Provided by America Apartment Owners Association
As Southern California faces one of its most devastating fire seasons in recent history, the rental housing market in Los Angeles has seen troubling trends. Thousands of families displaced by the fires are struggling to find housing, and in some cases, rents are spiking alarmingly in areas affected by the destruction.
A recent investigation revealed a Bel Air home listed at $29,500 per month—nearly double its September price of $15,900. While the listing was later removed, the spike in rental costs reflects a troubling phenomenon: post-disaster price gouging. California law prohibits price increases of over 10% during a state of emergency, yet reports of rental price hikes continue to surface.
California Attorney General Rob Bonta urged residents to report suspected price gouging. “If prices look really out of whack—if they’ve increased from what you’re used to—report it to us. We’ll take it from there,” he said.
Michael Lens, an urban planning professor at UCLA, noted that the sudden influx of displaced residents is putting immense pressure on the rental market, particularly in communities adjacent to the impacted areas.
A Positive Response Amid the Chaos: Ratner Property Management
While some landlords have capitalized on the crisis, others are stepping up to support their communities. Ratner Property Management and Maintenance, an AAOA member, is one such example. They’ve taken meaningful action to assist displaced families and individuals.
“To our Los Angeles County communities: As the fires continue to impact families, friends, and loved ones, we at Ratner extend our deepest sympathies to everyone affected by this catastrophic devastation,” said Dena Palmer, a representative of Ratner Property Management.
Palmer explained how Ratner is working with property owners and landlords across Los Angeles County to offer special accommodations to displaced families such as month-to-month leases and waived move-in fees. Additionally, the company is providing free appraisals and assessments for fire-damaged properties.
“We aim to help families and individuals find safe spaces as Los Angeles rebuilds. For those whose homes have been damaged and require substantial renovations or cleanup due to fires and related damages, we offer free appraisals and assessments for debris and repairs,” Palmer emphasized.
Ratner’s commitment to aiding the community is a beacon of hope during these challenging times. Their team has been serving Southern California for over a century, demonstrating resilience and care when it’s needed most.
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Taking a Stand Against Price Gouging
The actions of Ratner Property Management and others like them highlight the importance of community support and fair practices in times of crisis. As landlords, property managers, and renters navigate the fallout from these fires, AAOA encourages its members to act with integrity and compassion.
If you witness or experience price gouging, report it through the California Attorney General’s website. Together, we can ensure that the recovery process is equitable and supportive for everyone impacted.
By showcasing both the challenges and the inspiring actions of members like Ratner, AAOA hopes to encourage others in the industry to lead with empathy and action during this time of need.
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By Alondra Segoviano
When a renter is late on rent, landlords generally charge a fee each day the payment is late. Doing so not only penalizes renters for violating their lease obligations of making their payments, but the fee can help you cover costs normally covered through rent.
However, late rent fees are tricky considering each state and municipality varies on how these can be priced and when they can be applied based on grace periods. Plus, different factors go into determining a late rent fee, such as price caps, to ensure it’s reasonable based on your rent price.
With that in mind, we provide a breakdown of how to calculate your rent fee per day, how to collect them, and tips for avoiding delayed payments.
Landlord-Tenant Laws on Late Fees and Grace Periods
Before charging late fees, refer to your local landlord-tenant laws to determine if there are any restrictions you must abide by. For example, landlords in Arkansas cannot charge more than $30/per month or 20% of their monthly rent price in late fees.
Other states have no restrictions on how much you can charge but local municipalities might have laws that require fees to be stated in a written lease agreement to be enforceable with price caps. For this reason, double-check local laws and consult with a legal professional.
Law Fees by State
Below is information on landlord-tenant laws related to late fees and grace periods for the top states. For additional information, please consult with a legal counsel.
- Alabama: Late fees and grace periods are not regulated by Alabama. However, landlords can charge a late fee if it’s written in the lease.
- Arizona: Landlords cannot charge a penalty fee for late rent payment unless a tenant is allowed a minimum of five days beyond the date the rent is due.
- Arkansas: Landlords can charge a late fee for each month the tenant does not pay rent when due so long as the fee does not exceed the greater of $30.00 per month or 20% of the amount of monthly rent, and if the amount of a late fee and the conditions for imposing a late fee are written in the lease.
- California: Late fees are only enforceable if specified in the lease and reasonably priced related to the costs that the landlord has due to the rent payment being late. If the late fee amounts to a penalty, this is not legally valid.
- Florida: Late fees and grace periods are not regulated by Florida. However, it’s best practice to include late fees in a written lease agreement.
- Georgia: Georgia does not address late fees or grace periods, which means landlords are allowed to charge such fees so long as they’re stated in a written lease.
- Hawaii: Landlords may charge a late fee of not more than 8% of the monthly rent and are not required to provide a grace period.
- Idaho: Idaho does not regulate the amount of rent, deposits, or fees landlords can charge.
- Illinois: Late fees cannot exceed $20 or 20% of one month’s rent and cannot charge late fees until five days after the due date.
- Indiana: No law governs late fees or requires landlords to provide a grace period.
- Iowa: For rental agreements in which the rent does not exceed $700/month, the late fee shall not exceed $12/day or a total of $60/month. For rental agreements in which the rent is greater than $700/month, a late fee shall not exceed $20/day or a total of $100/month. Late fees and grace periods must be in a written lease agreement to be enforceable.
- Kansas: Any late fee or grace period provision would need to be written in the contract to be enforceable.
- Kentucky: Late fees and grace periods are not regulated by Kentucky. However, it is best practice to include late fees in a written lease agreement.
- Louisiana: Late fees and grace periods are not regulated by Louisiana. However, it is best practice to include late fees in a written lease agreement.
- Maryland: The lease shall not provide for a late fee over 5% of the amount of rent due for the rental period for which the payment was delinquent or, in the case of leases under which the rent is paid in weekly rental installments, a late penalty of more than $3 per week or a total of $12 per month.
- Michigan: Michigan does not have statutory provisions for late fees or grace periods. The lease would need to contain late fees and grace period provisions to be enforceable.
- South Carolina: There is no limit on late fees. However, the landlord should state any penalty and fee in the lease agreement. The landlord cannot bring eviction proceedings until five days after rent is due.
- Tennessee: Landlords are permitted to charge late fees. However, the landlord may not charge a late fee over 10%. It is good practice to note the late fee in the written agreement. The state of Tennessee provides a five-day grace period to pay rent.
- Texas: Texas landlords can charge a late fee of not more than 12% of the rent agreed to in the rental agreement. Late fees should be agreed to in a written agreement. Rent is not considered late until the second full day after it is due.
- Wisconsin: To charge a late fee in Wisconsin, the landlord must specifically provide the fee under the rental agreement. Generally, landlords should provide a five-day notice to pay rent or vacate.
Don’t see your state? Visit our Landlord-Tenant Laws directory for more information.
How Much You Can Charge In Late Fees
The amount you can charge in late fees will ultimately depend on your local landlord-tenant laws and what they consider a reasonable price for your area. Considering this, your late fee can be anywhere from $10 to $50 per day rent is late, but this can vary. Some states also limit how much you can charge in total each month, so you’ll want to consider a daily fee that doesn’t go over the monthly threshold.
You must also consider regulations on grace periods — certain states do not consider rent to be late until several days past the due date (versus the immediate day after). So if the state grace period is five days, you cannot charge fees until the renter is officially deemed late on their rent payment.
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How to Calculate Your Late Rent Fee
If your state has pricing restrictions on late rent fees, such as not charging an amount that exceeds a percentage amount of your rent, then you can calculate your fee with the following formula:
RENT PRICE X PERCENTAGE RESTRICTION = MAXIMUM LATE FEE PRICE
To put this into practice, let’s say you’re a landlord in Texas. In this state, you cannot charge a late rent fee of more than 12% of your rent price. If your rent price is $1,400 for a one-bedroom apartment, you cannot charge more than $168 in late rent fees to abide by landlord-tenant laws.
Most landlords generally consider charging up to 5% of their rent price in late fees to be reasonable.
Tips for Implementing Late Rent Fees and Avoid Delayed Payments
Many reasons can contribute to renters being late on rent, such as some not remembering that rent is due, or experiencing a sudden loss of income. While you cannot control when this happens, there are ways to avoid delayed payments or reduce the chances of this happening, such as:
1. Include a Late Fee Policy in a Written Lease Agreement
As stated above, most states only allow landlords to charge late fees if they’re stated in a written lease agreement. That means you cannot simply charge a late fee once a tenant is late on rent if this was not addressed before they moved into the unit.
By including a late fee policy, your renter will know what fees they’ll be responsible for covering if they’re past the grace period and officially late on rent.
2. Set Up Monthly Rent Reminders
While not common, there are times when a tenant is late on rent due to forgetfulness. Sending a rent reminder notice 24 to 48 hours before the due date can give them the heads-up they need to schedule their payment.
You can manually send a monthly rent reminder or use a rent collection app to automatically send this to your renter with a link to submit their payment.
3. Use a Rent Collection App to Automate Late Fees
There are different ways to collect rent, such as a payment platform, rent collection platform, or cash or checks. Each option has its pros and cons, but using a rent collection app is the main option specifically designed to increase on-time rent payments for landlords like yourself.
For example, Avail is a platform that makes it easy to schedule payments, automatically charges late fees once a renter is officially marked late, and sends monthly rent reminders based on your due date. When setting up payments for a new renter, you can turn on our Late Fee Automation feature which will automatically charge your fee once a payment is a specified amount of days past due.
Your renters can also report their on-time rent payments to TransUnion via CreditBoost, giving them an incentive that ensures you’re paid on time and their rent payments can help with their credit.
4. Allow Renters to Pay Rent Bi-Weekly
Renters are looking for ways to budget their money, especially with rent being the largest payment they make each month. Allowing them to pay rent bi-weekly can give them the room they need to pay rent on time without setting them back financially.
If using a rent collection platform, you can split payments directly in the app or schedule two separate payments for the entire rent amount.
Streamline Rent Collection With Avail
In an ideal world, renters would pay rent on time every month, but sometimes they may be late. If that happens, protect your business by charging a late rent fee policy.
To help you collect rent payments and late fees, use a platform like Avail that can streamline the process to save you time and money. You can also see which renters are on time or past due with their payments to stay on top of your rent collection efforts. Get started today with Avail.
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By Brad Kraus
Tenants may make unreasonable demands over maintenance issues asking for compensation or damages so landlords need to know the law.
The landlord/tenant relationship naturally has its ups and downs. Anyone who has ever lived in a house knows how things inevitably break down, need repairs, and/or require fixing.
In my experience, most of these items are small inconveniences that landlords and tenants work out between themselves without the need for attorneys like me. Occasionally, I have seen tenants make unreasonable demands for rent credits, damages, and other monetary claims for the smallest of inconveniences—if they can be called that.
Fortunately, much of these demands can be pushed back upon, if the landlord has knowledge of the law and their legal obligations.
As an initial matter, Oregon landlords are required to provide habitable housing consistent with ORS 90.320, which is commonly known as the “landlord duties” statute. If the premises “substantially lacks” any of the items set forth within that statute, then a tenant may have a claim for diminution of rent. On that point, it is important for both tenants and landlords to understand that diminution does not immediately mean “a month of rent.”
Diminution of rent is often discussed as a percentage of diminution—i.e., how much of the premises is diminished—or how much of the daily rent should be discounted based upon said diminution. An old case practitioner’s reference for this point is Lane v. Kelley. Additionally, diminution of rent is only discussed in terms of the stated monthly rent, and no more. The case to review for this point is L&M Investments v. Morrison.
These two cases inform the basis of legal analysis as to damages that may or may not be owed to a tenant for a particular issue. It goes without saying that any maintenance issue should be remedied as quickly as possible to avoid triggering any demands for compensation or damages. However, that’s not always attainable or avoidable.
For example a maintenance issue. Assume that a tenant’s bathroom—one of two they have in the premises—was out of commission for a week. Because the property has multiple bathrooms, the premises may not “substantially lack” what is required under ORS 90.320 at all. Even if it does, it would certainly be an appropriate argument that the premises was not diminished by 100% of the rental amount. However, even assuming that it was diminished by 100%, the tenant would not be entitled to any diminution of rent beyond one week (as that’s the amount of time it took to remedy the issue).
Additional issues can arise when substitute housing is brought up. ORS 90.365 discusses substitute housing, which is required if the landlord “intentionally or negligently fails to supply any essential service.”
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After a notice period and allowing the landlord “a reasonable time and reasonable access under the circumstances to supply the essential service,” the tenant may procure substitute housing if the dwelling unit is unsafe or unfit to occupy. This provision is not triggered under the following circumstances:
(a) The landlord substantially supplies the essential service; or
(b) The landlord is making a reasonable and good-faith effort to supply the essential service and the failure is due to conditions beyond the landlord’s control; or
(6) …. if the condition was caused by the deliberate or negligent act or omission of the tenant or a person on the premises with the tenant’s consent.
If substitute housing is required for some reason, then it behooves the landlord to control the substitute-housing cost by either offering the tenant a vacant unit in the complex/property, if available, or by procuring an extended-stay hotel with kitchen facilities in the area.
If that doesn’t happen, and tenants are left to their own devices, it is not uncommon for tenants to book Airbnbs and seek to recover those costs from landlords. While the statutes contain some pushback for such actions, litigation that often comes after substitute-housing demands will cause costs to skyrocket beyond the costs of that Airbnb.
Habitability issues are no fun.
Things like acts of God that displace tenants—which, in my opinion, are not the fault of landlords, despite what other narratives exist—often arise and sour the landlord/tenant relationship beyond repair. While that likely cannot be stopped, positioning yourself to mitigate costs and expense associated with such things requires knowledge of the laws, rules, and cases that control the analysis.
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Provided by The Fair Housing Institute
Marijuana use in rental housing presents a fair housing challenge for property managers who need to navigate the legal complexities in federal and state laws.
Navigating the legalities of marijuana use within property management is an ongoing challenge as states increasingly adopt diverse regulations.
This variance between state and federal laws places property managers in a complex position, tasked with adhering to legal requirements while addressing the needs and rights of residents.
This article provides a comprehensive overview for property management professionals to manage these legal complexities efficiently, fostering a compliant and supportive community environment.
State Law versus Federal Law
Navigating the complexities of marijuana laws can be perplexing for property management professionals.
Despite marijuana being legal for medical or recreational use in numerous states, it remains prohibited under federal law. This discord between state and federal regulations often confuses housing policies. It’s crucial for property managers first to understand these legal distinctions as they develop guidelines for their properties, particularly when dealing with federal funding constraints.
How Your Property’s Funding Can Affect Policies
The source of your property’s funding plays a pivotal role in the policies you can enforce regarding marijuana use.
Properties that receive federal funding must adhere to federal laws that do not recognize the legality of marijuana. This means that regardless of state laws, properties with federal ties must prohibit marijuana use to remain compliant. Conversely, privately funded properties in states where marijuana is legal might have more flexibility in setting their policies.
No-smoking policies in residential properties play a crucial role in decisions regarding marijuana use.
Initially aimed at preserving air quality and minimizing fire risks, these policies naturally extend to prohibit all forms of smoking, including marijuana. This comprehensive approach prevents confusion and ensures uniform enforcement across all residents. In regions where marijuana is legally permitted, property managers must balance these no-smoking policies with potential medical accommodations, possibly suggesting non-smoking alternatives like edibles or vaporizers to comply with both health standards and legal requirements.
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Reasonable Accommodations and Their Verifications
When a resident requests a reasonable accommodation for the medical use of marijuana, property managers face a complex and sensitive task.
Verifying the legitimacy of such medical claims is not only legally necessary but also a meticulous process, often involving the review of medical marijuana cards or prescriptions.
Due to the intricate and varying nature of state and federal laws and the detailed attention required to ensure authenticity, these decisions should be reserved for senior management within the property management company.
Furthermore, consulting with a fair-housing attorney is crucial to establishing a robust, consistent verification process that meets legal standards. This approach ensures compliance and maintains a uniform policy across all resident requests, safeguarding the property management against potential legal challenges.
Other Resident Complaints
Handling resident complaints related to marijuana use, such as the odor from smoking, requires a balanced approach.
While it’s essential to accommodate medical needs, the comfort and well-being of other residents cannot be overlooked. If your property permits smoking and marijuana use aligns with state law, consider practical solutions to mitigate the impact and be prepared to discuss alternatives. For properties with a no-smoking policy, this rule would extend to marijuana as well, thereby simplifying policy enforcement.
As the legal landscape around marijuana continues to evolve, property-management professionals must stay informed to ensure their policies comply with both state and federal laws. Regular training and updates on fair-housing laws are crucial in navigating these complex scenarios and ensuring compliance and high resident service standards. By understanding the intricacies of marijuana legislation and its implications for property management, you can better serve your community while upholding the law.
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Listen On:
We have done some soul searching for the last several months and through that reflection, we have found that we are very overwhelmed. So much so that we have stopped doing the things that we love and have become, well, workaholics.
If we are not working on Your Landlord Resource, we are working on one of the investment properties. If not either of those, we are playing catch up to chores around the house.
We have been good about spending time with our kids and our parents as often as we can, but there is so much more we want to do. We just need more time to do those things.
So, in this episode we are talking about our need to step back from this podcast. To catch up on some much needed us time, maintenance to OUR home, and reset our time management.
This is not goodbye, this is simply “see you soon”. To keep in touch with us, subscribe to our mailing list.
LINKS
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Listen On:
Do you ever wonder what other landlords may be interested in learning? This week on the podcast we are kind of creating a little pseudo networking by discussing which episodes are landlord favorites with our top 5 podcast released.
As we approach our 100th episode and that 20,000 download mark, we thought maybe it would be a good idea to talk about what you, the listeners, loved the most.
It’s a quicker episode with a short synopsis of our top 5 episodes. We are proud of them and hope you will love them too.
LINKS
👉 Episode 6: Creating Standard Operating Procedures for Your Business
👉 Episode 45: Basic Tax Strategies for Real Estate Investors
👉 Episode 46: Advanced Tax Strategies for Your Real Estate Portfolio
👉 Episode 16: Is Holding Your Rental Property in an LLC Right for You?
👉 Episode 56: How and When to Transfer Your Rental Property into an LLC
👉 Episode 58: The Hidden Costs of Owning and Operating Rental Properties
👉 Course Waitlist: From Marketing to Move In, Place Your Ideal Tenant
👉 Text Us a Question! Two methods available: SMS text to 650-489-4447.
OR https://www.buzzsprout.com/twilio/text_messages/2143553/open_sms
This text system is one way only, you need to include your email for a response.
Please allow 1-2 business days for us to get back to you regardless of method.
👉 Download our FREE Forms and Documents!
👉 Help other DIY landlords discover what we have to say… Please leave us a review of our podcast!
On Apple Podcast or ITunes, please scroll to the bottom of our main page (with our logo) and click “Write a Review”.
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Source: rentredi
Tenancy disputes are an inevitable part of managing properties. Roommates are certain to fall out, and damage to your property means you’ll need to take legal action.
However, as a landlord, it’s your job to retain a professional, kind approach throughout. The space you lease may be your property, but it is home to your renters. This means you must take steps to de-escalate emotionally fraught conversations and focus on mediating conflict when it arises.
You’ll also want to ensure that your paperwork and documentation properly protect you. This is key if you’re concerned about late payments or find that tenants are abusing the terms of your lease agreement. Setting clear expectations in your initial paperwork ensures that everyone understands their responsibilities before handing over the keys.
Communication
Clear, regular communication is the key to a happy tenant-landlord relationship. Getting in touch with your tenants before you schedule maintenance work or are planning to visit the property can help you proactively avoid disputes and disagreements. Maintaining a polite, professional tone throughout shows that you care about looking after the property and take your responsibilities as a landlord seriously.
If conflict does arise, you must be clear about everyone’s responsibilities. This is key, as some landlords can fall foul of the politeness paradox. Sometimes, striving to be “too nice” can undermine your efforts to be assertive and may mean that your boundaries are crossed and your generosity is taken advantage of. While you should never take a rude or aggressive tone with tenants, it’s important to know when tenants have crossed a line and require polite but firm communication.
Taking an assertive, professional approach is particularly important if you feel that tenants are crossing boundaries. This can put you in an awkward position and lead to friction if left unresolved. Rather than falling into the politeness paradox, assert your boundaries and maintain a professional relationship with tenants by practicing the art of saying “no” and gracefully leaving conversations that have become unnecessarily heated.
Mediation Techniques
Tenants who raise disputes are usually in an elevated emotional state when they report their aggrievement. This is entirely understandable, as tenant disputes usually arise when something is wrong with the home they are living in. Rather than escalating conflict during a dispute, use emotional intelligence (EI) strategies to calm everyone down. Effective examples of EI include:
- Self-Regulation: Utilize mindfulness and relaxation techniques to reduce your cognitive stress and improve your impulse response in the heat of the moment.
- Empathy: Actively listening to your tenants helps you understand the root cause of their conflict. This can help you avoid hasty judgments and ensure you maintain your reputation as a good landlord.
- Recognize Your Feelings: Take the time to name your feelings to navigate conflict with more grace. Recognize when anger or frustration is getting in the way of good decision-making.
It’s also worth noting that some conflicts have nothing to do with your responsibilities as a landlord. Sometimes, roommates fall out or relationships break down. When this occurs, you may need to take mediating measures to ensure that rent is paid on time while folks are given time to sort out their new living situation. If this does occur, you’ll want to have a clear understanding of the next steps already outlined in your documentation.
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Proper Documentation
Clear, legally binding documentation is crucial during a conflict. If you haven’t covered an issue in your lease agreement, it’s much harder to find a productive path forward with upset tenants. At a minimum, you should have paperwork that covers common landlord-tenant disputes like:
- Housing discrimination;
- Termination of tenancy;
- Eviction proceedings;
- Unlawful detainers;
- Rent abatements;
- Maintenance responsibilities.
Unless you happen to work in housing law, you probably can’t assemble this document yourself. As such, you should seriously consider working with a legal professional who specializes in lease agreements and rental law. Having a specialist on hand can help you move forward in a professional, polite manner, too. You don’t have to worry about arguing your case when you know the law is on your side, and you shouldn’t worry about wrongfully evicting tenants if you’ve squared things away with proper legal guidance.
Conclusion
Conflict and tenant disputes can be an almost inevitable part of renting a property. Eventually, you and/or your tenants will raise disputes that can be emotionally straining. Rather than getting drawn into heated arguments, put forward a clear, professional persona by working closely with trusted legal advisors who understand rental law. This will also ensure that all your paperwork is in order, which can act as a deterrent to tenants who might otherwise overlook their responsibilities.
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By Sarah Sher
Figuring out a rent-to-income ratio can be complex. Tenants want to ensure their rent doesn’t take most of their paycheck, while landlords need to consider their rent-to-income ratio to determine if potential tenants can afford to live in the rental property.
In this guide, we break down what the rent-to-income ratio means for both sides, offering clear, straightforward tips on how to wield this powerful tool. Keep reading to see how getting this ratio right benefits everyone involved and makes the rental world just a bit easier to navigate.
What Is a Rent-to-Income Ratio?
A rent-to-income ratio is how much of a person’s gross monthly income should go toward rental costs. The general rule of thumb is to keep it at or below 30%, which allows tenants to cover rent and other expenses they’re responsible for.
While the 30% mark is a solid aim, landlords aren’t required to stick to this percentage. There may be times when the rent-to-income ratio for tenants can be 30% to 45% — especially now that rent prices are higher than they were a few years ago. In this case, looking at a person’s complete financial profile is essential to identify if this ratio may be too much for them.
For tenants, it’s okay if the rent-to-income is slightly above 30%, so long as they can afford to cover other rental expenses, like utilities, and can comfortably afford their desired lifestyle.
How Do You Calculate Your Rent-to-Income Ratio?
To calculate a rent-to-income ratio, divide the annual gross salary by 12 to get the monthly income. Then, multiply that number by 30% to get a general ballpark on how much rent a person can afford.
Another option would be to outline all current monthly expenses. Dedicate 30% of one month’s portion to cover the rental payment. For example, if a person earns $60,000 yearly (before taxes), their monthly budget is $5,000 — placing the ideal rent at around $1,500.
Remember, factors like side hustles or unexpected expenses can tweak these numbers a bit.
Why Is a Rent-to-Income Ratio Important to Calculate?
Calculating a rent-to-income ratio opens the door to smarter financial choices that balance both living expenses and savings goals. A rent-to-income ratio helps to gauge whether a rental is within a person’s financial means, preventing budget strain and guaranteeing their ability to comfortably cover other life costs. Having this ratio also encourages a balanced approach to spending, which safeguards against financial overreach.
For landlords, the rent-to-income ratio is a tool for screening prospective tenants, highlighting those with a solid financial foundation who are less likely to miss rent payments. This ratio can play a pivotal role in setting competitive and fair rental prices by helping to determine income ranges prospective tenants should make to qualify.
Having a handle on rent-to-income ratio lays the foundation for a solid partnership between tenants and landlords, guaranteeing everyone can focus on their financial well-being.
How Much Should Tenants Spend on Rent?
When deciding how much to allocate toward monthly rent payments, tenants often juggle multiple financial considerations. The “30% rule” serves as a starting point for many. However, life isn’t one-size-fits-all — and neither are budgeting strategies.
Another guideline, the 50/30/20 rule, offers a broader framework. In this practice, 50% of the monthly income covers needs (including rent), 30% goes to wants, and 20% is tucked away into savings.
So, if we use the same gross annual income analogy from earlier ($60,000 yearly), $2,500 per month would be set aside to cover needs (50%), which includes rent. This leaves $1,500 for wants and $1,000 for savings each month. When looking to balance everyday enjoyment with saving for the future, especially when rent prices inch upward due to inflation, the 50/30/20 rule is beneficial.
Regardless of which “rule” a person follows, consider the full picture of rental costs. This includes the rent and other expenses, like parking, pet rent, and potential security deposits. Some landlords might even set a minimum monthly income requirement, which could steer a potential tenant’s apartment hunt.
Get creative in the search process for a dream rental that also fits within a defined budget. One method of doing this is to broaden the search parameters by looking for apartments that bundle utilities with rent. Or explore areas slightly outside the initial target location. Some online apartment search platforms also provide filtering options to match varying financial needs.
Finding the right place to call home involves balancing these rent rules with a personal financial plan, including savings and debt repayment. When considering these elements, craft a budget that supports a comfortable and financially sound living situation.
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Why Should Landlords Care About Rent-to-Income Ratio?
Focusing on the rent-to-income ratio is a key strategy for landlords who aim to create a positive rental community. Here’s a closer look at how paying attention to this essential metric benefits property owners.
Attracting the Ideal Tenants
Adjusting rental prices based on a well-considered rent-to-income ratio draws tenants who are more than just interested in the property — they’re financially comfortable with the rent. This match leads to longer stays, minimizing turnover and the challenges of empty units.
Setting Rent Thoughtfully
Applying the rent-to-income ratio guideline to rental pricing helps keep rates attractive to potential tenants while keeping the landlord’s financial health in mind.
Improving Tenant Screening
Incorporating the rent-to-income ratio into the screening process gives a clearer picture of a prospective tenant’s financial situation, informing decisions on security deposits and move-in fees. This careful approach helps secure the investment and lays the foundation for trust immediately.
Turning to the rent-to-income ratio is more than a numbers game — it reflects a commitment to both the financial health of the investment and the tenants’ contentment. Consider the impact this could have on making a property management approach more effective while presenting the landlord as a collaborative part of the community.
What Are Some Other Metrics to Use With the Rent-to-Income Ratio?
Renting involves more than a keen eye — it’s about understanding all the numbers that shape decisions. Here’s how researching these figures can benefit tenants and landlords:
For Tenants:
- Debt-to-Income (DTI) Ratio: Imagine balancing rent, student loans, and perhaps a car payment, all while keeping a social life alive. The DTI shows tenants what portion of their paycheck is already spoken for by these commitments. Aiming for a lower DTI isn’t just smart; it’s about making room for life’s little extras, like an impromptu concert or a weekend getaway.
For Landlords:
- Operating Expense Ratio (OER): Picture the property not merely breaking even but actively contributing to financial goals. The OER highlights the chunk of income consumed by property expenses. With it, landlords can make sure that the investment pays dividends, fueling future goals.
- Cash Flow Analysis: Check whether the property is pulling its weight. Is there a financial cushion at month’s end, or is it time for a strategy shift? Positive cash flow is more than just reassuring; it signals that the property is more than just bricks and soil but a crucial asset in a financial landscape.
Blending these insights with the rent-to-income ratio provides a compass for finding financial health and investment triumph. For tenants, it’s about crafting an enjoyable and sustainable lifestyle. And for landlords, it’s about turning properties into prosperous ventures.
What Is the Future of the Rent-to-Income Ratio?
The rent-to-income ratio is poised to adapt as housing markets and the economy shift. It traditionally reacts to the pulse of the economic cycle. Being aware of these potential shifts is crucial to making savvy decisions that align with personal and financial goals.
Platforms like Avail are at the forefront of these changes. For prospective tenants, Avail offers a way to streamline the application process, helping save on fees by efficiently creating profiles. And for landlords and property managers, it simplifies finding the right tenants through comprehensive screening tools that check income and credit reports with ease. This level of detail strikes a balance between tenant financial capabilities and property offerings.
Next Steps With Avail
Whether it’s about a potential tenant determining how much they can comfortably spend on housing or a landlord aiming to maximize their rental income, the rent-to-income ratio is an essential metric to understand.
Avail simplifies this process from both angles. Prospective tenants can use the educational resources Avail provides to find their ideal personal rent range. And landlords can access robust rental pricing tools, analytics to optimize revenue, and tenant screening services.
Take the first step toward making more informed rental decisions today. Create a free Avail landlord account or tenant profile to join a community committed to responsible rental practices.
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Source: NewsNation
A New York woman is set to be paid $165,000 in damages plus $585,000 for her apartment after the building attempted to evict her because of her three emotional support parrots.
Meril Lesser moved into the Rutherford, a 175-unit cooperative apartment building, in 1999. She lived there with the birds, which the Department of Justice said were to assist with her disabilities, without incident until March 2015. That’s when one of her neighbors started to complain about the alleged noise coming from Lesser’s apartment.
Over the course of a year, the New York City Department of Environmental Protection visited the building and Lesser’s apartment 15 times to conduct inspections. The DEP issues zero violations in any of those instances, with one inspector writing “no birds, no screeching — no noise,” on Feb. 7, 2016, The New York Post reported.
Rutherford did not conduct any evaluation over the noise themselves, and did not hire anyone with experience in soundproofing to address the neighbor’s complaints either, the DOJ said.
In March 2016, Lesser asked Rutherford to let her keep the parrots and gave them a letter from her psychiatrist. Despite this, the DOJ said, the apartment building began eviction proceedings against her in May 2016, causing Lesser “severe emotional harm.” Lesser left the apartment in July of that year, but Rutherford continued to maintain the eviction proceeding “well into 2024,” the Justice Department said.
Lesser filed a complaint with the United States Department of Housing and Urban Development in May 2018, saying the eviction proceeding interfered with her fair housing rights. Under federal law, reasonable accommodations in “rules, policies, practices, and services” must be provided to afford equal housing opportunities to those with disabilities. The Federal Housing Administration allows people with disabilities to use a wide array of animals as support pets, as long as they do not pose a direct threat to others’ safety or health, and don’t damage the property.
Once HUD completed its investigation of Lesser’s case, it stated there was probable cause to believe that Rutherford violated the FHA. Given the choice to settle or go to court, Rutherford chose the letter, so the Justice Department filed suit.
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The DOJ and Lesser prevailed in court, and now, because of a consent decree approved by U.S. District Judge Jennifer H. Rearden, Rutherford was ordered to pay Lesser $165,000 in damages and $585,000 to buy her shares. Rutherford also needs to dismiss the eviction proceeding against Lesser, per the decree, as well as “adopt a reasonable accommodation policy for assistance animals.”
This is the tenth such case brought in recent years by the Southern District of New York. According to U.S. Attorney Damian Williams, it’s also the “largest recovery the Department of Justice has ever obtained for a person with disabilities whose housing provider denied them their right to have an assistance animal.”
“This outcome should prompt all housing providers to consider carefully whether their policies and procedures comply with federal law,” Williams said in a statement. “We greatly appreciate our partners at HUD who provided invaluable assistance in the investigation and resolution of this matter.”
Peter Livingston, an attorney for the Rutherford co-op board, said his client was pleased to resolve the case, the Associated Press reported.
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