Ensuring Tenant Privacy

As part of the rental application, a landlord needs to collect confidential data about a potential tenant in order to determine if they are suitable for the suite or home they wish to rent.

Sensitive data may include employment information, bank account and credit history, social security numbers, and previous addresses, all of which are of interest to an identity thief.

A landlord may also know personal information about the tenant, including marital status, children, and other sensitive data that legally shouldn’t be on paper.

In the USA, both personal and confidential tenant data is protected, and a landlord is prohibited from releasing any financial or personal data to a third party, without written consent of the tenant.

Confidentiality of tenant information is a landlord’s responsibility, and it’s their job to ensure that their tenant’s personal and financial information is protected from nosy neighbors, debt collectors, or fraudsters who may be fishing for information.

When tracking tenant information you need to ensure that their confidential data is kept secure.

This is applicable to either paper records and computer data.

Keep tenant records under lock and key
Rental applications can be the main source of confidential tenant data.

Once an application has been processed and accepted, there’s no reason to leave it out in the open.

Keep tenant records in a filing cabinet that locks securely or in a closet with a deadbolt when not in use.

File essential paperwork immediately. If you’re leaving the office, lock your door behind you.

Keep sensitive information in a folder
It takes only a moment for someone to read information off a document.

When processing rental applications, keep in mind the foot traffic through the office.

Flip papers over or tuck them into a file folder so that passersby can’t read tenant information in passing.

Protect computerized files
Tenant files kept on a computer should be protected with the same care that is taken with paper files.

Protect access to your computer with a strong eight character password.

Take this security one step further to ensure that all confidential files storing tenant information are also password protected.

Protect information in transit
Dissuade prying eyes from flipping open unattended files.

If tenant records are stored securely off-site, transport them in a locking briefcase.

This provides one extra level of protection, in case you leave it unattended for any length of time.

Shred non-essential files
Carelessly tossing rejected rental applications into the bin is a violation of state laws.

Run any non-essential papers through the shredder to ensure that any information containing personal identities or credit card or banking information is destroyed.

Don’t reveal information about tenants
Whether someone calls you for information about a tenant or you’re speaking to their neighbor, it’s important to avoid talking about that person without written consent from the tenant.

Discussing other tenants without their consent is unprofessional behavior that can land you in trouble, particularly if you inadvertently disclose information.

It’s best to inform the other party of your policy and change the topic.

Possible exceptions may include written consent from the tenant which may involve providing confirmation that they lived at your location for a certain length of time, or when requested by a law enforcement official.

Landlords may learn more information about a tenant than they need or want to know, but they have the responsibility to ensure that tenant information stays between landlord and tenant, and is not shared via a third party.

As a landlord, it’s part of your job to protect personal and confidential data about your tenants from third party requests.

If in doubt, obtain written permission from your tenant before sharing their confidential data.

Basics of Accounting and Taxes Every Landlord Should Know

You’ve spent hours researching how to set up a property for rent, the administrative side of becoming a landlord, how to cultivate good tenants, and a dozen other things you learn as a new property manager.

One thing that you might not have thought of is all the accounting you have to handle.

Chances are you don’t have your own accountant or bookkeeper to do all the day-to-day work for you, so understanding essential parts of accounting keeps you from ending up in a world of financial trouble.

Schedule E

The main thing to worry about is whether you’re about to run afoul of the IRS.

They aren’t going to look kindly on you failing to file properly, and they don’t care if you’re a first-time landlord who doesn’t know exactly what he’s doing yet.

Schedule E: Reporting Rental Income and Loss is the primary form you’re working with.

This form applies to homes from which you receive rental income, as well as renting rooms within your main residence if the length of the stay exceeds two weeks.

The easiest way to keep track of rental income is tracking tenants’ rent checks using a simple spreadsheet.

If your tenant pays through an electronic payment portal, it’s even easier to keep exact rental income records.

Deductions

Tracking rental income is simple, but it’s not as easy keeping track of all the expenses associated with the properties and whether these expenses are deductible.

Use property management software or an accounting package to keep track of expenses associated with a particular property so that you have a full list of what you can deduct from your net rental income.

Capital Gains

Another tax consideration to keep in mind is what happens when you sell one of your rental properties.

You will be required to pay capital gain taxes on profits that you receive from sale, which depends on your property’s value.

You can reduce the overall amount that you pay with deductible costs and property depreciation.

Capital gains increase if you make additions to the property.

You can avoid the capital gains tax if you’re going to use the money to buy a new property or improve an existing property.

The property has to fall under several criteria in order to qualify for a 1031 exchange, which is what this procedure is called.

Passive Income

One of the biggest adjustments to get used to when becoming a landlord, especially if you come from a salaried job, is that your income is not based on the amount of time you work.

Instead, it’s a passive income that is generated based on the properties that you hold.

While you do hands-on work with maintenance, marketing, and other activities, the amount of money you make is not related to the amount of work you put in.

A Quick Guide to Hiring an Attorney for Evictions

You’ve asked, begged, and pleaded for your tenants to pay their rent, get rid of the unauthorized pet, or stop disturbing the neighbors at midnight with uncontrolled parties.

Being nice isn’t getting you the results that you need, so it’s time to look into your legal options.

Eviction is a fairly straightforward process as far as court cases go, but when you’re a new landlord, you don’t necessarily want to go it alone.

When to Hire an Attorney for an Eviction

Evictions are generally open-and-shut cases, as many tenants won’t respond to the complaint, so you get a decision by default.

However, even though it’s a fairly simple process compared to the rest of the legal system, there are specific rules that you have to follow perfectly to avoid giving your tenants any way to claim that you didn’t follow the proper procedure.

 

Nolo recommends that you get an attorney if you have never gone through the eviction process before.

This way, you have an expert to help guide you through the process and help you become familiar with each step.

Legal representation is also a good idea if your tenants are also retaining a lawyer.

You don’t want to go up against a lawyer in court, especially if this is your first eviction.

 

There are certain eviction situations that are a bit more complicated than a standard non-payment eviction.

Evicting tenants who are going through a bankruptcy process or attempting to evict tenants in an area that is rent-controlled, like New York City, requires additional assistance.

 

If you’ve never hired an attorney or would like to switch attorneys, talk with other property managers and landlords to see which law offices they go to for help.

Online review sites for professional services are also helpful resources for finding an attorney who works for your eviction needs.

Retain lawyers who specialize in eviction and real estate law, so they are up to date on the latest rules and regulations.

Can the Tenants Get a Lawyer

Tenants are free to retain legal counsel in the event of an eviction, although in most cases, you aren’t even going to see your tenants in court.

Eviction for non-payment is easily provable, and there are few circumstances where the court will consider stopping an eviction in this situation.

How Much Does an Eviction Procedure Cost

The exact price of an eviction depends on the city you file in.

For example, an eviction costs around $110 in Hamilton County, Ohio.

Generally, you’re paying for a process server to deliver the eviction notice to the tenants, the filing fees for the eviction complaint, any lawyer’s fees if you retain legal counsel, and a fee for a Writ of Execution if the tenants refuse to leave after the eviction and a sheriff has to get involved.

While this may sound like a large investment, you can add your legal fees associated with the eviction to the judgment against the tenants.

It may be difficult to collect on this judgment, but if they refuse to pay, you can levy bank accounts and and garnish their wages until the judgment is satisfied.

5 Home Repairs To Handle for Your Tenants

Your tenants have needs — including maintenance on the space that they rent from you. If you’re lucky, you have reliable contractors who are always available when your tenants need them. However, you may have a maintenance contractor with a busy schedule and takes awhile to get to minor issues. Instead of making your tenants wait, improve your landlord-tenant relationship by handling some small repairs on your own. While you may also offer tenants the option of handling small-scale repairs, it’s better for your peace of mind and quality assurance to take care of all repairs. When attempting repairs on your own, it’s vital to know building codes and other regulations in your region. After reviewing those, you can handle simple maintenance tasks quickly and efficiently.

1. Minor Cracks in Cement

There are a few repair options for small cracks in the cement or mortar of a sidewalk or brick staircase. Mortar cement is a type of material that allows you to repair cracked pieces without chipping it away from the base material and setting it up again. This is particularly useful for securing bricks back into place on a walkway, and handling smaller cracks. If you have large-scale cracks, mortar mix is not particularly hard to apply to the affected areas, although chiseling off the existing mortar may take some time.

2. Minor Plumbing Issues

You don’t need a plumber for every minor problem you run into. A common issue among tenants is a clogged drain. There are a few options for taking care of clogs, but one of the easiest is to use a hair catcher. This is a long, thin piece of plastic with teeth on the sides that you simply put down the drain and then pull back up. The teeth are barbed on one side and catch all the hair stuck in the drain. A hair catcher handles clogs that some caustic cleaners aren’t able to break through.

3. Drywall Repair

Scrapes and minor holes are part of normal wear and tear on a rental unit. While these are not usually high-profile repairs that affect your tenants’ quality of life, it is still important to address them. Wall repair kits allow for quick set up, sanding and painting. While these kits take different forms, one of the most common types provides wire mesh to go over the hole. This mesh is then covered with spackle material, which hardens and covers the hole in the wall. Once the spackle sets for 24 to 72 hours, it can be sanded down and repainted to match the rest of the wall.

4. Air Filter Replacement

If you have a central heating and cooling system, you have air filters located behind the vents in each room in the house, which often get overlooked. A dirty filter affects the air quality of your rental unit, and in some extreme cases can lead to allergic reactions from your tenants. Replacing the air filters only requires the simple removal of the vent cover and swapping in the new filter, which installs without additional tools. Consult the manufacturer’s instructions to determine how often filters need to be changed.

5. Water Heater Adjustments

Your tenant may complain about water that is too hot at the top end, or too cold overall. If they have access to the water heater, they may want to adjust it on their own. Since the water heater is an expensive piece of equipment and you may need to adhere to temperature guidelines set by local building codes, handle this type of request yourself. This also gives you the opportunity to check on the water heater for routine maintenance, helping you identify any potential problems down the road that you may need an experienced repairman to come fix.

Essential Obligations of a Landlord

Landlords have certain essential obligations that they must meet if they are in a leasing agreement with a tenant.

Most of these obligations are derived from the local landlord/tenant laws that govern the lease.

Obligations can also be specifically put into the lease itself.

Every jurisdiction is a little different when it comes to a complete look at the essential obligations of a landlord, but here is a comprehensive general overview of what is required.

There Is a Responsibility To Provide Safety

A rental property should be safe to live within.

Landlords are responsible for creating a structure that is secure.

This may even include a general feeling of safety when tenants are home by themselves.

This means any exterior access point should have working locks.

This includes windows and all doors.

Exterior doors should also be equipped with at least one deadbolt lock.

Access to keys is also part of the landlord’s obligations.

No one else should have keys to the home.

If previous tenants do not turn in their keys, then the locks need to be changed before a new tenant moves in to occupy the residence.

It is common for landlords to give keys to Realtors or maintenance personnel, but these should either be reclaimed or be used for a generic lock that is easily replaced.

Landlords must also have their properties up to code, including carbon monoxide and smoke detectors.

Outdoor areas should be free of hazards as well.

Landlords Are Responsible For Exterior Issues

Unless a tenant has damaged the exterior of the home because of direct action, landlords are generally responsible for the upkeep of a home so that it is clean and safe as well. This means taking action to fix roofing leaks, siding issues, or broken decking. Exterior concrete steps that crumble are a good example of an exterior safety issue which would need to be addressed. Landlords may put into their lease a requirement for tenants to provide property care and maintenance. This generally includes mowing, trimming, and weeding. Tenants cannot generally be held liable for tree services or specialty care needs a property may have. If a property has a fence, then it may also fall under the landlord’s care to provide safety. Damages by tenants are their own responsibility, but weather damage to an exterior item is generally the responsibility of the landlord. Pest control also falls into this category. Fleas, bed bugs, or similar infestations caused by tenant conduct are not generally a landlord’s responsibility, but roaches, rodents, and other pests may be.

Landlords Should Be Present For All Repairs

If you have maintenance personnel acting on your behalf to visit rental properties, then you are setting yourself up for a possible robbery claim.

Repairs must have a prompt response and some are required within 24 hours.

24 hour repairs are generally defined as those that adversely affect the health or safety of the rental property.

What are some examples of common 24 hour repair issues that may occur?

1. A hot water heater that begins to leak or fails to provide hot water.

2. A broken sump pump that backs up into the home.

3. An exterior lock on a window or door that fails to work properly.

Just because some repairs don’t need to be completed within 24 hours doesn’t mean that a timely response isn’t necessary.

Each jurisdiction has its own set standards of when a maintenance request must have a response.

Many fall into the 7-10 day range.

Landlords Must Store Security Deposits

How a security deposit is stored for a tenant varies from state to state. In general, however, landlords must notify tenants as to where their security deposit is being held.

Some landlords must keep a deposit in a separate account, but it can earn interest that the landlord is able to keep.

Other laws require any interest to be paid as well minus damages or cleaning.

Most landlords should also consider it an obligation to notify their tenants about obtaining renter’s insurance.

Most tenants are not covered under a landlord’s policy, so in the case of a flood, a fire, or other disaster, their possessions would not receive any compensation without renter’s insurance.

This notification limits the chances of litigation occurring.

Landlords may also be responsible for storing tenant possessions at certain times.

This may occur during a move-out, property abandonment, or even during an eviction.

By knowing what the essential obligations of a landlord happen to be in your area, it becomes easier to manage a rental property.

Check your local landlord/tenant laws regularly to make sure you stay in compliance.

Fair Housing Legislation: A Primer

The Fair Housing Act was first adopted in 1968 and covers most housing in the United States.

In 1988, the U.S. Department of Housing and Urban Development increased its power to enforce the Fair Housing Act to ensure that minority groups are not discriminated against by landlords and real estate agencies.

Since 1990, the Americans with Disabilities Act has provided protection for the disabled as well.

The Disabilities Act works in conjunction with the Fair Housing Act in certain civil cases.

So, what exactly is the Fair Housing Act, and how does it affect you as a property manager?

  • It protects minorities from being turned away by landlords and real estate companies solely on the basis of racial identity, religious affiliation, gender, nationality, or sexual orientation.
  • It disallows property owners from indicating a preference toward a certain race, religion, or gender when advertising the rental or sale of a property.
  • It makes it illegal for landlords and property managers to take threatening or intimidating actions toward prospective renters due to their race, religion, or gender.

These specifications can sound intimidating.

However, if you employ some common sense and a professional business model that is free of personal prejudices, you won’t have to worry about falling victim to civil cases in the future.

What are Your Rights as a Landlord

There are a few ways that you can optimize your property management practices to ensure that you don’t violate any of the clauses of the Fair Housing Act.

For instance, you can make sure that your tenant screening process is constantly updated.

Your right to conduct a general background check and screen tenants for credit scores, eviction records, and bankruptcy is protected by law.

You have the right to maintain a certain standard within the property you are renting out, and bad tenants can greatly affect your business by damaging your image and ratings on renters’ websites.

The courts understand this and will listen to your arguments if you are ever sued by a renter.

Staying Objective is Key

It can’t be emphasized enough that an objective and professional leasing process with prospective tenants and renters is crucial.

Developing a fair system for both property owners and renters can benefit both parties and is considered good practice.

It’s important to avoid any language in your rental listings that may appear to be discriminatory.

You can be upfront with your screening criteria as long as you do not reject renters based on protected statuses.

For example, if you prefer to rent to professionals or students, you can indicate this preference in your rental listing.

However, you can’t require that renters follow a specific religion, and you can’t mention that you prefer to rent to a particular gender in the listing or advertisement.

Once the tenant is ready to rent, use a standardized screening process that includes reviewing credit reports and criminal records, and speaking with landlord references.

Information from these reports can be used to approve or deny the tenant without resulting in discrimination issues.

Save yourself time and your potential tenant money by disclosing the non-discriminatory criteria that may disqualify them.

That way, you won’t waste time obtaining reports and references, and potential renters won’t waste money on screening and application costs.

Remember, the law permits you to screen tenants, but only to a limited extent.

Don’t make decisions based on biased judgments.

As a business person, it’s important to practice the utmost professionalism.

Once you grasp a full understanding of the Fair Housing Act and the consequences of violating it, you’ll be on your way to becoming a much more informed property manager.

Low-Cost Kitchen Renovations That Boost Rental Value

It is no secret that kitchen renovations boost property value, so it should come as no surprise that an upgraded kitchen can also help to attract tenants and boost the amount that you can charge in rent.

Unfortunately, major kitchen renovations run well over $10,000.

If you are not able to put a lot of money into your investment property, a low-cost kitchen renovation can still allow you to reap benefits now and when you sell the property in the future.

Even a minor kitchen renovation can offer a return of 82 percent on average.

Here are some ideas to get you started.

Refinish Cabinets
Instead of putting the money into getting all new cabinets, strip the current cabinets, sand them down and refinish them.

You can add a coat of paint to brighten up the kitchen, and the best part about this idea is the fact that it does not require you to do any major demolition in order to achieve your goal of a more updated kitchen space.

Backsplash
Backsplashes are a major part of the modern kitchen, and having an outdated backsplash or none at all can turn potential tenants off to your property.

Chipping away at the current tile is a tedious task, but it is one that you can complete on your own.

Laying the new tile is a do-it-yourself venture as well, and there are low-cost tiles available that still fit in with modern kitchen decor.

Overall, this is one of the cheapest ways to give the kitchen in your rental property a much-needed facelift.

Shop Smart
If there are new pieces that you need to add to the kitchen to make it look its best, shop through surplus retailers in order to snag a deal.

You will have to deal with installation on your own, but the deep discount is worth the trouble.

Many of these retailers provide the latest styles when it comes to kitchen decor, and you can find everything from countertops to islands this way.

Add an Island
Counter space is often at a premium in rental units, and more people are becoming interested in cooking their own meals at home.

That means that offering more room to slice, dice, and mix sets your rental unit apart from the rest.

An island offers an ideal way to expand counter space without actually adding a fixture to the kitchen.

Design options include wheeled islands that can be removed from the room if your tenants want more floor space, so these portable options are ideal.

Add Storage
Cabinet space is another desirable feature in any kitchen.

While adding an island will increase storage space, look at all of your options when it comes to low-cost methods of increasing storage for your tenants.

Shelving on a bare wall can be used to stack dishes, and kitchens that do not yet have upper cabinets can benefit from having these installed.

Change Up the Lighting
A modern lighting fixture helps to change the decor while better lighting the space.

While it will not improve a completely outdated kitchen, it can help to spruce up a kitchen that just needs a little boost.

Now that you know that there are ways to increase the rent you charge for your property while improving property value, it is time to get started.

Whether you choose one or several of these suggestions, a small renovation can go a long way when it comes to attracting tenants.