AAOA Blog

While the end of the year is a very busy time of the year for most of us on a personal level, it is usually a slow period for landlords. Many of us spend this time working on our taxes, cleaning out our desk drawers and preparing for the New Year.

One often overlooked piece of housekeeping that impacts your profit is old tenant files which still have balances due.

All too often, landlords simply file them away and forget them. By storing these files without taking any action, you are literally throwing money away.

Take the time to do some end-of-the-year housekeeping. Start by separating old tenant files which have no balance due from the ones that owe. One by one, go through the files with balances to make sure each contains a signed lease; then, make a breakdown of what is owed.

There are three different options to select from when collecting your lost profit. Each has its pros and cons.

Too often, I hear landlords advising other landlords to forget any debt they are owed and move on because it is not collectable. From experience, I can tell you this is not true. While all of it may not be collectable, a percentage of it is, maybe not immediately, but over time, you can recoup some of your profit.

There’s only one way to ensure that you won’t collect any of the debt, and that’s to do nothing, storing the files away and resigning yourself to accept the loss. Trust me when I tell you that doing nothing will cost you profit.

Print Friendly

Landlords must weigh convictions against tenant safety

by Robert Griswold

Q: After consulting your book, “Property Management for Dummies” and speaking with an attorney, I found a discrepancy in opinion involving tenant applicants with criminal records.

Your book said that I can deny a rental application submitted by a convicted criminal in order to protect my current tenants from having their items stolen.

However, the attorney I spoke with said a landlord can deny an application only if it’s based on bad credit and income history, even if the applicant has a considerable criminal history and is currently on probation for stealing and drugs. Has the law changed in the past few years?

A: While I’m not an attorney, some types of criminal convictions can provide very valid and legitimate grounds to turn away a prospective renter.

According to your question, the attorney said you can deny an applicant based not on criminal history, but only based on bad credit or income history. But that is not necessarily always true.

A convicted criminal could have good cash flow and may even have excellent credit, but that doesn’t necessarily mean they are not a threat to other tenants.

Having a consistent policy for conducting criminal background checks, and for rejecting applicants for specific types of convictions, such as violent crimes and property theft or damage, can be a good policy for protecting yourself and your tenants.

And you should ask your legal adviser about the types of convictions that may present good cause for rejecting an application, as this can be a tricky area for landlords who are trying to protect their other tenants and avoid violating the rights of the prospective applicant.

A convicted thief, as you describe here, may not be the ideal rental candidate.

Please note that arrests are very different than convictions, and someone who has had even numerous arrests may have been completely innocent of the crime or crimes alleged. An arrest is not a conviction or grounds to deny an applicant.

I believe that applicants with a history of certain violent or serious criminal convictions could present a reasonable basis for the denial of a rental application, while applicants with minor convictions in the distant past could be solid rental candidates.

Print Friendly

Depreciation, inflation among important considerations

by Bernice Ross, Inman News

DEAR BERNICE: We recently bought a property in the area of Yakima, Wash., with a lot of equity in it. After the renovation, we still have an equity position of approximately $35,000.

Initially, the plan was to renovate and flip the property, but we’re now having second thoughts about selling and are thinking about renting the property out instead. We are retired and any additional monthly income would be very good, but it would also tie up the cash that we paid to buy the property.

With certificate of deposit rates down and the fear of the dollar falling due to inflation, is it wise to just rent out the property? Property values seem to be appreciating. –Joyce T.


DEAR JOYCE: While no one has a crystal ball, there are several indicators to watch that can help you predict what will happen in your market and whether you should keep this house.


1. Median prices
Median prices are no longer a good indicator of what is happening in the market. As more jumbo loans become available, more higher-priced properties will sell. The result will be that the median prices will appear to increase when in fact actual values could still be declining. In your area, however, median prices have held steady since 2007 despite the U.S. recession.

The National Association of Realtors’ latest metro-area price report found that the median price of single-family resale homes in the Yakima metro area rose 2.7 percent in the third quarter compared to the same quarter last year, to $158,400. That compares to a median price of $136,500 in 2006, $156,500 in 2007 and $153,300 in 2008.


2. Total homes sold
An increased number of transactions usually indicate an improving market. In your area there tends to be a pattern of increased summer sales and fewer sales around the holidays.


3. Percentage of homes sold for loss or gain
Check your area for statistics on the share of homes that sold for a loss vs. a gain, which can help you gauge whether it’s advantageous to hold onto your property and rent it, or to sell it.

4. Percentage of homes where values are increasing vs. where values are declining
If a large majority of homes are still decreasing in value — do you feel comfortable holding a property that could face continuing declines in value?


5. Price per square foot
From my perspective, this is the most important statistic to watch in gauging home values in a given area.


Should you sell the house or keep it as a rental? In terms of keeping the property, your location seems to have done very well as compared to most other places in the country. I agree with your assessment that the falling dollar will probably result in significant inflation.

The government may have to print more money. When this happens, money flocks to hard assets such as gold and real estate. This, in turn, causes these assets to appreciate. If this happens, an additional reason for holding the property is that you will probably be paying off your mortgage with an inflated dollar.


In terms of selling, there are hundreds of thousands of properties that are bank-owned and have yet to come on the market. This additional inventory could drive values down if it comes on the market all at once. Furthermore, most experts are predicting an interest-rate increase sometime in the next 12 to 24 months.

Unless the economy is much stronger than it is currently, an interest-rate increase means fewer buyers qualify to purchase your property. Fewer buyers could translate into price depreciation. Furthermore, the Bush tax cuts sunset in 2010. Selling now, when the capital gains tax is at a lower rate, may be a good idea.


Before you make a final decision, see your certified public accountant (CPA) or other tax professional. Ask him or her to calculate how much it would cost you to hold the property after taxes as well as the financial ramifications of selling the property. Once you have that data, youll be in the best possible place to make the right decision for you. Good luck!


Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of “Real Estate Dough: Your Recipe for Real Estate Success” and other books. You can reach her at Bernice@RealEstateCoach.com and find her on Twitter: @bross.
Copyright 2009 RealEstateCoach.com

Print Friendly

How to prep Corian for granite overlay

by Bill and Kevin Burnett, Inman News

Rather than tearing them out and using plywood and backer board as a base to install granite tile, can I leave the Corian in place and use that as the base and use mastic or thin set to fix the granite tile to the Corian?

A: Keep the Corian. Forget the plywood and cement backer board. The Corian countertops will provide a good substrate for installation of granite tile.

Five years ago, brother Bryan moved to a condo about a quarter mile away from Kevin in Eagle, Idaho. The condo was built in 1978. It came with the original kitchen. The cabinets were built in place, made of oak-veneered plywood stained a dark walnut. The countertops were a light shade of plastic laminate. To say the least, it was dark and dated.

The first order of business was to lighten up the 1970s kitchen. Bryan spent the better part of four days priming and painting the cabinets and painting the walls and the ceiling — all bright white. Then he chose a maple floor. He decided to go with black marble tile on the countertop.

So he had your question exactly. Should he leave the laminate or rip it out and replace it with new plywood and cement backer board?

Because the kitchen sink was to remain the same size and in the same place, he decided to set the marble in mastic and forgo the extra work and expense of installing new substrate.

Assuming the sinks will remain in the same place, we recommend you do what Bryan did and forgo demolishing the existing countertops.

It will take a little preparation in the form of sanding them to provide an abraded surface to ensure good adhesion for the mastic and cutting the right-sized holes to install any sinks. Corian is manufactured with molded sinks that should be cut out to the right size for the new sinks. Corian can be cut easily with a circular saw equipped with a carbide-toothed blade.

Next, sand the surface with 150-grit sandpaper. A palm sander or orbital sander is ideal for this job. The final prep step is to wipe down the surface with some lacquer thinner to remove all the oil and sanding dust, leaving a pristine surface for the mastic. Then tile away.

Print Friendly