By David Pickron
When it comes time to perform a move-out inspection, it’s critical to engage your four senses, especially smells, to ensure that you don’t miss something that could end up costing you thousands down the line.
“Oh, I had a friend bring her little dog over maybe once or twice while I lived there.” That’s a direct quote from a recently moved-out tenant. Funny thing is, I went to the property the day after she moved out and all of the windows were open … in August … in Phoenix.
As I walked in, I caught the overwhelming odor of what seemed skunky, but I just could not put my finger on it. No wonder she wanted the windows open to air out the place and somehow save her security deposit.
When I asked her if she had been smoking or vaping marijuana, she adamantly denied it. “Did you ever have any pets in the property?” I asked. Refer to the first sentence of this article to see her answer.
I shut the property up and a few days later returned to start the rehab for my next tenants. Sure enough, when I opened the property that had been sealed shut for just a few days, the smell of urine overwhelmed me.
Turns out it was a combination of the urine smell and the smells from a nearby dairy that made me think it was initially marijuana. And just this week I met the carpet guys at the property and to no one’s surprise, when the carpets were pulled up, there were urine stains over every square inch of the carpet and pad. That little dog must have had some kind of bladder for just being there once or twice.
Now before you think I am anti-pet, I’m not. I have three adult Bernedoodles — Wellington, Winston, and Aspen — that bring me pure joy. And I’m not anti-tenant either, as I have multiple short-, mid-, and long-term rental properties that produce a great income and are valued assets. My challenge here lies in the fact that tenants will go to great lengths to avoid any extra expense that comes after they vacate a property.
When it comes time to perform a move-out inspection, it’s critical to engage your senses to ensure that you don’t miss something that could end up costing you thousands down the line. Here’s what I recommend:
No. 1 – SIGHT
If you have copies of photos from the initial move-in inspection, compare those with the current condition of the property. Things like holes in walls are obvious, but do you remember the paint color that was in the property at time of move-in? Or what appliances were there when the tenants took possession? (Was that room really pink with stars on the ceiling?)
If you own multiple properties or if a tenant has been in a home a long time, you may not remember exactly what was in place. I’ve seen tenants break my nicer appliances or fixtures and replace them with cheap ones, hoping I wouldn’t notice. Always, always take pictures of the property before a tenant takes possession so you don’t have to rely on memory.
No. 2 – SMELL
As my story above illustrates, the nose always knows. What I didn’t tell you is a week prior to the tenants moving out, I visited the property and it smelled great. The tenant asked specifically when I would be arriving and dolled the place up with air fresheners.
Quite literally, if it doesn’t pass the smell test, something is likely wrong at the property. To get the best results, turn off the HVAC system for a couple of days and seal the house up. Smells such as cigarette or marijuana smoke, mildew, or pet urine will become more pronounced once the air stops moving.
INSPECTIONS ARE IMPORTANT!
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No. 3 – SOUND
When I walk into a vacated home, I listen for all types of sounds. Is there an unreported leak somewhere that I can hear, as in the toilet? When the HVAC system turns on, does it sound right? Maybe I should inspect the filter to see why the A/C is struggling. Same goes for dishwashers and washers and dryers. Run all the faucets in the home and listen for any issues that might be related to the plumbing.
No. 4 – TOUCH
During the move-out inspection, I like to feel for things like drywall repairs the homeowner may have completed. Open the cupboards and make sure they glide smoothly. A lot of homes now have stone countertops, and depending on the stone, it may visually hide gouges or cracks caused by homeowner behavior. I also feel with my feet as I walk the property, as unreported water leaks can lead to warped or loose floors that I may not see but can definitely feel.
I teach new landlords all the time about the importance of finding the right tenant to be their “business partner” in maintaining and caring for a property. But even the best tenants can and do create problems for us as housing providers when they move out of our properties. Little things are expected, but when it comes to professionally and effectively managing our portfolios, we have to use everything in our arsenals to protect our assets. Using your senses to sense scents (and other issues) just makes sense.
Speaking of making sense, require a security deposit big enough to cover carpet replacement, as that is usually the biggest replacement item that holds those offending odors.
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By Emily Koelsch
California passed two bills in 2024 that impact Landlords and Tenants. We’ve updated our site with the necessary changes. To help Landlords comply with these new requirements, here’s a summary of the 2024 changes to California Landlord-Tenant laws.
Assembly Bill 12 – Changes to Security Deposit Regulations
Assembly Bill 12 went into effect on July 1, 2024. It limits security deposits to one month’s rent for furnished and unfurnished rental units. This is a significant change from the previous limit of 2 months’ rent for unfurnished rental units and 3 months’ rent for furnished rental units.
Bill 12 provides a notable exemption for “Small Landlords.” A “Small Landlord” is defined as a Landlord who:
- Owns no more than 2 residential rental properties that include no more than 4 dwelling units; and
- Holds the properties as a natural person, an LLC where all members are natural persons, or as a family trust.
Landlords who meet this qualification may charge up to 2 months’ rent for the security deposit.
Any Landlord who qualifies for this exemption and charges 2 months’ rent should provide Tenants with this Exemption Disclosure documenting that they fall into the category of Small Landlord.
California Senate Bill 567 – Changes to No-Fault Evictions
California Bill 567 went into on April 1, 2024. Here are the notable impacts it has for Landlords:
No-Fault Just Cause Evictions
Bill 567 changes the requirements for terminating a Tenancy due to the Landlord moving in and substantial remodels.
Under California Civil Code § 1946.2, Landlords may not terminate a Tenancy if Tenants have been in a property for at least 12 months without “just cause.” Landlords may terminate a Tenancy for no-fault just cause if:
- The Landlord or the Landlord’s spouse, domestic partner, children, grandchildren, parents, and/or grandparents intend to occupy the property;
- The Landlord plans to withdraw the property from the rental market;
- A government order requiring the Landlord to remove Tenants from the property; or
- Intent to demolish or substantially remodel the property.
Landlord or Family Member Moving Into the Rental Unit
As of April 1, 2024, Landlords may only terminate a Tenancy for the owner moving in if:
- The individual moving in is the owner or the owner’s spouse, domestic partner, child, grandchild, parent, or grandparent.
- The family member moves in within 90 days of the end of the Tenancy.
- The family member resides in the rental unit for at least 12 months as a primary residence.
Landlords who meet these requirements must provide Tenants with a 60-day Notice to Vacate that includes the name and familial relationship of the person moving into the property.
Landlords who violate this requirement can be subject to monetary damages including treble damages and punitive damages.
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Substantial Renovations
Bill 567 also sets out new requirements for Landlords who terminate a Tenancy for substantial renovations.
As of April 1, 2024, to terminate a Tenancy for substantial renovations, Landlords must provide Tenants with a Notice to Vacate that:
- Includes details about the work being completed, including when it’s starting and how long it will last;
- Attaches all applicable permits;
- Notifies the Tenants of their right to reoccupy the property if the work isn’t started or completed; and
- Advises Tenants that they should give the owner their contact information if they’re interested in re-occupying the property after renovations.
Government authorities can seek injunctive relief and monetary damages against Landlords who violate these provisions.
Limits on Rent Increases
Bill 567 also states that the current limits on rent increases will be in effect until January 1, 2030. The current statewide rent control limits rent increases in a 12-month period to not more than 5% plus the percentage change in the cost of living, or 10%, whichever is lower.
Owners who violate the rent control laws are liable to Tenants for damages up to three times the amount that rent payments exceed these limitations.
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Provided by Bigger Pockets
Selecting, validating, renovating, and managing a successful rental property requires specific skills, local knowledge, processes, and resources. The only source for what you need is a local investment team. Without it, you are merely guessing.
The Most Important Team Member Is the Investment Agent
Investment agents are entirely different from regular residential agents. Here’s how.
Residential agents
Residential agents help clients buy or sell homes. The process is simple: Clients scan real estate sites or drip feeds and choose the properties they want to see. The agent provides access to these properties.
If the buyer wishes to submit an offer, the agent facilitates the offer. If the offer is accepted, the agent facilitates closing.
Except for adding the buyer to a drip feed, providing access to the properties, and handling paperwork, residential agents provide little value to an investor.
Investment agents
Investment agents assist clients in purchasing income streams, not homes. They need to understand finance, market trends, ROI, and tenant demographics, and they are always part of a team.
The process is entirely different. Here’s a high-level overview of our process:
- Define the client’s financial goals.
- Develop a property profile that supports the client’s goals.
- Find conforming properties and generate analytics.
- Perform an on-site evaluation for properties of interest, including sending annotated walk-through videos to the client and property manager.
- Obtain the property manager’s evaluation of the property based on the video, including estimated rent, time to rent, and recommended renovation items.
- Estimate the renovation cost based on the property manager’s recommendation.
- Recommend offer price and terms.
- Manage due diligence, including inspections and in-person walk-throughs for property managers.
- Obtain quotes for all renovation items.
- Overwatch renovation after the close of escrow.
- Facilitate property manager take-over and rental listing.
The takeaway
Investment agents and their team members provide a wide range of services, including property selection, property analytics (not MLS data sheets), validation, renovation management, and more. These are highly valuable services for investors.
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Qualifying an Investment Agent
Finding a (good) investment agent can be challenging. The problem is that while there may be thousands of residential agents, there may be only one or two investment agents in a market.
Some residential agents will occasionally sell real estate that becomes rental properties. However, the client selects the properties and provides all the investment skills. The residential agent usually provides no services beyond those needed for homebuyers.
Interview questions
How can you tell an investment agent from others? By asking the right interview questions.
Before interviewing candidates, compose a list of 10 or fewer questions; you will not have time for more. Ask each candidate the same questions, and note each response for later comparison.
Here are sample questions, along with acceptable responses. Will you find a candidate with the “right” answer to every question? Probably not, but make sure they provide reasonable answers.
- Tell me about your investment team: You’re looking for a response like, “I’ve worked with X property manager for years. We’ve completed X properties,” or “I work with several renovation companies…” They have no value to you if they are not part of an investment team. Move on to the next candidate.
- Do you own investment properties? I would reject the candidate if they have not personally owned investment properties.
- How many investment properties did you close in the last 12 months? Some agents only sell two or three properties per year. Even if all were investment properties, there is insufficient repetition for the needed processes, experience, and resources. A minimum of 12 investment properties per year is necessary to be proficient.
- Did you or your client select the properties? This is an important question. Residential and investment-friendly agents do not pick properties. They send MLS data sheets for the properties the client requests. The client evaluates the properties and selects one or more to make an offer. The agent adds almost no value if you do all the work. Investment agents select potential properties and provide analytics. Reject the candidate if the client selected the property.
- What were your primary selection criteria? It could be the initial return, appreciation, tenant pool, or something else. You’re looking for a plausible answer based on analytics, not opinion or “feelings.”
- Tell me about the tenant pool segment you target: Understanding the existence of tenant pool segments and their characteristics is not common knowledge. It requires a person with investment experience. If they do not have a plausible answer or do not understand the question, go to the next candidate.
- How did you estimate rent and time to rent? They should be able to describe a process like, “I look at recently rented comparable rentals.” Another good answer is that they work with a property manager who supplies this information. If they answer that they use Zillow, Redfin, Rentometer, etc., they do not know how to evaluate investment properties. No real estate sites I’ve seen provide usable estimates of rent or time to rent for specific properties. This is critical information when you are evaluating investment properties.
- Tell me about your renovation process: You are looking for an answer like, “I work with the property manager to determine a list of renovation items. Next, I work with XXX company to get a quote. Once escrow closes, the renovation company does the work, and the property manager does final acceptance.” Renovation is a critical success factor.
- What else should I have asked you? This is an absolute golden question. I’ve learned a lot by asking this question at the end of interviews.
For example, I was checking out a neighborhood I did not know. Nothing looked unusual or concerning. While walking around, I saw a woman sitting on her front porch. I talked to her about the neighborhood for a while. I was about to leave when I asked her, “Is there anything else I should have asked you?” Her response blew me away.
She told me that when two drug dealers lived on the street, and they would occasionally shoot at each other. One was sent to prison about a year ago, and the remaining drug dealer keeps things quiet. I saw nothing to indicate the presence of drug dealing, and would not have known if I did not ask the “what else?” question.
If the candidate answered all questions satisfactorily, you are reasonably assured they know what they are doing.
Final Thoughts
Ask the right interview questions to determine whether an agent has the skills you need. Once you find and vet an investor agent, that person will bring the team of people and resources you need.
However, much like in any company, the investment team will only function as well as the leader, which is you. You are still responsible for directing the team and making all major decisions.
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By Bradley Barth
Estate planning is a crucial aspect of managing your assets, especially if you’re heavily invested in real estate. As a real estate investor, you’ve likely put significant time, effort, and money into building your portfolio. Ensuring that your investments are protected and managed according to your wishes beyond your lifetime is essential. In this article, we’ll delve into some essential estate planning tools that every real estate investor should have in place.
WILL
A will is the cornerstone of any estate plan. It outlines how you want your assets, including real estate properties, to be distributed after your passing. Without a will, state laws will determine how your assets are divided, which may not align with your wishes. When drafting your will, be specific about which properties you want to leave to whom and consider contingencies for any unforeseen circumstances.
TRUSTS
Trusts offer more flexibility and control over the distribution of your assets compared to wills. For real estate investors, a revocable living trust is particularly valuable. By transferring ownership of your properties to the trust, you retain control during your lifetime while
ensuring a smooth transition of ownership upon your death or incapacitation. Additionally, trusts can help avoid probate, which can be time-consuming and costly.
DURABLE POWER OF ATTORNEY
A durable power of attorney allows you to appoint someone to make financial and legal decisions on your behalf if you become incapacitated. This is crucial for real estate investors, as it ensures that someone can manage your properties and investments if you’re unable to do so yourself. Make sure to choose a trustworthy individual who understands your investment strategy and preferences.
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HEALTHCARE PROXY
In addition to financial matters, it’s essential to plan for healthcare decisions in the event of incapacity. A healthcare proxy, also known as a medical power of attorney, designates someone to make medical decisions on your behalf if you’re unable to do so. This includes
decisions about medical treatment, long-term care, and end-of-life care.
BENEFICIARY DESIGNATIONS
Many real estate investors overlook the importance of beneficiary designations on assets such as retirement accounts, life insurance policies, and even certain types of real estate holdings. By designating beneficiaries, you can ensure that these assets pass directly to your chosen
recipients without going through probate. Regularly review and update your beneficiary designations to reflect any changes in your personal or financial circumstances.
LETTER OF INTENT
While not a legally binding document, a letter of intent can provide guidance to your loved ones and beneficiaries regarding your wishes for your real estate investments.
This document can include instructions on property management, maintenance, and any specific goals or objectives you have for your properties. While it may not have the same legal weight as a will or trust, a letter of intent can offer clarity and peace of mind to your heirs.
Estate planning is a vital aspect of managing your real estate investments and ensuring that your assets are preserved and distributed according to your wishes. By implementing these essential estate planning tools, you can protect your properties, minimize taxes and probate costs, and provide for your loved ones in the future.
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By David Pickron
Think of your rental criteria as frequently asked questions for those applying to rent your property and are they written down?
Early on in my investing career I flew by the seat of my pants. I had no real policies or guidelines; I relied on gut reactions to situations as they surfaced. As I travel and meet with different real estate groups across the country, I always ask this critically important question; who here uses a detailed criteria? Rarely do I get many hands raised.
In fact, you may be asking right now, what is criteria and more importantly, how do I make one?
Like any business, your rental criteria can function as your rental policy, lining out your rules and regulations. It covers questions like:
- Can I smoke on the property?
- Do you rent to people with criminal history? If yes, what kind of history would disqualify me?
- How high does my credit need to be in order to qualify?
Think of your criteria as an FAQ for those applying for your property. I love the fact that I have all my requirements written down for the world to see. No surprises! And best of all this helps me treat everyone the same and avoid even a hint of a fair housing violation.
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One other important note is I always have a unique criteria for each property in my portfolio. Factors like location, square footage, and age or condition of the home all go into the creation of the criteria. I may require a lower credit score, less down payment, the inclusion of pets, or other things that are unique to that property. With that being said, I give every person that views that property the same criteria for that unique property.
While having your criteria is crucial, sharing it is even more important. I like to share with my potential tenants throughout our interactions in the following three ways.
- Share your criteria on your listing. Isn’t it a waste of everyone’s time to look at the listing, consider, schedule, and show a property when the applicant doesn’t even meet the criteria? Though I would encourage you to let everyone apply, giving them your criteria in advance allows them to read it before they reach out or see the property. If an individual reviewing your listing has three dogs and is able to see that this property doesn’t accept pets, chances are they will move on to the next listing. This saves you time from responding to someone who will never qualify under that properties criteria.
- Provide and review a copy of the criteria at the time of showing the property. Once again, if you do not allow smoking on that property, your applicant will have heard and acknowledged that, so even if you forget to mention that in the walk through, you’re still covered. A detailed criteria lets them know you are a professional and those trying to get away with something will move on. On the other hand, if they still apply and you have to deny them for something on the criteria, you know they took the chance, hoping you would not find out or they flat out lied to you. Either way, this is not an individual you want to enter into business with anyway.
- Before you invite them to apply, the Rent Perfect system I use will attach the specific criteria for that property to the link I send them. It’s just one more chance for them to see the rules of that specific property in advance. Simply put, if they cannot pass my rules, they will be declined, and I’ll move to the next applicant.
As a landlord, I give them three separate times to acknowledge and understand my rules before they pay the application fee.
I would rather have the tough conversations before they apply and become my tenant.
Catching a renter smoking after the fact while they are living on the property is a much more difficult (and far more expensive) situation. By being open and sharing your criteria, you can treat everyone the same with a well-documented process if there is ever a fair housing complaint against you. Remember, you are hoping to make this individual your business partner for the next few years. Taking this small but critical step is just one way to help you get the right tenant the first time.
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Provided by Steadily
Making mistakes with insurance coverages when buying investment properties can cost you big time. We won’t talk here about the really obvious ones like ‘‘not taking out enough insurance’,’ or ‘’not taking out separate flood insurance,’’ because you, one, most likely have already heard about these or two, are unlikely to have made those mistakes because you can’t even get your loan without mandatory home insurance coverage.
So, instead, let’s cover the other areas that investors tend to overlook. They can be less obvious and seem less important but trust us when we say that they can make your life miserable if you ignore them.
1. Not Upgrading to a Landlord’s Insurance Policy
This is easily the most common rookie mistake investors make at the beginning of their careers as landlords. It can seem that so long as the property is covered by homeowner’s insurance, it doesn’t really matter who lives at the property.
Actually, it does, so much so that you may lose your claims for damages caused to the property by your tenants or other problems that occur while your tenants are living at your property.
Landlord insurance is different from standard homeowner’s insurance, and it covers both the property itself and the homeowner’s liability. So, think of common scenarios like theft and break-ins, fires, plumbing damaged by a bad storm, and the loss of rent that can arise from your tenants having to move out after such an event.
Let’s imagine another scenario in which your tenant injures themselves while they’re on the premises. If you’re not covered by landlord insurance, you could be sued by the tenant and may have to cover their medical bills.
You have to learn to think like a landlord. While most investors realize that property maintenance is their responsibility, many don’t consider the other possibilities or the fact that your tenants, to a certain extent, are also your responsibility. Landlord insurance is the easiest way to keep peace of mind in case something does happen.
Of course, landlord insurance only goes so far in terms of what it will cover. Landlord policies, like other insurance policies, come with deductibles, and coverage is typically limited to what are known as covered perils. Fire damage, burglaries, and bad weather are typically included on that list. On the other hand, your tenant damaging your furniture is not, a point we’ll elaborate on shortly.
A quick look at the declaration page of your insurance will tell you if you have standard homeowner’s or landlord’s insurance. You can also call your insurance agent to clarify and discuss switching to the right kind of insurance if necessary.
2. Not Understand the Limitations On Coverage
The second most common mistake investors make is assuming that landlord insurance will cover just about anything that happens at the rental property, including your tenant spilling red wine on a couch you put in your short-term rental.
This is a costly mistake as you most likely will end up having to clean/replace the couch yourself. As a general rule, damage to personal property by tenants is not covered by landlord insurance. Now, if the damage was caused by a covered peril, say, the couch burned down in a fire (that the tenant did not cause), then you will be able to claim for it.
This isn’t a cause for panic. If you own furnished short-term rentals, you can get personal property damage covered via AirCover and other platform-specific programs for short-term rentals. You’ll just have to purchase them separately from regular landlord insurance.
If you want to educate yourself further on what’s covered by landlord insurance and what isn’t, Steadily recently made a valuable video that breaks down some of the common landlord policy coverages that you need to know.
Bonus tip: We mentioned ‘‘loss of rent’’ in our first point, and let’s reiterate that the only loss of rent that landlord insurance will cover is the loss of rent related to a covered peril. So, a situation where a tenant has to move from a fire-damaged building qualifies. One where a tenant just stops paying you rent does not.
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3. Not Realizing Vacancy Clause Time Limits
Most landlord insurance policies include a vacancy clause. This clause will cover the landlord in case it is impacted by several commonly recognized ‘’perils’’ during vacancy. These include vandalism, theft and break-ins, water damage, and sprinkler leaks.
Many new landlords don’t realize that this vacancy clause has a time limit, typically 30 or 60 days. What that means is that once the property has been vacant longer than the time period specified in the policy agreement, you won’t be covered for any of the ‘‘perils’’ outlined above.
Many landlords who rent out their homes long-term may feel that they don’t need extra vacancy insurance because their rental never stands empty for longer than a couple of months. However, if you own a short-term vacation rental, you’re much more vulnerable to the time-sensitive nature of standard vacancy clauses. In that case, getting extra vacancy insurance is a very good idea. This applies to home flippers, too, as properties that are being renovated can easily be unoccupied for many months at a time.
It is always very important to disclose all of the specifics when taking out vacancy insurance because the coverage and the terms will vary depending on why you anticipate vacancy periods at your investment property. You also want an insurance product that will cover you for the right risks. Steadily, for example, has specific products for properties under renovation, fix-n-flips, and long-term vacant dwellings.
4. Not Including Insurance Costs in Deal Analysis
Last but not least, not factoring insurance into your deal analysis can cost you a lot. Depending on where your investment property is located, the costs can vary considerably, and you really can’t just ballpark-guess it. State-by-state premium fluctuations are significant. For example, if you live in Arizona, you may only pay $839 per year, but if you live in Florida, the annual landlord insurance cost will be closer to $1,722 per year. That’s a huge gap.
And geography isn’t everything here. The age of the property and even what type of roof it has can significantly alter the premiums. Obviously, any investor worth their salt needs to know in advance whether landlord insurance will set them back an extra $800 or $2-3k.
So, always factor landlord insurance premiums into your prospective investment analysis. Using a landlord insurance calculator or getting a property-specific quote is crucial for investors performing deal analyses on properties. And bear in mind that landlord insurance, because of all the extra coverage it offers, can cost 25% more than home insurance policies. If you’ve been budgeting for standard homeowner’s insurance up till now, you’ll have to revise all your figures.
Conclusion
Landlord insurance is essential for protecting your rental property against many common problems that can go hand-in-hand with having tenants. Insurance is always about calculating risk, and when someone lives at a property who isn’t the owner, that risk goes up. It’s not just because rentals often get damaged but because there are many logistical difficulties, such as when a rental property is damaged and a tenant has to move out, or when a rental stands empty for long periods of time.
Because of the higher risks, landlord insurance will cost you more as an investor than standard homeowner’s insurance would cost you as a homeowner. However, If you only take away one important point from this list of common mistakes with landlord insurance, it’s this: don’t choose not to take it out. Landlord insurance protects you against the most unexpected events at your rental, which are often the costliest. It could even save your entire business.
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By Krista Reuther
When a tenant approaches you about breaking the lease agreement, before jumping to conclusions, it’s important to understand there are many situations out of their or your control. Being sympathetic, listening to your tenant, and staying mindful of different circumstances will help you understand how you should move forward. While you need to always check local and state landlord-tenant laws, here are five reasons tenants might want to break a lease:
1: Active Military Duty
Active military duty is one of the few times when a tenant is able to legally break a lease without penalty. Active duty military members are covered by the Servicemembers Civil Relief Act, which means a military service member who receives orders to be deployed or to move is allowed to break a lease. It’s important to note, the tenant still needs to follow the proper course of action. Should a service member receive a change of station order during the course of their lease that requires them to relocate for a period of at least 90 days, they must notify the landlord in writing no less than 30 days prior to vacating the rental unit. They also need to provide the landlord with proof they have been relocated, such as a copy of the change of station orders or military deployment.
2: The Tenant Unexpectedly Becomes Unemployed
Job circumstances can change unexpectedly and suddenly. Your tenant might have had a stable job and proof of pay stubs when they signed the lease, but down the road, loses their job. Unless there is a provision in the lease that allows a tenant to break a lease due to financial hardship, the tenant is still responsible for paying rent in a timely manner per the lease agreement. Having a clause related to financial hardship was atypical in the past, but the last year and a half could prompt landlords to include one. Some jurisdictions might require landlords to work with tenants in this situation.
If the lease does not include a clause regarding financial hardship, renters should contact the landlord to inquire about alternative options, such as adding a cosigner or negotiating rent. Remember to be sympathetic and communicate with your tenant to come up with a solution that works for both of you.
3: Job Transfer
A sudden job transfer is a common reason why tenants may wish to break a lease. Should this happen, the landlord is not obligated to release the tenant from their rental agreement. Landlords should explain to the tenant they must pay the remainder of the lease; a solution for this particular reason could be to allow the tenant to sublet which we’ll explain below.
4: The Tenant Has Found Another Home
A tenant may come to you and tell you they found a different rental unit to live in, or that they purchased a home and, as a result, need to break the lease. In this case, the landlord is under no obligation to agree to let the tenant out of their rental unit without penalty, especially if it violates the lease agreement and there are no other protections in place.
5: Environmental Factors
Tenants might want to break a lease based on additional environmental factors. The biggest example of this is domestic violence – the majority of states allow victims of domestic violence to break the lease agreement without penalty by providing landlords with written notice; double-check your state’s landlord-tenant laws to see what protections are in place for domestic violence victims.
Another environmental factor tenants might want to break the lease because of is an unlivable condition in the rental unit. If landlords have failed to keep the implied warranty of habitability to provide a safe and livable rental unit, tenants may have grounds to break a lease agreement. Once again, always check your landlord-tenant laws, or consult with an attorney to make sure you are staying compliant.
How to Protect Yourself in the Lease Agreement
The biggest thing landlords can do to protect themselves when a tenant wants to break a lease is putting the right clauses in the lease agreement itself. Since a lease agreement is a legally binding contract, it’s essential to always review the lease agreement with your tenant so they understand their responsibilities as well as yours as the landlord. Here are some things to include in your lease to help protect yourself when a tenant wants to break the agreement:
- Subleasing Clause: If you choose to include a subletting clause in the lease agreement, this can be a great alternative for renters who need to move away suddenly or cannot afford rent anymore. It can be a convenient solution for landlords as the previous tenant will find a replacement renter, and you can sign a new lease with a new renter. Remember to always screen subletters as well to protect your rental investment.
- Lease Buyout Fee: A landlord can protect their own interests by including a lease buyout fee in the lease agreement. This requires a tenant to give a 60-day written notice and also pay an additional amount equal to two months’ rent. The money is usually due upon notice, and the 60 day period begins when the fee has been paid and an exact move-out date has been provided.
- Forfeit Security Deposit: Another option landlords can include in the lease agreement is that if a tenant wants to break a lease, they forfeit the security deposit. This can be in addition to the buyout fee or any other legally allowed consequences.
Read here to learn what else should be included in a standard lease agreement. To customize a lease agreement, build your own state-specific lease in your TurboTenant account.
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How to Prevent a Tenant from Breaking the Lease
As we mentioned above, sometimes there are circumstances out of your control or legal obligations you have to follow when a tenant wants to break a lease. However, there are a few things you can do to help prevent tenants from wanting to break a lease in the first place. The most important and obvious thing to do is screen all potential tenants. While a screening report will give you a criminal background check, credit check, and eviction history report, landlords should also talk to the tenant and get to know them better.
Ultimately, landlords need to review all of the lease terms, clauses, and additional provisions before a tenant signs. Emphasizing both parties’ responsibilities will help everyone be on the same page.
If you have a tenant who wants to break a lease, remember to be understanding, communicative, and always consult the lease agreement, along with landlord-tenant law. Landlords should be prepared for this type of situation by knowing the legal reasons a tenant can break the lease and setting up the lease agreement properly. If you are looking to fill your vacancy or are expecting a tenant to break a lease, create your TurboTenant account today so you can streamline the process and fill your property in no time.
Tenants Breaking Lease Agreements FAQ
When a tenant needs to break a lease, do they need to give written notice?
Always check your local and state guidelines, but it might depend on the situation. In the example of an active service member, they are required to provide a 30-day written notice. Typically, when leases end, a tenant should also fill out a notice to vacate form.
Should I consult a lawyer when a tenant tries to break a lease?
It’s never a bad idea to consult with your lawyer to know your rights and understand what the correct actions are that you can take. Remember, each state and even individual city might have different laws when it comes to tenants breaking lease agreements.
How can I build protections against tenants breaking a lease into my rental agreement?
You can build protections into your lease agreement, like we mentioned above, by including things such as a buyout clause or subleasing clause. You can easily do this with our customizable and online lease agreements found right in your TurboTenant account. Our leases are state-specific and have been proofed by local landlords and lawyers to ensure you stay compliant.
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By John Triplett
A new survey says renters want flexible monthly payment plans, loyalty programs and help with the stress of moving.
The RealPage survey of more than 2,000 renters showed:
- 98% of renters want a loyalty program for paying rent.
- 93% of renters are interested in flexible rent payments.
- 97% of renters would choose an apartment offering an easy way to manage moving.
The 2024 National Multifamily Renter Study shows the multifamily housing industry must adapt and enhance its offerings to attract and retain residents amid the changing rental landscape and increase in supply, RealPage said in a release.
- 97% say they would be more likely to renew their lease if working with their property manager was as easy as interacting with Amazon.
- 97% would be more likely to choose an apartment offering a service to simplify moving, such as help setting up internet and utilities, finding a local mover and setting up payments.
- 93% were interested in flexible rent payment schedules (biweekly, bimonthly, weekly) rather than a full, once-a-month payment.
“It’s a renter’s market, and they demand more from moving assistance, loyalty programs and payment options to enhance their living experience,” Rob Franklin, Senior Vice President and General Manager of Resident Solutions at RealPage, said in a release. “This national survey confirms the modern experience renters want today, and we are thrilled to bring it to them with LOFT™, RealPage’s fully integrated resident experience platform.”
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Overall, the survey responses showed that enhanced offerings from a property manager, such as a seamless digital app and loyalty programs, factor heavily into a resident’s decision to select an apartment and renew. Research shows 97% of respondents would choose a specific unit and renew their lease if they were offered improved benefits from property management companies.
The study, conducted by Dimensional Research, was presented during RealWorld 2024, the company’s conference that brings together nearly 1,500 registered attendees from the multifamily community to highlight innovations in the rental housing industry. All 2,011 qualified study participants were currently paying rent for an apartment in a multi-unit building operated by a property management company. All were between 18 and 55 years of age living in the United States. A mix of genders, household incomes, regions and demographics were captured to enable analysis by various categories.
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Provided by Rental Awareness
Yes, a landlord can raise the rent if a girlfriend moves in. However, it is important to review the terms of the rental agreement to see if there are any restrictions or provisions regarding additional occupants and rent increases.
Some rental agreements may have limitations on the number of occupants or specific rules about rent adjustments.
It is recommended to communicate with the landlord and review the agreement to understand the specific terms and conditions.
The Landlord-Tenant Relationship
Understanding the Landlord-Tenant relationship can be complex, especially if a girlfriend moves in and the landlord wants to raise the rent.
It is important to know the terms of the lease agreement and consult local laws to determine what actions can be taken in this situation.
One of the key aspects of renting a property is understanding the landlord-tenant relationship.
Landlord’s Rights And Responsibilities
As a landlord, it is essential to be aware of your rights and responsibilities to maintain a fair and respectful relationship with your tenants.
By understanding your rights, you can ensure that your property is cared for properly and that your tenants are abiding by the agreed-upon terms. Here are some key points to consider:
- Right to collect rent in a timely manner
- Right to enter the property for necessary inspections or repairs, with proper notice
- Responsibility for maintaining the property and making necessary repairs to ensure habitability
- Responsibility to respect the tenant’s privacy and only enter the property as outlined in the lease agreement or with proper notice
Tenant’s Rights And Responsibilities
As a tenant, understanding your rights and responsibilities will empower you to protect your interests and ensure a comfortable living situation.
By familiarizing yourself with these key points, you can advocate for yourself and maintain a healthy landlord-tenant relationship:
- Right to live in a habitable property
- Right to privacy and quiet enjoyment of the rental unit
- Responsibility for paying rent on time and in full
- Responsibility for maintaining the property in a reasonably clean and safe manner
Knowing The Laws And Regulations
Understanding the laws and regulations that govern the landlord-tenant relationship is crucial for both parties.
This knowledge provides a solid foundation for resolving any disputes or issues that may arise during the tenancy.
By being aware of the legal framework, you can protect your rights and uphold your responsibilities. Here are a few reasons why knowing these laws is important:
- It prevents misunderstandings and ensures compliance with local regulations.
- It helps in resolving conflicts or disputes based on factual information.
- It allows for informed decision-making when entering into a rental agreement.
- It establishes a sense of accountability and fairness in the landlord-tenant relationship.
By comprehending the rights and responsibilities of both landlords and tenants and staying informed about the laws and regulations, you can foster a mutually beneficial and harmonious living arrangement.
This solid foundation will contribute to a healthy landlord-tenant relationship, providing peace of mind for both parties involved.
Remember, knowledge is power, and by understanding the dynamics of this relationship, you can navigate any challenges or situations that arise with confidence.
Defining A “Guest” And “Tenant”
Wondering if your landlord can raise the rent if your girlfriend moves in? Understanding the difference between a “guest” and a “tenant” is crucial.
While a guest is usually temporary and doesn’t have tenant rights, if your girlfriend becomes a tenant, the landlord may have the right to raise the rent.
Always consult with your local rental laws for specific guidelines.
Differentiating Between A Guest And A Tenant
When it comes to determining whether someone is a guest or a tenant, it’s essential to understand the distinctions between these two categories.
While a guest is someone who stays temporarily with the landlord’s permission, a tenant is someone who has entered into a rental agreement with the landlord and has the right to occupy the property.
Furthermore, a guest typically does not pay rent, whereas a tenant is obligated to pay rent for their use of the rented space.
Criteria For Determining Tenant Status
The status of someone living in a rental property as either a guest or a tenant is typically determined by specific criteria set forth by the landlord or governed by local laws.
Although these criteria can vary, some common factors that landlords consider may include:
- The length of time the person has been residing in the property
- Whether the individual contributes to household expenses
- Whether the person has received mail or packages at the property
- Whether the landlord has given permission for the person to live in the property
It is crucial to consult the rental agreement or local laws to understand the specific criteria used to determine tenant status and the rights and responsibilities that come with it.
Impact On Rent If Girlfriend Is Classified As A Tenant
If your girlfriend is classified as a tenant, it could have implications for the rent.
Landlords have the right to revise rent prices, but usually, they can only do so when the lease term is up for renewal.
However, if the girlfriend is considered a tenant, their presence in the rental unit may be subject to additional rent charges as per the agreement.
This increase in rent could be based on factors such as the number of occupants, utilities usage, or other related expenses.
It is important to review the rental agreement or consult with the landlord to understand the exact impact on rent if your girlfriend is classified as a tenant.
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Reviewing The Lease Agreement
When it comes to rental agreements, it is essential for both landlords and tenants to thoroughly review the lease before making any significant decisions.
One common concern that arises is whether a landlord can raise the rent if a girlfriend or additional person moves in.
To address this question, it is vital to understand the provisions outlined in the lease agreement.
Importance Of Reviewing The Lease Agreement
The lease agreement serves as a legal contract between the landlord and the tenant, detailing the rights and responsibilities of each party.
By carefully reviewing the lease agreement, tenants can gain a clear understanding of the terms and conditions governing their tenancy.
Additionally, landlords can ensure that the lease agreements they create adequately protect their interests.
Provisions Regarding Additional Occupants
Lease agreements typically include provisions outlining the maximum number of occupants permitted in a rental unit.
Landlords often impose these limits to maintain a comfortable living environment, ensure compliance with safety regulations, and avoid overloading the property’s utilities.
The lease agreement might state that only the named tenant or tenants specified in the original agreement are allowed to reside in the rental unit.
In this case, if a girlfriend or significant other moves in without the landlord’s knowledge or permission, it could be considered a breach of the lease agreement.
On the other hand, some leases may explicitly allow additional occupants but require them to be added to the lease agreement through a formal process.
This process typically involves obtaining written consent from the landlord and potentially adjusting the terms of the lease, such as the rent amount.
Understanding the provisions regarding additional occupants in the lease agreement is crucial to determine whether the landlord can raise the rent when a girlfriend or additional person moves in.
How Lease Terms Affect Rent Increases
The terms and conditions outlined in the lease agreement have a significant impact on the landlord’s ability to raise the rent due to the addition of an occupant.
In some cases, the lease may explicitly state that the rent amount will not increase if an additional person moves in, as long as the total number of occupants remains within the limits specified.
In conclusion, reviewing the lease agreement is of utmost importance when considering any changes in occupancy or potential rent increases.
By understanding the provisions regarding additional occupants and the impact of lease terms on rent amounts, both tenants and landlords can ensure a fair and transparent rental experience.
Considering Fair Housing Laws
When considering the question of whether a landlord can raise rent if a girlfriend moves in, it is important to take into account the fair housing laws that exist to protect tenants from discrimination.
Fair housing laws, also known as anti-discrimination laws, establish guidelines and regulations to ensure that all individuals have equal access to housing opportunities.
Fair Housing Laws
Fair housing laws are regulations that prohibit discrimination in housing on the basis of certain protected characteristics.
These laws aim to foster a fair and inclusive housing market, while also safeguarding against practices that could lead to discrimination or unfair treatment.
Prohibited Grounds For Discrimination
Under fair housing laws, landlords are prohibited from discriminating against tenants on the basis of protected characteristics. Some of the common protected characteristics include:
- Race
- Color
- National origin
- Religion
- Sex
- Disability
- Familial status
It’s important to note that fair housing laws vary from country to country and sometimes even at the state or local level.
Landlords must familiarize themselves with the specific laws that apply to their jurisdiction.
Implications For Rent Increases Based On Girlfriend Moving In
When it comes to the situation of a girlfriend moving in, the fair housing laws primarily focus on discrimination but may not directly regulate rent increases.
However, landlords must be cautious and ensure that any changes in rent or rental agreements are not based on discriminatory practices or targeting specific tenants.
It’s important for landlords to treat all tenants equally and not single out tenants based on their relationships or familial status.
Charging higher rent or increasing rent solely because a girlfriend moves in can potentially be considered discriminatory and may be in violation of fair housing laws.
While there may not be specific laws directly addressing rent increases due to a girlfriend moving in, landlords should always approach such situations carefully and fairly.
Communication with the tenant, evaluating market rents, and following established rental policies can help ensure that any rent adjustments are justifiable and non-discriminatory.
Conclusion
It is important for tenants to be aware of their lease agreements and understand the rules surrounding additional occupants.
Landlords generally have the right to raise rent if an unauthorized person, such as a girlfriend, moves in.
However, it is always best for tenants to communicate openly with their landlords to avoid any misunderstandings or legal issues.
Keeping lines of communication open can help maintain a positive tenant-landlord relationship and ensure a smooth living situation for all parties involved.
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Provided by Bigger Pockets
Home insurance prices continue to rise and could increase by another 6% this year after already rising nearly 20% in the last two years, according to one estimate. A combination of inflation and extreme weather events in some states has fueled the jump in prices, with the average annual rate increasing 19.8% between 2021 and 2023, a report from Insurify found.
The insurance comparison site estimates that prices will rise 6% to an average of $2,522 by the end of 2024 and could increase further in 2025 if the hurricane season is as bad as NOAA projections say it will be.
Where Insurance Costs Are Increasing the Most
Insurance rates aren’t the same across the board. Some factors are individual, like the size and age of the home, as well as claims history. Other impacts include where your home is located and how likely it is to be damaged.
Due to these various factors, not everyone will see their premiums increase this year. States more prone to climate catastrophes, such as flooding and wildfires, are more likely to see an increase in rates. Other states, like California, will only see a slight increase due to state regulations limiting how much rates can rise in a given year.
Louisiana, for example, is expected to have the biggest increase in rates due to hurricane damage. Meanwhile, rates are catching up in Maine, which has seen an increase in the sea level and subsequent flooding and coastal damage. Florida is also likely to see an increase in prices, although it already has some of the most expensive insurance in the country, with homeowners paying an average of $10,996 a year for coverage.
Here’s a look at the top 10 states where homeowners are bearing the brunt of increased insurance costs.
Why Insurance Costs Are Rising So Much
States with high insurance costs tend to be prone to extreme weather events. And with climate change increasing, some project that those weather events will get even more extreme in the future—which means homeowners in these prone areas are likely to be hit with large premiums.
According to a study from Realtor.com, nearly half of all homes in the U.S. are at risk from climate change. Many coastal states are in areas of relatively high risk of natural disasters, according to FEMA’s National Risk Index. Meanwhile, wildfires have become a growing risk in various areas across the country, with the damage they cause costing an estimated $394 billion to $893 billion annually.
Building repair costs have also increased since inflation has caused construction material costs to skyrocket in recent years. That means insurers have to pay more when a homeowner makes a claim—a cost that’s passed on when they increase premium rates.
Even reinsurance (basically insurance for insurers) has risen, further increasing prices, especially in areas prone to disasters like Florida. Some insurers (and reinsurers) have left areas they have deemed too high risk. According to Insurify, the number of available home insurance policies decreased by 35% in 2023.
As climate change increases, homes not in catastrophic weather areas could still see a lot of damage from events like large hailstorms and severe thunderstorms. But 60% of homeowners forgo flood insurance, according to a February 2024 Insurify study, and standard insurance doesn’t pay for flooding.
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What Increased Insurance Costs Mean for Investors
As climate change becomes more of a factor, it will not only cause an increase in insurance premiums, but it could affect the value of homes. According to Insurify, around 25% of homeowners feel like climate change has affected the value of their homes. Meanwhile, a Congressional report found that climate-exacerbated wildfires could diminish total real estate values by as much as $337.5 billion annually.
“Climate risk is a big deal,” Realtor.com economist Jiayi Xu said in a statement. “It can impact home values, insurance costs, and the overall stability of a housing market.”
Even homes that aren’t hit directly by extreme weather events are being impacted by rising insurance premiums, which only increases the cost of homeownership.
And it’s not just single-family homes being hit. Insurance for commercial real estate has also skyrocketed, which may be contributing to a slowdown in deals, as unpredictable insurance costs can impact an owner’s ability to underwrite a deal, Danielle Lombardo, managing director of insurance service provider WTW, told Pere News.
In other words, with an increase in natural disasters, real estate investors with properties across the board will need to pay closer attention to the climate and its potential impact on not just insurance prices but the overall prices of doing business.
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