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Sherman Oaks REALTORS® – Property Management – Leasing Services – Real Estate Attorney
10Dec

Landlord Property Management – How to Keep Your Investment Property in Great Shape for the Future

Posted by: admin Categories: Landlords
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If you ask any first-time investor or landlord to sum up their first year in a single word, it’s likely to be this: “overwhelming.” The first few months of owning a rental property bring a host of new challenges, from finding good tenants and responding to their needs to dealing with HOA fees and investment property maintenance. Unless you grab the proverbial reins and take steps to organize, plan, and adjust, you’re going to be stuck feeling like you just move from crisis-to-crisis.

It’s time to take charge. Property Management is the key! Here are three ways you can set yourself and your rental property up for sustained success: scheduling preventive maintenance, setting up an emergency fund, and becoming a quick-reacting owner.

Invest in Preventative Maintenance and Upkeep

Just like any home or condo, your rental property requires regular upkeep and care. This includes everything from lawn maintenance and landscaping to roof inspections and HVAC tune-ups. 

Our recommendation? Start by creating an investment property maintenance checklist. Take note of everything the property needs throughout the year, and then divide the projects out into their appropriate seasons. For example, it makes the most sense to inspect gutters and downspouts in the fall, right before winter snow and ice are set to arrive. On your new checklist, differentiate between tasks you can complete yourself and those you’ll need a professional to complete. The annual roof inspection, for instance, is best left to a licensed roofer.

In any season, prioritize critical items. If nothing else, you’ll want to ensure that the property remains safe, secure, and habitable. That means its roof, HVAC systems, structure, and plumbing come first. Every property owner is going to have months where they’re unable to fully keep up with their rental’s maintenance needs. That’s life. As long as you take care of the essentials, you’re set.

This includes scheduling spring and fall HVAC tune-ups. Your property’s heating and cooling systems require annual maintenance from a certified, experienced technician. An HVAC tune-up greatly reduces the risk of a system breakdown. By scheduling annual maintenance every year, you can even extend the lifespan of the property’s HVAC systems, pushing out the eventual date you need to replace them. For their part, your renters will appreciate the added energy savings and comfort that a professional tune-up brings.

To protect the property’s roof, clean out gutters and downspouts in the fall. Leaf litter can clog these critical water channels, preventing moisture from leaving the roof. This can degrade shingles and eventually lead to roof leaks. Overhanging tree branches can also pose a threat to the roof structure, so make sure you or someone you’ve hired safely cuts those down before the next summer storm rolls into town.

Set Aside Money for Emergencies

Start by setting up a savings account specifically earmarked for your rental property. Many property owners put their monthly rental income directly into this account and pay for the property’s overhead—including the mortgage, HOA fees, maintenance costs, and more. They then “pay” themselves with some of what’s left, leaving a residual balance leaving a residual balance (also known as a property reserve or account reserve) squirreled away future, unforeseen expenses. 

No matter how you slice it or set it up, it’s important to build a “rainy day” fund for your investment property. All homes, regardless of their age, location, or general condition, will inevitably need some form of emergency repair. It’s just part of the gig. Depending on the type and scope of the problem, it could mean you’re on the hook for thousands of dollars in repairs. Problems with the roof, foundation, structure, pipes, electrical wiring, or HVAC systems generally do not come cheap. The bank account you set up years ago and contributed to, through good times and bad, could be your saving grace when something goes wrong.

Just how much you need to save is a matter of nuance and debate. The common advice given to new homeowners (and property owners) is to set aside 1-2% of their home’s value every year for ongoing repairs and maintenance. That’s $2,500 annually for a home worth $250,000. 

Like all generalizations, this approach has its flaws. First, there’s no actual connection between property value and property maintenance: the exact same house could be worth $700,000 in San Francisco and worth $100,000 in Omaha. With this approach, the San Francisco property owner would save too much, and the Omaha owner would save too little. Second, different homes have different needs. There are dozens of variables: the age of the home, the climate where you are, the number of stories, and more.

If you’re a new property owner who just needs a starting point, start with the 1-2% figure, but plan on making adjustments as you go and price things out. When in doubt, save more than less—especially in that first year. That extra cushion could be a lifesaver in an emergency.

Act Quickly in Times of Crisis

One of the challenges of dealing with a rental property is that you’re not there. Outside of infrequent inspections, you’re not seeing the water heater, listening to the air conditioner running, or noticing that back door sticking. As a property owner, you’re more-or-less reliant on your tenant to let you know when something goes wrong. This is one of the key reasons why you need to establish a clear line of communication with your renter.

If your renter feels uncomfortable contacting you, or feels as though their observations are ultimately ignored, they’ll be less likely to report small warning signs of impending problems. Let’s say they notice, one morning, that there’s water pooled under the water heater tank. The tank otherwise looks fine. If they have to call you and leave a voicemail, they may feel as though they’re bothering you over what is (likely) nothing. However, if you’ve given them your cell number, they might feel more comfortable sending you a quick text message to let you know what’s going on. You, knowing that a water heater leak is a common warning sign of a tank failure, thank them and call one of the emergency plumbers you picked out months ago.

That last part is critical: to keep the trust of your renter, you need to act quickly in dealing with emergency repairs. Procrastination gets you nowhere: not only does your renter feel betrayed, but the problem is likely to still be there or have worsened. Keep a cool head and bring in a professional.

Setting a Strong Foundation

Just like anything else, property management is something you’ll get better at as the years go by. When it comes to maintenance, dealing with renters, and marketing your property, there’s always more to learn. But, by following the three tips outlined above, you’ll set a strong foundation for your rental property’s future.

Courtesy of RentecDirect

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14Jan

Moving Out

Posted by: admin Categories: General
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Giving and Receiving Proper Notice

Tenant’s notice to end a periodic tenancy

To end a periodic rental agreement (for example, a month-to-month agreement), you must give your landlord proper written notice before you move.

You must give the landlord the same amount of notice as there are days between rent payments.193 This means that if you pay rent monthly, you must give the landlord written notice at least 30 days before you move. If you pay rent every week, you must give the landlord written notice at least seven days before you move.194 This is true even if the landlord has given you a 60-day notice to end the rental agreement and you want to leave sooner (see Landlord’s notice to end a periodic tenancy.)195

If your rental agreement specifies a different amount of notice (for example 10 days), you must give the landlord written notice as required by the agreement.196

To avoid later disagreements, date the notice, state the date that you intend to move, and make a copy of the notice for yourself. It’s best to deliver the notice to the landlord or property manager in person, or mail it by certified mail with return receipt requested. (You can also serve the notice by one of the methods described under “Proper Service of Notices“.)197

You can give the landlord notice any time during the rental period, but you must pay full rent during the period covered by the notice. For example, say you have a month-to-month rental agreement, and pay rent on the first day of each month. You could give notice any time during the month (for example, on the tenth). Then, you could leave 30 days later (on the tenth of the following month, or earlier if you chose to). But you would have to pay rent for the first 10 days of the next month whether you stay for those 10 days or move earlier. (Exception: You would not have to pay rent for the entire 10 days if you left earlier, and the landlord rented the unit to another tenant during the 10 days, and the new tenant paid rent for all or part of the 10 days.)198

The rental agreement or lease must state the name and address of the person or entity to whom you must make rent payments (see When You Rent section).If this address does not accept personal deliveries, you can mail your notice to the owner at the name and address stated in the lease or rental agreement. If you can show proof that you mailed the notice to the stated name and address (for example, a receipt for certified mail), the law assumes that the notice is receivable by the owner on the date of postmark.199

Tenant’s notice to end tenancy due to domestic violence, sexual assault, or stalking

You may notify your landlord that you or another household member has been a victim of domestic violence, sexual assault, or stalking, and that you intend to move out. However, you would still be responsible for payment of the rent for 30 days following your notice. You are required to attach to your notice to the landlord a copy of the restraining order, emergency protective order, or police report, within 60 days of the day such order or report was issued or made.200

A landlord cannot end or refuse to renew your tenancy based upon the fact that you or a member of your household is a victim of a documented act of domestic violence, sexual assault, or stalking.200.1 If you request that the landlord change your locks and the landlord fails to do so within 24 hours of your request, you may then change the locks yourself. If the restrained person is also a tenant of the unit, that person is still responsible for upholding their end of the lease. These rules apply to leases signed after January 1, 2011.200.2

Landlord’s notice to end a periodic tenancy

A landlord can end a periodic tenancy (for example, a month-to-month tenancy) by giving the tenant proper advance written notice. Your landlord must give you 60 days advance written notice that the tenancy will end if you and every other tenant or resident have lived in the rental unit for a year or more.201 However, the landlord must give you 30 days advance written notice in either of the following situations:

  • Any tenant or resident has lived in the rental unit less than one year;202 or
  • The landlord has contracted to sell the rental unit to another person who intends to occupy it for at least a year after the tenancy ends. In addition, all of the following must be true in order for the selling landlord to give you a 30-day notice
  1. The landlord must have opened escrow with a licensed escrow agent or real estate broker, and
  2. The landlord must have given you the 30-day notice no later than 120 days after opening the escrow, and
  3. The landlord must not previously have given you a 30-day or 60-day notice, and
  4. The rental unit must be one that can be sold separately from any other dwelling unit. (For example, a house or a condominium can be sold separately from another dwelling unit.) 203

The landlord usually isn’t required to state a reason for ending the tenancy in the 30-day or 60-day notice (see “Thirty-Day or Sixty-Day Notice“). The landlord can serve the 30-day or 60-day notice by certified mail or by one of the methods described under “Proper Service of Notices“.204

Note: In the circumstances described in the Three Day Notice section, the landlord can give the tenant just three days’ advance written notice.

If you receive a 30-day or 60-day notice, you must leave the rental unit by the end of the 30th or 60th day after the date on which the landlord served the notice (see Written Notices of Termination). For example, if the landlord served a 60-day notice on July 16, you would begin counting the 60 days on July 17, and the 60-day period would end on September 14. If September 14 falls on a weekday, you would have to leave on or before that date. However, if the end of the 60-day period falls on a Saturday, you would not have to leave until the following Monday, because Saturdays and Sundays are legal holidays. Other legal holidays also extend the notice period.205

If you don’t move by the end of the notice period, the landlord can file an unlawful detainer lawsuit to evict you (see The Eviction Process).

What if the landlord has given you a 60-day notice, but you want to leave sooner? You can give the landlord the same amount of notice as there are days between rent payments (for example, 30 days’ notice if you pay rent monthly) provided that –

  • The amount of your notice is at least as long as the number of days between rent payments, and
  • Your proposed termination date is before the landlord’s termination date.206

What if the landlord has given you a 30-day or 60-day notice, but you want to continue to rent the property, or you believe that you haven’t done anything to cause the landlord to give you a notice of termination? In this kind of situation, you can try to convince the landlord to withdraw the notice. Try to find out why the landlord gave you the notice. If it’s something within your control (for example, consistently late rent, or playing music too loud), assure the landlord that in the future, you will pay on time or keep the volume turned down. Then, keep your promise. If the landlord won’t withdraw the notice, you will have to move out at the end of the 30-day or 60-day period, or be prepared for the landlord to file an unlawful detainer lawsuit to evict you.

Special rules may apply in cities with rent control. For example, in some communities with rent control ordinances, a periodic tenancy cannot be ended by the landlord without a good faith “just cause” or “good cause” reason to evict. In these communities, the landlord must state the reason for the termination, and the reason may be reviewed by local housing authorities.

Suppose that you are a tenant who participates in the Section 8 housing voucher program. While the lease is in effect, the landlord must have good cause to terminate (end) the tenancy. Examples of good cause include serious or repeated violations of the lease, or criminal activity that threatens the health or safety of other residents.207 However, incidents of domestic violence may not be used as a violation by the victim or threatened victim as good cause for the landlord to terminate the tenancy, occupancy rights or assistance of the victim.208

The landlord must give the tenant a three-day or 30-day or 60-day notice of termination under California law (see “Written Notices of Terminations“), and both the landlord and the tenant must give the public housing agency a copy of the notice.209 What if the landlord simply decides not to renew the lease, or decides to terminate the HAP (housing assistance payment) contract? In this case, the landlord must give the tenant 90 days’ advance written notice of the termination date.210 If the tenant doesn’t move out by the end of the 90 days, the landlord must follow California law to evict the tenant.211

If you live in government-assisted housing or in an area with rent control, check with your local housing officials to see if any special rules apply in your situation.

ADVANCE PAYMENT OF LAST MONTH’S RENT

Many landlords require tenants to pay “last month’s rent” at the beginning of the tenancy as part of the security deposit or at the time the security deposit is paid. Whether the tenant can use this amount at the end of the tenancy to pay the last month’s rent depends on the language used in the rental agreement or lease.212

Suppose that at the beginning of the tenancy, you gave the landlord a payment for the last month’s rent and for the security deposit, and that the lease or rental agreement labels part of this up front payment “last month’s rent.” In this situation, you have paid the rent for your last month in the rental unit. However, sometimes landlords raise the rent before the last month’s rent becomes due. In this situation, can the landlord require you to pay the amount of the increase for the last month?

The law does not provide a clear answer to this question. If your lease or rental agreement labels part of your up front payment “last month’s rent,” then you have a strong argument that you paid the last month’s rent when you moved in. In this situation, the landlord should not be able to require you to pay the amount of the increase for the last month.213 However, if your lease or rental agreement labels part of your up front payment “security for last month’s rent,” then the landlord has a good argument that you have not actually paid the last month’s rent, but have only provided security for it. In this situation, the landlord could require you to pay the amount of the increase for the last month.

For example, say that your rental agreement labeled part of the total deposit that you paid when you moved in “security for last month’s rent,” or that “last month’s rent” is one of the items listed in your rental agreement under the heading “Security.” Suppose that your rent was $500 when you moved in and that you paid your landlord $500 as “;security for the last month’s rent.” Suppose that you also paid your landlord an additional $500 as a security deposit. If the landlord properly raised your rent to $550 while you were living in the rental unit, you can expect to owe the landlord $50 for rent during the last month of your tenancy (that is, the current rent [$550] minus the prepaid amount [$500] equals $50 owed).

If your rental agreement calls your entire up front payment a “security deposit” and does not label any part of it “last month’s rent,” or “security for last month’s rent,” then you will have to pay the last month’s rent when it comes due. In this situation, you cannot use part of your security deposit to pay the last month’s rent. However, you will be entitled to a refund of your security deposit, as explained in the next section.

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7Jan

When to Evict a Tenant

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Tenant Eviction

For a number of reasons, tenants sometimes can’t or don’t uphold their end of the lease. Unfortunately, careful screening can’t prevent unemployment, unwelcome pets, or destructive parties. Evicting a leaseholder is a very drastic measure, but when is enough, enough? Know that when a tenant is unable to live up to their terms of the rental agreement, you are within your rights to begin the eviction procedure.

Here are 4 of the most common reasons for eviction.

 1.Failure to pay rent. If the tenant fails to send the check, does not respond to your calls and notices, or refuses to make the payment, the next logical step would be give a termination notice (also known as a “Pay or Quit” notice).

2. Violating an important provision of the lease. If your agreement explicitly forbids subleasing, moving in addition occupants or pets, it is up to you to decide whether you will amend the lease to allow it. If you refuse consent or find the subtenant unacceptable, but the unwelcome guest still moves in, begin the eviction process.

3. Damaging the property. In some cases, housekeeping practices can create unhealthy and dangerous situations. If there’s a buildup of waste, damaging alterations, or substantial destruction of property that decrease the property’s value, you can take the steps to terminate the lease and evict.

4. Illegal activity. You don’t need to wait until the tenant is convicted of a crime or arrested to take action. If you can provide fact-based suspicion that illegal proceedings are taking place, you may be able to evict the tenant. First, check with state law so you know what level of proof is needed to support the termination.

 

 

 

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