E-Renter News

A recent landlord-tenant case in Florida caught our attention. New landlords leased their furnished home to a tenant—or rather, the tenant’s company—who apparently had no intention of paying rent. After three months with no rent payments, the landlords started getting suspicious. They discovered a number of landlord-tenant disputes and court documents filed against the tenant and his company.

By checking with some of the other victims of the tenant’s scams, under the name Global Academy Online, Inc. the landlords discovered he was very “savvy” and knew just what to do to “dodge the bullet.” In this particular case, the tenant filed court documents or neglected to appear in court in an attempt to prolong the eviction process.

In court, the tenant claimed that the landlords did not live up to their end of the lease, because all utilities—including Internet access—were to be provided, and on three occasions the Internet service was interrupted.

The judge ruled for the landlords, and signed an eviction order. The landlords say they are not “after the money,” and they just want the tenant out of their house.

There are a few lessons to learn from this case:

• If a tenant wants to rent your property under their corporate or business name, consider it a red flag. Not in every case, but do check it out.
• If you run proper tenant background checks and credit checks, it’s more likely you will find out about landlord-tenant disputes and court filings before you sign the lease. It’s not a stretch to assume there were no credit checks or inadequate checks run in this case.
• A quick Google search can reveal a great deal about a prospective tenant, as well. This particular company raises a few red flags.
• Finally, don’t roll over and let a scammer get away without paying what is owed. Fight for the money you have coming to you.

If you’re a landlord or property manager who does not currently charge rental application fees, you could be missing out on a steady source of revenue. Why? Because the monthly rent covers only the privilege of living on your property—not the time and energy you spend finding the right tenant.

While the amount typically charged varies according to the market, most application fees are in the $25 – $50 range. Many landlords use the fees only to cover tenant screening. Others charge both an application and a screening fee.

Why charge an application fee above the screening fee? Well, it makes sense that you’d want to cover your time and out-of-pocket expenses each time you vet a prospective tenant—the time you spend showing the property, calling references, ordering credit checks and criminal reports can really add up. If the tenant goes away on his or her own, or if you reject their application, you have sustained a loss.

Charging a fee also helps weed out the tenants that may not be able to pay your rent. Yes, times are tough right now, but if a lease applicant can’t afford $25 or $40, can they afford to rent your property?

Remember, you’re in business to make a profit. Every time you expend time or other resources, you should be getting paid for it. So consider having every lease applicant pay for the tenant background and credit check you’ll be running, as well as for your time.

What else do you have to sell?

Landlords are split on the whole “holiday gifts for tenants” idea. Some say that tenants are not friends, and gifts are for friends. Besides, providing a habitable domicile in exchange for rent is as far as the landlord-tenant relationship goes. Other landlords say that tenants are customers, and without them, there is no rental business.

In the spirit of the season, it’s hard to argue that showing appreciation and giving to others is a bad thing. If it weren’t for the winter holidays, would any landlord ever give any tenant a gift?

I remember way back when, just before my husband and I got married, we lived in a cute little bungalow. Our landlord lived next door. We got along great; he took care of our house, and we paid our rent on time. We even invited him and his wife to our wedding, and we still have the gift they gave us.

Of course, not all landlord-tenant relationships are happy ones. But if you want to make yourself and your tenants feel good, even if it’s just for a few moments out of the year, drop by with a card and a token of your appreciation. Here are a few ideas.

Holiday Gifts for Tenants

• Tins of cookies, homemade or purchased
• Girl Scout cookies
• Gift baskets with small items from neighborhood businesses: soaps, cheeses, fruit, candy, water bottles
• Gift certificates from grocery stores, local pizza restaurants, department stores or a toy store if they have kids
• Don’t forget the pets: include a doggie bone or cat treats
• Nice chocolates
• Fruit baskets
• Cheese and cracker baskets

Remember, it’s better to give than to receive. A small token can go a long way toward improving the landlord-tenant relationship.

In this rental market, landlords hold the strings—and maybe even the leashes. With vacancy rates low and rents growing, many landlords can afford to be a little pickier than usual when it comes to renting their properties.

While the law prevents discrimination against choosing tenants based on family status, race, gender, religion and more, there is no law against prohibiting someone from becoming a tenant because they have a pet—even if they think of the animal as a member of the family. And it could be that more landlords will begin to exercise that right.

When finding tenants is challenging, many landlords ease up on pet restrictions in order to attract more potentially good renters. But now, demand for rentals is high as more people put off buying a home in favor after being squeezed out of the housing market, due to foreclosure, job loss or inability to qualify for a mortgage.

Many of these would-be homeowners have families that include pets, so finding rental property is tougher for them. And even if they do find a pet-friendly rental, what if their dog is over the weight limit, which can be 25 or 50 pounds? And what about people with breeds such as Pit Bulls, Rottweilers, German Shepherds or Doberman Pinschers—often prohibited by even the most pet-friendly landlords?

When you own your home, you may have any type of dog you want—but not when you’re trying to find rent a place to live. As a result, thousands of these dogs could end up at animal shelters.

In this tough economy, millions of Americans are facing the loss of their jobs, which can lead to the loss of their homes, which often leads to making the tough choice between housing and their pet. Landlords who allow pets can ease this worry.

Every landlord must assess his or her own situation, preferences, and vacancy rates to determine whether accepting pets works. But pet owners tend to be loyal and appreciative tenants, who are happy to have a pet to come home to. With the right lease, security deposit arrangement and good communication, allowing pets can be a win-win situation!

According to Freddie Mac’s October 2011 economic outlook, American households are continuing to choose renting over homeownership. For the year ending June 2011, there was a net increase of 1.4 million households that moved into rental housing. This figure translates to a 4% rise in the number of renting households, as the homeownership rate fell about 1.5%, or 600,000 households, over the past year.

Rental vacancies in buildings with at least five units dropped to 10% in the second quarter, the lowest rate in over five years.

The report indicates that much of increased rental demand is from households headed by individuals under 30 years old—previously, a typical age for first-time homebuyers. Now, these young adults are postponing homeownership in favor of renting. Along with tighter lending standards in the aftermath of the collapse of the home market, the shaky economy and uncertain job outlook led to drops in homeownership rates of 4.4% for those under 25 and 7% for those 25 to 29. Rates fell to 21.9% and 34.7%, respectively.

And here’s some good news for prospective rental home investors: financing for rental housing is becoming more readily available, according to the Freddie Mac report. The rise in lending activity is attributed to low mortgage rates and better apartment-sector economics. In addition, traditional lenders are returning to the lending market after cutting back during the recession.

If you’re a prospective landlord, don’t neglect these all-important steps to protect yourself and your business: require every applicant to submit an application, submit to a background check and tenant credit screening, and sign a lease that’s been reviewed by your legal advisor.

A recent incident in Youngstown, Ohio illustrates why landlords should think twice before protecting their rental properties from thieves and intruders (or even wayward individuals who may just be lost). In this case, the landlord suffered minor injuries. But it could have been much worse.

The Vindicator reported that the 44-year-old landlord was alerted to a break-in at his rental property at 3:15 a.m. He grabbed a handgun and his wife and went to investigate. Once there, he found a 22-year-old in the basement. The young man attacked him with a set of bolt cutters, hitting him in the face. The two then wrestled with the gun—and it went off. Luckily, neither of the two men were hit, nor was the landlord’s wife, who was outside during the confrontation, calling police. The landlord also suffered an ankle injury during the scuffle.

The younger man was arrested and charged with felonious assault, and breaking and entering. If convicted, he could get nine years in prison.

It doesn’t take much imagination to realize what could have happened here. One or more people could have been shot and gravely injured—killed. It could have happened in a flash.

It’s certainly natural for a rental property owner to want to check out a problem. Grabbing a gun for protection would be natural for many landlords, as well. However, the advice you’d probably hear from the police would be to call them and let them do their job.

After all, who’s better trained to handle a gunfight against a 22-year-old? You? Or the police? No property is worth risking your life, or that of your spouse.

You wouldn’t imagine landlords in the concrete jungle of New York City would have a problem with raccoons, but a new show on Animal Planet will change your thinking. Rat Busters will feature a team of brothers who are exterminators of the highest order. They search out roaches and bedbugs, mice and yes—raccoons—all over the city. They say the rodents are just like people—they live everywhere, and not just in the run-down properties or blighted neighborhoods. Rats, roaches and raccoons live wherever people are, in suburban neighborhoods, office complexes and the most luxurious high rise apartment buildings.

And in Middle America, tenants have been complaining about some unusual critters they’re living with in an Indiana apartment complex. No, they’re not roaches or bedbugs—a family of raccoons somehow found its way into the walls of the building and is terrorizing kids and adults alike.

The property managers say they repeatedly tried to seal openings and trap the critters. Tenants said their kids were scared and couldn’t sleep. One tenant took a photo of a raccoon looking at her through a heating vent.

Eventually the mother raccoon and three babies were captured. But some tenants still want out. Management’s case was clear: you can’t break your lease over a raccoon, and besides, we offered to move you to another unit.

Property managers couldn’t get much assistance in this matter. The health department wouldn’t get involved unless rats or bed bugs were the problem. It wasn’t a public safety issue, so animal control declined to help. Wildlife falls under the jurisdiction of the state’s Department of Natural Resources, which provides guidelines for removing them, but not much else.

The apartment complex owner eventually got some advice from a friend and trapped the masked nuisances.

Being a landlord is never boring, but if you’ve not had to deal with raccoons lately, things may be better than you thought!

Some people are turning their residences into hotels, booking travelers into spare bedrooms through an online service called Airbnb. But what if that residence is your rental property, and you don’t have the opportunity to approve, screen, or meet these temporary guests? And if your lease specifies that no sub-letting is allowed, does that cover a tenant charging strangers to stay temporarily in a spare room?

While travelers see this new trend as a great way to avoid the high rates and parking fees of hotels, or to access a city’s often unseen neighborhoods, landlords may not find it amusing to think of a revolving door of unscreened, unknown people coming through their property. How can you protect your rental property and other tenants when you have absolutely no control over the process?

And hotels don’t like the competition, either—not only do Airbnb hosts charge less than hotels, they are not subject to typically high lodging taxes as are hotels. Municipalities are also losing out on tax revenue each time a private room is booked.

Perhaps it’s time for landlords to take another look at their lease agreements and if necessary, change the language to make it clear that any form of subletting—whether it's for an hour or a year—is either not allowed, or must have the landlord’s approval.

When it comes to rental properties, landlords must do what is necessary to make them safe and habitable—and that means mold-free. Mold can be a health hazard, especially for children.

Recently, a Columbus, Ohio woman moved out of her rental home after mold began spreading through the home from the basement. Her kids were getting sick and she wants out of her lease. Her landlord says she took care of the problem and that the tenant owes rent for July.

In this case, the mold began in the furnace, and spread through the air supply. The tenant noticed an odor and her children were getting sick. She informed the landlord, who had the furnace cleaned.

The cleaning crew estimated that it had probably been 40 years since the furnace and duct work had been cleaned. The odor persisted, however, and the tenant discovered black mold on the basement walls. Soon after, her children were diagnosed with respiratory infections, and she moved out.

Landlords must stay on top of mold or it can become a huge problem. Educating tenants to notify you whenever there are leaks or drips in the plumbing is a good first step. Keeping basements as dry as possible is also important. Making sure the ground around the foundation slopes away and that any leaks are patched right away can help.

Once mold shows up, proper drying, removal and painting with EPA-approved products can help keep it from coming back.

According to an article in Kiplinger magazine, rental property investors are finding success in going down-market, where rents are much higher than the cost of ownership. Contrary to common advice of buying rental property even if for the first few years, monthly expenses exceed income (because of tax breaks and high appreciation), the business model now is to expect positive cash flow from the get-go.

This takes enough cash to buy properties outright, since banks are not lending to inexperienced landlords. And it means buying properties that have dropped far below original asking prices. Distressed housing markets and a surplus of foreclosed properties mean landlords can buy at minimal cost and find tenants who will pay enough rent to cover expenses and a reasonable profit.

The piece warns potential investors away from overbuilt high-rise condos and foreclosed suburban homes because they are not “economically feasible as rentals.” Inner-city homes and apartment complexes, townhouses and duplexes make more sense.

New landlords will also need to brush up on the local real estate market, as well as their handyperson skills, because it’s more likely they’ll be doing repairs and maintenance themselves—at least for a while.

The final bit of advice comes from a veteran real estate investor, who has a tried-and-true litmus test for would-be landlords: If you’re faced with evicting a family in December, could you do it? If not, you might not find success in the landlording business.

Read the entire article here.