HELPFULFACTS.NET

Things to keep in mind when looking for a house to buy or live in.

1. Stairs should never face the front door.

2. The back door should not be seen from the entrance.

3. The kitchen should be on the left when looking out from the inside (the same placement as your heart).

4. Avoid homes on steep abrupt hills (gentle grades are better)

5. Avoid homes facing hills, house that back to the hill and look out are good.

6. The road in front of the home should not be higher than the home.

7. Avoid homes where the street dead-ends into the home such as a home at the end of a cul-de-sac or a home at a tee intersection.

8. Look out for homes where the neighboring structures dwarf the home.

9. Look for square or rectangular lots and where the house is built in the center.

10. If the lot slopes the house should be on the higher part.

11. The distance between the street and house should be at least half the front to back length of the house (not too close to the street).

12. Roads that curve and follow natural contours are better than straight streets.

As a landlord who has acquired several new properties in the past several years, I have found nothing makes renters more nervous than a change in management. Fears of rent hikes, added fees and new rules are just some of the concerns tenants wonder about when there is a change in management.

If you are thinking of selling a rental property anytime soon, help ease your tenants’ transition by keeping them informed during the process and reassuring them of the new owner’s obligations.

First, tell them all rental agreements in place at the time of the sale are still legally valid until the end of each lease term. The new landlord cannot change the terms of any existing leases or move for an eviction without proper cause.

Second, rent cannot be increased in the middle of a lease just because the new owner wants to raise the rent. New owners must abide by the rental rate in the current lease.

Third, no changes can be made in lease provisions regarding policies concerning pets, number of occupants or anything else stipulated in the current agreement.

As the seller, once you have accepted an offer and have a deposit, you should begin sharing information on the property and tenants with the new owner. Let your tenants know you are selling the property as soon as you are confident the sale will go through. Keep tenants in the loop throughout the process by providing any important dates to them (inspections, closing, etc.).

Once the sale is final, send a farewell letter to each tenant introducing the new owner, providing the new landlord’s contact information and any other items needed for a smooth transition. Often times, the new owner will probably want to meet the tenants and inspect their units.

The final step is the closing, where you’ll turn over all keys, deposits and paperwork to the new owner. After this, you no longer own the building and can walk away knowing you have treated your tenants with respect and helped them to transition smoothly with their new landlord.

Your rental property sold and the closing went off without a hitch. Time to celebrate, right? Not just yet. Uncle Sam may be waiting for his share of the profits.

Capital gains taxes are a part of all real estate transactions realizing a gain (unless you are rolling the profits into another investment vehicle through a tax-deferred 1031 exchange). Property sales taxes are due at the time of sale. Of course, if the sale shows a loss, there is no tax liability.

Here is a closer look at the different tax scenarios of selling a rental property:

Capital Gains – After a building has been owned for more than 1 year, it is considered a long-term investment. Sellers pay capital gains on the amount of the selling price minus selling costs and adjusted basis in the property. The tax on this amount (the capital gain) is calculated at the capital gains rates, which is lower than the regular income tax rate.

Capital Loss – If you lose money on the sale, you may get a tax break in the form of a capital loss. Keep in mind a paper loss–a decrease in the property’s value below its purchase price–does not instantly qualify as a loss. The loss must be calculated on the sale or exchange of the property. You can then use this loss against capital gains or against regular income when paying your taxes, depending on tax rules.

Like-Kind Exchange – If you want to defer capital gains taxes, you can roll the profits on your sale into another investment property under a federal 1031 exchange, also known as a like-kind exchange.

Here is how it works: The proceeds from your first investment property are held by a third party until you purchase another investment property within a specific time frame. Specific rules must be followed such as type of property, value, etc. Assuming the transaction meets all IRS requirements, any capital gains are deferred until you sell the new property.

Importantly, you can continue to build equity by transacting one like-kind exchange after another. Many property investors use like-kind exchanges to build their rental property holdings.

LPA Quick Tips

* Automatic Agreement by No Response
Have you ever been frustrated because a tenant failed to return a signed copy of your notice of:
o LPA Lease Renewal
o LPA Rent Increase
o LPA Lease Update - Change of Terms or another notice you needed the tenant to agree to so that important changes affecting the tenancy can commence?

Here is the clause to insert into your LPA Notice of Rent Increase, Lease Update - Change of Terms Notice or Lease Renewal so that when you issue a notice, it will still be enforceable even if the tenants don’t return a signed copy to you. Just remember it is best to serve all official notices in person or by certified return receipt mail.
YOUR CONTINUED OCCUPANCY OF THE PREMISES AFTER ___________________, SHALL CONSTITUTE FULL AGREEMENT WITH ALL OF THE ABOVE IN ADDITION TO AND AS PART OF YOUR LEASE AGREEMENT. (PLEASE KEEP THIS NOTICE WITH YOUR LEASE DOCUMENT)

Just copy and paste the above to the bottom of your notice.
Disclaimer: State and local rental contract laws may vary, so The LPA recommends you consult a local attorney to make sure legal notice of this type is enforceable in your local court.

* Landlord Screening Tip:
When screening an applicant, ask for a copy of a picture ID or drivers license. Make sure the person in front of you is the same person on the application and credit report. - The LPA

* Have proof you have sent written notices.
I have on many occasions seen tenants deny they received written notices from the landlord. One of the best ways to prove a notice was sent by Certified Mail is to include the Certified Mail Article # on the document and also send a copy by regular mail, and also keep a copy for yourself. Having the article # on the document shows that the notice you sent was the same as the notice you say you sent.

Just pick up a pile of cerified mail postcards and receipt slips so you can prepare them before going to the post office. - The LPA

* Beware a Tenant’s Lease Agreement
Some tenants come with their own lease agreement already prepared for you - by their attorney in many cases. Watch out! First of all, I have never had good experiences with tenants who are experts on landlord tenant law. Secondly, it is only logical that the tenant’s lease will contain more tenant protection than it will have landlord protection. There is usually a good reason the tenant wants to use his own lease agreement. You can bet there are lots of innocent seeming little clauses in there that wouldn’t even raise an eyebrow, but can cost the landlord plenty. Just stick with a landlord lease. - John C., BVR Mgmt

* Giving proper legal notice to tenant:

(This applies to month to month tenancies or if your lease allows you to make unilateral changes to the tenancy as the LPA Lease does.)
* It is important to remember that proper notice must also be given by the tenant or the landlord for the Intention of Non - Renewal. Even though the lease has an expiration date, the landlord must still require a written notice to vacate from the tenant.

If it is a 30 or 60 day notice, be sure that the written notice is served before the beginning of the next rent period. That means if the rent is due and payable on the 1st of the month, have the notice served before that date. Serving a notice in the middle of a rent period will not change the fact that the 30 or 60 days notice period starts on the first day of the next rent period. An official dated notice should be delivered / “served” to the tenant,
o in person (preferable)
o sent by certified mail- return receipt requested
o regular first class mail combined with the above. We recommend getting a certificate of mailing receipt from the post office whenever you mail an official notice by 1st class (regular) mail.
John N., NY

* Finding a good Eviction Attorney
Since our Attorney Directory is not yet complete, this might help:
If you are searching for a good landlord attorney, first ask your family attorney (if you have one) for a referral. Then ask a local real estate rental office or property management company who they recommend.

If you are going to interview eviction attorneys, I suggest you ask a few key questions.
1. Are evictions your specialty?
2. How many do you usually do a month?
3. How long does the average eviction take from beginning to end?
4. How fast can we have these tenants in court?
An “on the ball” eviction attorney will have the answers to these questions on the spot. Pay attention to # 4- because that should be an easy one to answer if the attorney is familiar with the Landlord Tenant Court schedule.- John@theLPA.com

* Security does NOT = Rent
Let the tenants know at the lease signing that security may not be used as rent. Then ask for their word of honor- that they will not break the agreements in your lease. Point out that if the tenant stops paying rent- even if they are giving notice to vacate asking you to use the security deposit as the rent- that they will be breaking their word of honor sealed this day with their signatures. And if this happens, you (your manager or your lawyer can be the “bad guy”) have no choice but to use the security deposit for attorneys fees to swiftly evict them and destroy any good credit they may have because if their word and their signatures are NO GOOD, why should you believe that they’ll move out when they say they will? - John N., NY

* OPEN HOUSE saves time
When I’m showing a rental property, I like to arrange it to be a multiple showing, like an open house. I set aside an hour for a particular day like a Sunday between 1 and 2PM and try to send a dozen or so customers to see the property. I bring a pile of applications with me and am prepared to answer questions about the rental. The whole time I am scrutinizing the prospects.
There is such a feeling of competition between the prospective tenants, and makes any one of them feel lucky if they are chosen. Most of them are willing to submit their application, screening fee and deposit on the spot.
This has been a great timesaver for me, and makes getting them rented a little more fun. - John N., NY

* EPA Toxic Mold Information

* Quickglance Tenant Chart
Have a chart or calendar to remind you when to send a renewal form to the tenants. Put it where you will see it and refer to it. I suggest making a spreadsheet of your tenants or the Quick Glance Tenant Chart from the Essential forms page. It’s so easy to miss those renewal dates.- John N., NY

* When screening an applicant, ask for a copy of a picture ID or drivers license. Make sure the person in front of you is the same person on the application and credit report. - John N., NY

* Make copies of rent checks
If your tenant pays buy check, make a copy of the check for your records. You may need this information for future collection efforts. In the event that a judgment is awarded in your favor, the bank account can be restrained and the money can be taken from the account. - Jan Conte-Dailey N.Y.,yourcollectionsolution.com

* Enforce Late Charges
With new tenants be ready to enforce late charges the first time your tenant pays late. If you set a precident of waiving your late charge, tenants will be offended when you want to enforce your policies in the future.- Jack K., NY

* RRR: Raise Rents Regularly
One of my biggest mistakes was not raising the rent on a yearly basis. I thought that as long as the rent was being paid, I didn’t want to rock the boat. I later realized that my properties were way under rented. I found that when I tried to increase rent, the tenants went crazy. They resented that I “all of a sudden” want to hit them with a rent increase. They felt that as “good tenants” I was punishing them for no reason.- Louis C., NY

* When executing a new lease, remember to staple an Intention to Vacate form on the back of the tenant’s lease. Reminding the tenant to give proper notice and proper move-out procedure can make your life a lot easier when it’s time to start looking for a new tenant.- Dan A., OH

* Try not to collect rent in person if you can help it. It is an opportunity for the tenant to complain or make demands. Although many landlords like to check on their property under the guise of “collecting rent”, the visit often backfires. In some cases, if the landlord fails to immediately make an issue over a lease violation he notices (such as an unauthorized pet), it can be considered as giving implied permission. So, if you collect in person, be ready to confront tenants with violations.

* Don’t flash your riches in your tenant’s face
Also, if you have a beautiful car that you are proud to be seen in- try not to rub it in the faces of your tenants. Tenants resent the a landlord who arrives in a new Mercedes to collect the hard earned rent that the tenants just scraped together. Do you think they’ll feel bad for you if they’re forced to pay late or if you are behind on your mortgage? - John N., N.Y.

* Get a signed Property Condition Report
We have found that our properties are better maintained by tenants who have signed a Condition Inspection Report at Move-In. I highly recommend it.- John N., N.Y.

* Don’t forget the Landlord Reference
Always, always verify the current and past landlord. Ask the “landlord” to just verify the address of the property the tenants are leaving from. You’d be suprised how many phoney reference “landlords” don’t even know their friend’s address or how long the tenancy was. (We now have a new Landlord Reference Qualifier coming in April 2001 to the Essential Forms list.) - John N., N.Y.

* Get tenants to show their true colors
Pay special attention to your potential tenant’s reaction when you question any red flags on his application. If you strike a nerve, they may reveal their true colors if you have a potential problem tenant on your hands. - John Como, N.Y.

* Prepare your tenant
To avoid an unprepared tenant at the lease signing, be sure to instruct him on what to bring with him beforehand. We like to always require the tenant to bring a copy of his driver’s license, social security card, and the balance due in certified funds, money order or cash. Also, if there are any other adjustments, we’ll advise them at that time. - Lou, BVR Management, Inc.

* I’ve been a landlord for over 25 years and always have had a good relationship with my tenants. Unfortunately, they become my friends soon after they become my tenants and I’ve always enjoyed their friendship. That can be very costly. How can you raise rent regularly on friends? How can you enforce your lease when they break it if you value the friendship? I’m behind in my payments because my “friend” can’t pay the rent! My advice is: try not to become close friends with tenants. - Joan M., Allentown, PA

* I have been able to eliminate a few disasters by making a reason to visit the rental applicant at their current home before signing a lease with them. I get the opportunity to view how they live. Sometimes they even invite me to stay for dinner. - J.N., Naples, FL

1. Start small. The ideal starter rental is your own house because you know the condition of the property. Try one rental house and see if you like it and can handle it before buying a multi-unit building.

2. Rent your house unfurnished. Provide only a stove, refrigerator and washer-dryer hookups.

3. Do your own repairs. Maintenance companies can chew up your profits.

4. Aim high. Neighborhoods near military bases are great places for income property because transient military families tend to rent instead of buy.

5. Specify. Use qualifiers in your for-rent advertising. Saying “no pets” or “good credit required” will save you time and effort in screening applicants.

6. Use word of mouth. Offer a tenant referral fee of $50 to $100 to your good tenants to fill your vacancies. Good tenants tend to know other good tenants.

7. Don’t live in your own rental. As appealing as a duplex or four-plex might look on paper, neither you nor your tenants will feel comfortable in close proximity to each other.

8. Buy for you. Only buy income property in areas where you would want to live yourself.

9. Don’t overlook niche markets. For instance, by making your door openings 36-inches wide and installing grab bars and a ramp, you can rent to people in wheelchairs. It’s a great way to do some good — and you’ll always have tenants.

10. Don’t convert the beloved family home to a rental. If you’ve lived in a home forever and raised your kids in it, sell it rather than rent it because you’ve got emotional attachments that will prevent you from treating it strictly as a business investment.

If a tenant complains that their garbage disposal isn’t working and you send someone over to fix the problem, but the problem turns out to be something stuck.  Once removed, the problem is resolved, but you as the landlord is forked with the bill.  I would think the tenant should pay since it is something they caused?  Any opinions enlightenments on this topic?