What’s Considered ‘Normal Wear and Tear’ in a Rental?

1The one thought on every renter’s mind on move-out day (aside from “How the heck am I going to get this sofa through the front door?”) has to do with the security deposit. Will you ever see that money again?

According to most leases, your only hope is to return your apartment in the same condition as when you took possession, beyond “normal wear and tear.” Still, though, this raises the question: What exactly is normal wear and tear, and what crosses the line?

Read on to learn just what you need to fix, and what you can let slide.

What qualifies as ‘normal wear and tear’

Unfortunately, when it comes to pinpointing wear and tear, there’s no specific laundry list of flaws that landlords will find acceptable to leave behind. It helps to think in terms of things you encounter in your own home on a daily basis.

“Have you ever put a nail in the wall to hang a picture or scuffed the wall carrying in groceries?” asks Trent Zachmann, chief operating officer of Renters Warehouse, which manages residential real estate. (Of course you have!) “These kinds of things happen.”

Normal wear and tear is light damage that occurs over time and doesn’t affect the use of the home or appliances; it’s just not aesthetically pleasing. Other examples of normal wear and tear are light scratches on wood floors, wear spots on carpet (but not stains), and loose railings or banisters.

What tenants must fix

According to Gary Malin, president of Citi Habitats, these are some of the most common things that renters would be responsible for fixing:

  • Excessively scratched or gouged floors
  • Broken windows or torn screens
  • Broken or nonworking appliances
  • Pet stains and odors
  • Custom wall coverings such as paint or wallpaper
  • Any installations like shelving, light fixtures, or window treatments

The importance of a move-in checklist

All landlords or property managers will have different expectations, and so on your move-in day it’s important to discuss the condition they expect you to keep your apartment in. Scratches and discoloration should be documented, so whip out your smartphone or camera and take photos of any flaws you see and make sure your landlord is aware of them so he knows you didn’t create them.

Ideally, your landlord should provide a checklist of the property condition upon move in. But if not, Kimberly Smith of AvenueWest, which manages corporate housing, recommends creating your own (you can download a sample rental property checklist online). Ask your landlord to sign the document to make it official, include photos of flaws, and, if you want to be extra careful, search online and try to find out the life expectancy of various items. One biggie is the carpet.

“The carpet is a great example of an amenity that many tenants and landlords dispute,” Smith explains. “To establish the expectations for the cleanliness of the carpet, first start with the total life expectancy.” Experts estimate that in a household of two to four people, carpet will typically last around three to five years. So if the tenant rents a newly carpeted place for five years and the carpet needs to be replaced when he moves out, then this is considered normal wear and tear.

In other words, make yourself at home and don’t sweat the small scuffs.

Source: realtor.com

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Should You Sell Your House or Rent It Out?

1Remember 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 girlfriend house?

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.

Source: forbes.com

General rules to follow for an efficient and fire hazard free dryer:

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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.

Happy Ask a Stupid Question Day

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Happy National Ask A Stupid Question Day! Now’s your chance to ask us questions you’ve always wanted to about #Leasing and #PropertyManagement, but didn’t because you felt they might be “stupid”.

Property Manager… solving problems you didn’t know you had in ways you can’t understand.

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Although few outside the profession may understand what we do and how we do it, the basic facts remain unchanged: Property Managers play a critical role in a landlord’s success. As the rental market grows increasingly tumultuous, property managers toil quietly and efficiently behind the scenes to come up with solutions to problems that the average landlord doesn’t understand or even know he has.

Bev Roberts Rentals Presents: Festive Decorating Contest 2016

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Hello tenants, we have a new contest for you to get excited about!  The Bev Roberts Rentals family is bringing to you a chance to embrace your creativity with the Festive Decorating Contest!

What’s the first thing that comes to your mind when you think of fall?  Is it spooky spiders for Halloween, is it pumpkins and falling leaves for Autumn, or is team spirit for football season?  Whatever that is, send us your photo portraying your festive indoor or outdoor decorating!  The winning resident receives a $50 Visa Gift Card!  Please read the above flyer for more details.

The contest officially starts October 1, 2016.  Winner will be chosen on November 30, 2016!

Planning a Non-Renewal

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 tenants lease will expired the end of May. I do not wish to renew the lease, planning on remodeling. What would you recommend. I anticipate that the tenant may be difficult.
Thank you,
Lee Fadavi

A: I would notify them as soon as possible, that their lease will not be renewed. Also, review your lease carefully about what notice, if any, is required and how to give it. But even if no notice is required, I strongly recommend it.

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.