REPOST: How to spot bad tenants

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The private rented sector is becoming more and more competitive, meaning landlords could jump at any opportunity to fill their property. However, while most tenants are unlikely to cause any hassle, some will wreak havoc, meaning you need to be on the lookout for any bad apples.

According to a survey of 2,000 landlords - undertaken by AXA Insurance last year - 26 per cent of tenants fail to pay their rent on time, 15 per cent of participants had received complaints from neighbours because of excessive noise and ten per cent had experienced tenants disappearing in order to avoid paying rent arrears.

Ensuring that the right tenants move into your property can save you hassle down the line, such as the lengthy and costly eviction process. Some stick out like sore thumbs, so are easy to avoid, but others rely on deception and secrecy.

Here are some tips to help you avoid bad tenants.

Start with the advert

The first thing you should do is ensure the advert for your vacant property clearly states that prospective tenants will need to undergo background checks before they are handed the keys. Note that references will need to be verified and occupants will be expected to comply with specific rules, eg no smoking or no pets. This should help deter any untoward people from enquiring about your property.

Referencing checks

The research from AXA revealed that a staggering 38 per cent of landlords do not carry out checks on prospective clients, leaving themselves vulnerable to bad tenants. Referencing checks can provide a landlord with an idea of what to expect, such as if the potential occupier will pay their rent on time or if they could cause damage to the property. These checks will also reveal if the person has any criminal convictions or county court judgements against them for debt, which should give a landlord a clearer picture of the potential tenant.

Be wary of tenants who try and get around referencing checks, as this could be an attempt to keep their history hidden. It is likely that such a person would target landlords that have just entered the buy-to-let property market or private landlords that choose to work without the help of lettings agencies.

Wayne Mearns, from Belvoir Southend-on-Sea, told the Telegraph: "Tenants with untoward motives for securing a rental property will often target private landlords who find tenants themselves."

Guarantor

This may not be required in all cases, so use your initiative to decide if a guarantor will be needed or not. Tenants that work part-time or receive benefits or couples who apply for a joint tenancy may not be able to pay the rent if their situation changes, so in these instances it may be a good idea to give yourself added protection if issues regarding rent arise.

Deposit

Landlords should take a deposit, which generally equates to six weeks' rent. This provides the owner of the property with a degree of financial protection should any damage to the property occur or if the tenant absconds without paying their last month's rent. Deposits must legally be held in one of the government's three protection schemes until the tenant vacates the property.

Be on the lookout for any potential occupiers that ask you to forego the deposit, as it could be an indicator of a rotten apple.

Inventory

Taking an inventory will reduce the chances of a dispute happening when a tenant leaves a property. Write down what the house contains and make a note of any existing damage, taking photos as well. This means you have the evidence necessary to prove any missing items or new damage is the fault of the tenant.

The importance of tenant screening within the bounds of law

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Property management involves a full set of services from rental marketing to tenant screening. Most homeowners do not realize the importance of every step of the process when handling their real estate assets. This is understandable since there are other issues that must be taken into consideration as well, including taxes, maintenance, and accounting.

However, it cannot be stressed enough that choosing responsible (not to mention, reliable) tenants can make or break an entire property’s future state and profitability. Tenants are the individuals who live in and pay for the unit. Their actions directly impact how a property is managed and maintained.

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Given this, it is particularly important that close screening process be applied to the people who will be living in a specific property. The screening process comes with many hurdles since there are legal considerations. There have been a number of suits alleging tenant discrimination. Whether these cases have merit or not, it is often the property owner affected the most. The very label "discriminatory" affects how a potential buyer looks at the owner. It would not be a leap of the imagination to forecast a dramatic loss of sales should the case be known to the general public.

The property owner can take advantage of the hundreds of online sites available on how to properly screen tenants. Legitimate strategies take both local and federal state laws into account, which are especially applicable if the owner has properties scattered across the nation. When the property owner is unsure of any of requirements listed in his or her tenant agreement, he or she should consult with a trusted property management company.

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Trust inApplegate Property Management for all your property managing concerns. For more information on the company’s services, follow this Twitter account.

Avoiding common mistakes in property management

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Managing a property and a tenant relationship may be a fairly straightforward matter for some property owners. Some may take cues from their time as renters and copy a few methods that they liked while observing landlords and implement solutions to those they disliked. It doesn’t always turn out well as there are some areas where many landlords are prone to make errors.

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First among these is that many property owners tend to forget treating the management of the property as a business. As a result, some may see the necessary paperwork as a hassle and would prefer just verbal agreements with tenants. Without written documentation, it will be hard to resolve disputes so it is better to plan ahead and make sure that the stipulations for property use are properly recorded. Issuing receipts, meanwhile, is useful for tax records and making sure that all payments are up to date.

Another mistake that landlords tend to make is accessing the property without consent from the tenant. While they own the property, they must never forget that they agreed to rent it out to someone else. So, for the duration of the contract, landlords must remember to always respect the tenant’s privacy and that they have to gain permission to enter and inspect the property.

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Finally, landlords must make it a point to give out their contact information to their tenants. This is to make tenants feel secure in knowing that the property owner is available to deal with any problems with the property that may arise. It is understandable that some property owners may also be juggling managing their property with their work so it may be better for them to rely on a property management services provider.

For more information about property management, visit this Applegate Inc. Facebook page.

Including a pet agreement clause in a rental lease

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To answer the growing need of a pet-friendly home arrangement, many commercial and residential owners are now including pet agreement clauses in their rental lease. There are many provisions that are stated in the general contract, ranging from the type of pet to how long the tenant plans on staying in the area. Listed below are a few examples of the clauses most property management companies will address:

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The type of pet allowed: The pet agreement will state which type of pet breeds are allowed. Most landlords allow the standard type of pets, which include, dogs, cats, birds, fish, guinea pigs, rabbits, gerbils, small reptiles, and hamsters. The clause will also determine how many animals of each kind (if ever) the landlord will allow. Tenants should also clarify the specific type of dog or cat breed they intend to bring the area. Certain breeds, such as Rottweilers and pit bulls, are considered dangerous by some, and may not be allowed.

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Properly identified, licensed, and vaccinated pets: As a general precaution, landlords will state in their pet agreement clause that they will only allow pets that are kept under control at all times. This means that the pet is properly collared, has a licensed, and has vaccination papers. Some landlords may even require a tenant to carry a renter’s liability insurance (depending on the state and local laws). This insurance covers any damage caused by pet accidence that does not dog bite or similar injuries.

It is highly recommended that tenants talk to their potential landlord first before signing any contract. Also, it should be noted that for pet owners that they also take an extensive external audit of the surroundings and see whether the place and the other people living there will best suit their and their pet’s needs.

Applegate Property Management offers property management services in Wisconsin. Visit its official website to learn more about its services.

The realities of investing in a property

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Many Americans benefit from the improving real estate industry. Property buyers stand substantial chances of getting the best out of their investments, while property investment has become the channel to business success and growth in infrastructure. However, not all property investors reap the rewards of their buys, as many of them make the wrong decisions.

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To avoid falling into the same mistakes repeatedly, investors must understand some hard facts about investing and renting out property to help them make sound decisions. Here are some of them:

• More than what property advisers say, vacancies in rental areas are inevitable.
• Maintenance costs, such as for electrical and plumbing work, can take over the rental income.
• Overpaying happens when emotions get in the way when buying a property.
• Tenants’ rights can overpower landlords’ rights.
• Mother Nature can destroy one’s property.
• A property can sit in the market for a year or so.
• While many properties increase in value, there is no way to ensure that all properties will.
• The high price of selling properties is one of the hardest hurdles investors endure.
• The risk of tenants getting sued landlords is always present.

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Getting ready for the ups and downs of investing in and renting out a property ensures that the investment is a long and fruitful one.

Applegate Property Management provides management services, commercial real estate sales, and investment services to property owners, buyers, and renters. Learn more about the company by visiting this website.

Property Marketing: The three basic legs supporting the value of a home

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In property marketing, a review of a Comparative Market Analysis or CMA helps sellers outline the estimated value of a property based on its features and the conditions in the area’s housing market. Although most homeowners would like to believe their houses are worth more, it is the CMA of marketing that dictates the true market value of a property.

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To help sellers understand property marketing and CMA, listed below are the three basic legs that support the value of a home and how each affects marketability:

Condition and features. These refer to all important information about the physical aspects of the home. They typically include the age of the house, type of flooring, number of garage spaces, number of bedrooms and bathrooms, condition, and additional features like swimming pool and fireplaces.

Location. Housing markets arelocalized, which means they differ depending on areas. Is the house located near the city? Is it near the suburbs? Does it have a view? Is it populated? Is it near schools? All these location-related concerns affect the overall CMA.

Price. In comparison to other variables, the price is relatively controllable. However, it must always be aligned with the houses’ condition and location. For sellers, the basic principle is to improve the condition of the property to influence the selling price.

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Applegate Property Management handles marketing, tenant screening, leasing, maintenance, and accounting for residential and commercial property owners in the Twin Cities metro area and in western Wisconsin. Learn more about the company by visiting the official website.

Rental property: A gateway for tax savings?

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The opportunity to get a deduction on income taxes is one of the most popular reasons why some people choose to invest in real estate. However, as many would later on find out, this particular benefit is not ensured with every purchase of investment real estate. An analysis of the property owner’s full tax situation is needed to determine if tax savings can indeed be obtained.

What should property owners be on the lookout for?

When filling up their IRS 1040 main tax form, rental property owners should take note of the calculations for their real estate rental property operations on the schedule E form, which will also flow to the 1040 form line 17.

Many taxpayers use deductions and losses to reduce their starting “gross income” to the lowest “taxable income” possible. On the Schedule E form, the property owner needs to list all the property’s income and also its expenses for the year. The expenses, which include costs of maintenance work, property taxes, mortgage interest, insurance, and the property’s depreciation, are subtracted from the property’s income.

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The tax deductions stem from the resulting value of the property, if the expenses exceed the total income. The net value counts as a loss and the result is a reduction of the owner’s personal income. This affects the entire 1040 form because it can reduce their taxable income.

Caveat: There are also several limitations in place to prevent wealthy people from taking advantage of the tax saving measures available to rental property owners. Finding out which of these apply to their situation needs the input of a tax professional. It is therefore recommended for property owners to avoid expecting tax deductions simply because they’ve invested on real estate and consult a tax professional to determine if there are other options available to them.

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Applegate Property Management offers property management and leasing services to residential and commercial property owners in Minnesota and Wisconsin. For more articles about real estate, visit this Facebook page.