Should I raise the rent on a good tenant?

Written by Sarah Block on . Posted in edited, For Landlords, Income Ideas, paid, Rent & Expenses

Every June, my husband and I have the same question: do we raise the rent?

Our leases run August to August, and June is when we begin to consider the pros and cons of raising the rent on our tenants. Sometimes it’s clear. If they paid late or were difficult, we raise the rent. But many of our tenants are amazing, so it’s a difficult decision. Do we risk losing a great tenant by raising the rent?

Here are three questions to ask yourself when deciding whether to raise the rent.

1. What’s the market value of the rental?

I’ve been lucky to have long-term tenants on multiple occasions. All landlords know, finding new tenants is as enjoyable as stepping on a rusty nail. Still, if you haven’t raised the rent in a while, chances are the market value has increased. Is your rental way below comparables? You have a few choices for learning the market value.

  • Property managers—A property manager can compile a comp report to determine the ideal rent price for your rental market. This route isn’t cheap. It’s usually part of hiring an apartment search or property management company and their tenant-finding service. They usually charge a one-month rent fee.
  • Rent Estimate reportSet your rent price with confidence with a Cozy Rent Estimate report. See how your rental stacks up to nearby single-family homes and multifamily properties, with up-to-date info about the actual rents they collect. Each report includes comparable rent prices, local vacancy rates, rental trends, and investor metrics. A report costs $19.99.
  • Do-it-yourself comparables—Before rent estimate platforms existed, I came up with my own by using Apartments.com, Redfin, and Craigslist to look at local apartment listings. I would use their data, rent prices, locations, and time on the market, to determine my market value. It takes time, but not money.

Related: Should I increase rental rates every year?

2. Will the current rent still yield a profit this year?

Rent isn’t the only thing that increases in cost. Taxes go up. Insurance premiums may increase. Upcoming maintenance needs might be expensive. Take all these things into consideration before renewing a lease at the same rent.

Consider these things:

  • What were your costs on the rental the previous year? You should have this information from your taxes.
  • Are any costs expected to go up?
  • Is there any expensive maintenance expected to happen soon?
  • What is your monthly mortgage?

Add up your expenses and subtract from your rent. Will you still make a profit? If so, and the tenant is great, don’t raise the rent. Lucas Hall, the founder of Landlordology, says, “A quality tenant is far greater than a 3% rise in rent.”

Related:  3 ways to stay up-to-date on rental prices

3. Can I raise the rent without losing my tenant?

It is possible to raise the rent on a good tenant without losing them if you do it delicately. If you choose to raise the rent, follow these rules for the best opportunity to keep your great tenants.

  • Raise the rent, but keep it $100 less than comparables, and let your tenant know that while you needed to increase the rent, it is still lower than typical rents for the neighborhood. After receiving the notice that rent will increase, your tenant might begin looking around to see if they are still getting a good deal. However, if you keep the rent below market value, they will find a benefit in staying.
  • Provide plenty of notice. The amount of notice that is required depends on the state. However, the more notice the better. It gives your tenants time to prepare for the cost increase.
  • Be honest and communicate kindly. Remember, your tenants are people. While you are working on determining your finances, they will be doing the same. Be honest and communicate with them. When I raised the rent on a long-term tenant, I provided her with the market report I had and explained to her that the market value was $500 more than I was charging, but I was only planning on raising it $100 because I enjoyed having her as a tenant. Being honest and open about the process I went through in determining the rent went a long way with her, and she stayed for several more years.

In summary

When you’re a landlord, you have to be everything. You’re an accountant. You are a maintenance person. You are marketing. But, most of all, you’re customer service. To keep a great tenant when you need to raise the rent, keep customer service in mind, and make decisions based on data.

Now that I can get my data in Cozy Rent Estimate reports, June will be a lot less agonizing.

How to test appliances before a tenant moves in

Written by Chris Deziel on . Posted in appliances, edited, For Landlords, landlord, Maintenance & Renovations, move-in, paid

Landlords don’t have to supply appliances, but most do. After all, appliances make rentals more attractive.

If you furnish appliances, you’ll want to make sure they’re in good working order. You probably also want tenants to be able to use them to make their lives more comfortable and enjoyable.

Appliances don’t last forever, so when you’re getting ready to welcome a new tenant, test appliances to make sure they’ll last. Like people, appliances get sick, and when they do, they display recognizable symptoms. Looking for these symptoms when you test appliances usually doesn’t require any tools.

Related:

4 basic amenities that attract quality tenants

How long should appliances last?

The dryer

The dryer is the appliance that can cause the worst problems because it can overheat and start a fire. According to FEMA, dryers cause 2,900 fires in the U.S annually. After making sure the vent and lint trap are clean, dry a load of clothing you’ve just run through the washing machine and conduct these simple tests:

  • Turn the dial to manual and make sure the dryer starts. Check for excessive vibrations or squeaks, which could mean the drum belt is loose.
  • Set the timer to 60 minutes or the drying cycle to “Normal,” time how long it takes for the dryer to shut off. It will be 60 minutes if the manual timer is working. The timing is variable for an electronic dryer, but it should be close to 60 minutes.
  • Take out the clothes and feel how dry they are. If they still feel wet, the vent line could need a deeper cleaning. If you’re sure the vent is clean, it’s time to call a pro to check the burner or heating element on the dryer.

The washing machine

Like dryers, washing machines often malfunction because something in the outlet hose is blocked. In this case, the outlet is inside the machine, and you may have to have it professionally removed. But first, you need to know it’s there.

  • Do a load of wash and make sure the machine drains properly.
  • This test might also reveal strange sounds that could indicate a loose belt or a problem with the motor.
  • Doing a load of wash also gives you an opportunity to test the controls. If you hear any sounds, the machine vibrates excessively, or the controls don’t work, call a service pro. Most problems are fixable.

The refrigerator

Refrigerators also have moving parts, but they may make noise when they malfunction, and since a refrigerator is always on, you can probably hear it. The sounds are a warning to call a repair pro or get a new fridge. The gaskets, fan, and refrigeration system itself are also important.

  • Open and close the doors to check the gasket seal. You should feel a slight pull on the door when it’s almost closed. Replace gaskets that are torn.
  • Put a thermometer inside the fridge and turn the control to mid-range. Come back in 12 hours and check the temperature. It should be 40 degrees Fahrenheit. If it isn’t, turn the control to cold and check again in another 12 hours. Suspect a problem with the refrigerant if the temperature doesn’t reach 40 F.
  • Look for water on the ground or in the refrigerator compartment. It can indicate problems with the refrigerant or the controls.

The water heater

  • Turn on the hot water at every faucet and check the temperature.
  • Take a careful look at the color of the water. Cooler-than-expected water or a yellow or brownish tinge point to sediment and rust in the water heater.
  • Get it flushed before tenants move in to avoid water quality problems and premature water heater failure.

Related: The ultimate guide to “normal wear and tear”

The kitchen stove

The kitchen stove is probably the easiest to test.

  • Turn on each burner or heating element in turn and make sure it provides maximum flame or glow when the control is turned up all the way.
  • Set the oven to cooking temperature–about 400 degrees—and place an oven thermometer inside. Wait for it to reach the target temperature.

The other stove features are optional. They don’t have to work as long as you disclose that fact to the tenants.

Look for gas leaks

As you test appliances, be sure to listen for leaks coming from those that use gas. It’s a good idea to do a bubble test on each gas connection.

  • Make a 50-50 solution of dish soap and water and spray some on each connection.
  • If you see bubbles on any connection, tighten the connection.
  • If you can’t stop the bubbles, get a licensed gas technician to service the connection.

Check the lights, plugs, and smoke detectors

An outlet tester will come in handy. Plug it into each outlet to check for power.

  • Test GFCI outlets by pressing the bottom button on each one and verifying that the power goes off, and then press the reset button on the top to make sure the tester lights up again.
  • Turn on each of the lights to check for burnt-out bulbs.
  • Press the test button on each of the smoke detectors to make sure the alarm sounds.

Related: The long and short of smoke alarms

Give yourself time

As you test appliances, you may find problems that require professional repair. Give yourself time to make these repairs by conducting the tests at least a week before occupancy. That way, everything will be shipshape when tenants move in, and if anything goes wrong, it won’t be your fault.

When to sell a rental property

Written by Laura Agadoni on . Posted in edited, For Landlords, Income Ideas, paid

I often hear people talk about the day they’ll sell their rental property.

That’s a big assumption. There’s no law that says you must sell a rental property someday. You can hold onto rental property throughout your retirement years if it’s bringing positive cash flow.

But there are legitimate reasons to sell a rental property. So how do you determine the reasons and timing?

You want to cash in

Guessing the market is one strategy—buy low, sell high. This is a favorite strategy of house flippers who traditionally sell after holding the house a year or less. House flippers are typically not buying property to use as rental property. That’s usually Plan B if the house won’t sell. But some flippers have a five-year plan, where they hold a property for five years or so, making improvements gradually while collecting rent. Then when the house is sufficiently upgraded and if prices have risen in the area, they sell.

The property isn’t performing well

The best way to determine whether your rental property is doing well is by cash flow. Are you making or losing money each month? Determine this by taking your rental income and subtracting all your expenses associated with the property, including a mortgage payment. If you’re losing money, you might want to sell.

But first consider whether you can tweak the numbers so that you will have a positive cash flow. Do an analysis of what similar rental properties charge for rent in your area. You can save yourself some research time by getting a Rent Estimate report in Cozy. If you find you can get more for your rental than what you’re currently charging, consider raising the rent as soon as you can and keep the property.

For a more in-depth look at number crunching, check out this blog post. (I’ve interviewed this author many times, and he knows his stuff.)

You’re not cut out for the job/you’re just over it

Some people like the idea of renting property, but they let their emotions get in the way. They may become friends with their tenants, for example. If that happens, they don’t make the best business decisions. They may let tenants make late rent payments, for example, or they may waive their right to make periodic inspections because they feel awkward doing so. Landlords like this, may find—as what happened to me with my first rental—that their tenants have become way behind on rent and have damaged the place beyond repair. If that happens, it could be time to sell—either that or hire a property manager.

Related: The temptation of being friends with your tenants

You’re moving

If you manage your own rental properties, it’s easier to do so when you live nearby so that you can pop over when it’s time to inspect and maintain the property or to make or arrange repairs. If you want or need to move, you can keep your rental property and manage it from afar. You’ll probably need to hire a property manager, though. Another option would be to sell, especially if you’re moving to a favorable spot for rental property investment. You can buy another property in the new location.

Related: Should I invest in local or long-distance rental properties?

You want to trade it for something else

The rental property you own might be due for some major repairs, such as a new roof or HVAC system. You might want to sell rather than shell out a lot of money to replace big-ticket items. Or you might have bought an inexpensive property, but now you want to buy a nicer property and collect higher rents. If you decide to trade up, consider doing a 1031 exchange to postpone paying tax on any income gain your receive through the sale.

Related: The complete guide to 1031 exchanges

It’s time based on your plan

You might have bought rental property knowing that an event would trigger its sale. This could be sending a child to college, buying your dream home, or getting ready to retire. A death in the family or a job layoff are other reasons you might want to sell your rental property. But don’t make rush decisions. You might wish to meet with a financial advisor during emotional times in your life. It might make more sense, for example, to hold the property if it’s a good income stream for you.

The bottom line

If you decide it’s time to sell a rental property, you can feel better about your decision if you have a solid reason. Note that you can sell your rental property at any time, even with tenants in it. Just make sure you are doing so correctly.

Related: Tenant’s rights when selling an occupied rental property

Tenant move-out letter plus 2 other free templates

Written by Laura Agadoni on . Posted in edited, For Landlords, Landlord Tips, Leases & Legal, Move-in/Move-out, paid, Rent & Expenses, Security Deposits, Step 12 - Move-Out

Your goal as a landlord is not only to have tenants but to keep tenants (the good ones anyway) as long as possible. But no matter how wonderful you are as a landlord, and how great your rental may be, there usually comes a time when your tenant needs to move.

When your tenant plans to move, you should make the move-out process as smooth as possible. This benefits you and your tenant—when your tenant knows what to expect, they’re more likely to meet your expectations. Here are some templates you can use when your tenants’ leases are about to end.

The lease renewal letter

If you want your tenant to sign a new lease, contact them about two months before the current lease is due to end. The purpose of the lease renewal letter is to find out what their intentions are and to explain what they need to do if they wish to continue to live in your rental.

Tip: This is the time to raise the rent if you intend to.

Related: How to raise the rent in 4 easy steps [free template]

Related: Should I increase rental rates every year?

Note: If you do nothing after the lease ends, and your tenant stays, your tenant becomes a month-to-month tenant.

Lease renewal letter template

Note: You don’t have to increase the rent. If you don’t want to, change that section to reflect the rent will remain the same.

2. The move-out letter

If your tenant decides not to renew and wishes to move, send them a move-out letter about a month before the lease ends. The purpose is to give instructions on what you expect of your tenant.

Move-out letter template

Note: This letter contains language about lease requirements. Make sure yours does as well before you include that.

3. Notice to pay rent or quit

If your current tenant missed a rent payment (or two), you probably shouldn’t invite them to renew the lease. In fact, you should send them a letter asking them to pay the rent ASAP or leave.

Notice to pay rent or quit template

Once you rent your property, you will hopefully have wonderful tenants who stay a long time. But since that isn’t always the case, you can still make things easier for everyone involved if you are proactive with your tenants by letting them know what the expectations are during move-out time.

9 maintenance issues tenants are responsible for

Written by Chris Deziel on . Posted in edited, For Landlords, For Renters, landlord tenant, Maintenance & Renovations, paid, rental maintenance

Maintaining a clean, safe, and livable rental property is a shared commitment. The law requires a landlord to provide a safe and habitable residence, but it won’t stay that way for long unless tenants share upkeep responsibilities.

Landlords can’t control how tenants live, but they have a right to expect proper use of their properties. Some commonsense tasks, such as proper disposal of trash, need no explanation. Other maintenance issues should be specified in the lease so everyone is on the same page.

1. Waste disposal

You have to throw away the trash if you want a clean and sanitary home. Most municipalities provide waste disposal services for which they generally charge a fee. Landlords often pass this fee on via a lease clause or include it in the rent. In places without regular trash service, it’s important to negotiate a disposal strategy and stick with it.

Related: How to handle dirty tenants

2. Pest control

It’s up to the landlord to ensure that a rental is pest-free before anyone moves in. Once the place is occupied, though, tenants automatically assume some of the responsibility for keeping it that way. If the landlord has corrected structural problems that allow rodents and insects to enter, tenants should avoid attracting them with poor hygienic practices. Tenants could be financially liable for abatement of an infestation caused by negligence, especially if they violate provisions specified in the lease.

Related: Best pest control and prevention tips for your rental property

How to deal with bed bugs at your rental property

3. Landscaping

Lawn and yard maintenance can fall to the tenant if a lease clause assigns these tasks. In that case, any violation of city or county ordinances would be the tenant’s responsibility. The tenant is always responsible for keeping the yard safe by removing obstacles and generally cleaning up. In certain situations, particularly in shared housing units, a landlord may contract a tenant to do yard maintenance in exchange for compensation.

Related: Should a tenant be paid for doing yard work?

4. Snow removal

Snow removal is a matter of safety, not only for tenants but for anyone using a public walkway that crosses the property. Some municipalities assess fines for failure to remove snow in a timely fashion. Able-bodied tenants are in the best position to handle this job, but it isn’t their responsibility unless the lease specifies it. However, because tenants have a responsibility to keep the premises safe, they could be faulted for failing to clear snow from doorways and walkways that access them.

Related: Snow removal—how to avoid being negligent

5. Mold prevention

Mold grows where there’s moisture, and the question of whose job it is to prevent it—and clean it up—can be a thorny one. In general, it’s the landlord’s job if the moisture comes from a plumbing or building leak. Liability for cleanup may fall to tenants if the mold is the result of poor hygiene practices, such as leaving piles of damp clothing in the corner. Tenants are also responsible for providing adequate ventilation and could be required to clean surface mold on furniture and bathroom walls.

Related: Is a landlord always responsible for mold remediation?

6. Proper appliance use

Appliances, such as stoves, microwaves, and dryers, won’t last long under abuse. Proper appliance use is a must in any living situation, and if any repair or replacement is clearly the result of negligence on the part of tenants, they may have to foot the bill. Landlords are typically responsible for routine maintenance, such as filter replacement or duct cleaning. This could be addressed in the lease.

Related: How long should appliances last?

7. Smoke detector maintenance

Smoke detectors are generally unnoticeable until they need new batteries or they go off, which hopefully never happens. When a smoke alarm needs new batteries, it’s the landlord’s job to replace them, unless the lease says otherwise. It’s up to tenants to avoid false alarms caused by shower steam or cooking smoke, but if an alarm goes off for no reason, they must notify the landlord as soon as possible so it can be fixed or replaced.

Related: The long and short of smoke alarms

8. Septic maintenance

Improper use of a septic system can seriously shorten its life. This is such an important maintenance issue that most landlords include a lease clause or provide a handout that describes best practices. They include treating oils, greases, and non-degradable substances as trash and not plumbing waste. Septic treatments, tank pumping, and pump maintenance are the landlord’s responsibility, but if the system fails, tenants could be dinged if negligent use is the cause.

Related: How to educate your tenants about using a septic system

9. Contacting the landlord

It’s illegal for a landlord to make tenants responsible for all repairs. Tenants do have a responsibility, however, to contact the landlord or property manager when the property needs repairs. Any damage that results from a failure to do so could cost all or part of the security deposit or more. Unless authorized by the lease, tenants can’t make repairs on their own unless the landlord does not respond. In that case, most states allow tenants to make repairs that affect habitability and charge the landlord.

Understand the lease requirements

When it comes to maintenance issues for tenants, it’s important to read and understand the lease before signing it. Certain clauses may stipulate maintenance tasks that don’t normally fall to tenants, and once they sign on the dotted line, tenants own these tasks. Encourage your tenants to take the lease home and study it carefully before signing.

Staple supplies for landlords to keep on hand

Written by Chris Deziel on . Posted in edited, For Landlords, landlord, Landlord Tips, Maintenance & Renovations, paid, painting, rental maintenance

If you’re a landlord who wants to run a tight ship, you need certain supplies on hand to deal with common situations.

These supplies include tools and maintenance items, paperwork to make your life easier, spare keys, and a way to remove unauthorized padlocks and chains.

Tools and supplies for basic maintenance

Your toolbox should include the basics:

  • Hammer
  • Saw
  • Tape measure
  • Screwdriver
  • Power drill

For small electrical repairs:

  • Multimeter
  • Wire splicing tool
  • Utility knife

For plumbing repairs:

  • Two pairs of locking pliers (One pair is for holding the pipe while you tighten a leaking fitting with the other.)

Besides tools, you’ll need a few supplies to complete repairs. If you keep an inventory of a few basics, you can complete simple repairs efficiently without repeated trips to the hardware store. The list isn’t long. It includes:

  • An assortment of screws and other fasteners
  • Wall anchors
  • Electrical tape, duct tape, and plumbing tape
  • Carpenter’s glue and 2-part epoxy

Related: A landlord’s toolbox for appliance repair and maintenance

Supplies for painting and cosmetic maintenance

When a tenant moves out, you almost always have to do some painting to make the rental ready for a new tenant. Keep the following in your paint closet:

  • Touch-up paint
  • Brushes
  • Rollers

The painting job inevitably involves a certain amount of wall repair. So it’s a good idea to also keep the following supplies in your paint closet so you can make these repairs quickly and minimize downtime for the rental:

  • Drywall joint compound
  • Drywall tape
  • Spackling compound
  • Patching compound
  • A four-inch putty knife and a 6- and 10-inch drywall knife
  • A paint scraper

Related: The top skill you should perfect: painting

Cleaning tools and supplies

Cleaning is an important part of the turnaround process, so your supply closet should include the following:

  • Mop
  • Assortment of rags and sponges
  • Bucket
  • Vacuum cleaner
  • Spray bottle that you can fill with vinegar (comes in handy for cleaning hard water streaks from the bathroom walls and shower door)
  • Squeegee

In addition, it’s a great idea to keep the following supplies in the cleaning closet:

  • Ammonia
  • Bleach-based cleanser
  • Dish soap for delicate cleaning jobs
  • Enzyme-based drain cleaner for slow drains
  • Scouring powder
  • Vinegar and/or hydrogen peroxide for disinfecting
  • Window cleaning fluid

Related: How to get your security deposit back

Paperwork to keep in your file cabinet

Your file cabinet should include the instruction manual for each of your appliances, as well as a copy of the warranty (if it’s still in effect). Besides these, it’s a good idea to keep the following paperwork:

  • Copies of lead paint and other disclosure forms that you are required to supply to new tenants
  • Fact sheets about the rental that include safety information and important phone numbers that you can supply to tenants
  • Ready-to-fill-out leases and/or rental agreements.

Related: Find a rock-solid rental lease and stick to it

Prepare for lockouts

It’s good practice to limit the number of keys you give out, and it’s an even better practice to have at least one spare set for each rental. Keep the keys in a place you can access quickly, and a late night emergency call from a tenant who has misplaced keys will be less of a bother.

Tenants who lose keys sometimes use their own locks to keep doors and other parts of a rental unit secure. It isn’t unheard of for these unauthorized locks to remain when the tenants vacate the premises. Keep a pair of bolt cutters in your toolbox, and you can remove them.

Related: 4 considerations when choosing locks for your rental properties

Consolidate all your supplies in one place

Not all landlords do all their own maintenance and repairs, but if you do, consider investing in an inexpensive used vehicle in which to keep supplies (except paperwork). This is a great idea if you have multiple units. You’ll always have the things you need right at hand, and you won’t have the hassle of organizing materials each time a job arises. You’ll save time and money, and every little bit helps to keep your rental operation in the black.

Top 8 ways to know if your rental meets safety standards

Written by Chris Deziel on . Posted in edited, For Landlords, landlord liability, Maintenance & Renovations, paid, safety, Step 10 - Repair & Maintain

The most successful landlords understand the importance and value of conducting regular property inspections. Making sure your rental meets the safety standards mandated by statutes (and common sense) is the best way protect your tenants and your bank account.

Make a checklist for each property you own, and update it when you inspect the property. Include these eight important items on your list.

1. Do you have GFI outlets?

The National Electrical Code began to require Ground Fault Interrupting outlets (GFIs) in 1971, and, over the years, it expanded the list of locations where GFIs should be installed. These include:

  • Kitchens
  • Bathrooms
  • Laundry rooms
  • Anywhere outside

Many older rentals don’t have these safety devices, and that increases the risk of shocks and fires. If a non-GFI outlet were to overheat and catch fire in a place in which a GFI is required, insurance might not cover the damage.

You don’t necessarily have to retrofit all non-GFI outlets in a kitchen or bathroom. You could simply install a GFI breaker in the main panel, or you can locate the first outlet on the circuit and replace that one with a GFI. If it’s properly wired, it will protect all downline outlets by tripping whenever one of them detects a ground fault.

Related: How to get your landlord to fix a bad electrical system

2. Are there smoke detectors?

Most states have smoke alarm laws, so it’s a good idea to become familiar with those in your state or municipality and obey them. State or local regulations usually specify where the smoke detectors should be, and naturally, most fire prevention authorities require the smoke detectors to be in working order.

Check the smoke alarms in your rentals yearly by pushing the test button on each one and ensuring that the alarm sounds. Respond promptly when a renter complains of chirping noises because that means the battery is weak and the smoke alarm may not function in an emergency.

As of March, 2018, 27 states require carbon monoxide detectors in residential units through statute, and another 11 states require them through the state building code. To avoid having to keep track of both smoke and carbon monoxide detectors, consider installing combination units. These come with sealed batteries to fire code requirements in California and elsewhere.

Related: The long and short of smoke alarms

3. Are the outdoor railings safe?

If your rental has a deck or balcony, the railings need to be at least 36-42 inches high, depending on whether the local governing authority relies on the International Residential Code or the International Building Code. The railings must be able to withstand a minimum shear force, which is also specified by code.

Wood railings tend to deteriorate over the years. The wood rots, and the bolts holding the posts to the deck fascia work themselves loose. Check the railings on your decks and balconies every year. Tighten loose fasteners and replace rotting wood.

4. How safe are your stairs?

You don’t want renters, visitors, or anyone else to slip and fall on any of your stairways or walkways. You can’t prevent every accident, but you can minimize the risk of one occurring by keeping stairs in good repair.

Replace rotted wood on wooden staircases and fix cracks on concrete ones before they widen and turn into hazards. Painting stairs and walkways with a non-slip coating is a good way to guard against loss of traction in wet weather.

5. Do the doors lock?

Most states require landlords to provide secure housing, and courts are increasingly awarding large settlements to tenants who sue landlords after burglaries or break-ins.

A secure exterior door is one with both a locking lockset and a deadbolt. Re-key the locks or change them with every turnover to eliminate the circulation of spare keys. Even better, equip the doors with electronic or combination locks. Discourage renters from duplicating keys, and keep a log of the keys that you hand out.

In high-crime areas, installing an alarm system is an added precaution that could prevent a burglary and keep you out of court.

Related:

4 considerations when choosing locks for your rental properties

Should landlords (or tenants) install an alarm system?

6. Is that paint safe?

You should be concerned about lead-based paint if you have a rental that was built before 1978. Before that date, lead was a common ingredient in interior paints, and paint containing this toxic metal may be flaking off your old wooden windowsills right now. If your renters have children, and the children ingest lead-based paint, they could suffer developmental and neurological problems.

It’s in your interest, as well as the interest of your renters, to test painted walls and woodwork for lead. If you get a positive reading, consult a remediation expert to determine the best way to deal with it. According to federal law, you must disclose the presence of lead paint to your renters.

Related: Understanding “the lead disclosure rule”

7. Is there a pest infestation?

Besides being a general nuisance, pests such as mice, rats, and cockroaches are unsanitary and can spread disease and generally lower safety standards in the rental. Renters may attract them by leaving food around or failing to clean up, but it’s ultimately the landlord’s responsibility to get rid of them. If you add a monthly payment to a local pest control company to the rent, you won’t have to worry about this problem.

8. Are the appliances maintained?

The dryer: This tops the list of appliances that need an inspection and possible maintenance at least once a year. For the sake of fire safety and dryer performance, check the lint trap and the vent opening in the side of the house for lint buildup. Clean the vent if you can’t feel a steady stream of air from the vent opening when the dryer is on.

The washing machine: Check the lint trap on the washing machine.

The water heater: Check for leaks. You should flush the water heater every three to five years to prevent leaks and maintain its performance.

Related: How long should appliances last?

Mention known issues in the lease

You may not be able to correct all the issues that lower safety standards in your rental as quickly as you’d like. It’s important to get to them eventually, but until you do, disclose them in the lease as the law requires. That isn’t guaranteed to get you out of hot water if an accident occurs, but at least you’ll be following the law, and you won’t be misrepresenting the rental.

How to protect your tenant’s sensitive information

Written by Chris Deziel on . Posted in data storage, edited, For Landlords, frugal landlord, paid, privacy, rental maintenance, Software, Step 9 - Manage Lease & Collect Rent

The massive Equifax data breach of 2017 revealed that identity thieves are constantly updating the methods they use to steal sensitive information—and they’re getting better.

That should concern any landlord or property manager who collects personal data. Keeping credit card and Social Security numbers out of the hands of thieves calls for advanced IT skills beyond the scope of many property owners and managers. It’s one reason you should consider working with third-party online property management agencies.

1. Use firewalls and passwords

Storing the data you get from tenants in an unprotected file on your computer is like leaving a large sum of money on the hood of your car while you go shopping. If someone doesn’t steal it, you’re having a very good day.

Tenants and potential tenants shouldn’t have to rely on luck. At the very least, you need to enable a firewall on your computer to protect their data.

By itself, however, even that won’t necessarily keep out a determined hacker. You can add a second level of protection by using only a password-protected Wi-Fi connection, but this may mean keeping a second laptop for use in coffee shops and other public places.

2. Understand the malware factor

Hackers continue to devise new ways to lure you to fake sites and persuade you to click on links that download malware onto your computer. Once their software is past your firewall, only your anti-malware software stands between it and the sensitive information you’re storing. Keep your anti-malware software up-to-date. But even if you do that, there’s no guarantee that hackers aren’t one step ahead of you.

To show how easy it is to lure viewers, software engineer Nick Sweeting created a copycat Equifax site after the data breach. It was so convincing that some Equifax employees were fooled into navigating to it. They were “Rickrolled” (re-directed to a video of Rick Astley singing “Never Gonna Give You Up”) when they clicked on one of the tabs—a favorite internet prank. The stunt underlined the disturbing fact that fake sites can persuade viewers to click through. Those that do could potentially download malware without ever being aware of it.

3. Call the pros

It’s better to hire a lawyer than trying to represent yourself in court. In the same way, you can manage your own files, but it’s better to use an online property management system, the most reliable way to avoid having your data compromised. For example, Cozy protects you in these ways:

  • Transmits data using only the secure HTTPS protocol
  • Limits the amount of data it stores (Cozy never stores the results of background checks or credit card numbers.)
  • Encrypts all data it stores on secure servers
  • Submits to regular audits by third-party firms to ensure security

Cozy also only shares information with trusted third parties as required to provide services, prevent fraud, or satisfy legal requirements. All this security comes with an easy-to-use interface.

4. Go it alone

Property management companies charge a fee for the services they provide. If your budget won’t accommodate that, and you choose to store data yourself, you may find the following tips helpful:

  • Access data only when using a secure, password-protected Wi-Fi network.
  • Install high-quality anti-malware software, and set it to update automatically whenever an update becomes available. Set up a firewall.
  • Set up two-stage authentication. For example, have a verification code sent to your mobile phone whenever you log into your computer.
  • Avoid storing credit card and Social Security numbers. If you must keep them, store the numbers separately from the corresponding names and addresses. This may involve establishing a system to link them, which you should keep in yet another location.
  • Activate a tracking/recovery system, such as Lojack or Find My iPhone. This gives you and law enforcement officials a better chance of recovering your computer if it gets lost or stolen.

5. Take privacy seriously

Landlords must provide a safe and secure place for their tenants to live, and they have a responsibility to protect any sensitive information they collect. The consequences of identity theft can be as devastating as a physical accident. If investigators trace the theft to negligence on the part of a landlord, they could be liable. If you don’t have the time or skill to keep data safe, companies like Cozy can help.

What to consider when buying a foreclosure for a rental property

Written by Sarah Block on . Posted in edited, For Landlords, Income Ideas, Laws & Regulations, Maintenance & Renovations, paid, Rent & Expenses

The lure of a good deal can make some pounce before they think, and foreclosures are no exception.

Let’s say you’re scanning the internet for some hiking boots. As you know, your search history follows you, and a pair of hiking boots pop up in an ad for 50% lower than others. You pounce. You get them in the mail, and they look like a floppy, sad version of what you actually wanted.

That’s what acting too fast on a foreclosure is like. You see a good deal, buy, and find that it wasn’t worth the money.

Related: Save 40%-70% on your next rental property with a pre-foreclosure

Four considerations when buying a foreclosure

Before you buy a foreclosed home as your next rental property investment, consider these four things.

1. Can you view before you buy?

When you find a good deal, it might be tempting to buy sight unseen because of the fear of missing out (FOMO) nagging at your brain. Don’t let FOMO win. Always make time to see your potential investment before you buy, even if you need to travel to see it. No one wants a surprise money pit.

By seeing the property ahead of time, look for the following:

  • The neighborhood. This can tell you what kind of tenants you will likely have.
  • The house. This gives you an idea of what work needs to be done.
  • Area rents. You’ll need to know what rent you are likely to get to determine whether the deal will be worth doing.

2.  How long was it empty?

When homes are unused for a long time, the decay gets worse, not better.

Rodents and bugs infest the house. Plumbing dries up from being unused. Bigger problems could have happened and never noticed like a roof leak, plumbing burst, mold, or vandalism/theft.

If you are purchasing a foreclosure that had been abandoned for some time, it’s even more important to get a thorough inspection before buying. You always want to get an inspection, but when it has been empty for a long period of time, ensure that the inspection dives deep.

Related: Risks of leaving a property vacant

3. Should you find skilled labor before you buy?

With nearly all foreclosures, there will be repairs that need to be completed. You should have a team of tradespeople in place before you buy, and have them review the property with you.

By having trusted tradespeople lined up, you have a better idea of what you are getting into or on whether to pass on the property. Ask them to go to the inspection, and then begin pricing repairs before you purchase. Ask their opinion on whether this is a good investment. A reliable team can help you budget properly, quickly repair the property, and turn a profit faster.

4. Are there any rules I should know?

Foreclosures have different rules than a typical property-buying situation.

Some government programs will not allow a buyer to rent out a property for up to five years. Understand the program you are buying your foreclosure from, and ensure that you are allowed to rent it once you own it.

If there are current tenants, legally, you need to honor their lease in some states. The Helping Families Save Their Homes Act of 2009 requires that all new owners of a foreclosure honor leases of previous tenants if they plan on renting the property.

However, if the new owner plans on living in the property, they are allowed to give the tenants 90 days’ notice. This law expired in 2014, and now tenant’s rights vary by state. In Illinois, tenants still need 90 days’ notice; however, in Wisconsin, they can be evicted immediately.

Related:  Are tenants required to move out during a foreclosure?

Use the same best practices as with any property

The same considerations for any rental property are still valid with a foreclosure.

Before buying, consider the cap rate. What is your predicted rent? Subtract expenses, including expenses to get the property ready to rent, from the annual rental income. Divide that number by the value of the property. A cap rate of 5%-10% shows that the property is a good investment.

The bottom line

Before making the decision to buy a foreclosure as a rental property, know what you are getting into. Landlords need to find tenants, make fixes, collect rent, and have great relationships with your tenants. You’re running a business, so weigh the pros and cons before diving into renting a foreclosure.

Don’t buy the discount hiking boots without doing the research first.

10 landscaping tips to save water

Written by Ruth de Jauregui on . Posted in edited, For Landlords, For Renters, Maintenance & Renovations, paid

Drought, water restrictions, and increasingly expensive water bills should motivate everyone to learn how to save water in a landscape plan.

Whether you’re a landlord or a tenant, there are ways to save water without busting the budget on initial changes. Before beginning any project, review any HOA or city/county restrictions on landscaping. And tenants should always discuss landscaping ideas with the landlord before adding or removing lawn, shrubs, or trees.

5 suggestions for landlords

Implementing water-saving measures can range from repairing a faulty sprinkler system to fully renovating the landscape. Adding plants, shrubs, and trees suited to the local climate reduces the time required to maintain the landscape as well as reducing water usage.

1. Select the right type of grass

Save water by selecting the appropriate grass species for the USDA hardiness zones and environmental conditions. Grasses are divided into cool- and warm-season species. Most grass species require full sun or a minimum of six to eight hours of direct sunlight daily to thrive.

Bluegrass and fine fescues grow well in USDA zones 2 through 7. The fine fescues, Chewings, creeping red, and hard, are better choices than bluegrass due to their drought and shade tolerance.

In USDA zones 6 through 9, zoysiagrass requires the least amount of water. It, like bermudagrass, becomes straw-colored in winter.

Bermudagrass is another tough, spreading grass. It’s found in USDA zones 7 through 10. It is invasive and will take over the flowerbeds if not separated by a barrier—such as concrete edging—and edged regularly.

Related: Top 5 exterior maintenance items to perform before residents move in

2. Use ground covers

Water-saving alternatives to grasses are ground covers and native plants. Replace part or all the lawn with ground covers, preferably natives, which are suited for the site to save water.

Sun-loving miniature daisies, creeping thyme, and blue star creeper cover bare soil while reducing water usage.

In part-sun to shade, easy-maintenance ground covers like ajuga, also known as bugleweed, provide green coverage and flowers. After the ajuga finishes blooming, clean up and rejuvenate the plants by setting the mower at its highest setting and mowing over the fading flowers and foliage. (Avoid Vinca minor, also known as periwinkle and myrtle, and English ivy; both are invasive.)

While people often use decorative rocks as a ground cover, in time they begin to look drab and dusty. In addition, they harbor weed seeds and can develop into a messy expanse of unattractive weeds. Instead, weed cloth covered by organic mulch helps prevent weed growth and slows the evaporation of water from the soil.

3. Practice xeriscaping

Xeriscaping doesn’t mean cactus and bare rocks. The primary focus of xeriscaping is reducing water use. Plant drought-tolerant perennials, shrubs, and trees that may be natives or originated in a similar climate. The plantings might include iris, daffodils, daisies, hardy hibiscus, poppies, salvias, and other flowers that require less water once established in the landscape.

4. Consider installing a drip-watering system with a rain-sensing timer

Each plant, shrub, and tree receives water directly over the rootball according to the plant’s needs with this system. This allows specimen plants that may have higher water needs to receive the correct amount of moisture, while other plants are not overwatered. Set the timer to water in the early morning, between 5 a.m. and 10 a.m., on the city- or HOA-specified days. The rain sensor prevents wasteful watering on rainy days.

5. Inspect existing sprinkler systems

Repair leaks and replace broken or inefficient sprinkler heads. Adjust the sprinklers to ensure that the water lands on the lawn or in the landscape and not on surrounding hardscape, such as sidewalks or the driveway. Add a timer to prevent overwatering.

5 ways tenants can reduce water usage

Tenants have fewer options than landlords, but there are a number of water-saving steps that can reduce the water bill while maintaining the landscape according to the landlord’s or HOA’s rules.

Related: Should a tenant be paid for doing yard work?

1. Water grass deeply in the morning

But water only once or twice a week. Frequent, shallow watering encourages shallow roots. Less frequent watering that moistens the soil to a depth of 6 to 12 inches encourages the grass to develop deeper roots and better withstand drought conditions.

2. Mow the grass at the recommended height

Remove no more than one-third of the lawn’s height at each mowing. Leave grass clippings on the lawn to decompose and return nutrients to the soil. In spring, dethatch the grass, mow, and then rake a thin layer of compost over the grass.

3. Remove weeds from the lawn

Weeds compete with the grass and plantings for water and nutrients. Landscape as soon as they appear. Rake and remove debris under shrubs and trees before adding mulch. Spread 4 inches of mulch over bare soil or landscape fabric, beginning 4 to 6 inches from the trunk to the outer edge of the canopy.

4. Wind soaker hoses through the flower beds and around trees

Do this instead of hand-watering or using a hose end sprinkler to save water. At the spigot, install a simple battery-operated timer set for early morning on the watering days set by the city or HOA.

5. Add compost to a garden

If your landlord approves a vegetable garden:

  • Dig several inches of compost into the garden bed to improve the soil and to increase its ability to drain or hold water, depending on whether it is clay or sandy.
  • Plant the fruits and vegetables at the recommended distances, or consider a square foot garden to increase productivity in a small space.
  • Add trellises to the north side of the garden for peas, beans and cucumbers to save space and keep the fruits off the ground.
  • Use soaker hoses covered with loose organic mulch between the rows to reduce water usage while keeping the soil moist.

Landlords can implement a range of water-saving measures or can completely renovate the landscape to reap the maximum benefits of xeriscaping. Meanwhile, tenants can reduce their water bills by adding easy water-saving steps to their weekly lawn maintenance routines.

A well-kept home with a thriving green landscape is an asset for everyone. It makes the property more desirable, and reducing water use is good for the environment and the checkbook—a win-win.