Tag Archives: landlords

Top 10 Pain Points for Landlords and How to Fix Them

Rent, property taxes, insurance

Being a landlord can be incredibly profitable, but also very difficult at times.

I don’t know about you, but my properties aren’t exactly on Easy Street.

Over the last 10 years, I’ve experienced many of the issues that plague owners, and cast fear into the hearts of wanna-be landlords.

Through endless reading, trial and error, and tenant feedback, I’ve learned that almost every rental problem has a solution.

Based on my experience, here are the top 10 pain points that most landlords will eventually experience, along with ways to fix or prevent them.

1. Loss of Rent/Income

  • Vacancy
  • Rent Default (Tenant Stops Paying)
  • Tenant Hold-over (Tenant Won’t Leave and Won’t Pay Rent)

Solutions:

  • To reduce vacancy, start listing your units for rent 60 days prior to the end of the current lease.
  • Screen your tenants better – make sure you don’t let a deadbeat or a scammer into your property.
  • Terminate the lease immediately for nonpayment – with proper notice for your state, of course.
  • Learn about your local eviction process, and be ready to file the paperwork immediately after lease termination.

2. Eviction

  • Court Costs of Eviction
  • Strict Legal Rules for Eviction
  • Tenant Retaliation by Damaging the Property

Solutions:

  • Require a large security deposit (1-2 month’s worth of rent, depending on what is allowed in your state) at the beginning of the lease to alleviate potential expenses of court costs and damages.
  • Learn about your local eviction process, and be ready to file the paperwork immediately after lease termination.
  • Include a clause in your lease that mandates court costs and attorney’s fees be paid by the prevailing party.

3. Stress of Property Management

  • Cleanliness of Tenants
  • Unintentional/Intentional Destruction of Property
  • Illegal Drug Use
  • Lawsuits
  • Chasing Down/Collecting Rent
  • Tenants Lying to You
  • Noise and Nuisance Complaints
  • Dealing with Disgruntled Neighbors of Your Rental
  • Police/Domestic Violence Issues
  • Ensuring Tenant Satisfaction
  • Ensuring an Unbiased and Fair Screening Process

Solutions:

  • Find a rock-solid lease and stick to it.
  • Stop by or drive by the property at least once a month.
  • List the tenant’s cleaning responsibilities in the lease.
  • Put everything in writing (or email).
  • Ask the neighbors to call you first, whenever there is an issue.
  • Don’t be afraid to call the police.
  • Find a local landlord-tenant lawyer and build a friendship with him or her, before you actually need an attorney.
  • Use an automated tool, such as Cozy, to accept applications, screen tenants, and collect rent online.

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4. Stress on Personal Life/Relationships

  • Spouse or Partner Worried About Finances
  • Always Being On-call for Rental Issues

Solutions:

  • Include your spouse or partner in the financial decisions and respect their opinion.
  • Keep a three- to six-month emergency (or vacancy) fund for each property. Yes, it takes a while to build that up, but you’ll sleep better.
  • Ask your tenants to report issues via email or text, which only takes a second to review. If it’s urgent, you can deal with it immediately.

5. Tenant Turnover

  • Trying to Find a New Tenant
  • Cleaning up After a Previous Tenant
  • Feeling of Rejection When Prospective Renters Don’t Want to Rent Your Place
  • Exhaustion from Showing a Unit Week After Week
  • Handling, Storing and Disposing of Abandoned Personal Property

Solutions:

  • When looking for new tenants start early, while the unit is still occupied.
  • List your units for rent 60 days prior to the end of the current lease.
  • Refresh your listing on Craigslist every three to five days.
  • Don’t sweat the clean-up, just hire a maid service and deduct the cost from the deposit (excluding normal wear and tear).
  • Schedule showings back-to-back, every 30 minutes, in a four-hour block on a Saturday. I call this “The Landlord’s Open House.”

6. Repairs

  • Knowing When to Do It Yourself and When to Hire a Pro
  • Finding and Evaluating Qualified Contractors

Solutions:

  • Create a handy tool bucket that you can keep in your trunk.
  • Your rentals will provide great opportunities to learn basic handyman skills, but don’t get in over your head. I’ve made small leaks much worse because I didn’t know what I was doing.
  • Buy an all-purpose DIY book, and skim through it regularly. Keep it in your car, so you always have it nearby.
  • Ask to observe every service professional that comes to your property. You’ll learn a lot through observation.
  • Research contractors on Angie’s List, Handy (formerly Handybook), Yelp, and the Better Business Bureau.

7. Compliance with Laws

  • Obtaining Business Licenses and/or Landlord Registration
  • Understanding Landlord-Tenant State Laws
  • Knowing Landlord vs. Tenant Rights

Solutions:

  • Don’t try to circumvent the government. You may get away with it for a while, but eventually it will catch up to you.
  • Learn your state’s rental laws.
  • Join a local landlord association, rental housing association, or real estate investor association to network with other landlords.
  • Attend landlord training in your city. Landlordology provides free guides and occasional online webinars. Join our newsletter to stay in the loop.

8. Adequate Insurance

  • Insuring Each Property
  • Insuring Against Rental Income Loss and Lawsuits
  • Insuring Your Portfolio

Solutions:

  • You might get a better rate if you insure all your properties with a single provider.
  • Inform your provider that your properties are rentals, and not homeowner occupied (critical!).
  • Sign up for “Fair Rental Income Protection” in your policy to cover the rent during a covered loss.
  • Make sure you have proper coverage.
  • Consider getting “umbrella” insurance to cover excess liability and risk not covered by the individual policies. An umbrella policy will insure your entire portfolio, not just your properties.

9. Leases

  • Finding a State-compliant and Bullet-proof Lease
  • Explaining Lease Clauses to Tenants
  • Knowing Whether or Not Your Lease Will Hold up in Court

Solutions:

  • Use a premium, state-specific lease that has been reviewed by lawyers. It’s worth the investment. Check our toolbox for suggestions.
  • Don’t ever use a “free lease” that you find on the internet. It could cost you thousands in lawsuits.
  • Review your state laws for any required or prohibited clauses.
  • Review the entire lease with the applications before signing.
  • Use online document signing tools, like SignNow, HelloSign, and Docusign, to digitally sign leases remotely.

10. Finances

  • Keeping Track of Security Deposits
  • Calculating Interest on Deposits
  • Commingling Funds

Solutions:

  • Keep the security deposit in a separate, interest-bearing bank account.
  • Open a separate security deposit bank account for each property.
  • Collect and give interest on the deposit money if you are required to by law. If the statutes don’t regulate interest, just give the tenant all the interest that is accrued.

BONUS: Taxes

  • Keeping Track of Income and Expenses
  • Calculating Depreciation
  • Sending out 1099s to Contractors
  • Deciding to DIY or hire a CPA

Solutions:

  • Use an all-in-one property management software that lets you track income and expenses. If not, there are other great tools, like Freshbooks, Excel, and Quickbooks.
  • Property Managers (not landlords) who pay a contractor more than $600 in a given year, must send out 1099s. Some tools like, Buildium and Appfolio can make this task easier.
  • TurboTax can easily prepare and file the taxes for most small landlords. If you have multiple business entities, joint ownership, or tax shelters, then you should probably hire a CPA.
Credit to Lucas Hall

Lucas is the Chief Landlordologist at Cozy. He has been a successful landlord for over 10 years, with dozens of happy tenants and a profitable income property portfolio.

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Let Your Tenants Paint, but with 4 Specific Conditions

paint

Landlords often paint their properties in shades of white or gray, which are great colors to choose because they are easy to maintain, and they make rental units easier to show.

Your renters, however, might prefer more vibrant and interesting colors in the place they call home and might wish to repaint. Is it ever appropriate for tenants to take the job upon themselves? If you agree to let your tenant change the paint color, who should pay for it?

1. Tenants Should Always Check with You First

Color harmonization can improve a person’s life. But even so, this is not a basic human right or need.

If your tenant paints without your blessing, you can deduct from their security deposit the amount it will cost to repaint, assuming they don’t return it to the original color before departing.

It’s wise to have a paint policy in your lease to make sure there are no surprises. If you allow your tenant to paint, here are some ways to go about it:

  1. Discuss a color
    Pick a suitable color scheme consisting of one or two hues. Sometimes, a tenant will feel as if it’s a vast improvement to simply change the color of a single wall.
  2. Go pro
    Consider hiring a pro to make sure the job is done right. If you do the work yourself, put extra care into protecting the floors and woodwork. If you let your tenant paint, you can deduct any money spent toward cleanup needed when they move out.
  3. Don’t paint wood
    Avoid painting woodwork and other surfaces that haven’t already been painted and that would have to be stripped to restore them to their previous unpainted state.

There is a good chance you’ll have to restore the original colors when your tenant moves out, but if you do an excellent job that significantly improves the look and feel of the unit, you might be able to rent the place with the new colors.

2. You Can Veto a Color

If your tenant feels out of place because of the color scheme, don’t laugh. The colors in a home can affect a person’s moods and overall sense of wellbeing. However, that doesn’t mean you should allow a tenant to paint the kitchen red. Reds and pinks are some of the most difficult colors to cover up.

Feng Shui and Color

Color plays an important part in the ancient Chinese art of space harmonization — or Feng Shui — and many interior decorators use Feng Shui principles to balance energies in the home. Color harmonization at home can help your tenant relax while boosting concentration. It can also enhance social interactions by helping visitors feel more comfortable.

Balancing the Elements

Although landlords and real estate agents think of white and gray as neutral, Feng Shui practitioners don’t. Both colors represent metal, and they give a space a sharp or crisp quality. Earth and wood tones, water colors (such as blue), or the reds and oranges of fire could be more relaxing, inspiring, and generally beneficial for your tenant.

3. Do a Good Job

Few tenants are professional painters, and even if you like the colors your renters use, you may not be happy with the workmanship.

But if you do allow them to paint anyway, here are some tips:

  • Acknowledge good work
    Recognize a good thing when you see it. If your tenants do a professional job, and the colors are attractive, don’t be too set on going back to neutral colors when they leave. Reward the tenants for their good work with a full refund of their painting deposit if you plan to leave the paint as is.
  • Allow them to nest
    Tenants are more likely to stay if they feel they have the freedom to decorate according to their taste, and they save you the trouble of having to do the painting yourself, which is part of regular maintenance.
  • Put it in writing
    Get a written agreement before allowing your tenants to paint. Among other things, the agreement should stipulate if and how the tenants are reimbursed if they pay for materials and labor.

With a few exceptions — notably New York City — no state or local laws require landlords to repaint when a tenant moves out. It’s important to know, however, that some small-claims courts have considered periodic repainting a condition of habitability in the case of long-term tenancies. That’s an incentive to give the green light (or the lime light, or maybe the emerald light) to tenants with the motivation to do the job themselves.

4. Make Them Pay for All (or Some) of It

For some landlords, it’s a standard practice to repaint between tenancies, and once a rental is occupied, the paint job can be expected to last for at least a year. If you select quality tenants and choose quality paint, you won’t have to repaint for three to five years.

If tenants wish to repaint during the first few years of occupancy, it’s reasonable to expect them to pay for paint and materials. Over the years, paint ages and loses its luster. Repainting then becomes a maintenance issue, and responsibility reverts to the landlord. Every material, including paint, has a natural life expectancy.

A willingness on the part of both landlord and tenant to negotiate is always beneficial.

A common solution is for you to purchase the materials and the tenant to contribute their time and labor (as long as they do a good job).

 

Credit to Chris Deziel

Chris has owned and managed 4 rental properties in Santa Cruz, CA, and Salida, CO and is a DIY handyman expert for popular sites like Pro Referral.

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