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Ask Lucas : Q&A for Landlords
6 minutes | 4 years ago
Ask Lucas 035: What Happens to the Lease When a Tenant Dies?
Summary: Kerry from Florida had a tenant pass away in the middle of a fixed lease term. How should she handle the remaining unpaid rent with the estate, and who should pay for all the extra marketing fees to find a new tenant? Landlordology and Ask Lucas are brought to you by Cozy. Transcript: Lucas: Ask Lucas, episode number 35. Hey, what’s up, everyone? Welcome to Ask Lucas. I’m Lucas Hall, and this is a bite-sized Q&A show where I answer your questions about landlording and property management. If you have a question, just leave a recorded message on AskLucas.com. If it’s applicable to a large audience, we’ll try to answer it in this show. Today’s question is from Kerry in Florida who’s asking, “What happens to a lease when a tenant dies?” Before I get there, let me tell you a little bit about Cozy. Ask Lucas is brought to you by Cozy, which provides modern property management tools to landlords and property managers just like you and me. Here’s the best part. It is completely free. I know you’ve probably heard this before and I’ve said it before, but it is truly, truly, truly free. I use it, and I love it. You can screen your tenants with full credit reports and background checks and you can collect rent online. It will work on every mobile device. Just this week, actually, Cozy has gotten even better. Cozy can tell you exactly how much to charge for your rental. You’ll get to see how much the neighboring rentals are actually getting in rent. Cozy can tell you how much you can expect to receive. No more wondering if you’ve priced your rental too high or too low. I’ve used Cozy for years to help manage my properties and I’m able to do it from anywhere. Check it out at Cozy.co. That’s C-O-Z-Y.C-O. Now, let’s hear from Kerry. Kerry: Hi, Lucas. My name’s Kerry, and I’m a new landlord in Florida. I recently had a tenant pass away unexpectedly and I’d like to help her family by breaking the lease. She was six months into a one-year lease. However, there are going to be substantial costs to be incurred, i.e., agent fees, realtor fees, to re-rent the property and I’d like to know who’s responsible for that. I can’t find the answer anywhere online. I know that my tenant’s estate is responsible for the remainder of the lease, but who’s responsible when you break the lease, both parties agreeing, and who absorbs then the costs of the realtor fees to get the place re-rented? I’d really appreciate an answer to this because it’s driving me crazy, and I can’t find it anywhere. Thanks, Lucas. Bye. Lucas: Hey, Kerry. Thank you for your question. Welcome to the show. I am so sorry to hear about your tenant. Unfortunately, as you are experiencing, we as landlords need to deal with situations like this and we need to deal with it respectfully and legally and morally in the best way possible. I’m going to give you some advice. I’m not going to tell you it’s legal advice. Please don’t take it that way. I’m not a lawyer, but do know that the laws on this do change from state to state and possibly even from municipality to municipality. With that said, generally speaking, the laws on the death of a tenant is that the estate that they leave behind is still responsible for a fixed-term lease. If it was a month-to-month lease, then they’d really only be responsible for about a month because you could consider death as proper notice, but if it’s a fixed-term lease and there’s still six months left, then that estate still has to pay those six months. Now that’s horrible because they’re dealing with a loss and you need to be more sympathetic of that. I will say that, generally speaking, death is considered abandonment and almost all the states that I’ve researched have some sort of statute that say, “When a tenant abandons a property, then the landlord is responsible to mitigate damages to that tenant.” In plain English, what that means is when they disappear, when the tenant is gone and usually they just decide to up and leave and they didn’t die, but they just decided to disappear and they don’t want to pay anymore, then you as a landlord still have to go find a replacement. You have to try to find a replacement and hopefully you will. When that replacement starts to pay rent, then the old tenant is no longer responsible. Then that lease is terminated. That’s usually how it goes. Generally, if the tenant just disappears on you, you’re not going to be able to track down that money. You’d probably have to file a small claims lawsuit or something to get one, two, or three months worth of rent while you were looking for a new one, but that’s how it’s handled. In death, it’s very similar. The estate is still responsible, but you have a responsibility to mitigate damages to that estate. It doesn’t say anything about realtor fees or marketing fees because essentially you would incur those fees anyway. You’re going to pay those fees next time you re-rent the place, whether that’s now or in six months when the original lease was over. That’s on your dime, but I will say this. You could easily get that from the estate by simply saying, “Hey, if you help me with marketing costs, if you do this now and pay that little extra, you’re probably going to pay less in the long run,” and they will gladly just do that or they may come back to you and say, “Hey, how about I just give you five grand and we’ll call it even.” You do whatever you can negotiate. It’s certainly not a place for you to try to take advantage of them or get more money out of it than it’s worth, but just know that it’s really up to you and it’s really up to how you negotiate, but you do have a responsibility to notify the estate and to try to mitigate the damages to them and to do your best to find a new tenant. I hope that helps. Good luck to you. Again, I’m so sorry. Thanks again. Take care.
5 minutes | 4 years ago
Ask Lucas 034: What’s the Best Way to Calculate Income for Joint Applicants?
Summary: Joanne from Seattle is asking how to calculate the income requirement when you are screening multiple joint applicants. Do you use gross or net income when comparing to the rent amount, and what deductions do you look for? Landlordology and Ask Lucas are brought to you by Cozy. Transcript: Lucas: Ask Lucas, episode number 34. Hello and welcome to Ask Lucas. I’m Lucas Hall and this is a bite sized Q & A show where I answer your questions about landlording and property management. If you have a question, just leave a recorded message on AskLucas.com, and if it’s applicable to a larger audience, I’ll try to answer it in this show. Today’s question is from Joanne from Seattle, who’s asking, “What’s the best way to calculate income for joint applicants?” Before I get there, let me tell you a little bit about Cozy. Ask Lucas and Landlordology are brought to you by Cozy which provides modern property management tools to landlords and property managers just like you and me. The best part is, it’s truly, completely, absolutely, free. You can screen tenants with full credit reports, and background checks, and collect rent online for free. I’ve used Cozy for years to self-manage my own properties, and it’s allowed me to manage my properties from anywhere, and I never actually have to worry about the rent coming in, or if I’m selecting quality tenants. Cozy just gives me the tools I need to succeed. Get peace of mind for yourself at Cozy.co. That’s C-O-Z-Y-.-C-O. Now, let’s hear from Joanne. Joanne: Hi Lucas. My name is Joanne and I’m a landlord in Seattle. I have a question on screening for income when you have multiple applicants for one unit. Does their combined income need to meet the 2 1/2 to 3 times the rent, or does each individual need to meet that milestone? Thank you for your help. Lucas: Hi Joanne. It’s really great to hear from you, and thank you for your question. I’d really love to tell you more about income requirements, so let’s get started. To answer your immediate question, what you want to look at is the total household combined gross income of all of the adult occupants or applicants, which also can include cosigners. Basically, take their monthly income for everybody involved, add it all up, and then that needs to equal 2 1/2 to 3 times the monthly rent. Now, when you are looking it, you don’t want to judge it by 2 1/2 to 3 times, so pick one or the other. I recommend that range, and it should be different depending on where you live or what works best for you, but let’s just say it’s 3 times the rent. You pick one number and that’s what you’re going to gauge all of your applicants by. When you have a group like roommates or a family where there’s multiple adults, you want to take all the applications, and you want to get the total household income for all of those people put together, and then see if it’s 3 times the monthly rent. That is how you do income requirements and how you gauge whether or not they have enough money to pay rent. Now, it’s important that all of those adults are actually going to be on the lease and are all responsible under joint and several liability for the rent. What joint and several liability is it’s kind of like the three musketeers, all for one, and one for all. Each one of them has to pay the rent even if the other ones don’t. They can combine their funds and pay together, and that’s fine too, but they’re all responsible. Now, I want to go back and say that it is important that you also consider some things like garnishments or child support. Income is just one side of the deal. You really also have to look at a credit report, and what that tells you is the type of debt they have and how much. When I’m looking at income, income is great, they may make $400,000 a year which is awesome, but if they have debts that are equal to $400,000 a year, then they’re not making any money. They don’t have any money left over for rent. You have to look at the debt and compare that to income and see, really, how much of their money is eaten up. Again, it’s gross income that you’re looking at, so it’s the total before taxes get taken out, and medical insurance, and dental insurance, and all that stuff. If they do have any sort of judgements or garnishments, like child support, or tax withdrawals, or something like that, coming out of their paycheck, that’s probably not going to show up on a credit report. You want to subtract that out of the total gross, and then that bottom number’s what you use to gauge whether it’s 2 1/2 or 3 times the monthly rent. You know, one other thing to mention is that if you are collecting online applications through Cozy, Cozy will actually figure out this calculation for you. It will take all of the people in that group, and it will combine their household, or combine their income to form a household income, and it will tell you what the percentage is of the rent, of it’s 2 1/2 times, or 3 times, or 20 times the rent. Good luck with your next applicants and your next screening. I hope you find some really quality tenants. Take care.
6 minutes | 4 years ago
Ask Lucas 033: Am I Allowed to Collect Double Rent?
Summary: Kelly asks “am I allow to collect double rent on a property when one tenant moves out early?” It’s a question that all landlords ask themselves at one point or another. Learn what Lucas recommends, and why. Landlordology and Ask Lucas are brought to you by Cozy. Transcript: Lucas: Ask Lucas, episode number 33. Hey, what’s up, everyone? Welcome to Ask Lucas. I’m Lucas Hall and this is a bite-sized Q&A show where I answer your questions about landlording and property management. If you have a question, just leave a recorded message on asklucas.com and I’ll do my best to answer it here. Today’s question is from Kelly, who’s asking: “Can I collect double rent when a tenant moves out early?” Before I get there, let me tell you a little bit about Cozy. Ask Lucas and Landlordology are provided by Cozy, which provides modern property management software and tools for landlords and property managers like you and me. The best part is it’s completely free. I’ve been using it for many years to screen my own applicants and collect rent online, and I absolutely love it. In fact, my tenants love it to, so much so that when they left, when they vacated, they asked if they could take Cozy with them and use it on their new landlord. I think they got that worked out. It’s just a great testimony how much it’s enjoyed by both parties. Check out for yourself. The credit reports are detailed and complete, and you never have to worry about if your rent is in the mail. It’s all online and easy to use by everyone. Get peace of mind for yourself at Cozy.co. That’s C-O-Z-Y.co. Now let’s hear from Kelly. Kelly: Hi, Lucas. I have a tricky one. My tenant is moving out of his last month lease a few days early, but I also have a new tenant moving in during this overlap period before the end of the month. My question is, do I need to pay my old tenant a reimbursement for those end days that they’re not in the unit, which overlaps the days that my new tenant will be in the unit? I am getting double rent for this period, which is great, but there was nothing in the lease about this situation. I am not inclined to pay my old tenant for the extra days, especially because it has been their choice to move out these five days early. Would love to get your answer on this. My name’s Kelly. Thanks, Lucas. Lucas: Hey, Kelly. Thanks for your question. I’m really glad you asked it because every landlord will have to ask themselves about double rent at one time or another. Let’s just recap your scenario for the audience. You have a tenant who has paid up until the end of the month when their lease ends, but they’ve decided to move out early. I think you said five days early. Let’s just say the 25th. Now you have a new tenant who you’re wondering, can I let them move in, maybe on the 26th, and have them pay rent for those four days, and also keep the rent from the past tenant who also paid through the 30th. The short answer is absolutely not. Please do not do that. Do not collect double rent. Do not keep rent from two different people for the same rental property. Let me go into a little bit about the morals, principles, and ethics behind it. Generally speaking, when you rent to somebody you are guaranteeing exclusive access. It’s really quite simple. You’re collecting money and the tenant is paying you for exclusive access to that property. It’s the very foundation of a landlord-tenant relationship. When you collect money from someone else for the same property for exclusive access, then you’ve got yourself in a pickle because now you have two different leases, two different people, both with guaranteed exclusive access. That’s impossible. I’ve not come across a judge anywhere that will allow that, nor have I seen any sort of legal statute that allows that. That said, I’m not a landlord or tenant attorney, or attorney in general, and I don’t give legal advice. This is just common sense landlord advice. I would say that what you could do and what your best option is, is to go back to the previous tenant and say, “Hey, that’s great. You know, I love that you’re moving out early. It actually helps me out because I have a tenant who would love to move in early, and I will just refund the money for the days that I have a new tenant staying there.” You don’t have to give them back all the money for the days that they moved out because they still are paying the lease, but as soon as you have somebody else paying money then you need to not collect that double rent. If it takes you three days to turn over the property and then the person moves in on the 28th, then you’ve got just a few days of double rent and you can give back just those few days. That’s what I would recommend you do, is that you talk to the previous tenant and you say, “I am officially terminating your lease early,” and therefore they’re not responsible for the rent after the lease is terminated. It happens all the time. Landlords and tenants agree to this all the time because life happens and they need to move on and have some overlap or move out early. It just works out. Do not collect double rent. That would be my recommendation. Make sure that you give it back to the previous tenant and then just enjoy the fact that you were able to help out your new tenant and help them move in early. It actually helps you out because you don’t lose any rent. Enjoy nurturing that relationship so that you can potentially keep them for years to come. Good luck to you and thank you again for the question. Best of luck with your future tenants.
6 minutes | 4 years ago
Ask Lucas 032: Must I Give the Landlord Access to Show the Property?
Summary: Trudy from Colorado is asking about the landlord’s right to access the property in order to showcase it to prospective applicants. Does she have let him in or can she force him to wait until after she moves out before showing the property? Landlordology and Ask Lucas are brought to you by Cozy. Transcript: Lucas: Ask Lucas, episode number 32. Hey, what’s up, everyone? Welcome to Ask Lucas. I’m Lucas Hall, and this is a bite-sized Q&A show where I answer your questions about landlording and property management. If you have a question, just leave a recorded message on asklucas.com and I will try to answer it in this podcast. Today’s question is from Trudy in Colorado who’s asking, “Must I give my landlord access to the property for showings to future prospective applicants?” Before I get to that question, let me tell you a little bit about Cozy. Ask Lucas is brought to you by Cozy, which provides modern property management tools to landlords and property managers just like you and me. The best part is, it’s completely free. It truly, truly is completely free for landlords and property managers, and you can screen tenants with full credit reports and background checks and collect rent online, and all of that is completely free. I’ve used Cozy for years to self manage my own properties, and I absolutely love it. In fact, I’ve never actually had to worry about the rent check being in the mail or wondering if I have enough information to screen an applicant. Get peace of mind for yourself and check it out at Cozy.co. That’s C-O-Z-Y.co. Now let’s hear from Trudy. Trudy: I’m Trudy. I’m from Colorado. I want to know if during your last 30 days notice if you have to let the landlord in to show the place to prospective renters if it does not specify in your lease that you have to. Thank you. Lucas: Hey, Trudy. It’s great to hear from you. Thank you for your question. That one is really great because I think we all have to deal with it. As tenants and landlords, we have to address this. Let me walk through it. The simple answer is yes. In most states, and last time I checked I think it was around 40 of the states and territories in the United States that they all have a law that says that a tenant has to let a landlord in to show the property to prospective applicants. They’re not really clear typically on how much notice by the end of the lease because a lot of times people don’t have leases. They might have month-to-month agreements or it’s just week to week or maybe there’s no end date or whatever, but generally speaking, a landlord can enter a property with proper notice to do a variety of things. I say proper notice because that is so key. In most states, a landlord has to give at least 24 hours notice before entering a property. In some states, it’s more. Some states, it’s not mentioned at all, but it’s still a best practice, but as long as they do that, then they can enter the property to take care of a number of things. One, they can enter the property to deal with an emergency, and they don’t need your approval for that. They don’t need you to give them access because most landlords or property managers have keys to the properties that they own or manage, and that’s just good business. They can enter the property to deal with an emergency, like a flooded pipe or perhaps the heater’s gone out or maybe there’s a broken window or something like that deals with safety or habitability. Typically, they don’t need to give any notice for that because it’s an emergency so they can enter at any time with no notice because there’s a big problem, but all the other ones, they typically do have to give notice. The other things that they can enter the property for are, two, to inspect the property. That might mean to follow-up on a repair or just to do an annual inspection or monthly inspection or whatever the agreement is. They can check on their property. After all, it’s their asset. Three, they can enter the property to make repairs or improvements. They might be building a deck or they might be replacing the windows or replacing the smoke alarms or fixing the leaky faucet or whatever it is. They just have to give notice before they come over. Fourth, they can enter the property to show it to prospective applicants, and this doesn’t actually have to be them. It could be their agents, as well. If they send a representative over to do the same thing, that’ll work. They shouldn’t be sending over applicants by themselves without representation, but they can enter with those people to show it off, and that’s just part of business that they’re trying to rent it out. It’s their business, and especially if you’re lease is ending. Try to be conscientious of that and try to grant them access and be polite because they don’t actually need your approval as long as they give proper notice. Lastly, they can enter the property if you have an extended absence. Sometimes, and typically usually about seven days or more, they can go in at any time to just follow-up on things and they want to make sure that maybe the faucets during the winter aren’t … The hoses outside and the spigots aren’t busting. They want to make sure that there’s not problems. They can check on the property to maintain while you’re gone, but that’s it. Be nice to your landlord. If they want to bring people by and look at the property, just be courteous. Maybe if you don’t want to see it, go to a movie or something during that time, and remember that you still have to deal with the landlord as you move out to talk about the security deposit and do the move out inspection and all that, so you certainly want to be on their good side. I hope that helps. Please know that is not legal advice and if you want to look up your legal statutes for Colorado or for any other state, you can go to landlordology.com/state-laws, and you’ll see a summary there that you can click-through to the actual statutes and read up on those as much as you want. Again, best of luck to you and thanks again for your question.
6 minutes | 4 years ago
Ask Lucas 031: Should I Charge a Pet Fee or Pet Deposit, and How Much?
Summary: Sharon from California wants to allow pets in her rentals. However, she’s not sure what kind of pet fees or pet deposits she should ask the tenant to pay. Lucas gives his recommendation and some additional tips for handling pets. Landlordology and Ask Lucas are brought to you by Cozy. Transcript: Lucas: Ask Lucas Episode number 31. Hey, what’s up, everyone. Welcome to Ask Lucas. I’m Lucas Hall and this is a bite-sized Q&A show where I answer your questions about landlording and property management. If you have a question, just leave a recorded message on asklucas.com and I’ll try to answer it in this podcast. Today’s question is from Sharon who’s asking what kind of pet fees do I recommend that she charge and other landlords charge in order to cover themselves. Before I get to that, let me tell you a little bit about Cozy. Ask Lucas is brought to you by Cozy, which provides modern property management tools and basically gives you piece of mind. That’s really what it’s selling. Cozy lets you screen tenants with full credit reports and background checks, and lets you collect rent online. The best part is it’s completely free. I’ve used Cozy for years to self-manage my own properties. I think it’s awesome. On top of that, my tenants absolutely love it and want to take it with them wherever they go. Check it out for yourself at Cozy.co. That’s C-O-Z-Y.C-O. Now, let’s hear from Sharon. Sharon: Hi Lucas. This is Sharon from California. In the past, I haven’t allowed pets in my rental properties. I found that tenants often sneak them in anyway, even though they know this isn’t allowed. I’ve decided to change my policy and allow pets. I’m not sure whether I should charge pet fees or how that even works. What kinds of pet fees do you recommend that I charge. Lucas: Hey Sharon, thanks for your question. Pet fees and pet deposits are something that every landlord and property manager certainly has to make up a choice for themselves about that. I do think that everybody has a different opinion on it. I’ve been on both ends of the spectrum. I have been a landlord with pets in the properties. I’ve also been a tenant with pets as well. I have two Golden Doodles, one of which is 90 pounds and taller than my wife when he stands on his hind legs. His name is Bear and he’s just my first-born child. Seriously, I think he’s going to speak English any day now. I think that pets for the tenants are very much like a family member, pets for anybody really for that matter. We, as landlords, have to take that seriously and realize that we are expanding our net that we’re casting out to find tenants by allowing pets. I’ve got a couple of opinions on different types of pets. One, I’m not a huge fan of cats. I did say I was a dog lover, but I don’t let cats in my properties for a variety of reasons. One, they are self-cleaning. I know that sounds bad, but they do lick themselves clean. I just have a problem with things that are self-cleaning, I suppose, because it never really gets clean. Two, the dander and the saliva that they pass around the house is just a lot worse for people with allergies typically. If you look at the data, there are more people allergic to cats than there are to dogs. You can get hypoallergenic dogs, whereas you can’t really get hypoallergenic cats, I guess unless you get the hairless ones. I think generally speaking, I’m going to have more problems down the road if I have a cat palace, rather than a dog house. I just don’t allow cats. I’m a dog only landlord. With that said, if a tenant has a dog and they want to rent one of my places, I charge them a $50 pet fee. That is a monthly pet fee in addition to the rent. All that does is it gives them the right to have a pet. It’s per pet actually. If they had two pets, it’d be $100, $50 each. That is not in any way a deposit. That is not going towards any excess damage or anything. That is just a fee that they have to pay. It’s like a ticket price or an admission price. They don’t get that money back. It’s not refundable in any way. It’s a fee. Some people believe in pet deposits. I personally don’t. I think that a pet deposit just makes the waters muddy when it comes to deposits. You’re traditionally collecting a security deposit. Then if you start adding on other deposits like a pet deposit, it gets very confusing. Because what if the damage that’s caused is actually caused by a child and not a pet, or a pet and not a child. You have to figure out, “Well, I’m going to take X number of dollars from this deposit. X number of dollars from that deposit.” It gets really hairy. I just don’t even worry about it. If they do have a pet, I might actually require just an additional deposit that just gets added in with their general security deposit. Let’s just say it was $1,000 security deposit, or one month’s rent. I might ask them to pay a $1,500 security deposit because of the pet. Now it’s all mixed together. It’s one big deposit so I can use it for anything, most of which might be pet damage. I think that’s what I do. I think that everyone needs to decide that for themselves because depending on your area, you might exclude a lot of tenants if you don’t allow pets. You might exclude other tenants because you do allow pets because they might have allergies. It’s really a personal decision based on your location. Take take that with a grain of salt. I hope that helps. If you do end up handling it with your pet fees and your lease and all that, make sure you have a lawyer look at it. I am not an attorney. I’m not giving legal advice. It is critical that you do put a pet addendum in your lease. Just go into Landlordology/directory. You’ll see a bunch of legal forms websites, all of which have pet addendums you can buy. They’re not affiliated with us in any way, but we just think they’re a great service. Check them out. We don’t get any money from them. It’s just a recommendation. I hope that helps. Thanks again. Bye.
5 minutes | 4 years ago
Ask Lucas 030: How Do You Perform an Annual Property Inspection?
Summary: Brenda from Oregon is asking how to perform a yearly property inspection, and what to watch out for when communicating with tenants. Landlordology and Ask Lucas are brought to you by Cozy. Transcript: Lucas: Hey what’s up everyone? Welcome to the 30th episode of Ask Lucas. Today, we’re answering a question from Brenda who’s asking, what’s the best way to perform a yearly property inspection? I’m Lucas Hall and this is a bite sized Q&A show were I answer your questions about landlording and property management. If you have a question, just leave a recorded message on AskLucas.com. Ask Lucas is brought to you by Cozy which provides modern property management tools. Cozy let’s you screen tenants with full credit reports, and background checks, and let’s you collect rent online. It’s 100% free. It’s 100% intuitive, and I love it. I personally use it, myself, to manage all of my properties. My tenants love it too. In fact, I was looking at my balance sheet from last year, and I saved about $34,000 by using Cozy instead of hiring out a property manager. That’s it. Check it out. It’s Cozy.co. It’s C-O-Z-Y-.-C-O. All right, now here’s today’s question from Brenda. Brenda: Hi Lucas. My name is Brenda, and I’m calling from Oregon. You have been such a wealth of information, and I so appreciate all that you do. You’ve been my guru with rental properties that I have. Have a question, though, and one of things that I’m uncomfortable about is doing yearly inspections. How do you go about that? I would appreciate any information that you can give me on that. Thank you so much. Bye-bye. Lucas: Hey Brenda. Thank you so much for your question. The simple answer is, I don’t do annual inspections unless the tenants are actually renewing a lease, and they’re going to be there longer. I typically want to do a thorough inspection of the property once a year, but that will either come about through an annual yearly inspection for a renewal tenant. If they end up leaving at their lease time, then I can do a full, final, move-out inspection at that time. That accomplishes the same goal. Other than that, I typically try to get over to my properties at least once a quarter, and I use maintenance reasons as an excuse, and it’s a legitimate thing. I typically have to go over and do something at most of my single family detached homes, once a quarter. I’ll use that opportunity to tell my tenants, “Hey, listen, I’m coming over to do x, y, or z. Let me know if there’s anything else you want me to look at, or anything that needs my attention.” I’ll give some examples. I’ll say, “Is anything not working the way you think it should?”, or “Is there anything that looks suspicious?” “Is there a leak in the ceiling, or you know, something that you just want me to look at. It may not be broken yet.” That also gives me the opportunity to look around. Sometimes I’ll just tell them, “Hey, listen, I’m going to do some inventory,” or “I’m just going to make sure that things in the kitchen are working the way I think they should.” I’ll looking around. I never want to snoop. I never want to give the appearance of snooping. I want to respect their privacy, which is why I always give a full 24 hours notice even if, perhaps, your state law doesn’t actually require you to do so. Just keep them posted. Let them know what’s happening. That way, if I get over there once a quarter, these annual inspections aren’t that big of a deal. If I do have a tenant who’s renewing an annual lease, I’ll get over there and make that part of the renewal process. I’ll say, “I’m so excited you’re renewing, and I’m looking forward to working with you for the next year or two. I want to just get over there and do a full inspection.” Just let them know it’s not for the purposes of withholding their deposits. It’s not for the purposes of penalizing them in any way. I’ll just say it’s just for me to get a good assessment of the condition of the property. More helpful than not, what usually ends up happening is I’ll be able to look at things, and I’ll be able to point out issues that I see coming down the road for them if they continue with their behavior. Most tenants are clean, but typically I’ll have one or two tenants out of 10 that just never clean the shower, or they never clean a floor, or they just don’t even know that there’s something called Windex. That gives me an opportunity to keep a good tenant, but I can also say, “Hey, listen, if you don’t clean this shower, the mold’s going to get even worse, and I’m eventually going to withhold money from the deposit, when you finally move out, to hire a cleaning company if the grout can even be saved.” It’s a good way for me to just let them know this is coming if they don’t do something different. I hope that helps. Good luck to you and your rental business. I’m so thankful for you and the fact that you get a lot out of this podcast. Thanks for participating, and good luck. Bye.
7 minutes | 4 years ago
Ask Lucas 029: Are Bedbugs a Landlord’s Responsibility?
Summary: Gwen from London is asking about her obligations to eradicate bedbugs from her rental in New York City. The bedbugs appeared after the tenant moved in, and she suspects the tenant brought them in to unit. What should she do? Landlordology and Ask Lucas are brought to you by Cozy. Links Mentions: Cozy How to Deal with Bed Bugs at Your Rental Property – Landlordology Landlord-Tenant State Laws and Regulations – Landlordology State Bedbug Laws – NCSL Bedbugs and Tenant’s Rights in NYC – NYC Government Transcript: Lucas: Hello and welcome to the twenty-ninth episode of Ask Lucas. Today, we’re answering a question from Gwen, who’s calling in from London; very jealous that you’re there. She is asking about bedbugs and who is responsible for getting rid of them. It’s a great question, and as many of you know, if you’ve been a landlord for the last couple of years, that bedbugs have taken the country by storm. They are very difficult to get rid of, and a lot of states have passed laws about it. We’re going to discuss that today. I’m Lucas Hall, and this is a bite-sized Q and A show where I answer your questions about landlording and property management. To participate, it’s very simple. If you have a question, just leave a recorded message on AskLucas.com or call us and leave us a voicemail and we will try to answer it in this podcast if it’s applicable to a larger audience. Before we get started, I wanted to tell you about our sponsor. Ask Lucas is brought to you by Cozy. Cozy is modern property management software that you can use to screen tenants with full credit reports and background checks and collect rent online. It is truly simple and it’s completely free, and it is the company behind Landlordology. I use it to self-manage all of my properties, and my tenants completely love it. Check it out for yourself. It’s Cozy.co. Now let’s hear what Gwen has to say. Gwen: Oh, hi Lucas. My name is Gwen. I’m actually calling you from London, but I have an apartment in New York. I wanted to ask you about bedbugs. I have a tenant who is brand new. She moved in, and very, very shortly after, reported to me that there were bedbugs in the flat. Now, before she was there, I had tenants for a very long time, and they never had any problems. Actually, I had stayed there for a week right before her tenancy started and I didn’t have any problems. But now it looks like I’m going to spend thousands of dollars to treat these bedbugs. Can you tell me more about what my obligations are? Lucas: Hey, Gwen. Thanks for your question. Yes, bedbugs are a huge issue in New York City. In fact, according to Terminex and the number of calls they receive, it is actually the third most dense area in the United States for bedbugs. It is a major issue, but there are over a thousand different providers in New York City that will handle and mitigate this problem for you, so you have a lot to choose from, and there is hope. To date, there are about twenty-two states that currently have some sort of regulation about bedbugs. Really, the answer to your question is your obligations depend on your state laws. I hate to say that, because they’re going to be different in each state, but in New York, specifically for you, unfortunately, the landlord is always responsible. That is just in New York. It could be in other states, too, but I know specifically in New York, the landlord is always responsible. That’s just something that New York City decided to make that law, and it’s actually under the Housing and Maintenance Code, sub-chapter two, article four, that says the landlord is legally obligated to eradicate the bedbugs regardless of really what caused it. But if you are one of the other states, you know, for others listening, if you had bedbugs and you don’t live in a state that regulates it or requires a landlord to actually deal with the issue, then you can ask yourself a couple questions. One, for example, make sure that it actually is bedbugs. Sometimes a tenant will call and just say, “Hey, I’ve got bedbugs,” but in fact, it could be fleas or roaches. Sometimes they don’t know what a bedbug looks like, and so roaches sometimes look similar. Make sure that you’re actually dealing with bedbugs before you spend thousands of dollars on a service technician. Two, consider how they got there. Look at the situation and say, okay. You know, Gwen, in your case, you know there weren’t any bedbugs there before the tenant moved in, but then they happened to just show up. You didn’t bring them in. The house was actually clean, or the flat was clean and bedbug-free before the tenant moved in. You look at it and you say, “Okay, well where’d they come from?” When a technician actually comes out, you might want to have a conversation with the technician and just say, you can do it over the phone or whatever, and just say, “Hey, listen, can you try to diagnose the source of this problem?” Oftentimes, they’ll say something like, “Oh, yeah. I found a nest of bedbugs underneath their luggage or in their luggage,” or something like that. Clearly, they picked it up from a property or hotel that they were visiting recently on travel, which is actually the way that bedbugs typically spread, is they travel through suitcases and through moving. People who travel a lot for work, they’ll bring them home in their suitcase, or if you moved from another property that had bedbugs, they’ll come in the furniture or come in the clothes or something like that. You certainly want to deal with, perhaps, the source. If you are in a state that does not regulate bedbug eradication and you can prove that the tenant brought it in, then you can actually charge the tenant for the bedbug remediation. That’s really important to know because it can be super expensive. Chances are, the tenant probably won’t want to pay for it, but you can either send them a bill for it or you can hold it from their deposit at the end of the lease and deal with it that way. If you’re not sure or you can’t prove it, then you really should just take care of it as a landlord. That is because, as a landlord, you are offering the implied warranty of habitability. That is a clause or a obligation that is just built into every single lease, whether you write it in there or not. It means that they have a safe place to live. If it’s got a lot of bedbugs, then it’s not a safe place to live. If you’re unsure about what your state laws are, you can actually go check out the National Conference of State [Legislatures 00:06:00]. That’s a website called ncsl.org. They have a bedbug page that actually goes through the actual laws for bedbugs in the twenty-two states that have regulated it so far. You can also check out Landlordology.com/state-laws or Landlordology.com/bedbugs and we’ll tell you a lot more information about this issue and what you can do about it. I hope that answers your question. Again, unfortunately for you, you just have to deal with it because you’re in New York, but anyone in a different state might have some better luck at being able to mitigate that cost back to the tenant if it was the tenant’s fault. Thanks again. I hope the situation improves, and that you can get rid of this easily. Take care. Bye.
6 minutes | 5 years ago
Ask Lucas 028: What is a “Holding Deposit” and How does it Work?
Summary: Jenny is wondering what is the best practice for a “holding deposit” or “good faith deposit”, and can it be non-refundable? How does it work? Landlordology and Ask Lucas are brought to you by Cozy. Transcript: Lucas: Hello, and welcome to the 28th episode of Ask Lucas! Today, we’re answering a question from Jenny who’s asking, “What is the best practice for a holding deposit and why should I care?” It’s a great question because we get that all the time on Landlordology and I can’t believe I haven’t answered it on this show yet. To give you a little background. I am Lucas Hall and this is a bite-sized Q&A show where I answer your questions about landlording and property management. It’s something I’ve been doing for 10 years and I have been able to develop a profitable rental portfolio for myself and my family, and I want to teach you how to do it. If you have a question just leave a recorded message on asklucas.com and I will try to answer it here. Ask Lucas is brought to you by Cozy. Cozy is modern property management software. You can use it to screen tenants with full detailed credit reports and credit score, as well as background checks, and you can even collect your rent online. It is truly simple, truly easy to use, and it is completely free, completely free. I really do use it to self-manage my own properties. Honestly, I think it’s the best thing since sliced bread. Check it out for yourself it’s cozy.co. Now, let’s here from Jenny. Jenny: Hi, Lucas. Thanks so much for your podcast. My question today is in regards to the best practices for a hold agreement. For my first go around here as a landlord I had a party that wanted a property but could not occupy it for another 20 days or so. I had a little bit of fear that they might back out while I was holding it for them. What I did was send them a form for a non-refundable hold deposit. I made that amount the same as the security deposit. The verbiage on the document says that once they sign the lease then that money then converts to their security deposit. This way I don’t make any extra money on this agreement but I have some kind of assurance that they’ll actually sign the lease and move in on the agreed-upon date. Anyway, I would love to hear your opinion and your advice on what to do in the future, or if this was a good idea. Thanks so much, Lucas. Bye-bye. Lucas: Hey Jenny, thanks for your great question. We actually get that a lot on Landlordology. I think there’s some confusion about what a holding deposit is, so thank you, thank you, thank you. Before I get into the details I’ll just tell you that what you did is exactly what I do. It solves a real problem. That problem is, when a tenant comes to view a place and they want you to reserve it for them you really have no assurance. That holding deposit is their way to put their money where their mouth is. That money is nonrefundable typically. What it means is that you’re going to take the unit off the market and they’re going to put money towards it. If they back out for reasons of their own, if they just choose to walk away for whatever reason then that money goes to compensate you as a landlord for the time that you lost while you were wasting it on them. You might have lost two, or three, or ten, or dozens of other potential applicants and the place may stay on the market for another month or so. That’s what the holding deposit is supposed to compensate you for. A lot of people don’t realize that that holding deposit is nonrefundable, so it’s so critical that you actually make it very straight forward and you let them know that this is nonrefundable and this is your promise that you are going to sign a lease. If they sign a lease then they get that money back really in the form of a security deposit. You can convert that holding deposit to a security deposit. They are two different things. One is to hold the place before you sign a lease. The other is for damages to the place or lost rent or anything like that afterwards. They don’t actually have to pay another security deposit, it just gets transferred and then they get it back at the end of the lease. If I collect their application and I tell them, “Hey, if you want to get this place you need to put down a deposit, or a holding deposit, and I explain what that is. Then, we walk through that application process and they don’t qualify, because this happens a lot, too, they don’t qualify. Maybe their credit report is bad or maybe they don’t make enough. It’s less than what they said, or something. If I reject them because they don’t meet my standards then I give back that money 100%. It just is the way it is. It can’t keep it just because I didn’t like their credit report. They are still willing to rent it, I’m the one that changed my mind. If that happens I give them back 100% of the holding deposit and I move on to the next Applicant and such is life. That’s just the way it works. I move on and I may have lost a little bit of time. That’s exactly why it’s so critical to get through that screening process within like 24 hours. As best as you can just quickly try to screen them so you know if you’re going to proceed with a lease or not. That’s holding deposit in a nutshell. In some states it’s called an Earnest Money Deposit and that actually stems from the original idea of when you’re buying a house you give an earnest money deposit to show your financial muscle, and that just says, “Hey listen, if I back out,” that’s not a contingency like a financing contingency or home inspection contingency or something, “If I back out just because I change my mind you get to keep this money.” It’s the same thing with rentals. That’s where it comes from. That’s the problem it solves. That’s what I do. I noticed what you did say is that you had them sign an agreement for the holding money deposit. I think that’s a good idea. A lot of people just write it into the check. If they hand you a check just right there on the spot in the little memo section say holding deposit, nonrefundable. Put that in there and then that will act as a note for that. Anyway, hope that helps. Thanks for asking the question. It’s a really good topic. I appreciate it. Bye.
87 minutes | 5 years ago
Ask Lucas 027: A Property Management Q&A Marathon
Q&A Summary: A recording from our latest live Q&A webinar. Listen to Lucas Hall answer over 20 questions about landlording and property management. Landlordology and Ask Lucas are brought to you by Cozy.
10 minutes | 5 years ago
Ask Lucas 026: What are the Best Digital Signature Tools for a Rental Lease?
Summary: Blake from Maryland is wants to sign a lease with a remote applicant who is currently living in Texas. Will a digital signature hold up in court and what are the best tools to digitally sign a lease? Resources Mentioned: HelloSign – Free for 3 docs/month, available on iOS, Android, Web CudaSign – From $1/month, available on iOS, Android, Web, Mac SignEasy – From $5 for 10 docs, available on iOS, Android, Web DocuSign – From $10/month, available on iOS, Android, Web, Windows Full Transcript: Lucas: Welcome to the 26th episode of Ask Lucas. Today we’re talking about digital signing tools. Today’s question is from Blake in Maryland, and he wants to sign a lease with a tenant who is currently out-of-state. I’m Lucas Hall from Landlordology and Cozy, and this is a bite sized Q&A show where I answer you questions about landlording and property management. If you have a question just leave a recorded message on asklucas.com, or call us, leave us a voice mail and I’ll try to answer it in this podcast. Landlordology and Ask Lucas are brought to you by Cozy. Cozy is the best property management tool for landlords and managers to screen their tenants and collect rent online. I use it myself and it personally helps me manage my rentals all the way from application to move out. The best part is, it’s completely free. That’s right, you heard me right. It’s completely free. There’s no other company on the planet that lets you process online rent payments, order credit reports, and even in-depth background checks at no cost to you. Simply put, Cozy delivers peace of mind to over 100,000 property managers, landlords, and renters in every city in America. Check it out for yourself at Cozy.co. That’s C-O-Z-Y-.C-O. Now let’s hear from Blake in Maryland. Blake: Hi Lucas. My name’s Blake and I’m about to be a first time landlord for my home that I own in Maryland. I’m active duty military and I’m moving to Fort Bragg, North Carolina and will be renting my house out. I’ve found a possible renter that is moving here from Texas who is also military. I had a few questions regarding Maryland law and digital signing, or mailing and using the Postal Service possibly to sign leases. Can’t really find a whole lot of documentation to read up on it myself so I found the ability to ask you a question directly. Thought maybe you might have some insight for me. I know with my realtor that I’m working with purchasing a house in North Carolina, we used something called DocuSign to digitally sign leases, any sort of agreements that way. I was wondering if you know if that would hold up in court should I need to take somebody to court for breaking a lease or what have you. If you could please give me any insights you might have. I really appreciate it. Thank you. Lucas: Hey, Blake. Thank you for your question and thank you for your pursuit of Landlordology. I have been in almost every type of lease signing situation you can imagine, so I’ll try to help you out as best I can and tell you what I’ve done, and what your options might be. To recap for our listeners, you have a place in Maryland that you own and that you currently live at, but you are moving to North Carolina and you’re renting out your home. Makes sense. A lot of people do it. That’s a great idea, and I wish you the best of luck. I think it’s a great idea. Luckily you have someone in Texas who wants to rent your place in Maryland, but because that person is in Texas, you can’t get together with him or her and sign that lease. So what do you do? Right? This is a problem that a lot of people face. It is so common because people travel a ton. They move around for military. They move around for jobs. They move around for any reason. They oftentimes aren’t going to be at the new rental until they first move there. It’s too expensive to fly, or it’s too far to fly, or it’s just not worth it to do a lease signing. So what do you do? Well, let’s talk about the different ways to sign a lease. The obvious one is you get together. This is one of my favorite. You call the person up. You say, “Hey, let’s meet at Starbucks. It’s great to see you again.” Or, “It would be great to see you again. I’ll buy you a cup of joe and we can sign this lease and go over it.” I think that’s awesome because you get to review the lease with the applicant. You can go over every clause. You can let them ask questions, answer them, and walk through it. But that’s not possible always. In your case definitely not. The other way is to mail it. You send it and then you put little sticky tabs on where you want them to sign. They look at the paper, they sign it, and they mail it back to you. That’s okay. I honestly don’t think it’s a wise decision to do that simply because you’re adding upwards of 10 days possibly in mail time, transfer time, transportation time, to get that letter back and forth, and it’s just unnecessary. What I suggest, and if you don’t have access to that applicant right there in your town, or city, and you can meet with them at Starbucks, then do a digital signing tool for sure. It’s one of my favorite methods of doing remote signings. I have a couple of tools that I really like. Let me start out by saying, to answer your question, digital signing tools and digital signatures are certainly 100% legal. With that said, I’m not a lawyer, nor is this legal advice, but I will tell you that it will hold up in court according to the E-sign Act of 2000. It’s an act that Congress passed on June 30th, I believe, of 2000. It basically says that any sort of electronic signatures are weighted just as heavily and just as strong as any sort of physical signature. It’s an act that was written to help promote e-commerce, and to help promote transactions across state lines. I think it was great that they did that. They did it back in 2000, so it’s got 15 years under its belt. Next, now that we know that digital signings will actually hold up in court, what kind of tools are out there for you to use? You know, ever since that act was signed all these tools have popped up on the web. You can find a couple dozen of them just by typing in “digital signatures” into Google. I’ll tell you my favorites. My favorites are my favorites because I use them for leases. They work well for that industry. They may not work well for other industries, but for rentals and leases they absolutely do. My first and foremost favorite is a company called HelloSign. It’s hellosign.com. What they do is, they give you a 3 signings a month for free. It has some amazing integration with your Google account. You can actually save those pdf documents, or other forms of that file, to your Google Drive, or Google Docs account. You can share it that way too. Pretty neat integration and it’s free, and it works well. I’ve never had a problem with a tenant who didn’t understand how to use it. It was just very point and click. A 5-year-old could do this is the impression that I got when getting feedback from my tenants. It was just so easy. HelloSign is my favorite. Again, it’s free. My next favorite is a company called Sign Now. I think it was re-branded to CudaSign because a company called Barracuda bought them. CudaSign, C-U-D-A-S-I-G-N, .com. They’re also really fantastic. The company before CudaSign, it was called Sign Now and it just did a really great job. Really simple. Has a little more features than HelloSign, but that’s about a dollar a month, so we’re not talking about a lot of money. It’s $12 a year. That’s really great and it’ll save all the documents for you. You can go back and look at those. It’s just really easy. They also allow you to have multiple signatures, multiple signers, as well does HelloSign. They also do that. You could have 6 tenants on a lease and 1 landlord. You could even set the order in which they would sign it, which is pretty neat. The next one is called SignEasy. That url is getsigneasy.com. That’s a little more expensive at about $5 a month, but still we’re not breaking the bank. It’s comparable to both HelloSign and CudaSign. Then, last but not least, is kind of the industry leader. That is Docusign. You mentioned that earlier, about that’s how you were dealing with your realtor and that’s what they used. A lot of brokerages and attorneys, or law offices, use DocuSign because it is just, it has a ton of features. It has all kinds of red lining features, and it can go back and forth to multiple parties, and then you can correct things. It’s really a fantastic tool, although it can be kind of expensive. I’ve seen anywhere from $10 a month, upwards to $50 or more, depending on what kind of account you’re looking for. The reason I don’t use DocuSign is because it kind of feels like I’m killing a fly with a cannon. It just has all these extra features I don’t need. I really just need something that’s free or a dollar, and it just lets me sign documents with tenants from wherever they are. Those are my 3 favorite tools. Digital signing is a legitimate form of signing a lease, and it will act as a legitimate signature, a legally binding signature. Every state has their own e-sign law in addition to the federal level law that I mentioned earlier, that act that was signed in 2000, so you do want to check with Maryland, or North Carolina, or wherever. I guess it would be with Maryland because your house is there. Check with those, that locality, or even that city it might be in to see if there’s anything else added onto that e-sign act, but
9 minutes | 5 years ago
Ask Lucas 025: How Do I Handle a Short-Term Squatter?
Summary: Ben from California is asking if he can move back into his condo that has been highjacked by a friend. Full Transcript: Lucas: What’s up everyone, welcome to the 25th episode of Ask Lucas. Today we’re talking about how to handle rogue guests and unapproved tenants. Today’s question is from Ben in California, he has one of the wildest stories I’ve ever heard of. I’m Lucas Hall from Landlordology and Cozy and this is a bite size Q&A show where I answer your questions about landlording and property management. If you have a question leave a recorded message on asklucas.com or call us and leave us a voice mail and I’ll try to answer it in this podcast. Landlordology and Ask Lucas are brought to you by Cozy. Cozy is an online property management tool that helps landlords like you and me to screen tenants and collect their rent online. It’s also completely free, that’s completely free. I use Cozy to help me manage my own properties. Seriously, I’ve been using it for years and it saves me hundreds of hours and even thousand of dollars in rent collection and screening fees. Not to mention I’m really able to set it up and forget about it, it’s the only product I know that can make it that easy. Join me and join 80,000 other people who trust Cozy with their rent. It’s a best in class product and it’s completely free. Sign up at Cozy.co, that’s C-O-Z-Y dot C-O. Okay, now let’s here from Ben in California. Ben: Hi, my name is Ben. I own a condo in Woodland Hills California. I have a friend that I let stay there. I never signed a lease with him. He is taking ownership of the property, he put the bills in his name, changed the locks. I went to stay with my mom while she was sick, when I came back he moved his girlfriend in and his dog and changed everything. He’s telling me that I can’t move back in there. I’m wondering if I have legal grounds to move back into my place that I never actually rented out. I never got any rent. I never signed the lease, I just let him stay there and now he’s saying that I have to legally evict him if I want him out and that I cannot come back to my place. I’m asking if I can legally move back into my condo with him still there. Okay, thank you, bye. Lucas: Hey Ben, thanks for your question. I’m so sorry to hear about your sick mom, I hope she gets better soon. Thank you for sharing your story, what a crazy story. Let me recap it for the audience, you left to take care of your mom and then you let a friend stay in your apartment or your condo while you were gone, probably to house sit I would guess. When you came back or as you were coming back he informed that “I’ve taken possession of the property”, and that he goes “I’ve changed the locks, and you can’t come back. I’m living here. I’ve even moved in my dog and my girlfriend. Good luck getting me out. If you want me out you have to evict me.” Wow, what a crazy friend, so-called friend. This is certainly not a friend. I feel bad that you’re put in this situation and shame on him for even risking that friendship. Here’s what I think, in a normal landlord/tenant relationship there is the right of exclusive access so that tenant has the right to occupy that unit and the landlord doesn’t, unless it’s a live-in landlord situation. I don’t believe you said this was a roommate situation, this guy was just house sitting for you. You didn’t live with him previously and this was your primary residence. Because you don’t have a lease or because that person didn’t pay any sort of rent or compensation to live there, there really is no landlord/tenant relationship and therefor there is no exclusive access or exclusive right to live there. This tenant is seriously taking advantage of you and is claiming that he has tenant rights or squatter’s rights even maybe when it’s just not true. He doesn’t, he’s a guest and he never had those rights in the first place because there was never that landlord/tenant relationship. As far as I’m concerned if you go over there and change the locks you’re just changing the locks on your primary residence. You’re locking him out but I don’t suggest that you actually lock him out. I never believe that it’s a good idea to cut somebody off because it’s hard to react that quickly, you never want to put somebody on the street. I know that’s an exaggeration of a phrase, “put somebody on the street”, but there are times like this where you might actually because he was planning on sleeping in your place one night, now all of a sudden he doesn’t have a place to live. I don’t think that’s healthy for anybody and you could be liable for any damages were that caused but what I would do, and this is not legal advice, but what I would do if I were in your situation is I would call him up and say “Listen, you don’t have any rights to this property. You were a guest, you certainly shouldn’t have moved in anybody else and you have no right to touch my personal property, like my locks. You can’t change my locks, I’m sorry, you don’t have a lease and nor did you pay any rent. You don’t have any tenants rights.” Now I would tell him, “If you don’t leave and your stuff out in 24 hours it’s going to get really ugly.” Then after 24 hours call up the police and say “Listen, somebody has hijacked my house. I went on vacation, I let somebody stay there and now he’s denying me access to my personal property.” I’m sorry, “My personal residence.” Just say “Listen I’m going over there to confront him. It might get ugly, would you like to come with me.” Often times the police will send over an officer to escort you and to watch the situation. They often times won’t get involved but they will attend with you and stand behind you as you knock on the door so that the person who’s hunkered down in your property won’t come out with a baseball bat. I think having a police officer there might enforce that or send at least the message that you have the law on your side, whether you do or not. I think it would be the muscle behind you trying to enforce this person to get out. Then on your way over there call him up and say “Listen, I’m on my way. The police are coming with me. We’re going to confront you when I get there. If you don’t want to deal with that then you should leave now or get out.” And then do it, show up with the police. I think it would be okay to change the locks as long as you don’t lock him out. I emphasize that again, if he is living there and needs a couple more days to get his stuff out or the girlfriend or whatever, make sure that they have access to it. You don’t want to make anybody homeless necessarily. If you’re not sure what to do in that situation or he just won’t leave, he really just won’t leave then seriously get a lawyer to help you out because each state is different. California is particularly in favor of tenants even though this is not a tenant situation. I think you can be strong and say “This is my personal residence and you can’t lock me out. You have no tenants rights.” Call up the utility companies and tell them “Listen you wrongfully changed the name of the account and I need you to change it back. I’m the owner you can check the property tax record to make sure if you need to. I’m not liable for those times where you messed up, you changed it to some random hijacker.” Anyway, that’s what I would do. If it still gets really bad and the police don’t help you, they don’t emphasize that they can do anything in this situation or they won’t even escort you and the tenant won’t leave, then your only option might be to file an eviction case or an unlawful detainer case in your local courthouse. That’s tricky because I’ve seen some judges dismiss a case because there was no landlord/tenant relationship and just say “This isn’t an eviction matter.” And then it’s like what do you do next? But sometimes they will, they’ll address the situation. Hopefully it doesn’t go that far, hopefully the tenant will just be a little scared of you when you put down the hammer. If you bring a police officer with you maybe that will be the end of it. Good luck to you. I hope that helps. Again, this is not legal advice, this is just how I would handle it. If you have any actual damages, like your hotel costs from the time where you were locked out or anything else, you could sue him in small claims court for that. To be honest, I would probably do that just because I was pissed because I didn’t think that’s how friends should treat each other. Good luck to you. I hope your mom gets better. Thanks.
10 minutes | 5 years ago
Ask Lucas 024: Do I Have To Fix That Window?
Summary: Leah is asking about a landlord’s responsibility to fix issues that might affect habitability verses cosmetic issues. Full Transcript: Ask Lucas, episode number twenty-four. Lucas: Hey, what’s up everyone? Welcome to Ask Lucas. I’m Lucas Hall, from Landlordology and Cozy, and this is a bite size Q&A show, where I answer your questions about landlording and property management. I am a landlord. I live it day-to-day. I love helping people, and I love talking about landlording. I know. It’s a funny combination, right? Today we’re going to talk about a landlord’s responsibility to fix issues that might affect habitability versus cosmetic issues that don’t. Habitability, that’s a tough one. I always stumble over that. Anyway, if you have a question, just go to AskLucas.com, and leave a recorded message, or call us with the phone number that’s on the site and leave a voicemail, and I’ll try to answer it in this podcast. Today’s question is from Leah in Boston, and she has a very unusual situation, but it does strike a chord in me. It touches on basic landlord responsibilities, which I think is critical for everyone to understand. If you’ve listened to the show before, you know that landlordology is a free service, provided by Cozy, and Cozy is an online property management tool that helps landlords and managers screen their tenants and collect rent online. The best part is, it’s completely free. It really, really is free. It’s what I use to manage all of my own properties, and I love it, and it’s truly saved me hundreds, if not thousands, of dollars every year, because I switched over to Cozy. One of the perks of listening to Ask Lucas is that sometimes I will fill you in on happenings before they come to pass. For example, soon, Cozy is going to be releasing a new set of features. One of the most common feature requests that we get from managers is that they love using Cozy for rent collection, and they want to do more with it. They actually want to use it to collect one time fees, like late fees, or utilities, or parking charges, or storage fees, or anything else that might come up during the rental period. As a landlord, I completely agree. I would totally use that, too. Guess what? In the next week, Cozy will be adding these features as part of its newly redesigned lease ledger. If you’re not familiar with what a lease ledger is, it’s the central point of tracking all the finances and the accounting pertaining to that lease, so that relationship between a landlord and a tenant, and what that lease balance is. That lease ledger is critical to get right, and we have spent the last twelve months really refining it and tweaking it so that it’s extremely useful, and extremely accurate, and extremely to the point. I’ve seen the mock-up of it. I’ve seen the test. It’s awesome. It’s simple to use and easy to understand, and, honestly, we’ve looked around. There’s not another tool out there that displays it and makes it as easy to understand as what we’ve just done. No more complicated spreadsheets, no more outdated software that wishes it was a spreadsheet, but keep your eye out for that announcement on Cozy’s website. It’s really a game changer, and, again, Cozy’s completely free, so check it out at Cozy.co. That’s C-O-Z-Y.C-O. Now let’s hear from Leah in Boston. Leah: Hi. My name is Leah, and I’m from Boston. I have a tenant at will, who has a month to month lease, who is now complaining about a hole in a stained glass window. She’s lived here for about two years before she started complaining. The tenant is living in an apartment that I grew up in, with that same hole in the stained glass. I left the apartment well over twenty years ago, but my dad continued to live with that same hole until he died four years ago. I’ve completely remodeled the apartment, everything except for the stained glass, and she is paying way below market rent. She would never find an apartment like this for the rent she pays. Anyways, when she first started complaining last year, I told her I grew up with that same hole, and my father has lived with that same hole, and the apartment is as is. She responded that it is my responsibility, the landlord, for all windows and yadda, yadda, yadda. Since it’s now fall, I decided to look into it today, and found out, surprisingly, that the cost to fix that quarter size hole is eighteen hundred dollars. My question is, can I tell her that I’m not fixing the hole, and if she can no longer live with it, she should move. I’d love to take the apartment, hole and all. Thanks, guys. I hope you can help me with my question. Leah: Hi, Leah, and thank you for the question. Welcome to the show. I am excited to answer it, because it does touch on basic landlord responsibilities, and so let me just recap for the audience. We have a tenant in your house. Lived there for two years, and has just now started to complain about a quarter size hole in a stained glass window, and that hole has been there for over twenty years, and has not caused a problem in that time, but all of a sudden, now it’s a big issue. Let’s talk about your options. I think your question was, do you have to do something about it, and you went ahead and got a quote, and that quote was eighteen hundred dollars, which doesn’t surprise me at all, because stained glass windows are sometimes very complicated and very fragile, or fragile, as I like to say. With that said, it’s difficult to swallow that pill. Eighteen hundred dollars for a quarter size hole in something that’s been there for twenty years. I don’t think so. What do you do about it? I think it’s important to distinguish between two types of situations. One is whether or not that window is an outward facing window, exterior window, otherwise. If it’s an exterior window, and there’s a hole in the glass, then potentially the house is not sealed from the elements. It’s tricky, because, yeah, a quarter size hole is not that big. A squirrel is not going to go through that, but maybe a little mouse could, and definitely cold air, and rain or snow, or anything else could potentially get in. It just makes the house uncomfortable. If that’s the case, then you probably should do something. I do know that most counties do have laws that state that a landlord is responsible for sealing the house, reasonably sealing the house. That means all the windows have to shut correctly. Sometimes they even make you have screens on the windows, every window that opens, and so there are usually specific laws about that, and they don’t ever like to see holes in things, whether it’s doors, or windows, or screens, just because bugs get in and cause infestations, and it gets nasty. If you do have the window, and it’s between two interior rooms, like sometimes there’s a decorative stained glass window that separates a living room and a dining room, then you don’t have to do anything about it. Seriously, that’s just a cosmetic issue, and it’s not hurting anybody. As long as it’s not super sharp, then there’s no reason to touch it. I would say if it’s an interior window, I would just tell the tenant, “Hey, listen, the cost is eighteen hundred dollars. I gave you a courtesy of getting an estimate. I’m not fixing it. End of story. You’re on a month-to-month lease. If you don’t like it, you can leave. That’s just how it is, and if you cause a lot of major issues for me with this, if you continue to cause issues for me, I’m just going to terminate your lease and find somebody else who is not such a pain in my side.” That’s harsh, but I think it’s ridiculous that she’s complaining about this thing that she’s lived with for two years, if it’s not an exterior window. Going back to the exterior window, if it is, then I think you should try to fix it. I’m not saying you spend eighteen hundred dollars, but what you should do is talk to a window person, or a glass manufacturer, or somebody, or even just get a handyman, to cut either a small piece of glass that’s the size of the broken area, and seal it around that broken area, so that the light still comes through, and it’s clear glass, and it doesn’t affect the color of the stained window, or go ahead and get a larger piece of glass that fits into the actual frame of the stained glass window, and put it on the exterior side. I think that’s a great solution. A single pane of glass, even thick glass, is only going to cost you somewhere between twenty and forty dollars, and then to seal it in, you just need some window caulk or window glaze. It’s something that any handyman could do in a matter of maybe thirty minutes, and now you have that seal. The weather’s not getting through, and it’s not affecting the color of the window at all. I think that’s a great solution, and not only are you making the tenant happy, or at least silencing the tenant, I should say, you are, also, sealing up your house better, so it will create a better environment for everybody, and prevent water damage later on, and protect the window, too, from outside forces like baseballs or anything else that might potentially damage it. I hope that helps. That’s a crazy situation, and I wish you the best. I hope that your tenant just doesn’t cause you any more issues on this. Good luck, and hopefully you’ll get your apartment back some time soon. Take care.
8 minutes | 5 years ago
Ask Lucas 023: Should I Add an Unqualified Applicant to an Existing Lease?
Summary: Lindsey from Iowa asks about adding a very, very unqualified roommate to an existing lease. What are her options and what would I do in this situation? Full Transcript: Lucas: Hey, everyone. Welcome to the 23rd episode of Ask Lucas. I’m Lucas Hall from Landlordology and Cozy, and this is a bite-sized Q&A show where I answer your questions about landlording and property management. If you have a question, just leave a recorded message on asklucas.com, or call us and leave us a voicemail and I’ll try to answer it on the show. Today’s question is from Lindsey in Iowa and she is asking about adding a very, very unqualified roommate to an existing lease. Lindsey used Cozy, and so should you. But what is it, right? Cozy is an online tool that helps landlords and property managers screen tenants and collect rent online. It’s super easy to use, and it’s completely free for landlords and managers. There’s no other product out there that does that. I’ve been ordering credit reports for the last 10 years on applicants, and the credit reports that Cozy delivers are by far the prettiest and most complete that I’ve ever seen. In fact, just last month because of Cozy, I was able to catch an applicant who had lied about a previous bankruptcy. It probably saved me months, I would say. Months of late rent, vacancy, and a lot of stress because I probably would’ve had to evict that tenant. If you want to save time, a lot of money, and countless headaches, try automating your rental business with Cozy. Do what I do. Again, it’s completely free. Sign up at cozy.co. That’s C-O-Z-Y dot C-O. Alright. I’m excited to welcome Lindsey to the show. Lindsey: Hi, this is Lindsey. I’m a landlord from Des Moines. My question is regarding adding a roommate to a current lease agreement. We just started our first rental property early in August and our two tenants would like to have a third tenant join them. My concern is that after this tenant filled out the application, did the credit and background checks on Cozy, she’s less than desirable as far as minimal rental history, terrible credit score of less than 590, two small accounts are in collections that are less than $500 each, and she just recently her own hair salon. If we were looking at her as a single candidate, we absolutely would not extend her a rental offer, but how would you proceed in our current situation? Do we discuss her shortfalls with her and leave it at that, or say no she cannot live there, or do we discuss then request confirmation of understanding from the group as a whole that their lease is joint and several and they will all be held accountable for the full monthly rent, regardless of if she is able to pay or not. We’re still learning as we go, so we would appreciate any input you can give. Thanks. Lucas: Hey, Lindsey. Thanks for the question. Thanks for calling in, and congratulations on getting your first rental property up and running. That’s super exciting. I know that when I was first getting started, I felt really unsure during that first couple lease periods because I didn’t know what I was doing. I felt like I was trying to learn as fast as I could, but it wasn’t fast enough. But it does sound like you’re asking all the right questions and you’re taking the right steps. I want to encourage you there. Keep going strong, because I’m sure you’ll be fine. To try to answer your question, it does sound like you have a really, really bad tenant, or should say applicant on your hands and you’re trying to decide what to do with her. To recap, you have two existing tenants and they want to have a third roommate, probably to help with the rent, and she may or may not be a friend of theirs already but it doesn’t really matter either way. She has a very horrible credit score. I think you said it was 590, and 590 is not great and the majority of America has a better credit score. I would guess that her bad credit is probably due to the two items that are in collections right now. By the fact that she has a 590 means that they’ve probably been in collections for a while or she’s had other issues besides those two, so they’re not recent issues that just popped up. It sounds like she has a history of not really being responsible financially. I think the fact that she has two $500 items in collections means one of two things. She’s either just kind of lazy with her finances or she’s defiant in some way. I think anybody could probably come up with $1000 if they had a yard sale or they sold some furniture or they borrowed it from a family member. It’s really not that huge amount of money, but the fact that it’s gone to collections is kind of worrisome. Anyway, with that said, it doesn’t really matter. I’ll say it again. It doesn’t really matter what her financial situation is. You do want to make sure that she’s not a recurring criminal or just got out of jail for some grossly violent crime or even the fact that she’s had past evictions because that could be an issue later. From a financial standpoint, it doesn’t matter. She is jointly and severally liable for the entire lease with the other two roommates. What that means is that it’s like the Three Musketeers. It’s all for one, one for all. She is responsible. The other roommates are responsible. If one of them falls short, if she decides she just doesn’t want to pay anymore, the other two roommates have to pick up the deficiency and they still have to pay the full amount of rent. It doesn’t matter that she didn’t contribute her portion. I would have a conversation with her and just ask about some of the issues that you found on the screening report, see if her story matches up with what you see on the reports. If there’s a couple bankruptcies there and she says she’s never had a bankruptcy, then either she’s lying or the report’s wrong. Chances are, the report’s not wrong. I would also tell her, just point-blank, that you’re going to have to have a conversation with the other two roommates to let them know that you would not have qualified her independently. However, because of the joint and several liability on the lease that they are still responsible for her nonpayment of rent just in the same way that they would’ve been responsible for each other if one of the two existing roommates didn’t pay rent, and that they are taking on that liability in order to have you. As long as they’re okay with that, then I would just create an addendum to the lease and I would say, “We’re going to add you and it’s going to be under the same terms and conditions that they were under.” A simple addendum is a one-page document with the names of the current tenants, a reference to the existing lease by date, reference exactly what those dates were and that you can cite it, and then say what you’re changing about that lease. In this case, it would be to add that third roommate. You would then add that third roommate by name on that document and have everybody sign it. As soon as it’s signed, then it’s a ratified contract and she can move in. You just carry on like normal. You can accept rent from her if you’d like or you could still collect it from the other two through Cozy. However you want to do it, that’s up to you. The fact is that they’re now considered one entity. As long as the other roommates are okay with her bad financial choices, I wouldn’t care either as their landlord. Hope that helps. Good luck to you. I know that you’re going to be a success and keep me posted. Thanks.
6 minutes | 6 years ago
Ask Lucas 022: Tenant Screening in Less than an Hour?
Summary: Francie from Indiana asks about my methods to screen tenants quickly and effectively. Quality tenant screening requires reviewing lots of documentation and talking to other landlords. Learn how I do this in 1 hour or less. Full Transcript: Lucas: Hi and welcome to the 22nd episode of Ask Lucas. Today we’re talking about how I screen tenants in one hour or less. Yes. It’s possible. I’m Lucas Hall from Landlordology and Cozy. This is a bite size Q&A show where I answer your questions about landlording and property management. I have some big news for you guys. This week, Cozy released a background check product which means that, not only can you get credit reports … full on credit reports with all the data and the score, through Cozy. But you can also get background checks which cover; evictions, and national, and criminal, and terrorist watch lists, and sex offender databases. You can get all of that for free by using Cozy. There really is no catch. Cozy still makes money. They make their money on the applicant who pays for those reports. Then they make enough on that that they can actually give away rent collection for free, which is a nice bonus. That got released this week. Now you can request background checks in addition to your credit reports. This week’s question is from Francie, who appropriately asks how to screen tenants quickly and effectively and still get really high quality tenants. Let’s hear what she has to say. Francie: Hey Lucas. My name is Francie and I’m calling from Gary, Indiana. I heard you say that you can screen an applicant within one hour. Usually, it takes me several hours, even several days, to get all the information I need. How can you do that so quickly and still get the great tenants? Thanks for your help. Bye Lucas: Hey Francie. Thanks for your question. Your comment suggests that you might have read my tenant screening guide in which I do talk about how I spend only about an hour on each applicant or group of applicants. Props to you for doing that because there is a step-by-step guide in there and it’s really helpful. I will answer this question with that in mind. Basically, you are absolutely right. I don’t spend any more than an hour. I love doing tenant screening. I have a passion for finding high quality tenants. I like to claim that I have a little gut feeling about bad tenants that usually ends up being proven right. What I do to find high quality tenants with the least amount of work is that I require all of my applicants to submit a credit report and a background check when they submit the application. I don’t tell them to go get those on their own, because they will forge them. They will Photoshop a credit report and they will come up with a background check from a company I’ve never heard of. What I do is I use Cozy’s online applications. With full disclaimer, Landlordology is brought to you by Cozy. I am an employee at Cozy. But even if I wasn’t, I would still use it because the tools are awesome. I’m a landlord. I was a landlord before Cozy and I’ll be a landlord after Cozy. The online applications are standardized. They are easy to use and a tenant can fill it out on their phone. What I do is I … In the system, I require that they pay for and authorize a credit check and a background check that Cozy does automatically when they submit their application. When I get an email that says, “Hey. You have a new applicant. Here’s their application”. The credit report and the background check are included. It’s right there and I can just look at it. I don’t have to go back and ask for more information and then wait for all 3 or 4 of the applicants in the group to get their act in gear or come back from vacation to handle it. It’s just all there and done. I don’t even have to spend time on them until I have all the information. I do end up showing them, typically. That’s about 75% of the time. Tenants want to see a place before they actually rent it. Every once in a while I’ll get an out-of-state person who doesn’t care. The pictures are great and they’ll rent it site-unseen. But most of the time, they want to see it. I’ll spend maybe half an hour showing them a place. Then, maybe 10 minutes on the phone with them doing a pre screening before that. Add it all up. Between the review of the credit report and background check, and the application, and then calling former landlords, which is probably 20 minutes of time … calling and leaving voice mails and talking to people. Add it all up. It’s about an hour. It’s not one consecutive hour, but it’s about an hour. I can live with that. I follow all the steps. I have my standards for credit scores and convictions. If they pass, they pass. I’ll know about everything within an hour. I hope that helps you. I hope that you’re able to find some really high quality tenants in the future. I know that if you require credit reports and background checks with the application submission, then your process will improve. I know, for me, I’ve reduced the amount of time per group of applicants by about 3 hours. I think that you’ll see a definite improvement. For me, it was the simplest way to cut back the most amount of time, with the least amount of effort. I still get high quality tenants because, quite honestly, if they have evictions or really horrible credit or a ton of debt, I’ll know right off the bat. I don’t even have to bother with calling past landlords because I can rule them out within a matter of minutes. It won’t even take the full hour. Thanks again for listening. Take care and happy landlording.
10 minutes | 6 years ago
Ask Lucas 021: Why Don’t You Collect Last Month’s Rent?
Summary: Ryan asks about last month’s rent, and why Lucas doesn’t ever collect it. Is there a better way to provide security against a tenant who abandons the last month’s payment? Full Transcript: Lucas: Hey, what’s up, everyone? Welcome to the 21st episode of Ask Lucas. Today we’re talking about the pros and cons of collecting last month’s rent. I’m Lucas Hall from Landlordology and Cozy, and this is a bite size Q&A show where I answer your questions about landlording and property management. If you have a question, just leave a recorded message on asklucas.com and I’ll answer it in this podcast. Today’s question is from Ryan, but first let me tell you a little bit about Cozy. If you’re like me, you’ve struggled to find software that works well for your rental business. If you manage your own properties, there’s no better system than Cozy. I think it’s truly the best way for landlords to manage their own properties from application to move-out. With Cozy, you can collect rent online, accept online rental applications, screen your tenants, and order easy to understand credit reports. It’s simple, and the best part is it’s completely free. No other company on the planet let’s you process online rent collection and screen your tenants for free. Check it out. Get Cozy at Cozy.co. Now welcome Ryan. Ryan: Lucas, in one of your recent posts you listed that you do not require tenants to pay the last month’s rent, or you don’t recommend it. Just wondering why that is? Lucas: Hi, Ryan. Yes, you are absolutely right. I do not collect last month’s rent from my tenants and I don’t really think it’s a good idea for other landlords generally speaking. Let’s get into some of the ideas on why last month’s rent really isn’t a good idea, though it is a very common practice. First, it generally complicates things. It overly complicates things in my opinion. Tenants have a hard time understanding it. I think that they generally get the idea it’s like if I pay rent now I don’t have to pay it later. It’s something that they easily forget. Based on my experiences, I think that over 50% of tenants who have paid last months rent in the beginning typically forget about the fact that they did so, and then come last month, they just pay their rent like normal because they either set it up on autopilot or they just forgot. Then worse, I think probably about a quarter of landlords who collect last month’s rent probably forget, too. Suddenly they’re collecting that last month rent from the tenant and then they had forgotten that they even deposited something maybe a year or two or three years ago. It can get lost very easily. Two, it’s restrictive. In many states, including Massachusetts as an example, a landlord has to use last month’s rent for, surprise surprise, last month’s rent. You can’t use it for anything else. Let’s go through some scenarios. Let’s say you have a tenant and a landlord, and the tenant forgets that they paid last month’s rent and then pays the rent like normal. Let’s say it’s $1,000. Let’s say the landlord had originally first month’s rent, last month’s rent, and security deposit, so they had all that. Then now it’s time for the tenant to move out and they’re fully caught up on rent. They don’t owe anything. They even double paid last month because they forget, but they did about $2,000 in excessive damages to the property. Because the landlord collected last month’s rent, he can’t use it for any sort of damages. The landlord would be stuck having to refund that last month’s rent and then using the full deposit to cover a portion of the damages, and then turning around and having to sue the tenant in small claims court for the other $1,000 which he just refunded. Because he collected it as last month’s rent, he couldn’t use it for any sort of damages. I think that’s just crazy. Some states actually have laws about that. Then further, there’s a ton of states that have laws about commingling deposit money. If you collect a security deposit, you can’t put any other money in that account with it. You could take that last month’s rent and put it into your operating account for your business because it technically is rent money, but what happens and what I see happen almost on a monthly basis with landlords that I talk to is that they forget. I shouldn’t say that they forget that they collected it, but they forget that it’s in there. They have to replace the roof or the AC and they just move along and they spend the money. When last month’s rent finally comes about, they don’t have it in their account and their confused. They have a record of collecting it but it’s not there. Related: How to Handle Security Deposits Properly It makes for difficult accounting practice. One thing I do say is that if you are going to collect last month’s rent, make sure you set up an extra bank account for just that money so you don’t spend it, or have a really good accounting system or a really good savings account to cover you in that type of situation. Another thing to consider is what do you do when you have a rent increase. A lot of landlords don’t think about that or they only deal with short-term rentals, or maybe even a year or less, so there’s not much of a rent increase. Ideally as landlords we want to have long-term tenants. We want tenants who are going to stay for over one year, maybe two, three, four, five years, and make it easy on ourself so we don’t have to completely turn these places over every year. Then ideally, you want to raise the rent when you need to to cover any other increases. If the tenant pays last month’s rent in the very, very beginning of their lease and then over the course of, let’s say, three years, their rent goes up an extra $100, oftentimes the tenant just thinks this last month locked me into that rate. That’s not true. That just means that at the time it was $1,000, let’s say, but now their rent’s 1,100. You have to top off your rent. You have to go back to your tenant and say, “Hey listen, you paid last month’s rent but you have to pay an extra $100 to make sure it equals your current month’s rate.” Tenants, they don’t like that. They don’t like paying an extra $100 in the middle of a month when they weren’t planning on it. It doesn’t give them a warm and fuzzy, and then they associate that feeling with you as a landlord, because there really is a better way and they just don’t get why they have to deal with this. They may understand the concept but it just doesn’t leave warm fuzzies with them. Now let’s talk about what we can do in lieu of collecting last month’s rent. There might be a better option. What I do and what I recommend other people do is that they actually collect more of a security deposit. The good news is that in most states you’re allowed to collect two or three or maybe infinite amount of security deposit, really whatever you could get away with and whatever your market will allow for. There are certain states that do have restrictions on it. In fact, most states do have somewhat of a statute on it. Hawaii says that you can only collect one month’s worth of rent. Michigan, it’s only one and a half. Generally speaking, I find that consistently across the board it’s about two months rent, maybe three months rent, if there’s a statute at all. There are a few that restrict it less than two, but definitely go check out our state law pages on Landlordology to determine what your state says about this. Now you can check that out at landlordology.com/state-laws. Now if you can just collect two months worth of deposit, then you don’t have to worry about last month’s rent. You can use that deposit money to cover any unpaid rent or any fees or any damages that they incur. You don’t have to be restricted and bound by the fact that last month’s rent can be used only for last month. You can use a deposit to cover that last month’s rent if they skip out on it, or you could use it for $2,000 in hardwood floor damage that they caused when their dog chewed it up. It opens up the floor to being more flexible and gives the landlord the ability to compensate him or herself for the damages, just plain and simple. The only thing you really do by collecting last month’s rent is you bind yourself. You restrict what you can do, and it doesn’t really get you anything. Because if you wanted to collect essentially two months worth of rent in a security deposit and last month’s rent, you can just do that through a security deposit. To the tenant, it doesn’t matter. They’re still paying the same dollar amount either way. They don’t care. Further, with a security deposit you can actually tell the tenant, “Hey, this is fully refundable minus any excessive damages. If you just had normal wear and tear, you get this whole thing back.” They love that. All of the tenants, when they start out they think I’m going to return this place, they have good intentions, I’m going to return it in the way it was delivered to me and I’m going to even take really good care of it. When that’s true, then great; give back the whole deposit. If not, if something happens and they lose their job or they need to take off and they just skip out on the lease, then you can use that deposit money for actual damages, whether it’s financial or material. I hope that helps. That’s why I don’t collect last month
10 minutes | 6 years ago
Ask Lucas 020: Does the 3-Day Right of Rescission Apply to Rental Contracts?
Summary: Jill from Key West, Florida was promised an apartment but it was rented to someone else instead. She’s wondering if the landlord has the right to cancel the agreement with the other tenant within three days, and then sign a lease with her. Full Transcript: Lucas: Hey everyone! Welcome to the 20th episode of AskLucas. That’s right the big 2-O. Today we’re talking about the 3-day right of rescission to cancel a lease. I’m Lucas Hall from Landlordology and Cozy and this is a bite sized Q&A show where I answer your questions about landlording and property management. The way this works is very simple. If you have a question just leave a recorded message on asklucas.com and I’ll answer it in this podcast. That’s big news because we actually bought the domain asklucas.com to make it a whole lot easier to remember. So, today’s question comes from Jill, but first let me tell you a little bit about Cozy. If you’re like me you’ve struggled to find software that works well for your rental business. If you manage your own properties there’s no better system than Cozy. I think it’s truly the best way for landlord’s to manage their own properties from application to move-out. With Cozy you can collect rent online, accept online rental applications, screen you tenants and order easy to understand credit reports. It’s simple and the best part is it’s completely free. No other company let’s you process online rent collection and screen your tenants for free. So check it out. Get Cozy at Cozy.co. Now I would like to introduce you to Jill who comes from Key West Florida. Let’s hear what she has to say. Jill: Hello Lucas. My name is Jill and I’m in Key West, Florida and I’m actually supposed to be a tenant. I made a verbal agreement with the property manager on the phone that yes I will take this property. I will rent it, and I’ll come by tomorrow afternoon to pay my first, last, security whatever was needed. Then the next day I got a text messages saying that somebody else showed up and they rented to him on the spot. Is it possible for them to void his lease and let me lease it instead? I think it’s been 3 days. They signed it on Wednesday. I have the money in my pocket. I’ve been totally excited about renting this property and I’m just wondering if there’s like an exit way for the landlord or property manage to void the lease with the other guy so I can rent it? Thank you so much. Lucas: Hey Jill. I want to give you a huge welcome because technically you were the first tenant that we’ve taken a question from on the show. It’s not that we haven’t had others call in, but it’s just that your question is so pertinent to the landlord/tenant relationship that I thought it warranted bringing up on the show. Thanks again for asking it. Let’s get into this. Generally speaking when someone mentions a 3-day rule where you can cancel a contract they’re usually referring to the 3-day right of rescission which is a common law found in most state statues. However, what that generally means is that the receiver of the goods or the receiver of the contract such as the tenant or the buyer of goods or services they usually have 3 days to change their mind. After they sign that contract they can get out of it within 3 days if they provide written proof or some sort of written explanation that they are terminating the contract. However, that’s a big fat however, it usually only applies to really aggressive industries and things like gym memberships or time shares or vacation clubs or other kinds of good and services that might come to your house. Like window installation sales companies or siding companies or asphalt refinishing companies or pool refinishing companies, anybody that wants to sell you on something that’s multiple thousands of dollars and comes into you home and tells you how bad your windows are and then sells you on a twenty thousand dollar window package. Anyway, this rule, this 3-day right of rescission is generally supposed to protect consumers who bought something who maybe didn’t necessarily go out looking for it. That’s why timeshares are such a big deal because this applies because you typically go in for some sort of bonus like a free plane ticket to anywhere in the world and then you get sold on a twenty thousand dollar timeshare. Anyway, it’s there to protect the consumer. I’ve never heard and I’m not a lawyer, so take this with a grain of salt. I’m not a lawyer and this is not legal advice. I’ve never heard of that actually applying to a standard landlord/tenant lease. Generally speaking because they are usually longer term contracts or even if they are month to month it’s not like you were suckered into it. A tenant usually goes out looking for that. Since you’re in Florida, I actually went and found a brochure published by the Florida Bar Association, floridabar.org, and it’s a little brochure they have on legal and binding contracts. There is actually a paragraph in there that describes, contrary to what many believe there is no automatic right of cancel to a valid contract even if done within 3 days. Only certain types of contract come with a 3-day right of rescission such as health club contracts or some sales of goods or services made out of your home, which is exactly what I was just saying. It goes on to say, in order to cancel such a contract you must give written notice of cancellation to a seller within 3 business days of signing your contract. A lawyer would be able to tell you if a particular contract comes with such a right to cancel. Basically, they are saying it doesn’t exist unless it’s some sort of aggressive contracting scheme, and even then you need to talk to a lawyer. So that’s the gist for Florida. Now as it pertains to your particular situation, I’m really sorry you missed out on that apartment. It sounds like you were getting really excited about it, and I feel for you because I’ve actually been in that situation where I went to sign a couple contracts and they’d signed it a few hours before. The basic gist of it is that money talks. Money and action talk. When you want something you have to go after it. For a landlord, I can speak as a landlord. I’ve been a landlord for about 10 years and handled hundreds of tenants. Every time I have a new opening or a new vacancy I usually get one or two people who fully commit. They say, oh I’m coming by tomorrow and I’m gonna drop off my first month’s rent, and then I never see them again. They never show up. I can’t get ahold of them on the phone, and they basically just drop off the face of the earth and it’s because they are shopping around and they find 4 or 5 other places they like. They’re trying to decide and they try to hold all of them because they don’t know what they want. They finally pick one and they never talk to the other apartments again. This is a classic scenario of where a bird in the hand is better than two in the bush from a landlord’s perspective. He may have three other people who actually committed to it and said, I’ll take it. I’ll come by tomorrow, but there was one guy who actually showed up and said I’ve got the money right here and I’m wiling to sign a lease right now, so he took it. I think my advice generally speaking to anyone who’s looking for an apartment is if you find one that you like don’t wait. Drive over there right then and there or if they are about to close, you know the leasing office has hours let’s say, be the first one in the door the next morning. Be waiting there while they’re going to open the office, and say I’m here. Here’s my money. Though I think that the leasing agent should have maybe given you a change to remedy the situation and come by because he promised it to you verbally. That verbal commitment wasn’t really a legally binding contract because there wasn’t a signed lease and there wasn’t any money involved yet. Maybe the best case scenario and at least what I would have done is I would have called you and I would have said, hey listen I’ve got someone here and who’s interested in the one I promised you. If you can get here in 15 minutes to sign this lease then I’ll give it to you, but if not I’ve to go with the guy who’s willing to commit. With that said, as far as I know there is nothing that you can do to force the landlord to terminate that contract and then choose you as a tenant. It just doesn’t work that way. That’s the whole point of why the landlord signs that contract with the tenant to solidify that agreement, and as long as the tenant has paid all the money that he or she is supposed to and that lease is signed then they are stuck with each other. Now, both the landlord and the tenant could mutually terminate the agreement together if it’s a decision they make and they are both in agreement about it, but one of them can’t force it on the other. That’s the point of signing a lease. You could go to the landlord and say, hey listen I’m so sorry I missed this if that person backs out just know that I will be waiting with a pile of cash to give you so give me a call if that happens, but otherwise just let me know if you have another unit available. I hope that this helps. I’m sorry that you missed out on that apartment and I hope that you find another one hat you like a lot. Next time you find one make sure that you even give a holding deposit when you first see the apartment. As soon as you know that you want it put some money where your mouth is and say this is mine. I claim it. I call dibs on this apar
9 minutes | 6 years ago
Ask Lucas 019: Can I Split Utilities by the Number of People in Each Unit?
Summary: Danielle asks a follow-up question to episode 18. Wouldn’t it be better to split the utilities by the number of people in each unit, rather than square footage, and what are the pros and cons of doing so? Full Transcript: Lucas: Welcome to the 19th episode of Ask Lucas! I’m Lucas Hall from Landlordology and Cozy, and this is a bite-sized Q&A show where I answer your questions about landlording and property management. If you have a question, just leave a recorded message on landlordology.com/ask-lucas and I’ll answer it in this podcast. Today’s question is from Danielle, but first, let me tell you a little bit about Cozy. If you’re like me, you’ve struggled to find software that works well for your rental business. If you manage your own properties, there’s no better system than Cozy. I think it’s truly the best way for landlords to manage their own properties from application to move-out. With Cozy, you can collect rent online, accept online rental applications, screen your tenants, and order easy-to-understand credit reports. It’s simple and the best part is it’s completely free. No other company on the planet lets you process online rent collection and screen your tenants for free, so check it out. Get Cozy at cozy.co. In this week’s episode, Danielle actually has a follow-up inquiry about last week’s podcast where Elise asked about utilities and how to split that up properly among an apartment building or a multi-family building. Danielle’s question is very good because it simplifies it, but also inquires about the risks and the pros and cons of splitting it up by person. Let’s hear what she has to say. Danielle: Regarding your subject on utilities for multi-family buildings, you’re stating, and I’ve already researched, that the law only requires to divide it by the square footage. However, if you have five people living in one unit, and you have another one person living in another unit, it’s hardly a fair or just amount for the person in a one unit to pay an equal share for someone who has five people living in the same square footage. Wouldn’t it be more reasonable to divide the usage by number of people and then, if there’s five people living in one square footage, then they get it times five, versus the one person that’s living in the same square footage on their own? Lucas: Hey, Danielle. Thank you, thank you, thank you for asking that question. That is a great follow-up to last week’s question. Just to recap, what you’re asking is “Wouldn’t it be more fair and more just to divide the water bill, or the utilities, by the number of people in each unit?” If you had two units, let’s say a duplex, and one side had one person and the other side had five people, wouldn’t it make more sense to make the larger side pay for 5/6 of the utility bill while the other guy only pays for 1/6. To answer your question, yes, that will work, and that can be a very fair way to do it, assuming that the tenants agree to that in the lease. However, I personally try to steer away from that for a number of reasons. Here are the downsides to doing it that way. One is it takes the attention away from assigning a percentage of the utility to a unit by a finite number like square footage, and then it puts it on the actual people. Whenever you start focusing on the tenants themselves and their living behavior, their traits about them, then you also start getting into areas where they could possibly interpret that as discrimination. I will say that familial status is a protected class in terms of discrimination, which means that you can’t discriminate based on the number of people or the number of people in their family. However, there are occupancy limits in each county, so a county government will, in fact, say that you can only have two people for every bedroom, or four people that are not related in a unit in its entirety. There are those limits, but assuming that these tenants are within the occupancy limits, you can’t really discriminate based on family size. So, what happens? Let’s go through some scenarios here. What happens when you have the one person and the five people and you’re making the assumption that each person is using an equal portion of the water. Well, that is rarely ever true. I have a group of tenants who are all roommates. There’s five people in the house, and every single time I go over there to repair something, I never see them. They’re completely gone. They’re young professionals. They work from seven in the morning until nine at night. They take showers at the gym. They don’t even have a dishwasher. They rarely, rarely, rarely ever eat at the house. They’re always eating out and they travel a lot. So, they actually use less water than a guy I have in a studio. They’re not shared units in a multi-family building, but in that particular situation, those tenants are using less water than a single person in another unit. It’s just because of their patterns and their behavior. To take it a step further, let’s say they do have a duplex and there’s five in one, what happens when that single person gets married and then his wife moves in? It makes sense that maybe his bill would double almost, but what happens when nine months later they have twins? Now they went from one to four in a matter of about nine months. I guaranty you that those twins aren’t going to use as much water as an adult. Together they might use a quarter. They take baths and that’s about it. It’s hard to assign a price to a person. When you start getting into numbering people, that’s when you start to get into shady areas and situations where you are going to have to make judgment calls that could easily be interpreted as discriminatory. That’s what I want to stay away from. Another negative to pricing it by person is that it encourages the tenants to hide things from you. I personally care most about getting every adult that’s in the unit on the lease. I want to make sure that they are documented, that I have an application for all of them, and that I know who they are so that I could potentially sue them if I needed to. If they know that their utilities are going to spike if they have another person, then what motivation is there to show you? Their attitude is going to be, “Well, hey, I’ll just try to hide it, but if I get caught, then we’ll just add them to the lease and I’ll deal with it then. Until then, maybe I’ll get a few months out of it that I don’t have to pay extra utilities.” What happens if in-laws come to visit for three weeks? Perhaps they’re allowed to in your lease. Maybe three weeks is okay as a guest. Do they have to pay three times the utility if mom and pop come? These are all things that you have to consider. If you don’t consider it, the other people in the other units will consider it for you. They’ll call you and they’ll say, “Hey, Johnny just had his in-laws in town for a month. Shouldn’t my utilities go down?” It’s a nightmare to handle. In addition to the complaints, you’re also going to have administrative issues. Not only do you now have to track everybody that’s coming and going, which is fine, I need to know that too. When you start getting into an eightplex or a twenty-unit building, you really have to stay on top it. If you want any shot at keeping these utilities in track, you need to know everything. Then you have to adjust your calculations every single month based on the number of people. If there’s any people that are kind of hiding in the woodwork where you don’t know about, you need to track them down and decide, “Am I going to charge them or are they on the lease? Are they not on the lease? What’s happening there?” It really just becomes and administrative nightmare. Those are the reasons why I don’t do it that way, but I suppose if it was a small duplex, and it was a very obvious split, and everybody was okay with it, then I think that would probably be the most fair. It just gets into other issues that I’d rather not touch. I still think square footage is the best way to handle it because that number does not change. It’s a finite number and you can always count on it. You can do that calculation or create that spreadsheet once and then just pop in the utility bill price into your spreadsheet and get the calculations, so you don’t have to tweak it every month. I hope that helps. Thanks again for your follow-up question. Please know that I am not a lawyer. I’m just an experienced landlord who’s happy to help and give my opinion. If you’re looking for legal advice, you definitely need to talk to a lawyer because that’s what they do. Anyway, thanks again. Have a great day.
9 minutes | 6 years ago
Ask Lucas 018: What’s the Best Way to Split Shared Utilities in a Multifamily Property?
Summary: Elise from Utah asks about her seemingly high gas utility bill. The landlord manages the shared utilities, and it doesn’t seem accurate. Who is responsible for shared utilities at multifamily properties, and what is the best way to divide the cost among the units? Full Transcript: Lucas: What’s up, everyone? This is Lucas Hall from Landlordology and Cozy. Welcome to the 18th episode of Ask Lucas. It’s a bite-size Q&A show where I answer your questions about landlording and property management. If you have a question you can leave a recorded message on landlordology.com/ask-lucas, and I’ll answer it in this podcast. Today’s question comes from Elise from Utah, but first let me tell you a little bit about Cozy. Cozy is an online rental management tool designed for landlords like you and me. I use it and I really do think it’s the best way for landlords to manage their properties from application all the way the move out. With Cozy you can collect online rent, accept online rental applications, and even screen your tenants with credit reports. It’s super easy to use and the best part is it’s completely free, so it’s absolutely, completely free for landlords. No other company on the planet let’s you process rent and screen tenants for free. It’s worth checking out. Get Cozy at Cozy.co. Now let’s hear what Elise has to say. Elise: Hi, my question is regarding utilities and the renter’s responsibility, especially in Utah, Holiday, Utah. I rent an apartment and multiple renters here are being charged a very high price for using gas. We haven’t been heating our apartments at all for the last couple months, and these costs are just going up. My question is why is it legal that I am potentially paying for somebody else’s usage in Holiday, Utah. Why am I not just responsible for my own usage, and do I have the option of contacting Questar and having my own account so that I can just pay for what I use? Lucas: Hey there. Thank you for that question. That is actually a really good one. I’ve been getting a ton of questions on Landlordology about utilities and how to split them up, and what’s right, what’s wrong. I don’t know if it’s really just the time of year. Maybe it’s springtime, maybe there’s a full moon or something, but it seems like people are utility crazy right now. I want to address your question, and before I get too far in, you did say that you wanted legal advice, but I can’t give that to you. I am not a lawyer, nor is this legal advice, so if you do want the legal answer you should talk to a lawyer, because that’s what they do. But I can tell you about the general principles of utility disbursement, and how that works, and what is usually done. To start, first I think we need to think about whose responsibility it is to pay the utilities. I think generally speaking that is addressed in the lease, and it will say either the landlord is responsible for the utilities at a certain amount or perhaps the tenant is responsible for paying the landlord or even maybe paying the utility bill to the actual utility company itself, but there’s a lot of ways to do it. Occasionally I’ll come across someone who has a lease and it doesn’t actually mention utilities at all. People are still going to use utilities so we need to address that in the lease. If it doesn’t, then I think the common thought throughout the industry is that the person who consumes the good is the person who’s ultimately responsible. Doesn’t that make sense? It’s a consumable good, so if you use it you should pay for it. We don’t live in a world where you use water and then somebody else should pay for it; it just doesn’t work that way. I think that ultimately there are some utility companies that do hold the landlord responsible no matter. Water companies, for example, are notorious for that because they want to put a lien on your property if you don’t pay your water bill, water or sewer for example, but generally speaking it’s the person who used up the goods. Now, even if it is the tenant’s responsible to pay for the bill, how do we figure out what’s the right amount? That’s the next big question. How do you split it up? I think that gets to the heart of your question. It sounds like in your situation you’re just receiving some sort of flat rate or some high-priced bill that doesn’t seem to match the season. It’s springtime, the heater’s not on anymore, and therefore why should there be a high gas bill? It really comes down to how the building is split up. Some communities or large apartment buildings don’t have separate meters. Having a separate meter on each unit is the absolute best way to track this stuff, because that’s what the meter does: it tracks your exact usage and it tracks everyone else’s usage so you can easily divide it up and know exactly who paid for what. But in a lot of cases they don’t have separate meters. There’s only one meter for the whole building, so the community itself is lumped together and there’s absolutely no way to track it. You just have a bill that comes in and you say, “Okay, I don’t know who used up all the gas but we did. We have a big bill this month,” and you got to figure it out. The next step down from having separate meters, the next best thing, is to split it up by square footage. Oftentimes a landlord will just figure out the square footage of each unit and give that a prorated scale. That percentage will then go towards the percentage of the utility bill. If you occupy 6% of the building because of your square footage, and there’s a $100 gas bill, then you should pay $6. I think that that is actually the most fair way to do it if there’s no meter for each unit. Again, that’s not quite as good as if you had a meter for each unit, but in the absence of that you can’t really install these meters later on without a tremendous expense, so the best way to do it is by square footage. In your case, I don’t know what’s going on exactly. It could be that possibly the landlord is just doing a flat rate. Maybe it does have something to do with square footage but it has nothing to do with the actual bill that month. A good example is something that I do at one of my properties. It’s a duplex, and I don’t have separate meters on it. When the gas bill comes in I know that in the summertime it’s about maybe $60 a month, but in the wintertime it’s like $340. What I figured out is that the monthly average was about $120. I figured out that my tenants actually preferred to just have a flat rate. They pay $120 every month and that is the average; it balances out. If something happens and it’s an extremely warm winter and it’s just not as cold as it usually is, then I’ll figure all that out and I’ll balance it out at the end, and if I owe them some money, I owe them some money, or vice versa. Perhaps they owe me more, but I would actually never go back and ask for that. Anyway, that’s a third option, and is commonly done in cases where there aren’t meters. Anyway, to summarize, it is best if every unit has their meter, but in the absence of meters it’s best to split it up by square footage, especially in multifamily buildings where there’s dozens or hundreds of units. Sometimes small landlords will just decide on a flat rate that seems fair, and they’ll put that in the lease. As for the next steps in what you can really do about this situation, I think you have a couple options. One is you can certainly go talk to your landlord and just ask them to validate the numbers that they’re throwing out at you. Generally speaking, if they’re coming up with utility bills and they’re asking tenants to pay it, they have to have some sort of formula that they’re using to calculate that. If they can’t produce that formula or they’re really hesitant to show it to you, then that means something’s up or they’re just making up numbers. If they’re just making up numbers, then certainly you can go after them legally and put some pressure on them through demand letters or hire a lawyer, or even take them to small claims court, and then the judge will force them to come up with some sort of calculation. Hopefully at that point they will just be honest. Other than that, you could call Quest and ask them perhaps the same question, and say, “What should my landlord be doing?” and see if they come up with some other answer. Outside of that, Quest really can’t do much if there aren’t meters on each of the units. They can’t go in and they can’t put meters on there if the owners isn’t going to let them on the property or to do that, or even pay for it, because it is a substantial expense to do that. Then, if there aren’t separate meters on each unit, Quest isn’t going to be able to give you your own bill, because they’re not going to know how much you’ve spent. I think you might be between a rock and a hard place but I think it’s best just to ask you landlord how they’re calculating the utilities, and then take it from there. I know that’s not the answer you were hoping for, but I hope it does help a little bit, and I really appreciate that you asked this question, because it is a common issue. Thanks again. Have a great day.
7 minutes | 6 years ago
Ask Lucas 017: An Interview with Money Radio from Phoenix Arizona
Summary: Lucas Hall is interviewed by Money Radio 1510 AM, from Phoenix Arizona. How did you get started, and why do you invest in buy and hold rentals, rather than flips? How can Landlordology and Cozy help a new Landlord? How is it free? Tools Mentioned: Cozy Hosted by: Money Radio 1510AM Full Transcript: Lucas: Hey, what’s up, everyone. This is Lucas Hall from Landlordology and Cozy. Welcome to the 17th episode of Ask Lucas. It’s a bite-size Q&A show where I answer your questions about landlording and property management. The way this works is very simple. If you have a question just leave it as a recorded message on landlordology.com/ask-lucas and I’ll answer it in this podcast. Usually I like to take a question from a Landlordology reader but in today’s episode I’m actually going to share with you a recent interview that I did with Money Radio in Phoenix, Arizona. They heard about Cozy and Landlordology and had some questions of their own. So enjoy! Ken: When was the last time we talked to a Landlordologist on the show? Julie: I don’t know that we ever have. Ken: Well, we are going to right now. Lucas Hall is the Chief Landlordologist at Cozy. Good morning. Lucas: Hi. Good morning. Thanks for having me. Ken: A Landlordologist. Did you make that term up? Lucas: I actually did. It was part of a previous company and I thought it was just a neat, creative term that was kind of catchy and when I joined Cozy, they said, “No. We love it. It’s awesome. Let’s keep it.” Ken: You at a very early age discovered that perhaps there is some advantages to being a landlord as opposed to being a tenant. What got you interested in real estate? You were in your mid-20s. Right? Lucas: That’s right. Actually I did the most practical thing I could think of. I liked this girl and I actually bought my first house to impress her. Ken: That’s impressive. All right. Then you rented that house out? Is that what happened? Lucas: That’s exactly right. I bought a house, multiple bedrooms. I was going to live in one of them and find roommates for the others that would pay my mortgage. That was how I got into it. Ken: For our listeners, your website is Cozy. C-O-Z-Y dot com. You help not only landlords but also tenants. In what ways? Explain that please. Lucas: Sure. Actually the website is Cozy.C-O. Ken: Okay. Lucas: Yeah. We help landlords in 2 ways. Cozy provides the best online software for landlords. We help them collect the rent online. I collect online rental applications and then also the most secure credit report on the planet. Then we also have a website called Landlordology which is where the term Landlordologist comes from. That’s our free education website for landlords where we just teach landlords nationwide how to be better, more profitable, more efficient and how to keep your places rented everyday of the year. Ken: If I understand this correctly, you’re not one of those fix and flip type people who just constantly are in a turmoil, getting rid of properties and buying new ones. You believe in a buy and hold philosophy when it comes to rental properties. Why would people who are listening to our show who are investors find that a very attractive way to go? Lucas: I love buy and hold properties because they paid dividends the whole time that you have them and then they also show their worth two and three times over when you go to sell it. If you can hold it for 30 years or even 20 years, your tenants will pay off that mortgage. Then when you go to sell it, it will be worth far more than what you bought it for later. It’s a great way to secure your retirement with not that many properties. Sometimes as little as 2 or 3, you can have a retirement better than most people’s 401k. Ken: It seems right now especially among Millennials, renting is something that’s very popular with them. They’re just not perhaps ready to buy that first house. Lucas:It is. It’s more popular than it’s been in years. I love that because I’m a landlord and I have the property that they want. I think it’s something that is going to happen for a long time. I think in the next 10 maybe 20 years, renting is going to be the trend. Mainly because people will have more debt than they used to. They’re unable to buy that first home or they’re waiting until they get married and that’s later on in life for them. Renting is a favorable option because it’s cheaper. Julie: Lucas, How does it work? This is Julie. I buy a rental property and I have no idea what I’m doing and I come to your company. What happens and what does it cost? Lucas: Hi, Julie. Yes. Cozy is completely free and so is Landlordology. They’re 2 sides of the coin which cost nothing. If you were to buy your first property, you could come and learn how to find your tenant. You could come learn one of those best practices and why you should do rent a certain way and how you should collect it. Maybe what kind paint you want to color the walls or what kind of carpet to put in that attracts the best tenants. I can teach you all that through my articles or through my podcast. Then with Cozy, when you finally have those tenants and you want to collect the rent we can help you do that or we can help you screen them with credit report in a way that no other company can. Because we have a track record of actually 99% of our online rent is paid on time with no late fees. We process millions and millions of dollars every month. Julie: You’re not in this as a business as a missionary. You must get paid somehow. Ken: He owns properties. Right? Lucas: Right. No. It is a for-profit business. The way we make money at Cozy is through credit reports. A landlord is free to request it and it doesn’t cost the landlord anything but if they do ask for a credit report, we pull the report from Experian and charge it to the tenant – which is about $19 and we take about half that. There’s enough money built into that credit report service that we’re able to give away everything else for free. Ken: That’s a good deal. Again the website is Cozy.co, thats Cozy dot C-O. I have a suggestion for you. Since you came up with the term Landlordologist, Lucas, I think you need a new work to replace the word landlord because you look at old movies and TV shows and books, the landlord is always the mean guy. Maybe you could come up with just a whole new word to describe that process. What do you think? Lucas: Sure. I’ll think about that. I like thinking that I’m more of an entrepreneur than a landlord. Ken: Very good. All right. It’s been a pleasure talking with you and gain for our listeners who are renters or maybe want to become a landlord or are a landlord right now, go to Cozy. The website will give you some great advice there. Lucas Hall, thanks so much for joining us. Lucas: Thank you.
8 minutes | 6 years ago
Ask Lucas 016: What are the Rules for Entering and Showing an Occupied Property?
Summary: Michael from Fresno, California is a new landlord, and needs to show his property to a prospective tenant. Can Michael showcase the property while the dwelling is occupied by a tenant, and what are the rules for giving proper notice? Tools Mentioned: Cozy Full Transcript: Lucas: Hey, everyone. This is Lucas Hall from Landlordology and Cozy. Welcome to the 16th episode of Ask Lucas. This is a bite-size Q&A show where I answer your questions about landlording and property management. If you have a question, just leave it as a recorded message on landlordology.com/ask-lucas and I’ll answer it in this podcast. Today’s question is from Michael from Fresno, California, but first, let me tell you a little bit about Cozy. Cozy is an online rental management tool designed for landlords like you and me. I really do think it’s the best way for landlords to collect rent online, accept online rental applications, screen their tenants, and then order credit reports. It’s super easy to use and my tenants absolutely love it. The thing I enjoy about it most is that it sets up automatic rent payments for my tenants, so they can’t forget. In fact, 99% of my incoming rent is on time thanks to Cozy making it automatic. The best part is Cozy is completely free for landlords. That’s right, it’s really, really, really free for landlords. I used to use another system that charge me about $40 a month to have the same rent collection and screening tools, and Cozy does it for free. I switched over, and now, I’m a lot happier because I can take my wife out on nice dates a lot more often. Check it out. Get Cozy at Cozy.co. That’s C-O-Z-Y-dot-C-O. Now, let’s hear from Michael. Michael: Hi, Lucas. It’s Michael from Fresno. I have a lease ending in about six weeks. My tenants don’t want me to show the place, but I want to have showings too so I can get someone in there as soon as possible. How soon can I start showing the place and what rights do I have? This is my first time renting a place and I don’t know what’s normal. Thanks a lot. Lucas: Hey, Michael. Thanks for your question. It’s really great to hear from you. I think we met at the expo in San Mateo last year, so it’s good to hear that you kept up with landlording. I do want to say that I’m excited for you because you’re about to go through your first tenant turnover and it is super stressful the first time you do it, but it’s not that bad. You’ll figure it out and I’m here to help. After you do it one time, you’ll be able to do it pretty easily from here on out as long as you just set a clear process on how to handle things. With that said, let me get started. Your main question was really about how to show the unit to a prospective tenant or applicant while you still have a tenant living in the property and what are your rights there and how do you exactly go about doing that. I think that is an awesome question because we all have to deal with that, especially turnover. The answer to that is not simple. First of all, it varies by state. Since you’re in California, I’ll let you know what the rules are for that and you can find these laws in California Civil Statute 1954, I think, subsection A through D, possibly. Basically, what it says in California is that a landlord is allowed to enter the property in order to make repairs, decorations, alterations or anything else that has been agreed to by the tenant or even some things that just need to happen because it’s a repair issue, but also not only just a landlord entering but the people who actually make those repairs are allowed to enter with proper notice. A landlord can also enter in cases of emergency, which does not need proper notice, and then a landlord can also enter surrendered or abandoned premise without proper notice, and then enter due to a court order like an eviction judgment or something, they can enter for that too. I want to go back to the proper notice. In California, what is presumed to be reasonable notice is actually 24 hours. It goes on to further state that it needs to be in writing and then what is considered acceptable is if you deliver it by paper to their doors, slide it under the door, slide it in the door, or give it to them in person, or if you mail it, assuming that you don’t have any sort of tracking mechanism on it, six days prior to the intended entry would be considered proper notice if you’re mailing it, so that you give the mail six days to get there, which is more than enough. It doesn’t go on to say whether or not email is acceptable. Please don’t take this as legal advice, but what I found in the courts is that oftentimes, the judge will just look at the tenant and say, “Did you know that he was coming?” If they say yes, regardless of how it was delivered, if they say yes, then that’s considered being notified. I guess other judges might just typically or might actually have an issue with it and say that it has to be by book, but that’s a risk you have to take, I guess. Anyway, back to the point, once you give proper notice, then you can go in. A tenant cannot keep you out unless they have some really, really good reason like they fear for their bodily harm or they have a right to suspect you’re doing some sort of criminal activity. If they just don’t want you in their house, that’s not acceptable because you’ve given proper notice. It’s your house. It’s your property. You’re allowed to go on it to do and conduct business. If the tenant gives you a hard time about that and actually starts harassing you, then you can just say, “Hey, we’ll call the police” or “We’re going to let the cops handle it and figure out what’s going to happen from here.” Oftentimes they’ll just step aside and let you in. I’m sorry that you’re in that situation or that you think you might be. In order to show the house, I actually think that you should do something that I call the landlord’s open house. What that is where you pick a day, like a Saturday afternoon and tell your tenant, “Hey, listen, I’m going to show the property from 1 to 4 on Saturday. It’d be great if you would just kind of catch a movie somewhere and just disappear for like four hours or three hours and just clean up before you go and that’d be great.” What you do is, starting on Monday that week, you post a bunch of listings and actively try to market it and then start scheduling showings for Saturday afternoon. When you start to get confirmed showings, you schedule them back-to-back. One at 1:30, one at 2, 2:30, 3, 3:30 and literally plan about 20 to 30 minutes for each showing. That’s it. What that does is not only does it utilize your time well and it respects the tenants’ personal space, but it also creates the sense of urgency among the applicants that do show up and they pass each other as they come and go and they get a sense that there is this buzz about the property. I’ve actually had a lot of success doing that. Most of the time, I can get a place rented in one weekend just by doing that method. It’s also sometimes delivered multiple deposit checks in one afternoon for me. Obviously, I don’t cash them all, but I use it to hold the property until I pick one of those three applicants. It’s worked well, so I’d give that a try. If you don’t have a lot of interest and you’re just getting onesies, twosies every few weeks, then just call up the tenant and say, “I’m coming by on Thursday afternoon at 6:00.” As we said earlier, if you and the tenant agree to your arrival, let’s say you do call them up and say, “Can I come by at 6:00?” and they say, “Yeah, that’s fine,” then that does constitute proper notice. I hope that helps. Good luck to you, Michael. You’re not alone at this and I’m here to help. If you want to learn more about California state laws, go check them out on Landlordology. It’s landlordology.com/state-laws and then from there, you can click on the State of California and learn a whole lot more about notices and grace periods and what to do for evictions and things like that. They actually have the direct links to the statures. Again, good luck to you. We’ll do this together and I’m sure you’ll be great. Thanks and have a great day.
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