E-Renter News

The tough rental market that began the last quarter of 2008 might be over soon. Some markets are showing rent increases, and most are showing signs of stabilization. This is good news for rental property owners and managers. As the rental market recovers, when can landlords start recovering, too—by raising rents and cutting perks?

That answer depends on your market. If it’s still hurting, like in Las Vegas, San Jose, or San Francisco, you might need to hold off on trying to recoup your recent losses. In other markets, it’s best to do your homework before raising rents. Check out the rents and vacancy rates in your area. Talk to other landlords and property managers. Spend a little time making phone calls or email inquiries and be willing to share information with others in the rental business.

Whether or not a landlord should raise rents or cut perks also depends on your financial picture. If you’ve had to cut rents to fill vacancies, or just to jump-start cash flow, it might be a good time to look hard at your bottom line. If the balance sheet shows an unhealthy situation, it doesn’t make sense to continue on—especially if an increase can help stop the bleeding. Some rental businesses can absorb losses for a short time, but most cannot—and none can suffer negative cash flow forever.

If it’s time to raise rent, let your tenants know before their lease is up. Offer a renewal at the new rate, and then start the negotiation process. If you’re dealing with a good tenant, be flexible—and if they refuse the increase, talk about other ways to renew the lease to your advantage. Ask them to pay the cable or another perk you might have thrown in during the existing lease negotiations.

Be flexible. It’s easier and less costly to keep a good tenant for another year than to repaint, repair damages, and find another good tenant. But if you ask for a higher rent that is within your local market’s asking rents, and the tenant refuses to pay, you might need to let them go. Replacing a lower-paying tenant with a higher-paying one could be better for your bottom line.

FAQs for Landlords

Q: What appliances do landlords typically provide in rental units?

A: It depends on the landlord. Some refuse to provide any appliances at all. “I find that when tenants supply their own appliances, my liability, expenses, and hassles go way down,” says Mark, the owner of a six-unit apartment building. Others provide the basics: a stove, a refrigerator, and sometimes a dishwasher. Still others add in washers and dryers for their tenants.

Q: Why such a range of appliances supplied in rental housing?

A: Much of it involves expectations. Higher-end rentals usually contain higher-end appliances—because tenants demand and will pay for them. Lower-rent units are less expensive for the tenant because there are fewer amenities. And some landlords—like Mark—simply tire of repairing or replacing appliances in their rental units, so they often require tenants to supply their own.

Q: Is the landlord responsible for repairing appliances?

A: It depends on the lease. This is a prime example of how careful rental property owners must be when preparing leases. If the lease doesn’t state responsibility for appliance repairs, the tenant is not necessarily liable.

Q What about when the tenant misuses the appliance?

A: Again, the lease is the deciding factor. Make sure you cover appliance use, repair, and maintenance in the lease.

Q: What are some guidelines for a landlord who wants to include appliances in rental property?

A: First—more features on an appliance means there’s more that can go wrong with it. Refrigerator/freezers need to keep food cold. But add an automatic ice maker, and you have one more mechanical part that can break. Whether or not an icemaker is considered necessary, if the fridge in your rental unit has one, it could be your responsibility to keep it working as it was when the tenant signed the lease.

Second—cover proper appliance use in the lease. Provide instructions for use (many original manufacture manuals are available online) and have the tenant sign off that they received the instructions and will be responsible for any repairs or replacement needed due to negligence or misuse.

Third—encourage tenants to let you know immediately if an appliance starts acting up. Often, a problem is not a big deal at first—but left unchecked, a little thing can cause plenty of damage. Ask our landlord friend Cynthia who told us recently that while her tenants were away on vacation, the water line to the ice maker started leaking. The damages to the flooring, sub-floor, and joists added up fast--over $10,000 at last count!

Finally—do your homework. Find out what other rental units in your area in the same price range include. To compete in your market, you’ll need to provide the same amenities—or lower your rent.

FAQs for Landlords

When renting to members of the Armed Forces, landlords may be asked about adding a military clause to your lease. Here are some FAQs about military clauses:

What is a military clause?

A military clause allows a tenant who is a member of the Armed Forces, who enters military service, or who is called from reserve to active duty, terminate a lease when he or she receives orders to deploy or depart the area, as well as in other situations.

What other situations does a military clause cover?

Orders of transfer, discharge or retirement from the military, release from active duty, temporary assignment out of the geographical area of the rental unit (outside a 40-mile radius), and transfer into base housing. Also, in the unfortunate situation of an Armed Forces member’s death or missing in action situation, the remaining family members could terminate the lease.

What are the requirements under a military clause?

Tenants wishing to terminate a lease under the military clause must give 30 days’ written notice to the landlord. A copy of the orders is also required. Landlords must then terminate the lease agreement as of the effective 30-days later date.

What about spouses or other family members who are on the lease?

The military clause covers non-military family members as well.

Are landlords required by law to include a military clause in a lease?

Not in all states; however, they may still be obligated under federal law to allow a military member tenant to terminate the lease under the above conditions. Check with your lawyer for details.

The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining legal advice applicable to your situation.

Meet Demand and Reduce Costs

Landlords everywhere are discovering the joy of implementing non-smoking policies in their rental properties. Imagine countertops and vanities free of smoke burns; carpets with no melted fibers; walls without nicotine stains. And the lack of cigarette odors! Why wouldn’t a landlord prohibit smoking in all rentals?

Check out these numbers from a recent survey of renters:

• Three-quarters would rather live in a smoking-restricted building, "other things being equal."
• 52% would even pay extra rent to live in a smoking-restricted building.
• 42% would feel uncomfortable renting a unit next door to a smoker.
• Three-quarters say it's okay for landlords to prohibit smoking inside rental units to keep secondhand smoke from drifting into other units.
• Only 26% currently live in a building with smoking restrictions.
• More than a third of renters in multi-unit buildings are regularly exposed to a neighbor's secondhand smoke.
• Most renters don't smoke and many smokers smoke outside their units.
• Three-quarters of renters don't smoke at all.
• 19% of renters smoke daily—but only 11% of renters smoke inside on a regular basis.

Smoking is down across the United States—so it only makes sense that most of your potential tenants don’t smoke, and don’t want to deal with a previous tenant’s left-behind smells and stains. Smoke gets into carpets, drapes, and walls—and no matter how much cleaning you do when a smoker moves out, the smell lingers on.

When you implement a no-smoking policy, the expense and trouble of eliminating cigarette odors vanishes. You’ll save on paint and cleaning.

Smoking damages rental units. Burn marks in carpet; nicotine stains on counters where smokers “rest” their cigarettes; holes in vinyl flooring where a cinder landed. Fixing the damage is expensive and time-consuming. Who needs it?

A no-smoking policy means less replacing of carpet, vinyl flooring, and countertops.

Smoking is a danger to other tenants. While no laws specifically protect tenants from others’ second-hand smoke, if a tenant or their child suffers from asthma or other respiratory disease, they might qualify for protection under the Fair Housing Act. This could trigger legal action against the landlord. It’s easy to eliminate this possible liability.

A smoke-free building keeps all of your tenants safe from second-hand smoke.

Smoke-free housing is in demand. Just as hotels and rental car companies meet non-smokers’ demands with smoke-free rooms and cars, so can landlords meet this demand—and rise above the competition. In this difficult rental market, landlords need every advantage they can get to entice tenants to sign a lease. A large market wants smoke-free housing—and you can provide it to them.

No-smoking polices are legal. Smokers are not a protected class, and nobody has a “right” to smoke—it’s not like disabled tenants, who have a right to access, for example.

Remember—restricting smoking in your rental housing not only keeps your expenses down, it’s good for your tenants’ health. And that makes it a winner for everyone!

Source: Smoke-Free Housing Project