. But deciding whether to rent out your house or sell it is a choice only you can make after weighing all the options.
If you are trying to make that decision right now, take a look at the five factors outlined above and make the choice that works best for you, your family, and your financial future.
General rules to follow for an efficient and fire hazard free dryer:
1. Clean the lint trap screen after each dryer cycle.
2. Wash the lint trap screen after 20-30 loads. Let it air dry before replacing.
3. Use a vacuum hose to suck out any remaining lint inside the dryer where the lint trap is stored.