E-Renter News

Absentee landlords sometimes get a bad rap. While many out-of-town rental property investors take care of their properties, properly screen prospective tenants and make frequent inspection visits, others don’t. They’re often cited for code violations by the cities where their rentals are located, or accused of having “dilapidated” or “run-down” rental properties.

One city in upstate New York is attempting to solve the problems caused by some absentee landlords with a new law. Property owners in Oswego, NY must have a local contact that the city can hold liable for any code violation. As things stand now, when there are code violations on properties owned by out-of-towners, the city can’t take action. “We can’t get the owners into court because we can’t serve them papers,” said one city councilor, who lives next door to a run-down rental property owned by an investor in Virginia. The landlord admitted she had never been to Oswego.

Some are opposed to the new law, out of concern that landlords will require their tenants to be the accountable party—which may not be the best way to solve the problem.

The law, which goes into effect August 31, requires the property owner or contact to live within a 25-mile radius of Oswego. Existing rental property owners are grandfathered until it’s time to renew their permits, after three years.

What do you think of Oswego, NY's new absentee landlord law?

In Springfield, MA, people in need received a Thanksgiving surprise from an unlikely source: their landlord. Accompanied by his daughter, Yellow Brick Property owner Kevin Shippee loaded his car trunk with over 100 turkeys and visited tenants, handing each the centerpiece of their holiday meal. “Every little help counts,” said tenant Maria Rivera. Shippee surprised the tenants who would otherwise have difficulty affording a Thanksgiving turkey this year, according to a report on WWLP news.

And in Oakland, CA’s Uptown district, artists are moving into a formerly dicey area—with help from a few “cool” landlords, who encouraged creative use of the spaces they owned and kept rents low—in fact, below market rates. “He rented those spaces at half what he could have gotten,” said one tenant of his landlord. While most tenants expected rent increases as soon as the street started filling up, it didn’t happen. “The one thing he didn’t do…was jack up the rent the second he could.”

Another landlord renovated the apartments above the retail spaces he owned, installing hardwood floors and steam heat—and he didn’t increase the rent. “My theory is to keep the building full. I would rather have (the apartments) occupied at a lower rent than have them unoccupied for months at a time.”

It's not easy to dig into your own pocket or keep rents low, especially when the economy is making the rental business tougher than ever. So it's especially nice to report good news about landlords who care.

In a recent article, CNN Money offers advice to "reluctant" landlords--homeowners who cannot sell their houses after they've purchased a new one. For some folks, the decision to rent a house is made only in desperation--and in hopes of covering mortgage payments.

The article offers easy-to-follow steps to maximize the income possibilities of renting a home while minimizing the hassles. Step number 4: Screen Prospects! The author, Amanda Gengler, recommends readers have prospective tenants fill out an application which includes a Social Security Number for background screening--and points readers to www.E-Renter.com.

Read the full article here.

Q: I’m a single, female homeowner with a young daughter. I have a separate rental unit on my property. I’d like to rent it, but I’m wary of renting to men. Is it legal to specify “no male tenants” in my advertising?

The Fair Housing Act clearly states that landlords may not discriminate against tenants because of sex or gender, with a few exceptions:

• When the landlord is renting a room in the home he or she lives in
• The landlord is renting to tenants who will share living space with the landlord
• A college or university has single-sex dormitories
• A landlord owns four or fewer units, lives in one, and does not use the services of a real estate agent

It looks like the final exception applies to this situation. A landlord who lives on their rental property which consists of just a home and cottage qualifies for the “four or under” rule. This is also known as “Mrs. Murphy’s exemption,” and is intended for just such a situation.

However, state and local laws may vary. California lists exemptions to the gender rule only for single units with shared living areas.

Check your state and local laws carefully, to be sure you are not in violation. A landlord tenant lawyer in your area is the best resource for information on this potential problem, but your local housing office should also be able to direct you.

And no matter who applies to rent a dwelling on your property, protect yourself and your family, and experience peace of mind by conducting a thorough tenant screening. A professional tenant background check will help you rent to the best possible tenant.

It’s an entirely personal decision whether a landlord decides to manage his or her own properties or hires a property management company to do it.

Property management firms exist because there is a demand for their services. And they charge for them. Only each landlord can decide if the service is worth the fees and possibly lower profit margin.

If you have found that managing your own income property is not one of your stronger skills, there’s no harm in researching property management firms. Check out several, ask your friends in the rental business for their recommendations, and have a list of questions ready. Here are a few to help you narrow down your choices:

1. What are your fees? What do they include?
2. What would trigger an extra charge?
3. How will you advertise my properties?
4. How do you handle maintenance? Do you mark up materials and supplies?
5. What is your procedure for showing a unit that is for rent?
6. What options do you offer my tenants for rent payment?
7. How do you collect delinquent rent?
8. What about maintenance emergencies?
9. How will you prepare a unit for leasing after a tenant moves out?
10. How do you prescreen tenants?
11. How will you enforce my rules?
12. Why should I hire your company?
13. How does your insurance cover me? What about bonding?

Be sure to ask for references—and follow up on talking to as many as you can. You might hear three glowing reports and be tempted to stop—but number four could have information you really must hear. Consider finding a few clients that are not on the company’s reference list, since they’re not likely to provide you with a bad reference. Ask around.

Visit the offices of the management company and observe how they answer the phone, interact with tenants and property owners, and meet the person who will be handling your account. Establishing a rapport will smooth your interactions with him or her.

Before you sign any contract, know what you’re getting into. The way a property management company answers your questions will reveal a lot about how they will work with you.  Choose a property management company that will look out for your best interests.

First-Time Buyer Incentive Credited

Existing home sales were up 10.1% in October across the United States, according to a report by the National Association of Realtors. Purchases of existing homes drove total housing inventory down by 3.7%.

Inventories are becoming more in line with demand than they have been in two and a half years, according to the study. Buyers becoming more aggressive in some areas, especially in the lower end market.

The Federal first-time buyer tax credit of $8,000 is being credited with the surge in home sales. Buyers who may have been waiting for the economy to turn around before purchasing a home saw the combination of lower prices, low mortgage rates, and a one-time $8,000 tax credit as too good to pass up. The rush to beat a November 30 deadline spurred folks off the couch and into open houses and realtor’s offices.

Mortgage interest rates are the third lowest on record since 1971, according to the National Association of Realtors—another significant contributor to the movement of existing home inventory in October.

The tax credit, which was set to expire at the end of November, has now been extended to April 30, 2010.

Prices continue to be affected by foreclosures and other distressed properties—so this is an extremely favorable affordability climate for real estate investors. The report states that prices continue to flatten and are poised to rise again in 2010.

Check out These Unusual Items and Save

Conducting inspections or scheduled maintenance at a rental property is your chance to check for signs of trouble around the grounds or in common areas. Whether you handle maintenance yourself or hire a handyman for the bigger jobs, you might want to cover the small fixes yourself—it’s a good way to save money.

Landlords are never bored because there is always something to fix, tighten, touch-up, clean up, or patch.  Beyond the basic tools you’ll want to carry with you (channel lock pliers, hammer, measuring tape, wrenches) here are a few unusual items you might want to include in your landlord tool box:

Old English Scratch Cover: Use on natural or stained woodwork to cover minor dings and scratches that tenants inflict on your molding, cabinets, or paneling. It really works—use the light or dark shade to match the woodwork, dab it in and let it dry, then wipe off excess.

Touch Up Paint Applicators: We like the plastic bottles with shoe-polish-type spongy applicators. Just fill them with your rental units’ paint colors, label them and refill as needed. Or, just load up a small, air and water-tight container with paint and throw a clean paintbrush into your toolbox to cover inevitable paint scuffs and chips.

Garbage Bags: You will likely encounter some trash around your rental property every time you go to inspect, so be prepared with a selection of bags--try paper compostable bags for yard waste, and help your business go greener.

Cordless screwdriver: Keep one, along with several different sizes of bits, in your toolbox. There is always something loose in a rental property!

Rhino Glue: Reports we get say this is one of the best bonding adhesives on the market. Temperature changes and moisture don’t affect its durability--landlords find hundreds of uses for this product.

FastCap 2P-10 Adhesive and Cover Caps: another strong adhesive product, and caps that stick to just about any surface, so you can cover holes in walls, cabinets, countertops and floorboards quickly and easily. They come in many colors and wood grains.

Maybe Sooner Than You Think!

No landlord or property manager enjoys evicting tenants. Turnover is bad for your cash flow, and there are usually expenses related to eviction, too. Plus, it can be an unpleasant situation for everyone involved.

However, in the rental property business, evictions are a fact of life. Ask a seasoned landlord when is the right time to evict a tenant who is behind on rent, and you’ll probably hear, “the day after the rent is late.”

There are several good reasons to consider swift action when a tenant breaks the rental agreement:

• If the tenant breaks a condition of their rental agreement once, it is more likely to happen in the future. In other words, the situation is not going to get better, so why not replace them with a responsible tenant?
• You must demonstrate fairness to all tenants. Enforcing your rental agreement (the one that the tenant broke) in the same manner to all tenants is the best way to avoid discrimination claims. And, it can make things easier on you: whenever there is a problem, you simply hold up the rental agreement and stand behind what the tenant and you agreed upon.
• You are running a business, not a hobby or charity. It sounds harsh, but do remind yourself that in any business, rules must be followed and risk must be rewarded. You are the one at risk in your business. If you do not protect your interests, who will? It’s difficult to hear about problems tenants have, and while they may very well be genuine, you must stand firm and defend yourself and your business.

If you’re facing a tenant eviction for the first time, seek a property lawyer’s advice to make sure you don’t make common errors that can hold up your case.

Pros and Cons of Living Next to Your Tenants

When you live in the same building as your tenants, you see and hear everything. And that can be very good, or quite bad. Here are some pros and cons of owner-occupied rental property.

Pros:

You can keep an eye on things. When you live in your rental property, you will hear all the strange noises, see all the potential safety issues, and notice the dripping pipes long before they become major issues.

You’ll have a personal connection with your tenant/neighbor. Along with good communication, a personal connection can pave the way to an excellent landlord/tenant relationship.

Your tenant will behave better. Some tenants can be a bit like your kids—they do things when you’re away that they would never dream of doing in front of you. With their landlord next door or downstairs, most tenants will conduct themselves appropriately.

It’s a short trip to pick up the rent. Let your tenants know you’ll be picking up their rent check on the 1^st of every month. They’ll have fewer excuses, and you’ll have your rent in your hand, not in the mail.

You could gain financially. Check with your lender, but if you’re living in the unit, there could be certain financial advantages regarding down payments and mortgage rates. Plus, your tenants help pay your housing expenses!

Cons:

Your tenants know where you live. When they have a complaint or a problem, they might feel like they have direct access to you, day or night.

You might have to share common areas. If you’re used to your own space, it could be a problem to share a yard, storage area, or a garage with your tenants.

You can only deduct the appropriate percentage of expenses from your taxes. If you put a roof on your entire building, only the portion that covers the rental unit is deductible. Check with your tax advisor, of course.

Staying Organized will Pay Off

Good record keeping can ensure that every visit to your accountant will be a much more pleasant experience. But more importantly, documenting each step in the landlord/tenant relationship can protect you in a claim against a tenant, or verify your position in case of a legal dispute filed by a tenant.

Set up your tenant file system so you can access all information quickly. You will probably have two sets of records: paper and digital. Written records should be kept in fireproof, locking cabinets, and include:

• Tenant’s rental application
• Signed lease or rental agreement
• Verification forms
• Lead-based paint disclosure form
• Credit, Background ,Criminal Records Reports
• Receipt for security deposit and/or rent
• Move-in/move-out checklists
• Photos of unit taken at move-in
• Entry notices
• Addenda to lease or rental agreement
• Maintenance requests
• Tenant Correspondence

Your digital tenant files will include all email correspondence. You can also scan documents and save them on your hard drive or back up disks in case of loss of paper files.

The most important thing to remember is to gather all the information required for each tenant. Don’t fall into the habit of overlooking important details—you never know when you’ll need that proof of notification, or a document signed by your tenant to prove your case!