AAOA Blog

Tip #19:  Bringing in Roommates After the Lease is Signed

 

 

by Wallace S. Gibson, CPM

 

In some areas where the economy has not “stimulated”, many tenants who rented as “singles” are approaching their landlord about taking in a roommate…..landlords who say NO face lost rent and a vacancy depending on their tenant’s financial situation so having a policy to accommodate their tenants is a MUST.

Provide tenants with applications and require that their roommate complete it and return it to you. Charge any application or credit check fee as appropriate. Screen the applicant and if they pass, offer your tenant the option of approving them as an AUTHORIZED OCCUPANT under the current lease OR offer to re-write the lease and place them on record as a tenant who is jointly and severally responsible for the remainder of the lease term. I charge a fee for this lease re-write.

Option #1 allows your tenant to remain in control of the rented dwelling in case their new roommate does not work out.

Option #2 allows the landlord or property manager to now have 2 tenants on the hook for the rent AND responsibilities under the lease terms.

The security deposit at the inception of the lease remains the possession of the original tenant and the roommate should pay any deposit directly to the current tenant and they handle any disposition of the deposits between themselves. The landlord/property manager is not involved until the end of the lease or the unit is entirely vacant so that an inspection can be conducted.

 

Wallace Gibson, CPM, is the owner/broker of Gibson Management Group, Ltd., a full-service property management company offering 45 years of professional property management services for investment property owners in Central Virginia * Charlottesville, Fluvanna, Louisa and Greene counties. Her firm’s website is http://VaHomes4Rent.com and she blogs at www.propertymanagementmaven.com.

See last week’s Landlord Quick Tip.

Do you have a tip to share with other landlords?  Contact our editor at kim@joinaaoa.org.

American Apartment Owners Association offers discounts for landlords on products and services related to your rental investment, including real estate forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.

To subscribe to our blog, click here.

by Janet Portman, Inman News

Q: A friend who has just gotten divorced has asked me if he can rent the single-family house I own.

 

 

 

What do you think? –Paul M.

A: Whenever you do business with a friend — which includes loaning money — you have to be prepared to sacrifice either the friendship or your financial interests if the business deal hits a bump in the road.

 

So the question is not whether you should have presented a lease and demanded a deposit, as you would if the renter had been a stranger. The question is how likely is it that this tenancy will go smoothly? Can you expect that this friend-tenant will pay the rent, take reasonable care of your property, and be considerate to the neighbors? If the answer is a resounding “yes,” you may never hit that bump. The presence or absence of a written lease agreement won’t matter much if your tenant friend can’t come up with the rent and prevails upon your friendship for endless reprieves.

That said, writing down the key terms of the deal is always a good idea, simply because all of our memories fade over time. And asking for a deposit should not insult your friend or cause you embarrassment. You may need that money if your divorced friend has difficulty making ends meet on his own, particularly if he’s paying child support. To make things easier, you could ask that he pay you in installments.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of “Every Landlord’s Legal Guide” and “Every Tenant’s Legal Guide.” She can be reached at janet@inman.com.
Copyright 2009 Janet Portman

 

 

What to do when complaints about identity theft go unheard

by Robert Griswold

by Paul Bianchina

 

Q: I have a 40-gallon natural gas water heater that is 5 years old, located at one end of the house and the bathrooms are at the other end. We added a recirculation pump with timer that allows us to get hot water within 5 seconds vs. without, which used to take 60-plus seconds.

However, I have never been able to keep enough hot water going for my wife’s showering. She normally runs the shower for 15 minutes and unless it is at the top of the hot setting, she complains that there is not enough hot water. When we have visitors, it gets even worse. Does this mean we need a bigger-capacity water heater? Are there other solutions besides more capacity?

A: It’s unusual to not have enough hot water with a gas water heater, since they tend to either work or not work — there’s usually plenty of hot water or virtually none at all.

Before undertaking the expense of a new water heater, I would first talk with the utility company that supplies the gas, and have them come out and check the incoming gas pressure and the condition of the burner. Low pressure or a partially clogged burner can cause the problem. I would also suggest shutting the gas, then draining the tank and flushing it with fresh water to remove any sediment.

You might also be having a problem with the dip tube. That’s a plastic tube that sits inside the tank on the cold water side, and directs the incoming cold water down to the bottom of the tank to be heated. If the dip tube cracks or deteriorates, it allows cold water to remain at or near the top of the tank, where it doesn’t have time to get sufficiently heated. You can sometimes — but not always — recognize this problem by the presence of tiny bits of white or gray plastic in the faucet strainers. Replacement dip tubes are available at most home centers and other stores that specialize in retail plumbing parts.

If all that is OK, then the problem is probably one of capacity. A 15-minute shower is pretty long, and will go through a lot of hot water. You could consider low-flow shower heads, or replace your existing water heater with one that has a larger capacity.

 

 

Remodeling and repair questions? E-mail Paul at paulbianchina@inman.com. 
Copyright 2009 Inman News

See Paul Bianchina’s feature, Guide to Window Screen Replacement.

 

 

 

 

by Janet Portman, Inman News

 

Q: I have a durable power of attorney for finances for my sister. She is ill and in the hospital, and will go to a convalescent center after that. I need to get into her apartment to get her safe deposit box key and other important things. But her landlord won’t let me in, even after I’ve explained who I am. What can I do? –Kathy B.

A: As the holder of your sister’s durable power of attorney for finances, you have the right to act on her behalf when it comes to managing her finances if she becomes incapacitated. This includes paying bills, making bank deposits, watching over investments, collecting insurance or government benefits, and handling other money matters on your sister’s behalf.

A “durable” power takes effect as soon as you both sign it (though of course you wouldn’t use it until you need to). Sometimes people prefer to make the power of attorney take effect only when a doctor certifies that the person making the document is incapacitated; these are called “springing” durable powers of attorney because they spring into effect once the maker is incapacitated.

Check your document to see if it requires a doctor to certify that your sister is in fact incapacitated. If so, you are dealing with a springing document, which means you’ll need to give it to her doctor and request written certification of incapacity. Take the document itself (plus the certification, if you’re dealing with a springing power) to the landlord. The document should look rather formal (it will have a notary’s seal).

Also bring a copy of the document to leave with the landlord. (The landlord may want to show it to a lawyer.) You might also bring some explanatory material that will help the landlord understand the purpose of the document and feel comfortable honoring it. (You can get state-specific explanations of powers of attorney from this site.) Hopefully, this will convince the landlord that you have the legal right to enter.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of “Every Landlord’s Legal Guide” and “Every Tenant’s Legal Guide.” She can be reached at janet@inman.com.
Copyright 2009 Janet Portman

See Janet Portman’s feature, Landlord Charges Extra for Lawn Care.

 

American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.

To subscribe to our blog, click here.
 

Low rates, prepayment flexibility attract investors

by Steve Bergsman

It’s been two years since the subprime mortgage market blew up, taking down the residential housing industry and eventually the economy.

 

While everyone’s hoping the end of the property blues will be reached this year, there are still some sectors, such as commercial real estate, that were late coming into the down cycle and still have a long way to fall. (more…)

 

by Howard Bell

 

The economy’s decline leveled off significantly from April through June, confirming that the worst is behind us. GDP declined at an annualized rate of 1% in the second quarter, after shrinking an amazing 6.4 % earlier this year.

But consumer spending, 70% of economic activity, continues to fall as Americans continue to save and reduce debt. Economists express concern that our basic spending habits have been permanently altered by this great recession. This is also having an effect on rentals as renters downsize or insist on rent reductions.

With this as a backdrop we looked at rental rates which are a prime factor in evaluating a property. We clearly have a long way to go. The Dept. of Commerce chart indicates we are at a fragile beginning of a recovery. The key to successful property ownership now will be to keep it occupied and ride this out.

Apartments.com Study

Rent reductions at a 22 year high

In the second quarter the vacancy rate of 7.6% was an increase of 1.5% YOY. Landlords have been facing rising opposition to rent rates agreed to during the boom years. Tenants everywhere are asking for and getting rent reductions. Rents are in decline in every market nationwide in the current quarter with three with marginal exceptions, Tampa, Kansas City and San Antonio.

According to an Apartments.com study: For the first time in six years, rents are down nationwide and vacancies are up.

Adding to this market pressure is competition felt from the shadow market or a surge of investor owned homes and condos that account for almost half of the rental stock, expanding the national rental supply.

Despite these recent obstacles, a national Apartments.com survey found that an overwhelming majority of renters are still looking for a new place to live this year and more than half are planning to pay the same or more in rent. (via Reuters)

What To Do About Rent Reductions

Tenant Retention

If your are facing rent reductions and you want to retain the tenant, then ask for a new lease. In the 2001 recession, unemployment didn’t really recede for 18 months after the recession was technically over. Tenant retention locked in with a new lease is good strategy and will help you ride out this great recession.

How to Rent it Faster

Stage it. Home staging for a rental plays the same role as staging for a sale. Painting the interior a light neutral color, is an inexpensive way to get a new and clean look and feel. Tired looking places take longer to rent. Leave lights on in each room, and leave blinds open to make rooms look brighter and larger.

Sell it. Renting your unit or home is a sales process. Walk through the house as if you were a renter. Consider the negatives and be ready with answers that overcome its shortcomings. Be ready to talk up its features. Create a checklist of the things you like about the house. Use it to sell potential tenants. Check comparable rents with listing sites such as apartment.com or Craigslist. Consider consulting with a professional property manager to determine the right rent range if you still have difficulty.
Focus Your Advertising

Use Print Too

Consider the profile of the people you are trying to reach and then advertise in the places where they would be likely to look for a rental unit. If you are renting that basic apartment or studio, you have a good chance of attracting people in need of a lower monthly rent. Think students or people starting out or starting over.

Targeting your advertising you will save days on market. University campuses, free neighborhood papers, postings in local supermarkets or coffee houses might be the best place to reach that person.

Of Course, the Internet

If you don’t have a professional website you could use the blogs. Sites such as blogger or even Facebook have become so easy to use that you might consider a page for your rental property that features a slide show of vacancies as they come up.

As you receive phone calls you might ask them to go to your marketing page slide show and create an interactive conversation right there.

Howard Bell PFP CCRM is the founder/editor of Your Property Path.com, featuring over 450 articles on property management, Your Property Path SF, trade talk for the San Francisco real estate industry, Your Property Path News Brief, snap news updates and real estate market info, and Your Property Path Amazon Store. Howard is a property manager in San Francisco and holds a certification in financial planning.

See Howard Bell’s feature, New Home Equity Mortgage Available. 

American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.

To subscribe to our blog, click here.

 

 

 

Tip #18: Reporting a Tenant to the Credit Bureaus

 

This week’s tip submitted by Bill Gray:

I have been buried in email on how to report a previous tenant to Experian, Equifax and TransUnion.

 

The company I have worked with, Rent Recovery Services, has an automated service that reports to all three credit bureaus for 7 years. There are 2 options:

 

See last week’s Landlord Quick Tip

 

To subscribe to our blog, click here.

 

 

 

 

 

See Barry Stone’s feature, Black Crud Invades Whirlpool Bath.

 

American Apartment Owners Association offers discounts on products and services for landlords related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at joinaaoa.

 How midweek stays, travel insurance can pay off

Tom Kelly, Inman News

While family and friends can be the key to a successful vacation rental property, they also can be a major pain in the backside.

One of the most difficult things to handle — and the biggest obstacle to your bottom line — is when Uncle Fred wants to use your getaway for two nights — midweek — during the final week of the peak rental season when you could have booked the place for top dollar for 30 consecutive nights.

If there is no way around Uncle Fred’s two-day presence, ask if he can move his dates to the beginning or end of the rental week when you still could salvage four or five nights of prime rental income. If that’s also impossible, call the renters on both ends of Fred’s dates and ask if they would like additional days at a reduced rate. You could turn out to be a real hero to both groups, especially if they are arriving by car and don’t have to alter their airplane dates.

If that strategy produces no takers, see if you can take off work and surprise your family with a few days of vacation. You might even be able to paint the bathroom while they are enjoying the waterfront, ice rink or afternoon matinee. You also will be able to change the perception that “your place is always rented at the best times of the year.”

While many owners choose a weekend day for comings and goings, adjust your start and end dates with the most common mode of transportation. For example, if most of your visitors will have to arrive by air, the least expensive days to fly typically are Tuesday and Thursday. Depending upon the region, Saturdays can be inexpensive, too, and also in line with your competitors. That fact often surfaces when friends are staying in the same area yet at another property. Friends like to vacation with friends, and common arrival dates make for happier campers.

Many of your decisions to accommodate unorthodox requests like Uncle Fred’s must be made with cleaning in mind. If you have booked renters before and after Uncle Fred, make sure you have made arrangements with your cleaning folks (perhaps yourself!) to get the job done before the new people arrive. Altering a cleaning company’s routine during a busy resort season can be nearly impossible, making Uncle Fred’s visit all the more difficult to approve.

The key to a successful, money-making second home is satisfied renters who want to return because of the special experience they enjoyed at your place. And, if they were impressed with their time and accommodation, they are going to tell their friends and acquaintances. While you often can’t be there to place a rose in every room every time a new visitor arrives, make sure you take the time between cleanings to scoot back to your property and make certain your people are getting the kind of dwelling you want them to enjoy.

Another way to ensure your bottom line is to encourage your guests to invest in a travel insurance policy. While you might not be able to persuade Uncle Fred to pop for any additional costs to rent your place, it makes sense to offer the option to folks who have plunked down a sizeable deposit.

“Travel insurance offers you extra security because it protects your rental income in case a traveler cancels his or her reservation,” said Christine Karpinski, author of “How to Rent Vacation Properties by Owner.”

“It is important to keep travel insurance in mind whenever a renter alludes to a potential cancellation,” Karpinski said. “You don’t want to get stuck with a last-minute opening or a potential refund guilt trip. Travel insurance is the smartest and most professional way to handle possible cancellation issues with your guests.”

The biggest upside of trip insurance is that it can alleviate the burden of cancellations, refund issues and open dates.

“Let’s say you’ve got a renter scheduled to arrive at the end of the month, and you’ve already collected the full rental payment,” Karpinski said. “If your renter calls and has to cancel her reservation due to a family illness, there is little chance you would be able to rebook those dates that late in the game. If, however, she had purchased a travel insurance policy that covers cancellations for medical emergencies, then, generally speaking, any money paid to you should be reimbursed to her by the insurance company.

“Since the insurance is taking care of it, you won’t be torn between feeling guilty about your payment policy and wanting to use your best business judgment. It creates a better situation for all involved.”

That’s reassuring, even though Uncle Fred could care less about your business judgment.

Tom Kelly’s book “Cashing In on a Second Home in Mexico: How to Buy, Rent and Profit from Property South of the Border” was written with Mitch Creekmore, senior vice president of Houston-based Stewart International. The book is available in retail stores, on Amazon.com and on www.tomkelly.com.

Copyright 2009 Tom Kelly

 

See Tom Kelly’s feature, Empty House May Cost More to Insure.