Dealing with Troublesome Tenants

If you have not had a nightmare tenant yet, consider yourself lucky.

These tenants miss payments, sneak in pets despite the terms of the lease, and generally break key agreements you established with them.

When a tenant breaks the terms of the lease, ideally you will have clear and legally enforceable expectations for what happens next.

That could include warnings, penalties, and even eviction if the issues are serious enough.

However, what do you do when you have troublesome tenants who are making your life difficult, but who always stop just short of breaking the lease?

Try these tips and tricks to improve the situation.

Clarify Expectations
The first thing you should do is reach out to tenants and re-establish expectations.

Have a tenant who is consistently sending their payment a few days late?

They might just assume that you do not care about timely payments because a previous landlord did not mind getting their checks until the middle of the month.

A quick phone call or e-mail could nip that problem in the bud.

If you enter the property to make a repair and notice that the sink is piled with dirty dishes, you may justifiably want to get your tenants to clean up their act.

Think of it from the perspective of the tenants before you reach out.

You might have a group of recent college graduates who do not realize that they are inviting pests into the home by leaving their dishes out.

While it should not be your job to teach basics like home maintenance to an adult, it might be worth your time to have an informal conversation with the tenants.

When you follow up with them about the repair, say that you noticed that the dishes were piled awfully high, and warn them that pests will start to show up if they do not keep the home clean and tidy.

Communication can resolve many small issues, from maintenance to getting tenants to allow you to show the home, before they become major ones.

Review the Lease
If the tenant is not responding to informal outreach, it is time to go back to the lease.

Make sure you are not missing any clauses that you could use as leverage.

Look for general clauses that can potentially cover multiple issues.

Grounding a discussion with your tenants in the lease will let them know you are serious about resolving the issues.

Behave Yourself
When you are in a conflict with a tenant, it can be difficult to maintain professionalism at all times, but it is even more important than ever.

Make sure you are always meeting your obligations, regardless of what your tenant is doing.

Even if you are angry that the rent is late (again) do not hold off on repairs to get back at the troublesome tenant.

If you are always in full compliance with the lease, you will have an easier time if the relationship continues to go south and you have to involve lawyers.

Ask Them to Move
Just because the lease is not up yet, does not mean the tenant has to stay if you want them out.

Reach out and say that you would prefer to amicably break the lease so that the tenants can leave early.

They are under no obligation to do so, so you may have to offer an incentive.

Parting with a few hundred dollars in moving costs might be worth the hassle.

While you may just have to wait them out, with these tips you have a chance to get your troublesome tenants to straighten up.

How To Price Your Prime, New Property To Get The Tenants You Need (and Want!)

If you have a new property ready to be introduced to the rental market, but have little to no idea how you should price your home, condo, or apartment, you are not alone.

Whether this is your first rental property or the latest in your rental empire, determining the desirability pricing of a rental space can be tricky.

You want the property to be affordable enough to be attractive to tenants, but you also want a price tag that will demonstrate the quality of your space.

Last, but not least, you want this price to net you profit from your investment.

Follow these few tips to help you find the right number.

Determining Factors For Apartment Rent Prices
There are many factors to consider when setting the starting price of a rental property.

If you’re not sure where to begin, consider using a comparison tool such as the one found on Rentometer, which will allow you to compare rents in your area.

Learning what other landlords are charging can give you a better idea of what your particular apartment is worth.

You can also look through classified ads online to find properties similar in style and location.

Because tools like Rentometer don’t consider the amenities that make your apartments desirable, you will need to consider those selling points when creating your price.

View, on or off street parking, yard access and number of units in the building can all influence the price.

Also, consider hardwood and tile floors, access to public transportation, included utilities or stylish kitchen appliances.

Rental experts warn that pricing too high can mean a higher turn-around rate on tenants in apartments.

Having a long-term resident with whom you have a great relationship is better than a parade of renters who love the property but can’t afford the rent.

Pricing a Single-Family Home
Unlike multi-unit properties that allow you to combine multiple rents to make a profit, single-family units are harder to price.

Finding a happy medium between affordability and profitability may seem impossible.

According to real estate advisors, property owners should rent a home for no less than 1.1 percent of the value for houses appraised at up to $100,000.

When you move up into the next price bracket of $125,000 it is wise to rent at 1.0 percent of the home’s value.

That means if you’re renting a property valued at $120,000, ask for a minimum of $1,200 per month.

Keep in mind, most single-family rentals do not typically include utilities.

If utilities are not included in the rent of your home, make sure the tenants are responsible for the electricity, water, sewer, heating, and cooling.

Keep Up Your Confidence In Your Property
Depending on the rental market in your area, it may be necessary to adjust the price to meet the demands of prospective tenants.

You may need to lower the original asking rental rate in order to get renters interested.

Don’t get discouraged and “low-ball” for the sake of filling the space.

You’ll find the right tenant who is willing and able to pay for your property, as well the utilities and proper maintenance. All that’s required is patience and a little upkeep.

Are Tenants Protected Against Owner Move-In Evictions

Depending on where you live, you may terminate a lease if you or a family member needs to move into one of your rental properties.

Laws governing these evictions will vary by city, making it pertinent that you check your local regulations.

Read on to learn in which circumstances you may perform an owner move-in eviction (OMI).

Individuals Protected From OMI Evictions
Only certain cities, usually those with rent-controlled apartments, allow for OMI evictions.

Pay close attention to the wording of the law.

Even when these evictions are allowed, there are certain individuals who are protected against them.

One of the primary populations protected against OMI evictions are the elderly.

In most instances, individuals over the age of 60—who have lived in a residence for a certain period—cannot be OMI evicted.

In New York City, for example, an individual over the age of 62 cannot face this type of eviction.

The same holds true for disabled people and those who have been in the apartment for over 20 years.

These rules also usually true for disabled or terminally ill tenants.

Additionally, tenants with children who have lived in a rental property for a set amount of time are also afforded protections.

Looking at San Francisco, families with children who have been in a residence for at least a year are protected.

Always double check your local laws to see the necessary qualifications of protected individuals.

Exceptions
Although the elderly, disabled, and families with young children are often protected, these rules have exceptions in certain circumstances.

For example, San Francisco landlords are allowed to evict families with children as long as the school year has passed.

Again looking at San Francisco, an OMI eviction is permitted against a family with a child if the owner—or their family member—plans on moving in with a child.

This exemption exists for elderly occupants as well. In essence, the party that’s moving in must meet the same requirements that protect the current inhabitants.

These protections are often linked to how long tenants have lived in the rental property.

While an elderly renter may be exempt from OMI evictions after living in a unit for several years, it’s not likely they will have the same protections if they had moved in six months ago.

When OMI Evictions Aren’t Legal
There are also instances where a landlord simply won’t be provided the option to begin an OMI eviction.

In most cases, the landlord must have no other property in which their family member or themselves could move. If the landlord does have another empty rental unit, they must use that one instead of the property that’s occupied.

This is true even if the occupied unit doesn’t have individuals who fall under a protected status.

Additionally, the law often dictates that you must live in the same building as your family member.

If you live in Topeka, for instance, and you’re trying to do an OMI eviction at a property in California, it’s unlikely that the law is on your side.

Undertaking an owner move-in eviction is a difficult process.

When these situations arise, however, there’s a good chance that you or your family member will have a place to stay, so long as you’re undertaking the eviction in good faith.

Due Diligence: Getting The Lay of the Land On Investment Properties

1. Choose Your Investment
Determine whether you desire a long-term property investment or a “flipping” property. Long-term investments produce positive cash flow, increasing your net worth.

If you plan to flip, your focus will be on property appreciation and a quick cash return.

Flipping

  • Your profit margin depends on your acquisition cost, and it’s important you buy the property at a low price so you can sell at a profit.
  • Don’t be thrifty with small purchases but wasteful with large costs. If a property is super cheap, the amount you may need to spend on repairs will drive up the cost.
  • Have a “what if” plan in place. Even if you buy at a great price and get the property ready for the market, there’s no guarantee it’s going to sell.
  • Partner with an experienced flipper your first time, and consider it an apprenticeship. Your profits will be lower, but what you’ll learn will be invaluable.

2. Good Property Characteristics
Research areas that have characteristics to enhance the value of your investment.

  • High-quality suburbs close to cities, and properties near business districts or waterfronts are all desirable locations.
  • Close to public transportation. People generally like to leave their vehicles when they go to the city. Public transportation no more than 15 minutes away from the property is ideal.
  • Lifestyle amenities within 10 minutes of the property. These include malls, schools, libraries, theaters, parks, restaurants, cafes, and gyms.
  • Areas that have 35/65 renter to homeowner ratios.
  • Low or non-existent crime.
  • Available jobs.
  • Affordable property taxes.

3. The Lay of the Land
Park your car, and walk around to chat with the residents, shop owners, and anyone willing to share insight on the neighborhood.

Check with the city or county planning department to get an idea of what the area’s future holds.

New strip malls, business developments, or condos mean area growth; these developments are great news.

If new subdivisions and complexes are planned, they could drive down your rents, absorb available green space and lower the value of your investment.

4. Research Realtor Claims
Never take a Realtor’s claim of “guaranteed rent” as gospel; it could simply be a sales ploy.

If you work with a Realtor, and he or she makes such a claim, get second or third opinions from independent Realtors before you accept it as truth.

5. Additional Tips

  • Avoid areas that have 10 or more apartment complexes; scarcity is a desirable sales attribute, since rents plummet with an abundance of available units.
  • Try to buy the property at least 12 percent below market price. This gives you wiggling room should you decide to sell the property. You’ll be able to sell below market value and still pocket a profit.
  • Look beyond just dollars and cents, since time is a commodity. The specific property you buy dictates the time required to manage it.
  • Several investment property types are very high maintenance, requiring substantial property management. These include college rentals, vacation rentals, and properties in crime-ridden or very low-income areas.
  • If you buy a high-maintenance property, you can hire a property management company. They charge under 9 percent of the rental gross and sometimes lease fees as well.
  • Be open and friendly with other real estate investors. These folks have great insight into the market, and they are more than happy to spare a few moments to offer advice.

 

Make sure you go over all available data on the property you plan to buy, and do a thorough investigation to make sure your decision is good.

Since knowledge is power, though, due diligence always pays off in the end.

 

Why Landlords Are Opting For Non-Refundable Move-In Fees Over Security Deposits

A relatively new pattern seen amongst landlords is opting for non-refundable move-in fees rather than security deposits.

Despite misconceptions, these are not interchangeable.

They both have their own advantages, but if you decide to begin charging non-refundable move-in fees, you’ll see several exciting benefits.

Move-In Fees Not Affected by Deposit Law
While collecting a deposit for potential damage to a rental property doesn’t seem hard, state laws often make it alarmingly complex.

In some states, landlords are required to have a bank account or trust set aside specifically for security deposit payments.

Additionally, there are some areas where tenants must be paid money if interest is earned on their deposit.

Additionally, every state has specific a specific timeline of when these deposits must be refunded.

You may be required to send a landlord security deposit letter.

These rules can become quite complex, especially if you own properties in more than one state.

Fortunately, non-refundable move-in fees aren’t governed by these laws.

Move-In Fees Saves Tenants Money on Security Deposits
Some tenants may see a non-refundable fee as a scam or ripoff; assure them that this payment is in both of your best interests.

By doing so, you can negate their security deposit entirely, and since you won’t have to worry about refunding, you can charge substantially less for the non-refundable fee than a security deposit.

However, in most areas, security deposits and non-refundable fees do not preclude each other.

If it seems beneficial, charge a lower security deposit in lieu of the move-in fee.

This way, the tenant will still receive money back as long as there are no damages while you’ll still have a move-in fee to handle other issues.

Move-In Fees Offer Less Hassle When Tenant Moves Out
One of the biggest hassles related to security deposits is figuring if, and how much, to deduct once a tenant moves out.

If there was damage to the unit, the deposit can be used to repair the issue.

Note that you’ll have to refund what’s not used for repairs.

Security deposits can become especially hairy when you evict a tenant.

Most daunting is when a tenant argues over a security deposit they don’t necessarily deserve back. It’s important for landlords to understand when to withhold a security deposit.

If, however, you have a non-refundable move-in fee, this trouble can be entirely avoided.

Move-In Fees Guarantees Coverage of Incidentals
One of the biggest advantages of move-in fees is that they guarantee coverage of certain incidentals.

If there’s minimal damage to a unit, the fee can cover all expenses.

If you need to change out locks and pay house cleaners before a new tenant moves in, the fees can go towards those expenses as well.

However, charging a fee isn’t an invitation for residents to leave properties severely damaged. If they cause damage that exceeds the move-in fee, you can always take them to court.

A good landlord knows every tool at their disposal and the non-refundable move-in fee is one of the best new tools available.

Consider the benefits of both options, and whether you choose both or solely a move-in fee.

You’ll rest easy knowing you’re better protected from legal action and headaches.