SMARTERLANDLORDING

ADVICE FROM EXPERIENCE

Kevin

Why Are Your Tenants Moving?

by

Apartments.com just did an interesting survey of over 1,500 renters.    The survey examined the major reasons renters were and were not moving.  For example, here are the top five reasons survey respondents said they are moving in 2014:

 

 

 

  1. Shopping for a less expensive apartment: 24.6%
  2. Wanting to live in a different neighborhood: 13.6%
  3. Looking for a bigger apartment: 12%
  4. Change in marital status: 11.6%
  5. Looking for a smaller apartment, or to live alone: 10%

There are several other bits of interesting information from the survey.  You can read the rest of the article here.

Information from surveys like this one can be important to your landlording business.

Tenant turnover is probably the number one killer of positive cash flow.  If you can figure out the reasons your tenants are considering a move and can address their concerns you can save yourself a bundle of both time and money.

Always ask your tenants why they are moving when they give you notice of a move.  Perhaps some minor upgrades will encourage them to stay.  Perhaps you can provide them with a larger or smaller unit.  Perhaps you have something available in a different location.  If you have a decent tenant, try your best to keep them.  Good tenants can be hard to find.

Landlords – Don’t Do This Either

by

Unless you want your mug shot posted all over the news too!

Landlord forged judge’s signature to evict Cortlandt tenant, police say

Landlords – No Dirty Tricks!

by

One of the worst things for a landlord is a non-paying tenant.  It creates a crisis in your business as the revenue you need to pay for the mortgage, insurance, taxes, repairs, etc stops coming in.  In years past, landlords had all sorts of dirty tricks to deal with non-paying tenants.  Tricks you had better not even think about doing today.

Tricks like:

  1. Taking off the Front Door – This is one of the older more creative tricks landlords used to use.  If a tenant fell behind or did not pay, the landlord simply removed the front door, leaving the unit and the tenant’s possessions out in the open
  2. Changing the Locks – The ultimate in “no pay – no stay.”  If the tenant wanted the new key and access to their stuff, they would have to pay up.
  3. Shutting off the Heat – This worked especially well in the colder months, but the landlord ran the risk of frozen pipes.
  4. Shutting off the Water – How long would you live in a place with out a flushing toilet, or the ability to take a shower?  The hope of many landlords was not for long.
  5. Blocking Up the Sewer Line – Taking a 2×4 and jamming it in the sewer clean out line was another tactic.  It did not take long before the toilets stopped flushing and the showers stopped draining.  Can get pretty smelly fast.  Of course once the tenant is out, the landlord was left with a mess.

Like it or not, a landlord can get in a lot of trouble if they use any of the above tricks.  There are just too many lawyers out there waiting to sue you to take the chance.  Can you imagine what a judge would say in this day and age if they heard you shut off the heat on a family in the middle of winter or that you had removed their front door?  Instead of solving your problem and getting the tenants out, you have created a huge pay day for them, plus they get to stay.

Don’t let that sense of crisis you feel because you are not getting paid allow you to succumb to bad advice or do something stupid.  In years past, landlords had a lot of dirty tricks up their sleeves that they could get away with; some are still using them.

Today however, the best alternative when dealing with a non-paying tenant is to offer cash for keys.  This technique gets them out as quickly and as cheaply as possible with little or no mess to clean up later (or doors to put back on). Proper screening will also solve a lot of these problems.  Learn these two important techniques rather than resorting to dirty tricks.

 

Subscribe to Smarterlandlording and receive a Free Report: 21 Tenant Screening Red Flags

Landlords – They Are Changing The Laws

by

Where the landlord laws are made.

I have written about this topic before but it is important so I will say it again.

Landlords need to keep up with what their state legislatures are doing. 

Most landlord/tenant laws are written at the state level.  So it is important to keep up with what is going on in your state capital. Every year they try to change the state laws that outline how you run your business.  For example, many state laws dictate:

  • If you can charge a late fee
  • How much that late fee can be
  • If and how much of a security deposit you can take
  • What clauses should be in your lease
  • When you can evict
  • When you cannot evict
  • How difficult it will be for you to evict if you have to
  • What to do if a tenant abandons your property.

The list goes on and on.

As a landlord, would you not want to know if someone is proposing a law to make it more difficult to evict someone? How about if a law is being proposed to restrict how much a security deposit can be?  Would you not want to know about any law that will make you job as a landlord more difficult, like this one proposed here in Tennessee (Does a tenant who has been legally evicted really need another 48 hours)?

Of course you would.  These laws directly affect your business and you would likely want to voice your opinion on those proposed laws.

On the flip side, perhaps a law is being proposed that will make your job as a landlord easier.  Sometimes laws are proposed that might actually help us out, such as this one here in Tennessee which shortens the eviction appeal process.  Would you not want to know about and perhaps voice your opinion on those as well?  Of course you would.

As landlords, part of our job is to watch what those folks in our state capitols are doing, because what they do or do not do can really have an impact on our business.  Of course I would much rather focus on my business but every year I have to devote a little bit of time to watching what is going on in Nashville because my business could depend on it.

Where can you find out about these proposed laws?  I think the best place is your local REIA.  Most of the time someone there is focused on the state legislature and will report what is going on.  Plus, as far as lawmakers are concerned, numbers matter.  So get informed and watch what those legislators are doing. Your business may depend on it.

Where Do The Super Rich Invest Their RE $?

by

Here is an interesting story on where the super rich have been investing in real estate.  Seems they have been increasing their holdings quite a bit in recent years.

 

 

 

 

 

 

 

 

 

 

h/t to EconomicPolicyJournal.com

Do Not Enter – Respect Your Tenant’s Home

by

It can be difficult to find good tenants.  It takes time to show your property, take applications and screen out the bad guys.  Then there is the lease signing and move in processes.  After going through all of that, you want to keep the good tenants for a while right?  Of course you do. So don’t do things that will drive them away such as not respecting their privacy.

Once you find a good tenant, sign a lease and let them move in to your property you have given certain legal rights of possession to your tenant.  You have provided them with a home and as they say “a person’s home is their castle.”  You as the landlord have to respect that, even though you own the building you cannot just go into to a tenant’s apartment any time you fell like it.  If you do, not only are you a sloppy landlord (and kind of a jerk) you could be charged with a crime.

Check out this recent news story headline.

Tenants claim landlord broke into apartment overnight, heat still not on

The story continues:

Sievert rents an apartment for her daughter at a complex in Muskego near Woods Road and Racine Avenue.  She says Wednesday morning the landlord came by unannounced…

“He broke into my apartment.”

Sievert locked the doors to her apartment Tuesday night when she left.  When she came by to get her car this morning, she saw locks were broken.

“We noticed that doorknobs and locks were removed. The screw that we had screwed the door shut with was broken in half. The chains ripped off. The door was broken.

Muskego Police are involved and might give the landlord a municpal citation for criminal trespassing. But they want his side of the story.

“He’s sneaking around. He’s hiding his car in the garage.”

Certainly there is a lot going on in this story such as non working heat, code violations and a hiding landlord.  Plus why did he not have keys to his own property?  Who knows? But the story demonstrates my point.  A landlord can get themselves in trouble by “just going in” a tenant’s apartment.

But, what if there is an emergency such as busted pipes?  If there truly is an emergency, then yes, you are going to be permitted to go in unannounced to protect your property and fix the problem.

Otherwise, your local laws are likely going to dictate when you can and cannot enter a tenant’s home.  Here in Tennessee, the Uniform Landlord Tenant Act does just that.  Section 66-28-403 specifically addresses access by the landlord.  It states in part:

 (e) The landlord has no right of access to the premises except:

   (1) By court order;

   (2) As permitted by this section, § 66-28-506 and § 66-28-507(b);

   (3) If the tenant has abandoned or surrendered the premises;

   (4) If the tenant is deceased, incapacitated or incarcerated; or

   (5) Within the final thirty (30) days of the termination of the rental agreement for the purpose of showing the premises to prospective tenants; provided, that such right of access is set forth in the rental agreement and notice is given to the tenant at least twenty-four (24) hours prior to entry.

Your local rules may be completely different.  Local differences such as these are one reason it is so important to find a local REIA and understand your local laws.

Sure, there are other times when a landlord can have access to the property, such as to do a quarterly inspection, for a property appraisal, for insurance purposes, or if the tenant has requested maintenance.  But a good rule of thumb is to provide at least 24 hours notice and spell out when, where and why you may come into the property in your lease.

So be a smarter landlord and respect your tenant’s privacy.  After all, would you want someone barging into your home unannounced?

Real Estate Tax Benefits – Are You Ready To Claim Yours?

by

Real estate investing, especially landlording, can provide you with many tax benefits.  Are you ready to claim yours?

For example:

  • Do you use the internet to search for properties?  Do you read the classified ads in the local paper?  Do you buy notepads, folders, pens, etc?  These are all business expense deductions.
  • Do you work out of your home?  You may qualify for a home office deduction.
  • Do you “drive for dollars” with your car?  Do you travel to and from your rental properties to show them to possible tenants or do maintenance?  You may be able to claim the car mileage deduction.
  • Did you need to make some repairs?  Of course you did, you are a landlord!  Those repairs are likely deductible.
  • Rental income for the most part is not subject to self employment (social security or Medicaid) taxes.
  • Plus the biggest bonus of all, depreciation. 

All of these deductions came before you even take your standard deduction and other exemptions, significantly reducing your adjusted gross income and the amount of income tax you owe. 

There are many more tax benefits that real estate investing offers.  These can include such things like “real estate professional” classification and cost segregation.

Taxes however, make a lot of people nervous.  But they should not.  Taxes are not rocket science.  Taxes are really are just some basic accounting along with some addition and subtraction.  I have done my own taxes and while they are time consuming they are not that difficult to do.

Two things have really helped me understand taxes.

  1. I am no CPA, but I have one that I can call upon if I hit a road block.  She has experience working with real estate investors and understands my business.  Where did I find her?  At my local REIA group.
  2. This book has been a great help.  If you are new to landlording, have a couple of properties or a couple of dozen, Every Landlord’s Tax Deduction Guide can really help you.  It is written for you, the investor, not the accountant.  It will help you make sense out of income taxes.  I cannot recommend it enough.  Click on the link and order it today (I do get a small commission on every order, just so you know, but I really do think the book is worth every penny)!

 

Better hurry though.  April 15th will be here before you know it.  Are you ready?

5 Questions and Answers About 1099’s

by

Happy New Year!

Now, with that out of the way, let’s get to work.  And by work, I mean taxes.

The New Year means it is tax season again.  It’s time to close the books on 2013 and get all that paperwork together for Uncle Sam.

Part of that paperwork, is IRS Form 1099, specifically form 1099-MISC.

Why Should Landlords Care About Form 1099-MISC?

As a landlord, you are engaged in what the IRS calls a “trade or business” (I am assuming here that you are in the business to make a profit, well so is the IRS).  Therefore you are required to file form 1099-MISC. 

What Is Form 1099-MISC?

Form 1099-MISC is a form for reporting miscellaneous income to the IRS.  The IRS uses this form to help them determine how much a taxpayer made during the past year.  You are basically helping the IRS enforce the law.  The form has three parts.  One part goes to the IRS, one part goes to the payee and you keep the other part.  It’s pretty easy to fill out and the instructions can be found here.

Who Do You Fill Out Form 1099-MISC On?

You must fill out a 1099-MISC on anyone who provided you with a good or service in the past year worth over $600.  Did you have painters paint a house for $1,000?  Fill out a 1099.  Did you have a plumber do various jobs totaling over $600?  The plumber gets a 1099-MISC.  You get the picture.

One good thing, if your contractor or plumber is part of an incorporated business like an LLC, you likely do not have to file a 1099-MISC.  You can learn more here.

Will I Need Any Specific Information To File a 1099?

Yes, you will need the taxpayer’s tax identification number (TIN).  Usually this is a social security number but may not be.  To get that information you should have another form in your records, form W-9.  Get your contractors and others to fill out this form.  You can get and use form W-9 here.

When Do I have To File These Forms and Where Can I Get Them?

Yeah I know, that is two questions but they are important.  You have to file form 1099-MISC by January 31st.  But if you want to be a good guy, file it as early as possible as your contractors may need them to get a refund.

You cannot download the forms from the internet since the IRS uses special forms for their scanners.  You have to get and use their specific forms.  You can get the forms for free from the IRS, but they often get backed up.  I would suggest going to your local office supply store.  Go now however because they will sell out.

Let me close by saying that I am not an accountant.  I am a landlord who has done their own taxes over the years.  I seek competent advice from my CPA regarding taxes, and so should you.  The above are just some highlights regarding 1099’s, please seek advice if you have further questions. 

 

Axl Rose – Best Tenant Ever?

by

According to landlord Steve Fishman,

“People have mixed views of Axl Rose, but as a landlord, I loved him. If he ever needs a recommendation, I’ll happily write: Quiet, undemanding, and pays his rent.”

Read more here.

Top 5 Smarterlandlording Posts in 2013

by

 

Here are the top five posts for 2013.  Thanks for reading Smarterlandlording.com and look for lots more in 2014!   Have a Happy New Year!