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How to Become a Section 8 Housing Landlord

By Sarah Gabot on May 17, 2012 in Agent Tips with 0 Comments

Photo credit: KLMircea (Flickr)

Why would someone become a Section 8 landlord? Sometimes it helps with keeping your rental units filled, because the properties could rent out faster.

In order to become a Section 8 housing landlord, both you and your property need the stamp of approval:

Step #1: Fill out an application. The information you share will be reviewed with the housing authority and will be analyzed in contrast to the other properties in the vicinity. They’re going to make sure that your property’s rental rates are comparable or lower than the neighboring properties. If your property is considered overpriced, you may be asked to lower your asking rent.

Step #2: Prepare your property for an inspection. Make sure that your property doesn’t have any safety hazards and is in a good, habitable condition. Additionally, make sure there are working locks on all the windows and doors, the plumbing works, and there’s a sufficient heating and cooling system.

Step #3: Advertise your property. Publish your property on online listing sites like you would with any other rental. Don’t forget to include “renter’s assistance” or “RA” in the ad. This will help you be found when renters search for Section 8 housing. Once you receive inquiries, use an effective lead qualification system to find the best tenants.

Step #4: Determine how much your tenant will pay. Your tenant is expected to pay for a certain percentage of your asking rent, and the government will pay the rest. Check with your local and state laws for any additional information. Visit the HUD website for information on federal laws.

When Can You Enter Your Rental Property?

By Jennifer Chan on March 2, 2012 in Chicago with Comments Off

Image by Håkan Dahlström via Flickr

Chicago has very specific laws on when a landlord or agent can enter their rental property. Depending on the situation, you’re required to give anywhere from two days’ notice to none at all if you need emergency access to the property. Do you know the circumstances of when you can enter a unit and if advance notification is necessary?

2 days advance notice: In situations where the leased property needs maintenance, updates or repairs, you need to notify the tenant 2 days in advance. Property inspections or quarterly lease compliance checks also require a 2-day advance notice.

Form of notification needed: Either a written or oral notification is acceptable, so you can inform your tenants via phone call or note under the door.

No advance notice: By law, the only exception to the advance notice rule is emergencies. You are permitted to enter the unit without notice or tenant consent if, for example, there are flooding pipes in the unit or if a repair happening upstairs unexpectedly requires access to the unit on the lower floor. If emergency entry is required, you need to alert the tenant within two days after its occurrence.

Hours of entry: The Chicago Residential Landlord-Tenant Ordinance states that unless it’s an emergency, keep your hours of entry to a reasonable hour. Suggested hours are between 8am and 8pm, unless you’ve discussed and agreed with your tenant to access the unit outside the time frame.

If you enter unlawfully, without notice or consent, the tenant is able to either terminate your rental contract or recover an amount equal to a month’s worth of rent. For more information, see the Chicago Residential Landlord Tenant Ordiance.

Is it Okay to Text Your Tenants?

By Jennifer Chan on March 1, 2012 in Agent Tips with Comments Off

Image by Johan Larsson via Flickr

These days, smartphones have the ability to do almost anything. With all the apps and features available, you can practically run your rental office from your phone. It’s great to utilize all the tools to make your job easier, but is texting your tenant appropriate, or is it unprofessional? Knowing when to text your tenant can be a practice in judgment; a text simply won’t be enough in situations where an official notification is better for both you and the tenant.

Texting can be a great tool, but use it wisely. Here is a guide on when to text – and not to text – your tenants.

Does your tenant have text? This is something you should confirm before you start sending reminders that you’ll be dropping in for a maintenance check. Not everyone pays for a texting plan, and a minute-long phone call passes along the same message. Be respectful of your tenant’s finances and preferences; don’t be the unnecessary source of their irritation.

Have tenants sign up for text notification. This way, when the situation calls for it, you know whom to text, and whom you shouldn’t. Remember, just because a tenant signed up to receive text notification from your management doesn’t mean you can text-bomb them about community events. Texting often and for no reason at all will take the value away from your messages and might even make your texts ignored.

Text in emergencies. Texting comes in useful when you’re trying to mass alert your tenants about emergency maintenance repairs or criminal activity that’s occurred on the property. When there’s an emergency and its not possible to call and alert each tenant in a timely manner, text may be much more efficient, and your tenants will be grateful for the alert.

Text messages and e-mails are not considered legal documents. In most cases, such as sending alerts about lease renewal, maintenance or repairmen entering the property, a written notice is still your best option. Sending these notices via text or e-mail does not ensure your tenant will receive them or even read them. When a voicemail message doesn’t count as notifying your tenant 24 hours in advance, its highly unlikely a text message will do the job. Official notices are best delivered on paper, since they leave a legitimate paper trail and will hold up in court.

Texting can be considered informal. Some tenants might appreciate your efforts, but others may take it as a sign that you don’t want to deal with them and can’t be bothered to pick up the phone and call. If the issue is important, you should always call the tenant. A phone call and written notification will always be taken more seriously than a text message. Once again, ask your tenants if they would like to receive texts.

Use text as tenant reminders. If your tenants have signed up for text notification, use texting as a tool to send out reminders and follow up on written notices. It can be a useful system to send out reminders about office closure over the holidays, resurfacing the parking lot, or an 8-hour repair of busted water heaters. Never use text to express anger or annoyance towards tenants – save that for a phone call or in-person conversation. Similar to email, text can be an effective and immediate method of reaching out to an entire apartment complex of tenants.

Do you text your tenants, or do you think it’s inappropriate? Share your experience with us in the comments section below!

7 Tax Deductions for Landlords

By Jennifer Chan on March 1, 2012 in Agent Tips with Comments Off

Image by 401K via Flickr

Don’t pay more taxes on your rental income than you have to. If you own a rental property, there are plenty of tax benefits that you can take advantage of. Here are seven of the tax deductions available if you own a residential rental property.

1. Repairs – If you’ve made any repairs to your property in the last year, the cost is fully deductible. This means any money you’ve spent repairing gutters, leaky plumbing or repairing walls can be deducted. The term ‘repairs’ refers to property maintenance that keeps the unit in a livable condition. Property improvements, or additions that add value to the property, do not file under the category of repairs, so you won’t be able to deduct their full cost.

2. Travel expenses – Expenses that add up from traveling to and from the rental property to collect rent, oversee repairs or maintenance are deductible. This can include the expenses for gasoline or vehicle upkeep. If your rental business requires long distance travel, you can also deduct all the included expenses such as meals, travel fare and lodging. Make sure you have the records to back up all your expenses, or you’ll be stuck if the IRS auditors come knocking.

3. Home Office – If you run your rental business from a home office, you can deduct your business expenses from your taxable income. Provided your home office meets minimum deduction requirements, this can apply to any space in your home, such as the garage or workshop, you use for business. For more information about home office tax deductions, check out the IRS Home Office Deduction.

4. Employee Services – Wages paid to property managers or contractors can be deducted as a business expense. The cost for any services you hire for your rentals, such as accountants, brokers, repairmen for leaking pipes or legal fees for tenant eviction, are deductible and count as operating expenses.

5. Insurance—If you buy insurance for any part of your rental business, the annual premiums you pay are deductible. Landlords insurance, any of the additional coverage programs and health insurance you buy for your employees are all included.

6. Damages and losses – Tax deductions may be available for your rental property if it was damaged in the sudden event of flood or other disaster. The entire cost of the destruction won’t be deductible, but a portion of it can be depending on the extent of the damage and your property’s insurance coverage.

7. Mortgage interest payments – If the loan is secured for the rental property and you are the party responsible for its payment, the interest is deductible. Other examples of deductible interest are those that come with property improvement loans and credit card spending for rental services.

What To Do When Your Tenants Form an Association

By Jennifer Chan on February 29, 2012 in Property Management with Comments Off

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Your renters have formed a tenants’ association. Is your primary reaction to be worried, surprised or angry? Also known as a tenants’ union, tenants form associations when they feel that they’re not being heard and want to enforce their tenant rights. By coming together to form a stronger voice, they can communicate their concerns and work to better their living situation.

As a landlord, this news probably comes with the fear of sour battles over property maintenance, rent increase or management issues. The idea of your tenants teaming up against you can also feel threatening. How can you stay in control of the issue, avoid trouble and prevent it from escalating?

First, communicate with the leaders of the association. Listen to their concerns, and show a commitment to helping them solve the issue. See if they’ll let you sit in on one of their meetings so you can better understand your tenants’ point of view and where they are coming from. Don’t try to retaliate or bury the situation – it will probably make your tenants angrier and give them more reason to organize.

Second, identify the source of your tenants’ concerns. It’s not always possible to form a perfect landlord-tenant relationship, but associations usually form as a result of one very big problem or a buildup of smaller issues. Find out if your tenants were motivated to form a union due to the lack of repairs and maintenance, violation of privacy or rent increase. Does your building have inadequate heating or faulty electricity, plumbing and gas? Figure out the root of their frustration so you can act quickly and effectively to solve the problem.

Third, fix the problem or make changes to your management. By acting swiftly to take care of the issue and being responsive to your tenants’ concerns, you’ll diffuse the problem faster and make them feel less of a need to form an organized group. Remember, being a responsive landlord doesn’t mean you should cave to all requests – take it as a sign that you need to evaluate your tenant communication, landlording or property management practices.

Your tenants may choose to keep their association, but by being more responsive you reduce the chance of frequent meetings driven by tenant frustration. Don’t interfere with their group and allow them to meet in common areas of the property as long as they comply with your rules. Continue to keep an open line of communication with them.

Once the initial fire has calmed and the issue taken care of, it’s might be time to change your usual protocol. Learn about the local laws concerning tenants’ associations. Make it a policy to increase communication with your tenants, respond to problems promptly and adopt more careful business practices.

5 Strategies to Receive Rent Payments On Time

By Jennifer Chan on February 28, 2012 in Agent Tips with 1 Comment

Image by ericskiff via Flickr

It’s the beginning of the month. Is time for you to play phone tag with your tenants or go knocking on the doors of your units to collect rent? If so, it might be time to sit down and review your strategies for encouraging timely rent payments. In addition to making life easier for you, evaluating and revamping your current rent collecting policy can also help your tenants get rent paid on time.

Nagging tenants for late or non-payment of rent can quickly turn landlord-tenant relationships tense, but this doesn’t have to be you. Here are 5 strategies to encourage your tenants to pay rent on time.

1. Is rent easy to pay? Does turning in the rent require tenants to drive to a remote physical location? Don’t give tenants a reason to procrastinate on rent payments. If you make the process simple, such as dropping a check in the mail, picking it up yourself, or allowing renters to slip it under your door if you live on-site, the likelihood of receiving rent on time is higher.

2. Instill late fees. The rent-collection procedure that works best is the one that will have the rent check in your hands on the day it’s due. Not the day after. It’s your job to collect the rent, and being lenient with tenants will only give them the message that it’s okay to lag on payments. Don’t let this be your policy! Rent is due on the first of the month; turning it in on the second or the fifth makes it late. Enforce this policy by tacking on a fine for late payments – but make sure to include it in the rent agreement.

3. Charge higher rent and give discounts. Structure your rental agreement so that rent is slightly higher than you would want it to be, but when tenants make the payment on or before the due date, give them a $20-30 discount. This will give tenants a bigger incentive to get the rent to you on time.

4. Help your tenants build credit. Use a service to report rent payment to the credit bureaus. The aspect of improving credit while making on-time rent payments is appealing to most tenants, and may help deter late payments as well.

5. Encourage tenants to sign up for debit payments. Automatic debit payments are extremely useful in helping landlords get the rent on time (and will also make rent collection infinitely easier). This might not be an option all your tenants are comfortable with, but encourage sign-up by offering tenants a $25-$50 discount on monthly rent payments.

Rental Agreements and Leases: What’s The Difference?

By Jennifer Chan on February 27, 2012 in Agent Tips with 4 Comments

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When you close rental leases, do you draw up a lease or a rental agreement for your new tenant? The terms are often used interchangeably, but there is one key difference: rent agreements don’t require tenant to commit to a set length of time. To decide which agreement suits your situation best, know how the two differ.

By requiring your tenants to sign a lease, they agree to abide by the conditions drawn in the agreement for the length of time specified, usually six months to a year. For the duration of the lease, neither the landlord nor renter can change the terms of the lease unless there is a mutual agreement. For example, if a tenant breaks a lease and decides to move out before it expires, they are still responsible for paying the rent for the remainder of the lease. Knowing that rent will be paid for the duration of the lease can help you manage your expenses. Landlords who have mortgage payments to meet and lots of vacancies to fill might opt for a lease agreement to lock in a tenant.

Rental agreements, on the other hand, have no time commitment and are based on a month-to-month contract. This gives both the landlord the flexibility to raise the rent, evict a problem tenant, or change the terms of the rental agreement as long as they give the required period of notice (the notification period varies depending on the state). Tenants can also vacate the unit at any time, as long as they give you the appropriate advance notification required.

A rental agreement usually renews automatically at the end of each month if there is no call for change from either party. Offering tenants the freedom of a short-term agreement may make your unit more appealing than agreeing to a long-term lease. If you don’t have a problem offering flexible contracts and want to appeal to transient students and professionals, you can use rental agreements to attract new tenants.

Which form do you use for your tenants, and why? Share with us in the comments section below.

Mold: Is it the Landlord’s Responsibility?

By Jennifer Chan on February 23, 2012 in Property Management with Comments Off

Image by Editor B via Flickr

There have been numerous court cases where tenants have taken landlords to court over damages and health problems caused by the presence of “toxic mold” in the unit. Mold is a touchy subject, since there are no laws out there that set limits for minimum exposure. In some cases, tenants who sued landlords over mold damage or allergy have lost, while others have won multimillion dollar cases. It’s good to know that toxic mold growing on your property can get you into legal trouble, but instead of worrying about getting sued, it’s much more worth your time to examine your property for mold and take measures to prevent its growth.

How and where does mold grow?

Mold will grow anywhere where there’s moisture and nutrients. It usually grows as a result of poor ventilation or water coming in from the outside due to a weakness in the building’s structure. There are various types of mold that grow on different materials, such as carpet, water pipes, cardboard boxes or ceiling tiles. In addition to time, humidity and warmth provide ideal growing conditions for the organism. Not all mold is harmful – the mold that’s on your bathroom tile, for example, isn’t a health concern. Discoloration and musty odors are usually a sign to check for mold in your property.

What damage does it cause?

If mold grows undetected, it can cause stains and discoloration on the carpet, walls, fabric or any other surface it’s growing on. If you ignore it, it could ruin these materials as well as cause wood rot and disintegration. The major concern about toxic mold, though, is that it can cause health problems. Mold releases spores and chemicals that can trigger allergic reaction or illness in occupants. While the severity of the reaction depends on the type of mold and degree of exposure, those with weak immune systems, such as the elderly and young children, are usually the most at-risk.

How to get rid of it:

If you do happen to find mold growing on your property, and it’s a small-scale problem, try cleaning it with unscented detergent and water. Wear rubber cleaning gloves, protective goggles and a dust mask to protect yourself from spores, and stop if you develop nausea or headaches. Make sure the area is well ventilated post-cleanup, or else the mold will return. A larger mold problem, recurring mold, or a very damp apartment is best left to the examination of a professional. The best strategy is taking measures to prevent mold on your property, since hiring an experienced professional is expensive and not always effective.

Landlord Responsibility

Mold is present everywhere in the environment, even where you live, but it doesn’t become a problem until you give it an environment to grow in. Make sure your property is well ventilated, and your tenants understand how to prevent mold. Give them advice on how to regularly clean vulnerable areas such as bathrooms, and have them alert you as soon as they notice moisture buildup or leaks. Get the problem taken care of as soon as you can to prevent mold growth. If your tenant reports the presence of a mold problem and you ignore the notice, it could get you in legal trouble as well as potentially cause serious health problems.

Mold or not, it’s the landlord’s responsibility to ensure that the property is habitable. Under the law, you’re required to maintain the property for your tenant and make necessary repairs such as fixing broken windows, leaky pipes and roofs. Fortunately, neglecting in these repairs is usually what causes mold, so as long as you stay on top of property maintenance, your property should stay mold-free.

Cosigners: Should you allow them?

By Jennifer Chan on February 23, 2012 in Agent Tips with Comments Off

Image by Wiertz Sebastien via Flickr

Many landlords have split opinions about cosigners. Cosigners, often parents of student renters, agree to add their name in the lease agreement, thus gaining the responsibility of paying for rent or damages if the renter fails to pay. Having a cosigner on the lease doesn’t ensure that rent will get paid, but it doesn’t necessarily hurt the lease agreement either. Here are 4 factors to keep in mind when you’re considering whether or not you should allow a cosigner.

1. It can make your job easier to accept cosigners for student renters. Students typically don’t have very much credit history, and might rely on their parents for the majority of their income. A parent asked to pay for the damages or late rent is most likely to follow through, especially when their name is on the lease as well.

2. Be careful about a cosigning relative or friend. The risk of accepting a cosigner is that they have less legal pull than you’d think. In many cases, if a tenant doesn’t pay the rent and the cosigner does not respond to calls from the landlord, it’s actually much more efficient to evict the tenant than to take the issue to small claims court. Cosigners don’t live in your property and have no incentive to pay the rent – except for a very close friend or relative, that is.

3. Cosigners can help ensure that the rent gets paid. If the tenant is aware that you’re able to notify or sue the cosigner if the rent fails to get paid, they’ll take the responsibility of getting the rent to your door much more seriously. Alerting a cosigner of late rent or damage fees may also be more effective than bugging a tenant about the charges yourself, as concerned friends and relatives may step up to fulfill the agreement.

4. Run a credit check. If you decide to permit cosigners to the lease agreement, make sure to run a credit check for the cosigner. It’s important to verify that they have relationship to the tenant and are financially responsible. Draw up a separate agreement or make additions to the existing paperwork to require their contact information and signature.

Legally, you have no obligation to accept or refuse cosigners, except in the case of renting to the disabled. If the person qualifies under all of your tenant requirements, but doesn’t have enough income to pay the rent, he or she can request to have a cosigner, and under the law you cannot refuse this request.

Find the Perfect Tenant: An All-in-One Lead Qualification Kit

By Sarah Gabot on February 17, 2012 in Agent Tips with 9 Comments

Filling vacancies can feel like a rat race. Speediness is key to ﬁlling apartment rentals, but when it’s not done carefully, it can damage your business. Poor tenants are more costly and aren’t worth your time and effort. The “perfect” renter is a secure investment, because the rent will always be paid and your property will be maintained.

Choosing a tenant to ﬁll your vacant property shouldn’t be a rushed process. Qualiﬁcation needs to be meticulously and systematically performed on every prospective tenant to ensure you’ll have the most reliable tenant possible. Lead qualiﬁcation will help you weed out poor tenants, leaving you with responsible, long-term renters ﬁlling your units.

In this guide, you’ll learn how to qualify every prospective renter you run into by eliminating unqualiﬁed and problem tenants early in the application process. We’ve included sample scripts and checklists to help you in every step. Everything you’ll need to qualify renters is here in this kit.

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