E-Renter News

Tips for New Landlords

The economy has helped to turn the dream of vacation homeownership into a nightmare for many investors. If you’re considering turning a vacation home into a rental, or have already, here are some basic tips for new landlords that might come in handy:

• Decide whether to offer long-term leases or make your vacation property a vacation rental, with short-term agreements. Do your research and weigh both the downside and advantages of frequent turnover.
• Consider your tax situation when making your decision. Homeowners can rent their property for up to 14 days without reporting the income to the IRS, which can be helpful if your property is only rented during high-volume times in your area, like New Orleans at Mardi Gras. Consult a tax professional for advice.
• Consult an attorney to review your rental agreement and lease. Loads of information is available online regarding pitfalls to avoid and items to include in your rental agreement.
• Tenant screening is a must for short-or long term rentals. Investing a little amount of money in thorough background checks pays for itself in peace of mind and can prevent financial losses.
• Advertise wisely. It doesn’t have to cost a lot. Spend time online if you’re not familiar with social networking site—they’re ideal for advertising your rental. Setting up a Facebook page is easy. Upload photos and invite friends and family to comment and encourage their friends to visit your page.
• Check out vacation rental websites, and compare their rates and features. If you decide to run an ad, promote it through your Facebook page and Twitter.
• You can also use WordPress to set up a website. WordPress is known as a blogging site, but it’s become a fast and easy way to start a website. Hundreds of templates are available, the site walks you through each set-up step, and help is just a click away if you become stuck.

Making the decision to rent your vacation home is the first step to becoming a rental property owner. Check our archives and come back often for valuable landlord advice!

Most landlords we know have heard the request more than once from tenants who want to paint the walls or cabinets, upgrade light fixtures, or change the bathroom flooring.  Should landlords allow tenants to work on their properties?

There are many ways to handle this request. Some landlords are fine with upgrades and painting, as long as they approve everything first, from color to light fixture choice. Often, landlords will pay for the materials if the tenant chooses to do the labor.

Tenants often ask for a reduction in rent in exchange for working on the property. Steve is one of them. Steve is a handyman by trade, and his landlord is happy to have Steve do repairs, install plumbing fixtures, and lay tile in exchange for an agreed-upon rent reduction. Steve and his landlord worked the agreement out in advance, and it’s all in writing.

Many landlords have a simple answer when tenants make these requests: NO. There is certainly a liability issue to consider. If your tenant repairs a wood staircase that subsequently fails and injures a resident or visitor, guess who is going to be held liable? If you allow tenants to paint and they do a terrible job, it could cost you to fix it when they move out.

Be sure to be consistent when dealing with tenants; allowing one to paint and not others can cause problems. And if you don’t want to invite trouble, just tell your tenants that your insurance policy will not allow them to paint for do repairs—and hire your own contractor.

Landlords can typically begin eviction proceedings as soon as the rent is officially late. The rental agreement should clearly define on what day the rent is due, and what day it is considered late. If rent is due on the first, you may decide it is late on the fifth, the third or even the second day of the month.

When a tenant fails to pay rent on time, the first step is to deliver the “Three Day Quit Notice,” informing the tenant they have three days to pay or they must quit—or vacate—the property. Check your state’s regulations to find out how many days’ notice a landlord must provide—it varies from three to five in most states.

Because eviction proceedings can take time, it’s usually better to start as soon as the lease is broken by non-payment of rent.

Experienced landlords often describe their reluctance to give notice when they were first in business. “Not anymore,” said Roger, a multi-unit property owner. “I used to wait a week or longer before I served notice, thinking the rent would come in. Now I deliver the notice on the 3rd of the month if rent has not been received.”

Depending on your tenant’s circumstances, delivering a pay or quit notice may seem harsh; but in keeping to the letter of the lease, a landlord is completely within his or her rights to serve it. Informing the tenant that the notice is required whenever rent is late is as much explanation as needed.

Consistency, as always, is important. Giving one tenant more time to pay than others before serving a pay or quit notice could be interpreted as discriminatory. Besides, having consistent procedures makes running your rental property business easier—each situation is handled exactly the same way, every time.

After the notice is served, the tenant either must pay, vacate, or face eviction.

Text Messaging:  People respond to texts faster than voice mail. Rather than leaving voice mails that your tenants ignore, try texting—the preferred form of communication for a growing population. A survey conducted by Sprint, a mobile services provider, showed that adults who have the option will respond to a text in a few minutes, compared to voice mail.

Loaded Landlord Caddy: If you have the essentials for routine maintenance and repairs in your car at all times, you will save a ton of time. Keep a couple of caddies ready to go, with touch-up paint, basic tools, special glues for wood and other surfaces, scratch cover, garbage bags and pruners. Then you’re ready to clip an overhanging branch, repair a ding in molding, or tighten a faucet.

Property Management Software: Ask yourself how much time you can save if you invest in proper software to manage your rental property business. There are plenty of software packages to choose from. Check them out, read the reviews, and decide which is best for you. Trying to manage your business without a system is not a good use of time; when someone has already developed a system that works, why not use it?

Online Forms: E-Renter.com offers a variety of property management forms you can use as-is, or customize for your situation. Don’t work harder than you have to—rental applications, leases, notices and more are all available for downloading. And they’re free!

Take Care of Little Problems: The old advice is still applicable. Many large problems with a rental property can be prevented if addressed early on. Repairing plumbing leaks immediately will likely save you from replacing flooring and cabinets. Inspecting your properties often will prevent tenant problems from multiplying. Pet issues and improper use of systems can be held in check. Testing smoke detectors can save lives and your property.

What Landlords Need to Know

When screening potential tenants, keep in mind that landlords are required to comply to the Fair Credit Reporting Act (FCRA), which was enacted by Congress way back in 1970. The law was intended to protect consumers by ensuring that information in their credit reports is accurate.

Consumer reports are used every day by landlords to verify employment, rental history, and to determine credit worthiness. When landlords use these reports to reject a tenant’s application or take another adverse action, a notice to the applicant is required. (Other adverse action might be requiring a co-signer, a larger security deposit than other tenant’s pay, or raising the rent.)

The notice required by the FCRA must include the name, phone number and address of the Consumer Reporting  Agency (CRA) that supplied the report. It must also include a toll-free phone number for CRAs.

Additionally, the notice must contain a statement that the CRA did not make the decision for the adverse action, as well as a notice of the applicant’s right to dispute the accuracy of the report and to obtain a free credit report within 60 days.

Landlords who deny a potential tenant’s application for reasons other than an unfavorable consumer report are still required to give the adverse action notice in certain cases. For example, if the applicant has a previous bankruptcy, but the main reason for denial was a bad reference from a previous landlord, they must still receive the notice because the bankruptcy was a minor factor in the decision.

Non-compliance with the FCRA can lead to serious consequences; study the law and be sure that you are within its requirements.

Some Tips to Help Fill Vacancies

Smart landlords know that when the rental market shifts, the usual ways of doing things won’t always work. Being flexible helps, but tapping into your creativity is what will set you and your vacant rentals apart from the competition.

Staging is a tactic real estate agents swear by to help gain an edge. Staging is simply adding a few well-placed accessories to a vacant unit to make it look homey in photos and to prospective tenants. The idea is to make the rental look warm and inviting, so the tenants can imagine themselves living there.

Staging has been shown to decrease the time to fill a rental, and can even help increase its value in the mind of the tenant. Here’s how to stage a home or apartment:

1. First, make certain that the unit is spotless. If walls are dirty, scrub them thoroughly. Carpet should be professionally cleaned. Wood floors should only look old and well-used in a period home. Otherwise, dings, scratches, and worn spots should be repaired.  Bathrooms and kitchens should especially shine.
2. Fresh paint is almost always a must when preparing for a new tenant. If you paint your own properties, do an impeccable job—otherwise, call a pro. And of course, a neutral color is best. Warm white or ivory are good choices. Stark white can look cold.
3. Get rid of odors. Nobody wants to live with the previous tenant’s dog or cat smell, or their stale cigarette smoke. Often a fresh coat of paint will eliminate odors.
4. Before taking photos or showing the unit to prospective tenants, bring in a few personal touches. Either use items you already own or invest in the following:
   • One large and one small interior potted plant
   • An exterior potted plant if there’s a porch to place it on
   • Neutral wall art for the living room
   • A few candles
   • New kitchen towels and coffee mugs
   • Throw rugs
   • An overstuffed chair or two
   • Lamps
   • Side table
   • Books
5. In the living room and bedroom: Arrange a large plant, a chair, side table, lamp and rug in a grouping in both the living room and a bedroom. Add a stack of books, a small plant, or a candle to the table for a nice touch. Hang the art in the living room. Make sure the proportion is correct for the size of the wall. Keep it neutral with a modern piece.
6. Kitchen: Stack a couple of new folded kitchen towels on the countertop. Add two colorful matching coffee mugs to brighten things up. Add a throw rug in front of the sink.
7. Bathroom: Place a small potted plant on the vanity and a candle on the edge of the bathtub.  A small stack of new, white towels will make it look like a spa.
8. Exterior: Trim shrubs and branches, cut the grass, pick up trash and perform and repairs or touch-up paint that is needed. Place a large outdoor potted plant near the door.

Even a small effort to make your rental property look warm and inviting can help your prospective tenants want to live there--instead of the home or apartment down the street!

Five Tips to Remember

Tenants have certain privacy rights which their landlords must respect. Once the lease is signed, tenants can expect to live peacefully without landlord intrusion—as long as they are following the rules and conditions of the lease.

Landlords have certain needs regarding their properties. Whether it’s making repairs to the premises or conducting regular safety checks, there will come a time when you must enter your tenants’ living space. And there are regulations around how you do it.

Here are some tips to keep in mind about entering tenants’ living space:

• Giving notice: in most states, landlords must give sufficient notice (12 hours to 48 hours) before entering a leased unit. In all but a few states, you cannot just show up unannounced at the door. Even if it’s not illegal where you live, nobody appreciates unexpected guests, so try to avoid putting your tenants in this uncomfortable situation.
• Letting yourself in: Even worse than showing up unannounced is the landlord who knocks on the door and proceeds to let him or herself in before the tenant has a chance to answer the door!
• Emergencies: Of course, emergencies create an exception to the above rules. If you must enter without notice, try calling the tenant first. (One reason it’s important to have your tenant’s contact information up-to-date and accessible.) Then, knock loudly, ring doorbells, and give the tenant time to answer. If you must enter, call out “Landlord!” “Emergency!” and “Is anyone home?”
• Dealing with refusal: Most landlords have faced this situation: you’ve given notice, show up at the designated time, and the tenant refuses to let you in. Your first reaction may be anger, but try to diffuse the anger. Ask if you can reschedule for later that day or the next day. If the behavior continues, you might need police intervention.
• Put it in the lease: Make sure your entry policy is included in the lease and the tenant understands it. State the types of emergencies that will necessitate no-notice entry, such as suspected gas leaks, smoke, fire, other odors, or plumbing issues.

Remember that while your tenants have the right to enjoyment of their living space, you have all the rights and responsibilities of ownership. Good communication goes a long way to avoiding problems, so try to be reasonable about notice and work with tenants to find a mutually-convenient time to enter your rental property.

Five Easy-to-Implement Tips

Running a rental property business is like any other: there are certain risks involved, as well as rewards for taking those risks. The reward is usually a financial one, although for the past year or so, many landlords have experienced a decline in that area. Still, for the long term, it’s best to minimize your risk of loss to maximize your profit.

1. Avoid lawsuits: learn the federal, state, and local tenants' rights laws that apply to your properties. The Fair Housing Act, Americans with Disabilities Act, and your local statutes are not difficulty to comply with. Knowing their requirements will keep you from violating your tenants' rights—even inadvertently. The onus is on you.

2. Make your property safe: periodic inspections of the buildings and grounds you own are very important. Be on the lookout for tripping hazards on sidewalks, stairs, and common areas. Keep orange traffic cones and yellow hazard tape in your landlord toolbox to block off hazards in driveways, parking lots, and areas of ingress and egress. Keep trees trimmed to prevent injuries or fallen branches.

3. Be sure your property is habitable: plumbing, heat and electrical systems must work properly and safely. Don’t make your tenants suffer with broken pipes, insufficient electrical power, or faulty wiring. Install and test carbon monoxide and smoke detectors, and provide tenants with fire extinguishers. Substandard safety can lead to tragic endings.

4. Help keep tenants safe: installing good locks and adequate lighting can go a long way to preventing crime. Conducting proper background screening on potential tenants can help keep criminals out of your properties.

5. Be consistent: apply the same screening procedures and rules of conduct to every single tenant. When you bend the rules for one tenant, you are at risk for a lawsuit filed by another tenant. Treat everyone fairly and your risk declines.

Consider these Dos and Don’ts

Furnished apartments and homes for lease are not common these days, but they certainly exist. And some landlords we know have considered adding basic furnishings to gain an edge in this tough rental market.

Consider these dos and don’ts before you start furnishing your rental properties:

Do consider it a yellow flag if your tenant needs furnishings because they don’t have their own due to lack of good financial habits or “bad luck.” On the other hand, folks who are going through a divorce or moving to your area ahead of their family (for employment, for example) could be viable tenants who need basic furnishings.

Do keep things basic. You don’t have to furnish every knife and fork. Most furnished rentals (aside from vacation and corporate) include a bed, dresser, nightstand and lamp; sofa, chair and bookcase; dining room or kitchen table and chairs.

Do remember that, while investing too much cash in furnishings is not the best idea, if you go for the cheapest furniture, you’ll attract tenants who are okay with cheap furniture.

Do realize that any and all of the furnishings could disappear in the night. Conduct proper tenant background and credit screening before offering a lease.

Don’t hesitate to include the value of the furnishings in the security deposit. You’ll be covered if any items are lost or damaged.

Do get it all in writing. Include a list of furnishings and their condition with the lease. Obtain the tenant’s signature on the list during the move-in inspection, and before they move out, conduct another inspection to determine damages.

Don’t be insulted if potential tenants turn down your lease because they don’t like the furnishings. You can’t please everyone.

Do consider adding furnished rental units to your mix if it will help reduce your vacancies or increase your cash flow!

Easy-to-Read is Key

What do many landlords consider their best form of advertising? It’s not Craigslist and newspaper ads, coffee-house flyers or even their own websites: it’s signs.

Nothing catches a potential tenant’s eye like a sign on a building or house in a neighborhood they want to live in. Most folks will use a combination of web searches and on-the-ground search by car or foot when it’s time to move—so it’s important to use any means possible to attract them.

You can order custom, inexpensive plastic signs online or from your local sign shop. Use color combinations that are easy to see: black and white, red and white, and blue and white are all great choices. Red and yellow or blue and green combinations are harder to distinguish. Customize them for each type of unit you own, and have however many on hand will cover your normal vacancy rate.

Or, check your local hardware store for their standard “For Rent” signs. They’re not as specific, but can be used for all of your vacancies.  Hand-write your phone number, email address, and website in large, legible characters.

Place the signs in the front window, if visible from the street, and in the yard. An arrow sign at the nearest street corner is always helpful. Keep in mind that theft of outdoor signs is a reality.

Craft stores sell “For Rent” flags that you can customize with your phone number, too. A moving object catches the eye even better than a stagnant sign.

Consider placing signs at rental units that have been leased (befo tenant re the new moves in). They might read “Just Leased! But We Have More to Choose From!” with the contact information, or the address of the vacant unit.

Using signs to advertise your rental vacancies is a quick, easy, and inexpensive method to attract attention!