The Landlord’s Guide to Dealing With Problematic Tenants

From time to time our clients have run into some issues with their investment properties.  I thought I would share this article – great guidelines on how to deal with tenant issues.  If you have any questions or concerns, feel free to contact The Caton Team at 650.568.5522 or Info@TheCatonTeam.com

The Landlord’s Guide to Dealing With Problematic Tenants

Problematic tenants come in all forms and are not limited to bad neighborhoods. It can be that very detailed-oriented tenant renting a class-A home who doesn’t stop calling you about every little item or it can be the tenant in a class-D rental who has a son with gang affiliation causing trouble on the block.

The challenge in being a landlord or a property manager is that sometimes no matter how hard you screen a tenant or a family, you can still find yourself dealing with a tenant who continues to be an issue. I think as a property manager or owner, you find better ways to deal with tenants and the stress and agony they can cause early on in your investment career.

Analyzing the Situation

Below are the three main steps that we take to analyze problem tenants when there’s an issue:

  • Verify if it can be solved without moving out. We never want turnover, so allowing a tenant out of their lease or negotiating an exit from the term is our last option. We first try to find a solution with the help of our property management team, so it doesn’t result in a tenant moving out.
  • Internal or external? Next we try to figure out if the issue is an external problem or an internal problem. An external issue can be something going on in the neighborhood with a neighbor or individual who isn’t on the lease. An internal issue can be something about the property, such as damage to the property caused by the tenant or the property causing any issues to the tenant.
  • List all options. There are many ways to skin a cat, and at this point, we are looking for the solution that can be a balance of making sure that the problem is solved, doesn’t damage our relationship with the tenant, and makes sense economically.

Once the above steps are laid out, we then have to execute our plan. As property managers, we try to find a win/win first, but at the end of the day, we need to protect the interest of the property and the owners.

Guidelines to Handle Problematic Situations

Many tenant issues are not solved with a black and white handbook of answers, but we follow some guidelines that help our team make decisions on how to handle a problematic tenant. Some of them are:

  • Remove emotion. It is easy to get emotional when issues arise, and most of the time, it doesn’t benefit anyone. Continue to make fact-based decisions that are in the best interest of your investment today and going forward.
  • “Right is right” is not always the answer. You must consider that “what is right?” isn’t always the solution, and many times “it’s the principle” is irrelevant.
  • Refer to the lease. Remember that 6-25 page document you signed in the beginning? More often than not, many issues are laid out in the form of expectations in the lease. Refer to the lease to enforce items such as tenant damage, occupants not on the lease, and loitering.
  • It won’t go away. Issues that go unaddressed hardly go away and often reappear down the road in other forms or more serious issues. Address issues as they come and never expect issues to go away.
  • Whenever there are issues, make sure to communicate or discuss them with tenants. Many times, tenants become problematic simply because they might need a little more hand holding than the others.
  • Hold up your end. I have seen many landlords who stop doing what they are supposed to do because a tenant has created an issue. This is a good way to start a downward slope in your relationship with your tenant. As a landlord, hold up your end of the bargain by completing what you are responsible for as part of the lease obligation for the landlord. This can only help you to be the bigger person.
  • Learn from it. Like any problem in life, you want to analyze it and see how you can prevent that issue from happening again. Was there something you could have had in your lease to prevent this? Was there something on the application that in hindsight makes sense now or was a red flag?

I read this article at: http://gcrealtyinvestments.com/problematic-tenants/

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What Is Normal Wear and Tear?

What Is Normal Wear and Tear?

 

Ripped or torn carpeting, gaping holes in the walls, doors hanging off the hinges — when a tenant moves out, some damage goes above and beyond the usual. But as most landlords know, these things are rarely straightforward.

BY KEVIN ORTNER

 

What do you do about scuff marks on the hardwood flooring? Or nail holes from hanging pictures? What about dirty appliances? Can you charge a tenant to bring the property back into the same condition it was in before they moved in?

Of course, tenants want their security deposit back in full, but as a landlord, you must retain the deposit to apply toward any damage that the tenant is responsible for. When it comes to assessing what issues were caused by normal use and which problems are more excessive, it can get complicated.

When a tenant moves out, it’s up to the landlord to process their security deposit and return it in a timely manner. This deadline varies considerably from state to state, but for most areas, it’s about 30 days.

To further compound the issue, state and local regulations vary considerably on how security deposits should be handled. Not surprisingly, disputes regarding security deposits are among the most common reasons landlords and tenants end up facing each other in court.

To clear up some of the confusion surrounding this issue, here are some guidelines for the typical areas where damage occurs in a rental to help you determine whether it falls under the category of normal wear and tear or is something more serious.

Flooring

In most cases, you can’t expect the floor to be in pristine condition after a tenant leaves. Carpet naturally has a limited lifetime, especially if it’s a lighter color. High-traffic areas will naturally become worn down, and it’s common to see a few light stains and indentations from furniture. A steam clean, customarily performed in between tenants, should bring carpet back into decent shape. However pet stains, holes, and burns generally go beyond everyday wear and tear. When it comes to hardwood flooring, the same standards apply. Worn or scuffed flooring in areas that receive a lot of traffic is to be expected, while deep gouges or an extensive series of scratches are usually indicative of tenant damage. With tiles or linoleum, it largely depends on the quality of the flooring and what has caused the damage. If linoleum is starting to peel near the door, for example, it’s most likely the result of normal use. Broken or chipped tiles or deep scratches in flooring could have been caused by dropping heavy items or dragging something across the floor and may be damage the tenant could be held responsible for.

Walls and Doors

Faded paint or wallpaper is considered normal wear and tear, and minor superficial damage — such as a few small nail holes, or a hole where a door handle hit the wall — is usually considered normal wear as well. These small issues can easily be repaired and shouldn’t come out of the tenant’s security deposit. However, pen marks all over the walls, or deep gouges or dents that will require more than some quick plaster to repair, are usually considered excessive. Similarly, the cost to repair or possibly replace doors that are hanging off the hinges or sliding doors that have come off of their tracks and been banged around can usually be deducted from the tenant’s security deposit.

Appliances

Appliances that you supplied with the unit — such as air conditioners, furnaces, stoves, and washers and dryers — all age and will break down eventually. Your job is to determine whether the unit in question wore out on its own or was damaged by the tenant intentionally or by improper use. For instance, if your new appliances are broken and are still under warranty, you may want to find out the cause. For machines that are older than five years old, though, the breakdown could be normal wear and tear. In most cases, you shouldn’t take the cost of replacing appliances out of the tenant’s security deposit unless you can prove that they caused the damage themselves.

Pet Damage

One of the age-old landlording questions is deciding whether or not to make your rental pet-friendly. When you let furry friends stay, you’re acknowledging that they may make an impact on a unit. But just because you allow pets in your property doesn’t mean that you have to allow pet damage. Stained carpet, holes in the yard, and scratched or chewed floors, walls, or doors are not generally considered normal wear and tear and can all come out of the tenant’s security deposit.

Dirt and Grime

While you can’t require your tenants to shine the floors on their way out, this doesn’t mean that they have the right to leave your property in a filthy state either. Clogged drains from misuse or neglect; filthy bathtubs, showers, sinks, or toilets; food in the refrigerator or cabinets; a grimy stove; and piles of trash can all be considered excessive, and such in cases it’s not unreasonable for you to charge a cleaning fee. Just make sure to be clear about your expectations for the condition of the rental before your tenants move out, so they know exactly how you expect them to return the property to you.

The best test for these cases is whether the property has been returned to you in a way that’s considered to be reasonable, taking into account the amount of time that the tenant occupied it. For example, if you recently had new carpet installed and the tenant was only in the unit for six months, then the cost of replacing damaged carpet should come out of their security deposit. If, however, the carpet is ten years old, then you can’t expect the tenant to pay for a carpet upgrade simply because it’s worn out.

Finally, when it comes to security deposits, one of the best ways to protect yourself is by being proactive. Make sure you specify in the lease the condition in which you expect the rental to be returned to you. This should help to clear up any confusion and keep everyone on the same page. Another important tip is to always document everything. Always conduct a walkthrough of the unit before the tenant moves in, documenting the condition of the property. We do another walkthrough with the tenant when they move out. Video and photos are one of the best ways to demonstrate the state that the property was in, and will prove to be invaluable when it comes to withholding a security deposit or having to prove your case in court.

 

I read this article at: http://realtormag.realtor.org/commercial/feature/article/2016/10/what-normal-wear-and-tear?om_rid=AACmlZ&om_mid=_BYIjXLB9UYVfE8&om_ntype=BTNMonthly

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New Rental Units Too Pricey for Most Renters

New Rental Units Too Pricey for Most Renters

Much of the recent multifamily construction has focused on the luxury segment, which is pricing renters out of the market, according to Harvard University Joint Center’s 2015 State of the Nation’s Housing Report.

The rising costs in multifamily development pushed the median asking rent for newly constructed rental units up to about $1,290 per month as of 2013. That marks an increase of $180 compared to 2012, according to U.S. Census Bureau data.

Meanwhile, the typical renters’ incomes rose by just $60 a month, going from $32,000 in 2012 to $32,700 in 2013, according to the American Community Survey.

In order to afford a standard new multifamily unit, a household would need to earn at least $51,440, according to JCHS. Less than a third of renters, however, earn this much.

In some areas, rental costs are even higher. JCHS’ report notes that 84 percent of new multifamily units in the Northeast and 67 percent of those in the West went for a monthly rate of $1,350 or higher in 2013. In fact, many units built in 2012 to 2013 rented for at least $2,000 per month – which would require an annual salary of at least $80,000.

In the South and Midwest, new units rented in the $1,350 range were only about a third of growth, which indicates a more even regional supply of new units by price.

“While new multifamily construction is easing some of the demand for new units, it is currently not sufficient to ease the broader affordability problems facing renters,” notes Elizabeth La Jeunesse, a research analyst, at the JCHS’ Housing Perspectives blog. “Closing the gap between what it costs to produce this housing, and what economically disadvantaged households can afford to pay, requires the persistent efforts of both the public and private sectors.”

Source: “New Multifamily Construction Is Out of Reach for Most Renters,” Harvard University Joint Center for Housing Studies’ Housing Perspectives Blog (July 30, 2015) DAILY REAL ESTATE NEWS

I read this article at: http://realtormag.realtor.org/daily-news/2015/08/04/new-rental-units-too-pricey-for-most-renters?om_rid=AACmlZ&om_mid=_BVwQu3B9EOtOGt&om_ntype=RMODaily

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County rents jump — again

County rents jump — again

February 02, 2015, 05:00 AM By Austin Walsh Daily Journal

As rents continue to skyrocket throughout the region, housing experts say San Mateo County residents should not expect to see relief in the near future.

In the past year, average monthly rents in the fourth quarter increased $227, jumping to $2,572, according to reports from according to RealAnswers, a group that compiles apartment data.

During the fourth quarter in San Mateo, studio apartments increased by an average of $193 from last year, to $1,762 per month, marking a 12.3 percent increase. One-bedroom apartments with one bathroom increased by 10.3 percent on average to $2,332 per month, up $218 from 2013. And two-bedroom, one-bathroom apartments increased $181 per month, to $2,593, a 7.5 percent increase from the previous year, according to the report.

But some renters have seen increases as substantial as $600 in a year, said Josh Hugg, program manager at the Housing Leadership Council of San Mateo County.

Hugg and other advocates for renters promote policies that protects residents from exorbitant rates or increases.

“We need more affordable housing,” Hugg said.

Well-paying technology jobs are frequently cited for driving up costs across the region, but Hugg noted that for every job created in the tech sector, there are multiple support workers who are finding it increasingly difficult to live locally.

“When we bring in all these great jobs, they are creating jobs of more modest means,” Hugg said. “We are not making a place for them, even though they are the fastest growing part of the workforce.”

Some residents are being priced out of their homes, and are forced to move back in with their families to afford the cost of living, said Sally Navarro, a rental, sales and property management Realtor for AVR Realty in Burlingame.

“Everyone is piling in until they find something. Folks are just waiting it out to see what’s going to happen,” she said.

But the outlook is not optimistic for those hoping to see prices drop, she said.

Navarro, who has worked in the local rental industry for nearly three decades, said she has never seen a tougher rental market than what is currently available.

“I don’t see that it’s going to get a lot better,” Navarro said.

The best that renters might hope for is that rates level out from their constant incline. Navarro said that she has not seen rents decrease since the dot-com bubble burst around the turn of the century.

She said that the feeling of dissatisfaction with expensive rents is prevalent throughout the county.

“People are extremely frustrated,” she said.

But it’s not bad for everyone involved in the housing industry, said Navarro.

“I think landlords are very lucky right now,” she said. “They have been reaping the benefits for quite a while.”

But she expressed compassion for those who are trying to find a new place to live in the current market.

“I feel bad for tenants. We don’t know how it’s going to go, or when it’s going to change. In the meantime, we have people looking for places and there is nothing out there. It’s really frustrating,” she said.

Those interested in landing a new place should bring all the preliminary paperwork with them to the appointment, and be willing to pay more than the market rate, Navarro said.

Though the region has reaped the benefits of being a globally acclaimed hub of innovation and is seen as a gold mine for people across the globe, Hugg said the success has come at a substantial cost to those who have lived in the region for years.

“We are a victim of our own success,” he said.

 

I read this article at: http://www.smdailyjournal.com/articles/lnews/2015-02-02/county-rents-jump-again/1776425137606.html?interaction=normal

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Good News for Landlords: Rents Still Rising – Bad News for Tenants

Good News for Landlords: Rents Still Rising  –  Bad News for Tenants

The article below is both good and bad news.  For investors, whom have scooped up deals on the San Francisco Peninsula through the bust, they are raking in the gold with high rents.  For the rentals properties I service, it’s been amazing to see the increase in rent year over year.  But demand is there – and with few homes to buy – the rental market is booming.

For those who are renting, they cringe when they see a letter from their landlord in the mailbox.  Several clients of mine have emailed me this year concerned that their rent went up.  Some as little as $50 – other a more substantial jump.  These renters are the first time buyers of the future.  Skipping dinners out to stash away cash for down payments and closing costs.  And around here – where the median home price starts at $800,000 – we’re not talking pennies and dimes that need to be saved.

Right now the cheapest rental listed on the Multiple Listing Service is a 3 bedroom 1 bath home of about 1050 square feet in the Buri-Buri area of South San Francisco – asking rent is $3,000.  The most expensive rental is a dated but spacious 3 bedroom 4 bath home of close to 4000 square feet in Portal Valley asking for $9,500 a month.  The median rental listed today is a 3 bedroom 2 bath condo in Menlo Park listed at $4,250 a month.

Suddenly that $50 rent increase doesn’t sting as much.

But the word is out – the Bay Area is a wonderful place to live and we’re all paying for it now.  Enjoy this article below…

 

Good News for Landlords: Rents Still Rising

 

Average rental prices have ticked up nearly 4 percent nationwide, according to the latest TransUnion Rental Screen Solutions industry report of data collected from property managers in September 2012 and September 2013.

Rents were on the rise for all four of the classifications of rental properties that TransUnion analyzes: newer institutional properties; older institutional properties; older properties in less desirable areas; and older properties in less desirable areas that are in need of renovations/updating. The average rent of all four types of properties was $1,072 in 2013.

The largest rental increases were seen in properties that were in less desirable areas that need renovations, up 4.2 percent to an average of $693.

“The rental market continues to be strong as demand for rental units remains high while consumer credit risk slowly improves,” says Michael Doherty, senior vice president of TransUnion’s rental screening solutions group. “The combination of improving rental risk scores and continued demand for rental properties is particularly good news for property managers. … When the credit risk of the population improves, property managers may be more inclined to tighten their criteria to ensure they are getting the best possible resident. This is integral because a resident who ‘skips’ out on a lease can cost a property manager thousands of dollars in lost revenues.”

By: DAILY REAL ESTATE NEWS

 

I read this article at:  http://realtormag.realtor.org/daily-news/2014/01/28/good-news-for-landlords-rents-still-rising?om_rid=AACmlZ&om_mid=_BS6BpXB838Asq2&om_ntype=RMODaily

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Roaring Rentals…

When Susan read this article one morning over coffee – I just about dropped my cup. As full time Realtors we are well aware of the hot rental market – having just rented a unit out for a client in under a week. However, when I heard this – even I was surprised. Enjoy this article from the SF Chronicle – I enjoy Carolyn Said.

Rents soaring across region

San Francisco rentals were a different world when Chuck Post became a leasing agent – just four years ago.
“In 2009 we were actually discounting rents, offering things like a free month’s rent when you moved in, perhaps throwing in free parking,” he said.
Those days are long gone.
Now as the economy roars back, his listings draw long lines of wannabe tenants, and apartments get snapped up in less than a week.
Rents in San Francisco are escalating at breakneck clips this year, largely driven by an influx of tech workers. Oakland and San Jose likewise are seeing steep run-ups.
San Francisco’s bigger apartment complexes saw average asking rents break the $3,000 mark in the third quarter, hitting a record $3,096 across all size units, according to data service RealFacts. That’s an 11.9 percent bump from the same time last year.
Median asking rents for San Francisco apartments listed on http://www.livelovely.com clocked in at a record $3,398 in the third quarter, up 21 percent from 2012, said apartment-finding company Lovely.
“Rents are rising faster in San Francisco than almost anywhere else in the country,” said Jed Kolko, chief economist with housing service Trulia. “Rising rents are a bigger challenge than rising home prices, especially in a place like San Francisco where buying is out of reach for many middle-class and lower-middle-class people.”
Gabriel Metcalf, executive director of the think-tank San Francisco Planning and Urban Research, said the city is facing a “crisis of affordability.”
“What happens when you let a city get this expensive, is that over time, only the wealthy can live there. You lose everyone else,” he said.
A spike in evictions has spurred protests of gentrification, including one at City Hall on Thursday. Activists say San Francisco must act to maintain a diversity of income levels.
The root cause is simple, Metcalf said: “The growing regional economy coupled with decades of under-building housing.”
San Francisco’s construction boom is helping to increase inventory. But to really make a dent on the housing shortage, Metcalf said, the city would need to deliver 5,000 new housing units a year for quite some time. It’s averaged 1,500 units a year over the past 20 years.
New buildings in Mid-Market and the Mission have a two-faceted impact on rents.
They command a pretty penny, driving up the median and average rental costs.
However, some experts said the new buildings are forcing some older units to drop their prices to compete, thus giving prospective tenants some relief.
“There’s a lot of brand-new Mid-Market stuff with nice amenities and high prices competing for the well-paid tech people,” said Laura Gray, a leasing agent with Paragon Real Estate Group. “The not-brand-new units are left struggling a little bit.”
For instance, she’s listing for $2,900 a one-bedroom at a 6-year-old luxury building near AT&T Park and Caltrain.
“A year ago, this would have rented for $3,500,” she said.
Other agents said that there remain plenty of wallflower apartments, either because they’re in undesirable areas or overpriced.
But that’s cold comfort to the folks engaged in the blood sport of apartment hunting in San Francisco.
Rosie Simeonova and Jay Dillon thought they were prepared when they moved here from Los Angeles last month.
“We knew San Francisco would be expensive, so we upped our budget,” she said. “We knew it would be competitive, so we were very prepared with our renter’s resume, employment confirmation, credit reports, pay stubs, anything you could possible ask for.”
They quickly discovered that their $2,500 limit for a one-bedroom near Dillon’s new job at the University of San Francisco didn’t go far.
“We must have seen over 30 places,” Simeonova said. “We’d go to an open house for a little tiny apartment and there’d be 20 people on the stairway frantically filling out applications. The landlords had no leeway for renters; a lot of times they would just offer 15-minute windows to see places. It was intimidating.”
They got more aggressive. When they spotted an Inner Richmond place that seemed to fit their needs, they called the leasing agent and asked to meet before the open house, offering to sign a lease on the spot. That did the trick.
Lovely said that rents for studio apartments rose the most, with the $2,370 median up 24 percent from last year and 16 percent from the second quarter.
For all sizes of apartment complexes, Oakland clocked in at $1,595, a 15 percent increase, while San Jose was at $2,180, up 13 percent from last year, Lovely said.
For buildings with 50 or more units, RealFacts said Oakland’s average rents of $2,124 in the third quarter were up 10.3 percent from 2012, while in San Jose the $2,015 average was a 9.2 percent bump.
By Carolyn Said

I read this article at: http://www.sfgate.com/realestate/article/Rents-soaring-across-region-4924282.php

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Thanks for reading – Sabrina

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