When was the last time you did a compliance audit of your documentation forms and procedures for your rental properties? Why is it a critical practice that should be done regularly? This article will share why compliance monitoring is important and share some helpful tips to either get you started or fine-tune your process.
What’s that saying, “Big things come from small beginnings”? To increase income in your rental properties, a landlord must focus on many small changes that add up to a nice return at the end of the year. In this blog, we cover the most common ways to add more to your bottom line.
Increase Income
Going through the process of finding a valuable new tenant for your rental property is no fun. However, just as there are proper steps to follow when vetting a prospective tenant, there are processes and legal requirements one must abide by when it comes to denying an application. Read on to learn the best ways to deny a rental application.
Setting Yourself Up for Success
Let’s first start with some essential features of your vetting process. Our free 10-page guide, How to Place Your Ideal Tenant, discusses finding and vetting a tenant but does not cover what to do if you have to deny an application. One aspect of marketing your unit goes over how important it is for a landlord to create their qualifying criteria and ensure the applicants are aware of these criteria before paying a fee and completing your rental application.
Standard qualifying criteria would be:
Recently, we decided to sell farmland in one state and exchange it for a 4-plex multifamily complex in a different state, neither state of which we resided in. Having never done this before, we thought our readers might like to know what our first experience with a 1031 exchange as rental property owners entailed. Where we gained insight and learned a lot, it certainly was not an easy task. Would we do it again? Keep reading about our experience to find out and determine if a 1031 exchange is right for you.
Tenant moveouts are never any fun. Even if you have one who you’ve looked forward to having move on, flipping a unit and placing a new tenant is a lot of work. So, whether you’re new to this process or a seasoned landlord, please continue reading for our step-by-step guide to tenant moveouts.
If needed, set a reminder on your phone 65 days before a tenant’s lease is due for renewal. If you are not renewing their lease, typically, it is a safe business practice to give a tenant 60 days’ notice of non-renewal. Landlords can do this using a state-specific form or a simple email. Depending on your specific state, you may have to give a reason for the non-renewal or pay relocation fees. Know and understand your state and local landlord-tenant laws.
If the tenant is offered a renewal but opts to move out, they generally must give 30 days’ notice to vacate the premises. This is when the clock starts clicking for both the landlord and the tenant.
Acknowledge the Tenant’s Intent to Vacate
In written form (typically email), confirm you have received their notice to exit. Let them know that they have the option to schedule a pre-moveout inspection (more on this below) within the final two weeks of tenancy. Also, let them know that, within those last two weeks, you will send another email detailing the costs associated if they choose not to clean the unit.
Check On Old Marketing Info for Your Unit
Accepting physical checks for payment is becoming a thing of the past. Many landlords looking to replace this method without increasing expenses have considered using cash apps such as Venmo or Paypal. However, where these apps make receiving rent very convenient, they are risky. Continue reading to understand why landlords shouldn’t accept rent payments from cash apps and what their options are.
When you lease your rental property to a new tenant, information overload for them is real. They may be preoccupied with moving and all the fun stuff that comes with that monumental task. Even if you review move-in details in person, consider creating a “New Tenant Welcome Binder” for them to reference. Undoubtedly, there will be an instance when they try to remember something you mentioned. This welcome binder will keep them from having to make phone calls to you, saving you from having to repeat yourself. Here are 10 things new tenants need to know from landlords when they move in.
Our welcome binder includes all of the following:
1. A copy of their signed lease.
Yes, an electronic copy is great. However, we also include a physical copy so that tenants can do a quick reference on dates and amounts or look for the information we noted on an addendum that they can’t remember about the washer and dryer repair.
2. How they pay rent?
Make sure they have the link to the app you use, an address to mail it, or instructions on when they should expect an invoice from you (if using accounting software). If there are any specifics regarding fees or payment methods related to paying online, this is where you can remind them of it. For example, we use accounting software for invoicing our tenants on the 15th of the month before the next due date. Because it can take five business days for us to receive the rent (it gets deposited into our account), we always remind tenants to pay it by the 25th of the month before the due date so it will not be considered received late by us. This reminder is because we account for rent paid when it is in our hands, not when the system emails us letting us know the tenant paid their invoice and money is on the way.
3. Where they sign up for utilities not covered by you.
Adding value to your rental property is not necessarily a task to directly increase income, although generally, this is a benefit. By adding value in this sense, we are discussing ways to make your unit more attractive to existing tenants and more marketable to potential ones. Below we have a few ideas on how to add value for both single-family and small multifamily rental properties that won’t break the bank.
Many of these options may seem obvious, but you’d be surprised how many landlords overlook them. The nice part of these suggestions is that many of them are ones most anyone can handle and DIY.
Update Landscaping and Curb Appeal
We cannot stress enough that first impressions are key. So, when you advertise your unit, do yourself a favor and include photos of the front of the home or building. For more tips on how best to do this, check out our blog, Tips For Taking Great Rental Property Photos.
You can keep this simple or go all out. Remember that whoever lives in your rental property needs to keep it up, so be mindful about maintenance. For example, add some pretty flowers, trim bushes, and put down some bark or ground cover in flower beds.
As property managers for our family members, we had one home where we took a tired-looking area and spruced it up. We used wood chips that our city provided for free and transplanted some day lilies and purple coneflowers from our yard. We had planned on pulling these flowers out anyway as they were too overgrown for our yard. This update cost us nothing but a few hours of labor.
If you want to go all out, consider converting the front yard into a low-water, low-maintenance garden using large rocks, gravel pathways, and plants that do not require a lot of water or pruning. It helps the new tenant and looks great all year round.
Consider adding path lighting to decrease the chances of your tenant or a guest tripping and falling. These lights are a great solar option we added to our multifamily pathways.
For the house’s exterior, clean the windows and touch up any paint that may be peeling or chipped. Next, change out worn light fixtures with LED, efficient lighting. Or, if the lighting is still good but needs a touchup, buy a $3 can of spray paint, tape off the glass, and paint away.
Inside the Home
If you can believe it, back in 2014, credit agencies began accepting rent payments to measure a tenant’s credit score. It seemed to have a slow start, but since California passed SB-1157 in July 2021, we are seeing more and more landlords offering this perk and many tenants asking for it. Still, many landlords do not offer rent reporting to help tenants improve their credit score.
A Brief Overview of California SB-1157
California lawmakers created SB-1157 with the objective of providing renters with limited income the opportunity to improve and build their credit score by reporting their rent payments. By reporting on-time rent payments to the major credit bureaus, renters can improve their credit scores without opening a new line of credit or taking out a loan.
This senate bill requires landlords of assisted housing developments with more than 15 units to give every new and existing renter the option to report their rent payments to a consumer reporting agency. To learn more about this senate bill, click here.
Why This Service Is Important For Both Landlords and Tenants
Even if you do not own subsidized rental properties, this service is still important to consider. Being in Sacramento, our units have housed many recent college graduates. Often, these new renters have little or no credit history and require a guarantor for their lease. Others who may need this service to boost their credit score include those who lost their job during the pandemic and had their credit score take a downturn. Students in your student housing rentals certainly could need this service to start their credit building sooner rather than later, and tenants who are restructuring credit after filing for bankruptcy could use this boost.
Ok, so why does this matter to you? You would not accept them anyway if they cannot qualify, right? So we are right there with you! However, we have had circumstances where we have had minimal movement on a vacancy. As mentioned above, we received an application from a recent grad with a parent willing to guarantee their lease. So to us, these tenants are even more secure because they are entering the real world and want to prove themselves, and their guarantor certainly doesn’t want to receive a call that they now have to cover the unpaid rent. If, when these recent grads were students, their landlord offered to help improve their tenants credit score by providing rent reporting, you could eliminate the need for the guarantor. It would show right there on their credit report, each and every rent payment, much like a credit card.
Here are three reasons why offering rent reporting will benefit your rental property business.
It is not uncommon for tenants to have guests. But when those guests never leave, they become unapproved roommates to your tenants. They have not signed your lease and, therefore, do not have to abide by the rules or policies outlined in your lease. This blog post will show you ways to find out if someone other than the tenant is living in your unit and how to handle an unapproved roommate in your rental property.
Let’s touch a minute on why this is important. First, as a landlord, you should take the time to vet your tenants. Typically, you’ll check their credit and previous landlord-tenant relationships to ensure they can and will pay rent on time. Next, maybe you do a background check to confirm they are a law-abiding citizen and do not pose a threat to other tenants or neighbors. Finally, you do what you can to make sure the person leasing your rental unit is a good fit for you, the unit, and the complex (if you own a multi-family).
You jeopardize your rental property business when someone starts living with a tenant without being vetted. For example, this unauthorized roommate may not have the financial means to qualify for your unit. In addition, they may have been evicted by their previous landlord for lease violations or may even have a criminal background that adds liability to your other tenants or neighbors should that illegal activity continue in or around your unit. But, on the other hand, they may be a perfect tenant who you’d welcome to your rental property!