My landlord is withholding my deposit and is refusing to return it. How do I deal with this situation?

In most places your landlord is required to send a statement indicating what expenses were paid with your security deposit. This usually has to be done within a certain number of days after you move out. If you never got a statement, you should first read your landlord tenant laws and then if your state has those laws file against your landlord in small claims court. Provide proof to the court that you paid the security deposit and also a copy of your lease agreement. Show up and you will prevail.

Should I evict my tenant? He is chronically late paying the rent every month. I charge him a $50 late fee every month. That’s the max that I can charge.

Ok, this happens sometimes. But there actually may be a reason. Have you spoken to your tenant about the late payments? If not, I recommend that you do so. What you said here is that he pays every month but just late. Maybe it is because he gets paid by his employer in mid month. If that is the case, you are actually getting more rent every month to let this go on. There are two remedies here. If you find that he is getting paid later in the month, you can change the date that his payment is due. But at the same time, I would collect an extra month’s rent so that you can make your mortgage and other payments on time every month if this is the case. When you do this be sure that you write an addendum to the lease explaining the date due change and why you are doing this. Have the tenant sign and you sign and keep it with your lease. For use in case of disputes or need to present to a judge.)

If the tenant gives you some lame excuse for being late every month, like, “I took my kids to Disneyland and did not have enough money left to pay on time,” then your approach will be different. Remember that you are still getting paid every month and also getting more rent for having to wait, so this is how I would handle it. (oh and by the way, what is keeping you from charging a % of the unpaid rent and even a daily late fee? Are there laws in your city that prevent higher late fees for failure to pay on time?) I would again ask for a month rent ahead of time. I would also get the tenant to agree to a daily late fee so that he is charged rent (as interest) for every day that the rent is late. You may say this is too much work to figure out. To that I say, check out the software that I use to manage my apartments Smart Property Systems. I know that they are bringing out a special edition of the software called Ideal Landlord soon. It will cost you about $18 per month for one unit and you can set up the daily late fees in the system which are automatically added if the tenant is late. Plus everything else is also automated.  It will make you look very professional and cause your tenant(s) to pay more attention to their responsibilities.

Finally, if the tenant has missed months of paying rent, then you should issue a 3 day notice to pay or vacate. Typically this is issued when the rent is late the first time to force payment.  At the same time issue a 30 notice to vacate the premises. If they fail to pay the full amount due in 3 days, then you can start an eviction. But you also have the security of the notice if they fail to move and can provide those notices in your documents if you have to evict. It will make you look like you are on top of your business to the judge.

If you have to evict, you will need to go to court and fill out documents which will then be served to the tenant by a process server. There are process server fees and court fees for filing. The judge will need to see the lease agreement signed by both of you and a payment history showing the delinquencies plus all notifications and notices that have been sent. Do add your costs and your time for doing the eviction. Most judges will award you reasonable court fees and time by the hour you spent to manage the eviction and charge it to the tenant. Good luck.

Taking Over Grandfather’s Apartment Complex

Hi everyone! I’ve been presented with an opportunity of a lifetime today and need some advice from you amazing people!  My grandfather has been working out his will and apparently, I’m going to be the recipient of his 12-bedroom apartment complex. This is the opportunity of a lifetime but I’m a little nervous owning and managing this property at such a young age (22). The complex needs a lot of work, it’s currently on the lower end for rent for my area, $750 a month 2 bedroom 1 bath units. I have a few questions and am looking for advise here on how to proceed. I’ve reviewed his lease (which is about 10 years outdated) and have noticed that a newly rewritten one will probably be the first action I take. It is located across the street from a private university, but no university student has ever stayed there. My goal is to turn it into more of a college student housing hopefully, but I know that opens up a whole other can of worms. The college has also presented an offer to buy the property so they can level it and build a parking lot there ($100,000). I’ve just graduated college and selling the property would be a great short-term option, but my finance side is ready to take this head on and hang on for the long run. How do I manage a property? How do I proceed to meet all my tenants and know if they are good people? How do I reinforce my soon to be written lease agreement? How do I evict people? How do I handle frequent late payments? If I wanted to get a whole new set of residents, how would I go about getting all the current residents out? Should I sell now and not take on this project? I will be owning my family business within the next 10 years when my dad retires and I’m unsure how over worked I will be. Thank you all! Response: The value that the University offered for the property seems low to me. I know that you are young and probably feeling a bit overwhelmed but the reason you went to school is to learn how to think. I think you can manage this property and make money doing so. First of all, if you have some money available, I would have a contractor that your dad and trusts come and do an inspection of the property to find out what the problems are. Some common ones are old and leaky plumbing, asbestos in walls or in popcorn ceilings, mold, rotten wood in joist near bathrooms or kitchen, water leaking under the foundation, sinking or cracked foundation. Once you have that report you will have a better idea if this is something you want to take on. Second, I am going to recommend that you invest in software for your property management. I own a property management software company, Smart Property Systems and know that we can help guide you all the way as well as provide affordable tools that will keep you on track to be successful. Once you have done that, you can go to rentometer.com to compare your rents with the rents in the neighborhood that are similar units. Now review the tenant files to see who pays rent on time and who does not. Look at inspection reports to find out how they take care of the property. If there is no data, you will need to ask your grandfather. Now schedule inspections for each unit. You are required to give notice before you inspect the units and I would recommend at least several days’ notice. Smart Property Systems customer service can provide you with a document to use for inspection. Be sure to fill it out as you go through and have the tenant sign and date it when you finish. You can then make a copy for them and give it to them when you speak to them next. Now you can make a decision about who will stay and who will have their tenancy terminated if month to month and not extended if on a lease.  

Customer Service is an Important Part of Property Management

happy tenantsIf you work for a property management company you know the importance of maintaining good relationships with your owners and tenants.  And if you are self directing your own property management you probably know that tenants and landlords often clash.  But it does not have to be that way. You must stay on top of your management tasks, and let your tenants know that each one of them is important to you.

Our company has provided software for property management to over 20,000 subscribers since 2005.  We are recognized as one of the best property management software companies and, by the way, we have just rebuilt the software to be even easier to use thus making the communication with tenants even better.  The legacy software won a webby and the New Release has already won a Best In Business for software award. With all of this experience, there are some things that we know will help you get good tenants, keep your tenants happy and retain them longer.

Expect the Best from your Tenants

You are entering into a business contract with each tenant. You expect them to pay rent and care for your property in return for their access and right to occupy to a quality property in which to live or work if it is a commercial property.  Remember that it is a business relationship, not a friendship.  From the beginning treat the tenant with respect.  Once the lease is signed the tenant has agreed to pay rent on time.  Be sure that he/she does just that.  We recommend use of automated rent payments made through a tenant portal which contains all of the pertinent information that they need plus a way to make their rent payment in less than a minute. If they are late, do not offer to waive late fees. In the automated system, late fees are added automatically on the designated day.  Waiving late fees only encourages more late payments.  If you have a chronic late payer, make arrangements so that rent is due after they have received their wages or can reliably make the payment.  If that means you extend the grace days a few more days then that is a better way to resolve the issue than to waive late fees. You might also have them pay two times per month instead of once.Don’t worry, if they are using automated rent payments, the accounting is done for you when that payment is made. And remember that any changes to the original agreement need to be memorialized in writing and signed by both parties.

You Make the Rules

It is the responsibility of the landlord or property manager in conjunction with the owner to make the rules for tenants residing in the property.  Include those rules when they sign the lease.  We recommend a separate document stating policies and rules as well as vacating procedures.  The tenant signs that document and it becomes part of the lease.  Tenants need to know the rules before they move in, not when they have violated one.  Tenants need to know that they are responsible for  being cordial to neighbors and abide by the rules of the property.  It is always best to meet the tenant in a professional environment like an office.  Our SPS software offers esign for leases and notices so that an office is not required to look professional.  One other thing that is very important is good communication.  The SPS software has tenant portals through which the tenant can easily notify you of any issues or report maintenance items.

Get Repairs Done Quickly

Things happen to rental properties during normal wear and tear, and repairs need to be done to keep the property in good shape.  Occasionally there is also tenant caused damage, like a child flushing toys down the toilet or someone hitting the garage door with their car.  Both types of damage should be repaired by the landlord or property manager, not the tenant.  The most important thing that a landlord can do is get the repair done as soon as humanly possible.  The tenant can be billed for tenant caused damage or the security deposit can be used if they do not pay. We recommend billing first so that the security deposit remains in place for the future.  Always follow up after the repair with the tenant to be sure that the repair was done to the satisfaction of the tenant.  We recommend that you inspect the repair or at the very least have the contractor take pictures before and after the repair and send them to you.  Your tenant will know that you care about their comfort and you will retain them longer.  Maybe even more important is that you will be sure that your property is kept in top condition.

You Must Do Inspections

Inspections are part of the price of doing business.  Inspections done regularly will insure that there is no major damage being done to your valuable rental property.  With new tenants, you may want to do an inspection or visit the property in one month to see how the tenant is faring.  At the same time you can look around to see how they are caring for the property. If all is well you may schedule the next inspection visit for 3 months.  If things look dicey, give notice to clean it up and come back in a week to inspect again. This may seem like over kill but we have seen some tragic situations experienced by our subscribers when they do not use the inspection software available to them. One subscriber found three families living in a two bedroom house.  Only 4 people were on the lease.  Another found a herd of cats, none of whom were authorized by a pet agreement. In fact the pet agreement clearly said that no pets were allowed.  If these situations had not been discovered, you can only imagine the damage that would have been done to the property.  Inspections are an ounce of prevention against pounds of cure.

Develop Good Relationships

Always be cordial to your tenants.  They are supporting your business and even if you may not like them personally, you need to be pleasant.  Remember that your tenants are not your friends.  They have a business relationship with you.  That does not mean that you can’t send Holiday cards or throw parties for the multifamily community once in awhile.  But in the process of running your rental business, be firm and fair, attentive and respectful.

Smart Property Systems gives our subscribers the tools to be able to develop good relationships with tenants, members of associations, and owners of residential and commercial properties.  That is accomplished with automation of most repetitive tasks and by allowing all stakeholders in the business to easily communicate through the portals.  If you are not using software or are unhappy with your current software check out https://smartpropertysystems.com.

Submitted by: Timmi Ryerson
December 18 2015

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Engaging and Communicating with the Millennials: The Next Generation of Renters

cell phones

The next generation of renters is a tech savvy group who will use technology at its best to find their first or next perfect place to rent. That means that they will use tablets and cell phones to search for available listings, not print media and newspapers.  They will also want to be able to conduct the business of renting via their phones or computers. That means that rental housekeeping and tasks should be automated and able to be done over the internet.  Messaging and notifications including signing of leases and paying rents and deposits and other charges will be done via the internet as well.

 

First consider how the Millennial Generation will search for places to live.  They will use their cell phone or tablet, most likely.  Some will use a computer at work or home to search.  Rarely do your prospective tenants just walk up and rent a unit. So when a vacancy is advertised, it needs to have all of the relevant data present for the viewer’s information. The other most needed option is to have pictures and videos available for them to peruse at their convenience.  We suggest that our Smart Property Systems (SPS) subscribers give viewers enough pictorial evidence and data about each room that the prospective tenant can practically decide to rent by seeing the webflyer.

What is a webflyer? It is a template that our subscribers have to set up their internet advertising. That template allows the user to write a detailed description of the property, explain a bit about the neighborhood and amenities close by, the specifics about the rental unit, rent, date available, security deposit and more.

webflyer active.  SPS  recommends that you take a video of the property and post it to YouTube then connect that URL to the webflyer so that the prospective tenant can get a better idea of the flow of the property. Many of our subscribers have told us that the cost of a subscription is cheap compared to the cost of advertising the old fashioned way.  A subscription has all management tools needed to take professional care of your rental properties and includes the cost of advertising vacancies and for sale properties. It is a much better option than using print media and newspapers which do not  accept pictures and you are required to shorten descriptions to keep the cost down.

Of course offering a terrific property which is kept in top shape is your best bet at getting vacancies turned quickly. Being able to offer online rent collection and a way to pay a security deposit on line will be the future for fast turn-overs.  Smart Property Systems has a built in library which allows the user to attach esign to documents and send leases via email for signatures. This is also a huge time saver for those busy prospective tenants who want the convenience that technology offers.

Technology is a must in the present and future world of communicating with the Next Generation of renters.  Check out our Smart Property Systems software to see that it provides that technology which you need to meet the needs of your investment rental business future.

Timmi Ryerson
CEO
Smart Property Systems

Qualities of a Good Tenant

What are the Qualities of a Good Tenant?girl with halo
They say that you can’t judge a book by its cover. Well, that may be a fine saying when it comes to literature, but when you’re trying to find the right tenant to fill a vacancy, there’s a bit more at stake. After all, unless you want to deal with property damage, late rent payments, and time-consuming eviction processes, you should be doing everything in your power to determine exactly who will—and who will not—end up being the kind of renter you’re looking for. But what is it exactly that defines a good tenant? We’ve narrowed it down to seven specific qualities that you should look for when trying to select the right person to entrust with your property.

1. Job Stability
While almost anyone can scrounge enough money together to pay rent every now and again, those who are able to consistently get the check into your hands before the due-date are generally those who have stable employment. At the same time, the ability to hold onto a job for an extended period demonstrates commitment, reliability, and maturity. Be wary of any prospective tenants who have worked multiple jobs within the last few years, as they could end up being unreliable when it comes to their own responsibilities as renters.

2. Cleanliness
No tenant stays forever, and once a tenant leaves, you’re going to want your property back in the same condition that it was when you first rented it out. Well, in order for that to happen, you’ll need to have tenants who take personal responsibility for the condition of the property while they call it home. Tenants who are themselves clean and demonstrate good personal hygiene are more likely to translate that trait into good housekeeping and property management skills.

3. Honesty/Integrity
Your relationship with you tenant is defined by a contract, but there’s no way that that contract will be able to determine responsibility for every unique situation. Likewise, you’ll often have to rely on the tenant themselves when gathering information regarding issues and problems. A trustworthy renter will make things much easier on you by being honest and living up to their part of the rental agreement without looking for loopholes.

4. Lawfulness
You may think that as long as you get your rent check on time, it’s not any of your business how law-abiding your tenants are. However, the reality is that in addition to posing a danger to property, neighbors, and even themselves, criminals are often much more likely to try to take advantage of you and avoid their own responsibilities as renters. Additionally, as the owner, you may be held legally liable for criminal activity that occurs on your property. Suffice it to say that tenants who engage in illegal activities will cause you nothing but stress and expense in the long run.

5. Thoroughness/Attention to Detail
A rental agreement is a legally-binding contract. As such, it’s not something that should be entered into lightly. Prospective tenants who make a point to read and understand the lease—even if they have to ask questions along the way—show their own respect for the agreement. And, because they are willing to take the time to figure out what exactly is expected of them as a renter, they’ll be less likely to renege on the agreement.

6. Friendlyness

personalities

personalities

Human beings are social animals, which means that we tend to work best when we get along with each other. So, unless you’re renting out a piece of property that’s out in the middle of nowhere, you should consider just how friendly your potential renter is. When renters are unable to play nice with their neighbors, then invariably the end result is increased complaints, reduced renter satisfaction, and an all around cut in your profits. Try to make things easier on everyone involved, and find tenants who make good neighbors.

7. Low “Stress Quotient”
If you take the various traits displayed by your tenant and add them all together, you get something called the “stress quotient.” This is a general idea of the amount of stress that any one particular tenant might cause you. So, talk with the tenant, do background checks for criminal and credit history, ask for references from previous landlords, make note of the state of the car they drive, ask them directly about criminal activity and drug use, and yes, go ahead and judge that book by its cover (within the legal bounds of the Fair Housing Act, of course), because once the contract is signed, you’ll be stuck with each other for a while. If you can locate someone who demonstrates these seven traits, you’ll be much less likely to end up having to regret it.

So Why Do I have to Do Inspections

Well as a matter of fact, you don’t.  But we do not recommend that approach. This is a multifaceted topic for discussion and it will require us to discuss a full approach to property management.  If you have looked around our blog or our web site you have heard repeatedly that the most important job a property manager/owner does is tenant screening.  That screening should include a credit report and a criminal history along with identity verification as the very least.Furthermore, we recommend that you screen every person over 18 who will occupy your property. This should not be a cost to you.  You should charge an application fee which will at least cover the cost of the screening report.  Now that being said, you will certainly get a better quality tenant when you use the screening.  In fact what we see many times is that when you state that tenant screening is required of every applicant, those who know that you will find something  that will reflect badly, do not even apply.

Now that you have screened your tenant and they are signing the lease, be sure to tell them that you do regular inspections.  On our site it is part of the lease and the schedule is made at the time you create your lease.  But now it is time for me to tell you a story.

When I first bought my investment properties I had to do everything myself because software like we have available at SPS was not to be found then.  I actually lived in a different state from where my properties were located.  I had nice units which had tile bathrooms, granite counter tops, high grade vinyl in the kitchen and medium grade carpets in all other areas.  One of the tenants I had in a three bedroom 2 bath unit asked permission to have his adult daughters move in with him.  He had always paid his rent and every time I had been there the place looked well kept.  So I agreed.  My first mistake was not to do screening on these adult daughters.  That winter was particularly hard and I contracted with a local person to collect the rents for me.  When I returned the next Spring, I noticed that the yard of that unit where the daughters had moved into was very unkept.  The grass had not been mowed and there were tire marks all over the from lawn area.  So I filled out a notice to comply and posted it on the door.  They had 3 days to remedy the problem.  I came back three days later and nothing had been done.  I knocked on the door and there was no answer.  I posted a three day notice because their rent was now late. I also posted a notice to do an inspection in 24 hours.  I returned the next day.  No one was home.  Just then our friendly local gendarmes drove by.  I stopped him and he said that he had started doing daily drive by’s for MY property because of all of the neighborhood complaints. (I didn’t have time to ask him why I had not been notified). I immediately asked him if he would accompany me into the unit.  I had to show him my notices and he agreed.  We used my master key to enter and what I found was appalling.  I had never seen such filth and destruction. He told me to stay at the door and he actually pulled his gun to inspect the unit.  Then he called the hazardous materials team.  They found dead kittens in the kitchen cupboard.

Every inch of the place was ripped to pieces.  The garage was filled with torn out insulation.  We found unspeakable things throughout the house and in the back yard.  The upshot was the the girls had abandoned the place and others had come in and trashed everything.  I called the father and he pleaded innocencebecause he had moved out as soon as they moved in.  My cost to repair the unit was over $10,000 and we lost three weeks rebuilding the unit to make it habitable.  I filed a lawsuit against the father and he declared bankruptcy.  Because I had not had the daughters sign a lease agreement I had no recourse against them.  What a mess and what an expensive lesson.

But you can learn from my mistakes.  If I had done an inspection, this problem would have been discovered within a month.  The damage would not have been nearly as costly.  I could have demanded improvement or evicted them for failure to comply then.

So how frequently should you inspect your properties. The answer is “Well that depends”.  If your property is located contiguously with other properties which you own, your other tenants will always report problem behavior or suspicious goings on.  And as your tenant mix improves because you use tenant screening, you will come to rely on all tenants to assist in keeping the neighborhood safe and nice looking.  If you own properties which are not contiguous, then you will want to schedule monthly inspections for awhile.  As you see that a tenant is caring for your property as required and continues to live in the unit and pay rent, you can gradually space those inspections farther apart.  If you find a problem at any inspection you should notice the tenant immediately to remedy the problem.  Failure to do so at inspection, will not look good to a judge if you ever end up in court over damages.

In the SPS software we schedule the inspections at the time the lease is created and notices of inspections being due are sent to both the tenant and the manager 4 days before it is scheduled.  I love that about our system.  Remember to take your camera.  Dated and time stamped pictures can be taken and uploaded into the SPS platform for a complete record. Or you can keep a physical file on each tenant and the pictures should be kept for reference in that file.

So that is our take on why every property owner should do inspections.  Do you have stories to share about your experiences? Post them in the comment section.  Others can learn from your experience.

My new motto after that horrifying experience was ” Be proactive, not reactive in all aspects of property management.”

I have a very disturbing video for you to see.  These people were devastated by what they found at their precious and valuable rental property.  Watch at your own risk….it is really bad.

http://www.youtube.com/watch?v=MUseCJ7PhLQ&NR=1

Welcome to the Smart Property Systems Blog

Have you ever felt like this after a day working on your rentals?  Most of us have. This page has been created to offer ideas and solutions to common problems associated with managing investment properties of all kinds.  Why would we do this, you ask?  We are a company who has a subscription based software as a service, in the cloud for property management.  We work with our subscribers and tenants all day long and get much insight into what is happening in the world of investment real estate.  We want to share our ideas with you and get your feedback as well.  Of course we would love to have you visit our web site and would like even more to be your go to choice for property management software.  But our main focus on this page is to offer information.  We welcome your comments and wisdom as well.

Together with input from owners and managers like you, we should be able to compile a pretty good library of how to’s and best practices which will help owners/managers solve even the most difficult problem rental or rental problem.   There are a variety of subjects which will be discussed.  I will post interesting articles and we can all comment on them.  We can add topics as you wish.

Our goal will be to make everyone who participates here be able to have that same look of smug satisfaction as the young woman at the top of the page and not the one holding her head in her hands.  So welcome and let’s start sharing our solutions.

What Does Charisma Have to Do with It?

charisma

 

Are you a c property manager? Do you try to be everyone’s friend when they rent one of your properties? Most people think Charisma is vital to the relationship between landlord/manager and tenant. However the short term benefits of being everyone’s new best friend are often neutralized by the long-term consequences.

Charisma interferes with judgment. It is said that there are three ways to influence others. They are reason, force or charm. Charm is based on emotional manipulation whereas reason and force are not. (Even when we are forced to do something, we do it for good reason.)

It is important to consider what you want from your tenants and what they want from you. By being clear, concise and business like, you will establish that relationship from the beginning.

Meeting the tenant to show a unit is usually the first face to face contact you will have. Dress for success. Your first impression will set the relationship off to a good start if you show up as a professional. Remember that if this tenant wants the unit and passes tenant screening, that you could have a long term relationship developing. But it is business, strictly business. You will be collecting rents, and possibly utility and other payments every month. You want this tenant to respect and care for the property. You also want this tenant to abide by rules and be sensitive to other tenants and neighbors in the area. All of these details are certainly included in your lease, but when you have a charismatic relationship with your tenants, it is easier for them to smooze you on being able to pay rent late, Or they will tease you out of them not mowing the lawn often enough. You know what I am getting at here.

We suggest that you use our online rent collection so that everything about rent is automated. They cannot call the system and complain that they had a car repair and cannot pay rent on time. They know that the system will send the late notice and attach a late fee automatically. We also recommend that you use the message system to communicate regarding repairs and maintenance, etc. so that there is a record of all communications kept for that tenant. That way no one can ever come back to you and say “You never told me that.”

So the message is that you already have enough friends. Tenants can be acquaintenances, but you are not ever going to be their hero. Put some respectful distance between you and your tenant and you will enjoy your management experience much more