What Landlords Should Know About Subleasing

It is your right and responsibility as the landlord to know about everything that happens to your rental property, especially when a new tenant moves into the building. Ideally, you get to decide who rents your property. However, your tenants can assume this authority through subleasing. This can be good or bad for you and your rental business, depending on how you handle it. 

How Subleasing Works 

Subleasing essentially transfers a lease from the original tenant to another tenant. Clients usually sublease when they have to leave temporarily and are looking to offset the rent until they come back. Many tenants also sublease when moving away permanently before their lease expires with the same goal of saving money. 

Assuming that you don’t have a say in the sublease, the tenant will handle everything with the subtenant and make arrangements for important things such as maintenance and paying rent. However, it is advisable to control the subleasing process and hold both parties responsible for fulfilling the contract’s terms and conditions. 

The Pros & Cons of Subleasing 

Subleasing has good and bad implications for all parties involved, especially you, considering your stake in the property. Here is an overview of the advantages and disadvantages to you. 

Pros 

Here is an overview of the pros of subleasing, assuming that you are in control of the process: 

  • Qualified Tenants 

The landlord’s biggest concern about subleasing is that the tenant will give the property to a problematic subtenant. However, you can ensure that the subtenant meets your standards by taking part in the vetting process. 

Ideally, the subtenant should undergo the same screening process as other tenants. It is also advisable to delegate the tenant screening process to a screening agency to ensure that you don’t miss any red flags about the subtenant. 

  • Steady Rental Income 

In most cases, the tenant would have to cancel the lease agreement if they had to move, and subleasing wasn’t an option. This would leave the unit empty, resulting in lost income until another tenant comes along. You would also incur expensive tenant turnover costs when looking for another tenant. 

However, agreeing to sublease will ensure continuity in the rental income from that unit. It will also save you hundreds or thousands of dollars in tenant turnover costs. 

  • Positive Long-Term Relationships 

Some tenants sublease with the intention of coming back. Good tenants are difficult to find, and subleasing to a qualified subtenant for several months would be a small price to pay (if it is a price at all) to retain a good tenant

Cons 

As explained earlier, every landlord’s biggest concern about subleasing is that the subtenant will be problematic. Unfortunately, the tenant handling the subleasing process may not know how to screen subtenants according to your standards. A problematic tenant poses other threats, including property damage and lease violations. This is why it is important to either restrict subleasing in totality or get involved in the process. 

What to Do about an Unauthorized Sublease 

It is always advisable to cover everything in the rental contract, including whether or not tenants can sublease their units. You also have the right to cancel a tenant’s lease if they sublease their unit without your authorization. Ultimately, it is advisable to consult your lawyer and act within the law when handling such a case to avoid violating the tenants’ rights. 

Conclusion 

You never have to worry about subleasing if the subtenant meets your standards and passes the tenant screening test. LandlordStation can help you conduct thorough checks on your tenants and subtenants. Get in touch today to learn more about our tenant screening solutions. 

Landlord’s Guide to Security Deposits: What You Need to Know

When you rent out your home to someone, they will often pay a security deposit. Security deposits are a necessary part of renting out property. They are designed to protect landlords from damages that may occur. But what are the limits? Your landlord’s guide to security deposits will teach you what to do in these situations and more. Read on for everything you need to know about security deposits!

What is a Security Deposit?

A security deposit is a sum of money that tenants pay to the landlord upon moving in. If all goes well, it can be returned at the end of the tenancy. Security deposits are used as a way for landlords to protect themselves from damages or, in some states, unpaid rent. A solid tenant screening process will do a lot to protect your investment, but it can’t predict everything. A single missed paycheck can result in unpaid rent or damage could occur beyond normal wear and tear. Not being prepared for it can prove costly! It’s better to have something secured than nothing at all!

The Tenant’s Responsibilities

Tenants have responsibilities when it comes to renting property. They must pay rent on time and maintain the property. If they don’t take care of the property or pay their rent, the landlord can do certain things to make sure they get your money back. For example, if the tenant doesn’t take care of the property or pay the rent (in some states), you can:

  • Take legal action against the tenant
  • Put their name on a credit bureau list
  • Keep their security deposit

If your tenant breaks any agreement with you, you are allowed to do any or all of these things. 

What To Do If a Tenant Breaks Your Rules

We all know that when renting out a property, you need to prepare for the worst. If your tenant breaks your rules, there are a few steps you can take in order to protect yourself and your home.

If your tenant damages something like the dishwasher or bathroom, it’s important to keep detailed records of what was damaged and how much it cost to replace. This will help you if it comes time to evict the tenant. This also helps with backing up your decision to withhold part or all of the security deposit as a result of the damage the tenant caused.

If a tenant becomes problematic enough to warrant eviction, you’ll want to consult with an attorney to find out what steps you need to take to evict them legally and as quickly as possible. If you skip any steps or don’t handle the eviction completely legally, you can give the tenant the ability to stay longer and cost you more money.

What To Do If the Tenant Damages Your Property

The tenant will often be liable for any damages to the property – unless they have renter’s insurance. This is why it is important to make sure your security deposit covers the cost of these damages. Of course, it’s not always easy to predict if damage will occur or how much it will cost to repair. That’s why you need to take these precautions before renting out your property:

  • Make an agreement with the tenant about cleaning up after themselves and the process for any repairs that are needed
  • Take photos of everything before they move in and agree on what needs to be fixed before they move in
  • Get a signed agreement/contract with the tenant that states exactly what furniture, appliances, and other items are included in the rental agreement and what condition they are in – this will eliminate confusion over wear and tear or damage caused by tenants later down the road

Once you do these things, you should be in a position to easily determine whether the tenant gets their security deposit back and if they cause damage, how much of the security deposit to withhold for repairs.

When the tenant leaves, you should also take these steps:

  • Do a walk-through with the tenant to assess the status of the rental property
  • Take photos of everything and document specific instances of damage
  • Provide tenant with a detailed list of the damage caused and what it will cost to repair

When you take these steps, you ensure that the tenant understands why you are withholding part or all of their security deposit, if necessary. You also provide them with documentation in the event that they try to sue you for the security deposit, setting yourself up for a stronger court case.

How To Calculate A Security Deposit

A security deposit is often a certain number of months’ rent – typically one or two months. But how much you can charge is based on where you live. You need to familiarize yourself with the laws in your area. You’ll also need to look at the market itself. If other landlords are charging just one months’ rent, it’s going to be difficult for you to charge two or three months’ and find tenants. 

Security deposits are a landlord’s best friend. A security deposit is a small amount of money that a tenant pays to the landlord, in addition to monthly rent, in order to use the property as their home. The deposit is used to cover any damages that the tenant may cause to the property, or if they stop paying rent, which means the landlord won’t have to go through any legal proceedings to get their money back. It’s important that you know your rights and responsibilities as a landlord so you can avoid any conflicts and go about your business as usual.

6 Tips on How to Handle Tenant Conflict

No matter how carefully you screen your tenants, landlords will inevitably experience tenant conflict. From parking issues to loud music and common area conflicts, tenants can get into a confrontation for many reasons. Conflicts can have an negative effect on your property and even cause other tenants to move out. 

Learning how to handle conflict on your property can go a long way. Here are six ways to deal with conflict between tenants:       

Set rules that will prevent tenant conflict from arising

Handling tenant conflict on your property should begin with establishing a residential lease agreement that outlines your expectations from tenants. Ideally, it should highlight rules on what constitutes undesirable behaviors and how to avoid them. This can include rules regarding how to use shared spaces, noise, pets, and controversial issues like smoking. 

When a new tenant moves into the property, give them a copy of the agreement. Emphasize the rules and inform them that all complaints should be solved through relevant authorities and not between tenants. 

Have a policy on how to handle every complaint

Establishing rules on how to handle specific cases so you can remain consistent. That will protect you from approaching similar cases differently. Simple violations like noise can be dealt with less severely, while more severe violations can attract more severe punishment. 

Your policy should also include how tenants should file complaints. This could be through filling out forms online or physically. Your tenants should be aware of how to go about the process for smooth handling of a dispute. 

Keep a written record 

Keeping a written record of every conflict is important for solving any disputes that might develop in the future. In any case, if a tenant repeats the same mistake over and over again, you will have grounds to evict them without opposition or involving the courts. Your written document should have the following fields: 

  • Date of the complaint
  • Nature of the dispute
  • Tenant’s name and unit number
  • Date the complaint was resolved
  • Resolution

A written record essentially allows you to follow up on the agreement made and if there is a need to take further measures. 

Know your rights under the lease

Besides policies on how to handle tenant conflict, the lease also includes your rights and responsibilities as a landlord, and being up to speed with them allows you to protect yourself in case of disputes. Specifically, these rights help you to correct tenant behavior in accordance with the property agreement and local and state laws. 

It is advisable to consult a legal professional knowledgeable in tenant issues. This helps to avoid legal complications that may arise. 

Update both complainee and complainant  

Be sure to let the complainee know that a case was lodged against him, but don’t disclose the tenant who raised the issue. This is to avoid tension and resentment that could further escalate the problem. Moreover, give a detailed account of the complaint as well as actions to be taken if the tenant is found guilty. 

Make sure you conduct your own research to get the facts together. Don’t forget to issue every party a written document about the case and how it will be resolved. 

Consider mediation 

Mediation is a viable way to solve tenant disputes to ensure the problem at hand does not ruin the relationship between them. In some cases, you can play the role of a mediator, while in others, you might want to involve a professional mediator, especially if the case is rather technical. A mediator will help to come up with an amicable solution for the benefit of the landlord as well as the tenants in question. 

Summary 

While disputes are sometimes inevitable, there are several ways you can prevent them to ensure all tenants are living in peace and harmony. Having rules and policies in place is a sure way to avoid conflicts among tenants to keep your property safe for all. 

What responsibilities do you have when it comes to snow and ice at your rental property?

Throughout the winter season, snow and ice are common problems across many states. Even if clearing the streets is generally the responsibility of the municipality, there are often local guidelines mandating swift removal of snow and salting icy areas on sidewalks and other pathways to reduce the risk of accidents.

Property considerations

If your rental property is an apartment or multi-housing unit, you are likely responsible for clearing snow and ice in common areas such as stairs and walkways.

When it comes to a single-family property, the guidelines are less clear and vary between states and even cities within the same state. In some cases, the city or neighborhood clears ice and snow from the sidewalks. In others, this is the responsibility of the property owner.

In all cases, it’s important to do so as quickly as possible as liability for falls and injuries is a real risk. 

Lease language

To ensure that both the tenant and the landlord are clear on who is responsible for what, there are some key clauses to include in the lease, including but not limited to:

  • Who is in charge of snow removal and ice mitigation
  • Where the snow should be removed from
  • Where the snow should be moved to
  • How quickly the snow should be removed; this will vary by city so be sure to check with your local city government.
  • If your tenant is tasked with the responsibility, if you choose to provide snow clearing equipment or if tenants should provide their own

It should also be noted that liability may fall on you regardless of what is stated in the lease. Always be sure to check both state and local laws to ensure that your lease aligns with legal guidelines.

Winter maintenance

Cold weather, regardless of snow, can cause damage if not handled properly.

Before temperatures really dip, it is a good idea to visit the property and check on key systems and equipment such as the heating, water pipes, smoke alarms, and carbon monoxide detectors. Ensuring that all equipment is in good working order before the season gets underway can reduce the risk of failures and early-morning emergencies.

You should also regularly check the seals on external doors and windows to ensure they are being maintained properly and are in good condition. Not only can old or broken seals damage the property if water and ice get in, but it can also impact the overall temperature of the property and put a strain on heating systems. 

In addition to your regular maintenance, you may wish to discuss ways in which your tenants can look after the property during the colder months such as best practices for using the heating system or how to avoid frozen pipes.

Remember, always check your local laws and ensure that you are following them. In addition to legal requirements, helping your tenants maintain the property throughout the winter months may reduce the risk of long-term damage.

How To Find Out What Liens Are On a Property

Property liens can be problematic for a wide variety of reasons.

They tend to be discovered during the sales process and must be cleared before the sale will be allowed to proceed.

Some jurisdictions will automatically notify property owners when a lien is filed, but this isn’t always the case.

If you think your property might have a lien on it, then here’s how you can find out.

1. Check Your County Recorder or County Clerk’s Records.

Many of these records are online so they can be instantly searched.

You’ll need to find the specific county website that applies to you.

If you cannot locate the website, then you’ll need to stop by the office in person and ask for the records that pertain to your property.

Online options are usually free, but in-person options tend to have an associated fee.

2. Look At Your Parcel.

Whether you’re looking at the paper file or an online listing, you’ll need to go through the Parcel ID to look at the history of the property.

There will likely be a heading called “Liens” to locate.

It may be under the “Book” heading or could be listed under property taxes.

Select the tabs or open the file up to see if there are any liens that are listed.

3. No Liens Listed Doesn’t Mean They Don’t Exist.

Liens can sometimes exist on a property even if they aren’t in their proper place because of a misfiled document.

Go through the entire “Book” section of the file and look for specific language about a lien that may be present to see what turns up.

Look for anything that may be associated with a creditor, even if it doesn’t actually include the term “Lien.”

4. Use A Search Service.

Many online real estate agencies today offer a free property report for prospective buyers to determine if there is a lien present.

Just pull up the property in question and you’ll get the information that you need.

Knowing how to find out what liens are on a property will help to save you a headache later on during the sales or ownership process if one exists.

Use these tips to avoid surprises and you’ll be able to find and/or clear a lien effectively.

How to Make Sure Your Favorite Tenants Stay

Having to replace a good tenant can be very expensive. The final costs of replacing a tenant can easily exceed $4,000.

Accordingly, it’s very important that you try to hold onto your favorite tenants for as long as possible. Offering competitive rental rates and keeping your property in good condition are obvious requirements in this effort, but consider these five suggestions for extra steps you can take to keep good tenants signed on.

Offer a Longer Lease Renewal

If you normally offer one year leases, try offering a two year lease (or even longer) the next time your favorite tenant is up for renewal.

While this is technically a market gamble for both of you, from your tenant’s perspective it will seem as if you’re offering them the opportunity to avoid rent increases for the next couple of years. This will encourage their loyalty to you and the property.

The income stability of a tenant with a good payment history can often outweigh the potential downsides of missing the opportunity to increase the rent for a few years.

Give a Lease Renewal Gift

The small things matter, and that can be especially true when you’re trying to keep a good tenant.

The next time a tenant renews their lease, offer them a renewal gift. It doesn’t need to be much, and even a $50 gift card to a fantastic local restaurant can be enough to make a tenant appreciate you. Pair this with a small gift for the holidays and you’ll generate even more goodwill.

Give Them Opportunities for Feedback

It’s important to make sure your favorite tenants feel that their concerns are being noted, and this requires more than simply waiting for them to call with a problem.

Be proactive about communicating, and actively reach out to them from time to time. If you’re renting a multi-unit property, make sure to have a comment box in a common area, along with a placard that reminds tenants of your contact information. It’s also a good idea to send them a letter two or three times a year letting them know that you’re available to discuss any concerns that they may have.

Offer an Apartment Update

Part of the appeal in finding a new apartment can be that vacant apartments have often been newly renovated, or at the very least given a new paint job and touch up.

To recapture this feeling for your favorite tenants, particularly if they’ve been renting for several years, offer them an apartment update for their next lease renewal. This can be a simple repainting, but it’s also a good opportunity to accomplish two objectives from things you were planning to do anyway. For example, instead of simply stating that you’re going to replace their stove (if you were already planning on doing so), tell them you’re doing it because they’re a good tenant and you appreciate them.

Offer a Cleaning Service

In the same vein, offer them a visit from a cleaning service when they renew their lease. A good, deep cleaning can make a difference that is just as dramatic as an actual renovation. Tenants will feel like they’ve genuinely stepped into a brand new apartment, but one with all the comforts of their familiar home.

Cancellation of Debt on Rental Property

There are a lot of unique tax circumstances that can hit an investor at any given time. One of the most common issues that landlords face is a cancellation of debt on a rental property. The removal of a debt is a good thing and it brings a sense of relief, but that’s not the end of the story. A debt cancellation is viewed by taxing authorities as earned income. In many circumstances, this must be reported at the end of the year and it can increase tax liabilities.

Mortgage Forgiveness Does Not Apply To a Rental

Many homeowners have been able to get out of large amounts of debt through the foreclosure process, deed-in-lieu, or through short sales thanks to the Mortgage Debt Relief Act. The only problem is that many landlords believe they can take advantage of this law, but they cannot. This income forgiveness does not apply to a rental property.

Here’s an example of the income liability that you’d be facing at tax season. Your rental property has a mortgage for $200,000 and a value of $250,000. You can’t get a tenant and so you can’t make the mortgage payments. The home goes into foreclosure and you lose the rights to the property because the bank takes it back. They sell the property for $165,000 on the open market and then forgive the rest of your mortgage.

Your total income that must be reported: $35,000. This is because having a lien holder taking possession of a property does not automatically remove a loan. Some landlords have also found this out the hard way as well. Instead of having the debt forgiven, they’re finding collection notices in the mail.

There Is One Exception To This Rule

The only time a rental property does not need to report a canceled debt as income is when that debt is $600 or less. In this circumstance, not enough income has been generated to warrant the filing. The same is true for income that is earned through traditional means as well. As long as the initial amount threshold is never met, then the money does not need to be reported.

When would a landlord have $600 or less in a canceled debt on a rental property? A forgiven utility bill is the most common place this is seen. Discounts or debt forgiveness from repair personnel would also potentially qualify for this action.

The only time a landlord would be able to have their mortgage debt canceled and the income forgiven is if they are living in the home as their primary residence. In this specific circumstance, a portion of the income or even all of it may qualify for debt forgiveness without the phantom income charge on taxes.

The cancellation of debt on a rental property can relieve a landlord of their primary responsibility, but that only lasts until tax season rolls around. Know how much income you’ll need to report and plan your tax payments accordingly so that you aren’t surprised by the final bill that becomes due.

Safety Options for Rental Properties

Your rental property is an investment. There are a few subtle ways to protect this investment, such as getting homeowner’s insurance. However, it’s also important to think about more direct safety options for your rental properties to protect them from burglars and vandals.

Here are three options for protecting your properties and your tenants:

Alarm Systems


Alarm systems use sensors and codes to protect your buildings.

The sensors will alert the authorities when a door is opened or a window is broken.

Codes entered onto keypads can change alarm settings and turn the alarm on and off as your tenants come and go.

Sensors


The sensors included in alarm systems must be installed.

This cost of installation can vary significantly depending on the type and number of sensors used. Some sensors can only measure when a window or door has been opened, whether by a tenant or an intruder.

These less expensive sensors throughout the home won’t alert tenants to dangers such as carbon monoxide, fire, flood, or broken windows.

The more expensive sensors can detect significant risks to your tenants and property. They can also alert your tenants when there is motion detected in the home. For example, someone may sneak into a home while the alarm isn’t armed. They then may hide until the tenants are asleep. The intruder may even watch from their hiding place as someone enters the code to disarm the alarm so that they’ll be able to disarm it before they start stealing valuables. They can them disarm the system, take valuables out of the home, and rearm the system. This scenario is possible for a system without motion detectors. However, with motion detectors, as soon as they intruder began to move from their hiding place, the sensors would trip, the alarms would sound, and the tenants would be alerted.

Gated Entry


Another option for tenant and property safety is gated entry.

This entails having a strong gate constructed all around the property line with just a few entry points (for instance, one in the front, one in the back, and one on the side), for tenants to use. The tenants would need a key card or gate code to gain entry onto the property.

The Gate


The gate you choose would need to be high enough so that no one could jump or climb over it. Yet, you’ll want to monitor the height, because costs of installing the gate increase as the height goes up.

Also, for aesthetic purposes, gates that are very high tend to make residential properties look like prisons, and this may turn off potential (or even current) tenants.

Video Surveillance


Criminals may be less likely to steal from or damage your property if there are cameras visible on the land. If they understand there is a greater risk that they will be captured because they are being videotaped, they are less likely to take the risk of getting caught.

Playback and Monitoring


You may not need to have a specific security professional viewing the security cameras of a single-family home throughout every hour of the day. There are ways to digitally record and store various amounts of video so that you have it on file and can play it back to see who spray-painted a garage door or stole a laptop from a home. Since most people notice an act of vandalism or theft has taken place soon after it happens, you may opt to store video that covers a limited date range.

Based on the property you’re protecting, its neighborhood, and your budget, use this information to make a decision about the best single-family unit security options for your rental situation.

Keeping your property safe protects the longevity and the value of the land and structure that you have invested in.