Categories
- 1031 Exchange
- AAOA Forum
- Collections
- Credit Screening
- Financing
- Forms
- Going Green
- Insurance
- Make Extra Money
- Marketing Vacant Units
- Promotional
- Property Sales
- Remodel Tips
- Repair
- tax tips
Archives
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
Real Estate Resources
Welcome to the AAOA Forum, where we discuss the the topics our members want to hear and want to talk about. We like to take an active roll in the online community to help our members learn and help educate landlords new and old. We encourage you to participate and join in our discussions. Thanks.
Landlord Quick Tip
Tip #42: They’re Taking Names!
2010 is a U.S. Census year. Every household is required to answer a census questionnaire.
That includes your renters, so landlords and property managers need to know the rules.
Questionnaires will be mailed out to individual households in March, and responses are due back April 1.
If a tenant does not respond to the government questionnaire, they may get a visit from a census worker. That probably won’t happen until late spring or summer.
Landlords and property managers in multi-family buildings have to allow access for census workers to buzz or knock on front doors of specific tenants who have not responded to the census mailing. The census worker may have to return a number of times to catch the person at home. They must be allowed repeated visits, but their requests for access have to be reasonable.
If the census worker is unable to contact the tenant after repeated attempts, the landlord or property manager may be asked to provide demographic information about that unit.
The 2010 Census has several parts, or surveys, going on at once. Only the 2010 Census and the American Community Survey are mandatory. You do not have to allow access for others.
Obviously, this census process will bring out identity thieves and other criminals who will pretend to be census workers to gain access to your tenants.
Here are some tips to help you confirm that a census worker is legit:
Before you allow entry, you have the right to ask for ID. Workers are issued a government badge. Cross-check the badge with personal photo ID.
You can call the National Processing Center to verify the person’s employment. Try 1-800-923-8282 – you may be transferred to a different office. There will be a number of regional offices as well, but be careful if you get the verification phone number from the person you are trying to verify.
Ask them to tell you the specific name of the survey – cons don’t always do their homework.
Ask for proof that they are carrying a confidentiality statement with them – they are required to read it to each person they interview.
Make sure they have something with them to record data. This year, most census workers will be using hand-help computers.
You may see a bag, probably black, with “U.S. Census Bureau” printed on it.
Census workers will not request to come inside the unit.
Census workers will not request personal financial info or SSN’s — they may ask for general income data.
Be suspicious for those who ask to “canvas” – knock on random doors, or need to meet with quite a few renters.
Watch for someone who demands immediate access without time to call to verify or otherwise throws their weight around – threatens to have you arrested, for instance.
And don’t forget to fill out your own questionnaire — or you’ll have a census worker at your door.
See last week’s Landlord Quick Tip.
Do you have a quick tip to share with other landlords? Please email our editor at kim@joinaaoa.org.
American Apartment Owners Association offers discounts on products and services for landlords related to your rental housing investment, including rental forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at http://www.joinaaoa.org
Posted by Kim Ezzell on 02.08.2010. CLICK to Leave a Comment »
Filed under: AAOA Forum
Landlord Sued Over Routine Security Deposit Deductions
A landlord in Alaska is facing a major legal battle over its routine handling of tenants’ security deposits. The tenants are asking that the case be prosecuted as a class-action lawsuit so more tenants can join in.
This case serves as a good example of why landlords and property managers need to know the local laws regarding security deposits, and need to carefully review any new policies they may implement regarding trust funds.
At issue in this case is whether a landlord can streamline the accounting process by charging flat rates for common items, charging for those items in every case, or rounding up on hourly charges.
In the Alaska case, the landlord deducted exactly $35 for oven drip pans although that is allegedly not the actual cost, nor is replacement necessary in each case. Tenants were also billed for repairs at an hourly rate higher than what was actually paid, rounded up to the nearest hour.
State laws govern security deposit deductions. While some state statutes try to clarify landlords’ duties with regard to security deposit deductions, even these statutes leave unanswered questions.
Generally, though, deductions for damage can only be taken for the actual, out-of-pocket costs to the landlords. Remember, normal where and tear can never be deducted.
“Normal wear and tear” are those items that are inevitable with normal use and aging – some carpet wear, some scuffing or aging of paint. Normal wear and tear will occur despite proper maintenance and cleaning. Landlords cannot deduct for these items, even if a tenant agreed to pay for them in the lease.
Allowable items are those that would not have occurred with time or normal use. That can include exposure to the elements, for example, damage to the paint or carpet from leaving windows or doors open, or problems caused by excessive dirt build up. The costs of structural damage to walls, windows, and doors, or from pets, smoke, or bugs, if not caused by defects in the property, are probably deductible items.
When you do charge a tenant’s security deposit for damages, you are likely limited to the actual loss, not the replacement cost, or in this case, a rough estimate of the cost.
Each deduction must be justified and backed-up with documentation – pictures, receipts and proof of payment. There have been a number of court cases where landlords have lost because they didn’t provide proper documentation. Some states allow additional damages in those cases, and may stick the landlord with attorneys fees.
See our feature, Are Late Fees Legal?
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.
Posted by Kim Ezzell on 02.08.2010. CLICK to Leave a Comment »
Filed under: AAOA Forum
Costly Security Deposit Mistake
Non-refundable pet deposits can actually cost you money
by Bill Gray
The way in which you explain, or don’t explain pet deposits can cost you profit.
If landlords could spend just one day as a professional collector attempting to collect tenant debt, one of the top objections they would hear from previous tenants is about pets and pet deposits.
“The urine spots on the carpet are covered by my pet deposit” is one example of a tenant either intentionally or unintentionally misunderstanding the pet deposit. Many pet deposits are non-refundable. (Please note: non-refundable deposits may be illegal in your state.) If this is not fully explained at lease signing, most likely the tenant will believe that the pet deposit is no different than the standard deposit he placed on the rental unit.
Most tenants understand that when they pay a rental deposit any damage they cause to the unit will be deducted at move out from their deposit. If the non-refundable pet deposit is not fully explained, the tenant considers it the same as the rental deposit.
So when Fido has several accidents and soils the carpet, the tenant often will guesstimate that his pet deposit will cover the cost of cleaning it. In reality the cleaning cost is deducted from his refundable deposit. Imagine the difficulty a professional collector has on the telephone trying to explain the difference between a non-refundable pet deposit and refundable rental deposit.
This is not to say that a certain percentage of previous tenants have a convenient memory when it comes to the terms of the lease. But I do believe that a good share of landlords do not take the time to fully explain the terms. An initialed and signed pet addendum will go a long way in settling disputes after move out.
Use a clear, understandable pet addendum and explain it clearly before the new tenant initials and signs it. Doing so will save you profit by reducing tenant debt when the tenant moves out.
Copyright 2010 Bill Gray
Bill Gray is a tenant debt collection specialist, which makes him a tenant screening specialist. For tenant debt concerns, email him at Bill@thelandlorddoctor.com. Visit Bill Gray’s blog at TheLandlordDoctor.com.
See our seven part series, Vital Tips to Increase Your Debt Collection.
See Bill Gray’s feature, Tenant Screening Tips: Beyond the Basics.
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.
Posted by Kim Ezzell on 02.08.2010. CLICK to Leave a Comment »
Filed under: AAOA Forum, Collections, Forms
How to Write a Bulletproof Lease Guarantee
Who Pays When Tenants Damage the Property Before They Move Out?
Rent it Right
by Janet Portman, Inman News
Q: I’m renting to a couple of college students and have both sets of parents as lease guarantors. Last month, the tenants had an accident in the kitchen that resulted in several hundred dollars’ worth of repairs. I notified the guarantors and asked them to repay me, but they refused, saying that they’re obligated only if the tenants can’t pay, and because I hold a security deposit, it’s clear that the tenants’ money (the deposit) should pay for the damage. Am I required to use the security deposit before turning to the guarantors? –Ann N.
A: Like many landlords, you’re doubtless concerned about depleting the deposit before the end of the tenancy, when you may need all of it to cover unpaid rent or needed repairs (beyond normal wear and tear). To protect the deposit, you could have your tenants pay now for repairs required during the tenancy.But to whom may you look for reimbursement? Your ability to demand payment from the guarantors instead of the tenants depends on your lease guarantee clause.
A thorough, unconditional guarantee will have these elements:
The clause should clearly make the guarantors “jointly and severally” liable, with the tenants, for all monetary obligations under the lease.
Your clause should warn the guarantors that they are not entitled to notice should the tenants fail to pay. It’s up to the guarantors to keep track of the tenants’ performance under the lease.
Finally, your clause should state clearly that you’re not obligated to get the money first from the tenants. Practically speaking, that means you can send the bill directly to the guarantors.
Here’s an example of a clear lease guarantee:
“Co-signer agrees to be jointly and severally liable with tenants for tenants’ obligations arising out of this lease, including but not limited to unpaid rent, property damage, and cleaning and repair costs. Co-signer further agrees that landlord will have no obligation to give notice to co-signer should tenants fail to abide by the terms of the rental agreement. Landlord may demand that co-signer perform as promised under this agreement without first using tenants’ security deposit.”
Take a look at your lease guarantee and see how it measures up. If your clause simply makes the parents guarantors of the lease, without more, you will need to learn whether a “typical” guarantee, in your state, is unconditional and contains all of the elements noted above. Next time, make it clear in the lease from the outset.
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 2010 Janet Portman
American Apartment Owners Association offers discounts on products and services for landlords related to your commercial housing investment, including real estate forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
Posted by Kim Ezzell on 02.04.2010. 3 Comments »
Filed under: AAOA Forum, Forms
Tips for Renting to Families With Kids
by Michael Monteiro
Another category that requires specific consideration is tenants with children.
First of all, be aware that in most states refusing to rent to families with children (based solely on the fact that they have children) is considered discrimination and is, therefore, illegal. It is also commonly illegal to reserve only certain units for families.
So the question is not so much whether or not you decide to rent to families with children, but special considerations you should bear in mind when this situation arises.
When it comes to renting to families with kids, there are two main considerations to keep in mind to ensure the comfort of other tenants and the upkeep of your units: 1) noise and 2) unit maintenance/protection. Following are a few tips for ensuring you have both of these areas covered.
Noise
Kids will be kids. And sometimes being a kid involves a bit of noise. The bottom line, though, is that many tenants (particularly those who live directly under the pitter-pattering of little feet) may be annoyed by the extra noise that often comes with children. Luckily, there are some measures you can take to help minimize noise levels and keep all of your tenants happy and comfortable.
Make sure that floors are carpeted (more on keeping carpets clean below). According to HGTV.com, “The best covering for the floor is wood with an area rug over it. In this manner the wood floor gently absorbs the sound, while the rug swallows excess noise.”
Although it is somewhat intensive, if you rent to families frequently, you may want to consider using Green Glue, which creates a gap between your existing drywall ceiling and a new layer of drywall. According to a Today feature, this can reduce noise by up to 20 percent by blocking sound vibrations. For more information, visit SoundIsolationCompany.com.
Finally, remember that soundproofing walls and ceilings without securing windows is a moot effort. Obviously, your tenants’ windows will be open at certain times of the year, but make sure that they are sealed to prevent noise from leaking out when they are closed.
Protecting Units
Flooring
While carpeting will help prevent some of the noise associated with children and families, it can also be easily damaged by spills. When installing carpeting, make the extra effort to secure it with fabric-protectant spray, such as Scotchgard™ Protector for Carpet. Such products can be applied on either a DIY basis or be professionally applied by a carpet cleaner.
If you opt not to take the carpet route, you can add a bit more protection to hardwood floors by applying a stain. Hardwood stains protect from scratches, dust, and grime, are long-lasting, and can be applied to the hardwood surface with a paintbrush.
Walls
In addition to flooring, walls are another area often subjected to stains and spills at the hands of little ones. Protect paint jobs with a product like AGS Wall Guard. This clear coating can be applied as a “top coat” to paint and will resist scuff marks and stains, and is easily cleaned, thus ensuring your paint will stand up to the test of little hands.
While all of this may sound like a lot of work to ensure that your units are kid-friendly, bear in mind that tenants of all shapes and sizes can make noise and messes. Consider these measures not only way to prepare for families with children, but also a means of ensuring that all of your tenants live in a comfortable, peaceful environment that is as damage-proof as possible.
See Michael Monteiro’s feature, Watch Television While Learning Real Estate and Property Management. 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.
Posted by Kim Ezzell on 02.04.2010. CLICK to Leave a Comment »
Filed under: AAOA Forum, Remodel Tips, Repair
How to Get Sued for Wrongful Death
“If a family member has died as a result of carbon monoxide poisoning, you may have a wrongful death claim against the landlord…”
“If you have been sickened by carbon monoxide, call us. You may have a claim for damages against your landlord…”
These are just two of hundreds of ads that law firms are running this winter in response to the growing number of injuries and deaths from carbon monoxide poisoning.
It’s a chilly winter across the country, and that means furnaces are cranking. And a few are leaking. A woman in Minnesota just became the latest casualty of carbon monoxide poisoning.
A number of states now require carbon monoxide detectors. Even if they don’t, crafty lawyers will argue that you still had a duty to protect your tenants from this threat.
Inspect appliances, chimneys, and vents.
Make certain garages aren’t leaking exhaust.
Check and replace batteries in carbon monoxide detectors.
Don’t become a statistic for a personal injury lawyer.
For more, see Renter Deaths Prompt New Rules for Carbon Monoxide Detectors.
American Apartment Owners Association offers discounts on products and services for landlords related to your rental housing investment, including rental forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
Posted by Kim Ezzell on 02.04.2010. 2 Comments »
Filed under: AAOA Forum
Landlord Quick Tip
Tip #41: Medical Marijuana
Medical marijuana legislation seems to be sprouting up everywhere.
Needless to say, permitting some tenants to smoke pot at home creates controversy for landlords.
On the one hand, the use of marijuana for any reason is still prohibited by federal law. The state of California is a different story. So are many municipalities across the country, where the sale of medical marijuana is now allowed.
Do you have to rent to a tenant who uses medical marijuana?
Is allowing a tenant to use marijuana in your unit a reasonable accommodation under the disabilities laws?
Be prepared to these answer questions when they come up.
If you rent HUD-subsidized properties, it is unlikely that you have to allow medical marijuana use on your premises. But if you rent in a jurisdiction that allows using medical marijuana and an applicant is asking for this accommodation, talk it over with your attorney.
You may have to allow it, even if it violates current language in your lease.
If you do have to accommodate a user, your attorney may be able to negotiate a way to accommodate their need without violating the law, and without angering, (or enticing!) other tenants. Fortunately, there are other methods for using medical marijuana that don’t set off smoke alarms, or leave your units and hallways smelling like a rock concert.
It is too soon to draw conclusions on how judges are going to rule on excluding or evicting tenants for medical marijuana use. We’ll have to keep an eye on this issue. To be continued….
See last week’s Landlord Quick Tip.
Do you have a quick tip to share with other landlords? Please email our editor at kim@joinaaoa.org.
American Apartment Owners Association offers discounts on products and services for landlords related to your rental housing investment, including rental forms, tenant debt collection, tenant background checks, insurance and financing.
Find out more at www.joinaaoa.org.
Posted by Kim Ezzell on 02.01.2010. 1 Comment »
Filed under: AAOA Forum
Got Vacancies?
The biggest loss you may ever experience as a landlord is a prolonged vacancy.
Yet, in this economy, the tenant pool is shrinking, primarily due to high unemployment. According to researchers, even qualified renters who have jobs are fearful of committing long-term, and they are in a better position than ever to buy their own home.
Finding applicants is more complicated than it used to be. Why is that?
Newspapers are losing subscribers. To compensate, they may be charging more for ads, or following the trend to move online. In fact, most newspapers now have their own online classifieds, although they charge as though they are advertising to subscribers.
Take a look at this example:This sample ad: ”Move in Now. For Rent. Great Deal. 303-555-1234″ as a plain text ad in the Denver Post Classified would cost $546 for thirty days, $176.75 for one week. Pictures are an additional $25 a piece, and bold text is another $10. Compare that to this Sample Ad that you could run online — in fact, you could run an unlimited number of them online for three months for $39.95. You can also link to this listing in other ads or announcements, or email it to applicants who want to find out more about your rental.
The job market is shifting geographically. New job seekers as well as laid-off workers are moving to where opportunity takes them, whether that is a new job or a new college. Rental signs alone miss a significant number of qualified applicants.
Many renters are advancing students, raised on technology. They get their news from the Internet. They don’t subscribe to a newspaper. They don’t even know where to get a newspaper. In 2008, 26 million people shopped for apartments online.
Many online apartment searches begin as research. Renters shop the ads to get a feel for the market in your area. Once they decide to move, those are the listings that stick in their minds.So how do you get renters in today’s climate: If you want to snag a good tenant, you’ll have to cast your net a little wider than before.
Keep the sign up. Focus on curb appeal. There will always be some number of applicants who drive by.
Look at local spots for free ads. Hit your tenants for referrals, advertise in local offices, health clubs, bookstores that have community bulletin boards.
If ads in your local paper are expensive, go directly online with your ad - chances are, it’s cheaper and more effective. Watch out though. Free services like Craigslist have come under some scrutiny after a few high-profile rental scams hit the news. Con artists take deposits for properties they never owned. Some apartment searchers are leery of getting ripped off. Tenant advocates suggest searching on paid sites – that eliminates many of the risks.
AAOA members have a great opportunity to save 50% on online rental listings on national databases, but for a limited time. You must subscribe by February 5th to get in on that discount. Click 50% discount. Once you register, enter coupon code AAOA50 as you check out.
See our feature, How to Write a Killer Rental Ad.
To subscribe to our blog, click here.
Posted by Kim Ezzell on 02.01.2010. CLICK to Leave a Comment »
Filed under: AAOA Forum
Best Payback on Remodel
by Paul Bianchina
Q: In your opinion, what home improvements (kitchen remodel, new front door, or wood floors) offer the best payback on investment when you are trying to sell?
A: It really depends on the condition of the house, what existing problems it might have, what your competition is in the neighborhood, what the price range is, and several other factors.
First and foremost, I always recommend that people fix what’s broken. Today’s buyers are very savvy about maintenance issues, and anything that obviously needs repair is going to jump out at most people. Also, when a potential buyer sees the first defect, he or she tends to start being more aware of others. So take care of all those loose screws and broken window screens and sticking doors and towel bars that are hanging on by a thread.
Kitchens are always one of the primary selling features for a home in just about any price range. If you have an outdated kitchen with dark wood cabinets, outdated appliances, older counters, a poor work flow, or other problems that could be solved by a partial or complete remodeling, you will generally see more of a return on the home’s selling price than the amount of money you invested in the remodel.
Bathrooms are another area of the house that returns well on selling. If the home has only one bathroom, the addition of a second one is generally a huge return. Adding a bathroom to a master bedroom to create a master suite is typically another good return, as is remodeling outdated bathrooms.
You also want to take a good look at your home from a curb appeal standpoint. Updating old, single-pane windows is a big feature, as is a new roof if your old one is on its last legs. You will probably see only an even-money return or even a slight negative on these big expenditures, but in my opinion they make the home easier to sell.
A new front door might be a good investment if the other one is damaged or worn out. Also look at exterior paint, landscaping, fences, walkways and other outside areas — especially in the front — that could use repair, replacement or just a sprucing up.
Another big thing is interior paint, which is a fairly minimal investment if you do the work yourself. Paint that is old, faded, dirty, or otherwise doesn’t show well is another one of the maintenance things that make a positive or negative impression on people. I would also suggest painting over walls that are red, hot pink, bright yellow, or other colors that might have a limited appeal — you don’t need to paint everything white (in fact, I’d recommend against it), but go with colors that are more neutral.
As to wood floors, they are definitely a hot feature at the moment. Replacing old flooring with new hardwood is a selling feature, but I couldn’t say how much of a payback you would see on the investment, other than making the home easier to sell. Also, in my experience true hardwood flooring — either prefinished or finish-in-place — is a better selling feature than laminate flooring.
Finally, be sure you don’t overbuild for your neighborhood. Sinking $40,000 into a major kitchen remodel in an area of starter homes is not going to pay back very well, so keep the general price range of homes in your area in mind as you do your planning. An experienced real estate agent can help you in that regard as well.
To subscribe to our blog, click here.
Posted by Kim Ezzell on 02.01.2010. CLICK to Leave a Comment »
Filed under: AAOA Forum, Remodel Tips
No Capital Gains Tax on Home Exchange?
IRS worker touts perk, but CPA disagrees
by Benny Kass, Inman News
DEAR BENNY: My husband and I built a townhouse in 1983 for $33,000. We lived there for a few years and then rented it out for 17 years, taking all the tax advantages such as depreciation, etc.
In 2003 we sold it for $90,000, and did a like-kind exchange with a house that my husband built. That house has been rented for the past six years and now has a market value of $190,000. We have no liens on the home and would like to sell it and put the money towards our dream home.
If we moved into the home and lived there for two years, would we have to pay capital gains taxes when we sell the home? We’ve asked our certified public accountant (CPA) and she said we would have to pay capital gains because we took depreciation on the properties.
We also asked a friend who worked for the Internal Revenue Service and he said as long as we lived in the home for at least two out of the last five years before we sold the home, we would not have to pay capital gains tax. Who is correct? –Jeanne
DEAR JEANNE: I believe your CPA is correct. Any depreciation that you took after May 6, 1997, will be taxed.
And based on a new 2008 tax law, the gain must be allocated between the rental and the personal use starting after Dec. 31, 2008. The portion of the gain allocated to the rental period will be taxed. I would always follow the advice of your paid accountant, rather than that of a friend, even if he or she works for the IRS.
Copyright 2010 Benny L. Kass
See Crucial Tax Tips for Landlords.
American Apartment Owners Association offers discounts on products and services for landlords related to your commercial housing investment, including real estate forms, tenant debt collection, tenant background checks, insurance and financing.
Find out more at www.joinaaoa.org.
Posted by Kim Ezzell on 02.01.2010. CLICK to Leave a Comment »
Filed under: AAOA Forum