California court minimizes liability risk for landlords offering amenities

There was a time when simply providing a clean, comfortable and safe living space was all that was required of landlords. That was before the advent of community pools, common recreational areas, on-site laundry facilities and fitness facilities became the norm at apartment complexes across the country. Now tenants expect a host of extra amenities in addition to their rental unit.

But do all those amenities leave landlords vulnerable to lawsuits and other legal trouble? Should landlords be liable for injuries sustained by tenants or guests while using such amenities? A state appeals court in California has recently narrowed a tenant’s ability to sue landlords for negligence in such instances, thanks to their ruling on a case involving a tenant who fell off a treadmill and injured his shoulder in an apartment complex’s fitness room and sued the landlord for negligence.

According to an article in the San Francisco Chronicle, the Fourth District Court of Appeal in Riverside, CA, said a 1975 California law that prohibits rental agreements that try to excuse the landlord from any legal liability when it comes to personal injuries applies only to “core functions” of the residence and not to amenities like recreation areas.

The law was intended to protect “a tenant’s basic, essential need for shelter” and leaves a landlord free to demand a waiver of liability for “a nonessential matter of personal improvement or enjoyment” like a gym, the court majority said.

It’s good news for landlords in California who want to offer their tenants the best in amenities, but don’t want that generosity and good business sense to come back to haunt them later on.

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Tenant screening service should help you interpret the results, not just spit out a report

Most property owners understand the importance of tenant screening, but many are still a bit lost about how best to use all the information gleaned from background checks and credit reports. The best way to make the tenant screening process as simple and clear as possible is to hire a tenant screening service that not only provides accurate reports but also qualifies the information. This rare extra step allows the landlord to make an informed, quantifiable decision about who should become their next tenant.

At ATS, the landlord sets the criteria for the hiring decision. In other words, you pick what is most important to you in regards to the background check, and ATS returns an approval, conditional approval or denial based on what was found regarding the criteria you set. This system not only simplifies the screening process, it also creates a uniform decision that negates any question of bias and helps eliminate any subconscious discrimination against an applicant.

For even greater efficiency, ATS offers its clients pre-filled denial notice and Fair Credit Reporting Act compliance letters, to help landlords deal with the legalities involved with making the best decision for their property while maintaining a balance of fairness and objectivity.

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How to decide between two great potential tenants

All landlords dream about finding that perfect tenant. But what happens when you find two?

It might sound like a pipe dream, but there are lots of good quality renters out there, and if you find yourself in the company of more than one tenant who makes a good first impression, has a stable monthly income, and passes the tenant screening process with flying colors, it can be difficult to decide which one should get the keys and the lease.

What you don’t want to do is let your personal biases become discriminatory, thereby violating Fair Housing laws. The first thing to do is to compare their tenant screening reports side by side and see whether one rises to the top based on cold hard facts (including the credit rating and background check). If not, think about other factors, like the stability of their respective employers, the length of time they’ve worked there, and how long you expect them to live there.

Make the decision based on who is the better risk, not on which one you think you like better or which one you are personally more comfortable with. And when you think you’ve made your decision, justify it to yourself on paper so that you are sure there are no illegal biases at play. 

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Knock, Knock: Know Your Rights About Entering Rental Property

One area of the landlord-tenant relationship that should be clear between both tenant and landlord — but seldom is — is when, how and how often a landlord may enter the tenant’s residence. Some tenants think the landlord never has the right to enter, that for as long as their name is on the lease the landlord can only enter with an invitation. Conversely, some landlords believe they have the right to come and go as they please. Neither of those assumptions is correct.

Rights of entry differ for every state, although in every state a landlord may enter the rental property without notice to the tenant if there is an emergency such as a fire, gas leak, or severe water leak.

If it’s not an emergency, the rules vary, although in most states the landlord must give advance notice — typically 24 to 48 hours — of their desire and intent to enter the premises, and the reason for the visit. A landlord can’t just stop by to check on the place; there should be a specific reason, such as a repair needing to be made or the need to show the property to a prospective tenant or buyer. In some states, the landlord must only enter the tenant’s residence during normal business hours, which are generally understood to be between 8 a.m. and 5 p.m. And if the tenant refuses the landlord’s request, the landlord can enter without permission at a reasonable time.

Hopefully a landlord has worked at fostering a cordial relationship with the tenant, as well as a mutual understanding that maintaining the rental unit properly and safely is in both of their best interests. But it is best to also know your rights, and limitations, when it comes to entering your rental unit when it is occupied.

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Commercial Landlords — Time to Invest Money to Make Money

Every businessperson has heard the old adage:  “You have to spend money to make money.” Commercial landlords would be wise to heed this advice.

Unfortunately, economic times have hit commercial landlords hard since the market tanked in 2008. But that’s no excuse for those still in the game to avoid the realities of their situations:

1.  Tenants are Still Looking for Properties to Rent

Someone is going to win tenants’ leases. Will it be you? Not if you haven’t spent any money fixing up your commercial property in the past three years. Now is the time to invest a little money to make your property “pop.” You want curb appeal, but you also want to fine-tune the interior a bit to make the place look exceptional to potential renters who stop by to take a look.

At the very least, make sure the place is clean and move-in ready — nothing should stand in need of repair or be “negotiable.” Today’s market is not favorable for those kinds of landlord short cuts.

2.  Competition is High

If you want to compete with all the other “hungry” commercial landlords in your area, you have to be willing to put forth an investment. Is your space really worth what you’re asking? If you haven’t pulled the necessary reports in awhile, now’s the time to do some market research and make sure you’re priced competitively in your area for your type of property.

3.  The Market is Rebounding

Certainly, real estate is slow in rebounding… but all signs point to an upward swing. And when that happens, if you haven’t spent anything to help you, you’re likely to reap what you haven’t sown.

4. You Have to Do Your Own Cheerleading

Even if your property is primed and ready for new tenants, don’t expect them to magically appear. You have to do the legwork to move traffic to your commercial property. Start by placing a classified ad in the local newspaper’s commercial real estate section, and check into the cost of advertising in a trade magazine specific to your property’s use or location.

5. Tenants Are Online ... And You Should Be Too

Advertising on the Internet is a crucial step in finding qualified tenants. Add your listing to websites like LoopNet and Craigslist, and always include a picture or two as well as all the wonderful features of your property.

Use a word processing application to create a flier with photographs of the property and pertinent details, such as square footage, parking, zoning, and lease requirements, and save that flier as a PDF. Then email it to colleagues, friends, and owners of similar properties who might be in the market to expand their investments.

Commercial landlords who invest today will be happier – and more profitable – tomorrow.  A little financial outlay can result in huge rewards.

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Top 3 Tips for Finding Good Tenants

Are you a new landlord who isn’t sure how to select a “good” tenant? It’s not rocket science, but there is no set-in-stone formula that works for every prospective tenant and every property, every time. Here are a few tips for newbies out there:

1. Don’t wait until the perfect tenant comes to you; seek him out. Take an honest look at your rental property and surrounding area and decide what the ideal tenant looks like. Is this a three-bedroom house in a quaint neighborhood? Is it a one-bedroom flat in an up-and-coming section of the city? Think about the demographic who will most likely find your place appealing, and advertise where they are. The community bulletin board in the artsy coffee shop just down the block from your flat is probably the perfect place to hang a “For Rent” sign.
2. Credit, credit, credit. Running a credit report on a prospective tenant will tell you a lot more than how much debt they have. You’re not looking at the score, or the debt, as much as you’re looking for the overall history, to get a sense of whether the person is fiscally responsible. Car repossessions, credit card charge-offs, and previous evictions will show up on a credit check, so pay attention.
3. Double-check the dollars. Employment verification is key. Anyone can pluck a figure out of the air and tell you it’s their take-home pay. Verify the prospective tenant’s employment status, not just with a phone call but by requesting the most recent pay stub. A good rule of thumb is to decide the rent can’t be more than 30 or 35 percent of someone’s income. The last thing you want is a tenant who cares for the place but can’t pay the bills. 

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Evicted Tenants Aren’t Allowed On Any Part of Your Property

Eviction notices, proceedings and judgments can be tedious, stressful and time-consuming, which is why so many landlords use every means possible to avoid such a hassle. However, once the eviction judgment has been handed down, it is in place to protect you and your assets from the evicted tenant.

As such, if the evicted tenant is seen on your property — even in the common areas of your apartment complex, even if invited by other residents — that person is considered to be trespassing and you have every right to get law enforcement involved. Chances are evicted tenants return to their old apartments for one of two reasons: 1. To retrieve articles of clothing, furniture or other belongings left on the premises; and 2. To vandalize the property or simply to antagonize the landlord.

Let’s face it, they want revenge, either by taking what they consider to be theirs, or by doing something out of spite to the landlord or the landlord’s property. And they should not be allowed to get that revenge in any way, shape or form. Instead, a restraining order can be obtained to prevent the evicted tenant from returning to the apartment community. Don’t hesitate to file for one, thereby further protecting your assets.

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Don’t Reject on a Rumor. Make Lease Rules Clear and Trust the Tenant

Consider this scenario: A 21-year-old recent college graduate applies to become a tenant of your property. You run a background check, employment check, and credit check and everything comes out clean. But while calling personal references and her previous landlord, you discover that the young woman supposedly has a boyfriend who basically lives with her. Furthermore, there are offhanded remarks made about said boyfriend being an illegal drug user or, worse yet, a dealer.

What do you do? You certainly don’t want to open yourself, and your property, up to potential trouble with the law. And you don’t want anyone living in your property who is not on the lease. But you can’t discriminate against a tenant based on rumors and hearsay.

If you liked the applicant, she gave you a good first impression, and everything in her application and background check turns out solid, then go with your gut to sign her to a lease. But before you do, have a candid talk with the applicant that expresses your rules against people living in the home that are not on the lease, and that breaking such rules will result in eviction. Be stern from the start and allow her to decide whether something is worth risking her financial stability and housing future. Chances are, she’ll either withdraw her application and look elsewhere for a place with a more lenient landlord, or she’ll agree to your terms and hold up her end of the bargain.

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Back to School, Back to Safety: Make Sure Your Property Gets an ‘A’

It’s that time of year again: Back to school season. Now is a good time for landlords to assess their rental properties for any issues that could prevent their tenants or neighbors from staying safe during their commutes to and from school.

If you have a new tenant with children who moved in during the summer, it’s nice to let them know the bus route and approximate bus times, if you know them. At the very least, give them the name and number of the school their children will be assigned to. And if your property includes or is adjacent to a school bus stop, make sure there are no safety hazards in the area. Remove anything on the ground that might hinder small children from getting there, and prune back any branches or other vegetation that could interfere with a bus driver’s line of sight.

Likewise, if you know that neighborhood children use your property as part of their commute to school, make sure signs are in place at proper crosswalk areas and nothing on the property will impede them from reaching their destination.

If tenants have gotten into the habit of parking in spaces that might hinder a school bus from passing by safely, now’s the time to remind tenants about the parking rules on the property and make them aware that children will be out walking during morning rush hours commutes.

It only takes a little effort to make sure everyone stays safe this school year.

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Hire a Tenant Screening Service That Tailors The Reports to Your Needs

Every tenant is different, and therefore no two rental applications or tenant screening reports will look the same. Each time you’re vetting potential tenants, it’s of the utmost importance to get the necessary background information about them to ensure they are who they say they are, with the job they claim to hold, and the clean rental history they say they have.

But every circumstance is a little bit different, and you shouldn’t be forced to pay for a lump of tenant screening services if you don’t necessarily need all of them. Perhaps you already have verified a person’s employment. Perhaps they’ve provided you with a recent copy of their credit report. Whatever the circumstances are, you should hire a professional tenant screening service that is willing and able to tailor the screening service to your needs, only generating those reports you really need and not wasting your time and your applicant’s money with frivolous checks and duplicate reports.

When searching for the right tenant screening service, find out whether they offer different levels of background screening services. Research until you find a reputable company that offers everything from single a la carte screening services, to full-service background screening packages that check everything from employment verification and previous eviction reports to criminal records and sex offender registries. 

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Wisconsin Steps Up to Make Tenant Screening Easier

Tenant screening is a critical step toward a landlord’s successful relationship with a tenant. Recognizing this, the Wisconsin legislature is making it easier for tenant screening information to make into the hands of landlords who need it most.

In the past, local ordinances and laws have made it difficult for landlords to have access to important information regarding a tenant’s previous rental history, credit information, criminal history and other details. But a new statewide law makes it illegal for any city, town, village or county to enforce such ordinances that keep necessary tenant screening information under cover.

The law makes it clear that landlords are free to obtain and use any of the following information with respect to a tenant or prospective tenant: Monthly household income; employment information; rental history; credit report; court records related to criminal history, including arrest and conviction records, to which there is public access; and identifying information such as a Social Security number.

Those in the Wisconsin legislature clearly understand that landlords are not trying to violate a person’s privacy rights by obtaining this information. On the contrary, they’re just trying to protect their own assets and make the most intelligent decision for their business interests (without unlawfully discriminating against anyone, of course). Hopefully more states will follow suit.

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Ignoring Necessary Repairs Could Lead to Injury and Liability

A New Haven, CT, landlord was arrested recently after one of her tenants fell off a second-story porch when a railing broke. According to an Associated Press story, the landlord had failed to address 28 code violations that were brought to her attention during inspections at the three-family home she owned in 2009. The tenant was seriously injured in the fall.

Such a story is tragic and completely preventable. The failure to fix problems that were two years old amounts to negligence on the part of the landlord. A landlord’s duties go far beyond tenant screening for qualified renters and collecting monthly rental payments. A landlord is responsible for property maintenance so that it remains not just an aesthetically appealing home but a safe one as well. Necessary repairs should be made promptly upon hearing about anything that is broken or has not been properly maintained.

To make this an easy part of the job, the landlord should stay in frequent contact with the tenant, taking complaints seriously and asking frequently whether everything in the home is in good working condition. And to avoid liability and other legal trouble, the landlord should always promptly address any issues that arise, either through the tenant or through the various codes and other rules governing properties in the area.

No decent landlord wants to be on the wrong side of the law or cause harm to a tenant. Common sense and a good handyman on call can help landlords avoid such tragedy.

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Meth Lab Cleanup Is a Cost You Don’t Want to Incur

Methamphetamine is a problem that can destroy lives, bank accounts and families in a very short amount of time. But homemade meth labs are also highly damaging to residential properties. The ingredients used in the manufacturing of meth, when combined, create toxic contaminants that are absorbed into walls, flooring, and ventilation systems.

Once a meth lab is discovered and the residents are arrested, the problem of how to clean up the property falls to the property owner. Cleaning up the toxic contaminants left behind can be a lengthy and expensive process. After a typical meth lab bust, once the police have removed the chemicals and equipment, the local health department writes a condemnation order and orders the property owner to clean up the area. That can cost upwards of $30,000, an expense that is compounded by the owner’s inability to get rental payments out of the property for the month(s) it is uninhabitable due to the cleaning process.

Because the liability is so great when it comes to meth labs, every property owner should be diligent about conducting thorough background checks for all prospective tenants. Look for a history of issues related to substance abuse, check the tenant’s criminal record, and speak with former landlords about the tenant to get landlord references. Remember, screening residents is the first line of defense.

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Use Same Standards During Each Tenant Screening Process

Selecting a tenant isn’t rocket science, but it can be a complicated, confusing process if you don’t have a set plan in place. Every landlord should have a set list of standards that any prospective tenant must meet in order to be approved to sign the lease and move in. Those standards may differ from landlord to landlord, based on personal preferences, the type of rental unit, and past experiences with tenants. Here are some recommended standards for approving a tenant application:

• The application itself is properly completed.

• The prospective tenant is 18 or older.

• The prospective tenant must prove a monthly income that is three times the amount of the monthly rent.

• There can be no previous evictions on the tenant’s record.

• The tenant has a clean criminal record.

• The tenant’s credit score must be at least XXX.

• The tenant must be currently employed, and undergo a successful employment verification process.

• The tenant’s previous landlord must give a positive recommendation.

Whatever a landlord decides his standards for application approval are, those standards should be written down and checked (twice!) during each tenant screening process for every single applicant. That’s because in the rush to find a tenant — amid the sea of paperwork and reports and the business of collecting fees and applications — it’s easy to overlook a standard or two. It’s easy to forget that you were supposed to call their previous landlord or their current employer. So write down your list of standards and keep it on file to adhere to each and every time.

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Renting During a Recession Means Making Concessions

Every landlord hopes for a dream tenant to walk through the door, someone who’s friendly and clean with excellent credit, solid employment, good references and no criminal record. While these tenants do exist, it’s getting harder to find renters with spotless credit reports and an unblemished employment history. These last few years of layoffs and pay cuts have wreaked havoc on families across the country, and plenty of upstanding citizens, many who’ve owned their own home before, are facing hard times.

Landlords can’t become bleeding hearts, opening their doors to every victim of the recession. It’s still important to do a thorough tenant screening on applicants and think long and hard about the risks associated with allowing someone to sign a lease. But if the potential tenants you’ve been screening have lower credit scores than what you’re used to accepting, consider a few things:

1. Don’t make a foreclosure a deal breaker. The number of people who have a mortgage in foreclosure or mortgage payments significantly past due is rising. While those people couldn’t hang onto their homes, they more than likely are good prospects for renting because they’re used to caring for and maintaining a home, and they’re determined to improve their financial situation, which means they’ll pay their rent on time.
2. Reduce the security deposit but make it nonrefundable. Reducing the security deposit gives a break to those who will probably be good tenants but don’t have a lot of cash lying around to drop all at once. And making the security deposit non-refundable helps alleviate some of your risk in renting to someone with a lower credit rating.

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Try Partnering With Tenant to Make Eco-friendly Changes

Have your heard about how Internet giant Google is partnering with its landlord, McKinley Inc., to make several eco-friendly renovations to the building it leases in Ann Arbor, Mich.? According to reports, they’re also collaborating to build a huge outdoor rooftop deck, among other things. Representatives for McKinley, which is based in Ann Arbor, say they hope the partnership can stand as an example of what can be done between landlords and tenants to adopt renewable energy technology to enhance the workplace.

It’s an idea that makes sense from a business perspective and an environmental perspective, and it’s one that can be translated on a simpler level to smaller businesses and even residential buildings as well. If you’ve thought about making sustainable changes to your properties, why not talk to your tenant about them and see if splitting the cost is an option. The tenant has a right to refuse, of course, but if they see themselves staying put for the long term, they might jump at the chance to make a few changes that could substantially cut their utility bills and help the environment as well.

Even if tenants don’t go for such a partnership, it’s a good idea to make a list of what changes you could make to your property that would enhance its sustainability and save tenants — and you — money in the long run. Then methodically knock things off your list, starting with the least expensive and moving up toward the bigger projects. Eco-friendly changes will give your property great appeal to future tenants, and could make you eligible for special tax credits as well.

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Not everybody wants a one-year lease

A yearlong lease is a pretty standard length of time for a rental property that is a tenant’s primary residence. But sometimes a tenant will ask to do a longer lease or a shorter lease. Landlords should consider the pros and cons to both when deciding whether to grant a special request for the least term. First and foremost, perform a thorough background check, credit report and rental history on the applicant as part of the tenant screening process. This will give you a clear indication of what type of lease will suit both of you best.

Two-year lease. If a tenant applicant requests a lease term that is longer than the standard one-year lease, and they have excellent credit, references and employment history, don’t be scared to sign them up for the long haul. Not all tenants wish to be nomads, moving every year to a different place. Sometimes really qualified, respectful renters just want the stability of knowing they can stay put for awhile in a home they love. If you find these folks, count your blessings.

Six-month lease. If a tenant wants a six-month lease and they pass the tenant screening process with flying colors, talk to them about the reasons behind the shorter lease. Will they be going on an extended trip? Will they be moving for their job, or getting married? Are they in the military and might be deployed or transferred to a different base? Get to the bottom of the half-year request, and if you feel comfortable with possibly having to find new tenants twice in one year, go for it.

Month-to-month lease. If you find a tenant who is interested in a month-to-month lease, beware — especially if they don’t have a good credit score or employment history. However, if you just want someone in the property for as long as you both can make the situation work, it might be worth it. The benefit is you can easily kick out the tenant at the end of the month if they aren’t paying rent. And if they do pay the rent on time, then you bought yourselves one more month of a mutually beneficial arrangement.

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Thinking about Property Management? Do Your Research First

Are you considering trying your hand at the business of property management? There’s a lot that goes into property management besides coordinating tenant screening reports  and collecting rent. You have to know what property owners in your area expect from a property manager, you have to know what your strengths are, and you have to know how much to charge to stay competitive.

First, decide what kinds of services you’ll offer, and what you’ll need in terms of staff, equipment and other resources in order to effectively offer those services. Then decide which types of properties you want to manage. Commercial properties or residential? Single-family homes or multi-family housing units? Then do some research to figure out what services are most important to those property owners and those types of properties.

Then you have to study the marketplace and figure out what is being offered and at what rates. When you find the clients you want, sell them on your ability to give them better service or more for their money than they were previously getting. Help them to understand the benefit of unloading the more stressful aspects of property ownership to a professional property manager.

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Know the Laws — and Hazards — Regarding Lead Paint

Most homes built before 1978 have some lead paint, and homes built before 1960 have the most lead paint. Even if fresh coats of paint have been put on windows, trim, doors and railings, dangerous lead paint can still be lurking underneath, and tenants are still at risk.

There are a few things you should do — and must do — if you suspect lead paint might be present in your rental property.

1. Get a lead inspection to find out if and where lead paint is located in the home.
2. Watch out for lead dust when you repair, repaint or renovate the home. Lead dust can be released from peeling or sanding lead paint, and it can settle on windowsills and floors where young children can accidentally ingest it.
3. If your rental property was built before 1978, by federal law you must give your tenants both the EPA Lead Paint Pamphlet and a disclosure of your knowledge of lead paint hazards in the rental unit, along with the lease agreement. This has to be done before a new tenant signs a lease, and before an existing tenant renews a lease.
4. Tell your tenants to report peeling paint, damaged windowsills or other painted areas, and repair it promptly.
5. Keep all painted areas in good shape. Before doing any renovations, especially ones that involve sanding, scraping or repainting, do some research about the safest way to handle such repairs and renovations in order to minimize exposure to lead paint dust. 

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Use Several Websites When Advertising Rental Property

For a long time landlords had but a few options for advertising a rental property. You could take out a classified ad in the newspaper, put up flyers around town, and stick a “For Rent” sign out front. These days, though, landlords have the Internet — an invaluable tool for finding qualified tenants and getting the word out about your property and/or your property management business.

While many landlords now use the Web to find tenant applicants, they typically use just a couple websites to do so, unaware that there are several quality websites out there that are either dedicated to rental properties or include rental properties as part of their listings. After you list your property on Craigslist and the local newspaper’s online classifieds, you should cover all your bases by making sure your listing is being cross-referenced and picked up on other reputable websites dedicated to rental properties. A few to check out are: Rent.com, HotPads.com, and Cazoodle.com.

The next time you’re in the market for a pool of qualified tenants who are searching for a property to rent just like the one you have, try one (or all!) of these services in addition to your tried-and-true internet outlets. (But don’t disregard the power of that age-old “For Rent” sign.)

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Up in Smoke: When a Tenant Smokes, the Damage Can Be Devastating

If you asked, some landlords would say they wish there was one more detail a tenant screening service could tell them about a prospective tenant — whether or not the person smokes.

Many landlords don’t like to accept tenants who smoke because of the damage that cigarette smoke does to walls, carpeting and furniture (let alone the potential for burn marks on the floors and complaints by nonsmoking neighbors who live close by and prefer to breathe smoke-free air.) But many applicants are good at hiding the fact that they are smokers.

If you ask an applicant whether he smokes and he says “only outside” or “only occasionally,” consider that answer to be “yes.” Someone might usually smoke outside, but during those long cold winter months, you can’t be sure your tenant isn’t staying curled up in his living room for a smoke instead of shivering on his porch.

When you advertise your property, be sure to include that you’re looking for nonsmoking tenants only; that should help weed out many regular smokers. And even if the tenant you find says he or she doesn’t smoke, include the rule in the rental agreement that there will be no smoking on the premises, and make sure they initial it. You might even want to stipulate that if smoke damage is found on the premises, the needed cleaning and repairs will come out of the tenant’s security deposit. 

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Taking on Rental Property Isn’t an Easy Paycheck

On TV it seems simple, right? Buy a house, make a few improvements, find a tenant and start reaping in the cash. In reality, though, the business of property management is not quite so easy. Sure, there are rewards, but there are risks too, and the wise investor considers both before making an investment.

The first step is, of course, to buy the right property in the right location at the right price. This is no small feat, though with the plethora of properties on the market these days it’s easier than it has been in quite some time. The second step is to really think about whether you want to be a landlord. Becoming a landlord is not a magical way to get a check in the mail every month. Landlords work for that money, even when there’s a good tenant in place and no maintenance concerns lurking.

Ask yourself if you enjoy working with people, meeting new people and getting to know and trust them (to some extent, anyway) with your investment. Are you a good judge of character who is also astute enough to not go on emotions but to use an impartial service to screen tenants? Are you comfortable with fielding maintenance requests and hiring professionals when necessary? Do you have enough in savings or other investments to cover the considerable financial risks associated with property management? Are you a shrewd businessperson who can keep accurate and thorough records of all transactions and correspondences with tenants and service professionals?

Be honest with yourself about what kinds of skills are needed to be a good landlord; that honesty will either save you tons of money and hassle, or feed your dreams of becoming a property manager. 

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Know Fair Housing Laws

When landlords are new to the business, there are two things they need to learn right away. One is the value of using a professional tenant screening service to screen their applicants and give them crucial information on an applicant’s credit, employment, criminal record and rental history. The other is the importance of familiarizing themselves with the Fair Housing laws in their area and their state.

Fair Housing laws are in place to protect both tenant and landlord, but in order to be protected by the law, you have to know what that law is. Landlords can’t plead ignorance when it comes to Fair Housing issues, because it is their duty to learn and uphold the law when doing business.

In essence, fair housing laws are put in place to ensure there will be equal access to housing for all people. There can’t be any discrimination on the basis of race, color, religion, gender, national origin, ancestry, sexual orientation, age, familial status, children, marital status, veteran status or membership in the armed services, the receiving of public assistance, or physical or mental disability.

To learn more about the law, landlords should visit the U.S. Department of Housing and Urban Development (HUD) website. Also check your state’s Housing Department for state regulations and possible training classes on the law. You can also check with your county’s government seat for any local laws regarding Fair Housing issues. Remember that ignorance on this subject will not get you off the hook if you’re ever faced with a complaint or lawsuit accusing you of violating Fair Housing law.

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Rental Applications Can Have Pre-screening Warning Signs

Tenant screening is hands down the best way to tell whether a prospective tenant is qualified to rent your property or not. That way you will get detailed information on the person’s criminal record and employment history, obtain a credit report on the person, see if they have any previous evictions on their record, check their name against sex offender registries … the list goes on.

While the screening itself is invaluable and necessary in today’s world, there are some red flags on an actual rental application that could signal a problem tenant before the formal screening process begins.

First of all, check for incomplete information. If the tenant can’t think of three people they know who aren’t related to them and would give them a positive recommendation, chances are you might not find them to be recommendable either. Also look for mistakes on the application – phone numbers that don’t work when you try them, address numbers missing or inaccurate. Mistakes like that could be an intentional attempt to hide their past, could be a sign of identity theft or a troubled rental history.

Be wary of a tenant who doesn’t have a bank account. Nobody these days deals only with cash and money orders. Just about any responsible adult will have a checking account. Similarly, if they can’t verify a current address with a utility bill or phone bill, they might be hiding something. They might have a bad rental history and don’t want to disclose the name of their current landlord.

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Springtime Is the Right Time for Assessing Rental Property Grounds

The harshness of winter can wreak havoc on a home, and rental properties often fall into disrepair simply because nobody keeps up on regular annual outdoor maintenance. When both the tenants and the landlord think “It’s not my job to clean the gutters,” the result can be a flooded basement — a potentially much more expensive nuisance than cleaning leaves out of the gutters would have been in the first place.

Landlords should stop by their rental properties every spring to make a note of anything damaged on the building that needs to be repaired or replaced — gutters, siding, shutters, even lamp post light bulbs — and take a close look at the grounds for any hazards that should be dealt with immediately. A dead or diseased tree poses a risk, as do large branches and limbs that look like they could fall with the help of a stiff breeze. Look for holes in the ground from animals that may have burrowed in during the winter, and whether there are significant cracks in the sidewalk or driveway that should be fixed.

Check the gutters and downspouts for leaves and other debris that can clog the flow of water off the roof, and reattach gutters that have pulled away from the house. It’s also a good idea to clean siding with a pressure washer to keep mold from growing. Also check wood surfaces for signs of weathering, and repair, re-paint and re-stain when necessary.

A thorough inspection could also include checking the caulking, weather stripping around windowsills and doors, and cleaning and patching window screens. And even if it’s the tenant’s job to do yard work, the landlord should ensure the removal of any vegetation that’s touching the house.

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Make the Move-Out Process Smooth for Tenants — And You

Most tenants have good intentions when they give their landlord a move-out date. After all, they want as much of their security deposit as possible. But often tenants, especially ones who’ve lived in the same rental property for multiple years, grossly underestimate the amount of time, money and effort it takes to effectively move all of one’s belongings from one place to another. When time gets tight and energy runs low, the first thing to go is the tenant’s attention to the rental unit he’s leaving behind. Unwanted items are left piled in empty rooms, the kitchen and bathrooms are not cleaned properly, sometimes even the refrigerator isn’t totally emptied.

This leaves the landlord with a mess and a hassle – and if you’ve already got new tenants slated to move in right away, you could be left scrambling for a professional cleaning service to come at a moment’s notice and undo the damage done by the previous tenant.

The good news is there’s a simple way to help avoid all that. When a tenant gives his 30-day notice that he’ll be leaving the property, an effective landlord should be proactive and immediately give the tenant three things:

1. A copy of his signed rental agreement with any requirements for move-out and the return of the security deposit highlighted, as a memory refresher.
2. A copy of the move-in sheet that should have been filled out and signed by both tenant and landlord upon the tenant’s arrival. This should list, room by room, any damage or issues that were present when the tenant moved in. That will give the tenant a good guide when he’s getting ready to leave about what, if any, repairs he needs to make in order to leave the rental unit in the same shape he found it.
3. A move-out guide that gives a basic cleaning checklist for a tenant. Some tenants won’t remember to clean the oven or defrost and clean the freezer unless it’s written on a handy to-do list. 

Arm your tenant with all the information he needs to make a smooth exit and ensure he receives all, or at least most, of his security deposit.

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Tax Deductions Can Spell “REFUND” For Landlords

Tax time is stressful for everyone, and landlords are no exception. But there are several tax deductions many landlords don’t realize they can take. Don’t pay more than you have to on Tax Day this year. Here is a list of deductions for owners of small residential rental property.

1. Interest. This includes interest on credit cards used for goods and services having to do with the rental unit, and mortgage interest payments on loans used to acquire or improve rental property.
2. Repairs. The cost of repairs to your rental property is fully deductible for the year in which the repair was done.
3. Travel. Keep track of mileage when you drive to and from the rental property or anywhere else associated with the property management business. You can deduct the standard mileage rate (51 cents per mile for 2011), or you can deduct your actual expenses (including gas, maintenance, repairs). There are exceptions and qualifiers, so ask a certified public accountant or other tax adviser.
4. Employees and Contractors. When you hire anyone to perform services for your rental activity, whether it’s a carpet cleaning service or mold removal, you can deduct their wages as a rental business expense.
5. Home office. As a tax adviser whether you can deduct your home office expenses from your taxable income.
6. Legal and professional services. You can deduct fees paid to lawyers, property management services, tenant screening services and other professionals that assisted you with the rental property business that year.

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Worst NYC Landlords Called Out on New Website

There are a few negative landlord stereotypes out there — every landlord knows his or her reputation is built not just on one’s own actions and history with tenants, but on the public’s general perception of landlords being people who might want to cut corners on maintenance and repairs in favor of a better bottom line.

That stereotype is unfair for the vast majority of landlords, who conscientiously stay on top of needed repairs and treat their tenants with respect and honesty. But there are still bad landlords out there, muddying the rental waters for the good property managers. Now New York City’s public advocate is trying to change that, at least in his town. Thanks to an agreement with the online classified website Craigslist, tenants in New York City can find out more about a prospective landlord by clicking a link, “NYC’s worst landlords,” on the apartment search pages on Craigslist. The link takes renters to a page on public advocate Bill de Blasio’s website that lists dozens of landlords with the worst inspection records. Tenants can even click on the landlord’s name and be shown a map via Google Maps with the buildings that landlord owns.

The information is compiled by the New York City Department of Housing Preservation and Development, and the website also tells tenants how to file a complaint against their landlord. The list is revolutionary in giving tenants greater and easier access to information about landlords whose credentials and professional records are sub-par at best. Tenants often don’t have the luxury of performing a background check on their prospective landlord the way landlords do on their prospective tenants.

Beyond that, the list also is a wake-up call to landlords everywhere to make sure your reputation is solid, your record of housing violations is clean, and you are in good standing with your current tenants and the community at large.

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Landlords Should Heed Top Trends in Employment Screening

Employment Screening Resources (ESR) has announced its annual list of emerging and influential trends in employment background screening. Some of these 2011 trends have implications for the field of property management when it comes to tenant screening.

1. Controversy over whether it’s discriminatory for employers to use credit reports for employment increase. Because of unemployment, many would-be workers are stuck in a cycle of having bad credit because they can’t find work, and being unable to get a job because they have bad credit. In response, some states have passed laws or are considering laws to restrict the use of credit reports and employment and the U.S. Equal Employment Opportunity Commission (EEOC) is looking closely at this area and has filed lawsuits alleging discriminatory use.
2. Questions about criminal records of job applicants become more difficult for employers to ask. An employer who hires a person with a criminal record can be found liable for negligent hiring if the decision results in harm and could have been avoided by a criminal record check. The easiest way to avoid this is to perform a thorough background check on a job applicant, but the issue of whether employers can use a job application to ask about one’s criminal has become more complicated.
3. Employers discover fast and cheap online background checks using criminal databases not always accurate or legal. With the trend toward more thorough checking into the pasts of potential employees, many websites are springing up that promise cheap instant background checks using “national criminal databases.” But most of these sites aren’t legitimate or thorough. There is much truth to the saying “You get what you pay for.”
4. New accreditation standards help employers select background screening firms. Last year the National Association of Professional Background Screeners’ Background Screening Credentialing Council created the Background Screening Agency Accreditation Program to advance professionalism in the background screening industry. The program promotes best practices in the industry, awareness of legal compliance, and the development of standards to protect consumers.

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Rents Climb as Rental Market Gets Hotter

Have you noticed rents in your area creeping up in recent months? Have you been inundated with more applicants for a vacancy than usual? Have you thought about having to increase your rent, or have you upped it recently? If so you’re part of the national trend that’s responding to the fact that more people are renting than buying these days. The national vacancy rate for rental units is down to 9.4 percent — the lowest it’s been since 2003.

The markets for rented and purchased homes usually move in opposite directions. When more people are buying homes, rents tend to stay low or go down because of decreased demand for rental units. But when high interest rates or a weak economy cool the housing market, more people look to rent rather than buy. Since it takes awhile for builders to add more units, the supply-demand mismatch drives up rent prices.

And that pool of renters is growing by the day. Foreclosures have turned millions of one-time homeowners into renters. In response, Research firm REIS estimates that nationwide, rents will rise an average of 3.4 percent in 2011, which is more than inflation or incomes are likely to rise. In cities like San Jose, Calif., Washington, D.C., Seattle, and New York, rents will go up by more than average. And in a few select neighborhoods, rent increases could exceed 10 percent.

If you’re a landlord, be sure your rent price is staying competitive in your market. And if you’ve been thinking about getting into the business of property management, now is a great time to act on that dream!

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Rent Control in NYC

Rent control has long been a contentious issue between landlords and tenants, and in New York City where thousands live in rent-controlled buildings, the issue is a huge one. That’s why last week’s ruling by New York state’s highest court is so important: It has ruled against rent-stabilized tenants who were fighting to prevent landlords from raising the rent by $45. It is said that the decision will affect more than 300,000 apartments in the city with rents under $1,000.

Splitting 5-2, the New York State Court of Appeals ruled in favor of a 2008 Rent Guidelines Board move to allow small dollar increases on rent for apartments with one-year leases that have been occupied for at least six years. In doing so, the court overturned lower court rulings on the issue. Rent regulation legislation in the state already allows landlords to raise rents on some regulated apartments by 4.5 percent, but landlords have argued that the proportional increase doesn’t allow them to keep up with the cost of repairs.

Tenant advocates say the decision might help rally support behind the claim that rent laws need to be strengthened to properly protect tenants.

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Criminal background checks take step back in North Carolina

Thanks to a change instituted by the Administrative Office of the Courts, those who want to see state criminal records on prospective tenants will have to pore through old files in a much slower computer database system than what was previously being used.

According to the AOC, the change was necessary to protect the secrecy of criminal records that have been expunged. Through the previous protocol, the most cost effective way to search for criminal records was for private vendors to buy access to the state’s database. In some cases that information was outdated, meaning convictions or charges that had been expunged were still showing up on people’s records.

Criminal records in North Carolina are public. But the electronic system that keeps them is difficult to manage and nearly impossible for the average person to search records across the state. People can visit local courthouses and search criminal records, but they can see results only for that particular county, not the whole state.

It’s hard to say what this means for tenant screening services, but costs could rise as vendors are forced to pay more to get the information they need for their clients.

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Make sure that rental application is legible

Many tenant applications are filled out hastily, as applicants want to get their paperwork back to you before anyone else scoops up the place their interested in renting. The first mistake a landlord can make when reviewing an application is to assume something — anything — when trying to decipher someone’s handwriting. If you’re unclear whether that digit in someone’s social security number is a 6 or a 0, don’t guess! Likewise, don’t guess about the spelling of a person’s name. When it comes to background checks, you’ll need the following information to be rock solid:

1. You’ll need the person’s social security number in order to do a credit check. Thousands of people have common names and birthdays, and if you guess on even one of the person’s social security numbers, you might end up pulling the wrong person’s credit.
2. You’ll need a correct spelling of the full legal name and date of birth for any criminal background check or previous eviction check. Most public records databases have removed SSNs from their files. So screening providers use the name and DOB identifiers to narrow down their search. So a criminal record for “Thomas McMurray, born 6/2/1987” may not come up if the landlord inputs “Tom McMurry, born 6/7/1987.”
3. You’ll also need the proper spelling of the applicant’s name to do a state or national search in sex offender registries.

If something is unclear, call the applicant and double-check. Also let them know that if you have to re-run a background check because the information wasn’t clear and correct, they’ll have to foot the bill.

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Renting to College Students

College students get a bad rap when it comes to being good tenants. There are many, many college students out there who are hardworking, studious and responsible. Their lives are about much more than fraternity parties and March Madness. But they are young, which means for many of them the lease they sign with you very well may be the first lease they’ve ever signed.

Because of this age-based ignorance, the landlord that does a good job of being very forthcoming and patient during the application and lease-signing process has the best chance of forming a positive landlord-tenant relationship that leads to timely rental payments and respect for the property.

Be proactive in explaining things the students might not think to ask about. If utilities are not included in the rent, be sure that’s made known and give them the average monthly cost of utilities so they can factor that into their budgets. 

Tell students about the benefits of renters insurance, which doesn’t cost much but can protect them in the event that their belongings are damaged or stolen.

Finally, make sure they read the entire lease before they sign it, and go over each part with them so you know they’re paying attention. It may sound like hand-holding people who are supposed to be adult enough to sign a legal contract, but it’s worth the extra effort if it means less headaches for you later on.

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Credit Bureau’s Use of Rental Payment History Drawing Mixed Reviews

Experian RentBureau, one of the big three credit bureaus, recently began collecting data about consumer rental payments and including that data in its credit reports. Many see this as a positive step, particularly for those who are credit-worthy even if they don’t yet have traditional forms of credit, like credit cards or mortgages. Before this change, a lot of responsible people who don’t have a lot of credit were left at a disadvantage. Now their rental payment history can help boost (or lower) their credit scores. 

Still, there are some skeptics out there. Some point out that RentBureau’s database only covers about 8 million renters. That’s just over one-fifth of U.S. rental households, which is estimated at about 39 million. That leaves a ton of renters still at a credit disadvantage, even among their renting peers.

Others say reporting information on rental payment history may have a negative effect on low-income families struggling to pay the bills during the current recession. If an individual’s scores dip after a few late rent payments it’s not necessarily because that tenant is suddenly irresponsible, but because the economy is making it difficult for anyone to make ends meet.

As with any issue pertaining to credit reports, there are always two sides to a story. That’s why it’s important to stay on top of one’s own credit score, to know where you stand with creditors and lending agencies, and to dispute any inaccuracies.

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Recruit Neighbors To Watch Over Your Investment Property

Sometimes even the most attentive landlord isn’t around his or her property all the time. Unless you live right next-door, chances are a lot of your tenants’ behavior — and possible trouble — will go unnoticed by you unless someone tells you directly.

There’s no need to wait until the police call you to tell you about an arrest or other issue that happened at your property. The best observers of a tenant’s activity are that tenant’s neighbors, whether they also are your tenants or not.

Get to know the property owners who live near your rental property, and give them more than one way to contact you if something is amiss on your property. They have a vested interest in keeping their neighborhood safe and clean — and property values up — so they will be more than happy to send you an email or call you if they see or suspect trouble. Retired residents and stay-at-home moms are particularly helpful, because they’re home more than most and are fairly observant of their surroundings.

Increasing the number of eyes and ears on your property means you’re more likely to be alerted if there is a domestic violence issue, problems with people (or pets) that might not be on the lease, noise complaints, or another symptom of a problem tenant that didn’t show up on an instant tenant report or background check.

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Tips for Renting to College Students

March Madness is upon us, in more ways than one. Of course this is the time of year our attention turns to college basketball, tournament brackets and underdogs. But college students also are in a state of March Madness of another reason — housing issues. Specifically, now’s the time they start scrambling to secure off-campus housing for the coming school year.

Here’s what you should know about renting property to college students:

1. Make sure that the college students renting the apartment make enough money to cover the rent, or have their parents cosign the lease.

2. Make sure they understand the rental agreement is for one full year, not just during semesters. If they’re going to head “home” for the summer, they’ll need to find someone to sign a sub-lease or they’ll have to cover the rent themselves.

3. Make sure each person on the lease is responsible for the entire rent amount. College students sometimes switch roommates and housing mid-year due to personal conflicts, internships or studying abroad, so each tenant has to understand he/she is responsible for paying the entire rent amount until a new roommate is found and the lease is transferred.

4. Get a full security deposit to protect your assets from potential damage. College students are largely a responsible bunch who will respect your property while they live there, but parties and other gatherings will bring plenty of people through your place who might not be so respectful. It’s best to get a healthy security deposit and go over just what kind of cleaning and repairs will come out of that deposit if necessary.

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Many Americans Don’t Understand Credit Scores

According to a recent survey by the Consumer Federation of America and VantageScore Solutions, many Americans don’t really understand what goes into creating their credit score or how it may be used.

Among the findings, the majority of those surveyed didn’t know that a landlord or property manager could use a rental applicant’s credit score as a factor in deciding whether or not to approve them for a lease. About 67 percent of respondents incorrectly assumed age is a determining factor in the credit score, though nearly half knew the basic purpose of a credit score is to assess the risk for lenders of whether a borrower will or won’t repay a loan.

More than 1,000 Americans were surveyed by phone, averaging a D in total knowledge about credit scores, according to the survey results. VantageScore is a joint venture of three credit bureaus -- Equifax, Experian and TransUnion -- and calculates credit scores on a scale from 501 to 990.

Many may be ignorant about a credit score’s purpose or use, but that doesn’t mean a landlord shouldn’t use it. On the contrary, a thorough tenant screening and credit check are tops on the list of ways a landlord will know whether a tenant is lease-worthy.

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