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Can I use Social Media to Screen Tenants

Can I use Social Media to Screen Tenants

Can I use Social Media to Screen Tenants

Landlords have tools to use for tenant screening, namely background checks into credit, criminal and employment histories. Another avenue for information is social media. Viewing these public accounts can give landlords insight into a prospective tenant’s personal habits. While this information is valuable, it cannot be legally used to judge a tenant.

Social Media Information
When screening a tenant, social media can provide information on pets that were not disclosed on the application, partying habits that might result in excessive noise or damage and how well the prospective tenant is taking care of a current rental property.

Discrimination Laws and the Fair Housing Act
While social media can be a informative tool for tenant screening, some landlords choose not to use it to avoid discrimination lawsuits. It is best practice to utilize the legally available methods when considering an application. The federal Fair Housing Act prohibits discrimination based on race, religion, color, gender, disability or family status and requires that reasonable accommodation be made for persons who are physically challenged. Landlords must also follow all state anti-discrimination laws as well.

Social Media Laws
A number of states have passed laws that protect email and social media accounts from being scrutinized by colleges and employers. Public profiles are not protected, but landlords should stay current on all laws or amendments that apply to social media and privacy while conducting tenant screening.

Screening Tips
Landlords who do check social media accounts should keep the following tips in mind:

• Equality. If one prospective tenant is checked through tenant screening, then all applicants should be checked the same way.

• Facts. Not all information presented on social media is accurate. It is possible to link online data to someone else with the same name.

• Legality. Landlords should not discriminate against protected classes of people or break federal and state laws regarding social media during the screening process.

• Document. Keep detailed records of information found online.

Using traditional tenant screening methods will keep landlords and property managers out of legal trouble.

 

You Need A Property Management Agreement

Property Management Agreements

Property Management Agreements are Necessary

Whether you are an investor with multiple rental properties who hires a property manager or a homeowner who decides to have a friend manager their property, you need you need to have a management agreement.

While this can be a positive move, many times it can set the stage for a disaster waiting to happen–if there is no adequately signed rental agreement, better known legally as a property management agreement.

Our article below covers various methods to protect yourself by using a signed rental agreement and it will lessen the chances that anything goes wrong as a property owner or property manager.

What Things Can Go Wrong?

Virtually, anything.

  • Late rent payments
  • Injury on the property
  • Foreclosure
  • Fire
  • Unauthorized repairs or modifications

How Can These Situations Be Avoided?

Many of these scenarios can easily be avoided by stipulating a manager’s job description along with their responsibilities–mutually signed by the property owner and the manager both.

What Should A Property Management Agreement Include

  • Duties performed by Management
  • Services and Fees
  • Dealing with Fees
  • Equal Housing Opportunity
  • Liability
  • Manager’s Legal Liability
  • Owner’s Responsibilities
  • Term of Contract and Grounds for Termination
  • Handling Eviction Proceedings

Property management rental agreements are not expensive nor difficult to write. However, statutes vary from state-to-state. If you have trouble writing one, then an attorney or someone well-versed in real estate matters may help you. For a free example visit: https://www.rocketlawyer.com/document/property-manager-agreement.rl

 

How Does a Credit Inquiry Affect Your Credit Report?

credit inquiry

How Does a Credit Inquiry Affect Your Credit Report?

When looking for a new home or apartment to rent, you will likely encounter some tenant screening. You may be asked to provide a completed application, employment verification, and references from previous landlords. Your new landlord may even want to check the tenant credit score, something also known as an inquiry on your credit report. There are two types of inquiries, and it is important to understand the differences between them, how they are used in the tenant screening process, and how and how long they can affect your credit score.

A soft inquiry is an inquiry that occurs when a person or company checks your credit report as a background check, like when a credit card company preapproves you for a loan. Soft inquiries can occur without your permission, but don’t worry – they won’t affect your credit in any way. When you pull your own credit report for your personal use, it is also considered a soft inquiry.

A hard inquiry, on the other hand, will provide your potential landlord or property manager with your credit (FICO) score and your credit history. This credit check is similar to the one a lender would complete prior to offering you a loan, and it can have a negative impact on your credit score. According to myFICO (www.myfico.com), a single inquiry usually has a minimal impact of just a few points. This could be higher, however, if you have a sparse or short credit history. After several hard inquiries on your credit report (apartments, insurance companies, utilities, new loans, etc.), those small impacts could add up. Hard inquiries appear on your credit report for two years and can impact your credit score for up to 12 months.

How can I get rid of hard inquiries I didn’t approve?
You can simply call or write the creditor and explain to them you did not authorize the inquiry and ask them to remove it. You can also dispute an inquiry directly with each of the credit bureaus.
For most apartment hunters, there is little need to be concerned about a credit check during the tenant screening process. Most inquiries will have little or no impact on your credit score, and even if they do have a small negative impact it will shrink over time and be gone within the year. Monitor your credit regularly, and good luck on your search to find a new home!

 

Steps to Ending a Lease With Your Tenant

End a Lease

Steps to End a Lease

If you are a landlord, there are many reasons why you may want to end a lease with a renter as the end of the term approaches. If you want to do so, it is important that you take certain steps in order to make certain you are better able to legally protect yourself. You’ll also want to do so in a way that provides your renter enough time to secure other housing so that you part on good terms.

Reasons Why Landlords Sometimes Want to End Leases

Besides a tenant who violates the terms of their lease, there are other situations that may arise that make you wish to choose nonrenewal at the end of a lease. In some cases, a landlord may want to complete significant renovations and updates to improve the value of the home. They may also want to place the house on the market free from a tenancy so that a purchasing family can move into it. In other cases, a landlord may have fallen behind on their home mortgage payments for the rental property and have a need to make certain it is empty due to an impending foreclosure or short sale. Whatever the reason may be, it is important to clearly communicate your intention to terminate the lease when it expires with your tenant well in advance of that date.

Ways to Legally Protect Yourself When Not Renewing a Lease

Before a lease ever begins, it is important that you have a move-in checklist for the renter to complete with you while you do the initial walkthrough. It may also be smart for you to have date-stamped photographs or video clearly showing the condition of the property before the tenancy begins. If the lessee later does damage when you terminate the lease, you can use both the move-in and move-out checklists along with your video and photographic evidence to support your withholding a sufficient amount from their security deposit to complete needed repairs.

Most states also require landlords to provide lessees with written notice letting them know that you do not intend to renew their leases when they expire. While some states only require a 30-day notice, others require 60 days. Even if you are in a state that requires just a 30-day notice, it’s still a good idea to give your renter at least 60 days of notice that you will not be renewing the lease. This notice should always be in letter form, and it may also be smart to mail it by certified mail. This will give them more time to find other housing and reduce the chance they will stay after the lease ends. It is also a good idea to provide letters of reference and let your lessee know that you will be happy to provide a rental reference for them.

Taking the proper steps to make certain that you are legally protected when you want to terminate a lease with your lessee is smart. Doing so can help you to prevent a host of problems and a potential need to go through a court eviction procedure for a holdover tenant.

 

Top Cities to Rent in 2016

Sunset over City of Seattle

Sunset Over City of Seattle

  1. New York City, NY:
    If you want to buy a home in New York City, you will need a lot of money to spend. The average mortgage in Manhattan is about $1.3M. A property manager or landlord can help you find the right place to rent instead that won’t break your budget.
    2. San Diego, CA:
    San Diego is a great place to live but the average mortgage is about $477,000. Rent in San Diego is about $2,300 per month. If you want to enjoy the sunshine in this incredible city, considering renting your next new home.3. Washington D.C:
    The difference between owning and renting a home in Washington D.C. is pretty dramatic. A mortgage in the nation’s capital averages $359,700 while rent averages $1,098. Talk to a property manager and see what the city has to offer in rental property amenities and benefits.

    4. Los Angeles, CA:
    Los Angeles may be the City of Angels, but it cost money to live there. A typical mortgage will average $536,000 while rental housing averages about $2,500 per month. It has a lot of benefits and great attractions as well as many rental homes.

    5. Seattle, WA:
    The Emerald city is a very desirable location for jobs and lifestyle, but the average mortgage is $450,000 while rental housing can average about $1,200 per month. Talk to a local landlord and you might just find there are a number of benefits to renting.

    6. San Francisco, CA:
    The City by the Bay is a picture perfect location, but be ready to spend heavily to own a home. The average mortgage is $800,000 while rental housing is around $3,000 per month. The city has a lot to offer and rentals can help.

    7. Memphis, TN:
    Although not considered a major metropolitan city, The city of Memphis is more rental housing friendly. The average mortgage in Memphis averages $150,000 while the average rent will run approximately $750. This is a great place to live, but rental housing can help you go farther.

    8. Fort Worth, TX:
    If you have ever considered living in Texas, take a look at the rental housing in the city. The average mortgage in Fort Worth is $175,000 while a typical rent will average about $800. There are a number of rental homes available in Fort Worth.

    9. Portland, OR:
    The City of Roses is a beautiful place to live with lots of recreation and culture, but you will have to pay out to own a home in the city. The average mortgage in Portland is $250,000 while rental housing averages about $1,200 per month.

    10.Albuquerque, NM:
    If the southwest has always intrigued you, you can find lots to be excited about. But when it comes to cost of living, the average mortgage in Albuquerque will run about $150,000 while the average rent is roughly $600 per month. Contact a property manager for details.

 

How to Handle Bothersome Tenants

How to deal with Bothersome Tenants

How to deal with Bothersome Tenants

Unfortunately, almost every long-term landlord is going to deal with bothersome tenants at some point. While proper screening should help you weed out some of the worst offenders, it is vital that you understand all landlord laws and how they could affect you in the coming years. Here is a closer look at some tips that you can use to deal with bothersome tenants and what tenant laws you should know about before renting.

Keep Your Emotions Out of It
Due to the nature of the rental industry, it is quite easy to allow emotions to take over when dealing with a tenant. Those that leave their emotions out of it, however, might never have to rely on tenant and landlord laws at all. If you ever feel as if one party is becoming angry over a particular issue, then you should try to take a step back and approach the situation from a different angle. This might include taking a day off to collect your thoughts or carrying out the interactions through emails.

Document Everything
No matter what type of communication method you decide on, it is vital that you document all requests. This includes any requests that do not fall within tenant laws and will not be fulfilled. For many landlords, the easiest way to document these requests is to have them submitted by email. This will not only provide you with a permanent copy of the request, but it will also give you the date and time that the request was submitted.

Lead by Example
Another way to make this process as stress-free as possible is to lead by example. This includes sticking to your word and following through with any home repairs or replacements that you have agreed to. Issues such as failing to complete the work, showing up late, or not showing up at all will set the tone for all future interactions. Sticking to your word will also provide you with an additional layer of legal protection should these issues turn into a civil case.

Determining Legality
Completely ignoring these requests is not only a bad business practice, but it can also be illegal. Landlords are required by law to provide a tenant with a safe and functioning living space. That being said, you are not required to fulfill every request that is made. As a general rule, a landlord must maintain a home and make replacements or repairs after typical wear and tear. If the tenants damage your property, however, then they will be responsible for repairs or replacements.

Handling Invalid Requests
Even if you do not plan on fulfilling a request, it is important that you respond to the tenant. The best way to go about this is to clearly state that you will not be fulfilling the request and then directing them to your lease agreement, rental agreement, or the pertinent law. You should also keep a copy of the official request for as long as they remain a tenant. Verbal requests must be avoided at all costs, and landlords should ask their tenants to write down the information, sign it, and date the document.

 

How Long Should a Landlord Keep Tenant Documents?

How Long Should a Landlord Keep Tenant Documents

How Long Should a Landlord Keep Tenant Documents

When a landlord rents an apartment to a tenant, he or she wants to know that the tenant can pay the rent and their property will be maintained. To verify that this is possible, a landlord may do a background check, a credit check, an employment check, and a previous landlord reference check. The landlord may also verify that a potential tenant is actually employed or has a source of income. How long should these documents be kept on file?

Keep Them Until you’re No Longer Liable

The easy answer is that you should keep the documents until you are no longer liable in a potential criminal or civil suit. For instance, if a potential tenant claims that you performed a credit or background check without their authorization, you can use the rental application as proof that the applicant knew that getting the apartment was contingent on such a check taking place. State law dictates how much time an applicant or tenant has to file a civil suit, which is generally between two and four years depending on whether there was a verbal or written agreement between the parties.

Are You At Risk for Being Audited?

Keeping a rental application on file may be helpful in the event of a state or federal tax audit. The application may help establish how many tenants a landlord had in a given year and when they moved in. It may also help to verify when rent was paid, which may play a role in when the money has to be reported for tax purposes. In general, the IRS can audit a tax return for up to six years or longer if they suspect fraud.

Was There Ever a Tenant-Landlord Agreement?

Keeping a rental application is important in establishing that there is a landlord-tenant relationship. If there is no such relationship, landlord laws do not apply, but it may be harder to collect rent or other fees or get someone to leave your home. Paperwork establishing that a landlord and tenant had a formal relationship as such should be kept until any disputes regarding rent, living conditions or how to deal with a security deposit that a tenant may want back.

Landlords should keep any information that verifies that they have a valid lease or have acted in accordance with landlord laws. These records should be kept until any relevant statute of limitations has run out for civil action from a tenant or an audit from the government. As a best practice for confidential data security, sensitive records should be kept in a secure location such as a locking filing cabinet or a password protected file on your computer until they are destroyed.

 

Tax Requirements for Landlords

tax time

taxes for landlords

Investing in real estate or rental properties offers both tax incentives and favorable tax rules that are not available in other types of investments. As with most of the tax code, filing and taking full advantage of these tax breaks can be a bit challenging. Here are the top 10 tax deductions for the upcoming 2016 filing season as well as a breakdown of the tax forms required.

Top 10 tax deductions for rental properties

1. Mortgage Interest
Whether a homeowner is a property manager or resident, mortgage interest is likely to be the largest deductible expense. Landlords can deduct interest on mortgage loans used to purchase or repair a property, and even credit card interest if the expense is for goods and services related to the property upkeep or maintenance.

2. Real Estate Taxes
Real estate taxes are often paid through the mortgage company and are delivered to the owner on the Form 1098. There are also tax deductions available for permit fees, personal property taxes, and wage taxes that all relate to the property.

3. Passive Losses or Passive Activity Losses (PAL)
Most properties provide passive losses early in their investment as the cost of acquisition, setup, and repairs often outweigh the income. While these losses are deductible, passive income from other sources or properties needs to be considered. Landlords should consult a tax advisor when determining the PAL impact for tax filings.

4. Utilities
Landlords can deduct the cost of any utilities that are not paid by the tenants. These deductions include gas, heating oil, electricity, water, and trash removal.

5. Insurance
All insurance premiums that relate to the business of running or owning the property are deductible. General liability and personal umbrella insurance can be costly for a rental property, so this is a good way to recoup a portion of that expense.

6. Repairs
Any work that extends the life of a property or increases its value is an eligible deduction, but the expense must be depreciated over multiple years. A general rule of thumb states that any expense that exceeds one hundred dollars is deductible.

7. Depreciation
The total cost of a rental property is not fully deductible in the year in which it was purchased. Landlords get to deduct a portion of the cost spread out over several years.

8. Association Fees
Homeowners’ association, resort or condo fees are fully tax deductible.

9. Traveling and Mileage
Property managers and landlords are entitled to deduct travel expenses if they drive while performing the rental activity. There are two options:
• Deduct the actual or realized traveling expenses (upkeep, gas, repairs, etc.)
• Or use the IRS’ standard mileage rate. Using the standard mileage rate has some restrictions and limitations so; it’s advised that property managers consult a tax specialist

10. Legal and Professional Fees
Any fees paid to an attorney, property manager, or tax accountant are fully deductible as long as they relate directly to the rental property.

Filing Landlord Taxes

The ownership structure of the property drives the tax forms to be used when filing.

• Individuals should file IRS Schedule E to report income and expenses associated with landlord taxes.

• Properties owned by more than one individual also use Schedule E and identify the appropriate owner percentage when declaring the income and expenses.

• Individuals who own properties through some form of business entity must file IRS Form 8825.

• Partnerships and Limited Partnerships must file using Form 1065. The partnership must also provide partners with a separate IRS Schedule K-1 listing the partner’s share of ownership of the income and expenses.

• S Corporations owning real estate property file returns with IRS Form 1120S.
Limited Liability Companies (LLC’s) are a sole proprietorship for tax reporting and must report income and deductions on Schedule E of the partners’ individual tax forms.

Considering the complexity, multiple deductions, and various tax forms, a property manager or landlord would do well to consult a professional, keeping in mind that the fees associated with the consultation would be tax deductible.

 

Should you be a Landlord or Hire a Property Manager?

Shoud you be a Landlord or Hire a Property Manager

Should you be a Landlord or Hire a Property Manager

Managing a property can be a big headache for any landlord. It’s a lot of responsibility and work to deal with on a daily basis. Hiring a property manager can lift a huge weight from a landlord’s shoulders, but it’s not for everyone. It’s important to understand which situations call for hiring a manager and which ones would benefit most from the owner remaining as the landlord.

What are Landlords?

Landlords are owners of buildings that are rented out to one or numerous tenants. The renters in question can be either residential or businesses. According to most renting contracts, landlords are typically responsible for building and other property maintenance such as painting, patching up cracks in the walls and maintaining the plumbing. They are also responsible for making any major repairs to the land or building as needed, and they collect rent on a monthly basis.

What are Property Managers?

Property managers are third parties that landlords hire to do the technical work around the building. They are responsible for doing the regular maintenance for the building, collecting rent, advertising the location, finding potential tenants, going through tenant screening and a criminal background check, preparing leases and rental contracts, making repairs and dealing with eviction issues such as performing an eviction search if it is necessary. In these situations, landlords are essentially just the owners of the property who receive rent, pay for any materials needed for maintenance and repairs, pay their property managers and may make the final decision on potential tenants

When It Might Be Better to Remain as a Landlord

Many landlords simply don’t have the extra money to pay for property managers. If you’re perfectly capable of managing a property and don’t have excess money to spend, hiring a manager is probably not a good option for you.

Staying as the lessor on your property also allows you to avoid the complications of being an employer. Property managers are your employees, meaning that you’ll have to deal with things like payroll, insurance, legal matters and tax issues when you hire one.

Remaining as the lessor of your building also allows you to be more involved with the property and the tenants. You know exactly who’s living there, how they usually behave and you can judge for yourself whether someone should be evicted. You’ll also know exactly what needs to be done around the property and how to handle it as well as ensuring that the maintenance and repairs are done to your standards.

When You Should Consider Hiring a Property Manager

One of the biggest deciding factors in hiring a manager for your building is if you’re not capable or qualified to handle the responsibilities on your own. Regular land and building maintenance and repairs can be complicated tasks requiring skills in various areas. Good property managers will have plenty of skills and experience to keep your land and building looking great and functioning well.

They are not only trained in matters of maintenance and repair, but they are very knowledgeable in tenant screening. It’s not just about finding nice people and handing them the keys. A good property manager will carry out a full criminal background check and security checks, pull credit reports, analyze references from previous landlords and verify employment. If a tenant is problematic, they also carry out a full eviction search for you.

If you live too far away from your property to effectively manage it yourself, it may be best to hire a manager. Spending a lot of time and gas money merely to get to your property might not be worth it.

Likewise, if you don’t have the time to effectively manage the property due to family, work or other more important matters, property managers can take a great deal of the workload and stress from you.

 

The Free Ways to market your Rental Property

The Free Ways to market your Rental Property

The Free Ways to Market your Rental Property

Owning a rental property is a great way to bring in income and build wealth. However, your rental property isn’t worth much to you at all if you don’t have tenants. In a competitive renting landscape, finding quality tenants who will pass a tenant screening can be a challenge, especially for those who are new to property management and ownership. If you want to ensure that you find tenants in a prompt manner, it’s a good idea to advertise your property across multiple platforms. Here are some free options that will allow you to post multiple ads without spending a fortune.

Craigslist

Craigslist is king when it comes to advertising apartments and rentals. It’s the first place that most people look when they are in the market for a new rental. Craigslist is comparatively unregulated and unmoderated, so create a high quality advertisement that features clear photographs and a descriptive, well-written text. It will help you to stand out from other ads.

Zillow

Zillow is designed both for sale and rental properties. It’s a popular choice for just about anyone looking for a home. One of the key tips for success on Zillow is to leave no detail out when you are creating your listing. Zillow allows potential renters to narrow their search criteria to meet their exact needs, so make sure that your profile is thorough.

Trulia

Trulia is quite similar to Zillow and has a similar reputation for quality and specific ads, although Trulia is the somewhat more popular option in large cities and metropolitans. Similar to Zillow, create ads that feature lots of details and multiple clear photographs to ensure success.

By using these free sites, you can advertise your rental across several platforms without spending a fortune. Before you know it, you’ll be conducing the tenant screening and well on your way to signing a contract with your new renter.