Property Management Blog - Tips, Articles and Advice from RentingYourHome.com

A recent survey suggested that the #1 reason tenants moved out in 2006 was to purchase their own home. Not much a landlord can do about that. The #5 reason, however, was "Failure To Respond Quickly to Incidents." Now that's something a landlord can fix. The average nationwide turnover costs (vacancy, painting, advertising, listing fees…) are $3,000 so every time a tenant leaves you lose about $3,000 in turnover costs…and it pays to keep good tenants happy.

Digging deeper revealed that 79% of tenants had submitted a maintenance request to the landlord during the year…a surprisingly high number of tenants…and at the end of the year, 32% still had that request outstanding.

You certainly can't tell from the data if these maintenance requests were legitimate. I've received requests to change light bulbs and because they didn't like that the walls were painted with a "flat" paint instead of "eggshell" or "semi-gloss". Hmm, well those weren't legitimate requests. But, maybe we can do a better job of responding to requests from tenants even if that just means closing the issue out.

One of the best ways to communicate about maintenance with tenants is to use a formal maintenance request system, whether that's through RentingYourHome, another service, or just by using paper "Work Orders". These systems provide a number of advantages to the landlord:

1. Written records better support Schedule C/E tax deductions at tax time
2. Written records enable you to prioritize maintenance records — and help tenants better understand how quickly you'll respond. For example, a request marked "Emergency" should get immediate response, whereas a "Routine" request has more flexibility.
3. By writing "Closed" on a maintenance request when the work is done and sending a copy back to the tenant, it's clear that the issue is resolved from your perspective.
4. Written communication clarifies what each party expects of the other. Any time you reduce confusion, you have a better chance of making people happy.

So, if you don't have a system in place, start using one. We provide a free trial and can also provide a free "Work Order" form if you still like to use paper. Manage your maintenance better and eliminate the #5 reason for tenants moving away!

I spent half the morning in the Somerville, MA small claims court, suing a broker who'd decided not to pay his debts. I'm not a court newbie, but I don't find myself there often and I was reminded again how much of small claims court proceedings (and life too) is just about showing up. About 75% of the cases were concluded on the spot, with no discussion, in favor of the one side that showed up. My guy didn't show and we chalked up another "win" for our side.

As a landlord, we often get caught up in "he-said, she-said" arguments over rent payments, damage to the property, and security deposits. The great thing about small claims court is that it's simple, you don't need a lawyer, filing fees are around $40, and most of the time the other side doesn't show and you win. Claims are capped at an amount that varies by state but usually around $2,000-$5,000, which is enough to cover most landlord disagreements.

I'm also a big fan of the "multiple fronts" theory of debt collection. Not only do we employ a professional debt collection company as soon as a debt is 30 days+ old, I'll file in small claims court, AND pursue an eviction if that's applicable. This gets the issue immediately reported on their credit reports (debt collection company), and gives you multiple chances to win in court–either money in small claims court, or them out of the property so you can stop housing them rent-free. Most of the time, bringing the full force against a tenant enables you to negotiate a settlement, e.g. "Tell you what, you owe me $1,000 but if you give me $250 and move out by next week, I'll drop the whole thing."

If you've never been to small claims court, I'd recommend you spend a half day there. Same for housing court. No question that it's a dreadful experience. But, you get a great sense of the process, how few people show up to their own court dates, and what kinds of excuses the judges hear every single day. Nobody likes to end up in court but it's best to be prepared.

As I was reading through today's headlines, news stories, and landlord blogs, I found it striking how many landlords are in a precarious situation right now. Many folks kind of fell into being a landlord–that's certainly how I started. Literally the day after I bought my very first house to live in, I got military orders that ordered me to move within 4 weeks so I just packed everything right back onto the truck and headed off to my next duty station. Bang! That's how I got my first rental.

Now with the credit crisis and plummeting home prices, a lot of accidental landlords who assumed that if things went sour they could just sell the property and be done with it are finding that's not easy to do without taking a huge loss. Owners who are "upside down" on their mortgages owe more than the home is worth and would literally have to pay someone to take the property off their hands.

The only good news here is that average rents are rising in a lot of markets, which gives us some hope for income. Websites like Hotpads, Trulia and Rentomatic are great tools for landlords to make sure they're collecting current market rents. (if you haven't checked your rent rates in a while, now's a great time to do so). And the still-low Adjustable Rate Mortgage (ARM) rates give landlords temporary relief on the cost side.

If you're in a pickle, let us know what you're doing to stay afloat or where you need help!

(Yes, I realize the graph is of the Canadian dollar's exchange rate over time…I couldn't find a nice credit crisis graph quickly, but hey, you get the idea right?)

Checklists are used to establish a baseline of damage to a rental. When the tenant moves out, damage is again assessed on the same checklist to determine what, if anything, changes exist that need to be repaired or replaced. Landlords use move-in checklists both to monitor the condition of the home, and to fairly assign damage expenses to tenants.

Typically, a tenant has 7 days after move-in to fill out a checklist and return it to you in order to document any damage to the rental, but each state has specific timelines. Make sure the tenant signs a copy of the checklist and retain it for your records until after move-out. If you do not use a move-in checklist, it becomes very difficult to validate in court whether a tenant was responsible for any specific damage to the rental, since there would be no documented baseline. Taking video or still photos of the rental both before and afterwards is also a great idea to protect your interests.

Here's a typical courtroom scenario where there is NO checklist:

Judge: Mr. Tenant, did you punch a hole in the wall?

Tenant: No Sir. I've never caused any damage. I don't even have fists to punch with!

Judge: Mr./Ms. Landlord what evidence do you have that the tenant committed this specific damage?

Landlord: Um…I remember what it looked like before…

Judge: Do you have any proof?

Landlord: Nope. Just what I remember.

Judge: Well, you've shown no proof that the tenant caused any damage. Case dismissed in favor of the Tenant.

Or, if you have a checklist, video and still photos:

Judge: Mr. Tenant, did you punch a hole in the wall?

Tenant: No Sir. I've never caused any damage. I don't even have fists to punch with!

Judge: Mr./Ms. Landlord what evidence do you have that the tenant committed this specific damage?

Landlord: Well, here's a video of that same room prior to the tenant's moving in. You can see the room is freshly painted and there are no holes in the wall. Here's a copy of the move-in checklist where the tenant certifies there is no damage; please note the checkbox next to "Walls = No problems / Great Shape". And, Your Honor, the tenant's hand is in a cast.

Judge: Case decided in favor of the landlord.

Often times, applicants will forget to:

1. sign hard copy applications,
2. correctly print their date of birth
3. correctly print their social security number, or
4. complete the entire application.

In addition, we've seen a number of rental applications that don't explicitly ask the tenant's permission to run a credit check. Without that kind of a statement, you may not have legal authorization to run their credit. The rules on running credit checks changed in 2006-2007; they're getting harder. If you can't prove that you've been given authorization to run a tenant's credit, you may be violating the Fair Credit Reporting Act (FCRA).

When doing background checks on prospects most former landlords and professional property managers will require that you provide proof that you've been given authorization to run background checks before they'll share past rental history. A signed rental application with necessary authorization is what they're looking for.

So, when you take a rental application, make sure to triple check for the required information before a prospect leaves. And always, always get their signature authorizing you to conduct a background check on their behalf.

Are the days of rotten real estate agent post cards finally gone?

According to that same California Association of Realtors study this year, only 1 percent of buyers/renters who search real estate online (which is nearly 80 percent of all buyers/renters) said they found their real estate agent through that agent's marketing materials. The rest found them primarily on the Internet. Wow!

That's a LOT of agent marketing dollars down the drain, not that it's a big surprise. For years, agents have been sending us fridge magnets with hazy head shots, fuzzy pens, doodle pads, and all kinds of crap that has nothing to do with real estate. I've often wondered what conclusion I'm supposed to draw from an 8.5×11 calendar with the agent's giant face pasted on it. Why would this make me want to give you $10,000?

No offense to this guy, but if I never see his face on a postcard again, that'll be just fine by me.

Anyhow, I read that statistic and had a good, hearty laugh. That industry is changing dramatically.

This article in the NY Times today reminds me that zoning laws can change in a heartbeat and, when they do, they can have a dramatic impact on a landlord.

To the extent that it's possible, if you're a gung-ho landlord, you may consider signing up for RSS feeds or newsletters that will inform you of proposed zoning law changes. They typically have pre-decision hearings where landlords can plead their case.

Tough luck for these folks.

The things that make up your credit score are pretty straightforward and it doesn't take a "Fix Your Credit With Us" agency to do the basic repairs yourself. Here are the components:

1. High outstanding debts - keep balances low on credit cards and other revolving credit. One ratio the agencies look at is the level of actual debt versus available debt. In other words, if you have available credit of $19,000 on your credit cards, it is bad to have an actual balance of $18,900 on those cards. Having $1,000 or less is much better.
2. Late payments - note that paying off late / collection accounts will not remove them from your report. These accounts will stay on for seven years unless you get a letter of deletion from the collector.
3. New accounts - If you have been managing credit for a short time, do not open too many new accounts too rapidly

Help your tenants to manage these three pieces of their credit and you'll be doing them a great service. Not only are you teaming with them to provide a home, you'll be helping them build a better life.

A FICO score is current industry standard ranking for how likely a person is to pay their debts on time. Scores range from 440 (terrible credit) to 800 (perfect credit). The components of FICO are:

• Payment History - 35%,
• Amounts Owed - 30%,
• Length of Credit History - 15%,
• New Credit - 10%, and
• Types of Credit Used - 10%.

The bottom line here is that to get a good credit score, you do actually have to have credit. The FICO score is being phased out of the industry in favor of new risk-ranking techniques, but a lot of people still use them. In general, they just help to indicate how good a person is at paying off the debts they agree to pay.

Many renters are under the impression that their landlord's policy covers their belongings as well. Unfortunately that's not the case, and they often don't find that out until the worst possible time, after a disaster or a robbery. Your (landlord) fire policy doesn't cover any personal property owned by the renter. The only exception to this would be if the loss was caused by negligence on the part of you as landlord.

The purpose of Renters insurance is to provide the renter with a quick and relatively painless recovery from disaster. These policies are designed to reimburse the renter in the event of a loss to their personal property and to protect the renter in the event they are responsible for bodily injury or property damage to others. It is available for all kinds of rental housing.

If the renter has visitors to your apartment and someone slips on a wet kitchen floor and breaks an arm, who is responsible for the medical costs? In most circumstances the renter is but if they don't have insurance, they often look to the landlord to cover expenses. The last thing you need as a landlord is a lawsuit. If the apartment is robbed and the tenant doesn't have insurance, they're likely to see reimbursement from the landlord–warranted or not, fighting with tenants over money isn't fun and it isn't productive.

Renters insurance provides "named peril" coverage, meaning the policy states specifically what you are insured against. Some named perils include Fire or Lightning, Smoke, Vandalism or Malicious Mischief, Theft, Accidental Discharge of Water and 10 or more others. Liability coverage also includes Medical Payments coverage, which applies to nonresidents of the insured premises. This coverage pays for the actual medical expenses incurred up to the limit for a on-resident guest.

Always read the Renter's insurance contract for specific explanations of coverage and exclusions. The top three criteria for renter's insurance are:

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