Your Guide to Investing in Student Housing

Expanding your rental home portfolio requires consideration and strategy beyond just finding a home that is rentable and affordable. Each property is an investment and some locations offer a unique business model that you can benefit from. Affordable housing near any college or university, for example, will immediately become a candidate for student housing, a potentially profitable but more volatile form of property rental.

Student housing is livelier, faster-paced, and more accident-prone than typical investments, but also potentially very rewarding. Let’s dig deeper to find out if student housing is a smart investment for your landlording style.

What It Means to Rent Housing to Students

Students in college and university – and their friends already in the job market – are young. They are often renting a home without parents for the very first time, maybe with a little practice from the dorms. They don’t know how to fix things, many students have not yet learned how to clean, and late rent payments with a fantastic (often real) excuse about exams and all-nighters are par for the course. But if you have a thick skin and a sense of humor, student renters also provide never-ending demand. If the university continues to operate, you will have new students every year and may even develop a waiting list for properties near campus.

Pros and Cons of Student Housing Investment

Pros of Renting to Students

  • Endless demand and wait-listing
  • Chain referrals from good student tenants
  • Reliable rent when paid by parents
  • Low cost-cost amenities chosen for durability
  • Small and unusual properties included
  • Never-ending entertainment value

Let’s take a look at the pros of managing student housing. The biggest benefit is that demand is endless. It’s so endless there are wait-lists for near-campus housing and when students change plans mid-year, another roommate is ready to hot-swap and take over the lease. Students tell their friends about great places and you may even get a chain of good, studious tenants who refer each other to your property each year.

Expect students to be inexperienced at rent payment, but often with parental backup. Some parents will even sign the lease. You can choose between durable, low-cost housing for most students or luxury student housing for parents who insist on sponsoring the best for their collegiates. You can also choose properties that would be less appealing as family homes, like small and strangely designed houses, as students are not picky and often like strange spaces.

As an added bonus, students make entertaining and interesting tenants, so if you don’t mind the antics, you will rarely find student housing to be boring.

Cons of Renting to Students

  • Inexperienced renters
  • Untimely rent payments
  • Increased rate of damage and repairs
  • Increased cleaning requirement during turnover
  • Demand for short-term (semester) rentals
  • Roommate hot-swapping

All the pros aside, student housing is challenging to run. You will need energy – or an energetic team – to keep up with minor repairs like dents in the drywall and loose faucet handles. Expect excessive calls for repairs (and drain clearing) or eerie silence with inexperienced young renters who don’t know when to call for maintenance. You may get lucky with a run of reliable young students or unlucky with a pack of partiers. 

Student housing is most adaptive with 6-month leases and even if you enforce a 1-year lease policy, expect hot-swapping of roommates because students are tied to the semester-based schedule.

Special Legal Considerations for Student Housing

Your city or state may have specific regulations when it comes to renting to students or to residents below 18 or 21 years old. Because students do not yet have their full rights  (ex: to drink, book hotel rooms, or rent cars), and some freshmen are still 17 and legally minors, you will want to write your lease carefully and proceed with caution. In most locations, there are no special rules for renting to students and young adults, but the penalties for renting a hazardous unit may be increased if perceived as taking advantage of inexperienced tenants.

With this in mind, use safety and transparency as your rules of thumb. Write a clear lease and make a habit of going over it with new student tenants regarding both their responsibilities and what they can ask of you – like timely repairs. You will also want to pay special attention to safety and repairs during turnover. If the unit is never empty, be sure to schedule annual or biannual inspection-repair visits.

Choosing the Right Property for Student Housing

What kind of houses can you choose for rental student housing? This is an important consideration. The good news is selection is one of the perks for student housing investment. There are exactly three requirements for student housing:

  1. Near to campus (or the bus route)
  2. Safe and livable
  3. Durability

Location and Livability

Students will live just about anywhere, but it must be close to campus, on the bus route, and decently livable. Performing your legal duties as a landlord will more than fulfill most students’ demand for property quality, but location is key. The closer your properties are to a college campus, the more students will want to live there.

Any House, Any Size, Any Style

Students will stay in small houses, homes with strangely shaped rooms, lofts, attics, basements, and homes with no yard. The usual family-friendly considerations need not apply and most students are especially spry if there is a knee-wracking staircase or even a ladder to the loft. Students expect to live closely packed together, to share multi-bedroom homes as roommates, and to take over buildings by moving in with friends.

Interesting apartments are, in fact, one of the rights-of-passage for young adults renting their first homes. Many want to come away with a few strange tales about the attic apartments and strange campus houses they lived in during their wild college years. Older boarding-house-style homes, which are hard to rent room-by-room to any other demographic, are considered excellent student housing. Apartment buildings and townhouse rows can quickly become overrun with student tenants as roommates and neighbors.

Student Housing Durability

The final deciding factor for student housing investment property is durability. Can the house take an endless stream of energetic, inexperienced tenants who may party, exercise, and do unpredictable school projects on premise? The good news is that if you’re ready for light renovation, most homes have the “bones” to be durable student housing, and just need a fresh coat of gloss (read: washable) paint and new laminate board flooring. Throw in a few heavy couches and bed frames, and you’re student-ready.

Create a Custom Student Lease Agreement

Students are not your typical renters, and leases can be written with any terms that are most convenient to the two parties. Write your lease in a way that helps students become better renters by outlining the rules, using plain language, and providing a few training wheels and safety bumpers in the policies to help them learn without creating conflict or debt.

  • Make it a visual syllabus – easy to read
  • Outline house rules
    • Quiet hours
    • Drain care
    • Trash day
  • Flexible rent payment dates and penalties – training wheels
  • Included utilities or links to utility providers
  • Room for roommates
    • Wait-lists and referrals
    • Hot-swapping leaseholders
    • Guests and long-term guest policies
  • Copies available on request and online

How to Screen Student Tenants

Screening student applicants can be challenging because they do not already have a rental or credit history. Most have just taken their first big financial step in life – by taking out student loans. How do you screen a student tenant with no financial history to show their suitability? It is possible to ask more holistic questions while respecting the fair housing laws about certain personal details.

Ask Student-Housing Questions

  • Do you have roommates ready to move in with you?
  • Do you require roommate match-making?
    • see – your waitlist and other applicants
  • When does your school term begin?
  • Will you be staying through the summer?
  • Do you see yourself in this home for your duration at this school?
  • Do you have pets, or do you plan to get a pet?
  • What are your personal quiet hours for sleep or studying?
  • What is your field of study or chosen degree?

Have Parents Co-Sign the Lease

One of the cleanest solutions is to have a parent co-sign the lease and take responsibility for timely rental payments. From there, you can do the usual tenant screening checks on the parent to confirm sufficient income, a reliable credit score, and a good rental history.

Managing The Revolving Door of Student Housing

Student housing is a profitable and extremely active way to invest in rental homes. students change their housing situations every semester and every summer break. You may have students who stay put for all four years of school and students who only stay for a few months before hot-swapping their lease with another resident.

Fortunately, you don’t have to manage your lively student housing investments solo. With online tools like LandlordStation to streamline your property management and help students keep up with online bill-pay, helpful documents, and maintenance requests, you can simplify the effort of managing student housing.

To discover online property management through LandlordStation, contact us today!

Tenant Bankruptcy: How to Protect Your Rental

Tenant bankruptcy is one of the more frightening things that can happen to a landlord. You may find yourself unsure if your tenant can or will pay their rent any longer, and ambiguities in the law can make it difficult to know if you can (or should) evict your them.

We’re here to help you tackle those questions. This article will cover:

  • How to proactively protect your rental
  • Types of bankruptcies tenants are most likely to file
  • Recouping lost rent
  • Lease options after the bankruptcy is filed

Be aware that laws may change quickly, and that there may be state or local-level laws that affect how landlords can handle bankruptcies. Always check with the most recent version of the law, and you may want to hire a lawyer if you have questions.

Avoiding Problems Down the Line

Let’s start with the best-case scenario: avoiding problematic tenants.

Tenant Screening is your first line of defense to protect your rental property. The score on the credit report will give you an at-a-glance description of the client’s credit, but don’t stop there. Look at the entire credit report to give you a broader understanding of your potential tenant’s credit history.

Armed with that information, you’ll be able to answer applicable questions like:

  • Does the potential tenant have a history of late payments?
  • If so, how long has the tenant’s credit been suffering?
  • Are the late payments due to a one-time emergency or are they a trend?

Multiple bills that have gone to collections in the credit report can be a red flag.

A tenant screening will help you form an educated opinion about the tenant’s ability to pay rent and avoid bankruptcy. If you’re unsure about anything in the report, you can ask them for clarity.

No matter how diligent you are in your screening process, you cannot predict every scenario. Even the best tenant may lose a job or be overwhelmed by expensive emergencies. Some will get back on track quickly, while others find themselves too far behind to catch up. Let’s take a look at the kinds of bankruptcies you may encounter from your tenants.

Kinds of Tenant Bankruptcies

There are several kinds of bankruptcy, each with its own considerations.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is sometimes called a “straight bankruptcy.” It’s most commonly filed by individuals, but it can be filed by a business as well.

When an individual or a business successfully files for Chapter 7 bankruptcy, the court appoints a trustee. This individual handles the liquidation of the entity’s assets so that all creditors can be paid back as much as possible.

Chapter 11 Bankruptcy

A Chapter 11 Bankruptcy will not liquidate assets. The entity will retain complete and independent control of their finances, but they must pay back their debts in full (plus some extra). They are given some extra time to do this.

If they fail to pay their debts, the Chapter 11 bankruptcy may be converted to a Chapter 7 bankruptcy. If that happens, the court will assign a trustee and order the liquidation of assets and the payment of creditors.

Other Types of Bankruptcies

You may also see some other types of bankruptcies.

Chapter 12 deals with small-business fishermen and farmers and Chapter 13 is a rehabilitation program that focuses on regular wage-earners.

But these are more unusual, and most landlords will encounter Chapters 7 and 11.

Recouping Lost Rent

If you get that dreaded call that lets you know that your tenant has filed bankruptcy, your first thought will likely be how to recover any lost rent. To answer that question, first we need to understand how claims are filed.

Pre-Petition and Post-Petition Claims

The process of filing for bankruptcy is called “petition”.

Pre-petition claims are financial burdens that are put on a tenant before they file for bankruptcy. Post-petition claims are financial burdens placed afterward.

Rent is considered a claim, but when that rent was due will depend on what kind of claim.

There’s a chance your tenant will remain in your property after filing for bankruptcy. Any rent due during that time is a special type of post-petition claim called an administrative claim. Administrative claims are high-priority claims that tenants must prioritize paying off.

Alternatively, if money was due before the tenant filed for bankruptcy, that is a type of pre-petition claim called an unsecured claim. Unsecured claims are typically low priority for tenants to pay off, in comparison with other claims.

Now comes the big question:

Can I Still Collect Back Rent?

The court will institute what’s called an automatic stay when the tenant files bankruptcy. This means that most creditors cannot pursue any collection actions against the entity without the permission of the court. However, as the entity’s landlord, you are not subject to this restriction. You may still collect back rent as you normally would.

Remember that because back rent is an unsecured claim, it’s considered a low-priority payment and you may never get all of it back.

Terminating the Lease

Tenant Bankruptcy isn’t easy on anyone. If the tenant can’t pay you, they accumulate more debt and you lose income. Terminating the lease may be an option.

When the Landlord Terminates the Lease

There needs to be a breach of the lease to file a notice to quit or start the eviction process. Often this will come in the form of late or nonpayment.

There are some landlords or property managers that will add a clause to their lease stating that filing for bankruptcy breaches that lease. Keep in mind that many jurisdictions do not permit you to terminate a lease because a tenant has filed bankruptcy, and you may not put additional requirements on a tenant (such as increased rent or fees, or requiring payment in cash rather than a check) due to their bankruptcy.

Terminating the lease on your end may be tricky because of this, but there’s a chance that your tenant will want out as well.

When the Tenant Assumes (or Terminates) the Lease

Chapter 7 bankruptcy, in particular, lets the tenant decide whether they wish to assume or terminate the lease. This means that they can reconsider the financial obligation of the lease in light of their current situation.

If they decide that it’s too heavy of a burden in their current state, they may choose to terminate the lease within 60 days without a breach of contract. If they cannot decide during that period of time, they may file a request for an additional 60 days to decide, so long as they give an explanation of their circumstances and the court accepts this.

In response to this request, you are within your rights to explain to the court the stresses that this puts on you as the landlord or property manager. If the tenant chooses to terminate the lease, they agree to pay all outstanding rent within a reasonable time (which may vary by the locality, but is often within 60 days).

If the tenant requires additional time to pay, they’re going to have to make a motion for that with the court.

Re-Leasing

If your tenant gives notice of termination, you cannot stop them from terminating the lease. In this scenario, you should start showing the property immediately. You may have already lost money during this period, and the last thing you want is to have your property sitting empty.

Because of how the re-leasing process works and how long it can take to get a new tenant into the property, most landlords try to block any motions from the tenant to extend the 60-day period of assumption or termination of the lease.

Three months is a very long period of time to not know if you’re going to need to start screening new tenants.

Conclusion

When your tenant files for bankruptcy, it can initiate a period of uncertainty for you, and possibly even create conflict between you and your tenant.

There’s no doubt that it’s going to be difficult, but if you educate yourself about the bankruptcy process and what it means for you, you’ll be able to save yourself and your business potential financial losses—and a lot of headaches. Again, you’ll want to familiarize yourself with local and federal laws. Reach out to your legal counsel if you need clarity at any step along the way.

Lucrative Landlord Locales

If you’re thinking about investing in a new rental property (or two) there are several factors to consider. Perhaps one of the most critical factors and the first decision to make is where your property will be. This can have a substantial impact on being able to attract tenants and what rent you will be able to set. It’s important to do your homework on each location that you are considering. Here are five hot spots where rentals are in demand and command top dollar.

  1. Boise, Idaho

Home to rivers, mountains, canyons, deserts, and lakes, Boise is popular with those who love the outdoors. As coastal cities continue to grow and become more expensive, people are moving inland to find jobs and more affordable places to live.

With population and job growth triple the national average, low unemployment rate, and year-over-year rental growth, Boise could be a great place for you to invest in rental property. The Boise housing market was ranked as the #1 in the U.S.by Realtor.com in 2020 but slipped to #4 in their 2021 list. The average rent for an apartment in Boise City is $1,508 and 43% of properties in Boise City are rental properties. Best of all, Idaho has one of the cheapest landlord insurance rates, which means lower costs for your business.

  1. Memphis, Tennessee

Memphis, Tennessee remains one of the top locations to own rental properties. Located along the Mississippi River, the city is home to Elvis’ Graceland, the Blues Hall of Fame, and a bevy of tourist attractions.

There is also a high population of millennials, meaning that rentals are very popular. With Fortune 500 companies like FedEx and International Paper and AutoZone calling Memphis home, the job market is thriving. The average rent for an apartment in Memphis is $967 and 43% of property in Memphis is rental property.

  1. Tampa, Florida

Previously we listed Miami as one of the most lucrative landlord locales and, whilst it is still a great area to invest in, Tampa also deserves a look.

Tampa is an attractive metropolitan area and one of the most frequently visited tourist destinations. In addition, it is a popular relocation spot for retirees, providing many short-term rental opportunities. The average rent for an apartment in Tampa is $1,647 and 44% of property in Tampa is rental property. Also of note, a perk of owning property in Florida is that the real estate property tax rate is only 0.98%, compared to 1.08% nationally.

  1. Scottsdale, Arizona

Scottsdale is a favored spot for Arizona State University professors and graduate students to live, as well as for retired Northerners to visit during the colder months. With more than 76,000 students (plus the faculty that teaches them), landlords in Scottsdale have a steady stream of tenants interested in renting, distancing themselves a bit from Tempe’s undergrad-saturated communities.

And it’s not just students, Scottsdale is also an emerging tech market with companies such as GoDaddy, Yelp, Paypal, and Indeed.com all opening offices in Scottsdale. The average rent for an apartment in Scottsdale is $1,914 and 44% of property in Scottsdale is rental property.

  1. Dallas, Texas

Everything’s bigger in Texas, they say, and in Dallas that includes the number of renters.

Dallas has a substantial single, upwardly-mobile professional population. This demographic is a landlord’s dream as young professionals tend to be responsible and reliable tenants.Things aren’t slowing down either with the population expected to double in the next 15 years. One of the reasons for this population growth is the large and diverse job market with leading industries in technology, financial services, and defense. The average rent for an apartment in Dallas is $1,383 and 43% of property in Dallas is rental property.

These hot markets are full of renters anxious to sign on the dotted line and find their next home.

Best Legal Documents for a Beginner Landlord

You invest time and energy into your new rental property, and you want to protect your investment.

Handing over the property keys to your new tenants can be nerve-racking, as you are trusting them to respect and maintain that investment.

To protect yourself and your rental property, you need to acquire several legal documents.

These rental documents will ensure that you are compliant with your state’s landlord-tenant laws; they also give you legal recourse in the event that something goes awry.

1. Rental Application
To begin the renting process, you will need a steady supply of rental applications to document each potential tenant.

This simple form gives you all of the information necessary to perform background and credit checks, and it may also reveal your applicant’s serious or fickle intentions.

Check any employer or previous landlord references, establish that your rental applicant can make the rent each month, and ensure he or she has good rental responsibility.

2. Rental Agreement
Once you have chosen the renter(s) for the property, you need to create a rental agreement or lease agreement.

This is a binding legal contract between the renter and yourself, spelling out the exact details of your agreement, including the length of the lease, the exact location of the rental property, the amount of rent, when the rent is due and payable, and any other stipulations you may have, such as pets or no pets.

Each state has its own laws regarding the exact language to be used and if certain elements cannot be included.

Ensure you conduct thorough research.

3. Eviction Notice
No one wants to think about the worst case scenario.

However, it’s best to be prepared if your tenants are unable to make their monthly rent payments, or if they break the lease in another way, such as subleasing the property.

The only legal way to evict inappropriate tenants is with an eviction notice, which may have a different name depending on your location, such as demand of possession.

Once you notify tenants, you start the clock on the eviction process.

This process differs based on your state and whether the tenant is being evicted due to non-payment or other factors.

4. Notice to Enter
You should check on your property from time to time, to ensure that your renters are taking care and not violating any terms of the rental agreement.

However, you cannot stop by unannounced; the tenant is entitled to his or her privacy.

Therefore, you must give your tenants a notice to enter at least 24 hours in advance of your visit.

This gives your tenant enough notice to make sure that he or she will be home (if necessary) at the time of your visit and is in compliance with your legal responsibility as a landlord.

5. Notice of Non-Renewal
Sometimes you don’t want your tenants to stay for another lease term.

This may happen because you no longer want to rent out the property, or you may choose to move someone else in instead.

To give your renter(s) adequate notice to find a new place to live, you will need a notice of non-renewal.

State requirements vary widely on how much notice you need to give, but generally, the more notice you give, the better.

While there are many more forms that a new landlord may need, these five documents will give you the confidence to move forward in renting out your first property.

Find your locale’s requirements on the exact language needed and the time lines necessary to execute proper documents.

Many of the initial difficulties of renting out a property will be alleviated with the right paperwork.

How to Verify That a Renter Is Trustworthy When They Have No Credit History

If you’re only renting units or homes to tenants with an excellent credit history, you might be waiting a while before you get an acceptable application.

While it’s true that a good credit history normally equals timely payments, that’s not always the case.

There are many potential renters out there who haven’t yet had the opportunity to boost their credit score; they’re simply too young or too financially inexperienced to have any credit history worth mentioning.

Others may have flaws on their credit, but they’ve managed to bounce back from a rough patch and will be ideal renters in the future.

But how can you tell these renters apart from the troublesome ones?

There are a few ways to check a person’s trustworthiness, even without a credit history.

1. Ask for old payment records.
Oftentimes, even if a person has no credit history to speak of, they still have some form of past financial obligations that can vouch for their reliability.

You can ask them to provide these records as proof of their timely payment history.

It’s best, of course, to ask for old rent payment history from past landlords, but that’s not always an option.

In that case, any bill payment records will work.

Even a utility bill record will give you a good indication of a potential tenant’s past.

2. Ask for a large down payment.
If you’re still worried about the tenant paying on time each month, ask them for a larger down payment up front.

Because it’s difficult to rent without a credit history, most tenants will gladly put extra money down to secure a rental.

Many landlords use this money as a security deposit or apply it to the last month’s rent in the lease agreement.

Be sure and check local law regarding a large down payment.

3. Ask for references from past employers.
Regardless of credit history, you should always make sure your tenant has verifiable income.

You should verify employment with his or her current company, and you should also ask for references from past employers.

Legally, the questions you may ask employers may be limited, but you can usually ask if the applicant is eligible for rehire, which will give you a good indication of his or her prior work performance.

You don’t want a renter who is fired repeatedly from different jobs.

4. Ask for character references.
Since employers can’t give out much information about the tenant’s character, ask applicants for additional references to vouch for their dependability.

These shouldn’t be family members, though.

If possible, it’s best if references are honest people whose names you recognize in the community.

If that’s not possible, friends, past or present coworkers, teachers, or other professional acquaintances are always good options.

5. Verify their income.
There are several ways to verify a tenant’s income, and you should pursue at least one of them.

You can ask for past pay stubs or old tax records, such as W-2s or 1099s.

You can also request bank statement records.

Of course, their employer can also verify their income through an employment verification request.

Once you’re satisfied that the prospective tenant is honest and reliable, there’s nothing holding you back from extending a lease agreement offer to them.

As long as you verify their history, income and character, you’ll likely have an excellent renter with little to no problems in the future.

When Should You Deduct from a Security Deposit?

A security deposit is often, but not always, equal to one month of rent. Ideally, it helps the landlord or property manager pay for any repairs or cleaning that the property needs when the tenants move out. When the cleaning is over, the landlord sends their tenants a check for what remains from the deposit.

It sounds simple, right? Unfortunately for novice landlords, it’s hard to know exactly what to charge to a security deposit. Any miscalculating — whether accidentally or on purpose — is a great way to get angry tenants and a bad reputation for yourself.

Why Should You Give Back A Security Deposit at all?
Some landlords make their tenants hunt them down to give back their security deposits. Others don’t refund security deposits at all, effectively levying an extra month’s worth of rent from tenants.

These practices aren’t legal in a lot of jurisdictions, and you may find yourself in small-claims court if you don’t refund a security deposit when necessary; check your local laws to learn the details. Additionally, refusing a deposit refund makes your tenants very upset because, for a lot of tenants, a security deposit is a lot of money. Even if you never hear a bad word from your renters about it, their family and friends will — not to mention the whole Internet. Future tenants become much less likely to rent from you if they hear that they probably won’t get their security deposit back. Being unable to rent your properties out is not worth the money you get from holding onto the security deposit.

Therefore, it’s best to give back your security deposit. If there’s a delay, communicate that to your tenants. If there’s a dispute between you, remain as straightforward and clear as possible while always holding onto all records of your communications about the rental agreement.

Security Deposit Deductions 101

When your tenants move out, you’re likely to find wear and tear on the property: paint peeling, smudges on the walls, scratch marks and so forth. You can also discover actual damages: holes in walls, broken windows or torn carpet. Only heavy damage is generally considered fair game when deducting from a security deposit.

Remember that even a model tenant can have deductions from their deposit. As you walk through, photograph all damages so that you have a record if the tenant disputes your charges. Remember also that not all damage in a landlord’s eyes is damage in a tenant’s eyes. For instance, imagine that your tenant painted a wall a different color. It may look nice, and the tenant may have had the best of intentions. However, if you need to repaint the wall, that’s still property damage — especially if they never communicated it to you. If they did tell you before painting and you said it was fine, then billing them later isn’t fair — even if you changed your mind.

If you need to call in a repairman or a cleaning team after tenants vacate the premises, so that they can do badly needed cleaning, billing the tenant out of the security deposit is fair. If it’s a standard practice at your properties to call in professionals — to repaint all walls in your properties, for example — don’t deduct unless the damage goes above and beyond normal wear and tear. If you yourself are doing the repairs, keep a close eye on your time, and then you can bill tenants for your own work as you would for a professional doing the same job. Security-deposit deductions aren’t just to compensate for the time spent on repairs; they also pay for new materials. It’s also fair to bill out of the security deposit for anything that needs replacing, like doorknobs, hooks or appliances.

As a rule of thumb, any damage you don’t find within a week or so of your tenant’s departure isn’t eligible for a security-deposit deduction. If your new tenant finds damage a month after moving in, billing the old tenant for it isn’t really an option.

These deductions can add up. Keep a carefully itemized record of deductions. Ideally, give that information back to the tenant when you send back what remains of the deposit. Don’t forget to leave them your contact information so that they know how to get in touch with you if they dispute any charges.

 

How To Get Tenants to Pay Rent on Time

One of the biggest problems that landlords face is getting tenants to pay their rent on time.

You can speak with them every month about making late payments and it doesn’t do any good.

If you’re tired of having your words go in one ear and out the other, then here is how to get a tenant to pay rent on time in a more proactive, strategic manner.

1. Create a Rental Discount.

If you are having tenants consistently pay their rent late, then maybe it’s time to develop a new leasing agreement.

Add $50-$100 to the amount of rent that you plan to charge.

If the tenants pay their rent before the due date or on time, then they get to have this additional amount discounted from their monthly rent.

If they pay late, then they are subjected to this higher rent.

Some landlord/tenant laws require this additional amount to be a late fee, so make sure you structure your leases according to local regulations.

2. Lower Rental Amounts For Renewals.

This might hurt your bottom line a little, but it can also help to promote more on-time payments and better tenants.

Many markets have high rent levels that are a struggle for households to afford.

Consider adding an addendum to your leasing agreements which creates a lower rent after 12 consecutive on-time or early payments.

You’ll keep vacancy rates lower over time as the changes filter on down and though you might have a lower margin, you may wind up with more overall profits.

3. Setup ACH Rental Payments.

Lenders are using automatic payments as a way to guarantee payments and finding great success with it.

You might be able to do this with your tenants as well.

Create a time when the amount for rent will be withdrawn from the tenant’s bank account every month.

If problematic tenants are willing to sign up for this service, consider giving them a 5-10% discount on their rent since they’re doing you a favor.

This will give you a better chance of making sure you get paid.

Now ACH payments are only as good as the amount of money that happens to be in the bank account.

Not every tenant will have the needed rent payment available at the time of withdrawal.

Make sure you have a clear and precise return payment or rejected payment policy so that you can begin the eviction process immediately and have a way to recover the fees that may come when a full payment cannot be made.

4. Offer To Build Up Their Credit Score.

Many renters are in a place where they could use a boost in their credit.

They might be renting because of a foreclosure, a bankruptcy, or because of prolonged unemployment.

Landlords have access to services that will report on-time rental payments to the major credit bureaus and increase a credit score over time.

This also works in the opposite way as well.

You’ll also be reporting payments that were not paid on time and that can negatively affect a tenant’s credit score.

5. Hand Out a Holiday Bonus.

Do you think you can take out $5-$10 from the rent that is getting paid every month?

If you can, then consider putting this cash into an interest bearing account.

When an on-time payment is made, put the amount into this account. You might even consider matching the funds.

At the $10 rate and if you decided to match the funds that are in the account, then up to $240 could be given to a tenant at the end of the year.

They’ll have some extra cash for the holidays and you’ll be getting more on-time payments.

If you don’t want to cut tenants a check, you could put the amount onto a gift card as well.

6. Consider Different Rental Payment Arrangements.

Maybe your tenants struggle to pay their rent on the first of the month.

Some self-employed or contract workers might not know when their outstanding invoices will be filled.

By being flexible with the rental date, you may find tenants are better able to meet their contractual obligations.

That doesn’t mean you should have a floating payment date every month because that would make evictions nearly impossible.

It does mean that your due date doesn’t have to be the 1st of the month.

7. Make It Easier To Pay.

Do you have a slot for tenants to pay with a check at your office?

Is there a website you have that can process payments after hours?

If you can expand your collection areas, methods, and types of payment accepted, then you’ve got a chance to improve the number of on-time payments that you could receive.

If you have a grace period for rental payments, then a tenant isn’t late on rent until that grace period expires.

You can say rent is due on the 1st of the month, but if you have a fee-free grace period up until the 5th of the month, then rent isn’t legally due until then.

If you’re tired of tracking down tenants month after month, then consider removing any grace periods and implementing these ideas to create a proactive environment instead.

It could help you improve the profitability of your rental properties.

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.

Top 5 Things New Landlords Should Watch Out For

You’ve finally bought a rental property and are looking forward to your new role as a landlord.

Owning a rental property offers a dependable source of monthly income, but if you want to keep that cash flowing, you should watch out for a few practices that can affect the success of your new endeavor.

1. Getting Too Friendly with Tenants
Although it’s important to maintain a cordial relationship with your tenants, it’s best to find friends elsewhere.

If you become too friendly, your tenants might try to take advantage of the relationship, thinking that they can make late rent payments or ignore your policies.

Think carefully before renting to relatives or current friends.

If you do decide to open rentals to friends or relatives, use the same screening procedure you use for everyone else and emphasize that your role as a landlord will be separate from your role as a friend or family member.

It’s not easy turning down someone you know, but if you know that the person isn’t responsible or reliable, it would be better to rent to someone else.

2. Not Establishing Policies
Whether you’re renting 20 units or just one, it’s important to create written policies before the first moving truck pulls up to the door.

With written policies, there are no gray areas.

Are other tenants complaining that Joe in 2B is practicing his drum solo at 2 a.m.?

Pull out the policy and show him the “No loud music or noise after 10 p.m.” section.

Does Kaitlyn want to paint her walls black? Point out the appropriate section of the policy.

Policies are very useful because they clearly spell out what is and isn’t allowed.

Keep in mind that they must apply equally to everyone.

3. Not Running Background Checks
Most potential tenants seem like perfectly wonderful people when they’re touring a rental apartment or home.

But beyond that friendly exterior may be someone who has trouble paying bills on time.

If you don’t run background and credit checks, you won’t know that your new tenant views the monthly due date as a mere suggestion.

Background and credit checks can help you avoid big headaches with tenants who aren’t what they seem.

It’s much easier to turn down potential tenants than try to evict them three months from now.

4. Failing to Identify Your Market Segment
Is your unit the perfect place for a young family or will it appeal to college students?

Identifying your market segment can help you decide where to advertise it.

If it’s ideal for families, an ad in the local shopper makes sense, while college students will be more likely to respond to an ad in the college newspaper.

Make a list of the positive aspects of the unit to determine how to market it.

A unit with multiple bedrooms, a large kitchen and proximity to schools and playgrounds will probably attract families, while an upscale one-bedroom with luxury finishes in a busy urban area will appeal to young professionals.

Use the positive attributes in your ads, social media posts, and website, if you have one.

Even if you are focusing on a market segment, be sure that you do not appear to discriminate against any protected classes when you are advertising your rental.

5. Not Raising the Rent
Taxes and utilities tend to increase every year and so should the amount you charge for rent.

Although you don’t want to gouge your tenants, you do want to increase the rent every year to cover costs.

Tenants will be much more accepting of small rent increases than one very large increase after five years of stable rent.

Renting is more popular than ever, with 36 percent of American households renting.

The things you do as a new landlord will help ensure that you attract the highest quality renters from the renter pool.

Although you’ll do a lot of on-the-job learning, the process will be well worth it when you enjoy the financial benefits of owning rental property.