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

Just got back from this year's Greenbuild conference, an absolutely HUGE annual builder's conference, this year in Boston, MA. There were probably 1,000 vendors selling everything from flooring, to rain barrels, to reusable shingles, concrete, desks, automated homes…you name it.

For a bunch of stuff, my wife turned to me and said, "Is that really eco-friendly?" Probably not.

Which boils down to one thing: call something "Eco" or "Green" and it sells.

So this year, I'm becoming the first "Green, Eco-friendly Landlord". Just ask me what I've done to go green and I'll get into the weeds about the flyash content of my cinder blocks. I'll talk about the eco-friendly asbestos and plaster I use. Will you buy it?

Apparently most people would.

There is a high demand for smoke-free apartment buildings. And, while smoking rates continue to drop off rapidly over the past decade, and public opinion turns - rightly or wrongly - against the remaining smokers, landlords can use this to their advantage.

If you use a No Smoking Lease Addendum and enforce it, consider advertising your property with the tag line "Smoke Free". It gets a surprisingly strong positive response and helps to distinguish your rental from others.

You are normally allowed to deduct expenses for damage to the property, unpaid rents, and unpaid late fees. Some states allow landlords to deduct professional cleaning expenses, carpet cleaners, painters, and handymen. Landlords may deduct labor expenses for hired labor but not for their own time spent repairing rentals. Each deduction must be accompanied by a receipt or an estimate and provided to the tenant. State laws vary and you should consult your state-specific requirements.

You can learn more about your state's security deposit laws in the IREM Data Sheet here.

Landlord insurance is often referred to as a "fire policy" by mortgage companies. It covers the structure of the building and can either insure the cash value or replacement value of the property. Replacement value offers a better level of coverage over the long haul, but it also costs a bit more. Fire policies do not cover the personal effects inside or around a rental property like the tenant's clothes, computers, car, etc.

In general, a fire policy on a single family home in the countryside is going to be much cheaper than general homeowner's insurance. For one property in Virginia, I pay about $300 a year for my fire policy and used to pay around $1,200 for a homeowner's policy on a similar home.

There are other types of insurance too, including umbrella policies. A good, all around insurance agent should be able to explain the many different kinds of insurance and find something that fits your situation.

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!

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.

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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Read an article this morning I had to share.

I was trying to get rid of some roaches and I didn't want to bother the landlord so I went to the store and bought some of those pest-control foggers. Something went wrong and they created an explosion that blew my patio doors off the hinges and shattered the master bedroom window…

Who knew those bug bombs were that explosive? Ultimately, the renter doesn't have insurance and wants a free pass. The funny part to me is when she says "something" went wrong…what are the chances she left the fogger on a furnace or oil burner? Just guessing, but I bet a closer look reveals a "Darwin Award" moment…

A lot of landlords — and potential landlords — are under the impression that you need to live close to a rental property. While that helps you manage showings and maintenance, there is a flip side, too. Restricting yourself to buying and managing rentals within close proximity greatly reduces your investment options, e.g. the best rental deals may not be in downtown NYC or in cow country in Superior, WI (my hometown). If you go where the best deals are, instead of limiting yourself to whatever's closest, you're more likely to find cash flow positive rental properties. But how do you do it?

Many landlords live in different cities or states from their rentals; if you do, then know you are not alone! With a little preparation you can assemble a quality team, deliver a great rental service, and cut costs at the same time.

In general, this is a tradeoff between cost and convenience. Anything is possible if you have only a few rentals but if you're managing 100 or more, then you'll need a system with full time professionals.

You can use any of the following solutions…

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Wear and Tear Guidelines put down on paper your expectations for the condition of the rental property when a tenant leaves at the end of the lease. It is important to clearly state what constitutes actual damage to the rental versus what constitutes normal wear and tear because you will likely be charging the tenant for actual damages to the property, but state and local law does not allow you to charge for items that are everyday wear and tear. An example: slightly worn carpet on the stairs may be wear and tear (something that happens naturally over time).

The best way to avoid problems with the return of a security deposit is to provide tenants with a move-in checklist at move in; then, provide them a copy of the Wear & Tear guidelines (sample copy).