E-Renter News

If you’re a new-ish landlord, you’re likely learning the good and bad of owning rental property—by experience. They say that it’s the best teacher, but it doesn’t hurt to know what to expect, so you can prevent the bad stuff before it starts happening to you!

1. It’s not easy to treat all tenants equally. Some are just a pleasure to deal with: paying rent on time, keeping their rental unit tidy, and only calling when they actually need something. Others like constant landlord contact  landlord, break the rules constantly, and pay rent late every month. It’s very important to maintain a professional relationship with both types of tenants—because they are the reason you’re in business.

2. You will likely receive calls at all hours of the day and night. But you can train your tenants to call during certain hours, and teach them up front what constitutes an emergency. You can even decide to not answer your phone every time it rings—that’s why voice mail was invented. Educate tenants that you’ll return their calls within 8, 12, 24 or however many hours you decide works for you. And in cases of emergency, do respond quickly to maintain good relationships with your tenants. That’s your job.

3. Pets are cute, but they can really be a pain in the tail (pun intended!). Most pets will damage your rental property—period. But remember, your pet-loving tenants paid an extra security deposit for the privilege of having a pet (right??). When you see pet damages, don’t freak—just take it our of the tenant’s security deposit at the end of the lease. And make sure your lease has a provision that tenants pay for all pet-related expenses exceeding the deposit. Responsible pet owners expect this—but not all tenants will be responsible pet owners!

4. Tenants will break the rules—often. They will sneak in pets after claiming they own none. They will sneak in boyfriends, girlfriends, cousins, brothers, new acquaintances, or anybody else they feel like sharing their home (your property) with. Tenants can’t know what the rules are unless you clearly communicate them, along with the consequences for breaking them. If knowing that bringing a pet into a no-pets-allowed apartment means instant eviction, a tenant will be less likely to try that one out. Same for smoking, throwing major house parties, and allowing all their friends to live in your rental property without your approval.

5. Most landlord/tenant disputes are about the security deposit. It helps to be extremely clear about what happens at the end of the lease. Photos and videos of move-in and move-out day will bolster your case. But keep in mind that tenants expect to get their deposits back—and most of them count on it. If both parties know what to expect, and you educate your tenants on how they can get more of the deposit back, you both win.

Cure or Quit Notices serve to inform tenants of a serious failure in the landlord/tenant relationship. Usually, the tenant has broken a significant term of his lease. Landlords issue Care or Quit Notices for a variety of reasons. Here are some of the more common Care or Quit Notice provocations we see from landlords:

1. When a tenant in a “no pets allowed” rental unit brings a pet home to live with him. Many landlords allow pets; but not all do, and some tenants think it’s okay to bring home a cute kitten anyway. It’s not. If your tenant agreed to a pet-free lease, and won’t find a good home for Fluffy, then you are within your rights as a landlord to issue a Cure or Quit Notice.

2. When the rent is late past your grace period, if you have one. This is probably the most common reason for Cure or Quit Notices. The tenant is late with rent, usually not for the first time, and it’s past the limit for your grace period—and your patience. Smart landlords don’t let this situation go on—they issue the notice and move on.

3. When the tenant starts an unauthorized or unlicensed business from your rental property. Landlords are liable for activity and accidents that occur on their rental properties. Limit your liability by not tolerating a tenant’s unauthorized day care, homemade candle, or pottery business. The chances of litigation are too great.

4. When the tenant brings in unscreened and unauthorized roommates. As landlord, only you determine who lives in your rental housing, by your rules and procedures. This should always include tenant applications and tenant background screening of everyone who lives in your property. If a squatter refuses to abide by your policies, you have the right to terminate the lease.

5. When the tenant is excessively loud and ignores requests to tone it down. Like the “no-pets” policy, you set acceptable noise levels. When tenants ignore them, it might be time to issue a Cure or Quit Notice.

6. When the tenant is participating in illegal activities. Most landlords have a zero-tolerance policy on illegal activities. The reasons are many, and should be obvious. If you know there is illegal activity, call the police and prepare a Cure or Quit Notice.

7. When the tenant is smoking in a non-smoking rental unit. Smoking causes damage to carpet, floors, countertops (when used as ashtrays) and the health of everyone who breathes the air around the smoker. Landlords do not have to tolerate it.

8. When the tenant is withholding rent in retaliation for some lack of performance on the landlord’s part. If a tenant is unhappy, there are proper procedures to follow. Withholding rent is not one of them. If they don’t pay their rent, a Cure or Quit Notice is acceptable.

Legal disclaimer:
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.

1. Ignoring the law: Unless you’re interested in fighting complaints filed with the U.S. Department of Housing and Urban Development, don’t discriminate in your rental housing advertising. Even if it’s unintentional—you can still be found guilty, and ordered to pay a fine. The Fair Housing Act prohibits housing discrimination on the basis of race, religion, country of origin, family status, gender, disability, and sexual orientation. This extends to advertising for rental housing, too.

   Stating in your advertising that your rental unit is “near a church” or “good for singles” can be considered discriminatory against tenants who do not attend church (or attend mosques or synagogues) and families. So be careful, know the law, and abide by it.

1. Not updating your online postings: Craigslist.com, RentShout.com, RentJungle.com, and other online rental search sites are an easy way to get your For Rent as in front of a lot of potential tenants. Just make sure that you review your postings regularly. And on Craigslist, they will expire in 30 or 45 days, depending on your market. Renew online ads so they keep working for you!

1. Being unwilling to try new things: speaking of online rent search sites—if you haven’t used them yet, what are you waiting for? Maybe a sign in the window or a classified ad in the paper has worked well for you in the past. But if you’ve had more than your share of rental vacancies lately, it could be time to try a new approach. Learning new skills isn’t painful—it’s fun! And it makes good business sense, too.

1. Depending on one form of advertising: Mix it up! Don’t just rely on a sign in the window or an ad on Craigslist.com. Take a broad approach to advertising, putting your message in front of potential tenants wherever they are: online, in the coffee shop, driving by, looking on the corkboard at work, or even at the Laundromat. The more methods you use, the more likely at least one will return a result.

1. Having no plan: You’ve heard the expression, “If you don’t know where you’re going, no road will take you there.” It’s the same with advertising rental properties. Figure out who your best possible tenants are, write down a list of where they will see your ad, then put it out there. Not sure who they are or where they hang out? Ask your landlord friends. Be willing to listen to their advice.

   When your phone rings, ask the caller where they heard about the rental property. Keep track so you’ll know which methods work best—and which to delete from your plan. If newspaper ads aren’t producing results, don’t waste your money on them. But how will you know if you don’t ask?

The National Association of Realtors recently released a report that shows 2009 vacation home sales rose, but most purchases were personal use—not for rental income.

Vacation home sales rose 7.9% in 2009 to 553,000. In 2008, the sales figure was 513,000. Investment home sales fell nearly 16% in 2009 to 940,000. An NAR spokesman said that typically vacation home buyers are looking for a place to spend family time—although one in five buyers want to allow family members and friends to use their home.

Only 25% of vacation home buyers have plans to rent the property; while 20% of investment home buyers plan to use the home for vacations. The study shows that 26% of vacation home buyers and 8% of investment home buyers plan to use the residence as their primary home in the future.

Investment home sales in 2009 (at 940,000) represented 17% of the total market. This figure is down from 21% in 2008. It looks like rental property investors took a break in 2009, as inventories soared and rents declined.

Median prices for investment homes were $105,000 in 2009, a decline of 2.8%. Notable details from the report include an increase in investment sales in the West, with California showing a high percentage of cash sales in the lower-price range. Overall in 2009, 50% of investment buyers paid cash for their purchase.

If you’re wondering what a typical investment home buyer looks like, he or she is about 45 years old, has a 3 out of 4 chance of being married, earns about $87,000 per year, and bought an investment home close to their primary residence—the median distance was 24 miles. And 25% of investment home buyers purchased more than one home in 2009.

Springtime is flood time in many localities. If your rental properties are in flood-prone areas, you’ll want to do everything you can to prevent damage that leads to costly repairs.

If you don’t know the flood history for your rental property, it’s easy enough to find out. Google “flood plain information” along with your zip code or county name, and you should see some helpful links. Or, just call your city or county building services office for all the information you need, including projected flood elevation for the area your rental property lies in.

Flood maps are usually available from these offices or from your local emergency management office. You can pinpoint how much flood water is likely to enter your rental property, based on the flood map data.

There are several basic steps you can take before the first drop of rain falls to ensure your rental property is protected from damaging floodwaters.

Electrical:

• Your main electrical panel should sit at least one foot above the projected flood elevation. Electrical outlets and switches should also be positioned above the projected flood elevation; if your rental property lacks a basement, you could have a problem if the flood elevation is above the panel and outlets.
• If there are any baseboard heaters in your rental property, they, too should be positioned above the projected flood elevation.
• If you elect to have any electrical work done, install ground fault interrupt (GFI) outlets to reduce the risk of shock—and have all electrical work performed by a licensed electrician.

Drainage:

• Keep gutters and downspouts clear to prevent water from backing up and damaging surrounding structures or dripping down to the foundation.
• Channel water away from the foundation through use of gutters and proper grading—or dig French drains if soggy soil is a problem.
• Regularly inspect sump pumps for proper operation. They should run whenever the water level hits a certain level. Battery backups are handy to keep pumps running when the power goes out.
• Be sure that any basement windows are sealed tightly.

Heating Systems and Appliances:

• Any propane or natural gas tanks must be properly secured to prevent floodwaters from tearing them away—which can have dire consequences. Check with the propane company to ensure they have anchored their tank sufficiently.
• Instead of locating important systems like furnaces and water heaters on the floor, raise them on concrete blocks when you can. Or, put in a draft-down furnace in the attic, install a small, on-demand water heater, or suspend the furnace from the ceiling joists, if they can handle it.
• Put washers and dryers up on blocks, too.

Sewer System:

• Check it for a backflow valve. If your rental property lacks such a valve, have a plumber install one—or your sewer could back up into the property during a flood, causing a terrible mess.

Check your rental property’s flood insurance coverage, too—and be sure to add or increase it if you need to. It takes 30 days for flood insurance to become valid. Don’t wait for a flood to worry about damage to your rental property!

What’s going on in the roller-coaster housing market? First, home values dropped again—for the 13th quarter in a row—in the first quarter of 2010, according to a report from Zillow.com. Nationally, prices are down 3.8% from a year ago, and 1% from the fourth quarter of 2009.

Some California markets, however, may have seen the bottom of the housing slide. Investors are busily acquiring foreclosures—which helped home sales from plummeting further. In fact, March home prices in San Diego were up 3% over 2009—and sales of foreclosures made up 33% of the all San Diego home sales in March.

Another bright spot in California was Santa Clara County, home to Silicon Valley. Foreclosure filings there fell a whopping 32% in April 2010 over 2009’s figure, according to the San Jose Mercury News. April was the fifth consecutive month of decreases in foreclosure notices. The April figure was down 15% from March 2010.

Nationwide, foreclosure filings fell 2.4% in April 2010, compared to April 2009. The number indicates a drop of 9% from March 2010—a promising sign. However, the record foreclosure pace will likely continue for the foreseeable future. Some experts say the only reason for the dip is a paperwork processing backlog, while others say the number of foreclosed homes is beginning to stabilize.

“Underwater” mortgages, where the amount owed is more than the value of the home, now account for 23.3% of all mortgages. That’s an increase over the fourth quarter of 2009, when the figure stood at 21.4%. And more borrowers are defaulting on loans, even when they have the ability to pay.

Fannie Mae says that although single-family mortgage delinquencies are still high, the rate grew more slowly in the first quarter of 2010 than in each of the four quarters in 2009. While foreclosures dropped, bank repossessions hit a record high in April—up 45% from April of 2009.

As the federal home buyer tax credit ended in April, the typical high demand months may be behind us for 2010. Usually, demand increases during the summer, but many homebuyers moved their closing dates to meet the deadline of April 30 this year. This could mean another dip in home sales and value is still to come. In fact, according to Zillow.com, national home values are likely to hit bottom in the 3rd quarter of 2010, rather than the 2nd quarter as had been predicted.

It will be interesting to see how continued unemployment near 10% will affect the recovery of the housing market. The delinquency/foreclosure process may not peak until 2011, according to many experts.

1. Tenants want a clean unit when they move in. If your previous tenant didn’t clean thoroughly, tenants expect you to do it (or hire a cleaning company). You might think this is a no-brainer, but from what we hear, tenants have just as many “filthy apartment” stories as landlords have “bad tenant” stories. A few examples: Twinkies in the fireplace, a dirty diaper under the bathroom sink, and cherry stems in the kitchen drawer!
2. When they move out, tenants sometimes plug picture holes with toothpaste—not spackle. It’s a common trick that you might have noticed (especially if the apartment smells minty fresh after they leave); but some landlords have never seen it done. Beware!
3. Tenants appreciate the small things: a roll of TP (new, of course) and an inexpensive shower curtain, a plant, or a small bottle of dishwashing soap will go a long way to establishing a good relationship.
4. Tenants think you don’t want to give them their deposit back. They are waiting for a fight when the lease is up, they move out, and they’re waiting for their security deposit back. They might have been victims of these tricks we’ve heard about: landlords deducting $150 cleaning fees for apartments that were left in immaculate condition, charging $10 for a light bulb, and deducting $50 for “rudeness.” It may sound hard to believe (and illegal) that landlords would do these things, but they’re true!
5. Tenants expect an adversary relationship. Landlords have a great opportunity to “wow” every new tenant by treating them with respect and maintaining excellent communication. Many tenants have not had good experiences with previous landlords—and of course, landlords have nightmare tales to tell about bad tenants—but when you consider that tenants are your reason for having a rental business, it can’t hurt to be the ultimate professional in establishing a good relationship. And who knows—you might end up even liking each other!
6. Tenants will break things and not tell you. Judy, a landlord we heard from recently, reports that her “great” tenant made sure everything in the apartment looked perfect when he moved out. When the new tenant moved in, she quickly heard that the shower was broken. Judy couldn’t tell by looking at it—and the previous tenant never mentioned it. Lesson learned: Judy now checks the function of all systems during the move-out inspection!
7. Tenants will often leave the rental unit better than they found it. Believe it or not, many tenants take pride in their personal responsibility and wouldn’t dream of leaving a dirty apartment or home.

Great tenants are not an extinct species—in fact, you can probably find some for yourself, if you’re willing to be picky and, of course—prescreen tenants carefully. 

Since 1970, the Fair Credit Reporting Act (FCRA) has enacted strict guidelines for credit reporting agencies and credit report users. At first, its definition of someone who “has a legitimate business need for the [individual’s credit] information” was rather vague.

In 2004, Congress passed changes to the FCRA in an attempt to increase credit report accuracy and prevent identity theft. Subsequently, Credit Reporting Agencies (CRAs) tightened up their guidelines and restricted many individuals, including landlords, from obtaining credit information.

To qualify to receive credit reports, a rental property business must submit to an on-site inspection, hold a business license, have a publicly-listed business telephone number and a business checking account, and maintain a separate, secure business office.

If your business does not meet the above guidelines, it is still possible to screen tenants—you just won’t receive their actual credit scores. Instead, you will receive a Tenant Background Check Report. This exclusive report contains all the basic validations, like Social Security Number, Patriot Act, Liens, Judgments, Evictions, and Bankruptcies—and much more. Plus, you can have the peace of mind that comes with knowing your potential tenant meets your minimum credit requirements, based on information obtained from his credit file.

Even though CRAs tightened up regulations back in 2007, individual landlords or large-scale property managers alike can continue to count on E-Renter.com to stay in compliance with the FCRA. We keep up with changing laws and regulations, so you don’t have to!

Sure, you’d like to think that all of your tenants will pay the rent exactly on time and in full every month, keep your rental property immaculate, never have loud parties, and never complain. But the chances are that the more tenants you rent to over the years, the higher your number of “problem tenants” (however you define them) will be.

Here we present a handful of landlord dos and don’ts for dealing with less-than-perfect tenants:

Inherited Tenants
When you buy a rental property with existing tenants, it is your right and responsibility to require the same application and tenant screening procedures you conduct for all your tenants. In other words, don’t feel obligated to allow tenants to stay unless they meet your qualifications.

Ending a Month-to-Month Lease
If a tenant is on a month-to-month lease, do simply notify them that the lease will not be renewed, within the time required by the lease. Don't give a reason for not renewing. Don’t give in to the tenant’s requests for a reason. Don’t make up a reason to spare the tenant’s feelings. You might be giving the tenant ammunition to file a complaint or discrimination claim.

Keep it Professional
You might not appreciate your tenants’ housekeeping habits—or lack thereof. You might not think that their style of dress, car they choose to drive, or personal beliefs are “good,” or “right.” Even if your tenant has an obvious aversion to showers or teeth brushing—do remember you are the landlord, not a judge on “Project Runway.” People can live as they please, and landlords should let them, as long as they are within the requirements of your lease.

Document, Document, Document
Do keep meticulous records at the first sign of trouble. Tenants who break your rules, damage your property, smoke in a non-smoking unit, or host loud parties can be dealt with—but you’ll need proper documentation to be sure you win an eviction. Start by list dates and times of neighbors’ complaints to you or to the police. Drive by and take photos of your rental property exterior—during or after parties is a good time to do so. Call and schedule an interior inspection—and bring along your video camera. Keep copies of all correspondence to and from the tenant: letters, voice mails, emails, and notices.

Illegal Activity
If you suspect a tenant of illegal drug or other prohibited activity in your rental property, don’t deal with it yourself. Call the police—it’s their job. Accusing a tenant of illegal activity or drug use could result in retaliation.

Don’t Hesitate to Take Action
When a tenant is late with rent, doesn’t pay the utility bills, breaks windows or doors, parks a disabled vehicle on the lawn, or otherwise breaks the terms of her lease, do move immediately to legal action, including eviction. Just about every landlord we know who gives in to pleas and promises or waits for a tenant to clean up his act or get a job ends up wishing they had not done so.

Successful relationships are built on trust, respect, and good communication. This is true whether the relationship is between family members, employer and employee, friends, or landlords and tenants. As landlord, it’s your responsibility to be sure you are sufficiently communicating with your tenants.

There is nothing wrong with over-communicating. In fact, you might find it necessary to maintain smooth landlord/tenant relationships. It’s like the formula for essay-writing or speech-giving: tell them what you’re going to say; say it; then tell them what you said. People generally need to hear information a few times to understand and retain it.

When it comes to communicating the information you want your tenants to know, understand and follow, there’s nothing like a basic information sheet or brochure to help you in this task. Even if the lease your tenant just signed contains everything they need to know about living in your rental property, it’s not reasonable to expect a tenant to pull out their lease each time they have a question about your rules and procedures.

Make it easier on everyone—and improve your landlord/tenant relationship—by providing a “New Tenant Guide” to each tenant. Make sure it includes the following info, at minimum:

• Rent due dates, whether it’s the same for everyone, or customized to each tenant
• Cleanliness requirements, including trash pick up days and location of recycling and trash dumpsters
• Emergency procedures and fire escape routes. Include locations of fire extinguishers and water main shut-offs, as well as contact numbers for reaching you or your designated agent or handyman 24 hours a day. Tenants must know what you want them to do in case of an emergency.
• Quiet hours
• Parking regulations
• Smoking/No-smoking policy
• Pet policy, if applicable
• Repainting policy and window treatment requirements
• Basic info regarding heating/ac and plumbing systems, location of appliance manuals

Remember, it’s up to the landlord to set the tone for good communication with tenants. Over-communicating might take more effort, but it is worth it when issues are avoided instead of becoming major problems!