When a lease is two months away from expiring, you should start thinking about whether or not you should to raise the rent. Deciding how much the new rent should be is always a hard call to make. Making this decision is walking a fine line between leaving money on the table and raising the rent so much that the tenant leaves.
Today, the Associated Press, came out with an unsurprising story. The headline reads, "Marijuana use by US college students up, highest in 35 years." According to the story, nearly half of full-time college students admitted to smoking marijuana in the past year. There are currently 11 states in the union that have fully legalized recreational marijuana. Due to these policy changes many landlords will receive (if they have not already) a requests from tenants to use marijuana in their rental properties. Here are some thoughts on this predicament:
It's been about six months since your tenant moved in. The rent comes in on time every single month, and you think to yourself, "life is good."
In reality, you have no idea what your tenant is doing. You have no idea how the house is being treated, or even how many people are living in the home. At this point you essentially have two choices:
1. You can turn a blind eye and hope that everything is fine
2. You can give yourself some peace of mind and do a simple safety inspection.
Here at Mesa Properties, we recommend most rentals get a thorough tenant occupied inspection, or safety inspection as we call them, every six to eight months. Yes, we do check for illegal activity and unauthorized occupants, but we also check for the more common hazards such as leaking sinks and faulty smoke alarms.
Unfortunately, most tenants do not care for the rental as much as an owner would. Therefore, it is necessary to implement safety checks to ensure that your property is being properly maintained.
Rehabs are just a normal part of the rental property life-cycle. You shouldn't have to do a rehab after every tenant turnover, but there will be times when a tenant vacates and you have quite a bit of work to do.
This can range from the standard new carpet and paint to full on bathroom or kitchen upgrades. Rehabs can be pretty pricey, especially if it's been several years since you've done any serious amount of work on the property.
It's also important to note that rehab is above and beyond the normal work you have to do during a standard tenant turnover that may just consist of some cleaning and touch up paint. If you just had a tenant move out after only living there for a year, chances are a lot of the repairs and cost for you to fix stuff that they damaged can be charged to their security deposit. A rehab is usually required after several tenant turnovers or after a long term tenant. After years of wear and tear, you are eventually going to have to do more than swap out the carpet and paint the walls. It will also be required if you get someone who trashes your home.
What needs to be done during a rehab
Every decision you make regarding what appliances, carpet quality, paint, bathroom upgrades etc should be made with the intention of earning a return.
How much do you charge?
After a lease ends and the tenant moves out, it's guaranteed that there will be some amount of work that will need to be done to get the property ready to rent again.
This can range anywhere from just a good cleaning to a full scale rehab project. If it's the latter, this can take weeks to complete and cost thousands of dollars.
Many landlords are left wondering how much of the security deposit they can use to help cover the costs of getting the property prepped and presentable for a new tenant.
The hard part is determining what damage is considered tenant responsibility and what is normal wear and tear, and how much you can charge for each given item.
Also, how long do you have to complete repairs and return the unused portion of the deposit to the tenant?
Some landlords view the security deposit as a bonus that they get for renting out their property that they will keep no matter what. This is not only unethical, but can have some serious legal ramifications as well.
All of this is covered under California Civil Code Section 1950.5 but we'll go ahead and break it all down for you here.
When a lease nears the end, many property owners wonder if they should raise the rent, keep it the same, or end the agreement altogether and look to rent to a different tenant.
Assuming you signed a 1-year lease agreement and you would like the tenant to continue renting your property, decide if you want to have the tenant sign another 1- year lease or simply let the lease expire and go to a month-to-month term. Your original lease should specify if the the lease will convert to a month-to-month tenancy. Legally, as long as the tenant continues paying you rent and you continue to accept the rent, you have a month-to-month tenancy.
If the tenant has been a good tenant, paying the rent on time, in full every month and taking care of the property, you should evaluate the local rental market and decide if you want to give the tenant a rent increase. Be sure you abide by any rent control laws in your area as you look at increasing the rent.
The lease is signed and its almost time for your new tenant to move in! You get to stop spending money advertising and screening applicants and now you get to start making money as your property generates a monthly income for you in the form of rent.
The process doesn't end once that lease is signed though. There are still a few things to take care of before moving in a tenant.
There is one thing that can always be said about any property inspection: “A picture is worth a thousand words.” In the age of the smartphone, there is no reason not to have pictures and even video of every major area of your rental property.
Screening and selecting a tenant for your rental property is the MOST important step in renting out your home.
Think about it. What do you worry about most when it comes to your rental property?
Here are some common concerns that we hear all the time:
- Is the tenant cleaning the home and preventing mildew and mold?
- Are they doing anything illegal in the house?
- Are they subletting to other people that I wouldn't have approved?
- Are they upsetting the neighbors or being disruptive?
- Are they damaging the walls, cabinets or appliances?
These days, it is common knowledge that the best way to market your rental property is online. Gone are the days of having to call your local newspaper to list your property for rent. The Internet has once again disrupted another industry and changed the way we do business. Various listing sites and Craigslist have become the go to destinations for prospective tenants looking for a place to rent.
However, with new technology comes new challenges and threats that landlords need to be aware of and guard against. The most common threat often comes from people sitting in some internet cafe on another continent, trying to make a quick buck at your expense. The scam usually goes like this:
Knowing where to start when it comes to managing your own rental property is the hardest part. Breaking the process down into a series of steps is the easiest way to stay organized and stress free while managing your investment. In case you missed it, check out our 9 Steps to Help You Manage Your Rental Property Without a Property Manager. Once your property is “rent ready,” you need to determine how much to charge for your rental property. With online sites like Zillow providing their “Rent Zestimate,” it’s a fairly straightforward process to determine the market value of your rental property.