Landlord Ideas

Tenant Application-Red Flags

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A prospective tenant calls you and wants to see that 3 bedroom apartment that you have for rent.  What types of “red flags” should you be watching and listening for as you talk to the tenant, show them the unit, and process their application?

• When prospective tenants are late to the showing appointment and don’t have a valid reason, I am immediately skeptical. 
• If you are unable to verify their employment, income, or rental history, be concerned.  I had a very interesting discussion with a prospective tenant when I told him I was going to call his current landlord.  It went something like this:
  • Me:  “I see on your application you didn’t list your landlord’s phone number or last name” 
  • Him:  “I don’t have the phone number for my landlord”
  • Me:  “How do you call him if something needs to be fixed”
  • Him:  “He never fixes it anyway”
  • Me:  “What is his last name”
  • Him:  “I am not sure”
  • Me:  “Where do you send the rent?”
  • Him:  “He stops by around the 5th of the month and I pay him”
  • Me:  “Do you know where he lives”
  • Him:  “No”
  • …At this point, I was convinced he was lying to me, did not want me to call his landlord, or simply irresponsible.  All traits I don’t need in a tenant.
• I will often call the prospective tenant once or twice on the phone to see how much noise is going on the in background.  I am amazed how often I can’t even hear the prospect on the other end of the phone because of the yelling and TV blaring!  They are most likely going to bring this chaos to your apartment and disturb the neighbors.
• How a tenant carries themselves, dresses, and what kind of car they drive also gives me some clues as to their personality.  Now I have been surprised by a jean wearing professional that drove a BMW, rented a new townhouse I have, and lived like a pack of dogs, but I am often right!
• Because I charge $25 as an application fee, I will occasionally get a response “I won’t have the $25 until next Friday [6 days from now].”  I do rent in some lower-income neighborhoods, but if you were planning to rent an apartment and 90% of landlords in Minneapolis require an application fee, shouldn’t you have that money saved up?
• I am often receive many calls on my apartment ads during the last 5 days of the month.  I have to guess that they simply woke up on the 25th of the month and realized they need to be out of their current apartment on the 30th and then decided they should go and find a new place to live.  As enticing as it is to take one of these tenants instead of having an open apartment, you need to screen them extra carefully.
• Occasionally, when I am concerned about how a tenant may treat my apartment, I will actually require an on-site inspection of their current apartment.  How clean it is (especially the kitchen), tells me a lot.  If I see lots of grease on the stove and bathroom is nasty, I pass on them.
• When processing their application, if they “forgot” to tell me anything about anything derogatory on their application, I am concerned about what else they are hiding. 
• Constant moving of apartments or job is also concerning as it shows instability or problems. 

Some of these red flags can be identified on the phone prior to booking the appointment.  Save your appointments for the people that have passed your initial screen.  With some observations of your prospective tenant and some simple “gut checks”, you can often weed out potential problem tenants before they ever cross your threshold. 

Minneapolis Investment Property Workshop

The City of Minneapolis, the Minneapolis Police Department’s Community Crime Prevention, and the Minneapolis Housing Inspections department are working together to put on a Rental Property Owners workshop in Minneapolis on Thursday, October 25, 2007.  I have attended these events and found them to be a great resource even if you don’t own property in Minneapolis.
Investment [...]

The City of Minneapolis, the Minneapolis Police Department’s Community Crime Prevention, and the Minneapolis Housing Inspections department are working together to put on a Rental Property Owners workshop in Minneapolis on Thursday, October 25, 2007.  I have attended these events and found them to be a great resource even if you don’t own property in Minneapolis.

Investment Property owners will learn ways to keep their properties free of drug dealing and other illegal activity.  Other topics presented include:

• Working with the Minneapolis Police Department
• Working with Minneapolis Housing Inspections
• Tenant issues
• Hennepin County Housing Court
• Arbitration as an altermative to Eviction

This event is also a great opportunity to network with other Minneapolis Investment Property owners.  To get a registration form, click here.  The cost is $20 and includes a box lunch.  The details and location for the event are:

Thursday, October 25, 2007
5-9 PM
St. Mary’s Greek Orthodox Church
3450 Irving Ave S
Minneapolis, MN

You must RSVP by Friday, Oct 19 by emailing ccpsafe@ci.minneapolis.mn.us or calling the message line at 612-673-2812.  Plan to attend.

Evicting Your Tenant

If you are a landlord long enough or own enough rental properties, you will eventually need to evict one of your tenants. It can seem like a traumatic and complicated event, but if you follow some simple tips, it is actually quite simple.
The rights and duties of landlords and tenants in each state are [...]

If you are a landlord long enough or own enough rental properties, you will eventually need to evict one of your tenants. It can seem like a traumatic and complicated event, but if you follow some simple tips, it is actually quite simple.

The rights and duties of landlords and tenants in each state are spelled out in federal law, state statutes, local ordinances, safety and housing codes, common law, contract law and a number of court decisions. These responsibilities can vary from place to place around the country and even within each state and municipality. Also, tenants in federal housing and other forms of subsidized housing have additional rights under federal law. Consequently, this article is specific to eviction in Minnesota and the Minneapolis/St. Paul area. My goal is that readers from other areas can still use this article as a framework to make the process easier.

Why to evict:
Typically, evictions happen because a tenant is behind in their rent or has stopped paying their rent all together, but any violation of the lease can actually be grounds for an eviction. As a landlord, you need to understand the language in your lease and your legal regulations. Some examples of lease violations that I have evicted tenants for include: repeated incidents of disturbing the neighbors, excessive damage to the apartment, excessive police calls, unauthorized pets, and unauthorized people staying in the apartment.

When to evict (for other lease violations):
Evicting for lease violations (other than past due rent) requires good documentation and proper notification of the tenant to put yourself in the best position to win the eviction when going to court. You should document in writing each time the lease is violated. Make sure to note the exact details of who was involved. Follow up each lease violation with a written warning to the tenant (keeping a copy for yourself). Make sure to quote the section of the lease that was violated and inform them that any repeated violations can lead to their eviction. If the violation is severe enough you may need to immediately start the eviction process, after you have collected the documentation, without issuing a warning.

When to evict (for past due rent):
As a new landlord, it is very easy to listen to the sob story about why a tenant can’t pay their rent and before you know it, they can become several month behind in their rent. Ultimately, most books and “experts” will say, start the eviction process the first day after the rent is late. I would argue that in the real world, it rarely happens that way. I am not suggesting that you let a tenant pay whenever they want, but you should do what you feel is fair. I have many tenants that consistently pay their rent late, but they do pay and include a late fee. You need to decide what your tolerance is and when you are going to cut off a tenant. Set that date in stone and stick to it.

Time to evict (in MN):
Although you can file all the necessary paperwork and go to court yourself, I am strong proponent of paying a service or attorney to perform the eviction for several reasons:

• The costs for many of these services is less than what I value my time at ($88 for the service that I use). I simply fill out a 3 page document, sign it, and pay with a credit card. The service calls me when the court date has been scheduled and they call me after court is over to tell me the results. I do nothing else.
• The process may require multiple trips to the court and waiting at the court for your case to be called. If you have a full-time career, do you want to take time off to attend an eviction proceeding?
• Several steps in the process require a neutral 3rd party such as serving the eviction notice. If these are not done correctly, the court can throw out your eviction action. You have lost time (and more money, including the filing fee).
• Lastly, these services perform hundreds and even thousands of evictions per year. They can be an invaluable resource if you have questions about the process. You may even consult with them to see if you can evict a tenant in a specific situation.

Regardless if you handle the eviction or you pay a service, the process generally works like this (in Hennepin County in MN):

• The court has you fill out some short paperwork explaining why you are requesting the eviction. You will pay a filing and process fee ($342 in Hennepin County).
• The court clerk will assign you a court date (typically 2-3 weeks out in Hennepin County).
• A neutral 3rd party must serve the tenant with a notice regarding the court date and why they are being evicted. If the tenant is not home or refuses to answer the door, the notice can be secured to the primary door.
• On the day of court, several scenarios can play out:
  • Both the landlord and the tenant will be given an opportunity to explain their side.
  • If the tenant owes past due rent, the judge will ask them if they are prepared to pay. Sometimes the judge will allow the tenant a week to come up with the money, but most often the judge will side with the landlord as s/he recognizes that the tenant has had plenty of time to work out a payment plan or find other sources for the rent.
  • If the tenant is claiming to be holding the past due rent because of repairs that the landlord has refused to perform, the judge will often make the tenant give that rent money to the court to hold until the work is performed. Typically, the tenant is just trying to use this as a delay tactic and can not produce the money.
  • When the eviction is for lease violations, other than past due rent, the judge will issue a ruling based upon the evidence presented. Again, having excellent documentation can help you prevail.
  • If only one side shows at the court hearing, the judge will always rule in favor of that party. In my experience, only about 50% of the tenants will attend the hearing. Most will already have moved out by this date as they know they are going to lose in court and be required to move immediately.
• Typically the hearing is over very quickly and the judge will make a decision on the spot.
• If the judge rules in favor of the landlord: You can choose to enter into a payment plan with the tenant for any past due rent and allow them to stay in the apartment provided they honor the plan. OR You can file for a “Writ of Eviction” (in MN) which requires the sheriff to serve a notice on the tenant notifying them that they have 24 hours to vacate the property (there is an extra cost for this-$95).
• After the Writ has been issued, you have up to 30 days to schedule the sheriff to come to the apartment and have the tenant forcibly removed. In my experience, it rarely gets to this point. If a tenant loses in court, they are usually moving immediately as they don’t want to be removed from their apartment and locked out.
• Once removed by the sheriff, the tenant can be arrested for trespassing if they enter the building or apartment again.
• If the tenant leaves anything in the apartment after they vacate, you are required to store those belongings for 60 days before disposing of them as you like. You can charge the tenant to store the belongings, but you can not hold the belongings ransom to them paying the past due rent.

Other tips when going through an eviction:

• Sometimes it may be easier to threaten an eviction and have the tenant move out peacefully and quickly. This will save you time and the possibility that they will damage the apartment on the way out.
• Because it is difficult to accurately know when the apartment will again be available (or what condition it will be in), you should give yourself enough time after the eviction before releasing the unit.

The entire process can be intimidating, but it is a necessary part of being a landlord. It is always better to cut your losses, go through the process, and find a better tenant.

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment real estate. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com.

Tenants Moving In Early

It is very common for tenants to need to be out of their old apartment at 5pm on the last day of the month, but they can’t move into their new apartment until 8am the next day.  This can be a stressful time to be without a home and have all your stuff loaded in [...]

It is very common for tenants to need to be out of their old apartment at 5pm on the last day of the month, but they can’t move into their new apartment until 8am the next day.  This can be a stressful time to be without a home and have all your stuff loaded in a moving van overnight.

Many landlords will allow tenants to move their belongings into their new apartment early if possible.  I do this all the time.  Unfortunately, it is common for landlords to forget several key points when they allow their new tenant to do this:

• If your tenant is actually moving in early, make sure to sign an addendum to the lease for the additional days.  You may or may not be collecting rent, but you want something in writing that holds the new tenant to the same requirements they will be under during the rental period.  Evictions can be complicated with no written lease in place.
• If you are allowing them move furniture onto to the property only, have the tenants sign a waiver of responsibility.  You are only responsible for giving them a key, not for the contents of their apartment.  Again, your full lease will have this language.  Also specify in writing that they are not authorized to live there.
• Set a concrete date for their arrival to insure you will have the apartment ready.  You may need to negotiate the opportunity to continue to work on the unit despite the tenant beginning to move in.

Following a few simple rules when allowing a tenant to move in early will make the process easy for both you and the tenant.

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment real estate. He owns and manages almost 30 investment property units from single to multi-family. Find his blog at www.minnesotainvestmentrealestate.com. His website can be found at www.mnirea.com

Are You Leaving Money on the Table?

How did you decide what to charge for rent in your apartments?  Do you rent them quickly or do you show them to dozens of people only to get a tenant once you lower the rent?  Maybe you need to check what the other comparable properties are renting for in your neighborhood.  Here are a few [...]

How did you decide what to charge for rent in your apartments?  Do you rent them quickly or do you show them to dozens of people only to get a tenant once you lower the rent?  Maybe you need to check what the other comparable properties are renting for in your neighborhood.  Here are a few ideas on how to confirm you are maximizing your rental amounts and minimizing the apartment’s time on the market:

• Drive around the neighborhood and call on some “For Rent” signs.  In fact, introduce yourself, tell them which buildings you own, and give them your phone number.  We all need to help each other as landlords.
• Use Craig’s List to quickly see what landlords are offering their apartments for.  Also check out the “seeking housing” section to see what tenants are willing to pay.
• Ask your existing tenants what they think about the rent amount you are planning to charge. 

Even if you think you have the rent amount correct, watch how quickly or slowly your apartment rents once you start advertising.  If it is taking a long time to rent or you are experiencing a low call volume, lower the rent sightly.  You may also need to change your rent amount based upon the time of the year, changes in the neighborhood, and the condition of the unit while showing it.

Check your rent amounts at least yearly.  Setting your rent amounts correctly will help you rent your apartments quickly which will help you minimize leaving money on the table. 

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment real estate. He owns and manages almost 30 investment property units from single to multi-family. Find his blog at www.minnesotainvestmentrealestate.com and his website can be found at www.mnirea.com

Landlords: Read your Leases!

Landlords, when is the last time you read your standard lease from start to finish?  Should I dare say that some of you have never read it?  Your lease is your contract with tenant.  I assume you spent a considerable amount of time working on your purchase agreement (another contract) for the purchase of that investment [...]

Landlords, when is the last time you read your standard lease from start to finish?  Should I dare say that some of you have never read it?  Your lease is your contract with tenant.  I assume you spent a considerable amount of time working on your purchase agreement (another contract) for the purchase of that investment property.  Why are you now just coasting along with any old lease?

Regardless of whether you buy your leases at an office supply store or you found one on the Internet and print it off your computer, here are some items to put in your leases and some to take out:

• Require at least 60 days written notice for the tenant to vacate the premises even at the end of the lease.  The 60 days notice should start at the beginning of the next month; so you should get a minimum of 2 months notice.
• Rent is due on the 1st, but late on the 6th.  Most tenants look at that as the rent is due on the 5th.  Make sure they understand it is due on the 1st.
• Consider raising your late fee to a large enough amount to make it painful for the tenant to be late (check if your state has a legal limit).
• Put in a clause like the following:  “All drains, waste pipes, and plumbing are accepted as clear by the tenant at the time of occupancy and any material blocking them after occupancy shall be repaired by the tenant except blockages caused by roots or backups from the streets.”  This should put a end to late night blocked toilet calls.  I do recommend, however, supplying a $6 plunger to alleviate any potential problems!
• Remove any automatic 1 year renewal clauses in your lease.  At first it may seem like a good idea, but this clause can backfire on you when the tenant simply refuses to return your calls and the renewal notification window expires, leaving you bound to re-rent to this tenant. 
• Include the following language:  “Payment of rent may be made by personal check until first check is returned unpaid.  Thereafter, tenant will be required to pay using certified funds or cash.”
• Confirm your lease has the following regulation:  “Use of property for business is strictly prohibited”.  What if your tenant opens an auto repair shop in the garage or is using the basement as his warehouse?
• Specify the number of adults, children, pets, and automobiles in the lease and set requirements for notification if the number of any increases. 
• If you accept pets, make sure to have a pet deposit and some of it should be non-refundable for additional wear & tear on the house and/or carpet cleaning.  Also include the type and/or size of the pet (I have seen a tenant start with 3 approved dogs (10 pounds each) and then after a year upgrade to three 50 pound dogs.  They were still in compliance with the lease!
• Consider requiring the tenants to make any repairs under a certain dollar amount, depending upon the type of property you are renting.  You may also make them responsible for some or all pest control costs (depending upon the building).
• Do not allow any move-outs during November to March as these are the most difficult times to lease properties.

Here are a few others that you should consider using in the right market and circumstance:

• Specify the apartment or entire building as smoke free.  Have the tenants initial or sign a “smoke free addendum”.  This will save you some repainting and cleaning costs.
• Require the tenants to call a locksmith at their expense if they get locked out or lose their keys.  At least set a comparable price ($50-75) for you to unlock their apartment. 
• Have all tenants sign a “Non-violence” and “Drug Free living” document with the threat of eviction if violated.

Making these easy changes will make your leases and your position stronger when working to aleviate problems with tenants.  They should also save you money and frustration in the long run.   

(Confirm any of the above changes will work in your state and market.)

Scott Ficek is a Realtor with Keller Williams Integrity in Minneapolis and helps new and seasoned investors buy and own investment real estate.  He owns and manages almost 30 investment property units from single to multi-family.  His blog and website can be found at http://www.mnirea.com.