New Marijuana Laws Make New Landlord Headaches

The US Justice Department is not the only group trying to deal with new marijuana laws now in effect in Washington and Colorado. Landlords in both states are also scratching their heads as they try to understand how marijuana legalization affects their current and future lease agreements with tenants.

What new landlords and property owners need to remember is this: You can still ban smoking of any substance on your property, and you do not have to give exception to tenants with medical reasons. So, even though Colorado law says a person can grow, possess and smoke marijuana, a landlord can still make specifications in their lease agreements that prohibit a tenant from doing all three.

One thing a landlord cannot do is amend the smoking rules mid-lease. So, they have to wait until renewal to enforce any new marijuana-specific agreements with tenants. However, some landlords are dealing with tenants who ingest marijuana in liquid form or by vaporizing it.  Again, a landlord has the right to prohibit marijuana usage in any for, but one would be hard-pressed to police a tenant who chooses to take the drug in these ways.

The new legislation will take some getting used to for landlords and tenants, and there is no doubt the federal government and the two states still have a lot to sort out. However, landlords should rest assured knowing they do still have rights. Even though marijuana is against federal law, you the property owner will not be charged with any federal crimes as a result of tenants who possess the drug on their property. 

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Landlords Can Discriminate Against Dog Breeds

The Fair Housing Act prohibits landlords from discriminating any tenant based on race, color, sex, national origin, disability or familial status. However, it is within your rights as a landlord to decide what breed of pet is allowed to live on your property. 

Why should landlords be concerned with the breed of dog a tenant owns? The Insurance Information Institute says about $479 million was paid by all insurance companies for dog bite claims in 2011. As a result, insurance companies are getting stricter about the terms of their coverage with homeowners and renters. Rates are increasing, and in some cases, coverage is being denied if certain breeds of dogs reside on a property.

Eleven dogs make up the list of “riskiest” by insurance standards: They are: Pitt bulls, Dobermans, Rottweilers, German Shepherds, Chows, Great Danes, Presa Canaries, Akitas, Alaskan Malamutes, Siberian Huskies, and Wolf-hybrids. Knowing that insurance companies are taking certain breeds more seriously than others, perhaps you should, too.

While some landlords and property managers make vague references to their pet rules, such as stipulating a “50lbs-and-under” rule, it might be in your best interest to include verbiage in your lease agreement about specific dog breeds. A pet deposit or weight restriction might not be enough to protect you from the difference in rising insurance costs, or even worse,  the liability costs should the actions of the pet result in a claim.

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How Landlords Can Improve The Bathroom in a Rental

One of the best ways landlords and property owners can make their properties more appealing to renters is by making improvements to the bathroom. However, most new landlords probably don’t want to get caught up in an expensive renovation during times of economic uncertainty. The good news is, there are ways to improve the bathroom without breaking the bank:

Freshen up grout and caulk. New tiling can be a very expensive upgrade. A simple way to avoid those costs is to clean up your existing tiles by re-grouting and re-caulking around the sink and tub areas. Grout and caulk are relatively cheap, and can make such a huge impact.

Replace faucet fixtures. If your rental property’s sink and shower faucets are more than fifteen years old, they probably aren’t energy efficient. New fixtures don’t have to be expensive, and they will make your bathroom shine. Big box stores sell faucets starting around the $30-$40 range.

Add storage. If the bathroom space in your rental is small, tenant applicants will appreciate having more storage options.  Consider adding shelves or cabinets to a small bathroom area to make the space more appealing.

Don’t just paint the walls. If a new sink and vanity isn’t in your budget, consider sanding and painting the existing one. A fresh coat of paint can make an otherwise older, outdated vanity look brand new.  Accent the piece with new knobs and modern drawer pulls. Your tenants will not even know the cabinetry isn’t brand new.

Update the little things. Don’t overlook the smaller, inexpensive fixtures. Replacing old toilet paper holders, towel racks and adding a quieter, more efficient ventilation fan can bring your bathroom’s style & functionality into the new millennium.

Many real estate experts believe that updating a bathroom is a great way to add value to your property.  While a huge renovation may not be in the budget for 2013, even small upgrades to your bathroom will make a huge difference in the appeal of your rental. 

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Famous Celebrities Moonlighting as Landlords

Think being a landlord is strictly for the business-oriented individual? Think again! Many celebrities are trying their hands at being landlords, and offering their properties as rentals. One can assume it’s likely the rich and famous property owners are not conducting their own tenant screenings, and instead using a reliable property management company to do their dirty work.

Actor Orlando Bloom owns a 4-bedroom, 3,250-square-foot home in the Hollywood Hills that is on the rental market for $18,000-a-month. The home boasts a library, built-in-barbeque and a swimming pool.

Actress Pamela Anderson put her Malibu beach home up for rent this past summer for $50,000-a-month, but has since lowered the price to the bargain amount of $30,000-a-month. Anderson purchased the home over a decade ago for a $1.2 million.

Leonardo DiCaprio is also sampling the rental market. The actor is asking $70,000-a-month to rent his $23 million Malibu home. The impressive real estate investment sits on a half-acre of beachfront property and includes a 4-bedroom main house, in addition to a 2-bedroom guesthouse. No word on whether potential tenants of this palatial estate will be required to provide employment verification prior to signing a lease agreement.

Many other celebrities are also offering homes to rent all over the country. Oprah Winfrey has a Chicago co-op that is listed for $15,000-a-month, and actress Nicole Kidman has an apartment in NYC with a $45,000-a-month.  In comparison, chef Paula Deen’s Savannah home, which rents for $300-a-night, seems like a steal!

Who knew, nowadays if you are a new landlord or real estate investor, you can say you have something in common with the biggest names in show business!

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Landlords, here’s what you can deduct on your taxes

As the year winds to a close, it’s time to start thinking about your taxes. We know it’s not a pleasant thought, particularly in the middle of the holiday season, but the earlier you start working toward gathering the necessary records and receipts, the easier you make it for your accountant – and the larger your tax break will be!

To get you started, here is a list of landlord tax deduction tips:

1.  Interest. Often a landlord’s biggest deduction, the interest landlords can deduct includes mortgage interest payments on loans used to acquire or improve rental property and interest on credit cards for goods or services used as part of the landlord business.

2.  Depreciation. Landlords get back the cost of real estate through depreciation, which involves deducting a portion of the cost of the property over several years. Your accountant can help with the figures.

3. Travel expenses. This includes gas, mileage, and travel expenses for trips made on behalf of the business – trips to the hardware store for supplies needed to fix something, trips to another town or state to look at possible investment property, even traveling to and from your rental property to speak with tenants.

4.  Repairs. Keep excellent records and receipts of money spent on ordinary, necessary repairs and maintenance of the rental property, because it’s all deductible in the year in which those repairs were made.

5. Home office. Provided they meet certain minimal requirements, landlords may deduct their home office expenses from their taxable income.

6. Insurance. You can deduct the premiums you pay for almost any insurance that pertains to the rental business, including fire, theft, and flood insurance for the rental property and landlord liability insurance. And if you have employees, you can deduct the cost of their health insurance as well

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