Tenants’ Rights When a Landlord Sells a Property

Written by Emily Koelsch 

With changing economic and market conditions, some Landlords are deciding to sell their rental property with Tenants in place. There are various reasons to do this – for example, wanting to take advantage of strong markets, needing cash for other opportunities, or no longer wanting to be a Landlord. 

There are some distinct advantages and disadvantages to selling a property with Tenants in place. If you decide to buy or sell a property with Tenants, you must know and respect your Tenants’ rights. 

To help you do that, here’s an overview of those Tenant rights and tips for making the process go smoothly. 

Selling with tenants

Notice Requirements When Selling a Property With Tenants in Place

Tenants have a right to receive an official Notice of Sale of Property. This Notice should be detailed and include specifics about when you’re putting the property on the market, the notice Tenants will receive before showings, and any other Tenant rights or responsibilities. 

When drafting this Notice, look at your Lease Agreement and state laws. Some states have specific timelines for when Landlords must give notice. Additionally, good Lease Agreements include language about Notice of Sale and Notice of Showings. 

Here are some tips for drafting this Notice: 

  1. Review your Lease and make sure you comply with all terms; 
  2. Review state and local laws to ensure compliance with all requirements;  
  3. Include as much detail as possible; 
  4. Tell Tenants how much Notice you must give before showings; 
  5. Discuss the Tenants’ rights and responsibilities; 
  6. Encourage Tenants to contact you with any questions or concerns. 

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The Lease Agreement Is Enforced Even if Ownership Changes

One of the most essential things for Landlords and Tenants to understand is that a fixed-term Lease Agreement remains in effect even if ownership changes. The Lease isn’t tied to the Landlord; instead, it remains with the property and is in full effect until the end of the Lease period. 

Here are some Lease-related tips when selling a property. 

  • Tenants are understandably anxious when they hear that their home is being sold. To ease their concerns, let them know that their Lease terms won’t change. 
  • A strong Lease Agreement can make your home more attractive to investors. Investors are bound by the terms of the Lease. They’ll be more comfortable with a thorough, state-specific Lease Agreement. 
  • To protect your Tenant, put everything in writing. For example, if the Lease doesn’t include a Pet Addendum or address pets, the new owner could tell your Tenants their pets are not allowed. Add any needed Addendums to your Lease before selling the property. 
  • At the end of the Lease term, Tenants are entitled to their security deposit. At the time of the sale, Landlords should transfer the deposit and any accrued interest to the new owner.  

Effectively Marketing & Selling a Property With Tenants in Place 

Even with proper Notice and a good Lease, it can be tricky to sell an occupied rental property. The process is stressful for Tenants and presents uncertainty for buyers. Thankfully, there are some ways to make the process go smoothly. 

With that in mind, here are some tips to help you market and sell an occupied rental.

  • Make sure Tenants are current on rent. If Tenants are behind, it makes your property less attractive to investors.
  • Offer incentives to encourage Tenants to be cooperative during the selling process. Tenants can help by keeping the property clean, leaving during showings, and staying current on rent. To encourage cooperation, consider offering incentives like gift cards to local restaurants, a night at a hotel during an open house, or a rent discount while the house is on the market. 
  • Communicate well with Tenants throughout the entire process. Good communication includes coordinating showings around their schedule. Ask your Tenants when it’s convenient to show the property and, whenever possible, schedule showings during these times. 
  • Even if you don’t plan to sell a property, your Lease should always include language about a Landlord’s right to sell a property. 
  • Tenants are not required to clean or prepare the property for showings. To ensure it’s in good condition, offer to have it professionally cleaned. 
Money in envelope

Visit ezLandlordForms for the Notices & Forms You Need 

Good Tenants and a strong Lease Agreement are key factors for selling your property with Tenants in place. Buyers need to feel comfortable that they won’t have Tenant headaches. When there’s a thorough Lease and the property’s in good condition, the buyer has peace of mind that they’re inheriting quality Tenants. 

Visit ezLandlordForms.com to customize a Notice of Sale, create Addendums for your current Lease Agreement, or build a state-specific Lease Agreement. 

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4 Reasons Small Move Sizes Are Predicted to Grow in 2024

Source: Rental Housing Journal

Small move sizes by renters are predicted to grow in 2024 mostly because the ratio of rental moves and homeowner moves changed.

A full 50% of moves in 2024 will be renters with small move sizes, predicts one report based on moving company request trends.

Looking ahead to the warm weather moving season’s busiest months, the report notes that “people who own homes aren’t moving. Only renters are moving. And renters have a lot less stuff.

So, in 2023, we saw the average move size drop by about 30%. Mostly because the ratio of rental moves and homeowner moves changed. So, we’ll continue to see rental moves make up a big portion of 2024 moves.”

The report‘s predictions are based on user behavior — when movers submit requests, interest in those destinations and sizes of moves are logged. If the trend continues, rentals will reign, and small-size movers will take a larger and larger percentage of overall moves this year.

Why? And what does that mean? We’ll dig into some factors we think are behind the trend.

What are the Reasons Behind the Small-Move Rental Boom?

1. It’s Easier to Move a Rental Household

Typically, renters have fewer items to move than owners. That makes them more likely to relocate than owners, who might have decades’ worth of possessions tucked into garages, basements, and attics. It makes renters more mobile than owners.

Owners have social and psychological reasons to stay put, too. They may be ensconced in their communities, from schools to places of worship and city councils.

In fact, one study showed renters were three times more likely than owners to have moved recently.

But that doesn’t explain why this year’s renters are taking an even larger share of the pie. Or does it?

2.  The Current Job Market Favors Relocators

When it’s easier to move without having to find a new job, more and more renters who are thinking about relocation are likely to jump in.

Long-distance moves continued to accelerate through 2023 as jobseekers looked outside their own cities in search of affordable housing and better quality of life. The remote-work renaissance during pandemic shut-downs made that possible, and it shows no signs of slowing years after lockdowns.

Some even say that return-to-office “died” in 2023, so workers may be feeling bolder that their jobs will accommodate new moves.

Because renters can pick up and move more easily with smaller move sizes, more small-move relocators get in on the trend.

3.  Interest Rates Are High

At the same time, large move sizes (belonging to more homeowner moves) are stagnating.

While current interest rates can’t compete with their high 1990s counterparts, they’re still high compared to anything prospective homeowners have seen in the last two decades. That’s put a damper on home buying and it has encouraged owners who are moving to consider renting in their new location until rates come down.

With some speculation that this could happen by the end of the year, homeowners are more likely to put off moving for one more year, while renters face no such obstacles. They can move now, and many are.


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4. Pricing Pressures

Recent inflation on everything from food to consumer goods, coupled with an ongoing housing shortage that’s been driving prices upward, has put pressure on renters to move. According to one survey, 56% of renters said they felt pressure to move in order to seek relief from increasing rents.

And, as prices rise, renters who have a mobility advantage can look outside their home cities for a discount. With remote jobs, they’re even more likely to do so.

The result? Renters are less likely than ever before to ask themselves if lower-rent regions are “worth it.” Of course they are! They can increasingly keep their jobs anywhere in the country while saving more — and maybe even increasing the likelihood that they become homeowners in the future.

In a world where renters can work just as much, but save more and live larger in a potentially safer, cleaner location closer to nature, why wouldn’t they?

What Does the Rental Move Boom Mean for Renters?

More moves, more renters, and smaller move sizes?

Is that positive or negative? As housing transactions fall, demand for rental units necessarily rises, benefitting landlords. That small-size rental moves are grabbing a bigger share of the moving pie also predicts strong demand for rental properties, rising rates and competition for units.

However, there are benefits for renters that come with the trend toward smaller move sizes:

  • Focus on tenant satisfaction: As landlords try to keep down the high turnover that comes from more moves, they’re more likely to seek out stable tenants who they feel will stay long-term. That means more focus on tenant satisfaction and retention, with more responsive property management, on-point maintenance, and timely communication.
  • Greater flexibility: More small moves and higher mobility may pressure unit owners to offer more flexible lease terms, as renters increasingly value the freedom to move. Landlords can attract a broader pool of tenants when they offer more flexibility in housing terms.
  • Amenities rule: Tenants will be increasingly able to seek out properties near transportation or with lifestyle amenities from fishing ponds to crystal lagoons, car-free thoroughfares, and more. After all, they’re often moving to increase their quality of life. Appealing to these renters may mean the market increasingly bends toward differentiating their properties and making them lifestyle destinations.
  • Moving becomes more about location, location, location: Renters may find it more difficult to move to neighborhoods in high demand for their high quality-of-life amenities, access to culture, and accessible transportation. These hot spots should see increasing applications for new moves.

Small Moves Will Reign in 2024

While some landlords fear a rental market crash in 2024, the reality is far more nuanced. In fact, demand for rental housing stands to rise, with prices predicted to increase 1.5% in 2024. New supply is actually putting the brakes on the rental market, not a lack of movers.

Landlords can take heart from moveBuddha’s data that shows an increase in the market share of small-size moves, as they predict high move intent from renters throughout the 2024 moving season. But renters have plenty to celebrate, too.

The biggest takeaway?

The era of moving to “Zoom towns” is not over, as more and more renters recognize that it’s not the time to buy, and that they won’t lose their existing jobs if they opt for new rental digs. Renters who can harness the demand for these moves stand to gain in 2024.

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Are There Resident Bullying/Harassment Best Practices?

Article provided by Fair Housing Institute

It’s simply a part of any property; your residents aren’t always going to agree. This makes conflict inevitable, but the key turning point is when it turns into bullying and harassment. To be clear, the Fair Housing Act states that resident bullying and harassment cannot be tolerated. Are you sure that your property, as a whole, has the best practices in place when it comes to resident bullying and harassment? Let’s go over four key points that occur during this situation and highlight best practices for each.

Best Practice: Proper Training for Staff

Your staff members typically have the most contact with your residents. They’re the listening ear and first point of contact for many issues, including incidents of harassment and bullying. So, what if your staff member witnesses a case of resident bullying?

First and foremost, any member of staff who is not involved with management should not get involved in the situation in any way. This is because not all staff members will have the training to discern a personality conflict from a conflict based on a protected category/class.

The training you should invest in for all staff members is twofold: incident reaction and documentation. Training all staff members to stay a witness to an incident involving resident bullying and harassment is your first step. The next steps are to ensure everyone understands how to document the witnessed occurrence properly. Any little detail missed can impact management’s investigation of the incident.

Best Practice: Incident Documentation

So, a staff member has witnessed and documented a conflict between two residents that they perceived to be bullying and/or harassment. What are management’s next steps? Along the same lines as staff members training, ensure every step you take is documented well when following up on the reported incident.

Your first important step is to establish that there is bullying and/or harassment taking place between the residents. If there is enough evidence found to support this claim, you cannot hesitate to launch an investigation. Why is this?


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Best Practice: No Investigation Hesitation

The most important answer to the above question is quite simple: investigation hesitation can lead to a violation of the Fair Housing Act. It is illegal for harassment to persist with no action on behalf of the housing provider.

As a follow-up answer, the housing provider will almost always be the focus of the legal case if a court investigation is launched. This is based on the fact that the housing provider is operating as an asset of a property management company, therefore, they have more money to pay in a settlement, as opposed to an individual who was the cause of the bullying. In summary, if you want to avoid a pricey settlement on top of a violation fine, it’s best that you launch an investigation as soon as it has been proven harassment is taking place.

Best Practice: Zero Tolerance Policy

Once you have your documentation in place, from the incident report to the investigation, it is up to management to issue consequential action. Bullying and harassment are not only against the Fair Housing Act but also a violation of the resident’s lease.

So, depending on the severity of the situation, a lease violation or termination can be issued. A zero-tolerance for bullying and harassment policy can also be installed as part of your property for further proof of a decision made by management.

In conclusion, situations of harassment and bullying will occur on any property. And they’re tough incidents to deal with. In any case, remember the discussed best practices: ensure your staff is properly trained, incident documentation is as thorough as possible, don’t give in to investigation hesitation, and consider a zero-tolerance policy.

Above all else, remember the Fair Housing Act is against bullying and harassment of any kind. So, ensure you’re following through on your responsibility to uphold and abide by its laws.

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Episode 69: Part One, What Exactly is Squatting and Should You Be Worried About It?

Listen On:

This is a hot topic in many areas right now!

From property lot lines to someone actually gaining entry to your property and living there, many real estate investors have to be very careful about what you buy, how you manage the land and the structure, and protecting your vacant property.

In this episode we are talking about the law behind squatting, also known as adverse possession.  We will discuss the history behind it, where it has gone wrong, and what some states are now rushing to do and correct the problem.

This is a two-part podcast episode.  This week is all about what it is and how it can affect your rental property.  Next week we will discuss what to do if a squatter moves into your rental and how to protect yourself from it even happening in the first place.

LINKS

👉 Episode 68: An Interview with Self Managing Landlord, Dan Borrero

👉 NOLO: State by State Rules on Adverse Possession

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What You Need To Know About Investing Out of State

Written by Emily Koelsch 

Investing Out of State

Out-of-state investing is an increasingly popular strategy for real estate investors. Property values vary significantly from one state to the next. For investors who live in expensive markets, investing out of state often means a lower entry price and an increased rate of return. 

In addition, there are lots of tools available to make it easier to manage rental properties from out of state. This means that investors can still self-manage their properties to further improve returns. 

The combination of these factors has made out-of-state investing an increasingly popular choice. That said, it presents some unique risks and challenges for investors. To help you decide if this strategy is right for you, here’s a look at some things you need to consider before investing in out-of-state real estate. 

Investing out of state

Rental Market Research & Property Analysis 

Research is one of the keys to successfully investing in new markets. Before picking a location, you want to do plenty of research to ensure it’s a good option for the short- and long-term. Look at a variety of different data points, including: 

  • Housing prices
  • Recent housing appreciation rates
  • Economic growth 
  • Employment rates
  • Rental demand 

Once you’ve found a market that you’re comfortable with, you’ll also want to do a full financial analysis of any properties you’re considering. This should include: 

  • Target purchase price based on comparable sales 
  • Estimated rent amounts 
  • Taxes 
  • Maintenance expenses
  • Overall operating expenses 

This analysis will give you an estimate of your monthly cash flow and your return on your investment. Doing this analysis is important in all markets, but it’s particularly important when entering a new area or market. 

Create a Network & Local Team 

Once you’ve found a market and property you like, the next thing to do is build a local network and team. This should include: 

  • A real estate agent with expertise in the area and investment properties
  • A contractor and/or handyman that can help with big and small projects
  • An HVAC professional
  • A plumber 

This is the core team you need to purchase and manage a rental property remotely. You can also benefit by having a network of local real estate investors or by connecting with neighbors who can help keep an eye on your property. 

Become Familiar With Local Landlord-Tenant Laws

Each state has its own Landlord and Tenant laws. These laws can impact how you manage your property. For example, state laws control: 

  • What has to be included in a Lease Agreement
  • The collection and handling of security deposits
  • Late fees
  • Notice requirements for entering for a non-emergency
  • Lease renewal notice requirements
  • Landlord and Tenant responsibilities

Before entering into a Lease Agreement, Landlords need to be familiar with the laws of the state where their property is located to ensure that they comply with all applicable laws.   


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Consult a Tax Professional 

Out-of-state rental properties can make taxes more complicated for investors. Because you’ll be earning income in a new state, it can impact how you run your business and file taxes. Before investing in a new state, talk with your CPA or tax professional about the tax implications of expanding your portfolio in a new state. 

Tips for Getting Started as an Out-of-State Investor

Despite the unique challenges that can come from investing out of state, many investors decide it’s the right choice for them. If you decide to move forward with this strategy, here are some tips to help you get started: 

  • Consider locations you’re somewhat familiar with – for example, where you went to college, have family members, or used to live. Some knowledge of the area will give you a great head start. Plus, it usually means you already have some contacts to help start your local network. 
  • Never buy sight unseen. Pictures, videos, and virtual tours are increasingly popular in the real estate industry. While these are helpful tools, they’re not a substitute for seeing the property yourself. Before buying a rental property, always look at it in person. This will ensure you’re making an informed decision about the property and the location. 
  • Schedule regular in-person inspections. While you can do most of your property management digitally, you still want to periodically inspect the rental property. Plan for this from the outset and prioritize annual property inspections. 
  • Take advantage of tools that make it easy to be a remote or digital Landlord. For example, Tenant Screening Services, online Lease creation and electronic signing, online rent collection, and a digital system for Tenant maintenance requests. 

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New Settlement Sets Lease-Breaking Precedent Under the Servicemembers Civil Relief Act

In a landmark settlement, a property management company and its landlord have agreed to pay a significant sum following allegations of violating the Servicemembers Civil Relief Act (SCRA).

The U.S. Attorney’s Office, Eastern District of Virginia, recently announced the settlement involving a claim between a servicemember homeowner and their landlord and property management company, McGowan Realty LLC, operating as RedSail Property Management. The complaint alleged that the defendants violated the SCRA by imposing early lease termination charges and additional rent on a servicemember.

An overview of the Servicemembers Civil Relief Act (SCRA)

The SCRA is a federal law enacted to provide legal protections and relief to active-duty servicemembers of the United States Armed Forces. Originally known as the Soldiers’ and Sailors’ Civil Relief Act (SSCRA) when it was first passed in 1940, it has undergone amendments and updates over the years.

The SCRA aims to ease the financial and legal burdens placed on servicemembers during active duty by postponing or suspending certain civil obligations. For example, the law allows servicemembers to request a postponement of civil court proceedings, such as lawsuits, foreclosures, or bankruptcy proceedings if their military service materially affects their ability to participate. It also protects servicemembers’ property, such as vehicles, against repossession for nonpayment while they are on active duty.

This lawsuit involved a different provision of the SCRA, which allows servicemembers who receive permanent change of station orders or are deployed for at least 90 days to terminate their residential leases without penalty. Landlords are prohibited from imposing early termination fees or requiring payment of rent beyond the termination date specified in the SCRA.


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  • LLC articles of organization
  • operating agreement for member-managed LLC
  • operating agreement for manager-managed LLC
  • LLC reservation of name letter, and
  • minutes of meeting form.

Form Your Own Limited Liability Company has easy-to-understand instructions, including how to create an operating agreement that covers how profits and losses are divided and major business decisions are made. You’ll also learn how to choose a unique LLC name that meets state legal requirements and how to take care of ongoing legal and tax paperwork.


The allegations of SCRA violations in this lawsuit

Here, the defendants refused to honor a servicemember’s lease termination after he received a permanent order to a new duty station 33.5 miles from his residence in Virginia Beach. The defendants argued they were covered by the Virginia Residential Landlord and Tenant Act. Unlike the SCRA, the Virginia law allows servicemembers to qualify for early lease termination only if they must relocate 35 or more miles from their current residence. Therefore, the defendants forced the sailor to pay $3,408.55 in early termination fees plus additional rent.

The Department of Justice argued that the SCRA offers “relief to servicemembers who would otherwise be forced to pay rent for housing they cannot occupy because they have been ordered to move to another location.” The federal law, they argued, trumped state law in this case because the SCRA has no distance limitation. Moreover, while the SCRA allows a landlord and tenant to waive the applicability of the rules, there was no such waiver in this case. A waiver must be executed in writing separate from the lease.

After spending 14 months and $50,000 in attorneys’ fees litigating the case, the defendants opted to settle. The consent decree requires the defendants to pay the servicemember $10,225.65, which includes the unlawful termination fees and additional rent plus two times the unlawful fees and additional rent assessed. The decree also orders the defendants to pay a $3,000 civil penalty to the U.S. Treasury. Moreover, the company must provide SCRA training for its employees and avoid imposing the 35-mile restriction on leases involving qualifying service members and their dependents.

What this lawsuit means for landlords

The resolution of this case sets a precedent for the protection of SCRA rights nationwide. All landlords should be aware of how the SCRA affects their relationship with tenants. In litigation failure to provide a servicemembers affidavit can derail proceedings, wasting the time, effort, and resources of the landlord. Even out of court, failure to abide by SCRA rules can be an expensive mistake.

Source: JD Supra by Ryan Kennedy

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HUD Warns About Using AI for Tenant Screening and Advertising

By John Triplett

The U.S. Department of Housing and Urban Development (HUD) has issued two guidance documents addressing the application of the Fair Housing Act to two areas in which the use of artificial intelligence (AI) poses particular concerns: the tenant-screening process and its application to the advertising of housing opportunities through online platforms that use targeted ads, according to a release.

“We have released new guidance to ensure that our partners in the private sector who utilize artificial intelligence and algorithms are aware of how the Fair Housing Act applies to these practices,” acting HUD Secretary Adrianne Todman said in the release.

Demetria McCain, principal deputy assistant secretary for Fair Housing and Equal Opportunity said, “Housing providers, tenant-screening companies, advertisers and online platforms should be aware that the Fair Housing Act applies to tenant screening and the advertising of housing, including when artificial intelligence and algorithms are used to perform these functions.”

“Housing providers have a legitimate interest in selecting tenants who will pay their rent and otherwise comply with lawful requirements of their lease. However, some tenant-screening practices do not in fact serve these goals.


A square image with a dark blue background has the TurboTenant logo in white centered at the top of the image. Beneath the logo states “Free Landlord Software, (Seriously)”. Below that, on the bottom half of the image is stated all of the benefits offered with the TurboTenant landlord software. The read “Advertising, Maintenance Requests, Rent Payments, Rental Applications, Rent Reporting, Lease Agreements, Expense Tracking”. At the bottom left corner is our logo that says “Your Landlord Resource”.

A landlords one stop shop for tenant management…for FREE

You can’t beat free and the only time you pay is if you want to purchase a lease or have expedited rent deposits. Most everything else costs zip, zero, zilch.


“Tenant screening based on imprecise or overbroad criteria may unjustifiably exclude people from housing opportunities in discriminatory ways. These issues have been magnified in recent years by the increasing reliance by housing providers on tenant-screening companies to drive tenant-selection decisions.

“An increasing number of tenant-screening companies claim that they use advanced technologies, such as machine learning and other forms of artificial intelligence (“AI”). These technologies can increase these companies’ capacity to access and analyze information about applicants that has not been widely used for rental decisions until recently but may have little bearing on whether someone will comply with their lease.

“These technologies can also lead to a less transparent process by obscuring the precise reasons for a denial from the housing provider and applicant,” HUD says. “The Fair Housing Act applies to housing decisions regardless of what technology is used. Both housing providers and tenant-screening companies have a responsibility to avoid using these technologies in a discriminatory manner.”

On the advertising side, HUD cautioned that online advertising-targeting tools are covered by the Fair Housing Act. The release said violations “may also occur when ad targeting and delivery functions are used, on the basis of protected characteristics, to target vulnerable consumers for predatory products or services, display content that could discourage or deter potential consumers, or charge different amounts for delivered advertisements.”

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Episode 68: Landlord Talk, An Interview with Dan Borrero

Listen On:

If you have not heard of Dan Borrero, owner of USA Land Ventures, this is your chance to learn from one of the best in the business.

Since 1989 this investor started his journey as a self-managing landlord and, at one time, had over 300 units he and his team managed!  As retirement is creeping up, he has made some changes and is beginning the process of reducing his portfolio to manage, which is now down to just around a hundred doors or so.

We are talking entrepreneurship, building a team, risk management, and so much more!  Dan is a wealth of knowledge not only for rental properties and investing, but also with his outlook on life.  He really knows how to put things in perspective, and we sincerely enjoyed the hour we were able to spend with him during this interview.

LINKS

👉 Episode 20: The Nuts and Bolts of Residential Rental Property Insurance

👉 Episode 21: Rental Property Insurance Part 2, Interview with Ryan Bravo

👉 Episode 39: 50+ Must Ask Questions When Hiring a Property Manager, Part 1

👉 Episode 40: 50+ Must Ask Questions When Hiring a Property Manager, Part 2

👉 Episode 16: Is Holding Your Rental Properties in an LLC Right for You?

👉 Episode 56: How and When to Transfer Your Rental Property Into an LLC

👉 Connect with Dan:

Email: DanielBorreroJr@gmail.com

Website: https://USALandVentures.com/

Instagram: https://www.instagram.com/usa_land_ventures/

YouTube: https://www.youtube.com/@USALandVentures/

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5 Essential Property Management Bookkeeping Tips

By Ryan Squires

For landlords, property management bookkeeping is one of those ugly little jobs that must be completed day in and day out. As rent payments come in, expenses go out, and stacks of receipts pile up, it’s easy for landlords to lose sight of their financial pictures.

Imagine facing tax season with disorganized records, struggling to understand your true profitability, or missing out on potential tax deductions because of a misplaced receipt. Solid bookkeeping can help you eliminate these concerns. 

That’s why we compiled a list of the five most essential property management bookkeeping tips to help you stay organized throughout the year. If you put in the work upfront, recording your finances and preparing for tax time gets much easier in the long term.

1. Set Up Your Financial Foundation

Landlords’ most important step is to build a solid financial foundation. The first step? Establish a system that allows you to track income and expenses accurately. 

Open Dedicated Bank Accounts

Open separate accounts for your rental business. And we’re not just talking about opening a single business account that keeps your personal finances separate. 

Consider opening an account for daily transactions, a security deposit account to hold tenant funds (which may be required by your state to be interest-bearing), and additional accounts to fund major repairs or capital improvements.

Create a Chart of Accounts

A chart of accounts is the backbone of your bookkeeping system. It categorizes all your income and expenses so you can sort them out easily. Create separate income accounts for rent, late fees, application fees, and pet fees (if applicable).

In terms of expenses, these can include property taxes, maintenance and repairs, management fees, insurance, and utilities (if you, the landlord, pay them). Keep in mind that you can customize your chart of accounts to accommodate whatever needs you have. 

Choose An Accounting Method

Choose between cash and accrual accounting methods to properly document your income and expenses on your tax returns. Let’s briefly discuss each system to find what’s best for your property management bookkeeping system. 

Cash Accounting

The cash accounting system is more straightforward and easy to understand of the two systems. With the cash accounting system, you record income when it’s received and expenses when they’re paid.

For example, when you receive a rent payment, you’ll record it. If your tenant misses a payment, you won’t. As a result, the cash accounting system provides real-time cash flow visibility and a clear picture of your immediate financial situation. 

On the downside, cash accounting doesn’t provide the most accurate profitability picture. Your records won’t reflect income earned if it’s not yet received, nor will you see expenses incurred but not yet paid, which makes it harder to get a view of your actual financial standing at a glance. 

Accrual Accounting

Accrual accounting is a bit more challenging to understand than cash accounting. This method records income as it’s earned and expenses as they’re incurred. For example, even if a renter misses a payment, you’ll still record it. 

On the other hand, if you hire a repair worker and agree to pay them next month, you’ll still record the expense as if you exchanged cash that day. The benefit is that you’ll gain insight into where your accounts are headed rather than where they stand now.

In terms of drawbacks, accrual accounting is more complex to implement. Landlords using this system must track outstanding invoices and accrue expenses. But, if you have a large number of properties, the system can help you get a better overall view of your overall financial health at a moment’s glance. 

Of course, the preceding were just a few pros and cons of both systems; diving deeper into each is important to see which will work best for you. If you have a very small portfolio, cash accounting makes sense because it’s simple. But, as your number of portfolios scales, you may want to consider the accrual method. 

Choose Bookkeeping Software

Software like REI Hub helps landlords keep track of all their income and expenses without manual data entry. REI Hub enables you to link your bank account to import expenses and income quickly and securely for increased accuracy.

Plus, with secure document storage, you can snap photos of receipts and keep them in a single, digital location rather than searching for them in drawers or shoeboxes.

2. Manage Transactions Effectively

Now that you’ve got an idea of how to lay your bookkeeping foundation, the work shifts to ensure a solid and reliable flow of transactions. The best way to start streamlining your processes is to use property management software with the following features. 

Online Rent Collection

With online rent collection, landlords can easily collect rent without the hassle of meeting tenants in person and depositing cash, checks, or money orders at the bank. Plus, with the right software, all your income gets automatically recorded for easy bookkeeping. 

Additionally, software providers like TurboTenant enable landlords to send late payment reminders and automatically apply late fees. 

Convenient Expense Tracking

You could manually record your rental property expenses via a spreadsheet, but as you scale your properties, the number of transactions increases markedly. Instead, use bookkeeping software from TurboTenant to effortlessly record each transaction, store digital receipts, and effortlessly send those transactions to REI Hub for streamlined tracking. It’s property management bookkeeping simplified. 

Automation

As alluded to in the expense tracking section, you can use software to automate some of your more repetitive tasks. 

Software like REI Hub enables landlords to record monthly transactions automatically with their Rules system. Systems like this match transactions based on their amounts and descriptions and apply them to specific properties, revenue, or expense accounts. 


A square image with a dark blue background has the TurboTenant logo in white centered at the top of the image. Beneath the logo states “Free Landlord Software, (Seriously)”. Below that, on the bottom half of the image is stated all of the benefits offered with the TurboTenant landlord software. The read “Advertising, Maintenance Requests, Rent Payments, Rental Applications, Rent Reporting, Lease Agreements, Expense Tracking”. At the bottom left corner is our logo that says “Your Landlord Resource”.

A landlords one stop shop for tenant management…for FREE

You can’t beat free and the only time you pay is if you want to purchase a lease or have expedited rent deposits. Most everything else costs zip, zero, zilch.


3. Reconcile Accounts

Bank reconciliation is comparing your bank statements to your bookkeeping records. It’s a critical step toward ensuring the accuracy of your financial data because it helps landlords identify discrepancies. 

You can choose to reconcile your accounts at any frequency that makes sense to you, but many landlords perform the task every month. You could reconcile accounts by manually comparing bank statements with transactions made in a spreadsheet or in bookkeeping software. Alternatively, software like REI Hub can automate the process to ensure smooth sailing. 

4. Generate Financial Reports

Regularly running reports provides landlords with valuable insights into their business performance. Aside from performance considerations, running reports gives landlords financial clarity to help make informed decisions, prepare taxes, and track investments. 

Landlords should consider generating the following reports consistently, and many different accounting software brands offer these types of reports. 

Profit and Loss Statement

Profit and loss statements, or P&L statements, summarize your income and expenses over specified periods. They’re essential to calculate net profit and identify areas where you can optimize rental income. 

Balance Sheet

If you’re looking for a snapshot of your financial position at a specific point in time, create a balance sheet. In a single report, balance sheets show assets, liabilities, and the owner’s equity. 

Rent Roll

If you have more than a couple of properties, utilizing rent roll reports can help you understand how much rent you’ve collected on a per-property basis. They’re essential reports that help landlords get a quick at-a-glance look at who has and hasn’t paid rent. 

Schedule E

Schedule E forms are less directly relevant to understanding a property’s financial health on a day-to-day basis, unlike P&L statements, balance sheets, and rent rolls.

Instead, think of it as a yearly report card specifically for tax purposes. Landlords use Schedule E forms to report all their rental income and expenses (including depreciation) for the entire tax year to the IRS. This helps them determine their taxable income from the rental property and claim any eligible deductions to minimize their tax burden. It’s a crucial step in ensuring accurate tax filing for rental properties.

5. Stay Organized

For landlords, maintaining a well-organized bookkeeping system is critical for your long-term success. Tax time will be difficult if you can’t properly account for all the income and expenses of running a property management business. 

Plus, staying organized will help you understand precisely where you stand financially. Not only is it good business sense, but it’s critical if you want to create passive income and stay in business. 

How TurboTenant Helps DIY Bookkeeping

TurboTenant’s software enables landlords to collect rent online and record expenses from the mobile app. Then, income and expenses can automatically be filtered into REI Hub for streamlined financial tracking — consider it property management bookkeeping on easy mode. 

Sign up for a free TurboTenant account today and add bookkeeper to your list of titles. 

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FBI Searches Property Management Company in Rent Price-Fixing Investigation

By John Triplett

The FBI searched property management company Cortland Management’s headquarters in Atlanta in an unannounced search on Wednesday, May 22, according to several reports, as part of a multifamily rent price-fixing investigation.

National apartment developer Cortland Management’s Atlanta office was searched by the FBI under a limited search warrant, a representative for Cortland confirmed. The warrant was connected to an investigation by the Department of Justice (DOJ) into potential antitrust violations in the multifamily housing industry, according to a statement from Cortland.

The FBI property management search is part of a criminal antitrust investigation by the DOJ into allegations that Cortland and other property management companies have been involved in a conspiracy to artificially inflate apartment rents.

“We are cooperating fully with that investigation, and we understand that neither Cortland nor any of our employees are ‘targets’ of that investigation,” Cortland said in a statement. “Due to the ongoing litigation, we cannot comment further at this time.”

The FBI property management search took place May 22, according to MLex, which first reported the news.


Looking for the next level of landlord software before handing off to a property manager?

Hemlane is a software that is built to grow with your needs as a landlord.

For a minimal amount, there’s a really good basic package but what we love is the option to upgrade and add 24/7 maintenance management on. 

Hemlane offers complete financial support as well.  You can link multiple bank accounts for direct deposit rent payments, add automatic late fees, sends reminder notifications to your tenants, and has a detailed profit and loss statement that can includes automatic and manual uploads of income and expenses.

It gets better!  If you reach a place where you are ready to hand off management to a property manager, Hemlane has that too under their “Complete” option.


Cortland builds and manages apartment projects in most major markets across the United States, with a nearly $21B portfolio as of September, according to its website. Courtland manages 85,000 rental units across 13 states, including Arizona.

Cortland joins several other large real estate property management companies under investigation for creating a rental monopoly. The investigation is tied to RealPage, a co-defendant and consulting firm whose software has been used to determine the maximum amount rent could be raised, then doing so in tandem in a manner Arizona Attorney General Kris Mayes has characterized as monopolistic.

“The conspiracy allegedly engaged in by RealPage and these landlords has harmed Arizonans and directly contributed to Arizona’s affordable-housing crisis,” said Mayes. “This conspiracy stifled fair competition and essentially established a rental monopoly in our state’s two largest metro areas.”

Multiple tenants across the country have sued RealPage, claiming the tech company’s apartment software helped landlords collude to inflate rents. The lawsuits from around the country were consolidated in federal court in Nashville.

The Justice Department wrote that in the past, collusion has happened with “a formal handshake in a clandestine meeting,” they wrote. “Algorithms are the new frontier, and, given the amount of information an algorithm can access and digest, this new frontier poses an even greater anticompetitive threat than the last.”

A ProPublica investigation last year found that Texas-based software provider RealPage used rent-setting algorithms to recommend rents to landlords across the country to maximize profits — a practice that experts said may violate antitrust laws.

RealPage has denied the allegations.

“Antitrust enforcers have struggled to apply decades-old laws to new technologies such as RealPage’s rent-setting software, which have changed the way competitors interact with one another and with customers,” ProPublica says.

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