Landlord Ideas

Landlord/Tenant Law Training

I was thinking about using some cliche’ to start this post off with like:  “You can’t teach old dogs new tricks” or “you are never too old to learn”, but I just couldn’t bring myself to do it!  I was invited to a training course about a month ago that was sold as landlord training.  [...]

I was thinking about using some cliche’ to start this post off with like:  “You can’t teach old dogs new tricks” or “you are never too old to learn”, but I just couldn’t bring myself to do it!  I was invited to a training course about a month ago that was sold as landlord training.  The cost was $45 but the speaker wanted me to attend to see if it was something that I could recommend to my investors and blog readers.

I attended this seminar last week.  I was very skeptical that this wasn’t going to be much more than a very basic landlord class.  Boy was I wrong!  This class was informative and interesting, even for me (a guy that has owned lots of rental properties and helps investors get started as landlords almost daily).  This class is actually taught by an attorney from the Home Line Tenant Hotline.  They provide free legal advices to tenants and will even help them in court in certain situations.

The speaker was one of the attorneys from Home Line.  He was engaging and interesting, but what I found fascinating was how he and his peers looked at different situations that we as landlords encounter every day.  He was able to show how they defend the tenants by using the landlord’s ignorance of the laws and statutes.  A couple quick examples were:

• They are often able to have leases invalidated because the landlord has a PO Box as the mailing address (when the state statute requires a physical address).  I realized that I was taught as a landlord to use a PO Box to get your checks.  I am sure there are many other landlords out there that are breaking this rule.
• If your lease converts to a month to month lease for a tenant, you legally must send them a written notification 75-90 days prior to the expiration of the lease telling them about the automatic renewal. This notification can only be sent during that 75-90 window and must be sent via certified mail or personal service.  How many landlords do you think actually do all those steps?
• If you have  tenant that stays on past the end of the lease, they are a hold-over tenant.  If you accept money from them, you have entered into a new oral lease and you can not evict them.
• We also discussed many other legal issues such as fair housing and discrimination.

These and many more gaps/problems in landlord procedures were pointed out to us in class.  I was writing furiously because I could see places that I needed to shore up my processes to keep myself protected.  Not only could this information help you be a better landlord, it may help you stay out of court!  I recommend that every landlord take this class.  It was invaluable.

The next class is coming up on September 11, 9am-3:30 at the William Mitchell College of Law.  Lunch is included.  Contact Please contact Alex at (612) 728-5770 x 112 or alexh [at] homelinemn [dot] org with any questions or to register.

Minnesota 2009 Certificate of Rent Paid

If you owned a rental property in Minnesota during 2009, you are required by the State of Minnesota to send each of your tenants a MN Certificate of Rent Paid.  Depending upon the tenant’s income, they may be eligible for a tax deduction for a portion of the rent they paid for 2009. Although you [...]

If you owned a rental property in Minnesota during 2009, you are required by the State of Minnesota to send each of your tenants a MN Certificate of Rent Paid.  Depending upon the tenant’s income, they may be eligible for a tax deduction for a portion of the rent they paid for 2009. Although you must send your tenant this form, this does not affect any Minnesota taxes you pay or anything else. It is simply for the tenants tax reporting purposes.  You can find the 2009 Minnesota CRP here.

Like most government forms, the instructions are rather confusing and length!  I am not an accountant, government worker, or attorney.  Below are just some suggestions and ideas that I have come up with over the years of filling these out:

• When figuring out the totals, do not include any damage deposits, late fees, or other non-rent payments in the total amount.  Also, only include actual rent paid, not rent billed (or accounts receivable).
• Any rental subsidy amounts (including section 8 and other non-profit agencies) should not be included in the total line on the CRP. Only include rent paid by the tenant(s).  In your accounting system remember to mark each subsidy payment in the memo field to make this easier at the end of the year.
• When calculating the total amount, you must divide the total rent paid by the total number of adults in the unit, regardless of how much rent each paid.  Married renters are considered one person, again regardless of how they paid.  You should then send a form to each adult.  This may cause some frustration among roommates, but just tell them you are simply following the instructions.
• If you have many 2009 Certificate of Rent Paid forms to send, I recommend that you fill in a copy of the form with your business information and make copies of that original CRP to save yourself time. With almost 30 rental units, you can imagine how much time this saves me!
• Alternatively, the Certificate of Rent Paid form comes in a PDF format, so I purchased a copy of Adobe Acrobat and opened the PDF in edit mode.  I then entered my business info once and then simply changed the property and tenant info and printed them out (I am faster at typing than writing!).
• Often you will have tenants that have moved out during the year.  Personally, I just wait for past tenants to call me and request the CRP.
• The landlord must send the tenants the MN Certificate of Rent Paid by 1/31/2009 or face a $100 penalty per CRP not sent by the required date.
• Lastly, make a copy of all of the Minnesota CRPs for yourself.  I will always get a least 2-3 calls in August (when the tenants turn these in for their taxes) from someone looking for a new copy.  It will save you having to recreate the wheel when they lose their copy.

If you have many to do, simply do a couple each night until you have them all finished. Turn the music or TV on and just fill them out!  Good luck!

Rent Collection Tricks

I find that most new real estate investors are too soft on rent collection.  Unless you have training or experience in collecting debt, this is not a natural process for you.  Many people don’t like confrontation and rent collection is about putting someone (the tenant) on the spot.

Here are a couple quick tips when you [...]

I find that most new real estate investors are too soft on rent collection.  Unless you have training or experience in collecting debt, this is not a natural process for you.  Many people don’t like confrontation and rent collection is about putting someone (the tenant) on the spot.

Here are a couple quick tips when you are “dialing for dollars” to make it easier to collect rent:

1. Be consistent about calling immediately upon the rent being late.  If the tenants sense that you are not concerned about the rent, they won’t be either.
2. If you can’t get them on the phone, drive over there.  There is nothing more important to you and intimidating to them to have the landlord standing at the door at 8pm at night.
3. Impose the late fee every time.
4. Mail statements to everyone that owes anything over $5.  Make sure to get them in the mail or hand delivered immediately upon the rent being late.
5. If you get a partial rent payment, immediately call and find out when the rest of the rent is going to be paid.  Send another statement with the updated balance.
6. When you are talking to the tenant about paying the balance or when they are going to pay, push a little to pay more or sooner.  Most people (the tenant) will give in to authority when asked.
7. If the tenant does not live up to their commitment, start eviction immediately.  It is better to evict early than let it drag on and having them owe you more money.  Most tenants can not recover from being a full month behind.
8. If your tenants tells you they are paying you next Friday, call them a day or two before and remind them that you are expecting rent and how much your are expecting.  Again, if they believe you won’t call or check in, they may/will blow you off.

We own investment properties not because we have nothing better to do, but to make a profit (either short or long term).  Rent collection is the key to being a successful landlord.  You need this rent/income to keep your business solvent.

Get help buying and owning investment properties from someone who has been there/done that.

Renting to Roommates

Roommates add a special twist in that each one is typically contributing toward the rent.  This is good and bad.  You have multiple sources of income, but you also have competing priorities and motivations.  Roommates are frequently my most frustrating rental units.  Often this is what I experience (let’s assume the rent is $999 per [...]

Roommates add a special twist in that each one is typically contributing toward the rent.  This is good and bad.  You have multiple sources of income, but you also have competing priorities and motivations.  Roommates are frequently my most frustrating rental units.  Often this is what I experience (let’s assume the rent is $999 per month).

• Roommate 1 always pays her $333 rent on time.
• Roommate 2 has some issues paying on time, but always calls and usually pays everything by the 10th.
• Roommate 3 is always late on her rent and often short pays.  It is now the 15th of the month and after repeated calls you finally get $200.  She already owed you $150 from the month before for a total now of $350.

What do you do?

You can’t evict just roommate 3 as all of them are typically on the lease.  Do you want to spend the money to file an eviction?  Can you force the other 2 to make up the difference?

Here are some idea on how to handle this situation (preferrably before it happens):

• I got this idea from Ryan O’Neill over at Minneapolis Lofts.  He has all the roommatees sign the lease, but makes one of the roommates responsible for collecting the rent and cutting one check to him.  If they want to swap roommates or one is having issues, that one is responsible.  Love it!  This expectation needs to be set up in advance.
• When one roommate get’s behind, call a house meeting and sit them all down and explain that the other roommates need to pick up the slack.
• Send all the tenants a Cure or Quit notice.  Although it is not required, it may be enough to get their attention.
• Start an eviction or go to mediation.  This is a more drastic measure, but if the balance is high enough it may be worth it.
• Make sure that all the tenants receive a statement every month.  They should see that roommate 3 is not paying.

Managing this multi-dimensional situation can be challenging.  You just need to get out in front of the problem and stay there!

Let our experience get you started!

Our next Investment Property 101 Seminar is being held on December 16 at 6:30 pm in Burnsville. I look forward to seeing you there.

Register for the seminar by filling out this quick registration form or call 612-281-5419 for more information.

Pre Eviction Mediation in Hennepin County

Evictions are a necessary part of being a landlord. Depending where your investment property is located, you may do them once every 5 years or once every 5 months. Ultimately, though, I see an eviction as the last resort. At the same time, I can’t allow my tenants to push me around and simply never [...]

Evictions are a necessary part of being a landlord. Depending where your investment property is located, you may do them once every 5 years or once every 5 months. Ultimately, though, I see an eviction as the last resort. At the same time, I can’t allow my tenants to push me around and simply never pay me. But unfortunately, 95% of my evictions result in me collecting ZERO dollars from the tenants. I am left with a big bad debt right off.

Two weeks ago while I was down at Hennepin County, filing another eviction (5th one for 2008-not a good year), I read about doing Pre-Filing Mediation. This is a procedure in which a neutral third party, at the request of the parties to a dispute, assists them in reaching a mutually satisfactory settlement. In mediation, both parties need to agree to meet with each other and the mediator. The mediator is not a judge and will not decide the solution, he is more like a facilitator to help the parties find a agreeable solution.

3 possible outcomes to pre eviction mediation:

1. An agreement is reached and signed by both parties, no court case is filed, no fees are paid, and no record of this action exists. Good for everyone.
2. The parties can not agree during the mediation session, they are served right then to appear in court in 7 days. This case will be one of the first ones heard by the judge in Hennepin County eviction court.
3. If one of the parties is not willing to use mediation, the case is referred back to housing court and the eviction will proceed as normal. This case will be one of the first ones heard by the judge as a reward for attempting mediation.

Benefits to Mediation for the Landlord:

• No filing fees if the case is settled
• Priority status on the Hennepin County Eviction Court Calendar if the case does not settle

Benefits to the Tenants:

• If the case is settled, there is no court record of an eviction action being filed against the tenant.

In my case, I decided that the tenants just needed an authority to wake them up to the fact that they are not living in Mom & Dad’s house any longer. They have signed a lease and they have obligations to pay. Although we did not go to mediation, the letter from the mediator quickly motivated them to work out a payment plan with me. As of now, they are on their way to paying off their back rent!

Although I may not use this in every situation, I think mediation can be a softer approach that may get you your past due rent paid, instead of just clearing out your apartment.

Have you always wanted to own investment properties, but never knew where to start?

Don’t Just Let Yourself In To Your Investment Property

Amy Dickinson is a great read over at the Star Tribune. She writes a column called Rent in the Homes section and takes email questions from readers and answers them.  I suppose you could say she is kind of like a Dear Abby for renters and landlords!
A recent one article I found funny and tragic [...]

Amy Dickinson is a great read over at the Star Tribune. She writes a column called Rent in the Homes section and takes email questions from readers and answers them.  I suppose you could say she is kind of like a Dear Abby for renters and landlords!

A recent one article I found funny and tragic at the same time. It seems the landlord is actually a little too quick and helpful to fix things. He barely knocks before he uses his key to enter the apartment (one time catching the renter in a towel, just out of the shower). See the question and Amy’s response here.