Tenant Screening

The Importance of Tenant Screening

The Importance of Tenant Screening

The Importance of Tenant Screening

Tenant screening is a vital step that all landlords should take before renting a property out. In a perfect world, a landlord could trust all people who wish to rent from them. However, the world is not perfect and not all tenants are created equal. Screening potential tenants will lower the risk of losing money on a rental property.

There are three main reasons to screen tenants. These reasons for screening tenants are easy to recall if you can remember the Three P’s.

Profit: When a landlord is renting out a property the main goal is to make a profit on the rental. This means that the tenants need to be responsible, dependable and will pay the full amount of the rent punctually. Not only is it important to find a tenant that will pay the rent on time every month, but obtaining tenants who will fulfill the term of the lease is also imperative.

It can be difficult to predict what tenants will be financially responsible. One way to do so is to run a credit check on potential tenants. A credit check will give the tenants’ financial history and it will show whether they have a tendency to miss or make payments late.

Property: A landlord needs to make sure that they protect their property. This can be done by renting to people who have a history of taking care of past rentals. It’s impossible to tell by a person’s appearance whether or not they take care of their possessions or will take care of a property that doesn’t belong to them. The tenant screening process will help the landlord get a picture of whether or not the tenants will protect the rental. Contact former landlords to get an idea of how they took care their past rentals. Be cautious when renting to a first time renter. Contacting references is a way to obtain information on the tenants.

People: It is not just the landlord’s job to protect their profit and property, but it is also important to protect the other people living near the property. This may be other tenants or residents of the apartment complex or neighborhood surrounding the rental. References can help paint a picture of the type of people the potential tenants are. Some jurisdictions allow a background screening to be done in order to make sure that the tenants do not have criminal proceedings against them.

Landlords should set standards for desired tenants prior to starting the tenant screening process. It is important to have clear standards of what is acceptable for in order to avoid discrimination or other violations of the Fair Housing Act. Don’t rush through the process to just rent the property. Instead, take your time in order to protect your three P’s: profit, property, and people.

Termite Management

Termite Management in your Rental Property

Termite Management in your Rental Property

Termites are serious pests that can have a major impact on the quality of life of tenants, and represent a costly risk to landlords and property managers. The control of termites is a job that is best left to be handled by professionals, but there are some steps you can take to prevent infestations altogether and there are also some useful bits of knowledge that will help you identify infestations early.

Knowing how to identify termite infestations is critical. If a tenant suspects that termites are present on the property, do not waste any time in confirming an infestation and subsequently having it removed. Termites are often confused with ants, which can be a costly mistake in itself, especially since both tend to swarm during spring weather and wet conditions. Termites have straight antennae, thick waists, and wings of equal size, where ants have crooked antennae, slim waists, and wings of several sizes. The presence of termites indoors is almost always a sign that an infestation has happened, and warrants immediate action. Termites are drawn to the light, so doors and windows are places to check. The presence of termites at foundation walls, porches, and patios is a cause for serious concern. Termites leave behind mud tubes about a half-inch in diameter, commonly on foundation walls. Termite infections can remain hidden for years, as they will often leave no visible damage, so periodic inspection may be prudent in areas where infestations are common.

There are several practices for preventing termite infestations. Termites are attracted to moist environments. To keep humidity down, it is a good idea to repair all leaking water sources both in and out of doors, such as sprinklers, faucets, water lines, etc. Leaky roofs and gutters should also be attended to as soon as possible. Ventilate crawl spaces and attics to reduce their humidity, as well as any other cavernous but uninhabited rooms and structures. Eliminate clutter and structural conditions that are attractive to termites. Trim all plant life away from the foundations of buildings, and make sure that no mulch or leaves are left to accumulate at the foundations. If possible, give the soil a grade so that all water drains away from the buildings. Wood sidings, stucco, and foam board should start at least half a foot from the ground, and the foundations should be regularly inspected for cracks and holes that need to be filled. If any of the plant life on the grounds becomes infested, remove them, including tree stumps and trees. The general rules all aim to minimize moisture, remove wood to soil contact, and minimize clutter at the foundations.

If you have or suspect a termite infestation, there is no method for safely treating it on your own. You must have the infestation removed by professionals, both for the health and safety of your tenants and the value of the property. Choosing the appropriate termite control company can be difficult. Make sure they are properly licensed, and check their references and reviews as compared to two or three other companies. Getting inspections and estimations from multiple companies will give you a good idea of the extent of the infestation and the current market for services. Termites damage wood slowly, so you have weeks or a month to deal with it, so take your time, but do not ignore the problem; it will become serious.

Termite infestations are serious business. They can be avoided with proper planning and management practices, but sometimes fate throws curveballs that can’t be prevented. Knowing how to identify possible infestations and contract the appropriate professionals will prevent complete financial disasters

Why Landlord Insurance is a Good Idea

Insurance for Landlords is a Good Idea

Insurance for Landlords is a Good Idea

Insurance for landlords provides protection against property damage and liability claims. It also can pay repair or replacement costs and income loss for property owners who rent out one or more homes, apartments or condominiums more than a few weeks per year. It is not required by law but does cover things homeowner insurance policies does not.

What Types of Insurances are Available
Insurance for landlords usually is divided into three types: DP-1, DP-2 and DP-3. D-1 is a basic policy that covers things such as vandalism and fire. DP-2 covers a broader range of perils, such as hail and windstorms, and some even include a vehicle running into your rental unit. DP-3 is known as a “special form policy” or “open peril policy.” Unless something is explicitly excluded, it is covered. DP-3 also covers replacement cost, what something costs to replace now, versus cash value, what you paid for it when you bought it. “Landlord protective polices” cover things such as equipment breakdown.

What Should Be Covered by Most Policies
Rental property insurance typically covers damage to buildings and personal property caused by theft, vandalism, fire and storm damage. Some policies also cover tenant damage. It also covers liability claims and lawsuits if a tenant, visitor or even a trespasser, is injured on your property. Such costs can include judgment or settlement costs, legal fees, medical expenses and funeral costs.
You can buy additional landlord insurance for protecting your rental property. These policies include landlord contents insurance, employer liability insurance, natural disaster insurance (earthquakes and floods typically aren’t included in standard severe weather coverage) and rent guarantee insurance, if the building must be vacant for repairs due to a covered loss.

What Can Happen If You Don’t Purchase Insurance
Protecting your rental property is essential. If you don’t purchase rental property insurance you could suffer financial loss from a fire, break-in or severe weather. You also could get sued by a tenant or visitor who gets injured on your property. You also could lose income if your rental unit becomes unusable because of circumstances that are beyond your control.

Fire Safety for Your Tenants and your Property

Protecting your Tenants from Fire

Fire Safety for your Tenants and Rental Property

A fire can take everything away from you in an instant. As a property owner, fire should be one of the biggest concerns on your mind. As a landlord, a single fire can not only destroy your property, but leave you liable for damages that might put your property-owning career in danger. If you want to make sure that you keep both your property and your tenants safe, you need to make sure that you concentrate on fire safety.

First and foremost, you need to take responsibility for your property. Make sure that you have a whole-home monitoring system in place for both carbon monoxide and smoke – it’s the easiest way to alert your tenants to danger and to get the fire department to your property in a timely manner. You should also make sure that you conduct regular checks of the property for any kind of fire hazards (a property manager will be helpful here). Finally, make sure that you keep your home’s electrical wiring and appliances up to fire code standards at all time.

On the tenant side, make sure that you set specific rules in your rental contract. Don’t let your tenants bring in outside appliances other than a washer or dryer, and make sure that you keep some sort of clause active about cleanliness. While you might not always consider it, a dirty apartment is also a fire hazard – make sure that your property is never so dirty that a tenant can be trapped by a fire.

You have a responsibility to your tenants to make sure that any property that you own is safe. If you can do your part, you must make sure that your tenants do the same. With a little bit of extra work, you can make sure that the likelihood of a fire occurring on your property is greatly diminished. You may not be able to completely control every circumstance in which a fire may be started, but you can always go above and beyond to make sure that your liability in such a matter is never in question.

Smartphone Apps for Landlords or Property Managers

10 smartphone apps for Landlords

Smartphone apps for Landlords and Property Mangers

Most professionals, including landlords and property managers, have smartphones these days. The next step is getting the most you can out of these devices by installing these apps.

  1. The first one you will need, which many people don’t think about is Google Maps. You know where your properties are located but you also need to know where the latest break-ins, fires or car wrecks occurred relative to them. This app also will help when you are scouting new properties and giving directions.
  2. The next app you need is Facebook. It’s good for more than just cat videos. Use it to promote your business, your properties. You might need to use cat videos to get people to your page but one billion users is a lot of eyeballs.
  3. YouTube is another apps for landlords. Use YouTube one to show off your properties and yourself. Make sure to leave your potential clients wanting more but use videos to gain your clients interest in your properties.
  4. Onavo Extend is a free app that automatically compresses the data you receive and send, extending your monthly data plan by as much as fivefold. It also tells which apps are using the most of your monthly data plan.
  5. Skype is another of those overlooked apps but it is essential if you want to make sure you can make phone calls, plus video calls and texts, from anywhere to anywhere on your smartphone.
  6. Given the proliferation of smartphone apps for property managers and other professionals, security is essential. Lookout Mobile Security keeps your smartphone safe from and viruses and spyware.
  7. Flashlight LED HD lets you control your camera’s flash and screen brightness. It also turns your smartphone into an impromptu flashlight for late night property inspections. It does all this without stealing information off your smartphone, although it does drain your battery.
  8. Evernote is a perfect way to remember addresses, messages for vendors and first impressions of properties. Notes can be saved as websites, pictures and audio files as well as text and filed into notebooks for future reference.
  9. QuickOffice lets you view, edit and exchange PowerPoint, Excel and Word documents along with sending and receiving files efficiently and quickly from the cloud.

What are your favorite smartphone apps?

How to Increase the Value of Your Rental Property

rental-property-valueLike most rental property owners, you probably often try to find ways to increase the value of that property to keep good tenants happy and to continually improve your real estate investment. Many times, though, the cost of making improvements can prevent you from taking on a project that you know would make an immediate change for the better in your property.

There are ways that you can make improvements to your real estate investment that don’t cost as much as you might think. Sometimes a small change or two can make a big difference, so take a look at a few of the ways you can please good tenants and give your rental property a lift.

  • Work From the Outside-In and Add Some Curb Appeal. By simply adding a new mail box or planting some flowers, you can increase the beauty and curb appeal of your apartment complex and each of the rental properties within the complex. Other effective changes you can make include adding new shutters or installing new outdoor lights for safety and to give your tenants the chance to do more outside entertaining in the evenings. The beauty of this project is that you can add a few items at a time and see big changes.
  • Floor Your Tenants. If your rental property features older flooring, especially old carpeting, new floors can instantly open up a rental property and make it feel exciting and new. Price hardwood floors and laminate hardwood floors to see which one is within your budget. Either one will make a remarkable change in the property’s appearance.
  • Switch Out the Fixtures. Another small and affordable way to make a strong impact in an apartment is to switch out the light fixtures. Add floor lamps, track lighting or a new chandelier.
  • Soundproof for Peace and Tranquility. Many apartment dwellers frequently complain about the noise coming from their neighbors’ apartments. You can turn any insulation and soundproofing you install into your property into a strong selling point. You will keep current tenants happy, and you can feel confident that future tenants will love this feature.

Top 4 Landlord Mistakes to Avoid

Choosing the Right way instead of the Wrong one.

Landlord Mistakes to Avoid

There are many benefits for you to consider being a landlord. There is the lure of the steadily escalating rents, or you may just be interested in renting out your old place. Whatever the reason that is driving you, becoming a landlord can be profitable. However, learning the game requires effort. It is easy to take a misstep that may jeopardize your position. But when you play it right, you will have nothing to regret. Here are several mistakes that some landlords make and how to avoid them.

1. Don’t underestimate costs

It is easy to account for your taxes, insurance and mortgage (if you have one). But you may miss on expenses such as garbage, gardening, water and regular upkeep and repair tasks. Even riskier is failing to set aside money for big-ticket items and unexpected expenditures. Thus, for a realistic estimate, arrange for your annual costs (excluding your mortgage) to run at least between 35 and 45 percent of your annual rental income. A good rule of thumb when calculating your future income is to include only 10 or 11 months of the annual payments. This is because when a tenant moves out, you will still have expenses.

2. Never break the law

Landlord and tenant laws vary depending on the state or city you are in. For instance, you can require a month-to-month tenant to vacate the building within 15 days in one area while, in others, you must give a 60-days notice. One way to avoid such a problem is to avoid buying generic lease or other tenant forms that don’t reflect the local laws. To get an idea of what is permitted in your area, talk to a local or state apartment owners or landlord association. Such groups are not expensive to join, and may cost about $50.

You must also know that according to the federal law, you are prohibited from denying rental to someone based on gender, religion or race.

3. Don’t skimp on tenant screening and vetting prospective tenants

When looking for a good tenant, don’t just trust your instincts, or even depend on a friend’s referral. Landlords often get into trouble when they rush to find tenants or when they pity someone. Never rent your property to someone without carrying out a tenant screening. You need to do a background check on the prospective tenant’s credit, confirm their source and amount of income, and also check with their current and previous landlords. A good rule is to ensure their income runs at least two and a half times their annual rent. You can get their background and credit information from sites such as MySmartMove.com and E-Renter.com for about $25.

4. Don’t ignore the renter’s insurance policy

As a landlord, your policy covers the structure of the home, liability in case of property damage or injuries, and your appliances. It does not include the tenant’s stuff. You may imagine this is not your problem, but renting to tenants who lack an insurance policy may cause big trouble for you in case something goes wrong. Tenants sometimes lash out when it dawns on them they are not being compensated.

It is therefore recommended that in areas where it is legal, for instance, California, ensure that your tenants purchase a policy. This may reduce the number of your potential tenants, but it increases the chances of ending up with a responsible person. If it is not possible, explain to your tenants that you are not covering their stuff and suggest to them to buy their insurance.

The real estate business is of a profitable kind. But you need to understand some fundamental principles for you to be a successful player in this field. Don’t skimp on tenant screening, follow the law, and ensure that your tenants have an insurance policy. When all this is in place, you will have less to worry about.

Evicting Section 8 Tenants

Eviction notice letter posted on front door of house

Eviction notice letter posted on front door of house

Evicting any tenant can be difficult. However, it is not an impossible task. Housing codes and both federal and state laws dictate what is and is not legal grounds for evicting a tenant. Eviction of a Section 8 tenant can be especially complicated, but like evicting any tenant, it is not impossible. In most cases, situations which result in evicting a tenant and the accompanying court action can be avoided through careful and diligent tenant screening.

Schedule 2 of the Housing Act of 1988, in particular, outlines the requirements for evicting such tenants. Ground 8 is, perhaps, the most common reason for evicting a section 8 tenant. Ground 8 covers situations in which a tenant has not paid rent for in accordance with their rental agreement for an extended period of time. If a tenant continuously fails to pay rent at the time specified in the rental agreement, Ground 11 can be used to remove the tenant. In situations other than failing to pay the rent as stated in the rental agreement, Ground 12 can often be used to justify the removal of the tenant from the property. Ground 12 covers a number of situations, such as a breach of the rental agreement and mistreatment of the property.

Once grounds for eviction have been established, the landlord must draft the eviction notice. A copy of this notice must be provided to the Department of Housing and Urban Development (HUD) and the local housing authority which services the area in which the property is located. In the notice, it is important to clearly state under what grounds the action is being initiated. It is highly recommended to include an exact excerpt from Schedule 2 of the Housing Act of 1988 in the language of the notice. Also, it is critical that the tenant be allowed a fair amount of time to rectify the situation and that this amount of time be clearly stated in the notice. The landlord should also establish in the notice how and when follow-up inspections of the property will occur in order to ensure that the situation has, in fact, been rectified satisfactorily. Once the notice is drafted and finalized, deliver it to the tenant via certified mail or a bonded delivery service.

Following notification of the landlord’s intent to evict the tenant, the landlord must file an Unlawful Detainer Action with the local court system. This process differs slightly from state to state. The local housing authority will be able to clearly explain the process and necessary action required based on the area in which the property is located. Once the action if filed with the local court system, the process will continue as dictated by the court. If the tenant fails to take any corrective action within the specified amount of time and fails to appear, as ordered, in court proceedings, the landlord may remove the tenant’s personal property and change the locks to all doors. Again, it is highly recommended that landlords contact their local housing authority in order to confirm the procedures for removal of the tenant’s personal property. Throughout this process, it is of upmost importance that the landlord keep certified copies of all documents, including the confirmation of any documents sent to the tenant via certified mail. It is highly recommended that landlords attempt to avoid the complexities of evicting their tenants by ensuring that they establish clear guidelines and procedures for tenant screening.

Good Reasons To Get Renters Insurance

Renters_InsuranceLenders usually require a homeowner to have homeowner’s insurance but renters also should obtain renter’s insurance to cover their belongings and some liabilities. The landlord has insurance to cover the building itself but not your possessions, which many renters don’t realize.

Good Reasons To Get Renters Insurance
Renter’s insurance is affordable and most people underestimate how much their “stuff” is worth. Just your clothes and electronics could cost several thousand dollars to replace if you stopped to add it all up.

What Renters Insurance Covers
Renter’s insurance covers your personal property, which includes furniture, luggage, clothes, jewelry and electronics. You might not think it adds to much but think about starting over from scratch. The website esurance.com estimates the average renter’s possessions could be valued at as much as $20,000.

A typical renter’s insurance policy covers damages from aircraft, cars, falling objects, smoke and fire, household appliances (plumbing, sprinkler system) plus theft and vandalism. Flood and earthquake damage are covered by separate policies.
Some landlords (or their insurance companies) require their tenants to have renter’s insurance to limit their exposure.

Renter’s insurance isn’t just content insurance. It also provides liability coverage that pays for court judgements and legal expenses if someone is injured in your home or you injure someone.

It also protects your belongings from loss or theft when you are traveling.

Finally, renter’s insurance might cover “additional living expenses” such as food and lodging if you are displaced from your home due to something covered by your policy.

What Your Landlord Should Cover
Your landlord’s insurance should cover damage to the building from the usual perils, such as fire, storm, lightning, explosion, theft and malicious mischief. It also should cover liability claims for common areas of the property outside of the area you are renting.

Finally, be sure to check whether your insurance provides “replacement cost coverage” or “actual cash value.” The first pays the replacement value, without considering depreciation. The second only pays what the lost item is worth today, regardless of when you bought it.

What Happens If A Tenant Breaks A Lease?

broken-leaseUnder general circumstances, a tenant is required to fulfill their end of a lease unless the landlord violates the terms of the lease or breaks the law.

 

 

 

Examples of the landlord violating the terms of the lease would include:

  • Not making necessary repairs to the lease property
  • Not performing routine maintenance on the lease property
  • Not disclosing information about the lease property such as the presence of harmful chemicals
  • Not keeping the lease property in livable condition

Federal law states that active duty military personnel or other types of government employees are able to break a lease with no repercussions due to the nature of the job and frequent relocation associated with it.

If a tenant breaks a lease without due reason, the tenant will be required by law to pay the remainder of the rent due for the full term of the lease unless the landlord locates a new tenant. In most places, landlords are required by law to make an effort to find a tenant to replace the tenant that moved out. Once a new tenant moves in, the tenant that broke lease will no longer be responsible for the rent due for the remainder of the broken lease.

A landlord can legally keep all or part of a rental deposit if a tenant breaks lease. The rental deposit can go towards covering costs associated with the breach of the lease contract. The amount of the rental deposit that the landlord can legally keep will depend upon each rental contract and if there is an early termination clause in the contract. If there is an early termination clause in the contract, the tenant must abide by the clause for early termination, otherwise, the landlord is entitled to the rental deposit.