Be an ethical landlord

Written by Chris Deziel on . Posted in edited, ethics, For Landlords, landlord, Landlord Tips, paid, Step 10 - Repair & Maintain

communicationWhen a landlord has high standards, renters enjoy peace of mind. They know their comfort, safety, and happiness are important.

In return, an ethical landlord enjoys the benefits of happy renters who are more likely to treat the property with care and respect…and stay longer. And that’s good for business.

An ethical landlord has a mission: to supply comfortable and safe housing for a fair price. Here are the traits and practices you should adopt if you want to take this mission seriously.

1. Be accessible and responsive

Whether it’s noisy neighbors, a plumbing leak, or a fallen tree, problems happen. When one arises, renters need to know whom to call. And when they make the call, someone should answer. An ethical landlord will rarely have renters say, “I’ve been trying to get hold of the landlord, but no luck.” Even if it’s a problem you can’t fix immediately, such as rude neighbors, make it clear that you’ve heard your renters’ concerns, and you’ll take appropriate action.

Related:

3 must-learn landlord communication lessons

How to handle noise complaints from neighbors

Noisy neighbors drive me crazy. Now what?

2. Do maintenance right away

When things go wrong, renters’ lives are affected until those problems are fixed. An ethical landlord takes care of problems, whether they are leaks or toilet clogs, as soon as possible. If you can’t respond yourself, have a professional relationship with a local maintenance contractor who can respond on your behalf. It’s not a bad idea to develop a network of tradespeople to ensure that one contractor’s full schedule doesn’t prevent repairs from happening quickly.

Related: How to build a little black book of contractors

3. Set clear boundaries, but be flexible

Tenants have the right to enjoy your property, but they should never lose sight of the fact that it’s yours. The best place to assert this is in the lease, where you spell out your preferences and any rules you want tenants to follow. They’ll appreciate learning these rules before they sign the document, rather than after they’ve become settled.

An ethical landlord recognizes that life is unpredictable and can bend the rules when the situation calls for it. As the saying goes, “stuff happens.”

Related:

Compassion after the storm: Four ways to be there for tenants

7 extraordinary lease clauses I can’t live without

4. Be fair with money

You’re trying to run a business, but don’t gouge people. Besides, if your rents are too high, you’ll probably have difficulty renting your place. Research rental prices so you know what your property is worth on the rental market. A great tool for doing this is a Cozy Rent Estimate report. Set prices in a way that keeps you in the black without creating hardships for your renters.

Charge a security deposit—that’s standard practice—and return it in a timely manner to renters who fulfill the requirements for getting it back. If you need to keep some or all of it, give tenants’ an itemized list of charges.

Related: How to set the perfect rent price for your rental properties

5. Keep good records

When disputes arise over the condition of appliances or structural issues, you’ll be on firmer ground if you have clear records. Those records should include the dates when appliances were bought or serviced, dated statements from property inspectors, and invoices from maintenance and repair pros. When in doubt about whether damage is due to normal wear and tear or to renters’ negligence, those records can help avoid “your word against theirs” scenarios and keep you on the moral high ground. Besides maintenance history, your records should include a move-in checklist.

Related: 10 documents every landlord should keep on file

6. Keep renters in the loop

Good communication involves more than just being responsive. You should also be proactive when you become aware of issues that will affect renters in the future. Whether it’s a hike in the gas bill or the rent or an impending improvement project, renters appreciate knowing about it as far in advance as possible so they can be prepared.

7. Respect privacy

An ethical landlord doesn’t place property ownership above respect for privacy. Local laws may allow you to enter a renter’s home to perform inspections or repairs, but you should never do so unannounced. Make an appointment. That way, renters can be prepared for you, and they won’t feel violated.

Related: Can a landlord enter the property whenever they want?

8. Be careful with private information

When renters sign the lease, they entrust you with sensitive information, such as Social Security numbers. Abusing this information or losing it through carelessness is a violation of privacy, even though you may do it inadvertently. Taking care of that information by storing it safely, and using it only when necessary, shows your respect for privacy. If you keep the information on a computer, make sure the files are protected by a firewall. Better yet, store sensitive files on an external drive.

In a nutshell

When landlords maintain high ethical standards, it’s a win-win-win for landlords, renters, and the community at large. Not to mention it’s also good for business.

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

Written by Samantha Clark on . Posted in edited, For Landlords, paid, Rent & Expenses

communicationEvery landlord needs to know how to price their rental property. Listing the rent too high or too low can result in money lost, but finding the right balance between the two is tricky.

You don’t want to charge too much and risk the unit staying vacant, but you also don’t want to cheat yourself by not charging enough. Fortunately, when you stay up-to-date on rental prices, you’ll know what to charge appropriately every time.

No matter how big or small your business, it’s always a good idea to stay up-to-date on rental prices. Knowing the rental market ensures you’re earning maximum profit with the least amount of stress.

As you determine the right rental price, you might find that you need to raise the rent. Doing so can be stressful if you’re worried about your tenants fighting the price increase. The good news is raising rent is easier than you think as long as you give your tenants enough notice and gradually increase the rent at each lease renewal period.

Related: How to raise the rent in 4 easy steps

If your research suggests that you should possibly decrease rent, only do so if you’re having trouble renting out the unit or if your tenants don’t usually renew their lease. Here are three ways to stay up-to-date on rental prices.

1. Get a Cozy Rent Estimate report

Cozy’s Rent Estimate reports give you a detailed estimate on how much to charge for rent, which takes away the guesswork. Instead of spending a few hours doing the research yourself, these reports give you a recommended rent price so you can stay competitive with other properties.

Rent Estimate reports calculate the recommended rent price by comparing actual rents charged in your rental’s area, and you get that info in the report. The Rent reports also include other key info about your rental, including localized vacancy rates, county rent trends, and other investor metrics. These data points will help you ake informed decisions about pricing and marketing your rental.

2. Join your local landlord’s association

Your local landlord’s association is an organization within your town or city made up of other landlords, property owners, and investors. Joining can be beneficial to your business in a number of ways. You can network with landlords, stay updated on new eviction procedures, and get information on properties for sale. You’ll also get access to resources like tenant screening services, rent collection services, and credit reporting services.

Being a member of your local landlord’s association is a great way to stay up-to-date on rental prices. You can reach out to other landlords within the association who have properties in your neighborhood and get advice on how much to charge. Asking around will give you most of the information you need for rental prices, and you’ll build relationships in the process.

If you’re not sure how to find your local landlord’s association, Landlordology has a search tool that finds one for you. In case there isn’t a landlord’s association in your area, there are other resources out there. Another alternative is joining online landlord forums to answer your questions and get information about rental prices.

3. Conduct research

It’s simple to do a little research around your neighborhood without leaving your desk. You can start by calling other apartment building managers or landlords of other rental homes nearby and asking what their rates are. Also, sites like Craigslist and Apartments.com can give you a good idea of what rent is going for with properties similar to yours. Pay attention to what prices are going for in your neighborhood compared to what landlords are asking (and hoping!) to get.

But keep in mind, just because landlords are asking for a certain price doesn’t mean tenants are willing to pay that much. Sometimes landlords list a higher rent as a test to see if people are interested. So take caution when you are researching, and make sure to find at least three other properties that are similar to yours to compare to. Looking at three other properties instead of just one gives you an average of what your property is renting for.

With these tips, staying updated on rental prices doesn’t have to be difficult. Some people don’t do any research at all and end up losing money, even though there are simple resources out there. Take the right steps, and you can avoid missing out on the best possible rent price.

Spring maintenance checklist for landlords

Written by Chris Deziel on . Posted in edited, For Landlords, Maintenance & Renovations, paid, rental maintenance, spring, Step 10 - Repair & Maintain

communicationWhen March goes out like a lamb, it’s time for landlords and tenants to look at property matters that developed during winter’s deep freeze.

Spring maintenance items that affect habitability are most important, but it’s also the best time to address small defects that could turn into big ones, if they’re left unaddressed. Summer is coming, the best season to make repairs.

Warming temperatures create a good opportunity for landlords and property managers to inspect rental units and make a plan for spring maintenance. Tenants could handle some of the maintenance—especially in the yard or garden—but leaks, burst pipes, and other problems that affect habitability most likely need professional attention.

Related: 8 home repair tasks every landlord should learn how to do

Exterior inspection

Walk around the property to see the extent of winter damage. On this walk, try to do the following:

  • Check the roof and siding for deterioration. You don’t have to get on a ladder to see roof damage. Missing or broken shingles are usually visible from the ground.
  • Look for gutter leaks. Ice and snow are hard on gutters, and any leak you see should be repaired as soon as possible to prevent damage to the siding or erosion around the foundation.
  • Test the outdoor faucets. If water froze in the pipes, they may leak.
  • Inspect the walkways and driveway for cracks. This could happen from earth movements during freezing weather. These cracks need to be repaired or water will seep through them and cause further erosion.
  • Note any rot. Look on wood siding, trim, fences, or decking. A small amount of rot isn’t an urgent problem, but if the rot is extensive, now is the time to deal with it.
  • Pay attention to the condition of the lawn, garden, and surrounding foliage. Spring is the best time to prune back any branches that threaten to block windows or overhang the roof later in the summer.

Related: How to easily track maintenance requests and repairs

Interior inspection

If winter weather has caused any interior damage, tenants will probably know about it, but they might not let you know. It’s a good idea for a landlord or property manager to do a quick walkthrough to check a few things:

  • Assess the damage caused by roof or siding leaks. This could range from soggy drywall and mold to warped flooring or compromised electrical fixtures.
  • Note the condition of the floors and carpet. People tend to track salt-laden snow through the house on cold winter days.
  • Turn on the air conditioners. You want to make sure they work. Now is a good time to replace the filters.
  • Check for pests. Look for termites, cockroaches, and rodents. Critters tend to hunker down in the walls during winter, and they’ll still be there when spring comes.

Related: Ask Lucas 030: How do you perform an annual property inspection?

Handling spring maintenance

When it comes to repairs that affect habitability, such as major leaks and resultant water damage, it’s the landlord’s responsibility to do them or hire someone to do them.

The responsibility isn’t as clear-cut when it comes to defects that only affect the tenant’s enjoyment of the property. Peeling paint and displaced walkway pavers may be unsightly, for example, but they don’t stop life from going on. It may make sense to give tenants the option to make some of these repairs themselves. To avoid confusion over the issue of who’s going to pay, include a lease clause or amendment that covers it.

Lawn and garden maintenance is one area that the lease should cover. Many tenants like landscaping and may even consider a green light to do it themselves a perk of living on the property. But other tenants prefer this job be done for them. Landlords might consider charging more per month if they need to provide landscaping services.

General indoor cleaning is another lease topic for areas such as hardwood floors (that can suffer damage from salt and water), an unfinished basement, and the fireplace or wood stove. Whether it’s spring maintenance or year-round maintenance, it helps to clarify responsibilities in writing.

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

Get your game on

Once you’ve made your game plan, itemize the repairs you need to make with some urgency, and take care of those as soon as possible. Leave the others for later, but keep the list as a reminder. Priorities tend to change as the weather warms up and summer arrives, but winter will come again, and problems you don’t handle this year will be there next year. And they’ll be that much bigger.

 

How to rent your former home

Written by Laura Agadoni on . Posted in edited, For Landlords, paid, Rental Advertising, Step 2 - Find & Buy a Property

communicationRenting your former home will be easy, right? You know all there is to know about the house, so showing it to renters should be a snap. But something could get in the way of your success …

Your emotions.

That’s right. If you spent any amount of time living in your home, you probably have an emotional connection with it.

But if you plan to rent your former residence, even though you’ll still own the home, you’ll need to emotionally detach from it. It may still be your house, but it’s not your home anymore. And there’s a big difference between the two.

What used to be your residence—your home—is now your investment (rental) property. Here’s how to transition from a home you loved to a house that’s strictly for business.

1. Hold onto memories

You probably have some fond memories of your home—family gatherings, growing a backyard garden, hosting dinner parties, etc. You will always have your remembrances, and you should cherish them.

Appreciate that you have feelings for the home. That’s huge, so just sit with that for a bit. Understanding and getting in touch with your feelings should help you achieve your goal, which is renting the property.

To successfully rent your home, however, you need to get into the right mindset, and let go of your home. Otherwise, you might subconsciously sabotage your efforts of renting the place.

How? Here’s one way: Since it’s your home, you likely think it’s worth more than it really is. So you might ask too much for rent. By doing so, you might have a difficult time finding a renter.

Tip: Use a Cozy Rent Estimate report to help you determine the right amount to charge for rent.

Related: How to set the rent price for your rental properties

2. Set a numeric goal

Run the numbers to see the potential for making money from your former home. Being able to count on clearing an extra $500 or $1,000 a month, for example, should make it easier to help you view your former home as a business.

3. Picture what it will be like

Visualize renters living in what used to be your home to get used to the idea. Don’t be territorial. As soon as you get a signed lease or a month-to-month commitment—and first month’s rent and security deposit, of course—get comfortable with the idea that you no longer have access to the home as you once did. Let your tenants live in peace. This is the law, by the way. It’s called giving your tenants “quiet enjoyment” of the premises.

Note: You should always be able to enter your house. You, therefore, need a key to get in. It’s wise to change the locks before a tenant moves in and to keep a key for yourself.

Related: Lock lock, who’s there? The rules for changing locks

You can show up at the property for the following reasons:

  • Emergency situations (no notice needed)
  • To make regular maintenance and safety checks (with notice)
  • To show the property for sale or rent (with notice)
  • To make repairs (with notice)
  • To check on the property if the tenant will be away for an extended time

Make sure you have a section in your lease that lists the times you can enter.

4. Neutralize the home

You probably have personal touches around the home, what people on HGTV refer to as “putting on their stamp.” That red dining room or bright blue child’s room might have made you happy, but you must move on if you want to rent the place. Neutralize your home, and remove your “stamp.”

Why? Two reasons:

  1. Neutralizing the home helps you detach from it. It will seem less like your home and more like a home.
  2. You make the house show ready by neutralizing it.

Here’s how:

  • Remove all your personal belongings and furnishings
  • Clean it
  • Paint neutral colors
  • Repair all the quirky stuff you became used to (leaky faucets, doors that don’t close all the way, stuck drawers, dated light fixtures)

5. Advertise the house for rent

Once you’re emotionally ready and the house is physically ready to show, advertise it. I use Cozy, Apartments.com, and Craigslist to get this done. Once you start receiving interest, set up some showings. Be sure to screen tenants by requiring a credit and background check. (I use Cozy to get that done.) Then interview people who meet your criteria.

6. Stay away after you have a renter

No matter how tempted you may be to stop by the house and let yourself in, don’t do it. Once you’ve accepted money from someone, you no longer have the right to come into your house whenever you please. There are times when you will need to come over, but make sure you do this the right way.

This article explains how: Can a landlord enter the property whenever they want?

The bottom line

It can be difficult to turn what was once your home into an investment property. But after the initial difficulties, you will appreciate that extra money your house brings in and learn to let go of your former home.

3 signs it’s time to sell your investment property

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

communicationI had to make a tough decision. Was it time to sell my investment property?

As I’m writing this, my condo—and very first real estate investment—just went on the market. I had to say bye to that memory-filled investment to say hello to a new investment: one that is actually profitable. (Who buys a property in a real estate bubble? Me.)

What made me make the decision? How did I choose to say so-long to my always-rented property? The process started when I became a writer for Landlordology. I realized that while my condo’s always rented, and someone else was making the mortgage payments, the property wasn’t checking all the boxes for a good real estate investment.

What makes a good real estate investment?

While it’s easy to get carried away in the fun of starting a real estate business, it is important to pay close attention to know that your investment is a good one. Sometimes the signs are not so obvious that the property is a bad fit. So, what makes a good investment?

1. Your rental property is cash positive each month.  

The first thing you want to do when choosing a rental property is to determine the potential cash flow. To do this, use sites like Apartment.com, Redfin, WalkScore, and—of course—Cozy, to research the rental price. Now, look at the principal, interest, property tax, and insurance (PITI) per month. Subtract your rental estimate from your PITI. Is there positive cash flow? This is the first factor in a good investment.

2.  It’s in a high-demand rental community.

Location, location, location. We’ve all heard it, and it’s true. Renters flock to areas that are desirable. Look for properties that are walkable, have public transportation, shopping, beach, or are near popular destinations. For example, my rental properties are near Northwestern University with public transit to Chicago, the beach, and shopping. Universities with a high graduate population have great potential for rental properties. While the tenant turnover will be higher than other areas, there is always demand. Last, look at areas that will be hot soon. Certain areas price people out of the market, so renters move to another location that is nearby.

3.  You can easily manage the property.

If you are a Dave Ramsey fan, you know he always says to stay close to your rental properties. This makes managing your rental property easy. However, if your property is not so close, it gets tricky. A good real estate investment is close to where you live, low maintenance, and offers an easy system for managing your property and tenants. For example, let’s say you have a single-family home you rent out that is 10 years old and 10 miles from your home. The property management can be simple. Hire a lawn care service, a maintenance person, and use Cozy for collecting rent online and communicating with your tenants about maintenance requests. Now, if the property is high maintenance or hard to rent—that’s another story.

Related: When to sell your rental property

When should I sell my real estate investment?

While you should think of real estate investments like the stock market (buy and hold), sometimes the signs are there that it’s time to sell and reinvest or get out of the real estate game completely. Whatever makes you happy. Here are the surefire signs that it’s time to sell.

 1. Cash flow is consistently negative.

The No. 1 reason to choose a property to invest in is positive cash flow each month. When it’s negative, it’s time to sell. My first rental property was an accident. We bought a new house and couldn’t sell the old one. Because of this, checking the cap rate and PITI was not part of our “strategy” (read:  there was no strategy) for choosing an investment property. We fell into it, and from that first month, August of 2011, it has had negative cash flow. Negative cash flow is the first sign your rental property may not be meant to be. Consider moving back into it or selling it.

2. You’re a remote landlord.

When I began my landlord journey, I was only a few blocks from one rental property and lived in the other (a three-flat). Managing my property was easy. However, I sold the property I lived in, and now live 35 miles from my other property. I no longer had a relationship with my tenants. Showings were impossible. I felt panicked about maintenance requests. It wasn’t easy. If you’re moving away from your rental property, think about selling it and buying local. The property will be easier to manage, and you’ll have more control over your investment.

3. The cap rate has changed.

A cap rate is the income-expenses/value. The goal is to keep the cap rate between 5% and 10%. Generally, property investors determine the cap rate when choosing an investment property. However, if you are on the fence about whether to keep or sell a rental property, you should revisit this equation. Several changes can occur during the life of ownership that can turn a good cap rate bad. Did property taxes go up? Did the rental market in the area go down? Is maintenance more than expected? Are the utilities higher than you originally thought? Add up your monthly expenses over the year, and subtract that from your annual income from the property. Divide this number by the current value. If the percentage is less than 5%, you may want to consider selling.

Real estate investing can be lucrative, and the buy-and-hold strategy is typically best. However, sometimes you need to take a hard look at your investments and ask yourself, “Does this investment still make sense?” That’s what I did, and in the end, it didn’t make sense for me own my property anymore. Once you let go of a property that isn’t working for you, you can move onto the next property investment!

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